Nepali Times Asian Paints
Economic Sense
Crisis management


Peter Drucker in Managing in Turbulent Times written 20 years ago couldn't have foreseen Nepal today. But he gives us enough dope on how to deal with the unknown.

The Harvard Business Review compendium Managing in the New Economy lists the challenges ahead in the 21st century. While not much has been written about crisis management of businesses in Togo, Congo or Swaziland, some interesting works are available on how businesses survived in Peru and Colombia during times of insurgency. So Nepali management fraternity, there is much reading to do apart from holding annual elections.

Businesses are here to stay and profitable in all forms of environment. In a monetised economy, businesses will never cease to exist. Only the method in which it is conducted will be different.

Frequent disruption of the supply chain means more investment in inventories. Managing longer credit periods and the probability of smaller businesses going bust will be a challenge, as squeezing vendor credit becomes the name of the game. Technology oriented banks and travel companies will have to learn to function without communication links. IT related businesses will be hit the hardest during these times due to connectivity problems and people not being able to commute to work. So if there are companies trying to get into the call centre and other business process outsourcing trade-beware.

Nepal's small manufacturing base will erode further with the supply chain and distribution disruptions as well as labour-security related issues. New opportunities in trading will emerge as security spending increases. With the government as a major procurement entity, new vistas will open up. The need to understand the corridors of power and its linkages will be even more important than before.

Spending on recreation will increase as the cash-rich youth try to escape the depressing reality. The movement of the rural population to urban areas and the urban to migration will keep manpower agencies busy. New markets like eastern Europe and the CIS countries will be perceived to have lesser security threats than their homeland. The uncertainty in the taxation regime will make profits unpredictable as security taxes of all kinds increase.

Crisis champions in companies will emerge and change managerial hierarchies. These go-getting well-connected individuals will drive companies to growth while the conventional managers will be sucked into the whirlpool of khattam-cha myopia. Innovations will emerge be in terms of selling products or transporting them. Dairy farmers will start processing cheese as milk can't be taken to markets and tomato growers will contemplate diversification into sauce and puree. The firms that understand their consumer best will rule as the consumer psychograph will change rapidly and shift in perceptions continue. Any product or scheme associated with hope will do well, therefore instant noodles, beer and alcohol manufacturers need not worry.

The biggest problem for the country will be managing its image. Apart from the Golden Jubilee celebrations of the conquest of Mount Everest, Nepal is yet to be associated with good news. Parachute journalists will continue to justify their daily allowances by churning out stories and resident stringers will continue to export stories of gore and violence flavoured with rumours and speculation. The greatest challenge will be to disassociate Nepal as a brand associated with problems.

(11 JAN 2013 - 17 JAN 2013)