e globuz z-vol1_issue_iii
DESCRIPTION
Quarterly periodical of International Business Society @ SIMSRTRANSCRIPT
ForewordDear Readers,
It gives me immense pleasure to bring to you the third issue of e-Globuzz, Jul-Sep'10. We hope you liked our previous issue of Jan-Mar'10.
There are those who envision, and then there are those who work to make the vision a reality. We are proud to say that we have a team which does both. We would like to thank all those who were involved in taking this issue to the completion stage.
Our next issue is planned in Oct '10, which we trust will be even more insightful as we try and evolve with every issue of ours. In future we plan to evolve by bringing in greater participation from the corporate executives, industry experts, alumni & faculty. We look forward to hearing from our readers. Please do send us your feedback at [email protected].
We have dedicated this issue to late Prof. C. K. Prahalad whose books & articles have been a guiding light for us and hence some of these articles and books have been referred to in this issue.
For everyone in the SIMSR family, Late Prof. C. K. Prahalad was a great source of inspiration; a role
model and an outstanding academician for whom we always had and will continue to have profound respect and admiration. We were shocked at the news of his untimely passing away in April 2010. We were looking forward to reading many more of his books and articles in respected international journals.
Some of us at SIMSR, the students and the faculty had the privilege to listen to his insightful speech in January 2010 when he addressed a packed auditorium at the seventh Nani A Palkhivala Memorial
Lecture in Mumbai. Little did we realize that for us it would be his last lecture, and we would not get the privilege to hear him again But late Prof. C. K. Prahalad lives on in our minds and in our hearts. We will
fondly continue to read again his various articles and books, which will continue to inspire us and guide us in our quest for achieving academic & professional excellence.
Another great quality of Late Prof. C. K. Prahalad which we greatly admire is his humility which he had inspite of his truly exceptional professional achievements as a leading & globally respected author and
consultant to several leading multinational enterprises. His humility is evident in the Preface of his book -authored with Prof. Gary Hamel of London Business School.
ranging from Kenneth Andrews, Igor Ansoff, Peter Drucker & Henry Mintzberg to Michael Porter &
Kenichi Ohmae- all of whose works on strategy are eagerly read by SIMSR students, alumni & faculty.
The International Business Society (IBS@SIMSR) pays its humble tribute to late Prof. C. K. Prahalad,
Paul and Ruth McCracken Distinguished University Professor, Ross School of Business, University of Michigan, USA.
Prof. C. P. JoshiFaculty Mentor-IBS@SIMSR
Course Coordinator- PGDM-IB
Team
e GlobuzzFaculty Mentor
Prof. C P Joshi
Editors
Vikash Kumar Singh
Anchal Sachan
Designers
Parul Shrivastava
Rachit Goel
Circulation
Astha Pasricha
Celia Madona Vincent
All the views expressed in
the magazine reflect the
personal opinions and
views of the authors and
do not reflect the
.
6COVER STORY:
BOTTOM OF THE PYRAMID
How Sustainable is your
Business?
01 Company In Focus: APPLE
04 Sector in Focus: Global Automobile Industry
06 Cover Story: BOTTOM OF THE PYRAMID
How Sustainable is Your Business?
08 Country in Focus: SOUTH AFRICA
10 Academic fraud in China
11 Report on Economic Freedom Network Asia
Conference 2009
13 International Marketing: COCA COLA scores a
winner
15 International Finance: Global Banking Scenario
17 Interview with Mr ROHIT PANDYA, Dy. General
Manager, Buyer and Country Underwriting, ECGC,
Mumbai.
19 Debate: - Will the European Union Sustain?
21 Did you know these terms?
22 Book Review: COMPETING FOR THE FUTURE
24 Crossword #03
e - GlobuzZ, Volume I, Issue III July September2010 Page | 1
INTRODUCTION
Apple Inc. (previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics,
computer software, and personal computers. The company's best-known hardware products include the Macintosh computers, the
iPod, the iPhone and the iPad.
Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was previously named Apple
Computer, Inc. for its first 30 years, but removed the word "Computer" on January 9, 2007, to reflect the company's on-going
expansion into the consumer electronics market in addition to its traditional focus on personal computers.
Focused Differentiation Strategy
Earlier Apple followed a Focused Differentiation Strategy because
It was catering to a narrow market niche with unique needs
It adopted a premium pricing strategy to target high-end consumers and business market
Broad Differentiation Strategy
Now Apple has now moved towards Broad Differentiation Strategy after the introduction of i-phones and i-pods
It now offers a broad range of products to a larger number of consumers
Gives value to customers by differentiation
STRATEGIES FOR INNOVATION
following steps explain the techniques it uses for innovation.
APPLeCOMPANY IN FOCUS
e - GlobuzZ, Volume I, Issue III July September2010 Page | 2
Think Different
Apple maintains an introspective, self-contained operating style that is capable of confounding competitors and shaking up entire
industries. For example, Nokia, once considered the undisputed leader in mobile phones, never anticipated that a single product from
a computer maker might throw its ascendancy into question.
think differently about itself that keeps Apple at the head of the pack.
Build your fortress - Create the infrastructure needed for innovation
Size and sprawl are formidable challenges that most companies manage, either by splintering into disorganized, undisciplined
communities or by locking employees into tight, stifling bureaucracies. Apple tends toward the latter, but it does so in a unique way
ion with
secrecy is a double-edged sword, however: It gives Apple a vital element of surprise in the marketplace
Cultivate your elite - Empower your most valuable employees to do amazing work
, new products are often seen in their complete form by only a small group of top
executives. This, too, works as a strength for Apple: Instead of a sprawling bureaucracy that new products have to be pushed through,
knit group that has a hand in almost every important decision the company makes.
Short-term, cyclical, or competitive pressures do not overwhelm an effective strategy at Apple. It cancels, releases, and updates
products at its own speed, seemingly irrespective of market conditions or competitive pressure. The iPod and iPhone, iconic products
both, each began as rumors that Apple seemed determined to quash.
Clone your own Steve jobs - If you put a tyrannical perfectionist in charge, institutionalize his thinking
k, for
example, worked well as acting CEO during the first half of 2009, when Jobs was on sick leave. The most iconic Apple laptop, the
original PowerBook, was released in 1991, after Jobs had been absent for six years.
As per the financial statements of Apple for 2009, 70% of its revenue is contributed by hand-held equipments. Hence further analysis
of the company is based on the smart phones industry.
STRATEGIC GROUP
smart phones have been positioned as premium products with narrow product lines.
KEY SUCCESS FACTORS
As per experts smartphones seems to be a part of a difficult
industry as part of it is fashion & part of it is technology. Based
on this observation Apple has pursued following factors
relentlessly to gain the numerouno position in its respective
strategic group
Technology
Internet driven force It has immensely
helped Apple drive its sales to target
leisure time on internet (2009 NASSCOM
survey). Hence it becomes imperative for
Apple to have a good internet driven sales
force.
e - GlobuzZ, Volume I, Issue III July September2010 Page | 3
Hitesh Gandhi
Priyanka Singhal
PGDM IB (09-11)
Replacing communication
technology Smartphones have
changed the way people
communicate & manage their daily
offer a lot more value to customers
rather than just being a
communication device
Next Generation experience -Although 3G is newest kid on the
technology block but the talks of 4G
are already on. Hence its all about
embracing new technology &
innovating with evolving technology
& consumer needs.
Marketing
Brand name Apple is a well-
known& respected brand in the
market. It has trust of its loyal
customer base which has been built
over years.
Market segmentation Apple marketing philosophy takes its roots from proper market segmentation. It is based
on this market segmentation only that they have a very narrow product line positioned in premium category.
Skill & Capability
Value Addition test ability is to add value to customer in a faster, more convenient & less expensive
ways then the available options.
Design & Innovation Expertise This capability of Apple lets them innovate at a regular basis and present &
design those innovations in a package which adds value to customer at an affordable price.
Distribution
Strong Network Apple has a vast network of wholesalers, distributors & dealers. They have deep reach in the
market which enables them to make their innovations available to markets in a short span of time.
Fast introduction & application of services The vast distribution network, working with internet as its
backbone, helps apple to even put its services faster in the market than the competitors.
STRATEGIC RECOMMENDATIONS
To encounter certain threats like entry of corporate giants like Google, increasing competition and bargaining power of buyers,
following are some strategic recommendations for Apple.
Diversification: To explore new markets and focus more on developing markets like India and China.
Innovation: Apple should focus on innovation of national products; products adapted to the needs of developing nations.
Expansion: Apple should look at opportunities for mergers and acquisitions across the globe to enhance their distribution and
manufacturing capabilities.
�
��������������������� �� ����� �������������������������� � ����������������
��
Global AUTOMOBILE INDUSTRY
Sector in Focus
Current Global Scenario
������������������������ ��������������� ����������!�� ��������
�!�����!� ���" �"�� "���� ��������� ��!�� ��� ��� �!�����
����!���!����� ����� ���������� �� � ��"� ���#���������$� �����%����
!������������� ���"�!�� ���������������������������� �"���������
������������������"��!�������&��!�� ����!�����!�������!������ �
����������"��������'()�*+��#������ �������,�����!�������"����
���-� �� � ����$� .�"������ ��� ��� �&��!�� � ��� /���� ��!%� ��� ������
���"���"�������������������!�����!���!�������������� �!��������
!��#� ��!���� � ��!�������� ���� � #��� ���������� � #�����##�!�����
!���������!���������������������%���$�
����������� ��� !�� ��� ������������� �� � ��!������ ��� !��������
!��#� ��!��� !������ ���� ����������� �����������!%����� ����� �
����"��� ��� ����"���� ���� ����0������*������� � ����� �(�����
'0* (+��� �����������!��������"����������� �������!�������#�����
������� ����������� ���%���1� ������ ���� �������� �#� ����� ������!�$�
��������##�� ������� �!�����!�������������� ����������� ���� �� ���
����������� ���������������&��#�����������!���������������������,�
����!�����#������������!�������������������!%��#��������������� ����
��!������#�����##�!���!���� � �!���������������$��
�
�
�
�
�
�
�������2��%������"���
�������%���������"������!���������������� ������������������������
��� ��!������ ��� ����� #�����$� � ��� ��� ����� ��� �� ������� ����� ��� )����
"���������!������������������������ ������ ������!� ���� ���� �
��� �&��!�� � ��� ��!������ ������� �� � ������ ��� �������� 3� ���!���$�
����!��� ������ ��� ������ 4������ ������� ��%��� �� ���� ���� �#� �5�
���!���� ����� ����� ������� ��&� ����%�� ��� ���� ��!��� ���%���� ���
�&��!�� � ��� ���"� �� ��������� ��!������ �#� ,� ���!���$� ����������
������%����������������������"����������%����������"���#�����
������� ��� ���� ��������� ������ ������ #���� �� ������� �#� ��!���� ����
�� ��� ��!����� ��� "���� ��� ���� ������� ���%�� ��!���� ��� 6����� ����� �$�
���%�"����� )�� '�7+� ��� ������� ����� ������8�� ��!���� ���������
�����!����"�������������������������$�
������������������� ������
�����
�������
��������
���� ���� ����
���
(��� �� ��� ��� ����
9���� �������� ��� � ���� ����
2�&�!�� ���� ���� ����
:�����)����!�� ����� ����� �����
�� �� �� ��
������)����!�� �� ���� !���
�� �� �� ��
7�������;������ ����! ����� �����
;�������;������ !��� ���� ����
�� �� �� ��
(����� ���� ���� ����
� ��� ��� ��� ����
)���� ���� � ��� �����
�
�� ������!� � ����� ��� ���3� ��� ������ ��� ��� �!�� ����������� ��"�
����!���� �� � �!������ �� ������� �#� ����� ����� �<� ���!���� �#� ����
����������$�����!������������������#�����,����!�������#����������
�����������"��!�� ��������������!�� ������6���!������ �!���������
��� "���� ���� ��� ��������� � "������ �7� ������ ����$� =7���� ����
��������������� �#� >��������� ���3�8� ���� ���%�"����� ������ ���
���%���� ������� �!�����!� �� � �������������� ��� ������� ��� ����
����������� �� ������������3�?��7���� � ������������� �@��������
����������������������$��
�
������� �������� � ����� ���� !���� �#� ���� ��!���� "��� � ������ �##�
�������� A�$�� �������� �#� ���� ��!���� ����� ����$� ���� ��!���� �##�!�� �
�������"�������<����!���� �!������#� ��������� ������ ��#� ���������
"������28����������!����� �����,����!���� �������������������� $�
6�� �!����������������������������"���������������������#��������� �
�����"����������� �����������������$��
�
�������2��%���6���������
�� �� ��!���� ������� !�� �!�� � ��� 462�� ������������� ���
�������������BC������������ �����#�����5�!�����������!�� ����
�
India has emerged as an outsourcing hub
for auto parts for international
companies such as Ford, General Motors,
Daimler Chrysler, Fiat, Volkswagen and
Toyota
�
��������������������� �� ����� �������������������
)����!���)����6�!�#�!��;�������)#��!���� �2� ���;�
����������$����������� �������!�� � �(;D��6���� ���
(�������E������;&�!�������0��������9����.�� ��@��!����������
�##������ ����� !��������� ���"���� ��� ������� �� � ����
������ ��������� #��� ���� !������� �����!��������� ��� ��
�� �!��� �)����6�!�#�!����������������������������!������#����$
�$ (��������� ��� )����!�� ���� ���������!� ��� �!�����!�
�!���������"���
�$ ������������� ���"�������"������%������;2;)�!��������
F$ 0��� ����������!��������������;�������;�������� �)�
���"���
:G )�E�����*�� �)��� �
� ��� ��������������������#�����%������%���#�������
�����!����������!�������� �����&��!�� �������������
��� ������� ����������� ������� !����� ��� ���� ����� #�����$� � ��� ����
������ � ��� ��� �������!���� ���� #��� ����������� #��� ��
!�����������!�����@�� ����������2�������G�������(��
���%�"����� �� � ������$�G������ ���� ����� ���3��B�� ���� ���������
�� � �&����� #��� ����� !��������� �� ������ "��� ��!�� � � ��� 9�A�
�,$3,�0��������� �9�A�F$���0������������!������$�
���� � ����������� �����������%����������������"����#���
�������������������!!�� ���������������������������������#�����@��!�$�
������#�����%������"��� ��������#������� ���������C
• *�������� ���������������
• *����������!��������!����
• *�������� ���!�����
• 9�����������
• *������G������������!�����
• ;����#����!���!������
• *�������� �"��� �!�������� �!�����
�����������
��
)����!���)����6�!�#�!��;�������)#��!���� �2� ���;�������%���������
����������$����������� �������!�� � �(;D��6���� �����(���������
������;&�!�������0��������9����.�� ��@��!���������� ��#�
�� �� � ������� ���������$�
������ ��������� #��� ���� !������� �����!��������� ��� ����� �� ������
�� �!��� �)����6�!�#�!����������������������������!������#����$�
�
(��������� ��� )����!�� ���� ���������!� ��� �!�����!�
;2;)�!���������
0��� ����������!��������������;�������;�������� �)�����
� ��� ��������������������#�����%������%���#����������������� �
�����!����������!�������� �����&��!�� ����������������#�!���������
������� !����� ��� ���� ����� #�����$� � ��� ����
������ � ��� ��� �������!���� ���� #��� ����������� #��� ��������������
!�����������!�����@�� ����������2�������G�������(���������@�����
�B�� ���� ���������
����� �� ������ "��� ��!�� � � ��� 9�A�
���� � ����������� �����������%����������������"����#����������!����
�������������������!!�� ���������������������������������#�����@��!�$�
����� ���������C�
���� � ���� ����������� �� ������ ����#�!������ ����� ��
����!������ ��������������������� ����� ��������������
�� ������ ��� �&��!�� � ��� ���"� ���9�A� 5�� 0������� ��� �
����� ���<� ���� �� ������ ��� �&��!�� � ��� !���������� ��
������8���G6$� ������!!���#��� ����!���#������:����� ����!������
!��� ��� ����"��� �� ���� ���� �������� ��!��������� ��� ��
�� ������ �!����� ���� �����$� �� ����� � � ���� !������ �
� ����)���������� � �������������������������$�
�
�
�
�
�
����������#��������������!�1�� ����!������"���������������������� ������
��� ���� ����� ���� ���������� ��� 6�������� �� � �����
������������� ����� ��#��������������������;��������!��������
�� � ����� #����� � #����� ������ ���� �&������� �#� ;�����
�����������$�)����������������������������!�#����!�
���� ����� ����� ���%� "��%������ ���"���� "��!�� ��%��� ��
�&�������� ��� ���!��� ��%�� (����� �� � )����!��� �� � ���
%�� � #��� �������%�$� �����B������6���� ��#� �����-� !��������� ��� ����;������
9����������� ������!�� �������������"��$�)���������
������� �������"��������������������������!$� �����
������ ����� ���� ������ ��� ��!�� ��� ���� ������ �&��!�
!�����I������ ���� ������ "���� ��%���� ��� ��� � ��� #���� �������
� ��������$� 0��� ���� #����� �� �#� ������
�������������������������J���!%�J����!�����#�������
��!��������%������ $������"����%���� ���� ����"������ �� $
�
2� ��!������"�������������������#�����������#������
����������������!�������������#��������������������
����������������������� �������������!�����!���$���
#�����������������!��#� ��!���#��������%���C�"�����
��,H� �� � �� �� ���� �#�!��� �#� �F$<H� ��� ���B�� ��� "���
!������$�D����� !���������������"��!��������� �������
�������� �������� �� ���� � ��������� �������� �����%� � ��� ���������� �����K�
6���������� ��������"������������������������!��#��
�������� �������#��������������������"������������
���������������������#�����������%�����&�����������������C�0������1�� ��������
����������������������#�����;9���������������������
����� ���"������#����������������$�
;��������;!����������������������������� �����!�"# $���
% ##����
� ����������������
���� � ���� ����������� �� ������ ����#�!������ ����� ��� ��������
����!������ ��������������������� ����� ��������������������$�����
�� ������ ��� �&��!�� � ��� ���"� ���9�A� 5�� 0������� ��� ���,$� 0�� ����
����� ���<� ���� �� ������ ��� �&��!�� � ��� !���������� ��H� �#� ����
G6$� ������!!���#��� ����!���#������:����� ����!��������
!��� ��� ����"��� �� ���� ���� �������� ��!��������� ��� ���� �����������
�� ������ �!����� ���� �����$� �� ����� � � ���� !������ ��� ���� �#� ����
� ����)���������� � �������������������������$��
��/�����&����
2�����G$������
6�G2� 0�'�B���+�
�
����!�1�� ����!������"���������������������� �������"�����
�������� ��� 6�������� �� � �����$� ������ !�������������� �����
��� ����� ��#��������������������;��������!��������� ��#�������������
�� � ����� #����� � #����� ������ ���� �&������� �#� ;�����1�� ���%�� ��� �� ���� �
�����������$�)����������������������������!�#����!�������!������� ����%����
���� ����� ����� ���%� "��%������ ���"���� "��!�� ��%��� ��#�� ����� �##�!���� #���
�&�������� ��� ���!��� ��%�� (����� �� � )����!��� �� � ������� �������� �#� �� �##������
���B������6���� ��#� �����-� !��������� ��� ����;��������
9����������� ������!�� �������������"��$�)�������������!����������������"�
������� �������"��������������������������!$� �������!����������������������
������ ����� ���� ������ ��� ��!�� ��� ���� ������ �&��!�� ������ ���� ����� �#� ����
������ ���� ������ "���� ��%���� ��� ��� � ��� #���� ������� ���� �����
� ��������$� 0��� ���� #����� �� �#� ����������%��� ���� ���� ��� ����� ����
�������������������������J���!%�J����!�����#������������������ ������������
���"����%���� ���� ����"������ �� $�
2� ��!������"�������������������#�����������#��������!��������������������$�
����������������!�������������#��������������������������������#� ������ ������ ��
����������������������� �������������!�����!���$�������&�������"�������!��"���
#�����������������!��#� ��!���#��������%���C�"�����������!� ��������G6��������#�
��,H� �� � �� �� ���� �#�!��� �#� �F$<H� ��� ���B�� ��� "��� ���� ����� ���1�� ��������
!������$�D����� !���������������"��!��������� ������� �����!�1�� #���$� ����� ��
���� �������� �����%� � ��� ���������� �����K�
6���������� ��������"������������������������!��#������������#��&��������� �
�������� �������#��������������������"������������ ���������� ��#��!� $�������
�&�����������������C�0������1�� ��������
����������������������#�����;9������������������������������������������#����!���
)������%��2� �%�
6�G2� 0�'�B���+�
�
;��������;!������������������������������ �����!�"# $���
% ##����
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 6
COVER STORY A tribute to Late Prof. C. K. Prahalad
Bottom of the
PyramidHow Sustainable is your Business?
Did we know that a company could make a bigger
profit by focusing on the market segment consisting
of people who earn less than $2 per day?
growing market is at the bottom and not the top of
the fortune pyramid?
Were we aware that nine countries including China,
India, Brazil, Mexico, Russia, Indonesia, Turkey,
South Africa, and Thailand collectively have a GDP
of $12.5 trillion, larger than the GDP of Japan,
Germany, France, Italy, and the UK combined?
C.K.
Prahalad
know-how, and investment capacity, we are unable
to make even a minor contribution to the problem of
This profound question stares at you only to leave
you answerless. In 2002, The Fortune at the Bottom
of the Pyramid ushered in a new level of
consciousness in international business strategy.
Although the idea of doing good and doing well was
already well established, the anecdotal case by C.K.
Prahalad and Stuart Hart that the four billion people
each living on less than US$2 a day (the bottom of
held the
potential for immense profit captured popular
imagination. Multi-national companies (MNEs)
around the world launched initiatives to adapt and
poor.
The real fortune being sought is the simultaneous
accomplishment of a trifecta of goals corporate
profit, relevant and sustainable social impact and
local poverty alleviation. The impending questions
are:
I. Securing Internal Support: How can companies
gather data affordably in order to make a
compelling business case and develop accurate
projections?
II. Testing on a Budget: How can we run pilot
programs at an affordable cost with low-margin
business models?
III. Patience: How can we balance corporate
pressures for profitability with commitments for
impact in the community?
IV. The challenge of growth: How can we scale while
adapting the product composition and its delivery
mechanisms to the needs of each local community?
The assumption that the poor need to seen as a
market, but one different from the conventional
perception ofa market, has some immediate
Financially sustainable and integrated
BOP business lines are the pinnacle of
truly sustainable and strategic
Corporate Social Responsibility
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 7
consequences all of the traditional business
concepts are applicable but each and every one of
those concepts needs to be applied from a distinct
perspective.
What results is a practical example of the
applicationof innovative thinking and innovation to
an intractable problem How to cater to the more
than 4-billion humans who do not form part of the
target market of the organizations that are driven by
conventional assumptions about products, services,
value and needs.
Professor Prahalad demonstrated that the process of
poor can provide substantial returns to create real
partnerships and innovations for established
companies.
Thus Top of the Pyramid Approach may just lead to
Sustainability BUT Bottom of the Pyramid leads to
Sustainable Development
What is required is to undertake an analysis of the
current BOP paradigm to support the development
of a sustainable, participatory multi-stakeholder
approach.
-nationals towards SME
development
COVER STORY A tribute to Late Prof. C. K. Prahalad
participatory, bottom-up initiative
To a great extent, financially sustainable and
integrated BOP business lines are the pinnacle of
truly sustainable and strategic Corporate Social
Responsibility. Answering the questions at the
bottom of the pyramid may be the key to ushering in
a new era of capitalism which generates profit,
offers wealth-creation opportunities for the poor,
spreads products to reduce sickness and spreads
education around the world welcoming billions of
people to participate in a more inclusive, sustainable
global economy. The thousands of little fires lit by
corporations, entrepreneurs, academics,
governments and non-profits may yet become a
blaze that will change the world.
Vikash Singh
PGDM IB (09-11)
Workplace Wellness established its foothold in the West long back. The trend is now finally catching up in India. With the rapid growth of the IT and ITeS sectors,
the rest of the industries.
A 2009 study conducted by Right Management, a Manpower Company, suggests that wellness is an extremely powerful element that can play a significant role in
employee engagement, organizational productivity, talent retention, and creativity and innovation. It is imperative that wellness should be incorporated in the
organizational effectiveness framework to realize real business gains.
it is important to note that an
organization can position Wellness very effectively as an int
its influence going well beyond the boundaries of just physical and psychological health will translate into better organizational effectiveness. Wellness needs to be
looked at as an umbrella of various initiatives and offerings.
Redefining wellness as a concept that offers more than just health to the employees is the way forward for all the organizations.
The Wellness Wave: International HRMDhara Shah (MMS- HR 09-11)
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 8
COUNTRY IN FOCUS
SOUTH AFRICA
The Republic of South Africa is a country located at the
southern tip of Africa, with a 2,798 kilometers coastlineon
the Atlantic and Indian Ocean. The official currency is Rand.
The country is divided into nine provinces with the four main
regions of commerce being in the Western Cape (Cape Town),
Eastern Cape (Port Elizabeth and East London), KwaZulu-Natal
(Durban) and Gauteng (Johannesburg).
Industries
South Africa is rich in mineral resources, has a well-developed
minerals. It has a broad-based industrial manufacturing centre,
making it the largest and most industrially developed economy
in
trading nations. Agriculture is an important component of the
economy and the country is a net exporter of food.
Investing Climate
The South African economy is predominantly based on free
market principles, with some areas of state control. There is a
long history of foreign investment in South Africa, with heavy
involvement by British, German and American interests. As the
leading economy in Africa, with a well-developed
infrastructure and established trade links with the rest of the
continent, South Africa is a suitable base for generating
investment and trade with the rest of Africa, particularly in the
sub-Saharan region. Except in the banking, insurance and
broadcasting industries, there are no restrictions on foreign
ownership of local companies and businesses.
There are initiatives in place for the empowerment of black
persons (i.e. Black, Colored and Indian persons). These include
increasing ownership of companies by black persons and other
forms of empowerment through employment equity and
preferential procurement.
Economy
The country has an excellent physical infrastructure in terms of
roadways, railways, power distribution etc. South African
industry is able to produce most of the requirements of
Southern Africa. The market is, however, small in comparison
to European and US standards and in many instances a single
enterprise is capable of satisfying the entire needs of the
country with its products.
Political System
African National Congress, with Mr. Nelson Mandela as
president, was elected with an overwhelming majority. The
South African government comprises as the national,
provincial and local spheres of government which are
distinctive, inter-dependent and inter-related. The legislative
authorities, executive authorities and judicial authorities are
all separate from one another.
Social Issues
The education system and teaching methodology are not yet
modern. The number of graduates is quite less. There is a
critical shortage of low cost housing. Crime rates are high
though the government has implemented National Crime
Prevention Strategy. HIV/AIDS is one of the greatest
challenges for both the Government and the businesses.
IPR
South Africa has tight Intellectual Property laws though the
enforcement is not stringent. The review of South Africa's IPR
regime reveals a rather mixed picture of the state of IPR
protection in South Africa. The approval of South African
Reserve Bank is necessary for the export of any
technology/intellectual property. In South Africa, the
intellectual property division of CIPRO, the Companies and
Intellectual Property Registration Office, is responsible for the
registration of patents, trademarks, designs and copyright.
With a well-developed
infrastructure and established
trade links with the rest of the
continent, South Africa is a
suitable base for generating
investment and trade with the
rest of Africa, particularly in the
sub-Saharan region.
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 9
Foreign relationships
One of the leading voices in the African continent, South Africa
has been involved in a series of initiatives at both political and
economic level to promote and advance African interests and
peace in Africa. South Africa is a founder member of the New
Par a
member of several international organizations such as United
Nations, the Commonwealth and the Non-Aligned Movement
and has established diplomatic relations with over 150
nations. In recent years, South Africa has also developed
strong relations with markets in the rest of Africa, Asia and
Latin America. South Africa is also part of IBSA, a trilateral
developmental initiative between India, Brazil and South
Africa, to promote South-South cooperation and exchange.
Culture
South Africa is a mix of different cultures representing every
level of an extremely stratified community. Apart from the
Afrikaners, most of the white South Africans are of British
descent. But most of the traits of a heterogeneous culture
were ignored, destroyed or trivialized during the years of the
apartheid. In a society where a person could be imprisoned for
just owning a politically incorrect piece of art like a painting, all
the serious works of art were forced underground and the
galleries and theaters were filled with bland works of art.
South Africans have been referred to as the 'rainbow nation', a
title which epitomizes the country's cultural diversity. The
population of South Africa is one of the most complex and
diverse in the world. Of the 45 million South Africans, nearly
31 million are black, 5 million white, 3 million colored and one
million Indian. The population density is 32.9 people per km.
Conclusion
As an investment destination, South Africa has enormous
potential due to the unique mix of highly developed first class
economic infrastructure with a vibrant emerging market
economy. It is also one of the most advanced and productive
economies in Africa. After adopting democracy in 1994, South
Africa has been undergoing rapid structural transformation
with the implementation of macro-economic policies aimed at
promoting domestic competitiveness, growth and
employment and increasing the economy's outward
orientation. Not only is South Africa in itself an important
emerging market, it is also a key for accessing other sub-
Saharan markets. Key economic reforms have given rise to a
high level of macro-economic stability.
The government has made it clear that foreign investment is
welcome in South Africa, and investor-friendly policies support
the public pronouncements. SouthAfrica has a world-
class,progressive legal framework. Other factors like
unemployment, weak health care sector etc. notwithstanding,
South Africa appears to offer a lot to potential investors and
business ventures.
Parvathi Ramanandan
Aditi Gupta
PGDM IB (09-11)
MAP : South Africa
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 10
Academic Fraud in China
the need to foster innovation. He makes a strong case:
sustaining economic growth and competitiveness requires
China to go beyond mere labour-driven manufacturing and
into the knowledge-based business of discoveries, inventions
and other advances.
well-earned reputation for pervasive academic and scientific
misconduct. Scholars, both Chinese and western, say that
fraud remains rampant and misconduct ranges from falsified
data to fibs about degrees, cheating on tests and extensive
plagiarism.
The most notable recent case centres on Tang Jun, a
celebrity executive, a self-made man and author of a popular
book, My Success Can Be Replicated . He was recently
accused of falsely claiming that he had a doctorate from the
prestigious California Institute of Technology. He responded
that his publisher had erred and in fact his degree is from
another, much less swanky, California school.
Other cases involve accusations of plagiarism against well-
known Chinese scholars which have provoked the
authorities to talk of investigating. A western scholar
recounts how a social-science project was jeopardized
recently when data collection was contracted out to a
Chinese company whose researchers simply filled out the
survey forms themselves.
Such lapses of integrity are not unique to China, but poor
peer-review mechanisms, misguided incentives and a lack of
checks on academic behaviour all allow fraud to be more
common. China may be susceptible, suggests Dr Cong Cao, a
specialist of Chinese Sociology at the State University of New
York, because academics expect to advance according to the
number, not the quality, of their published works.
Thus reward can come without academic rigour and senior
scientists, who are rarely punished for fraud, set a wrong
example for juniors.
The implications of widespread academic misconduct could
be great. Denis Fred Simon of Penn State University argues
overall credibility of the entire scientific enterprise in China-
and unfortunately feeds negatively into the related concerns
about the safety of Chinese products and the integrity of
In practical terms foreign scientists may be deterred from
China, as they worry about getting caught up in scandals.
Early this year, after it was found that 70 papers on crystal
structures submitted to an international journal by Chinese
scientists had been fabricated, the Lancet medical journal
suggested, had failed to get to the root of why some Chinese
scientists lie.
Another direct cost may be felt by Chinese students looking
for college places abroad. Admissions officials are suspicious
of near-perfect scores on standardised tests and glowing
recommendations from professors, which are common to
many applications from China. The risk is that genuinely
qualified students are turned away because of general
integration with the outside world may help. As more
academicians earn degrees abroad and go back to posts in
China, informal networks are created that help outsiders
check on the quality of applicants. That is a small innovation,
but perhaps one that will benefit China.
Abhishek Modak
PGDM IB (09-11)
e - GlobuzZ, Volume I, Issue III July September2010 Page | 11
Report on Economic Freedom Network Asia Conference 2009
Siam Reap, Cambodia
In 2009, I bagged an opportunity to present a view from
India in the historical city of Siam Reap in Cambodia to a
distinguished and diverse gathering. The conference
discussed the ongoing financial and economic crisis and ways
to tackle it. The theme unearthed many more sub-themes
when considered through the pris
conference, economists, corporate professionals,
policymakers, lawyers, newsmakers, grassroots-workers,
philosophers, thinkers, educationists reflected and expressed
their views on the latest global debacle. The congregation of
130 academicians and practitioners from 18 countries
enriched the conversations on the broad theme.
Cambodia as a Setting for the Conference:
SEN, Deputy Prime Minister and Minister of Economy and
Finance (representing H.E Somdech Akka Moha Sena padei
Techo HUN SEN,Prime Minister of the Kingdom of Cambodia).
H.E. Chhon stated in his opening address that "In a broad and
global term, the Rule of Law is threatened worldwide from
four directions: (i) by the lumpen proletariat for their
ignorance, despair and poverty, (ii) by the lumpen aristocracy
for their arrogance and their insatiable greed as revealed by
the cataclysmic crisis of international finance, (iii) by the
deadly terrorism fuelled by ideological extremism and (iv) by
the organized crimes.
Cambodia was aptly chosen as the host
country representing the case of a conflict-
ravaged nation trying to get on the way to
economic recovery amidst the backdrop of
the economic shake-out in the western,
develope
economy grew at an average of 11.1
percent during 2004-2007, after its
accession to WTO in 2004)
The Rule of Law relates to the economy
through its power to protect property
rights, enforce contracts, ensure fair
competition, and mobilize and disburse
financial capital."
Key Points of Discussion:
transparent system) is preferred as
opposed which is
Conference took place in the once- glorious city of the Angkor
Wat (the famous temple complex built by King Suryavarman II
in 12th
century, which still is magnificent as a ruin).
Overall Experience of the Conference: The two-day
conference featured keynote addresses from internationally
renowned experts, as well as a series of themed panel
streams, presentations and exhibitions. The conference
up with their own agenda thanks to the Open Space
Technology.
Proceedings in Brief
The Conference was officially opened by H.E. Keat Chhon,
arbitrary, opaque and mainly for political ends).
part and parcel of progress especially in a capitalist
economies. Therefore instead of lamenting the
recessionary phase, the focal points should be on
finding ways of cushioning the impact of the
recession.
Free Market Economy may not be the perfect market
structure but is the best alternative
An inward-looking response to the economic crisis
will delay recovery and can deepen recession.
Thanks to globalization, the recovery signs have
appeared quickly, as compared to earlier crises
e - GlobuzZ, Volume I, Issue III July September2010 Page | 12
crisis?"
Causes of the Financial and Economic Crisis: Though the sub-
prime crisis initiated the domino effect, there were other
factors that contributed to the spread of the crisis. As
discussed in the conference a few of them are enumerated
below:
Central bank interventions
Too much regulation or too much freedom?
Nature of rules and regulations: Community
Reinvestment Act, Basel II
Misleading statistics and ineffective risk assessment
tools
Irresponsible credit rating agencies
Savvy Financial marketers who created fancy financial
products
Poor corporate governance
Ad-hoc bailouts
Undervaluation of currencies in Asia
Proposed Solutions:
1) Immediate Measures:
Curtail deficit spending
Reduce the role of politics in policy formation
2) Medium Term Measures:
International understanding/cooperation towards
reducing barriers
Define the Lender of Last Resort function of the central
bank
Risk-based Pricing of Deposit Insurance Premium
3) Long- Term Measure:
Moving towards Decentralization of Money and Free
Banking System
Yavnika Khanna
PGDM Marketing (09-11)
CR
OS
S W
OR
D S
OLU
TIO
N #
02
different sports. Sports act as a common platform to bring together people from different walks of life.
Marketers wait impatiently for opportunities
events. Such strategies or sports events for promotion of brands have been used since time immemorial.
Recently the Football World Cup was held at South Africa. Hoards of brands promoted their product and some
even launched products during FIFA. Coca Cola has a formal association with FIFA since 1974 and an official
sponsorship of FIFA World Cup that began in 1978. Coca-Cola has had stadium advertising at every FIFA
World Cup since 1950. Five additional sponsors for FIFA 2010 were Budweiser, Castrol, MTN, McDonalds and
Continental. Each of these deals have cost them more than $ 100 million only for the event. Mahindra Satyam
was designed the official IT partner at FIFA.
But Coca Cola went a step ahead and came up with several promotional activities tailor made for FIFA. It has
formal association with FIFA since 1974 and an official sponsorship of FIFA World Cup that began in 1978.
The FIFA World Cup Trophy Tour by Coca-Cola
had embarked on its biggest ever global tour
to 86 countries including every nation in Africa as part of the FIFA World Cup Trophy Tour by Coca-Cola. Free
tickets to the Trophy Tour were made available to consumers via Coca-Cola promotions in countries on the
route.
At events in each city, fans had souvenir photos taken of them with the trophy, viewed a 3-D movie showcasing
moments of the FIFA World Cup, participated in interactive displays and enjoyed other entertainment. This tour
save fans around the globe a chance to experience the excitement and pageantry of football no matter where
they lived. So this made the consumer feel that Coca Cola brings happiness to their doorstep, against all odds.
Coca Cola recorded the Coca Cola 2010 FIFA World C Flag Coca-
with Somalian hip- . This track was the music element throughout the FIFA World cup
campaign. It was featured in all TV commercials, played during promoted
online and more.
CCooccaa CCoollaa SSccoorreess aa WW iinnnneerrINTERNATIONAL MARKETING
From September 2009 to
greatest prize was embarked
on its biggest ever global
tour in 86 countries including
every nation in Africa as part
of the FIFA World Cup
Advertising
Coca-Cola created three commercials as part of the campaign the
story of how Roger Milla inspired footballers to celebrate goals in an African- an
way around the globe.
Commemorative Packaging
Coca Cola also came up with special packaging that celebrated the 2010 FIFA World Cup with dynamic
graphics and football imagery.
Coca-Cola Football Camp
250 teenagers from around the world gathered at a special football camp hosted by Coca-Cola in Pretoria, South
Africa during the FIFA World Cup tournament. The camp encouraged young people to remain active through
sports and also included training, skills demonstrations, celebrity coaches and a tournament.
Coca-Cola Flag bearers
Coca-Cola also gave young football fans around the world the once-in-a-lifetime opportunity to be official flag
bearers and lead the teams out on to the pitch before 2010 FIFA World Cup games.
Conclusion
Coca-cola, by showing the world how to celebrate the World Cup, has also showed the management gurus and
other companies how to market a brand by riding on the glory of a much loved event. It made a mark and was
the defining brand of this World Cup, even though other brands like Pepsi tried to ambush its position. The
multi frontal, multi platform and multimedia based approach of Coca-C marketing campaign ensured that
the audiences around the world over were left with the memory of celebrating the world cup with little drops of
joy.Shilpi Tayal
Celia Madona Vincent
PGDM IB (09-11)
Coca-Cola Celebration Award
Coca Cola interactive marketing strategies
included the recognizing of
goal. This grabbed attention of the fans as for the
first time ever they got a chance to vote for the
eventual winner online.
Coca Cola also came up with a CSR activity. For
every goal scored and celebrated with a dance it
made an additional donation to th
Water for School effort that helps provides
schools access to safe drinking water.
-
Coca-Cola produced a 60-minute documentary which unfolds
catches up with 2010 FIFA World Cup players as they plan their
Africa inspired celebrations for the tournament.
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 15
Global Banking Scenario
INTERNATIONAL FINANCE
Introduction
A bank is a financial intermediary that accepts deposits and
channels those deposits into lending activities, either directly or
through capital markets. A bank connects customers with
capital deficits to customers with capital surpluses. Banking is
generally a highly regulated industry, and government
restrictions on financial activities by banks have varied over
time and location. The current set of global bank capital
standards is called Basel II. In some countries such as Germany,
banks have historically owned major stakes in industrial
corporations while in other countries such as the United
States banks are prohibited from owning non-financial
companies. In Japan, banks are usually the nexus of a cross-
share holding entity known as The Keiretsu. The oldest bank
still in existence is Monte dei Paschi di Siena, headquartered
in Siena, Italy, which has been operating continuously since
1472.
Size of Global Banking Industry
Assets of the largest 1,000 banks in the world grew by 6.8% in
the 2008/2009 financial year to a record $96.4 trillion while
profits declined by 85% to $115bn. Growth in assets in adverse
market conditions was largely a result of recapitalization. EU
banks held the largest share of the total, 56% in 2008/2009,
down from 61% in the previous year. Asian banks' share
increased from 12% to 14% during the year, while the share of
US banks increased from 11% to 13%. Fee revenue generated
by global investment banking totaled $66.3bn in 2009, up 12%
on the previous year.
The United States has the most banks in the world in terms of
institutions (7,085 at the end of 2008) and their branches
(82,000). As of Nov 2009, China's top 4 banks have in excess of
67,000 branches (ICBC: 18000+, BOC: 12000+, CCB:
13000+, ABC: 24000+) with an additional 140 smaller banks
with an undetermined number of branches. Japan had 129
banks and 12,000 branches. In 2004, Germany, France, and Italy
each had more than 30,000 branches more than double of the
15,000 branches in the UK.
What is Banking today?
The current banking scenario is greatly different from the past.
Only 15 to 20 years ago, most Western banks generated 90% of
revenue from interest income. Now this percentage has fallen
to 60%, sometimes as low as 40%. The concept of banking is
being modified and the traditional barriers among financial
service sub industries (retail banking, private banking,
investment banking, asset management, insurance, etc.) are
vanished.
Global Banking
The common trends resulted in pace of dramatic change for
banking are:
The focus of banking is shifting from transaction
management towards sales of financial products.
Barriers to entry for the retail banking segment are
being lowered.
The growing variety of delivery channels for banking
enables new entrants to thrive.
Factors affecting Global Banking Scenario
The technological breakthrough caused by the
eruption of e-banking and e-finance.
Worldwide consolidation and consequent
restructuring.
Increasing competition in terms of both markets and
products.
Despite the improvement
to banks' balance sheets,
several factors raise
doubts about the
sustainability of banks
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 16
INTERNATIONAL FINANCE
A slowing population growth and increasing average
life expectancy and per capita income.
The growing importance of a clear strategic intent in
the banking industry.
New competitors are entering the financial service
business.
Consolidation : Consolidations take place for the
following reasons:
o To take advantage of economies of scale.
e.g.:-the merger between the Swiss banks UBS
and SBC creating one of the largest banks in
the
o To have access to distribution channels.
o To widen the range of products that the bank
can offer both actual and potential clients.
e.g.:-between Citibank and Travelers, has
originated Citigroup
Highlights of Global Crisis
In October 2007 major failures start to appear in the
bank has announced losses $3.4bn from investments
linked to sub-prime.
Following, American banking giant Citigroup posted a
sub-prime loss of $40bn.
US investment bank Merrill Lynch revealed a $7.9bn
disclosure to bad debt.
After failing to search for a potential buyer, Lehman
Brothers becoming the first major US investment bank
to collapse since beginning of the credit crisis.
Aftermath of Global Crisis
IMF warns that world economy development could
decline to its lowest point ever since World War II to
just 0.5% this year.
In USA the interest rate has been cut hugely by the
Federal Reserve from the 5.25% to 0.25%.
In UK pound was at a 23-year low against the dollar.
The Bank of England has cut interest rates to a record
low of 1% -the lowest level in its 315-year history
The US Congress passed a stimulus package worth $
838 billion, aimed at creating millions
of new jobs and steering the economy out of the
recession.
China announced a huge economic stimulus package of
an estimated $586 billion.
Japan announced $100bn to curb recession.
Germany announced $63bn
Conclusion
"Despite the improvement to banks' balance sheets, several
factors raise doubts about the sustainability of bank profits,"
the BIS (The Bank for International Settlements) said. Banks like
UBS (UBSN.VX), Morgan Stanley (MS.N) and Goldman Sachs
(GS.N) posted strong earnings in the first three months of this
year thanks to trading income. A number of countries had to
bail out banks at the height of the crisis to prevent the financial
system from collapsing.
Also not all crisis-related losses may be exposed yet as less
stringent and less timely reporting requirements for banks in
Europe had made it more difficult to gauge future write downs.
More write downs could be expected due to falling commercial
property prices, it said.
"Losses on European bank balance sheets are expected to
mount over the next few years," the BIS said. "Anecdotal
evidence suggests that some banks have taken to rolling over
existing loans rather than inducing foreclosures, thus delaying
loss recognition." The BIS also said that many banks in Europe
and elsewhere were overly reliant on US dollar swaps.
European and other banks had an estimated $7 trillion in
dollar-denominated assets on their books, much of them with
long-dated maturities.
So, the world's banks are still not out of the woods despite
recent multi-billion profits as write downs on loans loom and
funding pressures remain high.
Shalu Goyal
PGDM IB (09-11)
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 17
Q&AExcerpts of talk of
Mr. RohitPandya- Dy. General Manager-
Buyer & Country Underwriting,ECGC,
Mumbai with Sukhmani and Vikash of
PGDM IB (09-11)
Mr. Rohit Pandya joined ECGC in 1982 in the Risk
Management Division and then moved to the role of deputy
General Manager - Buyer & Country Underwriting and is
continuing in the position since then. He has over 28 years of
experience in the field and has been involved in numerous
International assignments.
Q. Tell us something about your background and the career path
over these years.
A. As far as my academic background is concerned, I did my
Hons. in Economics and then a Post-Graduation in Sociology. I
also completed my Masters in Business Management from
Bombay University and then went on to complete my diploma in
Foreign Trade from IIFT.
My professional career started when I joined ECGC in 1982 in
the Risk Management Division as well performed other
functions in the Corporation and then I moved recently to the
role of Deputy General Manager Buyer & Country
Underwriting and am continuing in this division since then.
Q. You have been associated with ECGC for past 28 years. What
changes have you seen in the International Trade environment
over your tenure?
A. There has been significant change in the International trade
environment especially in the last few years. Earlier there was
precious demand for Credit insurance and very little awareness
about the same. The trend has changed in terms of increased
awareness and demand for credit insurance because of transition
of Indian exports from traditional markets to non-traditional
markets and traditional commodities giving way to new
commodities .Also there has been an addition of a large number
of new buyers. On the country level perspective, in the last few
years the the
large and well-known companies going bust in developed
markets. Underwriting process has also undergone a change in
this view. About six years ago a more liberalized approach was
introduced, because the Corporation was showing operating
surplus in its schemes. The premiums rates were last revised in
2003 but the classification have been constantly revised and have
taken a totally new dimension post meltdown era.
In the Global credit insurance market in advanced countries the
Short Term businesses are now on a decline and movement to
medium/long term projects has happened In India a similar
prospect is visualised as the economy matures.
Q. How do you evaluate the risk for Credit Insurance Products
provided by ECGC?
A. We, at ECGC, follows a system of risk assessment wherein 3
dimensions or perspectives are analysed:
a. Indian Exporters-
IECD Code, membership of promotion Council, holding bank
account, pan card and assessment of capability of exporter to
execute the order or sustain himself in the International arena.
b. Overseas Buyers- in terms of financial & Non-Financial
factors. Reports from 13 agencies to get credit information on
the buyers are accessed. In addition ECGC Experience with the
buy
account.
c. Country - in terms of Objective Score Methodology with 7 fold
classification as A1, A2, B1, B2, C, D countries the political risks
associated with a country is assessed.
Q. What competitive advantage does ECGC have over its
competitors viz a viz private insurance players in the market?
A. ECGC has a unique competitive advantage of being a
Government supported ECA which expands its role and scope. It
has a record of over three lakh buyers to depend upon while
underwriting the buyer risks. The area of Indemnifying bank,
which comprises of 2/3rd
Support are the areas which have been introduced by ECGC and
not by any other global or Indian player and similar models are
now being replicated abroad. It has a strong hold in the credit
insurance business which affirms its position as the major body
in Export insurance sector.
Q. In case of European countries like Portugal, Italy, Greece
and Spain that are on the brink of sovereign defaults, some
private sector general insurers like ICICI Lombard General
Insurance Company Ltd and Bajaj Allianz General Insurance
Company Ltd. have begun tightening risk premiums to these
A.
Instead we deal with such cases by putting a restriction on the
buyers in such countries. For example, in UAE we have
discontinued Single Buyer covers and only offer Umbrella Cover
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 18
SCJFHDKJFDFDF
Strategy is the key to
integrate all the
techniques you learn in
management. A Three-
fold dimension of Focus,
Knowledge base and
Skills development is
required for competitive
advantage to be gained
through MBA in IB.
A. There is vast potential in such tools which are a result of the
collaborative effort between the two institutions. There has been
increasing role of ECGC in the International Trade environment
and that has led to great synchronization with other
organizations like EXIM bank particularly in areas of Line of
Q. ECGC Provides Overseas Investment Insurance to Indian
companies investing in joint ventures abroad in the form of
equity or loan. Are there any specific sectors which are covered
under this scheme?
A. ECGC Overseas Investment Insurance provides cover to all
the sectors and has an equal focus on all of them. The major risk
covers include Expropriation Risk & War Risk, Transfer Delay
risk etc.
Q. What major challenges has ECGC been facing in the
International trade environment lately?
A. Some of the challenges have been related to the high claim
insurance in the last couple of years; heavy loss in markets like
US, UK, UAE, Italy & Germany; losses in commodities like
Gems & Jewellery etc. The global meltdown and the
consequences of squeeze in credit lines and pile up in inventories
has affected the credit insurance requests sought which has
increased both in size and frequency. There is a noticeable
increase apart from delinquencies, requests for rescheduling and
elongated terms of payment.
Q. What leverage, in your opinion, does a course specializing in
International Business provide & what competencies should a
student of International business develop to be Industry ready in
the International Business environment?
A. I would term a management course in international Business
as an MBA PLUS. Strategy is the key to integrate all the
techniques you learn in management. Implementation is
achieved through a thorough understanding of the International
strategy that should be put in place for the company to succeed
in the global market. As for the competencies, having a three-
fold dimension is required: a Global Focus on the International
Scenari
the borders of the country, Skill adaptability & flexibility are the
most sought after competency areas. These should be well
coupled with having an international outlook, developing the
ability to assimilate different cultures, developing negotiation
skills & lingua franca will ensure that the student is well
equipped to add value to the becoming a major player in
International business.
products to have a good spread of the risk. Also if the situation so
warrants we re-classify a country which directly or indirectly has
an impact on the premium rates.
Q. ECGC has reclassified the credit-worthiness of 237 countries
in April 2010 by reviewing all the countries using its CRRM
model which includes forecasting as a parameter. Could you
please give some insight on the measures?
A. ECGC has a regular process of reviewing its rating
methodology. For example, Cuba lately has been revised for its
ranking and is now upgraded in the ratings after initiatives from
Indian government to develop trade relations with Cuba were
declared. ECGC has high level exposures, monitoring and
reviewing systems in place and is constantly keeping pace with
the changing environment.
Similarly, ECGC is quite bullish on Iran but as of now has
restricted exposures to Iraq.
Q. EXIM Bank in association with ECGC has planned new
credit tools (partially structured buyer's credit where exporters
will bear the subsidy) where government or multilateral lines of
credit are not available and ECGC will grant the political risk in
such cases. How much of market value do you see in such tools?
Q&A
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 19
DEBATE: WILL EUROPEAN UNION SUSTAIN?The Euro zone has a choice to make, which is, to either integrate or disintegrate. Greater integration has been chosen as
more financially disciplined nations of the European Union bailed out the PIIGS (Portugal, Ireland, Italy, Greece and Spain)
whose excessive spending and serious indebtedness have threatened the stability of the world's number two reserve
currency; the Euro.
The decision to make EU effectively a monitory union, tying its member countries into a joint currency and interest rate
decisions, while allowing them to retain control over national budgets and taxes, has left the fractured grouping at a
crossroads where in the members can either come together and stand by each other to tackle the problems or choose to fall
apart driven by self-interests of the country. So the major question arises whether the EU will sustain as a union or
disintegrate.
Inspite of the dark cloud surrounding the European Union
and the world over; inspite of so many articles being
written about European Union and predictions of torrid
times ahead; there is still lot of hope about its
sustainability in the future.
The Greek and the economic crisis have done no good to
it. Nearly $1 trillion bailout package was declared
from dragging under other weak economies Portugal,
Spain, Ireland and Italy that are all vulnerable. It comes in
the form of loans, debt guarantees, and additional cash to
the money markets. The risk of contagion has already
been mitigated through this bailout package. There are
some reason
Firstly, EU banks have survived the stress test. The tests
have found that 91 banks in 20 European countries could
deteriorating economic and financial environment. But
only 7 banks flunked the tests, coming up short a
Market reactions are muted, likely indicating that neither
the worst fears nor greatest hopes were realized. The euro
seesawed in New York trading, eventually gaining ground
against the dollar. The Dow Jones Industrial Average
dropped shortly after test results were announced around
noon Eastern Daylight Time, but ended the day up 102
points, to 10424.62. U.S.-listed shares of some big
European banks followed the same trajectory.
Bank supervisors throughout Europe hailed the test results
as affirming the stability of the continent's banking
system. Market confidence in Europe's banks has since
improved somewhat, partly due to optimism that a round
of stress testing, which last year helped ease the U.S.
banking crisis, would work similar wonders in Europe.
Despite worries about the health of the French, Irish,
Italian and Portuguese economies and banks, no bank
from any of those countries failed the tests.
2nd largest reserve currency. Failure of EU would mean
fall of Euro which will also endanger the other major
stakeholders around the world who maintain their part
reserve in Euro. These include countries like Russia and
china. Hence there would be a huge pressure from around
the world for EU to remain integrated. Even if the need
arises IMF would step in to rescue.
What we are talking about here is one fifth of the World
be ignored by rest of the
world. Disintegration just on the basis of some financial
jitters is unlikely. Austerity measures employed across EU
would bring down the debt level. European Union was
thought to be strict about its clauses of treaty, but it has
already softened on the no bail out clause. And even the
deadline of 2012 would most probably extend. All in all
Disintegration of EU is a very unlikely scenario.
Swastik Dasgupta
PGDM IB (09-11)
POINT
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 20
nations to have budget deficit ceilings of 3% of GDP &
external debt ceilings of 60% of GDP by 2012. The chart
shows standings as of 2009.
Countries in EU were left with what is famously known as
and
economic stability, or instability. And clearly countries
have chosen to take-up social pain. Several austerity
measures are been implemented all across the EU to bring
down the Debt levels.
year and another 2.6 per cent in 2011. And similar would
be the condition of other PIIGS countries. Both Greece and
Portugal have already been hit by serious protests as a
result of budget cuts. The question stands, would all the
nations be able to push through the necessary reforms,
because without much-needed reform, the gap between
the strong and weak members of the euro zone threatens
to get even wider.
5 of 16 Euro zone states have public finances in shambles,
enough to make the entire Continent uneasy. Investors
fear that stable countries like Germany, Finland or the
Netherlands could ultimately be affected; that they may
be forced to pay for the financial errors of other EU
members in order to maintain the stability.
put together
said Stephen Lewis, senior economist at London-based
COUNTERPOINT
Several leaders in the bloc are doing all they can to avoid
representing half a billion people, 7 percent of world
consumers and a fifth of world trade.
of exiting from the crisis. With the Euro that is some
Symbiotic association is slowly turning out to be a
parasitic association.
Can the stability of the whole union be bought at the
expense of few well off economies? Being in Union would
mean more threat to countries like Germany, Netherlands
and others who would have to carry the burden of the
limping nations. And all this is just to ensure that the
caused by contagion effect.
Is it right to use tax payer s hard earned money for
would imply a direct impact on all the 27 member nations
even if something goes wrong with one. Even if one
country fumbles and decides to withdraw from the Union,
it will send out shock across the whole world and may
even lead to immediate disintegration. With so much
happening around the world and in Europe, the stability of
EU is questionable.
Akhilsingh Patil
PGDM IB (09-11)
e- GlobuzZ, Volume I, Issue III July - September 2010 Page | 21
Empty Repo
The movement of empty containers
GDSM
Abbreviation for "General Department Store Merchandise."A classification of
commodities that includes goods generally shipped by mass-merchandise
companies. This commodity structure occurs only in service contracts.
Astern
Behind a vessel. Move in a reverse direction.
Beam
The width of a ship.
Jacob's Ladder
A rope ladder suspended from the side of a vessel and used for boarding.
Longshoreman
Individual employed in a port to load and unload ships.
DID YOU
KNOW
THESE
TERMS ???
Bunkers
A Maritime term referring to Fuel used aboard the ship.
Coal stowage areas aboard a vessel in the past were in
bins or bunkers.
Bull Rings
Cargo-securing devices mounted in the floor of
containers; allow lashing and securing of cargo.
Car Pooling
Use of individual carrier/rail equipment through a
central agency for the benefit of carriers and shippers
Sonam Doshi
PGDM IB (09-11)
e- GlobuzZ Volume I, Issue III July - September 2010 Page | 22
B O O K R E V I E W
COMPETING FOR THE FUTURE
Competing for the future by C. K. Prahalad and Gary Hamel is an
excellent book on strategy guiding the managers of companies to
think innovatively. It is a masterful blueprint for what a company
should be doing today if it is to occupy the competitive high ground
of tomorrow. Although this masterpiece was written about two
decades ago, it is very relevant today in the rapidly changing business
environment.
The book talks about three phases of competing for the future viz.
intellectual leadership, management of migration paths and
competition for the market share. There are two aspects occupying
attention. Restructuring and re-engineering.
Neither is an alternate for imagining and creating the future.
Competing for the future requires not only a redefinition of strategy,
To create the future a company must change in some fundamental
way the rules of engagement in a long standing industry, redraw the
boundaries between industries and create entirely new industries.
Creating the future is more challenging than trying to catch it. The
goal is not to benchmark a
imitate them, but to develop independent point of view about
how to create and exploit them. To get to the future, a company
must be willing to jettison its past, at least in part. What prevents
companies from creating the future is installed base of thinking
the unquestioned conventions, myopic view of opportunities and
threats, and the unchallenged precedents that comprise the
existing managerial frame. To beat competition, the best way is to
be the first to start alternative value delivery systems, the first to
BY GARY HAMEL & C.K PRAHALAD
Creating the future is more
challenging than trying to
catch it. The goal is not to
products and services or
imitate them, but to
develop independent point
of view about how to create
and exploit them.
Prof. C.K. Prahalad
Prof. GARY HAMEL
e- GlobuzZ Volume I, Issue III July - September 2010 Page | 23
B O O K R E V I E W
the future. Competing for the future must be a corporate
responsibility. The competencies needed to access the new
opportunity arena may well be spread across a number of
business units, and it is up to the corporation to bring these
competencies together at the appropriate point within the
company.
The book explains that firms should compete for industry
foresight. The goal of competition for industry foresight is, at one
level, simple: to build the best possible assumption base about
the future and thereby develop the prescience needed to
proactively shape industry evolution.
Crafting strategic architecture is another important aspect to
compete. It identifies the major capabilities to be built, but
A strategic architecture may point out the way to the future,
provides the emotional and intellectual energy for the journey.
Strategic architecture is the brain; strategic intent is the heart.
A company should work to shape the future according to its
own standards. Getting to the future first may enable a
company to be the first to establish a virtual monopoly in a
particular new product category and may also enable a
company to establish the rules by which other companies have
to compete. It also explains the vital importance of core
competencies, they being the gateway to the future. A
company that fails to understand the core competence basis
for competition in its industry may be surprised by new
entrants who rely on competencies developed in other end
markets. In the evolving global competition, growth and
diversification will increasingly be a function of core
competencies and core products rather than an extension of
existing products. Towards the end the book details out ways of
securing the future and thinking differently.
By showing that the key to future industry leadership is to
develop an independent point of view about tomorrow's
opportunities and build capabilities that exploit them, the
authors reveal an entirely new perspective on what it means to
be strategic--and successful. The book is a must read for both
the corporate executives and the business school faculty and
corporate managers. Hamel and
Prahalad argue persuasively that traditional approaches to
strategic planning are unlikely to prepare a firm for sustainable
industry leadership in the future.
Soniya Sahita
Iti Purohit
PGDM IB (09-11)
A strategic
architecture may point
out the way to the
ambitious and
compelling strategic
intent that provides
the emotional and
intellectual energy for
the journey.
CROSSWORD # 03
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 24
ACROSS
1. A Japanese term describing a loose
conglomeration of companies organized around a
single bank for their mutual benefit.(8)
2. Political system where the state, usually under
the control of a single political person, faction, or
class. (12)
3. Bond which is issued in several countries at the
same time.(10)
4. usage-based payments made by one party to
another for ongoing use of an asset, sometimes
an intellectual property (IP) right.(9)
5. Rise in the general level of prices of goods and
services in an economy over a period of time.(9)
6. Efforts by FACB and IASC to move toward a
common global set of accounting standards.(11)
7. Process of returning a person back to one's
place of origin or citizenship.(12)
8. Using the earth or earthly life as the only basis of
evaluation. (10)
9. System of organization replete with overlap,
multiplicity, mixed ascendancy, and/or
divergent-but-coexistent patterns of relation.
..(10)
10. kind of tax, often associated with customs, a
payment due to the revenue of a state, levied
by force of law.(4)
11. South Korean form of business
conglomerate.(7)
12. Protectionist trade restriction that sets a
physical limit on the quantity of a good that can
be imported into a country in a given period of
time.(5)
DOWN
1. Japanese process of continuous
improvement (6)
13. Situation in which cooperating company
takes an equity position in the company with
which it has collaborative arrangement.(13)
14. Standardized and simplified conceptions of
groups based on some prior assumptions. (10)
15. Third month of English calendar.(5)
16. Association of two or more individuals,
companies, organizations or governments (or any
combination of these entities) with the objective
of participating in a common activity or pooling
their resources for achieving a common goal.(10)
17. Individual whose ideas and behavior serve as
a model to others.(13)
18. Term used to describe a policy regime which
encourages exports, discourages imports,
controls capital movement and centralizes
currency decisions in the hands of a central
government.(15)
Sonam Doshi
PGDM IB (09-11)