Challenge of Management India

The challenge of managing investments and organisational growth will be difficult to organise unless there is proper awareness.

The last decade and a half has been seminal in yet one more recasting of the world. There has been major revi­sion of the framework of reference in interpretation of technological, financial and social events. The first major shift came in the early 1990s when it was realised that it was pos­sible to measure intellectual assets and the wealth that it would represent. The emergence of Bill Gates was a phenomenon, which had rev­olutionary overtones in the world of work and that of the industry.

Knowledge management at one stroke revo­lutionalised investment patterns and parame­ters of industry evaluation. Gradual emergence of China and India, not to overlook the intrinsic strength of Japan, Singapore and other coun­tries of South East Asia, ensured that the Asian perspective was more than just a geographical concept. The prosperity of West Asia and the assertion of the power of hydrocarbon made sure that the only real conflict in the world was conflict for control of resources.

The rest was the problem of branding. I am trying to make sense of it in categories that one is used to. The markets slowly recognised this shift and United States was no longer the growth pole of market economy It was not even the final market or destination. The current US subprime crisis has all the indications of a major convulsion and the shape of the world as and when it blows over, may be different from what it was before the current recession.

The International Monetary Fund has confirmed that the US economy has gone into a recession, which essentially means negative growth in two successive quarters. It has been Bally confirmed, interestingly, that US economy going into recession does not mean global mission any more. The G-3 economy, which is US, European Union and Japan, is estimated to have 1.3 per cent growth. The emerg­ing economy led by China and India could still be growing at 6.7 per cent. The world economy expected to have 3.7 per cent growth in 2008.

The significant dimension is that 3.7 per cent growth is lower than the 2007 average of 4.6 percent. Clearly this is not global recession.

The emerging capital markets of Dubai, Bahrain and Mauritius show that what used to be seen as not so prosperous earlier are poised to Asia is not only attracting attention also investments. No global company can not to have the China or India strategy. Chaina remains the prime destination for investment with India having moved from the sixth in 2003 to the second now. The investment flows are indicators of the shifting fulcrum.

It is estimated that China alone has nearly US $2 billion of foreign exchange reserve, Japan has U $90 billion, India US $300 billion, Korea has $350 billion, add to it Hong Kong and Singapore. The total reserves in this region are $4 trillion. In the absence of regional framework these countries have been putting that money in US treasury bonds, which have been yielding negative real rate of return for the past few years. Hence the management of foreign exchange reserve has become a challenge.

It is not surprising therefore, that some countries have up sovereign wealth funds. China singly has set up a sovereign wealth fund of W03 billion as the economic geography changes. There is a new list of debtors and cred­itor China is doing different types of investments diplomatically and economically while Indian companies have entered the game of acquisition in a major way. Investment in natural resources, be it oil or coal, is a part of international diplomacy. A lot of investment is also taking place in African countries, which have natural resources endowments. Internationalisation of operations with large companies having footprints in different parts of the world is becoming an Asian phenomenon. Tata with the acquisition of Net Steel in Singapore, Millennium Steel in Thailand, Corus in England and Netherlands today has foot­prints in 40 countries an achievement any ethnic group would be proud of.

Between resources and market lie the real industries strategy for any corporate. There is talk of the Asian Economy Community Regional commercial architecture is growing in Asia which may acquire similar significance to that of the European Union or NAFTA. Financial integration and cooperation is the flavour of the times and international unions and associations have a large role to play.

Global financial integration is also important and as several products and services enter the market, the investment opportunities widen as they have never done before. By the same token as the complexities of these products and services have grown so has the risk enhanced. Good answer and proper structur­ing of organisational processes will alone ensure organisational effectiveness.

It is important to realise that acquisition is one ballgame and effective running of the day-to-day operations is another. The challenge of managing investments and organisational growth in the modern world will be difficult to organise unless there is a proper awareness of the shifting nature of the fulcrum.

The other challenge which is imminent for managing the emerging investment opportuni­ties and using them for organisational growth is the constant upgradation of knowledge and skills of the capital and upgradation of technology flow of capital flows howevera problem.

Globalisation expands the opportunities for unprecedented human advance but for some it shrinks those opportunities and for others erodes human security. It is integrating economies, culture and governance but fragmenting societies. Driven by commercial market forces, globalisation in this era seeks to promote economic efficiency, generate growth and yields profit. But it misses out on goals of equity, poverty eradication and enhanced human security.

The debate goes on. It is obvious that those involved in this debate do not wish to face the truth. The human mind being what it is, can always find arguments for what it wants to believe in and what it seeks to do. The gener­ic truths of existence and economic reality are another set of factors altogether. That liberali­sation and globalisation has increased the vulnerability of the relatively weak is a fact of life. Obviously it cannot be addressed fill the stakeholders of liberalisation and globalization recognise it as a problem.

In the meanwhile, the economic fulcrum has definitely moved and progressive financial sector liberalisation cannot be the solution of problems of equity and common sense.

It is important to recognise that if the welfare of the weak and their vulnerable is to be managed effectively, it is important to mitigate the risks arising out of the progressive financial sector liberalisation. As indeed, the cost of housing plummets in the US and not so long ago rates of interest on housing loans were going up in India, obviously, the cost of borrow­ing likely to go up. It is about time we recognize that higher rate of interest itself is an indicator of likely default.