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Technologically competent MNCs in the infrastructure business hoping to cultivate progressive revenues from the developing world would have to own up, in their own interest, the responsibility for guiding and influencing respective governments on ideal conditions of associated infrastructure both physical and administrative to be able to progressively sell their products.

 

 22 November 2013

The high cost of low associated infrastructure

Volvo the Swedish brand which is very familiar in India for its big ultra luxury buses seems to have failed to uphold its brand image from the two ghastly accidents which together burnt 52 people to death. The accident, last Thursday near Haveri being similar to the terrible blaze which happened only 15 days before that at Mehabubnagar puts the brand in a spot of trial in spite of its smooth plying for over 12 years here in India.

 

Two terrible mishaps for which the causes are still being speculated can hardly hurt the image of a legendary brand. But, the way the companies respond against such dreadful situations can – and, Volvo clearly has lost a bit of brand image in dealing with the horrifying accidents. For sure, Volvo has missed to strongly reinforce its reputation, as a responsible mnc, with the situation.

 

For a global brand known for technological excellence, being served with a formal notice by the government in a developing nation for an explanation - that casts some doubts on its critical competence - tantamount to loosing a bit of reputation, more so in the global context. Though the reports on the accidents also talk of engineering design issues the deficiency that is fairly explicit in the way the company responded to the situation tells of certain lack of fine management maturity that can potentially chip off considerable brand equity.

 

I believe Volvo's demonstrated inability to assume responsibility for handling the situation arising out these accidents caused the brand to suffer the blame of culpability regardless of the good chance of the argument turning void. In fact, lack of thoughtful action from Volvo led to a set of speculation on the cause which prominently included the brand as well in the list of possibly guilty.  Not surprisingly, some of the agencies of the government have already put the blame on Volvo citing specific design flaws.

 

The response after the accidents from Volvo has been pointlessly defensive, insecure and lacked the finesse and professional competence expected of a reputed MNC. To say these accidents do not in any way relate to the vehicle engineering and to talk of promptness in compliance with the government safety rule books amount to shirking away from larger responsibilities on extended genuine concerns which are intrinsic to the business. Typically, a manufacturer’s perceived responsibility extends deep into usage and consumption aspects, more so in the infrastructure sector which invariably involves larger populace.

 

Technologically competent MNCs in the infrastructure business hoping to cultivate progressive revenues from the developing world would have to own up, in their own interest, the responsibility for guiding and influencing respective governments on ideal conditions of associated infrastructure both physical and administrative to be able to progressively sell their products. The approach is an essential marketing strategy for progressive long term growth and can be turned as a competition strategy as well, by being competitive in working with that. For Volvo, in particular, and also for its competitors these two accidents should serve as stern pointer towards understanding their business with larger responsibility perspectives. After two weeks and another accident Volvo spoke of passenger rights and about creating awareness on that, relatively a silly thought, beyond struggling to handle simple queries on engineering design issues; diesel tank, emergency exit etc. While the accidents hardly suggest the possibility of some learning on the engineering design which Volvo should have accepted as such they do tell loudly of damning associated infrastructure issues on which Volvo should have demonstrated leadership abilities, and, thus sustain the consumer trust on the brand. The accidents in fact tell only of lack of associated infrastructure; roads, roads again for the low ground clearance and a whole set of administrative deficiencies. It is indeed surprising to note that Volvo appeared rather helpless in spite of the very obvious need to take sure steps towards addressing associated infrastructural issues. The options, from that thought, can be many, the foremost being - to press the alarm, overdue though, in action with specific initiatives.

 

Companies, even those highly responsible from the developed countries, do not seem to be playing the marketing game with initiatives pertaining to periphery business responsibilities, possibly owing to short sight on the finances and the lure of easier and surer way of working with the establishments, with its flaws of course. On the contrary, done with right approach, intent and planning, building brands with programs on pressing associate issues can prove to be highly revenue effective and cost efficient too. Not just in the long term. The task is one of understanding the business with intense social leanings and to drive marketing with very worthy initiatives, smartly. More than any kind of research, to be able to accomplish something with the approach simply calls for simpler but extended thinking through the larger responsibility scope.

 

Again, and on the contrary the habitual ways of companies, in selling in the infrastructure market, invariably increase the cost to the end consumer; owing to increase in selling costs in the medium term and owing to infrastructural inadequacies in the long term. The impact of the two accidents will surely show in the prices of the tickets for traveling in Volvo or in its competitors' buses very soon.

 

Adve Srinivasa Bhat

Management Consultant

 
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Copyright: Adve Srinivasa Bhat, India