Impact of Liberalisation on Managerial Strategies: Some Preliminary Findings

Abstract

1991 witnessed a paradigm shift in the philosophy of development of India as it witnessed major changes in the industrialisation policy of the country. While the balance of payments crisis is gave the government a rude shock forcing it to change track, the new set of policy initiatives both on external and internal fronts forced the Indian industry to sit up and take stock afresh. There is ample evidence available in strategy literature to demonstrate the need for firms to formulate their strategies according to changes in the external environment. It is the willingness and ability of firms to do this balancing act that makes them successful. Since environmental changes are generally gradual, except for certain unexpected situations such as the "oil shock" of 1973. It is relatively a fit with the environment. The 1991 policy changes seem to belong to the "unexpected" category. The ability to adjust to regain a strategy fit is found to be limited for small and medium enterprises. The situation would be worse if the magnitude of change is greater. It is in this context that we decided to find out the implications of the policies related to liberalisation on the strategies of medium sized firms. Since liberalisation is nearly five years old, we decided to understand its implications on managerial strategies. This paper reports some of the very preliminary findings that we have made from a survey.