The reality of India: folding constraints into business strategy

Abstract

PurposeThis report provides a framework to better understand how constraints faced by companies and their customers in emerging markets can be converted into competitive advantage and thereby into factors for growth.Design/methodology/approachBased on a literature review, a framework is developed to understand how companies can generate competitive advantage from constraints that affect companies, their customers or both. The framework is explained with case studies of Indian companies and multinational organizations (MNCs) operating in India.FindingsA multitude of constraints affect companies operating in emerging markets such as India. India is an emerging market where MNCs would like to have a presence but are deterred by constraints. Some of these constraints affect companies, while others affect customers. Although many multinational organizations are struggling to meet their business goals in India, many local companies and some MNCs have successfully navigated the constraints and managed to grow by building these constraints into their business models. They gained competitive advantage by either differentiating their products and services or modifying their processes.Practical implicationsWe provide a framework that will guide executives on how companies can generate competitive advantage through products and processes by working around constraints. We also provide guidelines on how to sustain these competitive advantages generated from constraint‐driven strategies. Failure to include these constraints into business models will adversely affect the growth plans of companies operating in India and other emerging markets.Originality/valueThe paper makes a unique contribution in articulating how competitive advantage can be generated from the very constraints that threaten the growth of business. This study also makes a distinction between constraints that can affect companies and those that affect customers of goods and services. This understanding will guide executives on where to focus their efforts while navigating constraints. Further, this paper shows how executives can consider a parallel stream of innovation for growth while operating in emerging markets.