New Delhi: Many of the senior management of leading FMCG and retail companies in India don't believe they are strategically or organisationally ready to transform to meet the new challenges of changing business environment, according to a report. According to the report titled 'Changing your Orbit, 'The Handbook for Transformation in FMCG & Retail Businesses' by conducted by CII and The Boston Consulting Group it is only after the business comes under severe pressure that firms "wake up" to the need for change.
"In our survey done in India, 60 per cent of companies agree that the world around them is going to change significantly and a large number believe that they are not adequately prepared for that transformation. Acknowledging the challenge is a good first step," BCG Senior Partner and Director Abheek Singhi said.
Almost 60 per cent of respondents believe that their business environment has shown significant change in the recent times and not many believe that they are strategically or organisationally ready to transform to meet the new challenges, the report said. "Flat sales, rising costs, disgruntled customers as well as increasing new nimble competitors are typical signals that a company needs to initiate fundamental change. Yet, it is only after the business comes under severe pressure that they wake up to the need for this change effort," it added.
Too many companies, especially those with a sustained track record of success, fail to transform themselves till it is too late, the report said. According to the report, long term consumption opportunity in India is large and attractive, going from USD 900 million in 2010 to USD 3.6 trillion by 2020. "The structural socio-economic advantages driving this growth in India are intact and it will need customised consumer-centric strategies by FMCG companies and retailers to tap into this large opportunity," it added.
BCG in collaboration with CII conducted a survey amongst the leading FMCG and retail companies in India. The survey polled the senior leadership of these companies to gauge the extent of challenge posed by the current business environment and whether their organisations were ready to meet these challenges.
Fifty-seven per cent of the respondents agreed that consumer behaviour has changed in the last five years impacting the way companies do business, while 43 per cent said they could witness some signs of change but impact to business was still limited. The report further said 57 per cent of the senior management interviewed in the study agreed the external environment for their respective organisations is going to become more uncertain to a large extent while ony 14 per cent felt in the contrary.
