There’s quite a lot going on in the world economy: negative interest rates, inverted yield curves, currency wars, diamond glut, rising gold prices and the looming recession. Indian economy is also facing headwinds from all directions. Men’s underwear index (MUI), an established index to study the state of the economy is also sending ominous signals. The insolvency risk is also increasing with the rise in the number of financially stressed firms. We are indeed operating in a VUCA world where corporations find it increasingly more difficult to survive during an economic downturn. To devise new business survival strategies, one should first take a look at nature.
Survival Strategies: Lessons from Nature
Mother Nature has a lot to teach us in this fight for survival during tough times. For example, bacteria are particularly ingenious when it comes to survival strategies. They often create a biofilm to protect themselves from a hostile environment. Honey bees use amazing techniques to survive the harsh winters. A cockroach-another social creature like us-can survive a remarkably long time without food and its body can survive without a head for up to a week. It can also survive for several minutes underwater and sometimes even a nuclear explosion. Similarly, whenever mankind faces threats to the existence, the primitive survival instinct kicks in. And so is the case with business entities.
India Inc: New Strategic Initiatives for Business Survival
Unconventional times require unconventional measures. Facing existential threat, India Inc is forced to devise new survival strategies to stay alive in a hostile environment. The rule is either adapt or die. This is forcing the companies and their various stakeholders to embrace competitive adaptation and devise new strategies to stay alive in a hostile environment. Based on a comprehensive study of the Indian industry, here are a few of their secret survival strategies to beat the slowdown:
1. Credit Rating Agencies (CRAs): After the Sebi rejected Icra’s consent application in IL&FS case, the credit rating agencies are a worried lot. To ease the regulatory pressure and as a part of the risk mitigation strategy, CRAs have started engaging the services of astrologers to know the likelihood of the client default well in advance.
2. Accounting Firms: Facing a lot of flak for not raising red flags in the IL&FS fiasco, auditors have started hiring canines in large numbers. They will use them as diagnostic tools to sniff out and expose the wrongdoings of the management.
3. Mutual Funds: Now that luck has stopped favouring the active fund management, the mutual fund industry has started employing monkeys as Fund Managers. According to economist Burton Malkiel, “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts”. So why pay hefty salaries to professionals when the same job can be done by other primates with equal ease? This strategic cost-cutting measure is expected to bring in a significant reduction in fund management costs.
4. Stock Traders and Brokers: As part of the survival strategy, the bear cartels have entered into secret tie-ups with auditors. The modus-operandi is to resign on the flimsy ground while other participants (the media) spread negative rumours. The purpose is to trigger panic among investors and hammer the stock of the targeted companies. This time the targeted companies are mostly those where almost the entire promoters’ holding is pledged.
5. Promoters: After the Indigo episode, Indian promoters have decided to stop playing doubles game; going forward they will play solo only.
6. Tax Consultants: Taking a cue from Pakistan PM Imran Khan’s admission about Islamabad harbouring terror outfits, the tax consultants have started helping the tax officials in unearthing the riches amassed by their corporate clients. Their counterparts, HR & labour consultants are doing the same by helping labour inspectors, PF & ESI officials in a bid to arm-twist the companies to pay up.
7. Advocates: Those without gainful employment have found a new calling. Buy any product just once and keep on getting its free replacement. If any company dare to refuse, file a complaint in the consumer court.
8. Brands: In the face of climate change, environmental degradation and growing consumer awareness, brands have suddenly developed a conscience. As conventional advertisement is not working, they are jumping into the bandwagon of cause marketing to win the customer’s trust and increase the brand pull.
9. Automakers: The reason behind the severe slowdown in the auto sector is not NBFC crisis or BS-VI emission norms or the transition from ICE technology to EVs. The real culprit is the infamous traffic jams on Indian roads and the lack of parking spaces. So, automakers are planning to diversify into building multi-storey car parks. Many of them have also started offering a free Cycle with every car purchase. The purpose is to help customers negotiate everyday Indian gridlocks.
10. Retailers: Retailers have started offering free godown space to let customers trash their old wares before buying the new ones. As part of “Buy Now Use Later” offer, customers can also dump all their impulse purchases in the godown; that way they can also avoid feeling a sense of guilt and shame. The fast fashion is considering running End of Season Sale (EOSS) every weekend instead of only twice a year.
11. Home-Buyers: Now that home buyer are at par with financial creditors under the Insolvency and Bankruptcy Code, 2016, there is a predator-prey role reversal between developers and the buyers. With a power to initiate the insolvency proceedings against developers, the aggrieved buyers are making full use of their newfound power.
12. Banks & NBFCs: A famous quote of Mark Twain about bankers goes like this, “A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain.” This time the bankers are hell-bent upon proving it wrong. Flush with liquidity and to beat the slowdown, banks are gearing up their retail portfolio. They have now started offering unsecured long tenure (20/30 years) Flexi pay consumer loans with an option to go for moratorium period up to 10 years. The credit history of an individual will also be ignored. The loans will be available up to 90 percent EMI of net future income after considering annual salary increments of 20 percent. The GOI has also agreed to give interest subsidy of up to Rs one lakh on such loans and also considering offering premium-free loan insurance in addition to income tax benefit under section 80C. This innovative offer has been designed to weaken the self-restrain of people so as to fuel consumption. Both the leading economists as well as the industry veterans are all praise for this unconventional measure which is expected to give a much-needed fillip to the Indian economic growth.
13. Private Hospitals: Ayushman Bharat is the new goldmine for the hospitals. Why cheat ordinary hapless patients when you can fill your coffers by raising fraud claims under India’s flagship health insurance scheme?
{Disclaimer: The above narrative about survival strategies of India Inc is a mix of factual and fictional events created as part of the content marketing strategy of Idionomist.com. Please do not ever attempt to separate the two components.}
Also Read:
