Please don’t remember us

The effect of past FDI in a given location is an under-investigated aspect of internationalisation. This story from last week raises some interesting questions about legacy. Talking about Aussie bank ANZ it reports that:

ANZ’s mixed history in India could count against it in a three-way race for the some of Royal Bank of Scotland’s Asian assets.

It goes on to discuss the possibility that Indian banking regulators might not be too pleased to see ANZ back on the scene.

ANZ took over the Indian operations of British overseas bank Grindlays back in 1985 and ran them through to 2000 (along with other subsidiaries in Africa and Asia).

The bank was embroiled in a substantial chequing scandal involving an Indian share-trader that dragged on through much 1990s (for some discussion of this see here – although it is a startlingly complex legal affair). Awkwardly the plaintiff bank in the legal proceedings was owned by the Reserve Bank of India, the same body that will have the major say in approving ANZ’s bid (or not).

It begs the questions:

– Can ANZ distance itself sufficiently from a decade-old scandal?
– Can it make it strong case that it has better appreciation for international environments now?

The latter will be difficult as the Grindlays sale substantially reduced ANZ’s exposure to international markets, particularly in the Asian region. Indeed that was one of the main drivers of the sale, coming as it did in the wake of the Asian currency crisis.

The possibility that the article ignores (surprisingly) is whether the Indian officials (and public) might be just as annoyed by the Grindlays sale itself. ANZ could quite rightly be slammed for abandoning a large and viable bundle of assets in a time of economic crisis, and showing little faith in what would soon become one of the fastest growing and promising economies in the world.

To use a teen-flick analogy, ANZ could be seen as the jock who teased the shy, wallflower, promising much but publicly humiliating her. This shrinking violet has now lost the braces, removed her glasses and shaken out her hair to reveal herself as a real beauty. She can afford to play hard to get, and when choosing suitors the brutish Aussie has got a lot of sweet-talking and sorries to say.

Multinationals can’t afford to forget their past, or expect to be able to walk away from (or more importantly, back into) a country without folks remembering who they are and judging them in that light.

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Expectations and competitive advantage

I’ve been a bit of a slack blogger of late. My excuses lie in two domains – (i) travel for work, and (ii) real estate transacting. Both of these experiences have served to highlight an interesting set of issues around the nature of competitive advantage and its interaction with consumer expectations.

Turning to travel first, I flew to the UK and back on an unnamed Middle Eastern airline. In a fit of absence-mindedness I managed to leave my almost brand new laptop behind at a Gatwick Airport security screening point. The laptop had no clear identifying label linking it to me, and I was unable to alert the airline to my error until I got back to Melbourne. Yet they embarked on an incredibly courteous and Herculean effort to recover said item and return it to me at no cost. They bent to my increasingly idiosyncratic requests (e.g. “can I pick it up at 7pm at Tullamarine on a Wednesday night when I land from Brisbane?”) without ever resorting to “sorry, we don’t do it that way”. Their flexibility and good nature has won me over and I am now a happy champion of their business to anyone who asks. That translates to competitive advantage.

In contrast I flew with our national carrier back and forth to Brisbane. I was stunned to get a hot meal for a change on both legs (indicating I must be flying in the very narrow window in which such service is bequeathed). My colleague flying in from Sydney was equally surprised. Now, unfortunately, that is only meeting my minimum expectation. The fact the firm has wound down service levels to such an extent in recent years does not make it something I’ll be lauding to friends and family. The firm has, at best, made up an inch of lost ground.

On the real estate side, we had a fantastic set of transactions with a particular agent. He found us the perfect house (in Fitzroy), made us feel unpressed yet lucky, facilitated our purchase with ease, and then also listed and sold our apartment  (in Collingwood) with great results and also integrity. He defied the stereotype of the shonky agent. As such, we have been proselytising on his behalf to all who will listen. Of course, folks are stunned to hear such praise. Being so out of the ordinary no doubt serves to differentiate this agent (and presumably his firm) from competitors (i.e. it represents an advantage).

Alas, these transactions meant we had to go talk with a bank. We begrudgingly are sticked with our current lender, despite negigible service over the past five years. The personal banker we dealt with this time was surprisingly efficient and pleasant to deal with. But, I say this only because we were expecting the complete runaround and much frustration. Does this make me like the bank? No, I’m just not whinging quite as much as before. Again, this is merely enough to stay in the race.

Firms need to have a stronger awareness and responsiveness to consumer expectations. Maintaining them at a high level is great. But in instances were they have been lowered industry-wide, you will make the biggest gains by massively exceeding the norm is the biggest win.