In this article Sarang Khanna, Content Marketing Executive at iPleaders, talks about 4 foreign businesses that failed in India and the lessons we can learn from them.
Today, India is one of the biggest markets. Got a product? Chances are that there’s enough potential in this one country alone to make your sales and profits skyrocket. Businesses in the West realize this colossal reach that India has, and are always aching to invest and expand operations around our thriving economy. In fact, the West has always looked at India and seen only profits waiting to be reaped. Doesn’t this remind you of the East India Company?
Just like them, many other foreign businesses have also fared terribly in the country with some being forced to move out. This articles attempts to take a look at some of the biggest conglomerates who entered the Indian subcontinent but their aspirations soon came crashing down.
One of the world’s largest car makers, General Motors (GM), re-entreated India in 1994 (after leaving in 1954) as well. After 21 long years in the country, the company decided to stop selling vehicles in India in 2017. Reason? No profits, of course. During all these years, General Motors’ market share never went up to double digits in India
Why Did It Fail?
Primarily, bad networking and several structuring issues were the reason behind its shutting shop in India. The company was known to be struggling with various management issues, which contributed hugely towards this failure. In 21 years, GM India had 9 different CEOs with an average tenure of only 2.5 years. Meanwhile, Maruti, for example, is still on their 5th CEO in over 35 years of operations in India. CEOs at GM could never really focus on building a strong network, presence, or any strategy, as internal conflicts and problems continuously surrounded the brand.
Further, launch and withdrawal of products were rather frequent with General Motors, which also led to the lack of a long term reputation, which can arguably be said to be a must for the automobile industry.
This inconsistency, outdated practices, lack of trustworthy reputation, and the failure to sense the Indian market, led to the demise of operations for General Motors in India.
The Finnish company Nokia reached its finishing point in 2014 when it was sold to Microsoft. Although, the use of its name in technologies and branding still continues, but the Nokia we knew is now no more. Having been the industry leader for a long time almost all across the globe, Nokia’s sudden nose-dip into failure was a mystery for many.
Nokia Corporation started with products like paper items, bicycle tires, rubber boots and various other electronic items before getting into mobile phones. For 14 years straight Nokia was the largest global mobile phone maker.
Although the failure of Nokia was global, many argued that it started with losing its grip in the Indian market. Rightly so, it seems, because Nokia was the biggest name in India when it came to mobile technologies and also the reason behind many firsts, in the country.
The first phone call through a cell phone in India was made on a Nokia mobile in 1995. The first camera phone, business phone and even a torch phone were all launched by Nokia in India. The invention of the ever-so-popular Snake-game and the Sare-jahan-se-acha ringtone are both accredited to them. So, basically, Nokia was everywhere and was the definition of mobile phone in India.
Why Did It Fail?
The reason for their failure can accurately be summed in two A’s – Apple and Android. Apple and Android crushed Nokia. Relying only on Symbian operating systems, Nokia failed to adapt early to the software shift in the market and concentrated only on producing better hardware. They also overestimated the strength of their brand and assumed they will be able to catch up quickly even if they started late. With Samsung expanding base in India and investing heavy in Research & Development, and with the launch of the iPhones and iOS, along with increasing purchasing power in the country, it didn’t take time for the crowds to move on and forget about Nokia.
Again, for a company that at one point forced it competitors to be mere spectators in the industry, lost the game because of lack of innovation, over-estimations and the failure to adapt. Business strategies seem fairly simple until you start practicing the business. The fundamentals of any business require extensive knowledge and expansive research. This is a course that has not only helped people take their already established businesses to unimaginable heights, but has also given us many success stories amongst first time starters. It is a must for any entrepreneur, I would say!
Kellogg’s was and still is a mighty brand. It’s cereals are known and consumed worldwide more than any of its rivals. With various other popular sub-brands under its belt, at one point Kellogg’s sat on a staggering 40% market share of all ready-to-eat products due to their cereal products alone.
However, tough times began for Kellogg’s in the 1990s. Market share fell as competition increased, and therefore, Kellogg’s attempted to look beyond the traditional markets of the USA and UK, and entered India in 1994, three years after the opening of international trade barriers in the country. Their top brand Corn Flakes was launched after a heavy investment in the country and positivity ensued due to the huge market potential.
Why Did It Fail?
Cereal-eating was a new concept for India. For light breakfast, the subcontinent relied mostly on a bowl of hot vegetables, of which there were many brands in the country. Moreover, Kellogg’s was expensive. Other, widely accepted alternatives were available in almost one third the price of this foreign breakfast habit.
Without bowing down on the prices and with little to no research on the market, more products like Wheat Flakes, Honey Crunch, All Bran, etc. were introduced. As a result, the sales continued to go from decent to poor and Kellogg’s became a one-off novelty purchase for many, with limited returning customers.
Even the attempt to ‘Indianize’ the products with Masala variants didn’t work out too well, and now Kellogg’s is trying to venture into the biscuits space. All in all, in over 20 years, the ride is still going tough for this huge brand in India, no where close to as good as they expected. Yet, optimism is high and Kellogg’s is still willing to explore future prospects in the subcontinent.
The American company Kodak was the pioneer in camera technology. Built on the strong foundation of innovation and change, Kodak is rightly credited for many inventions in the photography industry. It was always such a huge name that it’s tagline ‘Kodak Moments’ was synonymous to having happy times in life, and was used in events around the world.
Why Did It Fail?
The story of Kodak is as ironic as it gets. The first ever digital camera was designed in 1975 by Steve Sasson. Where did Steve work? Yes, Kodak! When Steve introduced his revolutionary technology to his bosses at the company, their response was “that’s cute – but don’t tell anyone about it”, as reported in The New York Times.
As Kodak was also one of the biggest producers in camera films, the management saw this invention as a threat to that business. Result – no marketing of this brand new invention. It wasn’t long before other competitors like Sony, Fujifilm, Nikon got hold of the technology and capitalized heavily on the opportunity. Kodak remained in denial and was adamant to not go ahead with this filmless digital technology.
The world moved ahead, but Kodak failed due to its slowness in transition. Regarding digital photography as the enemy, Kodak chose not to adapt to the change that the market needed. It only got into digital photography when it was too late. Failing to lead the way with the innovation, Kodak itself gave to the world, the company announced bankruptcy in 2012 and exited the image capturing business. Kodak Moment enough!?
WHAT ARE THE LESSONS WE CAN LEARN FROM THEM?
- Learn – Do your homework. Every business operates on some rudimentary principles of operations; some general and some industry specific. Failure to identify and abide by these can result in fatal finishes. You can learn about everything that is required to know about managing your business here.
- Research and adapt – Market research and careful scrutiny of the same is vital for any business and helps in assigning realistic goals and making necessary changes. The importance of adapting in accordance with the research cannot be emphasized enough.
- Don’t underestimate (or overestimate) – Being truthful to your company and its standing is the biggest gift you can give to it. From the many examples above, you must realize that underestimating your competition or overestimating your strengths are some of the first anti-business practices. Kellogg’s underestimated its local competition, Nokia overestimated its market stature. Results? Scroll up to read, re-read, and re-re-read.
- Consumer is boss – Changing regional dynamics and consumer behavior in different cultures can make it really tough for even the biggest businesses to understand and adapt to. Nevertheless, if one is willing to treat customers as the boss of the company and keep their wants and expectations at the top, the going can get a lot easier. This is also a must for any brand who wants to succeed in India, or any other culturally diverse market for that matter.
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