So now we have a power panel talking about recession and the current scenario and the road ahead being moderated by Steve Tappin, chair, LII 2009.
What’s happening at the Global credit Markets?
Theres’ no doubt that the US and UK are going to see slow growth and hence if you look at where the growth would really be, well, India, China are in the race. We did go through difficult times in Q1, but now we are introducing the concept of reverse integration. We are manufacturing products at price points which make sense to the masses int he country. Hence we are focusing on a whole new market segment to look at.
Corporations like us have to better how to work with the governments around the world. We as an institution have to get better at doing this as the funds today really are with the governments. We have realized that in some markets its better to partner with exsiting organizations to achieve the right and fast growth.
Now we have the Airlines industry being represented and what we are discussin are the cycles in the airlines industry. Global recession and fuel prices, have hit the industry pretyt badly. Now how do you weather a downturn like that?
I believe, what you need to do is have a very detail and deep customer focus. If you listen to your customer right, you kind of know the bad weather for which you could well be prepared. You hence start thinking on what best can be done with the customers hence delivering and creating the right value. In any industry if you do your homework and understand where the world economy is going will help you a lot.
One of the reasons the Indian airline industry is losing 1.5 billion dollars is the Me-too syndrome!
And now we are discussing the remittance industry and interesting to note that the trends in this industry are still increasing. And what we did as a company is get the slow down much faster and quickly, hence we looked at strategic growth options. We as an organization grew and looked at our corporate strategy, aligning it with the growth and then we looked at investments. We had the following two crucial pieces with us:
- Communicating with our stakeholders
- Being progressive and Aggressive than the industry – high level of execution
And now we have the IT Services business being represented from the panel and interesting to note that the comopany went ahead to drive growth within and external to the organization.
We went to our top 50 customers and understood their issues and problems and had our swot teams helping clients and helping them grow their businesses
We went to our partners to look at how we could get the right pricing models for our customers and finally we went to unions in the EU, and supported the cause of outsourcing which highly supported us in generating new business than cutting on any sources/ costs
And now we are in the Q&A mode in the panel discussion, which will be open to public view next. Interesting to share the notes here, we are discussing the defence industry as an opportunity in India. Tejpreet from GE remarks that the new and innovative products which will come, will be from India and China and emerging economies now rather than the west and this will drive growth of the market in the west.
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So here we are with the second session of Day 1 of The Leaders In India 2009. This is a panel discussion with a very impressive moderated panel, and the discussion will revolve around Mergers and Acquisitions which surely is an interesting discussion to be in.
We have the resident editor from Mumbai for Outlook magazine moderating the session for the gathering and he talks some very interesting numbers.
70% of acquisitions fail
Company like Cisco which has done more than 135 acquisitions till date, we have the Chief Globalization Officer from Cisco, talking about how Cisco has mastered the art of acquisitions. He says the majority of our acquisitions came from our customers. This is the Go To Market anc business strategy for Cisco. We differentiate in market enetering, expansion and acceleration. Our success rate is 70%. We are very high on retention as well.
You need a culture in a company to be able to do M and A
We also do acquisitions to enter new business models. Our learning with acquisitions is that you have to have that culture in your company and today we have an entire team to do these acquisitions. Last but not the least, its a process. Now we are talking India in specific and interestingly Cisco has so far done 6 new investments in India.
Key takeaway: M&A can be a key part of your strategy and it can become your culture
Now we have Mr. Charles from wattson wyatt, giving the Human angle to M&A. What I have learned working with clients, there is no standard template for culture. It has to be something which is central to all parts of your transaction. In terms of due diligence, if you really dont understand the culture of the organization that you are buying, you should not think of buying them.
I was very impressed with the amount of expertise and process and real hard work which went into due diligence when I was working with clients in India
But the whole diligence was on the financial part and not the cultural or Human part. One of the things you need to accept about M and A, is that you need to be better at it.
Interestingly we have an expert talking about post integration and acquisition and she says, when you are in the midst of your deal, how much attention have you paid to the fact that what would happen to the organization after merger and what would form out of it?
You need to have the systems integrated to get the right prioritization, post acquisition integration. The key thing for you is to get the right internal team together. You need to bring all the elements together with common objectives and right prioritization, as you cannot do everything in 30 days, hence you need to have the right planning which will definitely pay dividends in the long run.
By bad post acquisition realizations, and if not planned well, you could inherit losses and other issues. Hence plannign the right internal team with the right objectives is the right thing.
Bad M&A?
Sure, there is bad M&A there, but it is also the time for opportunity. Governments are going to have to raise money in the near future and taxes are the way to do it and hence this is the time to have a strategic look at your group structure and if you have your IP rights at the right places in your organization and if you are exploiting them fully.
Q&A:
Now we are in the q&A mode with the moderator of the session leading with the questions.
Very interesting discussions happening about Indian family businesses and also how Cisco does the right things by setting the right expectations, while discussing business Integration across verticals and internal employee cultures.
Money is a Motivation – setting the right financial structure post integration:
We now are discussion how compensation structures change and how they are controlled and managed over time, post integration. You need to structure the deal looking at the fact that anybody who has set up a business has a huge amount of emotional attachment with the business. What we have found is: if you can intelligently find out the right roles for people post integration, looking at what they are doing, they love, you can have a successful post integration team merger and integration.
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