Remaining Competitive: Strategies for Small Medium Enterprises

Los Angeles | London | New Delhi

Singapore | Washington DC

India Strategy Forum 2011 -

Remaining competitive: possible

strategies for SMEs

Vivek Mehra

Managing Director and CEO

SAGE Publications India Pvt Ltd

India Strategy Forum 2011 Los Angeles | London | New Delhi


What is SMEs’ true value to Brand

India?

● Contribution

• 45% of industrial output

• 40% of exports

• Employing 60 million

• Creating 1.3 million jobs every year

• Produce more than 8000 quality products



Brand India – Global Perceptions

● Bureaucratic and corrupt

● Outsourcing hub for computer software

● Cheap destination for outbound calling

● Questionable quality of products

● Low skill base for technical products

● Culturally incompatible



Brand India – Fabled domestic

market

● Fragmented across segments

● Low accountability –

• Will save tax and forego product warranty

• High cash spend and hence true income

suppressed



Brand India – Fabled domestic

market

● Access to global markets

● High aspirational levels especially of Gen

X and Gen Y

● High costs of living – housing, food and

transportation (to work) consume 80% of

income



Brand India – For SMEs: a challenge

or opportunity?

● A challenging opportunity

● Extremely price sensitive across all segments

• Except the very creamy layer

● Savings based on perceived value not real value (Rs. 2 per sachet is perceived to be cheaper than the bottle)

● SMEs not small enough to survive on local clients

(except in remote rural areas)

● Not large enough to get economies of scale



What constitutes good competitive

strategy?

My top 2

Internal structure and company spirit

Brand building leading to product innovation



Competitive strategy 1: (Internal structure

and spirit) Illustration using SAGE (2006)

● 98 employees

● Middle single digit operating profit

● Revenue that of a large SSI (small ME)

● Decision making highly centralized – (resting

with the MD)

● Attrition rate 40%

● Average spend per employee (non salary) Rs.

1500



● Managers with no real empowerment

● No agenda for training and developing

individuals

● Office located in a house – aggressive

sealing drive

● Low aspiration among employees

● MD not easily accessible to employees

Competitive strategy1: (Internal structure

and spirit) Illustration using SAGE (2006)



Competitive strategy 1: basic re-

structuring

● Empowering managers – decision making

decentralized

● Building processes (automation)

● Documenting knowledge (internal)

● Building (manpower) redundancy within

departments



Competitive strategy 1: HR redefined

(the CEO’s agenda)

● Open door policy

● Providing anonymous access

● Creating open forums for discussions (Monthly Staff

Meetings)

● Departmental outings to build stronger teams




(the CEO’s agenda)

● Interdepartmental conflict resolution procedures

defined tightly

● Direct involvement in the appraisal and annual

increment process

• Charting every employee’s career path



Competitive strategy – 1 HR redefined

(the employee is the first customer)

● Profit sharing with employees down to the

grass-root level

● Sharing company performance with

employees

● Documenting hiring processes

● HR policies made employee oriented and not

merely legally compliant

● Advertising for candidates repurposed




(the employee is the first customer)

● Including families in medical insurance

policies

● CEO actively overruling policies in favour

of genuine employee problems

• Extension of maternity leave

• Extending financial help beyond basic medical

insurance



Competitive strategy 2: (brand building

leading to product innovation)

● Relocating from a house to a

professionally laid out open plan office

● Ensuring consistent branding across

products and activities

● Building visibility across core markets

● Strategic partnerships with key

stakeholders



Competitive strategy 2: (brand building

leading to product innovation)

● Strengthening product lines, increasing

output (60 to 100 books, 16 to 50 journals)

● Adding product lines (swimming against

the current)

• Legends in Marketing

• SAGE Impact

• SAGE Law



Strategic Tie-ups



Report Card 2011 vs 2006

● 227 employees

● Revenue up 5x

● Double digit operating profit; growth 4.5x

● Attrition = 10% (industry standard 18%)

● Average spend per employee (non salary)

= Rs. 20,000

● Average print run

• Academic 1200 units (industry standard 300)

• Retail 3300 (industry standard 1600)



Sneak peek

● Legends in …

● SAGE e-veda

● Journals 50 to ???

● Project Aristotle ???

● …???



Two rules to live by

A CEO doesn’t live in an ivory tower, he lives

in a glass house.

Break the mould.



Thank you

Vivek Mehra

[email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

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Remaining Competitive: Strategies for Small Medium Enterprises