Page 157 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes
“All right, Arnab, here’s your brief. You will be meeting Kshirsagar and Niyogi, who are
the CEO and the Vice-President (Operations), respectively, of Indo-Nichita. Just to refresh
your memory, which I know is in top gear first thing in the morning, that is the joint
venture between Nichita and Indian Automotives. Now, Nichita’s management in Tokyo
counted some $60 billion in revenue from 23 countries last year while Indian Automotives’
accountants put about ` 1,200 crore in the bank. But don’t jump to conclusions, my boy.
It is the Indians who run the show here. Nichita only gives them the designs, the technology,
and the systems and techniques.”
“What’s the problem?” Roychowdhury had asked.
“That’s what you must find out. All I know is that Niyogi called me last night, and said he
was worried stiff about a vendor improvement programme they are conducting at the
behest of their Japanese partners. You have to go and find out what the trouble is.”
As he prepared to head back into Indo-Nichita’s minimalist conference room – was it the
Japanese influence or the Indian thrift, he wondered briefly – Roychowdhury invoked the
photographic memory which had stood him in good stead so many times. Indo-Nichita
had begun manufacturing cars in 1994. Nichita was a steady, but not spectacular performer
since it had managed to increase sales by only about 15 percent every year. Check. And –
how could he forget? – since it was now 5 years since it had started doing business, the
joint venture must have indigenised completely by now.
Kshirsagar: “So long as we continued with the routine development stuff, none of our
suppliers had any problems. I mean, which manufacturer doesn’t do some kind of work in
collaboration with its suppliers these days? The problem is, through the VIT, we are
essentially telling them to radically – and, in some cases, totally – change the way they do
things on their shop floor. For such changes to really work, it has to be part of the vendor’s
overall strategy, right? So we have to get involved in their strategy. But that implies that
they have to open up their entire business to us so that we can work together.…
Roychowdhury: Which, of course, they won’t since they are not going to tell you what
prices they are getting from their other customers, right?

Niyogi: Absolutely. And it isn’t just the price-data; it is also all kinds of other information.
And that is making our vendors suspicious. They think we want to control them, and rob
them off their customers so that they become completely dependent on us. Okay, may be
all of them don’t think that way. Some of them are quite progressive, and know what we
are trying to do. But there is some resistance. And that is putting many of our relationships
at risk, which is something we are worried about. Of course, all our contacts with our
vendors are long-term. And we chose them after assessing their abilities, and setting cost
and quality targets – not through tendering or anything like that. But if we come across as
big brother to our suppliers, we are in trouble.…
Roychowdhury: I must ask an obvious question. I presume you must be having some kind
of measure for checking how well your vendors are doing, and how efficiently your
supply chain is working. So, have you checked on your gains from the VIT as distinct from
your regular programme?
Kshirsagar: To be honest, it isn’t easy to say. When Indo-Nichita started out in 1994,
I understand that the average vendor rating was 35 on a scale of 100. That is up to 60 now
although I can’t say for sure how much of it is due to the VIT. But, judging from the fact that
many of the techniques that have been transferred through the VIT are actually being
used, I would say that the VIT has paid off pretty well. Which is why we are hesitant about
calling it off altogether.…
Contd...

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