Impact of Government policy changes on business and industry
Increasing competition
When the markets opened, the competition increased. Let us take example of cars. There were just two brands of cars, viz. Ambassador and Padmini, and the waiting period for getting a car was more than two years. Now, customers are spoiled for choices in terms of numbers of brands and variations in the car market. With intense competition, companies are forced to be on their toes in order to grab their share of the market.
More demanding customers
Earlier, the customer was not demanding and was satisfied with what was on offer. People were happy without air-conditioner and power steering in cars. Now-a-days, many companies give these features in their base models.
Rapidly changing technological environment
Liberalization and globalization have helped in reducing the time lag between introduction and launch of a new technology in the country. Now, any innovative product is almost simultaneously launched in almost every major market of the world.
Necessity for change
Liberalisation helped the business organizations to understand the necessity for change. Bajaj, one of the leading manufacturers of two-wheelers in India is a good example. Earlier, this company sold scooters with two-stroke engines. During the middle of the 1990s, the company began to focus on motorcycles. Finally, when the company introduced the Pulsar brand of motorcycle at the beginning of the 21st century, it took the market by storm. As the company changed according to the time, it became the market leader in its segment.
Need for developing human resource
With some of the big companies entering the Indian market, new ways of doing the business came to the country. This necessitated the development of human resources which could cope with the changes in the market and intense competition. Many companies invested on in-house training.
Market orientation
Increased competition due to liberalization and globalization taught the importance of market orientation to the businesses in India. Earlier, a customer had almost a single option to buy a scooter. So, Bajaj seldom needed to think from the customer’s perspective. With many new and better options in the market for the customer, companies had to relook at their strategies in order to cater to the market.
Loss of budgetary support to the public sector
Privatization was aimed at increasing private participation in the business. So, public sector was strategically ignored. This resulted in gradual loss of budgetary support to the public sector. Many public sector units (PSUs) were sold off in order to reduce the burden on the government.