And now its 2009…

Sitting tight at his work office in Chennai, C. K. Ranganathan (or CKR as he’s lovingly called by his friends and colleagues) is giving a fair bit of thought to the next big leap for his carefully nourished FMCG gambit CavinKare. In as much, the Rs.700 crore company is poised at a crucial inflection point in its history today. Having already dug its tentacles in regional markets and won the confidence of low-income consumers, CavinKare is now mulling its next step, which includes pan-Indian forays for some of its businesses and even bringing in some SEC A consumers within its fold. Says an enthusiastic CKR, “We are making efforts to be seen across categories. And you’ll see that in another decade, we’ll be an HUL in the making!” CKR ambition is for CavinKare to soon “become a Rs.5,000 crore group.”

It’s not just empty posturing. Peep into his detailed roadmap for achieving that target, and you realise that his ambition is neither inflated nor overrated. CKR believes that the key to CavinKare’s growth is the slew of brands in its kitty, which have a tenacious stranglehold in regional markets, spanning segments like shampoos (Chik, Meera, and Nyle), fairness cream (Fairever), deodorants and talcum powders (Spinz), masalas and ready mixes (Ruchi, Chinni’s), hair colours (Indica) and toilet cleaners (Tex, Topp Mopp). Not only that, he’s also taken his brands in select overseas markets, with a particularly strong presence in Nepal, Bangladesh and Sri Lanka. Today, says CKR, CavinKare boasts a market share of 24% in shampoos, while Fairever has a 7% share in the fairness cream segment. Going forward, it is this strength that CKR hopes to exploit in his growth pursuit. “Most Indian companies simply leverage one parent brand. That is the weakness of Indian companies. They are afraid to create more brands thinking it will cost big money. But look at us, we have dozens of brands and all are growing healthily and we are even able to fund their growth,” explains CKR, adding that the company is now raring to “grow inorganically” and while he refuses to take names yet, he promises we’ll hear about new acquisition plans soon enough.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Fun for you, but they mean business

Ramanathan avers, “We are a company that is totally focused on domestic tourism. That is why we are in a way safe from global recession. Although we lost in the third quarter of last year, we covered it in the fourth quarter by focusing on customers, who have not been affected much by the slowdown like doctors, lawyers et al.” This can be well substantiated from the fact that almost all resorts of the company witnessed an occupancy rate of around 75% last year (69% members and 6% by non members). The company even successfully rolled out is Initial Public offer (IPO) last month for the expansion of some of its resorts and setting up of new projects to support its expansion strategy.

So is it all so good with MHRIL? Well, not exactly. There are few issues encompassing the credibility of the company. And the first one comes from its membership agreement. It is a long service obligation on part of both the company and its customers as the membership duration lasts for as long as 25 years where in the admission fee (60% of the total cost) and the entitlement fee (remaining 40%) needs to be paid on EMI basis. This is not only a burden on the part of the consumers for a quite elongated period, but also an obligation on the company to maintain its resorts for that stated time. The second problem for the company comes from the issue of demand seasonality and dependence on travel industry. Explains an industry analyst from Angel Broking, “The company relies on discretionary spending by consumers, which is a lot vulnerable to economic cycles.”

Meanwhile, in order to expand their portfolio now they are even looking at branding of their Spas, ‘Swastha’, so that it can be extended to cities as well. But how will that be possible when the company does not even have a pan India presence? Well, Ramnathan answers, “Currently we have around 23 resorts, but we have bought land in many parts of the country. Our focus will be to grow in India.” Presently MHRIL has resorts in the west and northern India only. Thus the challenges are humongous, but then that does not stop Ramanathan from dreaming big for his company, at least not at a time when the travel and tourism industry is set to contribute 8% to the Indian GDP.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Why does India matter to HTC?

4Ps B&M: How is the smartphone market in India shaping up and how are you placed in the same?
JT: Well, right now, India is the ideal market to be introducing smartphones in, as the market is growing quite rapidly and there is a strong demand for the phones that enable people to do more than just talking. HTC is a strong player in terms of data capable devices and we believe that the market would keep growing given the fact that 3G would be launched shortly in the country. As a matter of fact, we are quite bullish about the entire APAC region and India is a very important market for us in this region.

4Ps B&M: What are the other devices that would be offered by HTC in the immediate future? Any plans to get the second Android phone in soon?
JT: Well, we are looking at launching many devices that we have in the international market, in India too. You would see some of them shortly. But how many of them would be launched would depend on the market performance and the response our existing devices get. As for the other Android devices, that too would depend upon the response for HTC Magic and the market behaviour.

4Ps B&M: What sets apart HTC devices from all others in the market?
JT: Well, we may not have as many devices as some of our competitors, but we do have a robust portfolio in the segment we operate in and our strength lies in not the number of devices that we offer but the ease of use and innovations that we are able to offer to the end consumers. We don’t believe in packing features, but add things that would be relevant to the customers and make his mobile experience faster or simpler or both.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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A SWIFT DZIRE to climb the Rural band WAGON

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The cumulative impact of all these keen strategies reflect directly on Maruti Suzuki’s financial results for the last fiscal. They took everyone by surprise when they posted mind-boggling revenues of Rs.20,852.52 crore for the year ending March 2009, registering a 16% increase as compared to last fiscal. Despite a 30% dip, Suzuki also posted a cool Rs.1218.74 crore as net profit, way better than its counterparts. In absolute sales too, at 3.6% the company sold lesser than expected, but analysts believe the growth to be decent keeping in mind the hit that the sector has taken in recent times. Industry watchers go so far as to claim that parent company Suzuki Motor Corporation, Japan has been able to avoid losses for the Jan-Mar 2009 quarter simply on the back of the boost given by India’s sales figures.

Given the praise and glory that is coming the way of Maruti Suzuki and the strategies it adopted to deal with falling demand, it was inadvertent perhaps that the company would continue to enhance its focus on these same strategies in at least the near term. And here’s how the company is planning to further cash in on the rural opportunity. For starters, the sheer number of RDSEs are going to go up and so are the number of outlets in rural areas. Says Shashank Srivastava, Chief General Manager (Marketing), Maruti Suzuki India, “We will be hiring in the rural areas very aggressively this fiscal,” adding that the company is hoping to lift the rural contribution to total revenues (from the present 9%) to 15% by the end of this fiscal. Of course, requirements in the rural and semi-urban areas are very different from that of the urban market and the company is expecting higher sales for its entry level vehicles in these markets. The bid is clearly to play the volumes game rather than spruce up margins and profitability by offering high end products like a Vitara or a SX4 in these markets. “We are open to meet any demand that comes from rural areas,” points out Srivastava. As any true blue marketer would, he is betting on upping the marketing blitz at the time of crop harvest or when “the farmers have money to purchase a new vehicle,” he explains.

Perhaps Maruti Suzuki’s unexpected announcement of not phasing out the popular 800 is a well-thought out decision to cater to the rural and semi-urban markets. Auto expert Tutu Dhawan explains, “They’ll probably remove the 800 from urban centres and sell the entry-level model in rural areas only where its demand will be high.”

There’s more cooking! The new-found potential that they have discovered in the hinterlands is prompting the marketing brains at Maruti Suzuki to double their number of outlets in rural India. As of now, rural India has 231 outlets out of its total 680 outlets - a 35% share. Two years hence, the company intends to jack the number up to 450 outlets in rural India, out of the planned total of 1000 outlets - an almost 50% representation. If that is not indicative of Maruti Suzuki’s rural ambitions, what is? The expansion is largely being led by offering small rural dealerships to existing urban dealers and hiring the educated local residents, so that an easy connect can be made with the target segment. Going forward, experts believe that other auto players – Hyundai, Tata Motors – are also likely to enter the rural markets very aggressively. But once again, Maruti seems to have captured the first mover advantage!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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On pleasures of having fun!

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Brand: Hero Honda Pleasure
Agency: FCB Ulka

By telling boys to take a backseat and girls to take charge, this campaign carried a strong message for its target consumers. It enabled Hero Honda’s Pleasure to jack up its sales in the category, despite being a new entrant. Rival TVS Scooty’s share fell by 3% and within a year Pleasure captured 9% of the scooty market. Big boys at HH seem to be having some fun!

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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‘Tax’ing days... ...are here again

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It’s time to file tax returns. A simple task for some, but for most – a complicated, convoluted and totally bewildering exercise. Manish K. Pandey lists out a few essentials to make the job somewhat easier for the latter...

Once again, it’s that time of the year when we see most of us standing at a familiar annual juncture, scratching our heads and scribbling figures on little post-it notes. It’s the time that reminds us of the hefty price that we need to pay every year for earning our livelihood. And as the financial year ends we know we can’t run away from it any more. Yes, it’s time once again to file your income tax returns. You can crib as much as you want, but you can’t escape it! Here are a few things that can help you in simplifying your own financial karma...

Who need to file the return?
Filing of tax is compulsory for every individual whose gross total income is under the five heads of income (salary, house property, business, capital gains and other sources) before allowing for any deductions such as insurance premium - exceeds the basic exemption limit set by the income tax department. For the assessment year 2009-10, while the threshold limit for men stands at Rs.1,50,000, for women it’s Rs.1,80,000 and for senior citizens Rs.2,25,000. Apart from this, individuals in occupation of an immovable property exceeding a specified floor area, whether by ownership, tenancy or otherwise, as may be specified; or is the owner of a motor vehicle other than a two-wheeled motor vehicle; or is a subscriber to a cellular phone; or has incurred expenditure for himself or any other person on travel to any foreign country; or is the holder of a credit card, not being an “add-on” card, issued by any bank or institution; or is a member of a club where entrance fee charged is twenty-five thousand rupees or more, is liable towards filing of the tax return.

Selecting the correct form
In fact, this is the first step towards filing a tax return. Many times it happens that the IT Department changes the forms of return in the middle of the year which increases the chances for mistakes by an individual who is filing the return on his own. Moreover, there are about eight forms of return notified by the tax authorities, out of which only four are applicable to individuals. Therefore, selecting the correct form and that too latest one is of utmost importance.
What else do you need to furnish?
Though the obligation to attach supporting documents along with the return has been done away with a long time back, one should still not commit the blunder of thinking such documents debris. All documents used for calculating income-tax, such as Form 16, bank statements and advance tax receipts need to be potted as they might come handy if assessing officer calls in for a scrutiny to verify the authenticity of the details furnished in the form.

Precautions while filing the return
Make sure that interest from bank deposits or NSC certificates, no matter how small the amount is, have to be disclosed in the return. One must not make the mistake of skipping interest income on the basis that it is not shown in Form 16, as in many cases, it might land the tax payer in serious trouble.

Further, utmost care should be taken when the income of spouse or minor child is being clubbed with your income. Also make sure that deductions under section 80 have been fully utilised. This can save an individual from a situation where he ends up the financial year just scratching his head and paying up more than he was actually obligated to.

Moreover, be cautious while calculating surcharge and education cess. It needs to be noted that while surcharge of 10% is not required to be added to the tax if the total income does not exceed Rs.10 lakh, education cess (at 3%) should be added to the amount of tax even if the total income is less than Rs.10 lakh.

Last but not the least, double check all key informations like PAN number, bank account details, communication address, et al. In case of a refund, the bank account number needs to be filled in accurately.

How to file the return?
There are two alternatives - you may either file the return by using the traditional paper form and submitting it at the nearest income tax office yourself (you can even hire a financial consultant to do it for you), or you may file it electronically over the Internet through sites authorised by the Income Tax Department (for instance, sites like Taxspanner, Taxsmile, Taxshax, et al). You can use either of them depending upon your knowledge and of course convenience!

What if you don’t file tax return?
Yes that’s an option as well! But that’s going to cost you a little more... So in case you opt for this option, be prepared for the following consequences:

Under the tax laws, a tax payer is not allowed to carry-forward any loss ((like loss on house property, short-term capital loss, et al) for being set-off against the future incomes unless the return has been filed by the due date even though all taxes have been pre-paid.

If while filing, there is any unpaid amount of tax, you will have to pay a penal interest at the rate of 1% per month. Moreover, a penalty of Rs.5,000, in addition to the above consequences, can be imposed by the Tax Department. In fact, in certain cases, you may even be liable for prosecution for not having filed returns with the intention of willful tax evasion.

So, as you know all details now, go ahead and file the return with a big smile this time! Oh, don’t forget to do it before July 31.

Manish K. Pandey

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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LG Scarlet 42” LCD

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Technical Specification
Screen size - 42’’; Screen resolution – 1920x1080; Response time – 4ms;
PRICE: Rs.98,000 without taxes
WARRANTY: 1 year

The stylish design of the LG Scarlet LCD has won admiration from millions... What’s special about the Scarlet is its picture quality. “For the first time ever, LG has launched the Full HD technology in 42 inch LCD, which gives the stunning broadcasting experience,” asserts Amitabh Tiwari, Business Group Head, LG India. It also carries the dynamic contrast ratio of 50,000:1 with eye catching brightness, and has three HDMI ports. The scarlet features a clear voice technology which automatically adjusts human voice by reducing background noise thus providing supreme quality sound. Unlike other brands available in this category, it also has an invisible speaker system giving a surround sound experience. It has two USB ports for connection of the devices for quick connectvity.

Marketers’ delight: For consumers who want the slimmest LCD and the perfect picture quality can always go for elegant Scarlet. The LG Scarlet is stylish and desirable and that too at an affordable price.

Tester’s note: Pros – Excellent colour quality, contrast, HD video processing. Slick design. Cons – Jagged edges. Even lowest backlight level is too bright for dark rooms.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Based on a comprehensive survey conducted by Indian Council for Market Research (ICMR) in association with 4Ps B&M and The Indian PC Magazine

Now IIPM's World-Class Education... for everybody!!

METHODOLOGY The survey was conducted in three phases. Their descriptions are:

First Phase: The first phase marked the listing of the gadgets launched successfully in the year 2007-08 and a few past launches that had a wonderful stint even during the previous year. A total of 135 gadgets were listed to be identified by the respective companies (to ensure availability of the products) and was then evaluated by dealers and customers. The final list of gadgets was prepared taking into account gadgets from about 17 segments such as: Camcorders, Mobile phones, Laptops, Home Theatres, Music systems, Projectors, Printers et al.

Second Phase: In the second phase of the study, the list of gadgets were scrutinised by the dealers based on the availability, demand and likeability factor of the gadgets. Most of the gadgets were excluded from the list due to non-availability or for reasons of discontinuity. The retailers contacted were both multi-brand outlets and exclusive company showrooms. However, the maximum focus during the survey was on multi-brand outlets, where our research team got better insights into the host of available gadgets within the category.

Third Phase: The final phase of the research was based on a feedback both from the retailers and customers. The retailers/dealers were asked to rate the gadgets on a scale of 1-5 (where 1 is low and 5 is high). In totality, 220 retailers/dealers were covered in the 5 major cities of India - Delhi, Mumbai, Bangalore, Chennai & Kolkata. Based on averages of dealers’ perceptions, a Dealer Rating – DP* Rating, was given to each gadget. The break up of retailers covered is given in table 2. Similarly, the editorial team’s perception was listed too as 4Ps B&M* Rating. Finally we boiled down to 56 gadgets.

Apart from dealer’s perception, customer feedback on the gadgets were taken to list the final set of gadgets after analysing the responses. The customers for the gadgets survey belonged to SEC A1 and SEC A2.

A separate opinion poll was conducted amongst 1,000 customers across the 5 main cities and the average rating to choose the best gadget in a special category (like Apple MacBook Air was chosen as ‘The Most Desirable Gadget for 2008’).

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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The Financial Markets and The Rest of the US Economy

IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA

The Federal Reserve stepped in to prevent the bankruptcy of Bear Stearns and thereby protect both the financial markets and the rest of the US economy from what it thought could have been massive collateral damage. For the first time in its 85-year-old history, Bear Stearns reported losses in the last quarter of 2007; and amidst fears that the next to hit the wall would be Lehman Brothers, the Fed opted for the $30 billion bail out. The bailout, often termed as a ‘third line of defence,’ is a part of the package, which includes interest rates and tax cuts (now Fed rate is at 2.25%). Many argue that since Q4 results were bad for banking, then post the Q1 results, firms will be begging investors for fresh capital. If forecasts are to be relied upon, then there are another $50 billion of write-downs in the waiting. Marcel Theiliant (Analyst Global Economics, CREDIT SUISSE) avers, “If you think that the worst was over in Q4, then Q1 results will be a rude awakening.” In such a scenario, it will be a real challenge for the ilk’s of Lehman Brothers to raise capital. Nevertheless, the bailout package of $30 billion, followed by the rate cuts, infused in some degree of confidence in the markets.

Days later, when Lehman Brothers and Goldman announced their Q1 profit estimates, it turned out to be quite a relief. The profit estimates have been questioned; some claim that Lehman must have tinkered with the accounting method to suit its ends. The recent developments can be closely compared to the 2001 recession, wherein the S&P indices had gained close to 18% in March and April on the view that rate cuts announced by Fed would stave off a recession. Interestingly, the happiness was short lived and eventually the S&P plumetted, dropping by a whopping 42%.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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ROHIT SHARMA - Another lil’ master?!

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ROHIT SHARMA
Another lil’ master?!

It was one of those nail-biting situations again. The finals of the T20 series, India vs Pakistan. Limited overs, young blood and arch rivals... it was India’s chance to wash away the World Cup 2007 debacle. And indeed, they did! Winning the Twenty20 World Cup 2007 answered many questions, one of them being the selection of young players in the team. And among those young stars was Rohit Sharma whose splendid performance in the series (remember that swashbuckling knock of 50 on a tricky Durban wicket) and especially the unbeaten 30-run knock against Pakistan played a pivotal role in India’s historical win.

“I grew up during a time when India saw Sachin Tendulkar as the biggest icon in cricket. Everyone idolised him and many players still look up to him. And being from the same place as him, it had a huge impact on me,” recalled Rohit when asked for his inspiration for choosing a profession which is almost considered a religion in India... and his inspiration was none other than the God of this very religion. “Every time I watched Sachin play, I got inspired to try harder to find a place in the Indian cricket team,” mused Rohit. If we trace some big names in the world who have created historical records, one would not come across many who’ve had a glorious beginning. And Rohit is another name in the league. With a sluggish start in the early years of domestic cricket, Rohit did not give reasons enough to predict his upcoming accomplishments. But his performance in the U-19 World Cup (where he was one of the top scorers) grabbed the attention of many, which then lead to his selection in the Twenty20 World Cup. And after the triumph in T20, there has been no looking back. Rohit also turned out to be a reliable pick in the CB series in Australia, where he made a significant contribution, especially with his match-winning score of 66 in partnership with Sachin Tendulkar in the first final. And with this, he has also proved to be amongst the most sought after players in the Indian Premier League.

With a cool and composed temperament and cavalier batting technique, this exciting young right-hand middle order batsman has just the desired combination to make him an able replacement for ‘the big three’. Indeed, for reasons obvious, Rohit Sharma, today, is being pegged as one of those whose footing on the pitch is going to be long and strong.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Not so mellifluous is the flow...

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...of oil money for the common man in Gulf nations, who is struggling to make both ends meet

Are high oil prices ($102/barrel) good or bad for the mid-east population? On the face of it, a layman would say that an economy, which revolves around crude oil must reap in huge profits; observe a surge in the general well-being and see the state coffers overflow with petrol dollars. Beyond doubt, the political and business leadership in the oil exporting Gulf nations is experiencing the mellifluous flow of dollars into their chests, the common man and the middle classes are however, beginning to feel the pinch. “I have been a resident in the Gulf for past 12 years now. We had never known what inflation was for so many years, but now we are beginning to feel the brunt of high food prices and essential commodities.” Toufail Ahmed told B&E from Dubai.

Saudi Arabia, where the inflation rate for the past decade had been well-nigh nil, the current level of 6.5% is certainly alarming according to experts. In Jordan the government has been forced to withdraw fuel subsidies, pushing the fuel prices up by almost 76%. Such a steep hike has certainly led to a cascading effect on foodgrain prices. In Bharain, where according to the Oil and Gas Affairs Minister Dr. Abdulhussain Mirza, “the oil industry is on the threshold of a golden era.” The rising prices are however perplexing, “..consumer price index was 104.64 points at the end of January compared with 104.07 points in December. Food, beverage and tobacco costs climbed 2.1% in January from December while housing costs were steady,” says the Bahrain government’s Central Informatics Organisation (CIO) .

The soaring prices in the Gulf are certainly an outcome of the spurt in the global commodities prices; the dwindling agricultural production; the slump in the dollar and of course, the now infamous sub-prime crisis in the US. All these factors are contributing in exacerbating the common man’s plight in the mid-east region, which according to the reports emerging from the region indicate towards a simmering discontent among the masses, leading to protests marches.

For all these years, the ruling classes in the mid-east region have adopted the carrot and stick policy to manage the masses. Both religion and strong arm tactics have been relentlessly used to keep a tight lid over all forms of discontent. The questions which many analyst are now asking- is the credibility of Gulf ruling classes coming under strain? Are the political risk management strategies of the Gulf ruler failing? And will a global economic downturn eventually lead to democracy taking roots in the region? One only wishes that the benefits accruing from an oil economy are fairly passed on to the poor in the Gulf.

B&E edit bureau: Atul Bharadwaj

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Bottoms up approach...

IIPM : EXECUTIVE EDUCATION

...to building India and making it look beautiful

Nano has shown to the auto industry that “there exists a fortune at the bottom of the pyramid.” But why aren’t others taking a cue from management guru C. K. Prahalad’s wisdom & of course, the inspirational work of the British born Indian architect late Laurie Baker? “ I don’t think that the real estate sector is thinking of any low cost housing projects. This is mainly because the land & construction costs are too high for any builder to venture into this arena. The problem can be met by greater public-private participation only,” says Alok Agrrawal, Principal Sun Apollo, a private equity fund, with expertise in reality sector. More importantly, “The homeless or poor have to be involved in the process that leads to their having homes,” says Pratima Joshi, Director of Shelter Associates, an NGO into housing homeless. She adds, “Occupants of government’s housing scheme for the poor, Valmiki Ambedkar Awas Yojana, weren’t satisfied with the dwellings given to them. If dwelling schemes served to them, doesn’t suit them, they will slide back to slums.” Perhaps, it is the jaded mindset in the industry, which prevents them from looking at the bottom of the pyramid. Otherwise, what stops the reality sector from building low cost houses for India’s 170 million slum dwellers? The companies should not totally leave the un-glamorous jobs to the government. Such efforts will only add sheen to their corporate face; and make them better corporate citizens.

B&E edit bureau: Rajeev K. Singh

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The disruptive Ram Charan!

IIPM : EXECUTIVE EDUCATION

Management magnate Ram Charan shares his insight on disruption exclusively with B&E

Ask this 67-year-old Harvard doctoral graduate over dinner about why he never married and this preeminent global strategy guru dismissively parries our query off like a celebrity would. Recently, Forbes magazine quoted a global survey ranking him amongst the world’s top 25 business thinkers. GE’s Jack Welch consulted him for over three decades. When Jeffrey Immelt took over GE, Ram Charan was the first person he called. Ram serves on the boards of innumerable Fortune 500 companies. With his books having sold millions of copies, Ram Charan makes a meteoric impact. B&E caught up with this magnate over two days to understand his views on disruption. Some excerpts:

B&E: Why has the phenomenon of disruption become prominent in recent times?

Ans: At a critical top level, disruption is a phenomenon with the capacity to not only make companies disappear, but even industries. The voice based telecom industry will disappear one day due to internet telephony. The key point for a CEO hit by such disruption is to understand that whatever he’s doing needs to be radically changed. At a second level, well entrenched companies are themselves creating disruption by introducing new business models. The reason why this has become more prominent is because industry/company/product life cycles are becoming much shorter.

B&E: How can (or should) well entrenched players prevent such disruption?

Ans: Some changes are continuous, some disruptive. The leaders who succeed are vigilant about changes, anticipate changes, and are themselves confident about creating changes. For a well entrenched CEO, complacency is never good. In any industry, many innovative technologies exist with the capacity to cause disruption. But well entrenched CEOs should realise none of these can really cause disruption till some entrepreneur converts a technology into one that’s customer oriented, something big enough. Steve Jobs is one CEO whose biggest plus is his capability to marry incisive consumer insight with his product offering.

B&E: What strategic points are required to change the rules of the game in a sector?

Ans: First of all, a leader needs to have the courage to make strategic bets. Beyond that, the leader should: a. Define precisely what the ‘specific’ opportunity is, not just the broad category. A telecom player entering the insurance sector cannot just generally think of ‘insurance’, but rather specific segments.
b. Understand what capabilities you need to capitalise on the opportunity – both internal and external.
c. Find out what leadership/leaders you need to implement the plan in action.
d. Finally, do you have enough financial resources – can you move with speed and become profitable? B&E: Which companies/leaders have been most successful in enabling disruption?

Ans: Apple (Steve Jobs) in various products. The iPod completely disrupted the music industry. In the same way, Rupert Murdoch buying The Wall Street Journal is another classic example.

B&E: Could you also cite examples of companies that missed the disruption bus?

Ans: Sony, Philips... and AOL too.

B&E: Any ground rules on implementation for players riding the disruption wave?

Ans: My book, The Discipline of Getting Things Done gives a clear idea. In short: a. Have laser sharp dominant priorities very clear. CEOs have many ‘general’ priorities. Have defined specific priorities!
b. Ensure that key performance indicators are aligned to the overall strategy.
c. Realign your financial resources to the new gain, new opportunity.
d. Align the rewards to the new gain.
e. Have right people for the right job.

B&E: But how important are ‘people’ in this whole framework?

Ans: Most! A leader cannot succeed without other leaders. Jack Welch once told me, “Ram, people before strategy!” Ratan Tata succeeds because he gets the right leaders to run his companies.

B&E: Any final words on disruption?

Ans: Disruption doesn’t happen everyday. Change happens everyday. CEOs should not go one-minded into creating or implementing disruption forcefully within their companies. Rather, understand and appreciate the constant change occurring in your company, industry, and align yourself to that.

B&E: Your all-time favourite management books?

Practice of Management, Peter F. Drucker. I still love going back to it and reading it again. So many of the principles still apply so perfectly. And My Years With GM, Alfred Sloan. Did you know GM actually attempted to stop the publishing of this book?

B&E: Your personal objectives in life?

None whatsoever (smiles!). If you try to find out what you love to do, and keep doing that, you don’t need any objective in life to get peace...

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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From communication to education for all

IIPM’s 36th Glorious Year of Academic Excellence

The man is hell-bent on educating India

If one Indian was to be nominated for introducing the PPP (public-private partnership) concept & judicious use of technology in India, Sam Pitroda’s name would certainly figure at the top of the list, because he is the most deserving candidate. The man is credited with making almost the entire nation communicate with ease and lay a strong foundation for the telecom revolution to take shape in the country. He had laid a strong foundation for technology enhancement. Now, as head of Knowledge Commission, the visionary is engaged in bridging the digital divide in the country and transforming the way knowledge is disseminated across the nation. Sam is all set to change the mindset in the country with regards to the way the primary and higher education is conducted in our education centres, because he understands it fully well that illiteracy in the country can only be eliminated through democratisation of knowledge. When controversy arose regarding the reservation for dalits in the educational institutions, Sam gave his candid views on the adverse impact of such thoughts on the educational environment. However, he continued with his pursuit with single minded devotion.

The man has to be backed because his ultimate aim as he himself told B&E is to “strive to provide every Indian with adequate food, clean drinking water & shelter.”

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
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Aren’t they prized?

IIPM’s 36th Glorious Year of Academic Excellence

It’s time we redefined what makes one a national asset...

P rivatisation has been one of the most controversial and rabble rousing word, in the Indian lexicon, since the emergence of economic liberalisation. Every attempt to privatise Indian PSUs has not only been greeted with serious resistance by Opposition parties, it has also been termed as attempt to sell off ‘National Assets’ or ‘Family Silver.’ While national parties like BJP & Congress have taken turns to oppose it, depending on whether they are in government or in Opposition, the Left parties have always been opposed to it. In 2004, in an article in rediff.com, CPI General Secretary A. B. Bardhan stated, ‘It was National Democratic Alliance Government that set up the first ever Divestment Ministry. It virtually put India up for sale: it set up a shop to sell off prime national assets.’

The real is issue here is not privatisation but how India as a nation perceives as to what can be defined as a national asset. Inspite of having shed the shackles of the Jurassic Age License Raj, more than 16 years back, India at times reflect the demeanour of a society yet to come out of the mental blockades of the past.

Last 16 years witnessed the ascent of a resurgent India which was otherwise fed on a defeatist, inward looking, timid and a Third World attitude for long. It not only had a Phoenix like rise from the verge of bankruptcy to become a trillion dollar economy, but its companies, instead of getting decimated by the onslaught of foreign companies, emerged as true blue multi-nationals. The likes of Reliance, Infosys, Wipro, Bharti, Tata, M&M, Ranbaxy, Suzlon & Cipla have not only become household names abroad but also helped India have global footage through their relentless cross-border acquisition. Last heard, analysts have stopped counting the countless number of foreign companies being acquired by their Indian counterparts every month. Yet for the likes of A. B. Bardhan and majority of the indoctrinated populace, these companies and their creators are not yet national assets. For them, a company has to be necessarily owned (rather exploited) by the government if it has to have that coveted tag.


Well by that standard, even the Indian cricket team and the likes of Sachin, Sourav & Dravid are not national assets because BCCI is a privately managed entity. Even Shah Rukh Khan, Amartya Sen and the millions of new generation young men and women who are striving to shun the blanket of secured jobs and venture into unknown territories of creative indulgence to give shape to the next generation of Reliance and Tatas, are not national assets. The makers of Rang De Basanti or Chak De who can inspire a whole generation to defy status-quo and become change agents are not national assets either. But... loss making and totally uninspiring companies like National Textile Mills and hundreds like that, are national assets, simply because they are state owned. At will, their bad debts of thousands of crores get written off while young India struggles to get a few lakhs to start a new entity. All that has been done by stalling privatisation of HPCL & BPCL is to burden them with apocalyptic losses so that polity can continue with its game of oil populism. Indian Railways is truly a national asset giving it the national right of killing people in accidents and negligence without accountability. Well, let’s hope a day comes soon enough when, if not the entrepreneurs, at least the common man would be called a national asset. At least in that case he would be spared from paying with his life in terrorist attacks, hunger and political riots.

Edit bureau : The IIPM Think Tank

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
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IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
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Maddening crowd!

IIPM’s 36th Glorious Year of Academic Excellence

There are a host of organised retailers on the streets, and they’re all craving for footfalls. Problem is – they all look almost the same! Can they create a unique position for themselves? savreen gadhoke finds out...

Let’s begin with a small mental game. Think of organised retail. Next, narrow the list down to just convenience stores. Next, think of a brand. So what did you think of? “Well... errr.... mmmmm...” That is perhaps your answer, and don’t worry, we don’t blame you. Yes, today when when we talk of the new format of retailing and brands associated with it, the consumer mostly imagines bachat or perhaps, morcha against kharcha! There are many brands too, creating a hyper-cluttered space. There’s Sabka Bazaar, Big Apple and Reliance Fresh trying to make a separate identity in the convenience retail format (the typical 7 to 11 store). But the truth is – most have everything in common. Take a walk down Mumbai’s Cuff Parade or just saunter along Delhi’s Malviya Nagar, and you’ll find a host of ‘Mom-n-Pop’ stores ranging from Aditya Birla Group’s ‘More’ to RPG’s ‘Spencers Retail’; from R.Subramaniam’s ‘Subhiksha’ to Mukesh Ambani’s ‘Reliance Fresh’; all lined in close vicinity to each other. And in such a situation, do these convenience stores have a strong positioning to induce the customer to visit their store and not walk into the one next door? Worse, this situation is not something temporary as most of the above-listed stores are on an expansion spree (and investing hundreds of crores of rupees).

And there is a clear question which this crowd gives birth to (perhaps about which you never thought of) – what is stopping these cash rich giants from advertising and creating a unique positioning for their retail ventures? Yes, this is true for all except one – Subhiksha. Talking about his strategic outlook, R. Subramaniam. MD, Subhiksha asserts, “In this kind of business, it becomes necessary for us to come up with a strong brand positioning and Subhiksha has always worked on that.” And indeed it’s a fact that apart from Subhiksha, no other retail giant has invested in building a strong brand image for their respective ventures. Subhiksha has always harped over the message strategy of “Lowest prices and largest network of stores,” which as per Subramaniam is the strongest message that one can have in this nascent sector. But then, talk to Rajat Gupta, GM Marketing, Big Apple and he says, “Big Apple has positioned itself to cater to all strata of consumers, considering the wide range of products available and convenient store timings of 7 A.M. to 11 P.M.” The point here is that even though Gupta talks confidently of Big Apple’s positioning with its target audience, has this positioning really sunk into the consumer mental make-up? To answer this question, Anand Halve, Co-founder, Chlorophyll Brand & Communication Consultancy asks yet another simple question – “Today, what is it that is compelling the consumer to go to a particular retail outlet for his day-to-day grocery shopping? Is it because that that ‘a particular’ retail store gives you the lowest prices (which perhaps all boast of) or is it because it is in close proximity to your residence?” If your answer is the former then really, spreading a message across will definitely help. And if your answer is the latter, the prescription remains exactly the same... Really, it’s not long before all the major international retail giants (following the entry of Wal-Mart) enter the Indian market. Policies can change overnight, and if FDI is permitted in multi-brand retailing, then the Indian players are in for a rough ride!

But why is it then that almost all the players are bragging about nothing but ‘low prices’? Are quality of product, ambience, USP dead and gone? Answers Halve, “When the Indian retail venture (in its true sense) kicked-off, almost everyone took Wal-Mart as their ‘golden destination’. This threatened others and forced them to reduce their prices.” With the help of logistics, these retailers may be able to swing prices of “some of their” products but the strategy inherently remains fraudulent because it is dependent upon sustaining a competitive advantage, which is where most these players need improvement. Quality still takes precedence in the minds of the consumers as rationale get the better of emotions. And today, the “I bought cheap...” syndrome is not anymore a virtue across the board. Therefore, it becomes imperative for retailers to have a strong positioning and an effective communication strategy.

However, Thomas Xaviers, NCD, Orchard Advertising (which handles Subhiksha’s account) counters on the point of quality and says, “Most of the stuff that is sold in Subhiksha is the same branded goods we find in other pricey malls. So, we needn’t harp on quality… But we do not shy from pointing out to people that they should not pay more for the same goods in the superfluous markets.” The crux of the matter remains that to make the consumer loyal, it is important to make ‘convenience’ the primary deliverable, and convenience today doesn’t mean price alone.

Another reason why it is extremely important for the retailers to have a strong communication is because almost all of them are expanding at a stupendous rate. “In FY08, we had 1,300 stores and we plan to reach to 2,200 stores by FY09,” reveals Subramaniam of Subhiksha. Reportedly, Spencers Retail too is investing close to Rs.1,000 crore in 2008-09 and plans to achieve a turnover of Rs.1,800 crore by FY2008-09. But then, why on earth are these retailers shy of advertising? As Halve of Chlorophyll says, “It is primarily the ‘Reliance Fresh’ effect.” The amount of protests Reliance Fresh invited for itself when it unleashed its big plans, has probably shaken others and this is why most of them refrain from advertising. However, they do indulge in promotional and BTL activities. Agrees Gupta of Big Apple, “Big Apple has not been too aggressive in terms of advertisements in media, but surely has been involved in activities in and around all its outlets and has been able to positively form a connect with the consumers.” But can such promotional activities replace the impact of advertising on a large scale? Answers Xaviers, “Advertising is still the most economical way to build a mass brand. There is enormous economic advantage to be derived from a relevant creative idea that has been applied to brand. Perception Management is too important to be left to chancy PR or word of mouth.”

Probably this is the reason why Subhiksha, while it has powerful systems to deal with PR and word of mouth, uses the power of advertising to steer the brand. And indeed, where big money is involved, it is imperative for the marketers to be ‘bang on!’ with their marketing strategies and realise the importance of advertising and a strong positioning. Probably the next time I ask you for a convenience retail brand, you’ll not fumble for words!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
The Hindu : Education Plus : Honour for IIPM
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Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs