Question

Management Decision

Cultural Backlash in India

As you look at the latest quarterly earnings report of your clothing and accessories company, you congratulate yourself. It was your idea to move manufacturing to India last year, and it was your idea to partner with a local retail chain to get your products to Indian consumers. So even though your U.S. sales fell 5 percent, much in part due to the recession, your company’s profits actually rose 35 percent, thanks to all the money you made in India. Almost every day, you walk through the city, and you see young, affluent Indians wearing your jeans, clutching your purses, donning your sunglasses, and you are unbelievably glad that you decided to come into this dynamic, fast-growing market that really likes Western fashion.

There are many people, however, who aren’t so fond of your styles, and of Western culture in general. Various religious and political conservative groups have recently been protesting the growing influence of Western culture in India, sometimes in quite violent ways. Recently, on Valentine’s Day, a group of men publicly beat young couples who were holding hands or having a romantic dinner. In another city, a group of people attacked women who were at bars and dance clubs. And just the other day, you saw a crowd of people throwing your jeans, purses, and sunglasses into a big bonfire as a statement against Western fashion. Even businesses are getting into the anti-American sentiment; a local beverage company announced that it would take on the popularity of Coke and Pepsi by selling a beverage based on cow urine, which is considered a holy, medicinal drink by Hindus.

When you came up with the idea of expanding into India, you certainly didn’t think that you would find yourself in the middle of a cultural clash. “I’m just here to sell jeans,” you think, “not to tell people how to live.” But clearly, many people view companies like yours as a threat to their culture and heritage.

Questions

1. How would you, as the manager of this company, deal with the risk associated with doing business in countries that feel threatened by American culture?

2. How might your company use an alliance with local companies to adapt to local concerns about American culture?

Answer 1

Introduction: -

The Indian subcontinent is a favoured region for most countries to set up their operations and sales. The main reason for the same can be attributed to the fact that it is a fast moving country and the overall sales projection thus can relatively be at a higher side.

The United States is seeing a slowdown of demand as market economics of demand and supply are taking jobs to foreign countries where cheaper labour is freely available.

This combined with the fact that the purchasing power of countries such as India and China are rising thanks to the increase in production is making them hotspots for sale of Western products over the years.

However, the key issue of cultural integration and product related concerns of Westernization are taking over and it is to be noted that these problems may cause issues which companies would need to address.

Accordingly, the case study has been answered as follows: -

(Answer to Question 1) As a manager it is important to mitigate the incoming risk which business may face over the years. Sales have to continue and we must ensure that people have access to our products. Any issues of cultural integration must be handled in a professional and ethical manner.

I would firstly limit my business into key regions where the problem is seemingly lesser. This is to ensure that sales can happen in those regions uninterrupted and free from religious and cultural problems. Areas such as the national capital and Mumbai are those which have progressed rapidly.

These are those regions, where such problems are limited and the law and order situation are tough. People work in companies from across the globe and as such these problems do not take place.

Further, it is important for companies to let the general audience know, that their culture is never in threat from our products. Advertising and reaching out to people are important to maintain customer base. As long as customers realize that the products being offered are in no way going to damage their culture it will help the organization.

This can be done by letting the public know, how the company contributes positively to the lives of employees and stake holders. Local procurement of raw materials can also be encouraged and highlighted so that those concerns are also handled in a mature manner respectively.

Answer to Question 2)

Local alliance is crucial to adapt to concerns which people have about American culture. Often people feel that Americans would only take away profits from the country and this would cripple our economy when the time comes.

Therefore, we can have local alliances to make people more aware of how the company procures raw materials from local vendors and contributes towards their livelihood.

It is important that we let the general audience know clearly know that our company contributes towards the lives of those who we collect raw materials from and provide employment to.

We can also engage in Corporate Social measures and donate for causes that will help the local population grow. Once we have control over the customer and our supplies these issues would not lead to major issues for the company. Perception building and going local are the way forward for our company.

Please feel free to ask your doubts in the comments section if any.