The supply chain is as important as a backbone of businesses and the global economy, connecting raw material sources to the end consumer by managing the flow of goods and information, ensuring efficiency, quality, and timely delivery. This intricate system is crucial for providing products, boosting economic activity, modifying risks like disasters and geopolitical events, fostering innovation, and creating a competitive advantage for businesses.

Supply chain risks can cause big problems for firms. These risks come in many forms. Natural disasters, cyber-attacks, and supplier issues can all disrupt the flow of goods. The COVID-19 pandemic showed how fragile supply chains can be. Many companies struggled to get parts and materials. This led to empty shelves and angry customers. To cope, firms need to build supply chain resilience. This means having backup plans and suppliers. It also means using tech to spot problems early. Smart firms keep extra stock of key items too.

The bullwhip effect is a phenomenon in supply chain management where small changes in consumer demand create increasingly enlarged and distorted order quantities as they move up the supply chain from retailers to wholesalers to manufacturers. This exaggeration of demand leads to excess or insufficient inventory, higher costs, and reduced efficiency. It occurs because each stage in the supply chain lacks perfect information about actual consumer demand and tends to overreact to perceived changes, creating a ripple effect like a whip’s increasing motion.

The term “Bullwhip Effect” was first coined by Procter & Gamble researchers in the early 1990s. It described the phenomenon they observed in the supply chain for their Pampers brand diapers. They noticed that small changes amplified consumer demand as they moved up the supply chain, leading to significant inefficiencies and increased costs.

The bullwhip effect in a supply chain is when small changes in final consumer demand are magnified into increasingly larger fluctuations in orders as they move upstream to distributors, wholesalers, and manufacturers. This distortion causes parties to overcompensate for perceived changes in demand, leading to inefficient overproduction, excess inventory, stockouts, increased costs, and supply chain disruptions.

P&G experienced though the demand for their best-selling Pampers diapers was stable, the orders placed by retailers, distributors, and their own suppliers showed progressively larger fluctuations, leading to inefficiencies like excess inventory and increased costs. P&G coined the term to highlight this phenomenon, which they and other companies recognized as a major cause of inefficiencies in their supply chains. 

Common supply chain problems include material and labor shortages, logistics challenges like port congestion and rising transport costs, demand and supply imbalances, lack of visibility, geopolitical instability, and cybersecurity threats. These issues can lead to increased costs, operational disruptions, delays in delivery, and negative impacts on customer satisfaction. Some common problems for bullwhip are as follows: 

Demand Change at the Customer Level

A minor shift in consumer purchases occurs. A change in customer-level demand can disrupt a supply chain by creating sudden imbalances, leading to stockouts or excess inventory and increasing costs for businesses. This happens because the supply chain, which amplifies demand variability, struggles to react quickly enough to unexpected shifts, whether they are sudden surges or unexpected drops in demand.

Retailer Overreaction

The retailer, lacking full visibility into demand, overreacts to the perceived trend by increasing or decreasing their orders to the distributor by a larger margin. When retailers overreact to market conditions, they can cause supply chain disruptions through sudden spikes in demand (leading to shortages) or sudden drops in demand (leading to excess inventory). Overreactions, such as stockpiling or sudden order cuts, disrupt the flow of goods, causing higher costs, production halts, and potential loss of supplier and customer confidence. Effective supply chain management requires real-time visibility and intelligent demand forecasting to avoid these disruptions and ensure a smooth flow of products.

Amplified Orders Upstream

The wholesaler, receiving distorted information from multiple retailers, further inflates its own orders to the manufacturer. Where small fluctuations in customer demand become increasingly amplified as they move upstream from the retailer to the wholesaler, distributor, and manufacturer. This distortion leads to inefficiencies like excess inventory or shortages, increased costs, and operational instability, as each supply chain stage.

Magnified Demand Fluctuation

The manufacturer, with even less direct information about customer demand, drastically adjusts its production and orders from suppliers, creating the largest and most erratic swing.

Complex Supply Chain

The number of intermediaries between the manufacturer and the ultimate customer grows with a complex supply chain. Each intermediary may make assumptions about demand in a complex supply chain and place orders accordingly. Due to the sheer number of interconnected and interdependent entities, the vast amount of information and material flows involved, the global reach and multiple geographic locations of these entities, and the constant dynamic changes and disruptions that occur, making cause-and-effect relationships often unclear. These factors create a system with many moving parts that require significant coordination and can lead to cascading effects when problems arise.

Batch Orders

Batch order is a common practice in supply chain management where orders are placed in bulk at set intervals. The supplier and the retailer or distributor agree on a schedule for placing orders rather than placing orders as demand occurs. Batch ordering creates a distorted view of actual demand. This distortion of information leads to an excess inventory, which causes a stock-out or increase in holding costs. It can also lead to the bullwhip effect by creating a delay in the flow of information. This delay causes suppliers to react to changes in demand too late, leading to an oversupply or stock-out.

Consumer Pressure

Consumer pressure can cause the bullwhip effect by creating demand fluctuations that are difficult for suppliers to predict and address. It happens when consumers pressure retailers to stock a wide range of products and always have those products available. Consumer pressure leads to an overestimated demand and an increase in inventory levels. When consumers pressure retailers to stock a wide range of products, retailers place large orders to ensure they have enough supply to meet consumer demands.

Bad Communication

Distorted communication directly causes supply chain disruption by creating misaligned expectations, increasing operational costs, and leading to poor decision-making, which results in delays, shortages, and damaged relationships. This breakdown in information flow, especially in global networks, can be due to incompatible systems, data silos, security issues like cyber-attacks, or a general lack of real-time, transparent information exchange, hindering agile responses to unexpected events. It creates a lack of visibility and coordination among supply chain partners. It makes it difficult for suppliers to accurately predict demand and make informed inventory management and production levels decisions. Poor communication can lead to an overestimated demand and an increase in inventory levels, causing the bullwhip effect.

Price Volatility

Price volatility refers to the degree of price variations of a product or commodity over time. It measures how much the price of a product or commodity changes in each period.  Price volatility causes the bullwhip effect by creating uncertainty and unpredictability for suppliers. The rapid fluctuation in the price of a product or commodity makes it hard for suppliers to forecast future prices. This volatility causes them to overestimate demand, leading to an increase in inventory levels and the bullwhip effect in supply.

Lead Times Issues

Lead time is the time it takes for order fulfilment, from placing an order until the goods are received. Long lead times create delays in the flow of information between supply chain partners. This delay makes it difficult for suppliers to accurately predict demand and make informed inventory and production levels decisions. For example, if a supplier has long lead times, a retailer may place large safety stock orders to ensure they have enough inventory.

Incorrect Forecasts

Suppliers, retailers, and distributors often use historical data to make future forecasts. However, when there are significant changes in demand, it may cause them to base their projections on incorrect information. This wrong projection can lead to an overestimated demand and an increase in inventory levels. Incorrect supply chain forecasts create a vicious cycle of overstocking and stockouts, leading to increased costs, reduced profitability, and damaged customer satisfaction. This inaccuracy also triggers the bullwhip effect, amplifying small errors up the supply chain into significant demand and supply imbalances.

Outsourcing is the business practice of contracting with a party outside a company to perform services or create goods that usually were traditionally performed in-house by the company’s own employees and staff. Outsourcing is a practice usually started by companies as a cost-cutting measure. Particularly, the non-core areas such as sanitation, security, household, pantry, etc are outsourced by a company. The company makes a formal agreement with the contracted agencies. These contracted agencies are specialized agencies. Services outsourcing in India started in the 1980s and rapidly accelerated in the ’90s. In today’s world where information technology has become critical to business, the meaning of outsourcing has undergone a drastic change over the years.

When organizations decide to go international, they look for ways to tap into new markets and expand their operations with help of outsourcing. Global outsourcing helps businesses get services from countries with lower labour costs, save money and stay competitive.

Organizations prefer lean structures; lean organisations often have cross-functional teams, flexible job roles, and a strong commitment to continuous improvement. This structure aligns with Lean principles, fostering a culture of efficiency, waste reduction, and customer-centricity. And lean organizations prefer outsourcing to cut down on wastage of any sort, especially lean organizations cut costs by employing minimum labor. They also prefer saving on operational costs. Following are some reasons why outsourcing has gained importance in organizations:

Multitasking is inevitable

Multitasking usually hurts employee’s productivity. As a result, organizations have difficulty motivating them and getting the required quality output in their work, thus affecting customer satisfaction. Outsourcing’s potential for further savings is one of the main reasons it is a sought-after strategy. An eight-hour shift could be easily consumed by routine tasks such as answering emails, data encoding, bookkeeping, filing, record keeping etc. These tasks can drain the energy, effort, and creativity of a team, eventually resulting in more employees leaving organization. Employee retention is a big challenge. This is one of the reasons why companies outsource time-consuming tasks to free up their team’s time so they can take on the core aspects of their responsibilities.

Focus on core competencies

The entire idea of an outsourcing strategy is to save money, time, and effort to focus on the core competency of a business. Organizations can focus on their core competencies by delegating small, day-to-day tasks to outsourcing firms. When used effectively, this gives them some control to fight competitors, plus allow employees work-life balance.

Why outsourcing?

Outsourcing, and at times offshoring (the practice of relocating business processes or work functions to another country to cut costs and increase efficiency) remains to be an integral and cost-effective part. Whether outsourcing a business process or manufacturing services, teaming up with an external outsourcing partner allows organizations with several advantages. Most companies flourish when they partner with qualified professionals from external firms. In response to the sudden boom in the industry, organizations have responded positively to the service provided by outsourcing agencies.

Outsourcing is essential globally as companies pave the way to gain access to better services. It ensures prospective employees do not waste their process potential and skills, whether on the other side of the world or behind a couple of time zones.

India is preferred outsourcing centre

India is becoming the world’s largest outsourcing centre. In the global market, all multinational corporations and other large corporations want to reduce their variable and fixed overheads, which has a huge impact on their profits. Information Technology is India’s core competency, but other than IT services, India is a well-known outsourcing nation that also supplies HR processes, financial solutions, data management service, and more. With so many services the country can offer, it is not surprising that many global companies are attracted to India. The following reasons make India an attractive outsourcing centre.

Qualified and skilled manpower

When compared to other countries, India has the largest workforce. On the other hand, the more highly skilled labor is costly to company’s payroll. To avoid rising payroll costs while lowering other expenses, India is the best place to outsource work. India has more work-friendly environment that provides a development model for multinational corporations.  The time zone variations work out as the biggest advantage for outsourcing to India. It is time saving.

Time zone advantage

Due to time zone differences, work is completed at night, resulting in increased efficiency. India’s time zone is advantageous for businesses located in other parts of the world, such as the United States and Europe get advantage in engaging Indian companies in outsourcing. The time difference allows Indian outsourcing companies to provide 24-hour operations, ensuring that projects are completed faster and more efficiently.

Young and English literate labor

India has highest English speaking and very young workforce. Outsourcing problems typically arise when there is a lack of understanding due to a language barrier. However, because English is the medium of instruction in most higher education institutions, many Indians speak fluent or native-level English. This is one reason why foreign companies prefer Indian employees. The Indian workforce is ideal for customer support services because they have no trouble conversing with end-users and addressing their concerns.

Types of outsourcing:

Outsourcing is a multifaceted business strategy, and companies often engage in various types of outsourcing depending on their specific needs and objectives. Understanding these different categories provides insights into the diverse ways businesses can use external power to enhance efficiency while focusing on their core competencies.

Business Process Outsourcing (BPO)

Payroll processing services, data processing services and tax solutions are examples of horizontal BPO. Vertical BPO concentrates on functional services in specific industry domains such as manufacturing, retail, finance and accounting services and healthcare. Business Process Outsourcing involves contracting out specific non-core business functions to external service providers. Infosys is one of the leading outsourcing companies in India as per NASSCOM, it provides services and operations in Brazil, China, Philippines, Europe, and Australia. As of June 2023, it has over 57,000 employees worldwide and has made an annual revenue of over 1 billion USD in 2022.

It specializes in providing services such as Business Transformation, Master Data Management, Customer Care Solutions, Robotic Process Automation, Finance and Accounting, Annotation, and Legal Services among others. Its solutions include Cloud Computing, Cybersecurity, Robotics, Data Analytics, AI solutions, and other outsourcing and consultancy solutions.

Information Technology Outsourcing (ITO)

Information Technology Outsourcing focuses on delegating technology-related tasks and responsibilities to external vendors. This includes software development, infrastructure management, network maintenance, and technical support. ITO facilitates companies to stay technologically competitive while leveraging expertise and cost advantages offered by external specialists.  There are other aspects as well that we can include in IT outsourcing. Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), utility systems, and cloud-based services are all examples of IT outsourcing services. Several types of industry-specific software development are also included in IT outsourcing such as application development, mobile, web design, web app development, and more. Wipro is one of the leading Big Tech companies. Wipro’s capabilities range across cloud computing, computer security, digital transformation, artificial intelligence, robotics, data analytics, and other technology consulting services to customers in 167 countries.

Knowledge Process Outsourcing (KPO)

Knowledge Process Outsourcing involves outsourcing more complex, knowledge-intensive tasks that require specialized expertise. This often includes research and development, data analysis, and other high-level cognitive activities. Companies choose KPO to access domain-specific knowledge, innovation, and advanced analytical capabilities. Genpact is a leading global KPO services firm that started its humble beginnings in 1997 as a business unit within General Electric to being a publicly traded company ten years later. The firm runs some of the most complex business process operations primarily for Global Fortune 500 companies. Genpact serves various industries such as commercial and consumer banking, consumer goods, energy, healthcare, industrial manufacturing, and retails.

Manufacturing outsourcing

Manufacturing outsourcing result in contracting the production of goods to external suppliers. This is particularly common in industries such as electronics, apparel, FMCG and automotive. Companies outsource manufacturing to take advantage of cost savings, global supply chains, and specialized production capabilities. In India, Coca-Cola works with various bottling partners that manufacture and distribute beverages for the company. Hindustan Coca-Cola Beverages (HCCB) is among the largest bottling manufacturers in the country with 16 factories; additionally, it maintains eight contract parking facilities, 20 lakh sq ft of warehousing. It manufactures and sells 60 different products across seven categories such as Coca-Cola, Thums Up, Sprite, Minute Maid, Maaza, Smart Water, Kinley, Limca, Fanta. The company has 115 factories in India, and it is outsourcing services – bottling for more than 20 global beverages.

Accounting

It is one of the most common areas where small businesses choose to outsource. It takes a lot of time and skills to learn all the processes and compliance standards a company requires to meet. However, a skilled accountant can often manage this area for multiple businesses at once. This increases efficiency and saves organization’s money. Patron Accounting LLP is an ISO certified accounting firm based in India and has successfully registered 100+ Foreign Companies in India. Their clients are based out from Dubai, Germany, Australia, USA, UK, Russia & other parts of the worlds.

Marketing & Sales

When it’s time to grow business, an outside marketing firm can be very useful to help quickly. The seven functions of marketing are marketing information management, financing, product and service management, pricing, promotion, selling, and distribution. To help the business grow, we need each area to come together and build a productive marketing approach. Indian pharma firm, Orchid Chemicals and Pharmaceuticals has picked up its second marketing partner in the US. Last year it tied up with Par Pharmaceuticals, a subsidiary of US-based Pharmaceutical Resources, for marketing its oral cephalosporin formulations in the US.

Administrative Tasks

When running a business, it is quite demanding for organizations to perform administrative tasks on their own. It starts from taking phone calls, schedule customer appointments, make travel arrangements, manage email accounts, facilitate staff, handle payrolls and much more. Post Covid, outsourcing is in practice across the globe. The globalization of outsourced goods and services is highly effective in helping enterprises to drive their profitability. A lot many factors are instrumental in increasing its widespread acceptance. Cheaper salaries/wages, impressive currency exchange rates, and a wider range of facilities are the prominent reasons for its growing success. It is surprising to note that over 67% of businesses now outsource their administrative activities to third parties.  

Customer Service

For businesses that deal with customers mainly online or over the phone, prefer to outsource their customer service strategy to a call centre or chat service. Customer Satisfaction is the top goal for every business. The key criterion in achieving this is timely transfer of information. Call Centres typically assist organizations in achieving this. Genpact Ltd, WNS Global Services, 3i Infotech, TCS BPO, IBM Daksh and 24/7 Customer Pvt Ltd some of the famous customer care service providers. 

Shipping and Logistics

Today e-commerce is become part of our life. The arrival of e-commerce and m-commerce (mobile) has transformed the entire retail sector.  Retailers are tapping multiple channels for selling their merchandise; from traditional stores, using catalogue, through the internet and more and more via smart phones and tablets, no stone is left unturned. For surviving the competition in the e-commerce world distribution has become key component of the business. Supply chain and logistics experts have become key players. They assist in services right from strategic locations for Distribution Centres (DC). Outsourcing logistics is when a company uses an external provider (third-party 3PL, fourth party 4PL) to handle various supply chain functions. These can include a mix of shipping, storing, packing and/or delivering a company’s physical goods, from raw materials all the way to the finished product.

Blue Dart Express Ltd. an Indian logistics company is South Asia’s premier express air, integrated transportation & distribution company. It offers secure and reliable delivery of consignments to over 55,400+ locations in India. Blue Dart is a provider of choice for its stakeholders due to its customer centric approach and aims to further strengthen this partnership. As part of DHL Group’s DHL eCommerce division, Blue Dart accesses the largest and most comprehensive express and logistics network worldwide, covering over 220 countries and territories, and offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions, customs clearance etc. It offers a complete suite of online services for shipment preparation, package tracking, shipment rates and tools for international shippers and small businesses.

Research

Global industries have realized that apart from technical support and software development, India is also a great place to outsource research and analysis services. Presence of specialized resources with multi-domain expertise, combined with exceptional processes have made India an ideal outsourcing destination for high-end processes like financial research analysis, market research analysis, and business research analysis. Today, India has taken over other outsourcing destinations like China, Russia, and the Czech Republic because India provides highest cost savings, excellent operational efficiency, access to skilled professionals, and quality services.

The present and future of the pharma companies will see a huge R&D, sales and marketing network spread across geographies, and their infrastructural costs can grow exponentially. Therefore, pharma companies need to adopt technology that can offer dynamic lines of communication between the global markets and their manufacturing and research centres in India. Ultimately, India’s growth as a global player depends on its ability to overcome challenges and given the scenario outlined, integrating, and facilitating cost-effective communication is a major benefit for India.

Human Resources

Human resources encompass any tasks in a business related to hiring, onboarding, or managing the team. The most common type of outsourcing in this area is to work with a recruiting service to bring in qualified candidates for a new position. However, there are options for outsourcing training, benefits administration, payroll, and time and attendance issues as well. Human Resource Outsourcing is a practice in which an organization hires a third-party organisation to handle its human resources activities and administrative tasks. In other words, HR outsourcing is the process of receiving work previously completed by corporate personnel from sources outside the company. ABC Consultants in India is among the top 10 HR Outsourcing companies.  They are one of the best leading recruitment brands of India who have shaped the career of 1,65,000 professionals in 50 years. Their network is widespread across 8 main Indian cities with over 465 consultants. ABC Consultants believe in providing customized recruitment solutions across 24 industry practices. They have developed long-standing relationships with their existing clients because of their high-quality output. Their vision is all about “Building Careers”.

In business management, vertical integration is an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation.

Vertical integration and expansion is preferred because it secures the supplies needed by the firm to produce its product and the market needed to sell the product. Vertical integration and expansion can become unattractive when its actions become anti-competitive and hinder free competition in an open marketplace. Vertical integration is one method of avoiding the delay problem. A monopoly produced through vertical integration is called a vertical monopoly. For example, Google purchased “Motorola Mobility” in 2012 as a dedicated Android partner which enabled Google to supercharge the Android ecosystem for enhancing competition in mobile computing. The deal didn’t end here. In 2014m Chinese firm Lenovo acquired the Motorola Mobility smartphone business from Google for $2.91 billion in a cash-and-stock deal. The acquisition would strengthen Lenovo’s position in the smartphone market and grow its presence in the USA.

A company that undergoes vertical integration acquires a company that operates in the production process of the same industry. Some of the reasons why companies choose to integrate vertically include strengthening their supply chain, reducing production costs, capturing upstream or downstream profits, or accessing new distribution channels. To do this, one company acquires another that is either ahead or behind it in the supply chain process.

Vertical Integration strategy is important for many companies for several more reasons. Not only does it increase profits from the newly acquired operations by selling its products directly to consumers, it also guarantees efficiencies in the production process, and cuts down on delays in delivery and transportation.

For example, Ikea furniture to gain control over its raw materials for its flat pack furniture, purchased woodland in Romania and the Baltics to coordinate its own forestry management and wood production. The Swedish company’s investment will allow the retailer to stabilize its timber costs, at a time when prices are on the rise.

Companies can integrate vertically in two ways: backward or forward. Backward Integration occurs when a company decides to buy another company that makes an input product for the acquiring company’s product. For example, Apple retails most of its apps online through Apple Store.

Forward Integration occurs when a company decides to take control of the post-production process. For example Amazon.com Inc’s acquisition of grocery store chain ‘Whole Foods Market’ for $13.7 billion will help them dominate grocery sales both offline and online. However, so far the deal markedly expanded Amazon’s reach offline.

Advantages of Vertical Integration: 

Helps in avoiding supply disruption: The first benefit is that the company can avoid supply disruption. By controlling its own supply, it can avoid the problems of sluggish suppliers. It also in neglecting the frequent strikes and labor disputes from companies those are in socialist countries such as China, Vietnam.

Avoid monopoly suppliers: Second, a company benefits by avoiding suppliers with a lot of market power and their dictations. It gets all the more critical if the supplier has monopoly in market. If the company can go around these providers, it reaps many benefits. It can lower internal costs and have better delivery of needed items. It’s less likely to be short of critical elements.

Economies of scale: Third, vertical integration gives a company better economies of scale. That’s when the size of the business allows it to cut costs. For example, it can lower the per-unit cost by buying in bulk. Another way is to make the manufacturing process itself more efficient. Vertically integrated companies eliminate overhead by consolidating management.

Imitation becomes easier: A retailer with vertical integration knows what is selling well. It can easily “knock off” the most popular brand-name products; because it copies the ingredients or manufacturing process. It creates similar, store-branded products with similar marketing messages and packaging. Only powerful retailers can do this. The manufacturers of those brands cannot afford to sue for copyright violation. They are unwilling to risk losing distribution through a major retailer.

Lower the cost: The fifth advantage is the one that is most obvious to consumers. That’s low prices. A company that is vertically integrated can lower costs. It can transfer those savings to the consumer as lower prices. The best example is of Wal-Mart.  The store keeps costs low by using a sophisticated and largely automated supply-chain management system, Wal-Mart has huge bargaining power when it comes to its suppliers. Many brands depend on Wal-Mart sales to stay in business, while even larger, established companies can little afford to be removed from Wal-Mart’s passageway or WebPages.

Disadvantages: The biggest disadvantage of vertical integration is the expense. Companies must invest a great deal of capital to set up or buy factories. They must then keep the plant running to maintain efficiency and profit margins.

Secondly, it reduces flexibility. Vertically integrated companies get entangled in the profitability of its operations. Retailers can’t follow consumer trends that take them away from their factories. They also can’t change factories to countries with lower exchange rates. Also, vertically integrated suppliers must manage inventory by keeping sufficient stock products in their stores. A third problem is a loss of focus. Running a successful vertically integrated business requires a different set of skills; it’s difficult to find capable staff.

The consumer behavior analysts have noted through many studies that ‘Country of Origin’ has become a significant phenomenon in today’s marketing practices. The words ‘Made’ and ‘In’ conveys the strength of the product.  The label ‘made’ on the packing label of the product refers to the manufacturing aspect of the origin of a product. It is often related to legal certifications, the technologies involved ingredients and techniques as well as work ethics and safety standards. And, ‘In’ refers to the origin and the geographical dimension of origin such as the location of the manufacturing process and the source of ingredients. ‘Made In’ therefore suggests information and associations that are both tangible and intangible. The ‘Made in’ tag helps consumers to make rational and emotional decision both.

In its 2005 “Year of Ideas” issue, The New York Times Magazine listed nation branding among the year’s most notable ideas. The way a country is perceived can make a significant difference to the success of its trade, business, tourism efforts, as well as its diplomatic and cultural relations with other nations. Simon Anholt coined the term ‘nation branding’ in 1996 and since then he has been working with governments to help them plan the policies, strategies, investments and advance which lead their country towards an improved profile and reputation. America has become the largest and most powerful brand in the globe; it virtually shapes the world in almost all dimensions such as national governance, policies, exports, people, tourism, economic and social status etc. In the fast growing global village nation’s branding is considered as big as federal mega-projects. Steve Silver and Sam Hill, both marketing experts define nation branding as most complex (brand) positioning problem; how can we brand a nation? A nation is as big as a Meta brand inclusive of numerous mega brands. There are so many mega activities of in a nation such as political governance, commerce, education, human resource development, environment, foreign affairs, infrastructure, environment, tourism, culture and heritage and most importantly the national character. The study of national character refers to anthropological studies after World War II.

The Japanese are known as law abiding people; the Americans are known for their grit for freedom – freedom of speech, freedom to pursue their own interests, freedom from bullying, freedom of religion, freedom of movement within the country, freedom to associate with whomever they please. The Chinese are known for their orientalism; the French are known as arty.

The country of origin (COO) specifically matter to the customers because every country has its reputation and the association between the product and the country’s expertise matters while buying products. For example Italy is known for designs, North Caroline for furniture, France for fashion and wine, the USA for entertainment, India for spices, Germany is famous for cars. Today’s consumer understands legal and safety issues sharply. Consumers today look at the ‘made in’ label with many perspectives. The ‘made in’ dependent on a combination of many factors – from heritage, to design and physical manufacturing, skilled labour, infrastructure, market intermediaries etc. Hence manufacturers can leverage a lot on the country of origin as one of their competitive advantage. A company needs to be physically present in the country; the design and patents need to have emerged from talent in the country, or the brand needs to have factories or parts of the production process in the origin nation. In the past, when it was  enough to ‘borrow’ associations from a country for pure marketing purposes, today consumers not ready to accept country of origin as a choice driver unless it is bona fide.

Successful brands contribute to nation branding. Of the world’s 500 largest stock-market-listed companies measured by revenue in 2014, among the Fortune 500 companies 28 are headquartered in Germany. Well-known global brands include Mercedes Benz, BMW, SAP, Volkswagen, Audi, Siemens, Allianz, Adidas, Porsche and DHL. Thus, famous brands strengthen branding of a country. Similarly, brands across every category, like Apple, Cadillac, Clinique, Coca-Cola, Ford, Kellogg’s, McDonald’s, Microsoft, Ralph Lauren, Starbucks and M&M’s have made the USA a strong nation brand. These corporate have made Germany and America leading nation brands.

The concept of branding is viewed as ‘cultural diplomacy’ of nations. It is a somewhat new way of looking at a nation, but every nation is already a brand. Every nation is perceived in the minds of people living differently in nooks and corners of the world. Some countries are known for good things, some for bad, and others have mixed insights. Based on the different perceptions, nations in the world interact and do business with each other, either contributing to its development or encumbering it. For example Africa is associated with civil war, Iraq with suicide bombings, Pakistan for terror bombing, India for scam and Cuba with Fidel Castro’s dictatorship (though he is dead). On the other hand, countries such as the US, Canada, Germany or France, are perceived positively for decades for their sound political and economic development. Nation branding is based on the underlying hypothesis that every nation can make a good or bad brand depending on its efforts. The important thing to realize about branding a nation is that one of its ingredients is the escalating value of something that is found already within that nation.

Consumers in developing countries like India, China, and Brazil still tend to prefer brands that come from other countries. Global supply, manufacture and export of goods began to accelerate in response for lower prices and greater choice of goods. Companies became international or multinational and the rise of an affluent middle class in the USA, Europe, India, China and UAE demand more sophisticated marketing. Due to rise of consumerism, categories of goods and services became more sharply defined. And, most brands started crossing the borders of their origin. With all the great business strategies, advertising, marketing and intelligent supply chain strategies even today in the 21^st century for most of the brands, their place of origin and heritage continues to be a key part of their appeal and differentiation. Their name, identity, design and symbolism of logos or trademarks become synonymous with their country or place of origin.

We should realize the fact that Brand building in emerging markets is a difficult task. As the rapid growth in an emerging market gives millions of consumers new spending power, they eye for and are encouraged by their counterpart in developed countries to buy established brands. Marketing efforts in developing countries is very multifarious.

In 2003, when Mahindra & Mahindra launched a smartly designed sport-utility vehicle called the Scorpio, CNBC India, BBC World’s ‘Wheels’ program, and others chose the vehicle for the

‘Car of the Year’ awards in the SUV category. That was not a small achievement: The made-in-India automobile won top honors ahead of global best sellers such as the Mercedes-Benz-E-Class and Toyota Camry sedans. To M&M, which manufactures tractors in several countries as well as vehicles targeted at India’s semi-urban and rural markets, the awards signaled that it could finally take the world’s automakers head-on. Even as the Scorpio successfully battles multipurpose vehicles like Toyota’s Innova and GM’s Chevy Tavera at home, M&M has started marketing the SUV in South Africa, Spain and many other countries.

As a nation, Singapore’s stunning rise from third world to first world in a matter of 30 years was spearheaded by an intensive and rigorous closely-coordinated programme of nation branding. Today, brand Singapore attracts the investments, business, trade, tourism and talented human resources from all over the world which is helping it further to become more flourishing nation. This state is internationally known as a vibrant, safe, corruption-free place to do business. Name any of the great businesses of the world; everybody wants to be in Singapore! The vibrancy and liveliness of the nation in its culture and the fine art attracts more and more tourists. In global surveys of quality of life, Singapore regularly tops the charts.

Nation Branding is catching up rapidly: the brand must be accepted internally first, i.e domestically, meaning throughout the nation, by all stakeholders. Only then can it be effectively promoted internationally.