Chief Executive – The Firm and Ex Director Coca Cola SWA – Dr. Adil Malia talks about consumer behaviour amid corona economy the critical things that needs to be managed well during Merger Acquisition to prevent a serious downfall, in an interaction with SCIKEY
Which industry sector/s are will be severely affected why. What would be the impact on consumer behaviour?
What we are experiencing are ‘Paradigm Redefining Moments’. What we are experiencing is greater in its impact and implications on the rest of the world than even the second World War. It is a moment of such criticality that we are going through at present.
Paradigm redefining moments are causing tactical shifts at the global level. There is no – one industry that is getting affected because this redefinition is impacting the entire market, the economic models, people behaviors and consumption patterns not in any particular industry or in a specific country but rather globally for all industries.
However, clearly, there are 5 to 6 industries that are severely impacted affected like travel, hospitality, realty, migrant dependent EPC industry, beauty products, automobiles etc, which are badly impacted. People are trying to opt out of travel and thus this industry has faced a catastrophe.
Certain critical changes in consumer behaviors are bound to happen as a response to such market stimulus. People tend to conserve cash in crisis due to insecurities and vulnerabilities. Whenever consumers are worried, insecure feel anxious, they want to be physically closer to their homes, conserve cash make expenditures only if necessary. They avoid luxury buying. So, travel tourism industry, automobiles industry, hospitality industry, construction industry and any capital-intensive industry where a lot of money is spent, people will try to postpone their decisions for purchase.
What would be the most critical business functions that will require strategic shift POST-Covid 19?
The entire value chain will have to be rethought; your ‘go-to-market’ strategy will need overhauling, consumer insights will shift, and ease of reaching out to the market is also going to be different.
The IT department has to work closely with the sales and marketing function to understand how they can use IT tools and techniques to reach out to their customers. The sales department has to change their strategy. The supplier and logistics department have to change their designs and approaches. The HR will have to look at the manpower structuring and employee well-being and happiness differently before hiring new talent. The entire business landscape is changing. Old responses cannot suffice in the new market landscape.
There is no one ‘best common approach’. When one thinks of strategic changes, it will have to be suitable to the type of industry, (whether it’s a B2B industry, whether it’s a B2C industry, MNC, MSSEBs or a consultancy).
Depending on where each industry stands in terms of the products they sell, which are their manufacturing zones, which are selling zones, what are market substitutes available, etc., each company will need to work out its strategy. However, it is very important that the IT, the sales marketing and the business overall work out a new go-to-market strategy in line with the realization of the changing landscape of business. Its high time that leadership should relook up the business landscape redesign the business totally from scratch.
Work from home for IT companies will be extended till July 31st, what do you think how will the IT companies will embrace this?
Not only the IT companies but the non-IT companies will also have to embrace WFH. The price of real estate is hitting the balance sheet negative. When businesses are not doing well, you cannot afford to buy very high priced real estate or even afford to rent it out. Investing free money and loading the Corporate balance sheet with those non-value creating assets, certainly is not advisable. Non-performing assets can only be an unproductive load on the balance sheet. It’s better to invest in a rather small property let some % of the work-force actually, work in the office. The others can continue to work from home, depending on the value the employees serve to the business.
Situation context have changed. Now, to get the work done, you no longer need to be physically present. With the new emerging technologies, work can be done remotely for any part of the world. Now employees can make a collective decision to hire small places operate from there; it can save a lot of capital for the organization.
Two things we have realised from this WFH situation, not everybody have to be in office necessarily to work to happen, it is not necessary to go to office everyday second thing is it is not necessary to rent a bigger office space. Organization can rent a small place or few seats in co-working space from where everything can be operated.
The biggest change management problems occur especially at the time of mergers and acquisitions (MA), What are the critical talent challenges that emerge during the transition cycle.
Merger Acquisition is only one event in the life of an organisation. A lot many changes and other transitions take place. There are five critical things that happen in an organization during such an ownership transition. If not managed well, they cause a serious downfall:
- A Victor / Vanquished feeling:A company that has been bought over or acquired, the general psychological feeling of the people associated with that organization think that they have lost some battle. Their owners who were connected committed with their earlier company lost out and could not retain and retain their assets. This Victor and a vanquished feeling is one of the most important sources of failure during merger acquisitions. If leadership address these sentiments of the employees effectively objectively, then such transitions will be smooth. If you leave these sentiments to get resolved by forces of nature, then negative emotions slowly creep in. New unions come up to take advantage of such situation and claim their pound of flesh. Critical, therefore is the need to address the anxiety disturbance in the peoples’ minds.
- Merger of two cultures is another criticality:No two organization have the same culture. Someone has to take the lead and understand the two cultures communicate about how it will work in the new situation and how the situation will work out.
- Power Loss:All those who come from the company which is acquired and taken over by the other company, they experience power loss. The acquiring company managers feel powerful. They tend to believe that they are more powerful than all the other employees of the acquired company, even if those guys are smarter, more intelligent more qualified. This conflict has to be managed positively.
- Sense of joblessness:A certain sense of vulnerability is very natural. Even if one is a brilliant employee, the fact that there is another person in the acquiring company with similar skill-sets, creates vulnerabilities. It makes such employees feel despondent. They start believing that they have lost their jobs. In such a situation. This insecurity makes people get anxious they start looking for new assignments in the market. This is the worst moment for the acquiring company, as they have acquired the assets of the company, but the people who create the most value in these assets, either leave the company or feel demoralised.
- Loss of communication:Organisations often are stingy about sharing information. Information creates value only when shared and not when stored in treasury boxes !!!. They believe that people should be communicated only on a ‘need to know basis’; this creates a problem in the mind of people. When people don’t get proper flow of information. The penury of information causes miscommunication, which leads to anxiety. Before people get disengaged from the organisation, its very important to pass the right information. There should be a clear communication between the employees and the management to have a smooth effective merger that succeeds in unlocking the value, which is the purpose for which the M A was created in the first place.
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