Monday, July 22, 2013


India Reflection

By Bryan deRegt

            India was quite an experience that I never thought I would have in my life. This idea became clear to me when I stood in front of the Taj Mahal. Besides realizing how amazing the building was, my only thought was “Wow, I am actually at the Taj Mahal.” I have seen the statue of liberty, the tower of London, the David, and many other attractions. I figure I will see the national monuments in Washington DC at some point and places like the Eiffel Tower. The Taj Mahal was always a place I would not go because I never thought I would find myself in India. Now, I can say I have seen the Taj Mahal without having ever even seen the White House.

            The India trip was a main draw to the Cal Poly MBA Program for me and now looking back, I think it lived up to my expectations as the best part of getting my degree, both in what I enjoyed the most and what taught me the most. My only experience with India prior to this course was living with an Indian roommate. He was born in America but his family still followed many traditional Indian cultures. That little experience was nothing compared to what I witnessed when in India and really reshaped how I view India and Indian culture.

            When comparing to other MBA courses, India had a few things stand out that made me really think about what I learned in class and how it applies to the real world. The most interesting connection I made from the India class was to my Marketing Research class. In the class, we focused on the analytics of marketing and what makes customers loyal to a brand. We analyzed department stores in the United States and found a wide variety of customer loyalty to different brands but found that the qualities that lead to loyalty are having excellent products and even more importantly, having excellent service to the customer. Customer service is the area that India goes much beyond what Americans will do for their customers.

            Indians have very high customer loyalty from what I witnessed and heard from the different businesses that I visited. This makes sense because the customer service was of the highest quality in the majority of establishments. The Lemon Tree Hotels were the best example of the service that we came to expect in India. Immediately upon arrival, employees were taking our bags and marking room numbers to bring them to the room even as I arrived well after midnight. Then, throughout the trip at breakfast, anything I could ever need was quickly brought to me whenever I asked. This continued beyond just breakfast as any employee was happy to help in any way possible. This type of service is always appreciated and I know that if I am ever in India again that I will definitely book my stay at a Lemon Tree.

            With service being so important to Indians, there are some Western products that I am surprised have no become more popular. One such product that I think could be successful in India is a MenuClub type service. Family meals are a very big part of the culture but no one always has time to cook a big meal. Food delivery service with many different restaurant options could allow for families to order a full meal and still have a traditional dinner without the hassle of cooking. Additionally, deals could be tied into the service so the Indian attitude of wanting to beat the seller could still be met. I think this is an idea that could make money although would probably be slow in the beginning and take a few years to really penetrate the market and would have to be aimed at younger individuals to start.

            Bringing a Western product to India is not the only money making opportunity though. India has some products and ideas that could make money if brought to the United States. One night for dinner we went to a village place that had cuisine from many different regions around India and each individual could get food buffet style from anywhere they wanted and even try from a multitude of regions. In addition to the food, there was dancing and attractions such as a puppet show. A place like this could be very successful in the United States. It would be a fun family outing that would be different than the usual things that Americans do on a daily basis. The food could either remain traditional Indian cuisine as Americans tend to enjoy trying different cultures or could be switched to have foods from different US regions. The buffet style food with many different options would allow everyone in the family to eat something they like which I know is a problem for my family at a lot of meals. In addition, the fun after the meal would keep families at the venue for a longer period of time. If they sold drinks as well, families would spend more money as they hang out for an extended period of time. This could be a fun new idea if brought to the United States.

            In addition to bringing the restaurant idea to the United States, all companies in the US could learn from the practices of Indians. In India, there is an attitude to always say yes and try to be helpful. This can cause some problems like when asking directions because people will tell you where to go whether they actually know or not. However, in business, this can be a very good policy when dealing with customers. In the US, many companies are quick to say no when a customer makes an odd request or wants something changed. By saying yes, whenever possible, it sticks in that customers mind and leaves an overarching positive experience with the company. I know I would be a frequent customer to establishments in the US if I was treated with the same level of hospitality that I received almost universally in India.

            The say yes attitude is something that is in Indian culture but I believe it is also something that is aided by being an emerging market. Indians are very hard working and trying to move to that next level in society. The US does not have this same drive and instead has a very high sense of entitlement. I was amazed to find out that the staff at the Lemon Tree was mainly comprised of interns with college degrees. These individuals were working hard in positions that I think many American college graduates would feel was below them. The big lesson I saw from this is that it is ok to start at the bottom of an organization even if you have an education that makes you feel like you should be starting higher. With enough hard work and skills, no matter where an individual starts they can probably emerge and reach the higher levels.

            While the United States as the developed market has the entitlement issue, developing markets like India have their own constraints. The biggest constraint I witnessed to the Indian market was the lack of infrastructure that causes problems in all facets of businesses. The biggest issue I noticed was the roads and driving in general. India has roads and plenty of them but they are not organized as well as the United States. I think this plays into the lack of any driving rules that were easily noticeable as we traveled which in turn leads to large amounts of traffic. Whenever we visited a company, it always took a long time to go a short distance because of traffic. Better infrastructure could drastically cut down these traffic delays in my opinion. Besides the roads, more housing and utilities are still needed. These are all expensive projects that the government will have to fund for India to truly emerge as a world power. And as long as the government has these additional expenses, it puts an extra strain on the Indian economy that does not exist in developed nations.

            The lack of infrastructure is one of the main issues I would have if I ever was asked to move to India for a job. Going into the trip, I thought there was no way I would even consider it but after spending time there, I think I may be open to the possibility for the right job. However, I would have some conditions. In order to consider, I would have to be set up with acceptable living quarters and have a driver because I would never consider driving myself around India. It would not be safe for me or for others. If those conditions were met, I now think that I am flexible enough to live in India although it would still be difficult. The most difficult issue for me would be food as I tended to not like the food during the trip but if I was living there, I think I could survive cooking my own meals and occasionally ordering some Domino’s which I was thankful was an option occasionally on the trip.

            The meals were by far the area where I was most out of my comfort zone. I am a very meat and potatoes type of meal person. I do not eat salads and am as far from a vegetarian as probably is possible. Therefore, when many of the meals in India only had vegetarian options, I did not really eat besides bread and rice. Even though I was not one of the more adventurous eaters, it still taught me a lot about myself being around these meals. Most importantly, it taught me that in any business situation, no matter what food is served, I can find enough to eat to get through the meal and that is what ultimately matters to conduct the business. Other areas that affected my comfort zone was the lack of alone time that I am accustomed to having at home and initially, dealing with people from such a different culture and with different attitudes.

            When meeting people in India, it taught me my most important lesson from the trip and changed me as a person. I learned that although cultures and customs are very different, people are ultimately very similar. This was learned in many different times throughout the trip whether it was talking to people on the train ride, during business visits, or just walking around the cities. However, the time it was most obvious was during the cricket game against MET. I had no idea what to expect when Cal Poly mixed with MET for a cricket game, but what I learned was that the MET students were not very different from Cal Poly after all. Some students were very competitive and wanted to be the best. Some students had no idea what they were doing. Some students were just trying to be helpful to the Cal Poly students and did not really care about the score. This is very similar to what I would expect it to be like if a group of Americans were trying to teach MET how to play baseball or football. Outside the game, when getting to talk briefly with MET students, we were able to find common ground and talk in the same way I would talk to a random American I just met. By learning that people are not very different after all, I changed as I am more comfortable talking to strangers because although everyone is different, I know that a common ground can be found.

            Overall, India was a great experience. It is an experience that I will never forget because my outlook on India has completely changed. From watching the news and pictures online, I had an image of India that was not correct and now I feel like I have a good understanding of Indian culture and an idea of how India actually looks. Now, instead of just a third world country that is attractive to US business, India has a new meaning. For me, India is an emerging market that will have an impact on my career down the line. I am not sure how it will affect my career. It might be doing business with an Indian company or even in India. More likely, it might just be working with Indian individuals in the United States. Either way, the trip will leave me better prepared when that time comes. Even if India does not end up affecting my work life, if I travel back to the country, I won’t be surprised this time how safe I felt the whole time and that I would forget I was in a developing nation a lot during the trip. It truly was an experience that cannot be replicated.

Thursday, June 13, 2013

Five Year Plan

India’s 12th 5 year Plan

What are some of the main overarching implications of the most current Five Year Plan that are likely to affect businesses operating in India (both domestic and Western)?
                The first overarching implication of India’s most current Five Year Plan involves the water resource for India. India has a water shortage despite strong rainfall. Water shortfalls are common for companies when they have low rainfall, but shortage with strong rainfall is a bad problem for a country to face. Currently, India has 16% of the world population but only 4% of the fresh water. This shows a significant larger portion of the world’s population lives in India than fresh water is available to adequately meet everyone’s needs. There is excessive use of water in the country to make matters worse due to incorrect pricing in the industry in India. This is further compounded by the fact that 80% of the water goes to irrigation and a quality issue with the water. The quality issue is due to fertilizer, pesticide, and waste disposal contamination. In order to fix these problems, India’s plan proposes the creation of a regulatory body that hopefully will come up with new ways to aid as many people as possible suffering from any water shortage.
                A second implication is the focus on the service industries. The service industries will provide the greatest potential generator of employment moving into the future for India. Information technology is project to only represent 12% of growth and is trivial to the overall employment so it can be ignored for the most part. Not to be ignored, Tourism, hospitality, and construction are major employers and the key to the planned growth in the 12th 5 year plan of India. Tourism has the highest growth potential in the coming years. This highest growth potential is supposed to last until 2021 but does not come without any risks. The biggest problem for India’s tourist industry is the capacity constraints from airports, hotels, security, and infrastructure.
                A third implication is the energy challenges that India will face going forward. In order to achieve the desired growth of 9%, India will need 6-7% growth in each of the five years. This is higher energy achievement than what was previously managed over the last twenty years. With this growth in required energy, India will become much more dependent on foreign energy sources like oil, natural gas, and coal. The overall dependence of India will rise from 36.5% to 38%. As dependence and need both rise, India will place more emphasis on exploration and production.
                A final implication is on the railways in India. India has railways that carry 22 million passengers and 923 million of freight a day but are of poor quality. The plan for India over the next five years is to create western and eastern dedicated freight corridors. On top of the new corridors, the railways will need substantial investment and improved financial performance. In order to reach this improved performance, India plans to de-politicize the fare structure of the railways in India. These are just a few important implications of India’s 5 year plan as there are many more issues addressed.

What are some of your key observations and takeaways from the 12th Five Year Plan?

                After reading the five year plan for India, I had one major observation and takeaway that always seemed to be in my mind as I thought about each point. India seems to have a good sense of many of its issues and ideas for improvement. The government has a good grasp and wants to see India have a promising next five years. However, my biggest takeaway was that it seemed to be a lot of things for the government to do to improve India. I did not find that many ideas really were about stimulating the private sector to improve India and do a lot of the government’s job for them. This should be the most desirable outcome as will be the best for long term growth. The government can do a lot for its people but ultimately, the people have to fund any government improvements. The biggest growth in history has always been funded by private resources as this allows for the developments and growth that is needed while also passing the costs on to private sectors that will most reap the rewards instead of citizens. I would like to see India focus more on this private sector.

Some economists argue that 10% GDP is the minimum growth floor India needs to achieve to create enough jobs for its markets and stability. The most recent plan appears to shoot for growth for most of 2012-2017 at 8.2%. Can India achieve such growth over the next four or five years? What may happen for them, and for us/the USA, if they come in lower than that number?

            I think India can achieve the growth rate of the plan at 8.2%. In fact, I think it is necessary for India to reach this goal for India to have a successful next five years. Whenever reports like this are issued, I assume that the reported numbers are optimistic. If the optimistic number is less than the growth economists feel is needed for India to create enough jobs for market stability then India could be in a difficult position going forward. Less growth then needed would mean that unemployment would rise in India. This would increase the poverty that India already faces as an issue in the company. In addition, this could slow the education growth planned in the region if children are needed to work at a younger age to help support their family. This could very easily lead to more children going to work instead of college like India’s five year plan hopes to accomplish.
                For the US, less growth for India will likely also affect the US market. If there is less growth and opportunity in India, more Indians are likely to look for work in other countries. This may not even be just low level workers but skilled workers that feel they have better opportunities in the US. With high unemployment rates currently in the United States, an influx of foreigners looking for work will put more Americans out of work. Not achieving the growth that is necessary would be a bad situation for both the US and India.

What are some of this plan’s targets and longer-term priorities? How do these differ from our priorities in the USA, and why?

                A main target and long term priority for India is urbanization and improving life for people living in the rural areas. This is very different than the priorities in the USA. People living in the rural areas in America have the necessary resources to live a life just as equal as people in the city even though it may be very different by choice. Water is safe. Food is plentiful. Technology is available. This is not the case in many rural areas for India. This makes it very understandable why India has to have different priorities than the USA. It is important that India’s plan is able to help bring clean water, food, education and technology to the rural areas to help them develop and be a key component to the growth of India over the next five years.

What were some of the accomplishments (and failures) from some of India’s previous Five Year Plans?

                Previous five year plans have had many accomplishments for India. One such accomplishment is an Increase in National Income. India’s national income has been on a steady rise since India began having five year plans and they hope to see this continue with their next five year plan as this is a strong indicator of economic development. Second, there has been a strong development in agriculture. There has been a steady upward trend since India began having five year plans. Third, much like agriculture there has been a development of transport and communication. In fact, the first two plans had more than a quarter of the total outlay developed to this area. Finally, throughout the plans, there have been many successful steps to increase employment. These are just a few examples of accomplishments that India has had under their previous five year plans. There are also many failures of the plans but I think the biggest drawback of the plans has been the unequal distribution of income and wealth. This is an issue that is beginning to face the US and a wide wealth gap is never something that a country wants to achieve. There are other failures but I feel overall the plans have had more success than failure.

Do you think this type of strategic planning is possible in the USA? Would the pros outweigh the cons, and what would be some of the pros and cons of a Five Year Plan in the USA? If a Five Year Plan option was presented to American voters as a constitutional amendment, would you vote for or against it, and why?

                It is not possible for the USA to have this type of strategic planning. Our democracy is built upon a lot of elections and this does not provide the stability for a five year plan to have a chance to be enacted. Instead, I consider the USA having multiple two year plans that different interests push and they eventually become what happened over the period. There would be pros to this type of plan for the USA in that it would provide more stability, but the cons of losing some of the electoral process would not be easily sold to American citizens or to the political party that is not currently in control. If a Five Year Plan option came up for vote, I would vote against it as I feel flexibility is very important and think a balance between parties is very important in our system and worry a five year plan would put too much influence into the hands of too few individuals.

Friday, March 22, 2013

Book Review: The Elephant and the Dragon

Book Review: The Elephant and the Dragon

Author: Robyn Meredith

What the rise of India and China means for all of us?

By Bryan deRegt

In The Elephant and the Dragon¸ Robyn Meredith paints a concerning future for American workers. As an MBA student, it made me wonder a little bit how much my degree will help me stand out as I enter the job market. The book focuses on the repercussions of a global job market especially as India and China have emerged as economic powers.  She uses the analysis of India as an Elephant and China as the Dragon. India is the elephant that has been slowly gaining economic strength. China is the dragon that has emerged with a fast rise to power. Meredith explains how both emerged in more detail throughout the book. The most interesting part of her explanation to me is her discussing the differences in work that college graduate look for between countries and how the job market is affected. She mentions at one point that college graduates in India are happy to take a job answering an 800-number to listen to American's complain. This is example is meant to demonstrate that China and India are willing to do jobs for cheaper than Americans even as they may be just as highly qualified as the United States. Overall, the book does a good job explaining the situation but does not do very much to offer solutions for America.

The difference between job desires among individuals in the United States versus China and India. Americans have an attitude that if we go to college we should be able to find a good job with a good salary and begin our work experience. This has not been the case in recent years as unemployment rates have been high and recent college graduates are having trouble finding work. From my own experience, I am completing my MBA and it is a difficult job market. An MBA now just makes me one of many versus twenty years ago when an MBA would make workers stand out from the crowd. India and China do not have this same attitude. College graduates are happy to take jobs for salaries that Americans would not consider working for that little. A graduate with a degree in computer science in America used to be looking at some top jobs in Silicon Valley that pay as much as $120,000 per year. This is obviously a top job that anyone would be happy to have. Meanwhile, in India, a similar job will attract a college graduate as well but to be the same IT professional, the salary in India may be only $5,000 per year. That is a $115,000 difference. It is easy to see why IT work has seen a mass exodus from the United States to India.

The question for us as American workers is how we are going to react to this change. I think the biggest area that Americans need to adapt is in our attitude. I know growing up that I always thought that I would go to college, get my degree, and have multiple job opportunities to do what I wanted. When the time came after I finished my undergraduate degree, this was not a reality. The job market is difficult and just having a college degree doesn't mean that I have the right to a high paying job. As I entered the MBA program, I knew this would help in the job search but again it is not a golden ticket to a six figure salary. Americans need to adopt the attitude that there are now people who are just as skilled as us all over the world who work for much cheaper so this is going to bring down salaries and job availability in the United States. There are no longer job markets for each specific country but instead there is a global job market. 

Meredith discusses many more issues but one particular that she brings up is that China and India are very different. We tend to group them together in America because they are emerging powers in the east but they are not very similar at all. India has major infrastructure problems. A few of Meredith comments on India's infrastructure are:

 "India doesn’t have enough power plants and electricity supplies are so unreliable that lights--and computer screens--regularly flicker in downtown business districts."  

"Indian airports are so shabby they have become a national embarrassment."  

"Companies must navigate antiquated customs processing, variations in taxes and byzantine rules for transporting goods between Indian states in addition to the crumbling highways, decrepit airports, and what-me-hurry ports."

These quotes give a great idea of the infrastructure problems that companies still face when doing business in India. China on the other hand has some of the best infrastructure in the world. In an interview, she asks the question if you landed at an airport in Shanghai or at JFK in New York if you would be able to look around and tell which is the developing country. This affects what type of jobs are moving to each country. 

China has become the world's factory. They have the infrastructure and ability to build the large factories. Combined with a large base of workers it is not surprising that anytime you buy a toy in America it is no surprise to see it have "Made in China" on it. Meredith explains this shift, "Instead of doing the inventing as the West watches on with envy, China excels at building Western inventions cheaper than Westerners can build them at home.  China has shifted from a hub of invention to one of rote production." For Americans, it means that there is still room for the innovators but the factory workers are going to have more difficulty finding work as it can be done just as well for much cheaper in China.

Since China is the world's factory, Meredith describes India as becoming the world's back office. As I have already mentioned, IT jobs have been a big mover to India because of the qualified labor and cheaper salaries. The IT and call market industry in India now represents 5% of the countries GDP. America has in a way accepted the loss of these jobs as most of us know that when we call an American company, we will be talking to someone in India. This hurts the lower skilled workers in the US, but saves companies money. Unless Americans are willing to take much lower salaries, these jobs will not be coming back but new jobs can take their place.

Overall, Meredith does a good job describing the emergence of China and India and how it relates to the United States job market. The book is a good read for anyone interested in globalization but I would have liked to have read more about solutions. I had already known about the emergence of China and India but did not know how I could take advantage of this situation. I think this is the big question and I still do not know the answer.