*Disclaimer: It merely reflects the authors opinion on the subject matter and shall not be construed as placing either party in a certain frame. Also, in his view all parties have constraints and objectives; hence, each acts in own best interest. Moreover, no single reason can justify this approach and this blog flows like a funnel, identifying reasons at each step.
Dichotomy, better known as double standards. Although it is more apparent in the approach of corporates, it is also prevalent in the choices of individuals. In its extreme form, dichotomy becomes discrimination; while in subtle forms it is merely varying preferences. From business perspective, some amount of dichotomy is needed for effective localisation to fulfil varying customers needs; however, in the pursuit to serve own-interests dichotomy goes a bit too far leading to an inferior product or practice that deviates significantly from the company’s usual standards.
For instance, certain international food chains have different menu offerings for India; however, this does not warrant for substandard ingredients. Although this blog topic is restricted to India, the same applies to various products in China. At this point, you might want to classify this as ‘Country of Origin Problems’. But this is different and in fact this might even contribute to the country of origin challenges.
Although the localisation of features may be mandated by the market demand forces, the compromise of quality is rather unwarranted. The former includes adaption of products to accommodate Indian context such as low cost medical diagnostics equipment as well as McAloo Tikki; while the later includes companies compromising ingredient quality for products to be sold in the India.
The former is necessary; however, the later only serves self-interest and may have negative externalities. For instance, only few cars sold in India are tested for Global NCAP (Crash Safety) Ratings, despite the perilous conditions of road safety in India. However, as far as the ownership for this dichotomy of MNCs is concerned, it can neither be generalised nor can exclusively passed on to companies.
For instance, an FMCG MNC that had to compete against am Indian detergent company, it was unable to degrade its detergent quality to match the characteristics of competition as international standards prohibited use of inferior ingredients. The Indian Consumer wanted high fuzziness and intense fragrance; however this required changes in ingredient type and quality. In case of later, many Indian companies that receive statutory certification and environmental clearance from authorities are in a state that would lead to penalties if left to the FDA (Food & Drug Administration), OHSA (Occupational Health & Safety Administration), and EPA (Environmental Protection Agency).
Hence, it is not only an integrity failure on part of corporates who act in their own best interests but also is also a policy failure on part of authorities who need to act in the best interest of the public. Also, it seems to be a self-fulfilling prophecy facilitated by market forces.
The parity standards in India, purchasing power adjustments, are lower compared to most Western markets. This compels companies to position products at much lower prices subsequently necessitating lower costs across all line-items on income statement, which also include ingredients – CoGs. While delivering the same quality would result in higher prices, reducing addressable market and revenues. For instance, famous Coffee Shop in India maintains its quality at global parity, which has resulted in prices higher than many of their stores in the United States. This explains the case of numerous MNCs exiting India despite their success in other APAC countries.
And finally, as long as the individuals continue to harbour double standards their thoughts, approach, and attitudes; the corporate culture will merely be a reflection of such cumulative individual attitudes. Hence, as long as we (individuals) fail to upheave our standards and integrity whether as a consumer or as managers, bureaucrats, and policy makers such dichotomy will persist.
After all:
In a capitalist economy, suppliers deliver only what the market demands and accepts!
And if you want to learn more about business from our experiences, check out our Udemy course on Business Management Essentials.
Header Image Photo by Tania Melnyczuk on Unsplash
Savvy Munshi 