Is Sunlight on the right track in going global without trying to consolidate its position further in the home market?

XIBMS – Sunlight Chemicals XIBMS – Sunlight Chemicals Starting at the vast expanse of the Arabian Sea from his comer office at Bombay\’s Nariman Point, Ramcharan Shukla the 53-year old executive vice-chairman and managing Director of the 500-crore Sunlight Chemicals. (Sunlight felt both adventurous and apprehensive. He knew he had to quicken the global strides Sunlight had made in the last four years if the company was to benefit from its early gains in the world markets. However, he was also shaken by a doubt: would his strategy of prising open international markets by leveraging the talents of a breed of managers with transnational competencies succeed? Globalisation had been an integral part of Sunlight\’s business plans ever since Shukla took over as managing director in 1990 with the aim of making it the country\’s first international chemicals major Since then Sunlight — the country\’s third-largest chemicals maker — had developed export markets in as many as 40 markets, with international revenues contributing 40 per cent of its Rs. 500 crore turnover in 1994-95. The company also set up manufacturing bases in eight countries — most recently in China\’s Shenzhen free trade zone — manned by a mix of local and Indian employees. These efforts at going global first took shape in December 1991 when Shukla, after months of deliberations with his senior management team, outlined Sunlight\’s Vision 2001 statement. It read \” \”We will achieve a turnover of $ 1 billion by 2001 by tapping global markets and developing new products.\” The statement was well-received both within and outside the company. The former CEO of a competitor had said in a newspaper report: \”Shukla has nearly sensed the pressures of operating in a new trade with a tough patents regime.\” But Shukla also realised that global expertise could not be developed overnight. Accordingly, to force the company out of an India-centric mindset, he started a process of business restructuring. So, the company\’s business earlier divided into domestic and export divisions, was now split into five areas: Are I (India and China), Area 2 (Europe and Russia), Area 3 (Asia Pacific), Area 4 (US) and Area 5 (Africa and South America). Initially managers were incredulous, with one senior manager saying: \”This is crazy. It lacks a sense of proportion.\” The Cynicism was not misplaced. After all, the domestic market — which then contributed over 90 per cent of the company\’s turnover — had not only been dubbed with the Chinese market, but had also been brought at par with the areas whose collective contributions to the turnover was below 10 per cent Shukla\’s explanation, presented in an interview to a business magazine: \”Actually, the rationale is quite simple and logical. We took a look at how the market mix would evolve a decade from now and then created a matrix to suit that mix. Of course, we will also set up manufacturing facilities in each of these areas to change the sales-mix altogether.\”   He wasn\’t wrong. Two years later, even as the first manufacturing facility in Vietnam was about to go on stream, the overseas areas\’ contribution to revenues rose to 20 per cent. And the mood of the management changed with the growing conviction that export income would spoon surpass domestic turnover. Almost simultaneously, Shukla told his senior managers that the process of building global markets could materialise only if the organisation became fat flexible, and fleet-footed. Avinash Dwivedi, am management consultant brought in to oversee Sunlight\’s restructuring exercise, told the board of directors: \”Hierachies built up over the years have blunted the company\’s reflexes, and this is a disadvantage while working in the competitive global markets.\” The selection of vice-president for the newly-constituted regions posed no immediate problem. For Sunlight had several general managers — from both arms of marketing and manufacturing — whose thinking had been shaped by the company\’s long exposure to the export markets. For obvicus reasons, the ability to build markets was the primary criterion for selection. The second criterion was a broad business perspective with a multi-functional, multi-market exposure. That was because Shukla felt it did not make good business sense to send a battalion of functional managers to foreign markets when two or three business managers could suffice. But Specific markets also needed specific competencies. That was how Sunlight chose to appoint a South African national to head Area 5. The logic\” only a local CEO could keep track of changes in regulations and gauge the potential of the booming chemicals market in the US. However, the effort was always focused on using in-house talent. Shukla put it to his management team: \”We should groom managerial talent — whether local or expatriate — for all our overseas operations from within the company and should rotate this expertise worldwide. In essence, we should develop global managers within the company.\” While doing the personnel planning for each area and fixing the compensation packages for overseas Assignment. Sunlight realised the importance of human resource (HR) initiatives. The HR division headed by vice president Hoseph Negi, had been hobbled for years with industrial relations problems caused by the unionisation of the salesforce, \” You have to move in step with the company\’s global strategy.\” Shukla had told his HR managers at a training session organised by Dwivedi who was spearheading the task of grooming global managers. Four years down the line, Shukla felt that Sunlight was still finding its way around the task Sure, a system was in place. Depending on the requirements of each of the four areas, Sunlight had started recruiting between 25 and 30 MBAs every year from the country\’s leading management institutes. During the first six months, these young managers were given cross-functional training, including classroom and on-the-job inputs. The training was then followed by a placement dialogue to determine the manager -area fit. If a candidate were to land, for instance, on the Asia-Pacific desk at the head office, he would be assigned a small region, say, Singapore, and would