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October 01

 

Coping with change

- by Tejas


Auroville business can only meet the demands of the ever-changing market if new entrepreneurial skills are developed and a new type of business economy is actively promoted.

Coping with change: Filaure has introduced computer-aided design (CAD) technology for pattern-making

Asked to comment on the extent to which the forces of globalisation tend to affect the performance of Auroville's commercial units, Angad, of Mantra pottery, answers with two observations. "There is tremendous potential for India to make a bid for global markets along with other developing countries like China," says he. "With the developed world showing an increasing tendency to outsource the bulk of its manufacturing, there is scope for any player who is ready to respond appropriately. That, for us here in Auroville, is a wonderful opportunity to exploit. But we have also to deliver. And for this we should be prepared to play by the newly evolving rules of the game." And, he adds, "The days of easy profits seem to be over."

Valerie of Filaure and Prema of Auromode, both garment manufacturers, agree. It is no longer sufficient to have capital, resolve, ability and dreams. You now also need inventiveness at a dizzying pace together with financial and managerial flexibility to make the best bid to get the order.

These newly evolving rules of the market are governed by changing parameters. In the past, products resulting from a combination of quality and originality commanded a high price. Today, the customer of the new global market demands the very best in quality for the lowest possible price. Intense competition, greater market awareness and more buying options have cumulatively engineered this change in buyers' attitudes. This pressure to provide high quality at competitive prices necessarily lowers profit margins.

To cope with these changes, new tools of production and management have to be embraced. Adaptation, however, is seldom a uni-dimensional affair. It demands a movement as a whole and not in parts. " If pricing is going to be offered as the competitive edge, then a complete overhaul and re-look at other related factors is necessary too. This calls for critical management," Auromode's hand-painted silk scarves are the only of its kind being made in India.declares Prema unequivocally. "Cheap labour, which is one of the main attractions for overseas buyers to cultivate producers in India, is no longer as cheap as it used to be. It is becoming increasingly a price-qualifying factor. In labour intensive manufacture, the need to uphold quality means that more qualified people are involved in the production line. We then need to either recruit capable staff or upgrade the skills of existing ones. These investments add to costs. It calls for very efficient management of resource and manpower."

The adoption of new technologies is an important aspect of changing market contexts. "Computer Aided Design (CAD) is becoming more important to our work and is likely to become central to it in the years to come," reveals Valerie. "The market of the future is becoming very hard to pin-point. CAD could give us the leverage we need to make our manoeuvres in this ever-shifting scenario. With it Filaure can seriously consider both product customisation, sampling collections, pattern-making and even design consultancy". In fact the new economy is being characterised more and more the world over by such auxiliary activities.

Imagination has diversified into handmade soaps with a low profit margin but a steady turnover.Harish Joshi of Imagination, a maker of handloom textile products, has discovered another way (albeit by accident) of adapting to these changing dynamics. His unit has been affected by a severe drop in business. Long-standing buyers have gone into mute mode and a few potential customers are driving very hard bargains because they have other and, possibly, cheaper options.
"I am forced to activate survival measures," he says. These include laying off surplus staff, delaying infrastructural expenditure, however vital, and developing a new product line - handmade soaps. The reasoning is simple. "This product has long-term demand, and is produced as cheaply as we can. Though the profit margins are low, they provide a steady turnover, which, in the end, is the life blood of a unit," declares Harish.

Innovation is another way to cope with changing markets. Mantra has been developing a new range of pottery products besides its regular line. This has given it access to new markets, even if only for a while, for both competition and copying are intense. "You A mirror encircled by tiles, shown by Angad, is one of the many new products of Mantra.have just that bit of head start before someone begins to cash in," laments Angad. Abha of Shradanjali, a maker of floral stationery and decorative items, encounters the same problem, as does Guy of Radiance, a maker of lanterns and decorative crafts. However, he reveals yet another coping strategy. This is the targeting and cultivation of the niche market, which simply means developing exclusive products for an exclusive market. "The problem with this," he confides, "is that such niche markets are trend driven. Its exclusive value is subject to changing market trends."

Diversification and innovation, it would seem, are emerging constants in this new economic drama - unless one manages to hold some kind of product exclusivity, either by way of design or production technique. Prema seems to have just such a secret weapon in her arsenal. Auromode's hand-painted silk scarves, she points out with pride, are the only of its kind being made in India.

Commercial units that wish to survive in this time of globalisation, then, will have to be very professional. "That," says Manou of the Auroville Board of Commerce (ABC) "is exactly what is lacking in many units." Along with that, most units - over 80% - are still very small in terms of capital outlay, turnover and profits. Almost as an aside, he adds "Our avowed spiritual aspirations keep getting in the way of seeing business in a positive light. Yet, business, if done in the right spirit, can be as much a part of one's spiritual path as any other activity."

Money is the forbidden word in our community. Yet it takes up much of our time and thinking. The continuing attempts to spiritualise moneymaking have only resulted in a kind of materialistic myopia and collective hypocrisy. Perhaps we give money more attention than is needed. It is after all just a means to an end. And the more we have of this means, the better for all. Why can't we face this truth?

Ulli, the former manager of Shuttle, thinks this is true indeed. He goes on to point out that over the past years Auroville has had no new business undertaking that was singular or outstanding in some way, good enough to run with the best. "It's time we ask ourselves why we do not attract top calibre entrepreneurs, those who are knowledgeable in emerging cutting edge fields and who can lead us to participate in the new global economy," iterates Ulli. "For this to happen we should take the pains to create the right climate for such a species to come to Auroville. A climate that is stimulating and supportive rather than one that is limited by its own confusion and absence of clarity. What we have now is essentially a cottage industry economy that by its very nature cannot meaningfully upgrade or upscale beyond a point. Such a production system represents a waning industrial type of economy. It is based on cheap unskilled labour and high running costs. As such it cannot hope to compete in the markets of the future beyond a specific level, no matter what trimming and pruning is done. Auroville has to resort to a new economy that is capable of taking advantage of the emerging info-economy and develop a system of wealth generation that is based on knowledge, expertise and leadership. What affects the world will affect us and the global trends and demands will dictate the way we do business eventually," says Ulli.

Manou believes that, apart from developing knowledge based industries, Auroville's future businesses should also focus on sectors like organic and chemically-free food production, traditional and natural health care products, appropriate building construction materials, non conventional energy systems and natural fabrics. In the service sector Auroville could provide consultancy in the fields of water conservation, afforestation and renewable energy systems. Another development may be the areas relating to culture and entertainment, which could turn into promising business propositions in the long run.

Mother spoke about Auroville as a self-sustaining township. Ultimately, all our business, whether targeting outside customers or providing for the city itself, should work towards this objective.

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