Strategic Thought Transformation - The IIPM Think Tank

S T R A T E G I C I S S U E S
lure of Asia Pacific!). The second impact went
far beyond an individual and had more far
reaching implications.
For years, academicians had been writing
brilliantly analysed scholarly papers on how
MNcs must pay more attention to the Asia
Pacific. Coming from the ivory towers, these
papers were largely ignored by strategists and
marketing mavens. But the imprint of a global
powerhouse like Goldman Sachs on similar
conclusions meant that no MNC worth its
salt would be able to ignore the inevitable
– that the Asia Pacific region would be the
hub of economic activity in the 21st century.
This article need not go into deep details of
the BRICS Report, for virtually all students of
strategy have already poured over it. Suffice
to say that if you believe the report, China will
be the largest economy in the world by 2050,
followed by the United States and India.
In 2006, Price Waterhouse Coopers published
the E-7 Report that further reinforces
the projections made by the BRICS Report.
The E-7 Report states that the size of the Chinese
economy will be far bigger than that of
the US in terms of purchasing power parity
while the size of the Indian economy will be
almost the same as the United States. More
importantly, the E-7 Report projects that the
combined GDP of the E-7 countries (China,
India, Russia, Brazil, Turkey, Indonesia and
Argentina) will be far more than the combined
GDP of the so called G-7 countries. There is
much more that is interesting, insightful and
even ironical in the E-7 Report. Yet, to be
able to understand why Grey Worldwide and
research firm Millward Brown had to conduct
such a survey, it is sufficient to broadly agree
with the conclusions of the Report that the
centre of gravity of the global economy is
shifting decisively and irrevocably to the Asia
Pacific region.
Now that legendary global brand names
like Goldman Sachs & Price Waterhouse
Coopers have given their stamp of approval,
along with many others, the Asia Pacific
region has become the hunting ground for
many MNCs. And the Asian consumer has
become a new animal that needs to be studied
very closely.
The Eye on Asia survey needs to be examined
in this context; more so the alleged
lessons for strategists and brand managers
thrown up by the survey. Let us try and examine
the three lessons mentioned above in the
Indian context and see how valid they are.
The first lesson that needs to be examined
is the almost clichéd maxim ‘Think Global,
Act Local’. Two iconic multinational American
companies and their contrasting performances
in the Indian market illuminate the
validity of the lesson extremely strong. The
two companies are McDonalds and Kellogg,
both giants in their own right and highly successful
across the world. In fact, along with
Hollywood and a few other brands like Pepsi,
Coke, Levis and Nike, McDonalds and Kellogg
are acknowledged to have projected ‘soft’
American power across the globe in the later
half of the 20th century. Yet, one company
is an outstanding and runaway success in
India while the other is still struggling reach
anywhere near its global performance in the
MNCs cannot
hope to be
successful if they
fail to act local and
deliver products &
brands that will
‘culturally’ fit
Indian markets.
When McDonalds entered the Indian
market in the late 1990s, strategists were
clear about one thing: the mainstay of the
company’s global sales-the beef burger-will
find no place in the McDonald menu in India,
as eating beef is strictly taboo with the
Hindus, who constitute more than 80% of the
country’s population. So the first smart thing
that McDonalds did was heavily publicize the
fact that beef will never be sold in any outlet
in India. And half the battle was won. Subsequently,
the mcDonalds unleashed a slew of
new products, exclusive to the Indian market-catering
to the vegetarian tastes of many
Indian consumers. The Aloo Tikki burger is a
typical example of how McDonalds has been
acting local. No wonder, the fast food chain
is a runaway success in India.
The other American giant Kellogg entered
the Indian market well before McDonalds and
has been a heavy advertiser in India for almost
a decade and a half. In the early days of
Kellogg in India, missionary style managers of
the company were convinced that an informative
and educative advertising campaign will
convince Indian consumers to switch from
their traditional breakfast routines to eating a
cold, wet and sweet breakfast. Some analysts
would have called this almost missionary zeal
to convert the food habits of Indians as both
naïve and arrogant. And after almost 15 years
of trying vainly to make Indians stop eating
their oily, spicy and piping hot breakfasts,
Kellogg seems to be realizing that acting local
might be a better idea than trying to impose
strange eating habits on Indians. To be sure,
Kellogg is not a disaster like so many foreign
brands have been in India and many upper
middle class Indians have converted to the
healthy breakfast of cornflakes with milk.
Yet, the replication of its American success
remains a chimera for Kellogg.
So, when MNCs increasingly eye the Asian
markets and try to lure the Asian consumers,
they cannot hope to be successful if they fail
to act local-understand local cultures, sensitivities,
spending habits and aspirations and
deliver products and brands that will ‘culturally’
fit with the Asian consumer.
The second lesson thrown up by the Eye
on Asia survey, is about how Asian consumers,
perhaps like all consumers in the worldpay
a lot of attention to what is known in
20 STRATEGIC INNOVATORS
An IIPM Intelligence Unit Publication