8/7/2019 Live Oct 2007 0.10

1/39

8/7/2019 Live Oct 2007 0.10

2/39

FromtheeditorsdeskThereverberationsoftheresoundingsuccessoftheFinanceContinuumandtheHRContinuum

held a month ago was still ringing in our ears, when we at Shailesh J Mehta School of

Management, IITBombayhad theMarketingContinuumand theOperationsContinuum.The

marketingContinuumsawaseriesoflecturesandpaneldiscussionsonthethemeEvolutionof

MarketingintheIndianGrowthScenario.FromModernRetailtoumbrellabrandingtheevent

had insightful discussions on thechallenges and opportunities for marketing in a burgeoning

India. As summed up by the words of keynote speaker, Mr. V. Chandramouli, HR Director,

CadburysIndiaLtd.,itisallaboutmakingtheIndianelephantdance.

TheOperationsContinuumwasonthethemeofAchievingGlobalExcellenceinSupplyChain.

It brought together a host of industry experts in various areas, and helped students gain

valuableinsightsintotheindustrialissuesofsupplychainmanagementandtheeffortsengaged

bytheindustrialgiantstoachieveexcellenceinsupplychain.

WealsohadDikshaLecturesfromthelikesofMichaelSweeney,ManagingDirectorattheUBS

Leadership Institute and Dr. Dinesh Keskar Senior Vice President, Sales, Boeing

Commercial.

Seasons come and go but some ties never wither with time. It was a sense of nostalgia and

pride for all who attended the Annual Alumni Meet 2007 of the Mumbai Chapter of

SJMSOM,IITBombay.

Takingacuefromtheweatherthetemperatureinthecampusisalsosoaringandtheactivities

aregettingfreneticwitheachpassingday.Forallthatshappened inthe lastmonth itseems

just a precursor to the big one, Avenues 2007. The preparations are on in full swing and its

leaving everyone breathless. In this Issue we give you an account of whats gone by and a

glimpseofwhatstocome.Itsbeenaspateofnonstopeventsandwearejustgettingstarted.

Editors: NachiketPadwal AnkurHazarika ChinmoyDasDesigners: YudhirAgrawal JaiminGandhi NachiketKarajagi

8/7/2019 Live Oct 2007 0.10

3/39

8/7/2019 Live Oct 2007 0.10

4/39

MarketingContinuum2007 MarketingContinuum2007

ShaileshJMehtaSchoolofManagement,IITBombay

Continuums, the rolling seminar series at the Shailesh J. Mehta School of Management, IIT

Bombay, aim to cover the latest trends in management by inviting eminent speakers from

across the corporate world. From their inception in 2003, the Continuums have constantly

focusedonkeymanagementissueswiththeaimtodrawinsightsfromtheknowledgeandvast

experience of the speakers. The seminars are well attended by delegates from different

organizations, our distinguished alumni, and students from various business schools.

Completing the circle for the year were the Marketing and Operations Continuums, held on

29thand30th

September,2007respectively.

The MarketingContinuum 2007, this time around,was centered on the theme Evolution of

MarketingintheIndianGrowthScenario.Theinauguraladdressbyourveryown,Prof.Shishir

Jhatrulysettonefortheeventslinedupduringtheday.

8/7/2019 Live Oct 2007 0.10

5/39

KeynoteAddressbyMr.V.Chandramouli,HR&StrategyDirector,

CadburysIndia

It may seem strange that the keynote

addressattheMarketingContinuum,2007

was delivered by a person currently

spearheading the human resources of an

organization. But as Mr. Venkat

Chandramouli, HR & Strategy Director,

Cadburys India Ltd. himself put it HR is

all about marketing selling your

workplace to your future and current

employees, itmaynotseemsooddafter

all.Infact,withover15yearsofexperienceinhardcoremarketing,Mr.Chandramouliwasthe

ideal person to give us an insight upon The evolution of marketing in the Indian growth

scenario

Christening the India growth story as the dancing elephant, Mr. Chandramouli gave an

account of the transition of marketing in India over the years. As against earlier times when

marketing was limited to the FMCG and manufacturing sectors, new age marketing has

transcended across various other verticals. Increased global connectedness has made the

Indian consumer extremely demanding and marketing itself has moved beyond the middle

class. The success stories of fairly new sectors such as telecom, retail and insurance bear

testimony to the paradigm shift that has occurred. Common to all of this is the fact that in

recent times the biggest success stories are those wherein current markets are expanded or

newmarketsarecreated.Through thisheemphasized thesignificanceofcategorygrowth in

lieu of increasing market share and the need for marketing in the Indian industry to move

beyondtheoldschoolsofthought.

Mr.Chandramouli,thensuggestedareaswhereinchangeismostsignificantlyrequiredIndia,

earlier conceived as a single, large market to now being an amalgamation of different layers

requiring different marketing approaches; the emergence of the point of buying as a key

interfacewiththeconsumer;understandingthedifferencebetweenashopperandaconsumer;

the need to move beyond traditional consumer touch points into the realm of internet

marketingandphysicalconnect;thestrategicopportunitiesthatneedtobeharnessedacross

the supply chain with marketing itself taking ownership to add value and lastly, a changed

mindsettounderstandthecategoryfromaconsumersperspectiveratherthantheotherway

around.InterspersedamongtheseweresnippetsofhisexperiencesatCadburysandacrossthe

industryasawhole.

8/7/2019 Live Oct 2007 0.10

6/39

Finally,heemphasizedthatsuccess intodaystimes involvesseizingthe

biggestopportunitywhichcanbewonmosteasilyamongsttheplethora

of opportunities available in the country. Then, signing off in his truly inimitable style, Mr.

Chandramoulileftuswiththeseinspiringwords:

NewIndianeedsnewtalentItsyourtimenow.GOCONQUER!

By:

KshitijVerma

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

7/39

PanelDiscussion

Apaneldiscussionon"TheEvolutionofModernRetail:Challenges&Opportunities"washeld

ontheoccasion.Mr.RamanPandya,formerpresidentRetail,EssarLtd.wasthemoderator

forthisevent,whichencompassedenrichingtalksbyMr.AbhijitSanyal CEStaplesBusiness

Foods,RelianceRetail;Mr.VenkatSubramanyan DirectorS&D,Shell IndiaMarketing,Mr.

HasitJoshipura ManagingDirector,GlaxoSmithKlineandMs.AnitaSharan exEditor,Brand

Equity,EconomicTimes.

ThediscussionstartedwithMr.RamanPandyaintroducingthevariouspanelistsandplacingthe

themeofdiscussionbeforethem.Hethenaskedeachofthepaneliststopresenttheirsideof

the story and then called for a formal group discussion on the issue. Thereafter, Mr. Abhijit

Sanyal, Chief Executive (Staple Business Foods) Reliance Retail, enlightened the students of

Shailesh JMehtaSchoolofManagementwithhis insightfulspeechonEvaluationofModern

Retail:ChallengesandOpportunities.Mr.Sanyalstartedbyexpressinghispleasure intalking

to young and bright minds. After that, it was an enriching time ahead for us. He started by

mentioning various key facts and figures with respect to the retail industry today. The retail

industryisawhopping8trillion$businesstodayacrosstheglobe.Soundsunbelievable,yetitis

true.Further,foodretailingoccupiesthetoppositioninthissectoras9outofthetop10largest

retailersareintothefoodbusiness.

Amongthecountriesacrosstheglobe,USAandUKhavenowbecomematuredretailmarkets,

Chinaisadevelopingmarket,whileIndiaisstilltocatchupwiththebiggies,butisundoubtedly

growingatagreatpace. Ifweconsidertheworldretailtrade,70to80%belongstomodern

retailtradewhileinIndiaonly3%ismodernretail.Thereasonsforthisaremany.Whilecities

playamajorroleinmodernretail,itisverydifficulttotaptheruralmarketwhichisquitehuge

8/7/2019 Live Oct 2007 0.10

8/39

inIndiawith627,000villagesspreadacrossthegeography.Indiahasthe

lowest retail space of 2 feet per capita, a space in which it would be

difficulteventostand.

Havingsaidallthis,thingsarechangingfast.Urbanizationisthenormtodayandthecountryis

witnessingahugechange inconsumptionpatternswithhigherconsumerspending.Theretail

tradeamountstoadescent13,50,000crorebusiness in Indiaand isprojectedtobeworth20

lakh crores by 2010. Increasing educational awareness, brand awareness and effective

marketing is fuelingthisgrowth.The focus istomakeconsumersnot justbuy,butenjoy the

experienceofpurchasingandusingaproduct.Apart fromadvertisement,companiesarealso

lookingtocapitalizeonotherconsumertouchpoints.AsMr.Sanyalsaid,ifapersonissmoking

acigarette,makehimexperiencethefreshnessofHallsafterhesmokesandyouhavecreateda

newcustomer!

Thefocusalsoneedstobeonthebasicslikequalityoftheproduct,ambience,valueformoney

andtherangeofproductsofferedtomakeamemorableexperiencefortheconsumer. Itwill

pave the path for High Revenues, Category growth and a boost to the packaging industry.

Challengesliketechnologymanagement,importedgoodsandcostcontrolwillalwaysbethere.

However,the Indianindustryshouldbegeareduptomeetthesechallenges.Ifthingsgowell,

thereisabrightandlucrativefutureawaitingtheretailindustryinIndia.

Duringthepaneldiscussion,Mr.Sanyalsaidthattheobjectiveofmodernretail isnottostop

thetraditionalmomandpopstores.Themarketishugeandeveryonecangetashareofthepie

providedtheystickto thebasicsand focuson innovation. Initiallyresistancewouldbethere,

but then even Rajiv Gandhis idea of computerized banking and railway reservation was not

cherishedinitiallyandtoday,wecannotimagineourworldwithoutit.

Onalighternote,Mr.Sanyalsharedajokewithuswhichgoesasbelow:

OncethedirectorofNescafewenttothePopeofaChurchandofferedhimadonationof100

mn$providedtheychangedtheirprayerfromGiveusadailybreadtoGiveusadailycoffee.

Thepopebecomefuriousafterhearingtheideabuteventuallyagreedwhenthedirectorraised

theoffersubstantially.HewenttothemembersoftheChurchandannounced,Thereisagood

andabadnews.Goodnews isthatwehavegotadonationof500mn$andthebadnews is

that

we

have

lost

the

Britannia

sponsorship.

8/7/2019 Live Oct 2007 0.10

9/39

Sharinghisthoughtsontheoccasion,Mr.VenkatSubramayam

(ManagingDirector,Shellgas&LPG),gaveaveryinterestingperspective

totheentireissue. HesaidthattodayretailIndustryinIndiaisatcrossroads.Thisisthepoint

oftimewhenweneedtoponderonourcurrentsituation,decideastowhereweneedtoreach

andthemeanstoreachthere.Aroadmapintothefuturecanbemadebasedontheenablers

(positiveforcestendingtowardsgrowth),blockers(roadblocksincurrentsituationhampering

growth)andtheinitiatives/responsesthatneedstobetakentoovercometheblockers.

Hethenpresentedastrategicanalysis(PEST)ofthevarioussituationsnamelypolitical,social,

economic,andtechnologytounderstandtheirimpactonthegrowthoftheretailsector.

Enablers Blockers Response

Political a)Centralgovernment

openingupretailsector

b)Liberalization

a)Ambivalencebetween

politicalgroups.

b)Retailingpoliciesvaried

acrossgeographical

sectors

c)Presenceofboth

domesticandforeign

players

d)Tremendousresistance

betweenenchanted

groupsforanychanges

broughtbygovernment

a)Governmentaligning

with theworld Open

Doors

policy

b) Government lives

with

policies

c)GlobalisedEconomy

d) Determine a clear

cutroadmap

Economic a)Goodgrowthstory 9%

growthinGDP

b)Improvingpayscales

leadingtolarger

disposableincomes

c)Tremendouspaceof

growthEg:ITservices

boom

a)Crunchinskilled

resources

b)Infrastructure

a)Coordinated

planningbetween

centerandstate

b)Governmentstaking

upresponsibilityand

not

shying

away

c)PlanHR:Selection

andretentionoftalent.

Social a)Workingclass Huge

youngpopulation

a)entrenchedlocalgroups

opposingchanges

a)Trainingworkforce

todeliverCVPs

8/7/2019 Live Oct 2007 0.10

10/39

8/7/2019 Live Oct 2007 0.10

11/39

Shebeganbyobservingthatevenafter6 to8yearsof retailrevolution

wearestilllookingforforeignmodelsthatcanbeimplementedinIndia.

Shefound it interestingthat inthecaseof Indianretailrevolution,theconsumerneverasked

forthischangeintheretailformat.Hewascontentwiththeexistingretailmodel.Butitwasthe

corporate and the investors who have taken the initiative to bring about this change in the

Indian retail model. Since the consumer has not articulated his need for modern retail, the

onusisonthecorporatetomakethismodernretailrevolutionwork.

According to her, the primary questions that need to be addressed in this modern retail

scenarioinclude

Whatformatisgoingtowork?Howdoyoucreatefootfallsinsideyourretailoutlet?Howtoconvertthesefootfallstopurchase?

Answeringthelastquestion includescreatingareasontobuy.Firmsareusingentertainment

asatooltocreateincreasedfootfallsaswellastoconvertthesefootfallsintosales,shesaid.

ShegavetheexampleofKishoreBiyanisFutureGroupwhichhascreatedamediacompanyof

itsowntoboostsalesinsidetheirstores.However,MsAnitaSharanalsowarnedthatonceall

thisinnovativeinitiativesbecomeapattern,customersstoprespondingtothem.Shesaysthat

ifoneaddsthetravellingcostassociatedwithgoingtoaretailoutletitsometimesmakessense

torathergototheneighborhoodstore.

Withregardtothegovernmentsplanstoallow100%FDIinretail,AnitaSharanbelievesitto

be a very good thing for the retail business. But what about the other players in the retail

industry?,sheasked.

Incontrasttothepopularlyheldbelief,AnitaSharanbelievesthattheneighborhoodmomand

popstorewillsurvivetheonslaughtofmodernretail.Shebelievesthattheyareveryresilient.

Sheaddedthattheyhaveadevelopedabusinessmodelovermanycenturiesandthestrength

of this business model will not let them become extinct.She said that the real losers in this

revolution are going to be the middlemen who act as an intermediary between the

companies/farmers and the mom and pop stores (kiranas). Reacting to Mr. Abhijit Sanyals,

Chief Executive (Staple Business Foods) Reliance Retail, statement regarding wastages in the

supplychainbeingcutdownbymodernretail,sheagreedthatitmustbetrue,butweneedto

understand

at

what

cost

is

this

happening?

She

illustrated

this

with

the

example

of

Reliance

retail.AlthoughRelianceretailmayactuallycreatemorethan10,000jobsinretail,shepointed

outthatthesejobswillbefortheeducatedpeoplewhiletheonesgettingdisplacedbymodern

retailaretheuneducated.

HoweversheagreedthatthebigcorporatecandefinitelymakeabigimpactontheIndianretail

scene. Eventually the consumers will shift to the new retail model. But the corporate must

move beyond setting up new models and look at other issues like Corporate Social

8/7/2019 Live Oct 2007 0.10

12/39

Responsibility (CSR). The modern retail organizations must take

responsibility to protect the consumers interests. Ms. Sharan also

requested one to consider that if once the modern retail system is established, will the

customerstillhavechoice?

Reacting to a statement by Mr. Raman Pandya that Walmart is likely to fail if it comes into

India,shebegged todiffer.Shewasconvinced thatWalmart is unlikely to failbecause ithas

Bharti, and moreover if Walmart were to enter India it would do so only after appropriate

research.Shealsobelievedthattheywillquicklyadapttothelearningcurve.

Givinghis insightsonthe issueMr.RamanPandyatouchedavarietyoftopics inherenttothe

Indianscenario.Startingright fromthetrade intheHarappaCivilizationtothemodernretail

sector,hesaidthatthesuccessofmodernretaillaysinIndianisingit.Todrivehomehispointhe

quotedtheMacdonaldshomedeliveryinitiative.Hesaidthatthoughforeignproductcouldbe

broughtintheretailersinIndiahastothinkdifferently,seeenvironmentalandculturalaspects

andfactortheminwhilestrategizing.Inadditiontothesetheyneedtomarrytheirstrengthsto

technologyefficientSCMtosqueezeoutwastages.Accordingtohimtolookattheconsumer

isthekeytosuccess.HestressedtheimportanceoftheMallsinthepresentretailscenarioand

saidthathandlingthemwouldbecrucial.Finallyhesaidthat,no,matterwhateverisbeingsaid

ordone,WalmartwouldbeabigfailureiftheydontIndianise.

By:

AbhishekMohta

BharatulaKrishnaKishore

AnupamShrotary

AnoopKulkarni

ChinmoyDas

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

13/39

TalkonUmbrellaBrandingMr.KBSAnand,VPSalesandMarketing,

AsianPaints

Mr. KBS Anand, VP, Asian Paints gave a wonderful

insight into the marketing strategy of Asian Paints

during his address to the students of SJMSOM, IIT

Bombay during the marketing continuum held at

SJMSOM, IIT Bombay on Sept 29, 2007. He regaled

theaudienceaboutbrandingingeneral,itsportfolios,

brandbuildingandUmbrellaBrandinginparticular.

He gave an insight into the brand strategy on how

brands are different from a product. He mentioned

thattheessentialdifferencebetweenaproductand

abrand isthatapartfrommeetingaphysicalneed,

italsoprovidesanemotionalneedtothecustomer.Thevaluedeliveredbyabrand isalways

greaterthanthevaluedeliveredbytheproduct.Thisvaluetranslatesintoastrongeremotional

linkwiththeconsumerwhichleadstobetterconsumerloyalty,abilitytocommandapremium

overanyotherproductanditprovidesastrongbarrierpreventingcustomerfromswitching.He

gavethecasesofvariousbrands likeP&G,Sony,Nikeetc.Allthesebrandsconveyanintrinsic

meaning that could be attributed to that particular brand. He also gave details about a

companybrand,masterbrandandsubbrands.HesaidthattheConsumerBrandBehaviorisa

functionoftheInvolvementLevelsoftheconsumerandtheFrequencyofPurchasedonebytheconsumer.

HestatedthatBusinessStrategyiseffectivelybasedonchoiceofportfoliosandthecostofa

brandbuilding isdependentonhowwellacompanyreexaminestheportfolio,theassociated

costs, media fragmentation etc. He informed that (Share of Voice SoV) is an important

parameterwhichgivestheshareofthemarketofvariousplayers.HeaddedthatSoVofPaints

stand at 1% and the share of Asian Paints is at 0.5%. He added that three important

componentsofmaintainingahighSoVarethatofthebusinessstrategy,consumerbehaviour

andthecostofbrandbuilding.

Elaborating further on Umbrella Branding Mr. Anand explained that paints belong to low

consumer involvementandtheyarenearlyaconsumerdurablecategoryas the frequencyof

interactionbetweenthebrandandtheconsumerisprettylowandthefinancial/emotionalrisk

associatedwiththebrandisprettyhigh.So,itisbettertoswitchtowardsaumbrellabranding

insuchcases. InUmbrellaBranding (UB), thenumbersof interactions increasesignificantly if

the brand is portrayed along with the companys name. It increases the emotional bond

between the consumer and that of the company. It provides better visibility. This strategy is

basedonunderlyingthecorecompetencewithUBprovidingtheroof.Asanexample,hecited

8/7/2019 Live Oct 2007 0.10

14/39

the cases of Sony and Honda where people associate the product with

thecompanywiththecompanyactingasthebrand.Hepointedoutthat

UBcannotcovertheentirelineofproductsmanufacturedbythecompany.Besides,forFMCG

companies which have different line of products the UB strategy may not work whereas

companiesworkinginthedurablesegmentcouldconcentrateonUB.

In the case of Asian Paints he mentioned that earlier most consumers never recognized the

nameofthecompany,butalwaysknewaboutthebrand.PreviouslyAsianpaintshadanumber

ofsubbrandsandthecostofadvertisingforeachbrandwasprettyhighwhichresultedinthe

reductionofprofits.So,thecompanydecidedtogowithacommunicationportfoliohavinga

reducednumberofbrandsandthishelpedthecompanytoconcentrateonafewbrandsand

helpeditinconsolidatingthebrand.Byreducingthenumberofbrands,hesaidthattheoverall

synergyandshoppresenceofthebrandhas increasedtremendously. Hementionedthatthe

responsefromthecustomersforthenewstrategywashighlypositiveandthemovetoUBby

reducingthenumberofbrandshasyieldedpositivegains

Hesummedup thewholetalkbysayingthatUmbrellabranding is increasinglyseenasthe

only way to launch new products. The appeal of Umbrella Branding is such that even FMCG

companies have begun to follow similar strategy. He said that Umbrella Branding Strategy

should be followed if the product line is similar and if the product line is different then the

individualofferingshouldbeconcentratedon.

By:

KSridharan

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

15/39

WorkshoponPricingStrategiesMr.SatishBelani,Director

(Operations),ACNielsenIndia

Mr.SatishBelaniDirector(Operations),ACNielsen

India conducted a highly educative and enriching

workshop on "Pricing Strategies". He said that

pricing strategies requires a thorough

understanding of the regular pricing dynamics

influencing the consumer decision making and the

process to do so includes so many surveys and

questionnaires. Citing the questions manufacturers

andretailersneedtoaddress,hegavethefollowing

examples:

Whoaretheregularpricingmakers?

Whataretherelevantregularpriceselasticities?Howdothesevarybydistributionchannelandgeography?Whataretherisksassociatedwithaspecificproposedregularpricemove?Whatistheoptimalpriceposition/strategy?

Giving an insight into the strategies adopted by ACNielsen he said that ACNielsen has

developed a consultancy service to cater to the pricing strategy needs as mentioned above.

ACNielsens regular pricing models use weekly scanning data to fully understand the

movementsinregularprice.Hesaidthatpricingstrategiesaredifferentindifferentdistribution

channels:

SupermarketsHypermarketsConveniencestoresPatrolstations

Different product groups also need different strategies. Measured elasticities confirm that

consumersare fewerpricessensitivewhen it is impulsivepurchase.When theyhaveenough

timetheyareverypricesensitive.Thisdifferencehelpspricepromotionalstrategies.

Insupermarkets,availabletimeandwideproductrangeincreasesconsumerspricesensitivity.

Shopper's promotional activities have higher responsiveness than in other channels due to

longerdurationoftheconsumersstayinthemarket.

8/7/2019 Live Oct 2007 0.10

16/39

InPatrolstations,productavailabilityismoreimportantthanpricepoint.

Lackofrangewillalsoreducepriceconsciousness.

He informedthatresearchconcludesthattherearethreewaysto increaseprofits:Sellmore,

cutcosts,raiseprice.Firsttworequirelotofeffortwhilethirdoneiseasy.

Mr. Belani said that the fundamentals of value revolve around the benefits the customer

receivesfromaproductorserviceandthepricetheywillpayforit.Thequestionishowmuch

morethecustomerwillpayforaddedvalue/featureovertheabovepresentprice.Pricemarket

researchcanhelpinidentifyingtheseprices.

Toverifypricingassumptionanswerthepricefeaturestradeoffs. Iftheprice is increasedwill

salesvolumedeclineandifitdoeswillitbemoreor lessproportionaltoriseinprice?Testing

thepriceofacceptabilityofproduct incomparisontocompetition ismainprincipleofpricing

research. Basic law of demand is the relationship between the price and the quantity. Rules

differ

according

to

commodity

or

manufactured.

Mr.Belanithenwentontoelaborateonthedifferentpricingstrategies.Therearevarioustypes

ofresearchesonecandobygoingtocustomers

IfoneislookingforpriceelasticitythenoncecandoGaborGranger.Itisatechniquedeveloped

bytwoeconomistsin1960.Customersareaskedwhatmaximumandminimumpricetheyare

readytopay.Fromtheresultswecangettheoptimumprice.

HealsotalkedaboutthePriceSensitivityMeterdevelopedbyWestendrop.Itasksdifferentset

ofquestionsthantheonementionedabove.Thequestionsposedare:

Atwhichpricedoyouconsidertheproductwillbe:

Cheap?Expensive?Verycheap,sothatyoudoubtitsquality?Veryexpensive,sothatyouwillnotconsidertheproduct?

Basedontheanswerstotheabovequestions,pricingisdecided.

ThereafterMr.BelaniwentontotalkelaboratelyonConjointAnalysis,ChoiceBasedConjoint,

Brand Price TradeOff andBrand PriceChoice Modelingandgave anexhaustive insight into

the different pricing strategies that can be implemented in order to identify the optimum

prices.Overall,thesessionwasahugelearningexperienceforallofus.

By: SriramVangara

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

17/39

OperationsContinuum2007OperationsContinuum2007

ShaileshJMehtaSchoolofManagement,IITBombay

CarryingtheContinuumseriesfurtherafterthehugesuccessoftheMarketingContinuumwas

theOperationsContinuum,2007setagainstthebackdropof"AchievingGlobalExcellence in

SupplyChain".

Prof.S.V.D.N.RaooftheSchoolofManagementsetthingsrollingwithhisinauguralspeech

highlightingtheroleofthesupplychaininoverallcompanyperformance.

8/7/2019 Live Oct 2007 0.10

18/39

KeynoteAddress Mr.V.Srikrishnan,ExecutiveDirector,AirIndia

InhiskeynoteaddressMr.V.Srikrishnantalked

at lengthabouttheaviation industry ingeneral

and Air India in particular. Mr. V. Srikrishnan

started his address by talking about the

herculeantaskoforganizingtheHajpilgrimage

that Air India undertakes. He said that it

involvedtheleasingofaircraftsforabout11000

people. Through it he brought out the

complexities and constraints that many

industries in India have to operate in todays

globalscenario.Hesaid that thoughaviation is

exploding in India, Air India was serving 42 destinations with 18 aircrafts only. As Air India's

destinationsarevery long themaintenanceof theiraircraftswasamajor issue.Theystarted

addressingtheissue,5yearsback.Therewaspositivereactionforsuggestionofexpandinginto

newmarketswhichwastoughbecauseof lackofresources i.e.aircrafts.Sotheywentahead

with leasing which has its own share of problems. Giving an insight into the working of the

aviation industryhesaidthatonerule inthe industry isthatwhateverbethecost, incaseof

anydoubtorconcernsregardingtheplane,theaircrafthastobegroundedandcannotflyuntil

all the checks are completed. He said that a leased idle aircraft would cost $35000 per day.

TakingintoconsiderationallthecostsinvolvedinmaintainingtheaircraftsAirIndiadecidedfor

neweraircrafts.Sothenumberofaircraftswasincreasedfrom18to58.

Mr.SrikrishnanthenwentontoelaboratethestrategyadoptedbyAir India.Hetalkedabout

thetwobrandtheoryinthiscontextandmentionedaboutAirIndiaExpress.Itonlydealswith

lowcostinternationalcarrier.Thereareonlytwosharesofthecompanywhichareheldbythe

President of India and hence making any change in the organization was lot tougher. The

mergerofAir Indiaand IndianAirlineshappenedon1stApril2007andthenotificationcame

outon28thAugust.Theyfacedthechallengeofintegration,synergiesandbenefits.Synergies

both the companies had different aircrafts. So, now they were handling Air Bus and Boeing

fleets. With the size of the fleet that they had, they were among the global top 10. They

acquired48aircraftsfromAirBusand65fromBoeing.Becauseofdifferentconfigurationsand

customizations

it

was

all

the

more

difficult.

Talkingaboutstandardization issueshesaidthataircraftshavemilitarystandards, likeNS i.e.

NavalStandard,whichmakesitverytoughfortheprocurementandmaintenanceofspares.BY

2010 theywould have 172 fleets and willbeamong the top 5airlines in theworld. Then he

talkedabouttheirplanstogoglobalandaboutthebasicfoundationworkthatwasbeingdone

to bring in 7 more airlines under one banner. This alliance, he said, would give them lots of

8/7/2019 Live Oct 2007 0.10

19/39

synergy.Moreoverhealsomentionedthattheywere looking foranew

hub inEuropetoserveEUandTransAtlantic.Hethentalkedaboutthe

cargoactivitiesofAirIndia.

InhisaddressMr.Srikrishnanverylucidlybroughtouttheexistingchallengesandopportunities

beingfacedbytheaviationindustry.HewentontoimpressupontheneedforefficientSupply

Chain Management practices and IT in the aviation industry. In this industry, he said, one

shouldhaveatleastsixaircraftsofsametypeandeffectively0.5millionpartsarepurchasedand

replacedeveryyear.Therearevariousmaintenancerelated issuesthatneeds tobehandled.

Addedtothisthepricepatternofeverypartisvariable.TalkingaboutIThesaidthatitistough

toanticipateIT.Theyneedinformationwhichrequiresfeed.SoforSupply

Chaintobesuccessful, InformationSystemhastobegood. Inthiscontexthementionedthat

BoeinghasanexcellentIS.Acompanymanufacturingballbearingsmaynotbeabletoshipall

ofthematonegoandhenceweneedtokeepatrackoftheshipping.Hesaidthatfacilityto

intercept

and

change

the

routing

is

not

possible

in

the

existing

systems

and

these

issues

needs

to be worked upon. He said that the general notion in aviation industry is that engineers

shouldn'tusebrains;theyshoulduseonlythecopybookrules. If justasmallnut isremoved,

thewholeproducthastobereplacedandtheproductcanonlybesuppliedbyacertifiedagent.

Andhenceproceduresandrulebooksaremandatory.SoweneedaSCMwhichcantriggeran

eventincaseofanyreplacementneed.

Finally Mr. Srikrishnan asked the IT industry to cater to the needs of SCM in the airlines

industry.He feltthatpresentlytheydonthavethedomainexpertisetomeetthedemand in

the

industry.

According

to

him

application

of

knowledge

in

areas

where

it

meets

industry

needs

is more important than just degrees. So he took the opportunity to issue a clarion call to

everybodypresenttoincreasetheiraspirationsandmeettheindustryneeds.

By:

SriramVangara

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

20/39

AddressbyMr.K.R.Siddharth,OperationsHead,HindustanUnilever

Effective Supply Change Management can

bedescribedinfourwordsAgile,Lean,Fresh

andAvailability,Thiswasthemantragiven

by Mr. K. R. Siddharth, Head Operations

Hindustan Unilever Limited during his

speechatOperationsContinuum.

He introduced by stating that Hindustan

Unilever Limited deals in segments of

Personal wash, Detergents, Beverages and

Food segments and has 3540 % of market

share in each of its product segments.

Hindustan Unilever Limited distribution networks are spread across 80 locations with 43

warehouses.

Hecitedthatthecorporatepurposeistodelightconsumerbyhighqualityserviceandreward

investorbycreatingvalue.He furtherelaborated thatvarious functions Commercial,Supply

Chain,R&D,MarketingandSales,playanimportantpartinachievingtheseobjectives.Hemade

usawareaboutvariousaspectsofGeneraltradeandModerntrade.Generaltradeconstitutes

about90%oftotaltrade,growingat810%andModerntradeconstitutes10%,growingat50

%.

Hefurtherenumeratedvarioustradeservicingstrategiescitingdifferencesbetweentraditional

and modern trade. In traditional model services were done as direct service or indirect

wholesaleledservicewhereasinmoderntradeitisfocused,relationshipandtechnologybased.

He quoted Packaging is the brand ambassador among clutter of products on shop outlets

today.

Hediscussedaboutvariouschallengesthatsupplychainfacestoday.Theyarelegalframeworks

(State and Central), Infrastructure, language and geographies. He told about the status of

infrastructure in India among which creaking are roads, warehouses, transport infrastructure

and airports etc. due to which 34 months of inventory valuing 7500 crores is always in the

pipeline.

Head

above

water

for

the

economy

is

in

National

Highways,

Private

ports

and

VAT

whereasworldclassfacilitiesareinTelecom,InternetandonITthereisquestionmarkdueto

uneaseandcomplexityinfacilitiestheyareprovidingtothecustomers.

Hecautionedthatvarious implicationswereevolving fastonthedemandsideandtherewas

continued complexity in the drive towards high customer service and evaluation of modern

trade. Indicating the positive points on the supply side he mentioned about the Golden

Quadrilateralproject,ValueaddedtaxandeliminationofCentralsalestax.

8/7/2019 Live Oct 2007 0.10

21/39

He endowed us with a unique mantra of Agile, Lean, Fresh and

AvailabilityinSupplyChangeManagement.Agilemeansvelocitytostore

and deliver. Lean signifies reduction of cost encompassing all elements including tax costs.

Fresh implies providing sustainable supply chain with responsible network of suppliers,

customers,academiaandNGOs.Availabilitymeanscustomershouldalwaysbeservicedasper

need.

Intheendhediscussedabouttheunlimitedopportunitiesthatstillneededtobetapped like

integrating the IT systems, various players to collaborate for efficiencies in supply chain,

strengtheningthewarehousinginfrastructureandintegratingthedistributionstrategy.

By:

AnupamShrotary

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

22/39

Address by Mr. J.P. Banerjee, Business& Strategic Development

Consultant,JohnDeere

Mr. J.P Banerjee, a Consultant in Business &

StrategicDevelopmenttoJohnDeere,enlightened

all of us with his insightful talk. If you cannot

measure, you cannot manage, Mr. Banerjee

startedwiththesewordsandthestudentsstarted

lookingforwardtoanenrichingtalk.Hecouldnot

resist expressing his elation to be among the

Future Leaders of this country. The event had

broughtbackmemoriesoftheyear1962whenhe

wasinIITBombayfortheInterIITSportsevent.

He started with a quote said by the founder, Mr. John Deere I will not put my name on a

product that does not have in it the best that is in me. These words clearly state the

importanceofqualityatJohnDeere.Withbusinessinaround160countries,47,400employees

andannualrevenuesof22BillionUSD,JohnDeereisoneoftheleadingcompaniesdealingwith

Agricultural Equipment. John Deere has presence in India in the city of Pune. Mr. Banerjee

mentionedthattheychose Indiaasamanufacturingcentreowingtovariousreasonssuchas

cheap labor, low cost, reliability, strategic location and ease of R & D, agriculture based

economyanda largedomesticmarket.Asan insighthesaidthatwithcloseto60billionbulls

beingusedforfarminginIndia,thescopeforagriculturalequipmentsishuge.

Mr.BanerjeesaidthatJohnDeerehasaglobalpositioningtechnologywhichitusestotapthe

agricultural sector. Besides that it has high focus on Quality, the three Ps (People, Product

KnowledgeandProcess),InnovationandOperationalExcellencethroughimplementationofsix

sigma.ThesearetrulythecoreofSupplyChainManagementatJohnDeere.

Mr.Banerjeealsotalkedaboutthevaluechainprincipleslikestrongrelationshipwithsuppliers,

superiorperformance,globalsourcing,integrityandvalueadditionwhichisakeytothesuccess

of JohnDeere.Fundamentaldrivers likeautomatedsupplychainand timely flowofaccurate

informationhavehelpedagreatdeal.Afterall, iftheMumbaiDabbawallascando itwithoutany supply chain tools, why cant organizations do the same? From supplier of parts the

objectiveshouldbetobecomesuppliersofvalue.Mr.BanerjeealsotalkedabouttheRating

System being used for grading the suppliers based on parameters like Quality, Delivery,

TechnicalSupportand CostManagementSystem.Thishashelped them insourcing from the

bestsupplieratcriticaltimes.

8/7/2019 Live Oct 2007 0.10

23/39

Mr.BanerjeeconcludedbymentioningthattheywishtoleverageinIndia

under four dimensions: Market Ownership, Talent Pool, Manufacturing

HubandSourcing.All inall,Mr.Banerjees talkgaveallofusadeep insight into thevarious

intricaciesofSupplychainandthebestpracticesinthisdomain.

By:

AbhishekMohta

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

24/39

AddressbyMr.SatishMoorjani,VPOperations,Mahindra&Mahindra

Mr. Satish Moorjani VP Tractor Division, M&M

took a very interesting session highlighting the

transitionofthesupplychaintodealwiththeever

changing global scenario. He very conspicuously

highlighted the present business environment in

whichmostofthefirmshavetooperatenowadays.

He talked about increased competition, customers

becomingmoredemandingandlessloyal,products

growing in variety and becoming readily available,

increasedvariationsanduncertaintyindemandand

thecrucialroleplayedbytherightproductandright

availabilityintodaysmarkets.

Hethenwentontounderscorethe importanceofmakingtheprocesses inan industrymore

efficient and effective in order to deal with the existing challenges being posed by the ever

changing economic scenario. In this context he went on to elaborate various initiatives

undertaken in M&M in order to face the challenges and grab the opportunities present in

todaysmarketplace.Hetalkedatlengthaboutthe3PLProcurementprocesswherehetouched

abouttheroleplayedbythevendorclusters,thehubsconsolidationanddeconsolidationin

thehubsandtheMISschedulesandreports.

Mr. Moorjani also provided a thorough insight into the Supplier Kanban System that was

implementedinM&M.Hehighlightedthevariouspositivefalloutsoftheimplementationofthe

SupplierKanbanSystem,themostprominentamongthembeing thedrastic reduction in the

stockbalancethatwasobservedafterimplementingtheSupplierKanbanSystem.

TowardstheendofhissessionMr.Moorjanidiscussedacasepertainingtothetractorbusiness

ofM&M.ItwasaninterestingcasewheretheM&Midentifiesalossinthemarketshareinthe

tractor business. Upon investigating it comes to know about the new expectations of the

customers and in order to meet those expectations it comes out with a superior designed

product.Throughthisproductithopedtofacethestiffcompetitionbeingprovidedbynewand

established players that has entered into the tractor business. But the launch of the new

product

presented

its

own

share

of

problems

by

resulting

in

an

increase

of

transportation

costs

due to its peculiar design. The ways and means that was adopted to tackle this particular

problem initially emphasized how innovation plays a crucial role in adapting to the changing

marketdemandsandgaveusanentirelynewinsightintermsofproblemsolving.

8/7/2019 Live Oct 2007 0.10

25/39

Allinall,theentiresessionwasatremendouslearningexperienceforall

ofusandeveryonepresentgainedvaluable insights intothefunctioning

ofpresentdayindustryfromtheinteractionwhichwehadwithMr.Moorjani.

By:

ChinmoyDas

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

26/39

DikshaSessionsDiksha is the name given to the series of talks conducted by eminent speakers from the

corporateworld.Thesetalksareorganizedaspartofthecontinuousendeavourbytheschool

tobringforthvariousissuesandtoattempttofindanswerstothem.

Dr.DineshKeskar SeniorVicePresident,Sales,BoeingCommercial.

Dr. Dinesh Keskar got his bachelor's degree in mechanical

engineeringinIndiain1975.Hegothismaster'sanddoctorate

degrees in aerospace engineering from the University of

Cincinnati in1976and1978,respectively.After that, in1987,

he got an MBA from City University in Seattle. He has also

worked as a research associate in the Flight Dynamics and

Control Division at NASA's Langley Research Center before

joiningBoeing.

Mr. Keskar began his address with the poignant point, that

everytimeBoeinggoesinforanewaircraftdesignitisamake

orbreak for thecompany.Elaboratingon thecomplexitiesofthetradehesaid that,asingle

seattakes18monthstobecertified. Itneedstosurvivea10Gcrashandtemperaturesupto

1000C.Intheendtheseatweighsatonandcostsaround200000USDtoproduce.Comparing

thestrategiesofAirbusandBoeingMr.KeskarmentionedthatwhileAirbusbelieved inLarge

Aircrafts,Boeinghasbetonsmalleraircraftsandpointtopointtravel. Boeingfeltthatunless

a500seatairplanewasfilledtocapacityitcouldneverrecoveritsseat

milecost.Healsoaddedthattravelerswouldpreferpointtopointtravelratherthanwaitingall

night at major metros. This would be even more pertinent given the development of small

townsandcities,whoseairstripscouldneversupporta500seatairplane.

Onthetopicof787Dreamliner,thelatestairplanedevelopedbyBoeingandtoutedasthemost

environmentfriendlyairplane,Mr.KeskarsaidthattheDreamlinerhasanallcompositebody

andislesspollutingthensomeofthetrainsinEurope. Boeinghasalreadysoldover700planes

whileoneisyettotakeoffandifyouwishedtobuya787Dreamlinertoday,youwouldneedto

waittill2015.

On

the

subject

of

the

Indian

aviation

sector

Mr.

Keskar

said

that

while

its

growing

at

a

rate

of

48%comparedtotheglobalaverageof4.8%thehighgrowthratewasmainlyduetoitssmall

base.HelamentedoverthefactthattheIndianaviationsectorlostanaggregateof500million

dollarslastyear.Hethenquippedstupiditycangoononlyforsolong.Thechiefreasonforthe

lossaccordingtohimwasthefactthattheairlinesbroughtincapacitytooearlyandtherewas

toomuchcompetition.Hehopedthattheairlineshavelearnttheirlessonsandtherecentspate

ofmergerswouldhelptheindustrytomature.

8/7/2019 Live Oct 2007 0.10

27/39

Lookingatfuturetrendsinaviationhesaidthat,inspiteofthefateofthe

concord Hypersonic travel was something to aspire too. Pollution and

carbonfootprintsareamajorconcernfortheindustryandtheyarelookingatinnovativeways

totackle it.Whileentry intotheairlinemanufacturingbusiness isreallytoughheopinedthat

Russian and China both have plans to enter it soon and the aircraft manufacturing industry

couldsoonseesomenewcompetition.

By:

NachiketPadwal

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

28/39

Michael Sweeney Regional Head of Leadership Development for the

AsiaPacific(APAC)regionandManagingDirectorattheUBSLeadership

Onthe5thofSeptember,Michael(Mike)Sweeney,

RegionalHeadofLeadershipDevelopment for the

Asia Pacific (APAC) region and Managing Director

at the UBS Leadership Institute visited Shailesh J

Mehta School of Management, IIT BOMBAY to

share his views on the financial markets in Asia,

how UBS approaches them and about talent

management in this industry. UBS AG is a

diversified global financial services company

headquartered in Basel and Zurich, and UBS

Leadership Institute is the wing of UBS that

develops

programs

and

processes

to

help

senior

leaders shape, communicate and implement the

firm's strategy. Michael Sweeney is an MBA from London Business School and is a regular

speakerat leadingBusinessSchools(Berkeley,MIT,NYU(NewYork),LondonBusinessSchool,

PennStateUniversity,HongKongUST)andatinternationalconferences.

UBS has been achieving 40% growth in the Asian region for the past four years, and Mike

iterated the figures thatmade thisphenomenal growthpossible Asia Pacificcontributes to

25% of world GDP, 32% of equity market value and 29% of investable liquid assets. The

marketsofJapanandHongKongarethematuremarkets(percapitaGDPofnearly32,000USD)

of

this

region

while

Korea

and

Taiwan

are

developed

markets,

though

not

properly

regulated.

The business emphasis is on the emerging markets of China, India, Malaysia, Thailand and

Indonesia. Mike contrasted India and China and asserted that the dynamics of these two

economiesaresuchthattheycansurviveverywellwithouteatingintoeachothersbusiness.

UBSishandlingdiversetasksofretailbanking,wealthmanagement,corporatebusiness,asset

management,brokerage,tradingandinvestmentbanking.UBSmadeaforayintoAsianmarkets

andgreatlyflourished.InMikesownwords,Thereisnocompetitiveadvantageindesigninga

new product in a finance industry as it is very easily and quickly replicable. Knowledge,

information and advice are a banks primary assets, and business thrives on the proper

employment

of

this

resource.

UBS,

unlike

many

other

international

banks,

refused

to

operate

from remote headquarters and set up shop in local places. Commitment and trust are two

cornerstonesofsettingupbusinessofwealthandassetmanagement.UBSistakingakeenlook

attheIndiancompaniesthataregoinginternational,asitfeelsthatthesecompanieswillsoon

be inneedofdrastic restructuringtosuittheglobalmarkets.Speakingof Indianbanks,Mike

saidthatthecountryhasopenedupitseconomy,butitremainstobeseenhowquicklyIndian

bankscanmatureintermsofservicesandpracticesandhowwellthegovernmentderegulates

8/7/2019 Live Oct 2007 0.10

29/39

and frees the market for competition. He cited the case of Australian

banks after opening up of their economy; these banks matured so fast

thattheforeignbankstryingtomakeaforayintotheireconomyhadtoretreatwithlosses.

Mike gave a cursory into the streams that UBS has in India, namely, KPO services, and

operations.UBScurrentlyhasaround1300employeesatitsservicecentreandplanstoexpand

greatlyinthetimetocome.Talkingofprospectiveemployees,hesaidthatthetraitstheylook

foraredrive,ownership,curiosity,ethicalorientationandtheanalyticalprowess.

By:

AnkurHazarika

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

30/39

AnnualAlumniMeet2007@MumbaiChapter

Educationisnotonlythedrivingforceforaleadertomoveaheadinlifebutalsothemotivation

to take an occasional pause and reflect back, connect with ones alma mater and share the

richnessofonesjourney.TheAnnualAlumniMeet 2007oftheMumbaiChapterofSJMSOM,

IITBombayprovedtobethatpause.

Itwasindeedhearteningtoseesomanyalumni,especiallyfromtheinitial batches,comeand

drive the discussion in the Alumni Discussion Forum which is a platform for the current

batches, faculty and alumni from the last eleven batches to discuss the concerns around

managementeducationatSOM.Asignificantpointraisedwastheneedofthealumnitotouch

base with the current curriculum of management at SOM, so as to revise the basics and to

update themselves of the shifting paradigms in their respective domains. This highenergy

discussionmoderatedbyProf.ShishirKJha,VP,SOMAssociation,concludedonareallypositive

notewiththegrouprecognizingthestridesmadebySOMinthefieldsofIT,operations,finance

andmarketing.Thisnostalgicvisitbacktocampusmadethealumnifeelathomeandbrought

excitementintotheinteraction.

Movingaheadtothesecondvenue ,SaffronSpiceatHiranandaniComplexwherean informal

gatheringwasplanned,provedtobetherightplacefor individualbatchwise introductions,a

tourofthecampusandstudentlife intheformofanextremelymovingfilmdirectedbySOM

09,anupdateontherecentachievementsofSOMintermsofthediverseprofilesofferedand

the placements touching the stratosphere, new courses like aviation management and the

scopeofAvenues2007,theannualinternationalfestivalofSOM.Theeventwasconcludedwith

ascintillatingsongperformedbytheSOM09bandInSOMniacswhichinspiredthebatchof

07 to sing the all time favourite SOM Bhajan. Amidst the cheerful mood, the crowd

proceededforinteractionoverdinner.Itwasindeedenlightenmentforthecurrentbatchesas

sthey got to hear about longterm career planning, flow of Indian economy and worklife

8/7/2019 Live Oct 2007 0.10

31/39

balance from those who had been there and done that. One senior

alumnus from consulting domain was talking about atmagyaan.

Anotherone,theCOOfromthepowersector,wasstressingtheneedforaSWOTanalysisof

selftodecidethespecializationinsteadofmarketforces.Anentrepreneurwasemphasizingthe

domainknowledgeaspectandmentalstrengthtokeepgoing.Onecouldreallyfeelthebroad

horizonsofperspective.

Allinall, the evening resulted in sharing of reminiscent times, new networks built, rich

experienceshared anda lotof appreciationconveyed by thealumni to SOM 08 for suchan

exemplaryeventmanagement.Theallpervasivefeelingoftheoccasionisextractedinthisone

quote Educationiswhatsurvives,afteryouveforgottenwhatyoumemorised.

By:

AvinavGoel

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

32/39

StalwartsRisingRupeeHowvalidaretheconcerns?

From

the

time,

when

the

then

Indian

government

had

to

pledge

countrys

gold

to

stave

off

the

forexcrisis, to todaywhen thecountryhasmore than$200billionof forex reservesand the

bankersbank isstrugglingtokeeppacewiththeappreciatingrupeeandtherebysalvagethe

condition of the exporters, the Indian economy has indeed come a long way. The market is

flushwithforexinflows:netinvestmentsbyFIIswere$10.16billionduringJanuaryJune2007.

Similarly, FDI inflows touched $19.53 billion in 200607, a 153% increase over last year. The

turnaroundhasbeenmadepossibleduetoseveralreasons.Thefirstandtheforemost,being

the liberalization of the economy after 1991 and its subsequent continuance till date. The

qualityofgoodsbeingexported increasedandthe Indianexportersstartedgainingground in

the

international

market.

The

remittances

from

the

NRIs

have

been

increasing

continuously

year on year attracted by better interest rates and investment opportunities. But the most

importantdriveristheinternalconsumption.

Butthereisacatchtothesituationaswell.Thisincreaseinthereserveshasledtoappreciation

oftherupee.Itinturncreatedaconditionfortheexportstobeuncompetitive.TheITandBPO

companies,whosemajorsharecomefromtheexportsarebleedingandtheirprofitsaretaking

anosedive.TherupeewhichtradedataroundRs.4748adollar,nowisaroundRs.40adollar.

Though ITandBPOcompaniesarecreatingraucous,accordingtotheCII it isthe leatherand

textileindustrywhichwillbehitthemost.ThecurrentGDPdeficitofIndiais2%ofGDPwhere

asitsfiscaldeficitis5%ofGDP.Addtothis,thepublicsectoraswellasthesubsidiesactingasa

drain,therequirementoffundsforIndiawillbeunending.Withthepressurefromtheindustry

to intervene, as well as the goals of achieving current account convertibility, the RBI is now

facing a tough question. But the question to be asked over here is that do Indian exporters

needtorelyonlyonweakerrupeetosustaintheircompetitiveness?Theothersolutiontothe

problemcanbefoundbyraisingtheTotalFactorProduction (TFP)andoutputperemployee.

ComparingwithEuropeancountries,sayfore.g.Germany.Thecountryisstilldoingverywellin

theexportsofautoandsoftwaretechnologies,inspiteoftheEUROappreciatingtremendously

againstthedollar. Indiashouldcapitalizeon itsstrength: Itsabundant labourforcewhichcan

help inkeepingtheprices low.Weshouldalsotryandruleoutthetrivialcomparisonsabout

how

Chinahasalloweditscurrencytoremainatanundervaluedpriceinordertohaveacompetitive

edge. The Output per employee in China has risen by 8.5% since 1993. For India the

corresponding figure is 4.6%. Same is the case for Total Factor Productivity (TFP) which

increasedby4%forchinaandby2.3%forIndia.

LetusnowunderstandastowhataretheoptionsavailablewithRBIandhowcanitgoaboutit.

AratherstrongintentwasshownbyfinanceministerPChidambaramintheannualbudgetto

8/7/2019 Live Oct 2007 0.10

33/39

effectivelyusethereserves.Thefinanceministerhadproposedtouse5%

of the reserves in the infrastructure development projects. This would

leadtofasterexecutionoftheprojects,stalledonthebasisofunavailabilityofthefunds.The

otherviableoptioncouldbetheinterventionoftheRBItostabilizethenominalexchangerate.

The rate could be stabilized, which in turn would increase the liquidity in the market. The

liquiditywill increase the interest ratesand thereby the inflation.Hence theproblem will be

justaneverendingone.Hence,TheReserveBankofIndiahasoptedfortheeasierwayoutby

allowing more money to leave the Indian shores. But this freedom will not mean increasing

demand fordollarsasyetwithdomesticgrowthbetteringtheglobalaverageand the lackof

global expertise, not many will opt to invest abroad either especially when the returns on

Indianstocksarefarbetterthaninmostcountries.Secondly,ithasalsorespondedbydivesting

itself of domestic securities. One of the other options available with the government is to

providesops.Itmightseemtobeawonderfuloptionatthisstage.Butwoulditreallyimprove

thecompetitivenessoftheIndianfirms.Thiswilljustmakeunprofitablefirmsprofitable.Thisis

one

very

important

fact

which

needs

to

be

taken

into

account.

Whatarethestepsthatthecompaniescantake?Firstandforemost,itisforthecompaniesto

understandthatthefruitsofglobalizationcannotbereapedwithoutitsinevitablesideeffects.

Hencethemoreobvious lookingoptionforthe Indiancompanies istodecreasetheirreliance

onUSmarkets.Themostaccessiblemethod istohedgethecurrencyexposure intheforeign

market.TheEuropeanmarketsareemergingstrongerandstrongereachpassingday.Alsothe

rupeehasbeendepreciatingagainsttheEUROandpoundSterling.Itwillnowbeimperativefor

theITcompaniestogooverboardandtakeuphighendassignmentsacrossallthesectors.The

exportersthoughhavealotofoptionswiththem.Thetimeisafantasticonefortheexporters

to

go

about

an

acquisition

abroad.

The

resource

utilization

will

be

better.

All in all, it seems to be a fantastic time for the Indian growth story, where the rupee is

appreciating,asitdoesforothercountrieswhentheeconomyisstrong.Itistheconsumerwho

isbeingbenefitedafteralldue to lowerpricesandastrongercurrency.RBIshoulddefinitely

restrainitselffrominterveningtoomuchandletthemarketforcescomeintoplayasoftenas

possible.

By:JaiminGandhi

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

34/39

GlobalFinancialImbroglio

Thepopularbeliefis,whatgoesupmustcomedown.Ifthatistobebelieved,thenwhereisour

globaleconomyheading?Afterafewyearsofgreatrunupinthevaluation,acrossalltheasset

classes, the decelerating forces have raised its heads. Since, the start of this year, pundits

predicationofslowdown in US economy started sounding logical.They always havedoubted

where theUSeconomy isheadingwithsuchahuge increase inbudgetdeficit.Theexcessive

consumerism backed by heavy borrowings by US citizen had its nemesis in the form of Sub

primemortgagecrisis.

Technology, liberalization,globalization, leadtoeasyglobal fund flowandgaverisetoCarry

Trade. InFebruary2007,whenBankof Japanraised interestrate from0to0.5%,the jitters

werefeltacrosstheglobalfinancialmarket.TheprecedenceofSouthEastAsiancrisiscame

backfreshintothemindofpeople.

The

history

of

last

decade

in

financial

market

has

been

cyclic

in

nature.

The

booming

economy

ofSouthEastAsiantigersgotpuncturedbyAsianfinancialcrisis.Thetwomajorfactorscausing

thecrisiswereUSeconomyrecoveredfromrecessionandtheraise intheFedrate.Thenext

came intheInformationTechnologyboomfollowedbyagoldrushindotcom.Cashingonthe

euphoria dotcom companies started entering primary market. Investors forgetting the basic

principlesof investing invested incompanieswithoutanybusinessmodelandsoon facedthe

hardreality.Thedotcombubblebegantoburstand finalnail inthecoffincameasa formof

9/11andwhatfollowedwasaperiodofrecession.

Theperiodof2002to2005undertheguidanceofAllanGreenspansawsubsequentcutinthe

interestratefromhighof6%toaslowas2%.ThepumpingofmoneybyFedintotheeconomy

lead to stockprices to rally followedby otherassets.Most importantly, it lead toaboom in

housing market. Ultimately the boom busted in the form of Sub prime crisis. Subprime

mortgageoriginationsgrewfrom$173billionin2001toarecordlevelof$665billionin2005,

which represented an increase of nearly 300%. The repercussion lead to consumer spending

going down, the credit crunch, the slump in housing market and jitters in stock market. The

economygotsothreatenedthattheFederalReservesetasideitsworriesaboutinflationandon

September18cutshortterminterestratesbyhalfapercentagepointforthefirsttimeinfour

years, hoping a shot of stimulus would head off a recession. Commodities had the biggest

monthlygainin32years,ledbywheat,crudeoilandgold,asthedollar'sslumpenhancedthe

appealofenergy,grainsandpreciousmetalsasahedgeagainstinflation.

8/7/2019 Live Oct 2007 0.10

35/39

Areweheadingtowardssofteningofinterestrates?Thatthecomingtime

only will tell. But, whatever be it, Fed must be cautious in reigniting

inflationandspawningnewbubbles.Japaneseeconomytooisshowingsignsofrecovery.Ifthat

sustains then we will see hardening of interest rate by Bank of Japan which will lead to

unwindingofcarrytradeandlotofglobaltrembling.

Indiaalsohad itsdream runup intheglobalboom.Thecommodities,realestateandstocks

haveskyrocketed.ThoughthereallyisbackedbyfundamentalsofIndiagrowingatfastest,but

are we enough shock proof to global imbroglios. After a dream run up, Japanese economy

cooleddown,sowasSouthEastAsiancountries.Now,theonus ison IndianGovt.andRBIto

keenlymonitortheglobaldevelopmentandformulatemaximumriskmanagementstrategyfor

anyglobalrecessionaryeventualities.

By:

PushanSikdar

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

36/39

ChimeraHumanisticManagers

Whyarentemotionsconsideredimportantformanagers??Wekeepcomplainingaboutour

bossesthattheycan'tunderstandtheproblemsoftheirsubordinates.Bossisalwayswrong

andwefeelthatwewouldhavedonethisandthatifweweretobeinthatposition.Butwillwe

everbeabletodothingsproperlywhenweareinthatposition.Forgetaboutbeinginthat

position,evenwouldbemanagersi.e.studentspursuingMBA,cantheybehavethewaywhich

ishumane.

Thoughbeinginhumaneisastrongadjectivetobeusedforthesocalledpettythingslike

hurtingsomeone,playingwithsomeone'semotions,I'dstillconsiderthatinhumane.Iwould

notwanttocompareitwiththeinhumanconditionsprevailinginIraq,Afghanistan,and

Ethiopiawhichcannotbeexpressedinwords.

Asamatteroffact,Iamspeakingaboutaverysimpleactofhurtingemotions.

Inmyperspective,theimportanceofunderstandingtheotherpersonissomethingthatevery

Bschoolshouldimplement.Agreed,numbersmatterincorporateworld,butwhatswrongin

achievingthenumberswithouthurtingsomeone?Idontwanttoconcludeanythingfromthis

article.

Justaconcernasawouldbemanager.

By:

SriramVangara

(SJMSOMBatchof2009)

ExcerptsfromtheblogofSriramVangara:http://vangarasriram.blogspot.com/

8/7/2019 Live Oct 2007 0.10

37/39

By:

AbidHusain

(SJMSOMBatchof2008)

8/7/2019 Live Oct 2007 0.10

38/39

BizQuizQ1. WhatdidChurchilldescribe in1940asanenemywithingatesdoingmoreharmthan

good?

Q2. TowhichcompanydidtheshipmentofteadestroyedbytheAmericancolonistsduring

theBostonTeaPartyin1773belong?

Q3. In1991thiscompanybecamethefirstprivatelyownedcompany(atthatpointoftime)

intheUStoofferstockoptionswhichitnamedBeanStock.Namethecompany?

Q4. WhichwordoftenusedinthebusinessparlancecomesfromItalianfor`brokenbench'?

Q5. Agroupof twentyfour tradersgatheredunderabuttonwood tree to negotiatesome

conditions,theresultofwhichwastheButtonwoodAgreement,asimple,twosentence

contracts.

What

was

this

all

about?

Q6. This term was coined in 1938 by nineyearold Milton Sirotta, nephew of American

mathematician Edward Kasner who announced the concept in his book. A company

takesitsnamefromthatparticularword.Whichcompany?

Q7. WithwhichbrandwouldyouassociateLOTUSandMOUNTAINlogos?

Q8. ResearchinMotion(RIM)isaCanadiancompanyheadquarteredinWaterloo,Ontario.It

was founded by Mike Lazaridis, who currently serves as its coCEO along with Jim

Balsillie.Whatistheirmostfamousproduct?

Q9. PiomaIndustriesisbestknownforwhichbrand?

Q10. It was first founded by the California clothing company Pacific Mills to showcase its

Catalina swimwear brand. Later, it became a part of KayserRoth and then Gulf and

WesternIndustries.In1996theownershipwastakenoverbyDonaldTrump.Whatare

wetalkingabout?

By:S.Prashanth

(SJMSOMBatchof2009)

8/7/2019 Live Oct 2007 0.10

39/39

ANSWERS

1.BBC2.EastIndiaCompany3.Starbucks4.Bankrupt5.FormationofNYSE6.Googleformgoogol7.Adidas8.BlackberryCommunicationDevice9.Rasna10.TheMissUniversepageant