How to Manage Survival & Growth in Competitive Market?

"Survival of the fittest" is the law of the jungle which is equally applicable to the competitive market place where firms struggle and fight for survival. Ensuring survival of the firm is a critical task of the manager. But that alone is not enough. The manager has also to actively seek growth. No matter how big or powerful a firm may be today, it is sure to be left behind in the race by newer, healthier and more efficient firms if it does not pursue growth.

Two sets of factors impinge upon the firm's survival and growth. The first is the set of factors which are internal to the firm and are largely controllable. These internal factors are choice of technology, efficiency of labor, competence of managerial staff, company image, financial resources, etc.

Most of the old traditional textile mills were setup in India around the late 19th or early 20th century based on the then prevalent technology. These mills continued to flourish till the late 1960s. The early and mid-seventies witnessed a dramatic revolution in textile technology all over the world. Ignorant of this changing trend, the Indian mills continued with the old technology. But some new companies (notable among them Reliance Textiles with its 'Vimal' brand of textiles) entered this field with the latest technology, offering superior quality textiles in a wide range of polyester and cotton blends. The traditional mills could not match these new entrants in terms of either product or price. And one of the oldest and the most prosperous industry was faced with unprecedented levels of sickness. Most of the old mills became unprofitable and had to be bailed out or taken over by the government, or finally shut down. Failure of managing technological change sounded the death knell of the textile mills.

The second set of factors influencing the firm's ability to ensure survival and growth are those which are external to the firm and over which it has little or no control. These external, environmental factors refer to government policy, laws and regulations, changing customer tastes, attitudes and values, increasing competition etc. Hindustan Lever Limited (HLL) is a subsidiary of a multinational company which, till some years ago, was manufacturing and marketing detergents (Surf, Rin), soaps (Lux, Liril, Lifebuoy, etc.) and Dalda Vanaspati, groundnut oil, and agroproducts. Most of these are low-technology lines. Being a foreign company in lowtechnology areas, further growth opportunities were restricted under the Foreign Exchange Regulations Act (FERA) unless HLL diluted its foreign equity to 40 per cent. Not willing to dilute the equity holding to 40 per cent level HLL had to find a way to manage its survival and growth. HLL sold off its line of vanaspati and cooking oil to Lipton India and diversified into the production of basic chemicals-a high-technology area where foreign companies are allowed to invest and grow as per FERA. Thus by changeover from low-tech to hi-tech area HLL has ensured its future in India.