There is reverse production. There is reverse marketing. There is reverse pricing. These are all functional decisions. They are based on adjusting to the market conditions. They are based on industry reactions. They are based on prudent analysis.
Do they make business sense? Absolutely. They are the bread and butter of running a business. Business acumen is all about reading the situation earlier and changing accordingly.
They ensure business safety to market shocks. They safeguard business interests against crisis and crashes. These are good sensible ways of sustaining in hard times. Pakistan is a business nightmare presently. Economy is crawling. Industrialists are crying. Workers are fretting. Multinationals are leaving.
There is a sense of complete doom where hope has become a mocking commodity. The old maxim of ‘tough times don’t last, tough people do’ has created a mindset of “this too shall pass”. This mindset is a placating thought process. This mindset makes you focus on “survival”. This mindset makes you go into the “save for more rainy days”. These thoughts lead to the strategy of business pruning, budget tightening and layoffs.
These are tested, tried, followed recessionary models of business slow and steady. While these may look as the only options in such a discouraging environment, what about the opposite?
The opposite will of course mean businesses stepping up their operations and investing in growth. Such talk may sound bookish and foolish, but it is a worthy option. Does that mean a big disruption? Not really. It just means to look for spaces vacated by businesses that are un-growing and having the sight to create new spaces. Some undone but feasible reverse strategies are:
1- Big business shrinks, opportunize, optimize, capitalize— The large businesses are shrinking. The production of big industry in Pakistan witnessed a significant contraction of 14.96pc last year. Many companies are selling off. Multinationals are very edgy. 9 MNC companies are reported to have left Pakistan including Total, Telenor and Shell. The ones that are here are putting off their expansion plans.
The worst hit are the food and beverage giants like Coke, Pepsi and McDonald. These are all signals for companies to wait and watch.
However, the reverse would be to locally fill in the empty spaces. The Multinationals are suffering due to the Gaza boycotts on many big names. This is the time to capitalize these recently vacant spots. Local beverages have been introduced by many bakeries and businesses.
The scope is much larger. In food businesses the local burger shops need to look for expansion by creating alliances that help new and old to develop. Local Pakistani alternatives in nearly all fast moving goods have an opportunity to invest and expand.
2- Look out, go out, grow out— The other strategy is that start looking at international markets that are similar to Pakistan or who will be wanting the same type of goods. Take pharmaceuticals. Pakistan exports barely 713 million dollars worth of pharma products compared to India’s 28 billion dollars.
The potential for pharma exports from Pakistan is anywhere between 3 to 5 billion dollars in the next five years. Foreign markets are unexplored fully and untapped. Afghanistan is of course the most obvious one. Pakistani pharmaceuticals export to Afghanistan but need to do a more serious penetration effort than to be just a beneficiary of proximity.
Sri Lanka and Bangladesh are also markets where Pakistani pharmaceuticals need to look beyond the Colombo and Dhaka centers. Similarly, African markets are now the next Asia. Pakistani products do go to Kenya but the other rising markets that need proper targeting are the ones that are mentioned in the IMF World Economic Outlook for April 2024.
The report illustrates an important dynamic. Out of the top twenty economies that are projected to experience the world’s fastest growth rates in 2024, nine are African countries. These are Niger, Senegal, Libya, Rwanda, Côte d’Ivoire, Djibouti, Ethiopia, the Gambia, and Benin. Niger will be not only the third-fastest-growing economy in the world but also, surprisingly, the fastest-growing in Africa.
Thus a separate African export development strategy is required to capture them. Similarly, the Central Asian markets are now up for exploration. If Pakistanis are holding their corporate conferences in Baku, time for a more detailed study of the other neighboring markets that can be captured along with the more accessible ones of Azerbaijan.
3- Remodel, redesign, recreate— The good part of being in a crisis in today’s world is that the way people communicate and sell has transformed. Businesses have actually found a new lease of life when they think of looking at the digital world, the e-commerce market, the virtual highway.
Can the online developments open new avenues? Absolutely. The apparel industry can become an exporter through some creative on line selling. The pharmaceuticals can offer virtual medical services.
The food company can form alliance with home cooks and delivery companies to supply where their distribution is not available. But for all this the appetite for some dare and dash are a pre-requisite. You cannot win the match by just sitting on the sidelines.
When we talk to the business community they rightly talk about the tariff and non-tariff barriers. However, the biggest barriers are the mindset barriers. Sometimes the enabling environment becomes a disabling environment. Industries that are five decades old are still asking for relief and rebates as they were half a century ago.
They are still complaining about the fact that their competitors have established foreign brands that consumers demand while they are still selling the same basic products through the same channels that they were years ago. This is the result of waiting for the “enabling environment” that we are talking about.
This has created a dependency mindset that operates on concessions and reliefs. As they say you cannot control an external crisis but you have a choice of how you respond to the external crisis. The mind’s eye has to look beyond the immediate. The business has to embrace the discomfort zone.
The inertia brought about by dependency on external circumstances, the slow motion initiated by the fear of dipping lower are the two enemies of reversing the fortunes of the business. The biggest enemies, thus dear Leaders, lie within.
Copyright Business Recorder, 2024
The writer is a columnist, consultant, coach, and an analyst and can be reached at [email protected]
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