Pratibimb June 2011 - TAPMI's e-Magazine

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Pratibimb | June 2011

Volume II, Issue 1I June 2011

A Bi-Monthly Magazine The Reflection of Management

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Mission

T.A. Pai Management Institute (TAPMI) is a premier management institute situated in

Manipal and is well known for its academic rigour & faculty-student interaction. The

Institute has been recently ranked amongst top 15 B-schools in India & 4th in the South

Zone by The Week Magazine.

Founded by the visionary, Late Shri. T. A. Pai, TAPMI‘s mission is to provide much needed

impetus to the task of building professional management capability in the country. In the

process, it has also played a role in strengthening the existing educational and health

infrastructure of Manipal.

We are committed to excellence in post-graduate management education, research, and

practice by nurturing and developing global wealth creators and leaders. We shall

continually benchmark ourselves against the best in class institutions. We shall foster

continuous learning and reflection, achievement-orientation, creative interdependence and

respect for diversity with a holistic concern for ethics, environment, and the society.

About TAPMI

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Pratibimb – The TAPMI‘s e-Magazine - is the conglomeration of the various specializations

in MBA (Marketing, Finance, HR, Systems and Operations). It is primarily intended to

provide insights into the plethora of knowledge that relate to the various departments of

Management and to give an opportunity to the students of TAPMI and the best brains

across country to exhibit their creative cells. The magazine also strives to bring expert

inputs from industries, thereby bringing the academia and industry together.

Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The issue

comprised of an interview of denoted writer Ms. Rashmi Bansal along with a series of

articles by students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra

Satyam) & Ed Cohen who is a global leader and chief learning officer who led Booz Allen

Hamilton & Satyam Computer Services to the first rank globally for learning &

development . It also included a hugely successful and engrossing game for finance geeks

called ―Beat the Market‖ to bring out the application based knowledge of students by

providing them the platform where they were expected to predict the stock prices of two

selected stocks on a future date. The magazine is primarily intended for the development of

all around management knowledge by providing unbiased critical insights into the modern

developments.

TAPMI believes that learning is a continuous process and is not limited to the four walls of

the classroom. This viewpoint is further enhanced through Pratibimb wherein students

manage and contribute to create a refreshing learning environment outside the classrooms

which eventually leads to a holistic development process. The magazine provides a

competitive platform and opportunity to the students where they can compete with the best

brains of the country. The magazine also provides a platform for prominent industry

stalwarts to communicate their views and learning about and from the recent developments

from their respective fields of business which in turn helps to create a collaborative

learning base for its readers.

Pratibimb is committed in continuing this initiative by bringing in continuous improvement

in the magazine by including quality articles related to various management issues and

eventually creating a more engaging relationship with its readers by providing them a

platform to showcase their talent.

We invite all the best brains across country to be part of this initiative and help us take this

to the next level.

About Pratibimb

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I am pleased to state that the team members of PRATIBIMB have continued their sincere

efforts to bring out this fourth issue in June 2011, despite the first year PGP students were

busily engaged in their Summer Project work in April – May.

The previous three issues had a number of management articles written by our students

and faculty. This student magazine is also accessed and appreciated by our alumni and

industry and business readers.

The magazine provides a platform for our students to use their creativity, imagination and

language skills to reflect upon various management areas i.e., operations, marketing,

system, HR, finance and entrepreneurship as well as in areas of their interest. It also

fosters research culture among students. Research orientation and sharpening analytical

mind are crucial for their academic orientation. Generally literary work, research article

writing and publication should become part of students’ learning goals while they are in

the campus. This would perhaps sow seeds for pursuit for academic career by a few

management students after their initial experience in industry and business. It has been

observed that on comparison with fast developing country i.e., China in Asia, the focus on

research and publishing from Indian students and faculty in management journals and

pursuit of Ph.D. programme in leading universities has been moderate in recent past. This

situation needs to be improved.

To this extent our students and faculty can best express themselves about their creative

thoughts, opinions, knowledge and interests by contributing to PRATIBIMB. Let

PRATIBIMB grow in content and variety with thoughtful articles in months to come.

I congratulate the persistence and continued efforts put in by the team members of

PRATIBIMB for timely publishing this volume. I wish them higher performance, joy and

success in their endeavor.

Dr. A. S. Vasudev Rao

DIRECTOR’S

ME

SS

AG

E

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Pratibimb | June 2011 Editor’s Corner

Chief-Editor

Creative Designer

Special Thanks

Mr. Vinit Monga, Head & Finance Control,

Nokia Siemens Network

Mr. Mitesh Thacker, Head Research &

Trading Analyst, www.miteshthacker.com

Dr. A S Vasudev Rao, Director In-Charge &

Dean-Administration, TAPMI

Prof. Chowdari Prasad, TAPMI

Dr. Jaba M. Gupta, Associate Professor

and Chairperson—eGPX, TAPMI

Mr. Gautam Prasad, PGDM (2010-12) -

Cover Page Design

Dear Readers,

Presently, Indian economy is battling inflation along with its

commitment to meet growth target. Among other problems

being faced by India, the chief one is corruption which has

become buzzword these days. Everyone is trying to gain mass

popularity by showing their support for corruption. Corruption

has been rampant in India since independence in the form of

scams and bribes. The latest among these is the telecom scam.

We are pleased to present you the June issue of Pratibimb which

will analyze the telecom scam in detail and will show you its

implication on various stakeholders like government, industry,

consumer etc. Along with this, there are other interesting

management articles that will also draw your attention.

The highlight of this issue is the interview with Mr. Vinit

Monga, Head & Finance Control, Technology Centre, Nokia

Siemens Network, Bangalore who shared his views &

experience in various areas of Finance with us.

We are extremely happy to introduce a marketing game –

―Route To Market‖ for booming marketing managers of future.

This will provide them with a platform to feel the challenge that

they are going to face in this age of globalization in future.

We are thankful to all the students from various colleges who

put in great efforts in writing articles on various issues/topics

and worked hard to send entries for ―Beat-The-Market‖. The

articles have been selected by the Editor‘s Team whereas Beat-

The-Market has been judged by Mr. Mitesh Thacker, Head

Research & Trading Analyst, www.miteshthacker.com. We

thank him for his precious time.

We thank all those who helped us in improving Pratibimb

through their feedbacks. We would like to take this opportunity

to extend our gratitude to Dr. A. S. Vasudev Rao, Director In-

Charge & Dean-Administration, TAPMI, Prof. Chowdari Prasad

and all other faculties at TAPMI for their continued support,

guidance, motivation and inspiration to take Pratibimb to next

level.

Please continue to send in your valuable suggestions/feedbacks

at [email protected] so that we can make

improvements in the coming issues.

Happy Reading!!

Rohit Kumar

Editor

Branding

Editor

Correspondent

mailto:[email protected]

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Contents

Advertising Through Brand Extensions 34

Ramanuj Vidyanta, TAPMI

Operations in Turbulent World 38

Anish Bhattacharya, Goa Institute of Management

Attitude: It Matters 18

Paminderjit Sunner, TAPMI

Talent Supply Chain Management 36

Aby John Kottukappally, MBA-HR, SCMHRD

Paradigm Shift in Optimal Media Mix Strategy 31

Akankasha Sharma, SIMSREE

Social Media As Means for Consumer Research 16

Nickhie Ann Antony, MICA

Giant Awakening: Indian Manufacturing Sector 22

Deep Aggarwal, MBA(MS), FMS

The Telecom Scam and its Implications 7

Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI

Balancing The Horizon and Renaissance 14

Anuja Yadav, IIM Indore

Interview with Mr. Vinit Monga 27

Head of Finance & Control, Technology Centre, Nokia Siemens Network, Bangalore

303030

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INDIAN MOBILE SECTOR: OVERVIEW

Phenomenal subscriber growth in the mobile

segment

The telecom services sector has grown rapidly over

the past 5 years on the back of a meteoric rise in the

mobile services space. The mobile subscriber base

soared from 99 mn in FY05 to 584 mn in FY10,

making it the second-largest wireless market in the

world, next only to China.

Increased affordability (due to continuous decline

in tariffs, handset prices and reduction in initial

subscription costs) and greater availability (with

rapid expansion in coverage and wider distribution

network) of mobile services has fuelled this

buoyant growth.

The industry has witnessed phenomenal growth in

the past eight years at a CAGR of 73.8% as is

reflected in the graph above. As of December 2010,

mobile subscribers in India had reached 752 million

translating into an overall teledensity of 66.2%.

Industry wide ARPU witnesses significant fall

While there has been significant subscriber growth,

Average Revenue Per User (ARPU) has plummeted

due to intensifying competition between service

providers in the sector. Fall in call tariffs, initial

subscription costs as well as SMS and non-voice

services rates, has led to a reduction in the average

ARPU of the industry.

The fall in ARPU has led to a reduction in the

Revenue Per Minute (RPM) of service providers.

With RPM for several players falling below the

operating cost that the service provider is incurring

per minute, survival in the industry has become

tough.

Total mobile subscribers base

7 14 36 57 99

166

261

392

584

0

100

200

300

400

500

600

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

(In

Mil

lio

ns)

Mobile subscribers

Source: COAI, AUSPI and TRAI

The Telecom Scam and its Implications

Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI

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HISTORICAL SPECTRUM PRICING

STRATEGIES

In August 1995, Mobile services were launched for

the first time in India in the city of Kolkata. Under

the National Telecom Policy, 1994, the policy‘s key

objectives included:

Universal service with complete coverage of

urban and rural areas

Availability of a wide range of services at

reasonable prices

In the first phase in 1994, 2G spectrum was allotted

to four service providers per circle on the basis of

the lowest rental proposed in metros (to increase

affordability) and the highest fee quoted by service

providers in Non metro circles (to maximize

revenues). This was later extended in 2001 to

accommodate more players in order to increase

competition leading to a reduction in prices.

Moreover, the excess spectrum allocation from

2004 onwards had been done by DoT in proportion

to the number of subscribers that a service provider

had in the respective circle.

3G pricing strategy employed by DoT

In the case of the 3G spectrum allocation,

government conducted an auction between

interested parties for three-four slots of spectrum in

the 2.1 GHz range for service providers. As against

a budgeted Rs. 35,000 crores from 3G and BWA

auction made in the Finance Minister‘s speech for

the 2010-11 budget, the exchequer collected Rs.

107,000 crores from the two auctions.

International pricing strategies

Varied spectrum allocation strategies have been

employed in various countries with reasonable

success. The beauty content plus fixed fee pricing

strategy have been employed on most occasions.

Some of the international pricing strategies

employed in various countries are given below:

Having considered historic as well as international

pricing strategies, the following criteria can be used

for determining spectrum price:

1. Demand supply situation reflective of scarcity

2. Economic and social benefits emanating from

3G services

International pricing strategies for spectrum

Country Pricing strategy 2G/ 3G

Australia Auction 3G

Malaysia

Beauty content

plus fixed fee Both 2G & 3G

Singapore

Beauty content

plus fixed fee Both 2G & 3G

Korea

Beauty contest

plus fixed fee 3G

UK Auction 3G

Source:TRAI consultation paper issued 12th June 2006

Spectrum pricing strategies employed by DoT

Key Selection parameter

Metros: Lowest Rental proposed to be charged

from subscribers

Non Metro circles: Highest license fee quoted

by the bidders

1999 Shift from license fee to revenue sharing

2004

Additional spectrum issued on the basis of

number of subscribers

2008 New licensees selected on arbitrary FCFS basis

2010 3G & BWA spectrum alotted through auctions

Source: TRAI recommendations on spectrum allocation

1994

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3. Maximizing government revenue

4. Extent of competition in the market

THE 2G SPECTRUM SCAM

In September 2007, TRAI issued recommendations

on capping the number of access providers.

Salient features of these recommendations were:

1. No cap to be placed on the number of access

service providers in any service areas

2. No additional spectrum to be allocated to

licensees without fulfilling the rollout

obligations and failure of the same would lead

to termination of license

Later that year, DoT accepted all the

recommendations made by the regulator. However,

despite the recommendation, DoT issued a press

release accepting applications only till 1st October,

2007. DoT further accepted applications only till

25th September, 2007.

Irregularities in FCFS strategy adopted by DoT

1. Arbitrary dates fixed as cut off for receiving

applications in September 2007

2. Selectively leaking out information to benefit

a few players who were ready with pre-dated

demand drafts prior to the date of issue of

application asking for Demand drafts

3. Out of 232 applications received from 21

applicant companies till the changed cut-off

date, 121 applications from 16 applicant

Companies were found eligible

4. Opaque & uncertain delivery system due to

UAS licenses barely being issued from 2004-

05 to October 2007

5. Change in the method for applying FCFS

criteria from the date of receipt of application

to date of compliance of LoIs

The Prime Minister, Minister of Law and justice,

Finance Secretary and the DoT Secretary were

against the hasty allotment of spectrum at 2001

prices and believed that DoT had lost an

opportunity to discover the real economic value of a

scarce national resource - spectrum.

Criteria for allocation not met by new entrants

2G Scam : Timeline

24th Sep, 2007 DoT conveys no application to be accepted after

1st Oct, 2007

19th Oct, 2007 Policy for dual technology announced, LoIs issued

to Rcom & 2other companies

2nd Nov, 2007 DoT decides that only 232 applications till 25th

Sep, 2007 will be considered

2nd Nov, 2007 PM writes to Telecom Minister to consider auction

of spectrum in fair transparent manner

2nd Nov, 2007 Telecom minister writes back saying that sufficient

2G spectrum is available

31st Dec, 2007 Secretary DoT and Member (Finance) DoT retired.

10th Jan, 2008 Out of 232 applications received up to cut off date

121 LoIs were issued to applicants found eligible

2G spectrum scam: New licenses

Company Irregularities in the new licenses

Suppressed non - registration of alteration in

the main object clause of MOA by ROC

Authorised share capital only Rs. 5.20 crore

against requirement of 128 crore

Request for Registration of increase in

authorised share capital submitted 24 Oct.

Suppressed non - registration of the

resolution effecting alteration in the MOA

Authorised share capital only Rs. 1 lakh

against requirement of Rs. 138 crore

Submitted false certificate from Company

Secretary

Suppressed non - registration of

alteration in the MOA/AOA

Authorised share capital only Rs. 10 lakh

against requirement of Rs. 18 crors;

Submitted false certificate from Company

Secretary

Source: Various public releases on the website

Shipping stop dot

com now Loop

Telecom

Datacom Solutions

Pvt. Ltd. (Now

Videocon Telecom

Ltd.)

S Tel

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Even ignoring the arbitrary FCFS methodology

adopted by DoT in the issuance of articles, the real

issue lies in the type of companies that were allotted

spectrum to roll out 2G services. Most of the new

entrants who won spectrum were novices in the

telecom field having no background in the industry,

existing only on paper.

Additionally, most of the new entrants did not meet

several criteria for the allocation of spectrum. In the

table below, the irregularities with respect to the

new licensees have been mentioned.

IMPACT ON INDUSTRY

In an already competitive environment, number of

service providers were raised from 6-7 to 11-12 in

various circles, resulting in a hyper-competitive

scenario.

Preferential treatment for new entrants

While established players were waiting in line to

gain spectrum, new players were offered spectrum

within a few months of applying for the letter of

intent. Idea Cellular had been in queue for more

than 2 years for spectrum in the Punjab circle, while

new entrant Unitech Wireless was issued spectrum

in just 2 months, despite being much lower than

Idea in the priority list for the Punjab circle.

Spectrum issued at throwaway prices

The spectrum issued to new entrants was offered in

the range of Rs. 1,500 to Rs.1,600 crores which was

the same price at which most of the incumbent

players had received startup spectrum post the

implementation of the National Telecom Policy,

1999. In eight years, the industry had undergone

major changes and from its infancy stage had

zoomed forward. To realize the true value of

spectrum, we can consider the equity sales made by

the following companies, most of whom did not

possess any assets on their books, but a piece of

paper – The 2G license.

Little impact on competition in the sector

While the allotment of 2G spectrum was expected

to usher in a new wave of competition leading to a

further reduction in tariffs, most of the new entrants

failed to meet their roll out obligation norms.

Equity sales by new entrants to foreign players

Seller Buyer % Stake In Rs. Crores

Swan

Telecom Etisalat

Mauritius 50% 3,598

S Tel

BMIC,

Mauritius 5% 239

Unitech

Telenor,

Norway 67% 6,120

Source: Media releases on company websites

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Moreover, the new entrants have failed to garner a

significant amount of market share since their roll

out. In fact the top six players of the industry have

remained unchanged in the past several years. As of

December 2010, six new entrants (Etisalat, Uninor,

Sistema Shyam, S-Tel, Loop Telecom and

Videocon) had managed just 4 per cent market

share translating into just one per cent revenue

market share.

IMPACT ON GOVERNMENT

Non fulfillment of roll out obligation norms

As per the roll out norms, new licensees were

required to roll out services in 90% of metro service

area and 10% District Headquarters in other service

areas within 12 months of being allotted spectrum.

Although the startup spectrum of 4.4 MHz was

made available to all players in 2008, none of them

had rolled out services as per the earlier stated

provisions till January 2010. Therefore,

1. DoT did not earn any spectrum fee from these

operators in 2008-09 and 2009-10

2. DoT has also not recovered penalties

amounting to Rs. 700 crores from these new

entrants

Huge loss of revenue

The notional loss suffered by the exchequer due to

the 2G spectrum scam can be calculated in two

ways:

1. On the basis of S-Tel‘s offer to DoT of Rs.

13,751 crores for 6.2 MHz of spectrum for

10 years, leading to Rs. 47,964 crores for 122

licenses

2. On the basis of the 3G spectrum auction price

which is Rs. 111,512 crores

In addition, if losses due to dual technology specific

losses and excess spectrum issued over and above

6.2 MHz is considered, then the figures in the two

cases amount to Rs. 67,634 crores and Rs.1,76,645

crores respectively.

Burgeoning fiscal deficit

In the year 2007-08, India ran a fiscal deficit of Rs.

1,509 billion representing 3.1% of the country‘s

GDP. While in the union budget for 2009-10, this

fiscal deficit had risen to 6.7 % of the country‘s

GDP.

However, support was lent by the auctions

conducted for 3G and BWA spectrum in 2010-11.

Against a budgeted Rs. 35,000 crores expectation

by the government for 3G and BWA auction, the

exchequer made Rs. 107,000 crores through the sale

Estimates of loss due to 2G scam

Based on S

Tel's offer

Based on

3G auction

prices

Revenue

expected 47,964 111,512

Revenue

through

auctions

9,014 9,014

Loss 38,950 102,498

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of spectrum. This helped in fiscal consolidation as

fiscal deficit came down to 5.1 %.

IMPACT ON CONSUMERS

When the Telecom Minister wrote to the Prime

Minister on 2nd November 2007, explaining the

rationale behind issuance of spectrum on 2001

prices, he mentioned the following points:

1. More number of operators per circle will

bring down the tariff

2. In order to increase affordability, if a high

cost was imposed on the spectrum, service

providers would have no option but to pass on

the costs

The roll out of new licensees has led to competition

further intensifying in the domestic mobile services

space with the HHI falling from 1,590 to 1,394 as

of December 2010 (Considering subscriber market

share). However, it is imperative to note that the

new licensees do not have a substantial amount of

revenue market share in the industry with the

incumbents still being the dominators.

Moreover, a high proportion of the subscriber

additions that have been achieved in the past three

years have been due to attractive schemes rolled out

by the incumbents.

1. Airtel brought down lifetime prepaid scheme

from Rs. 199 to Rs. 99

2. Simply Reliance plan offering competitive

tariffs to subscribers

3. Tata DoCoMo‘s launch characterized by per

second billing

In a nutshell, the impact on the consumers due to

overcrowding of 11-12 players in each circle has

been marginally positive, however, the new entrants

have had little profits to show in this period.

NEED FOR REGULATIONS

Telecom Regulatory Authority of India (TRAI) was

established in 1997 to regulate telecom services and

for fixation/revision of tariffs and also to fulfill the

commitments made when India joined the World

Subscriber additions in the past three years

Source: TRAI, COAI and internal research

6

8

10

12

14

16

18

20

Ju

n-0

7

Au

g-0

7

Oc

t-0

7

De

c-0

7

Fe

b-0

8

Ap

r-0

8

Ju

n-0

8

Au

g-0

8

Oc

t-0

8

De

c-0

8

Fe

b-0

9

Ap

r-0

9

Ju

n-0

9

Au

g-0

9

Oc

t-0

9

De

c-0

9

Fe

b-1

0

Ap

r-1

0

Ju

n-1

0

(In Millions)

Lifetime prepaid scheme

reduced to Rs 199,

RCom’s GSM launch and

Vodafone and Idea’s

new circle launches

Tata DoCoMo's GSM launch

characterised

by per second billing

Sustained growth due to incumbents

perfroming well & new entrants

chiping in

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Trade Organization (WTO) in 1995. The formation

of TRAI separated the regulatory function from

policy making and operations which remained

under DoT.

With reference to the 2G Telecom Scam, several

issues have come to light.

1. Disagreement in opinions of the regulator

TRAI and the Department of Telecom (DoT)

2. Uniform decisions need to be taken by the

DoT, Ministry of Finance & Prime Minister‘s

office

3. Level of corruption and non-transparency in

the Telecom Ministry

4. Nexus between media representatives,

lobbyists, politicians, bureaucrats as well as

industrialists

The regulator needs to be offered independent

authority and a larger responsibility in framing

policies for industry stakeholders. The regulator can

go a long way in increasing transparency and

accountability in the system and offering

recommendations for the designing of policies to

DoT.

With reference to the current industry scenario, the

regulator needs to design a uniform pricing strategy

for future 2G as well as 3G spectrum allocations.

Also, issues such as Spectrum trading, Mobile

Virtual Network Operator, change in merger and

acquisition norms need to be studied in detail and

relevant policies need to be designed in order to

ensure the smooth functioning of the sector for all

major stakeholders.

RECOMMENDATIONS

The 2G scam has tarnished the reputation of Indian

politicians and bureaucrats and in the aftermath a

lot has changed. Despite the resignation of A. Raja

from the post of the Telecom Minister, questions of

corruption have also been raised against the Prime

Minister and other members of the UPA

government.

On the other hand, the scam has resulted in a

gargantuan financial loss to the exchequer

amounting to more than Rs. 60,000 crores atleast.

Irrespective of the exact financial loss made due to

the 2G scam, the Department of Telecom lost

accountability and transparency. Moreover, there

has been a substantial loss due to the new entrants

not rolling out operations on time leading to lower

revenue collections for the DoT.

Going forward, DoT in accordance with the

Telecom Regulatory Authority of India needs to

arrive at a uniform spectrum pricing policy to

avoid similar discrepancies in the future. Also, in

order to make the sector sustainable for service

providers and to promote expansion into the

hitherto neglected rural hinterlands, DoT needs to

relook at the Merger and Acquisition norms

currently prevalent in the industry.

With consolidation imminent in the sector, the next

phase of growth is expected to stem from the

expansion into the rural areas and revenue

generated from 3G services. The Indian telecom

sector has witnessed a honeymoon period till now

and the good times can last going forward, if the

Telecom Ministry, can tinker the M & A norms

and make the industry environment more favorable

for industry players.

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O rganizations often find themselves at

crossroads when faced with the

defining questions of bringing in a new

era of infinite possibilities and the horizon. Why do

brilliant ideas crash? Is it the lack of vision and

resources? Or is there something more than that?

More often than not what‘s missing is the balancing

act which could make or break deals. How smartly

can the horizon be found? – The point where

ground reality meets sky high vision.

When David met Goliath, only an idea could have

turned the tables around. That‘s the power, the

essence, the true enigma – and David did win.

Could this have been possible without the balancing

act? Never and from this never- land one is tempted

to ask – what could have been done differently?

Let‘s take the example of the retail industry. We all

know the might of global powerhouses like Wal-

Mart etc. or our very own Future Group. These are

the Goliaths, what could David or the local Mom-

and-Pop stores do differently to take on the might

of such giants? It is the close association with the

customer that is the USP of these stores compared

to the diversity of brands carried by Big Bazaar .

KYC or Know Your Customer, direct marketing

and customer segmentation are the winning horses

to bet on. The inherent assumption here is that the

customer is lazy. He has to be coerced and

persuaded into buying what he needs, and if the

need is not evident, it has to be discovered. So the

strength of the giant (read push strategy) becomes

the opportunity for the local retailer. Knowing the

buying pattern of the customer, engaging in tele-

marketing and marketing the products which are the

daily essentials which the customers might soon run

short of; this could be something as basic as the

daily groceries.

Don‘t expect the customer to come to you. Bring

the product to the customer; chances are that 1 out

of 5 cases, you will succeed. And in that one, you

have a satisfied customer. A bird in the hand is

worth two in the bush. Based on the buying pattern,

the next call becomes that much more effective.

Categorize your customers according to brand

preferences, buying timing, purchase volume and

value of purchases. This calls for significant

amount of investment and personalization which

could only be catered to by the local retailer, but is

Balancing the Horizon and Renaissance

Anuja Yadav, IIM Indore

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definitely a winning combination. After all,

customer is the king.

In fact, predicting consumer behavior is highly

sought after in the retail industry and the retailers

are willing to shell out huge amounts for business

intelligence and analytics. Retail analysts and

consultants are earning anywhere between $30-45

million annually in this space. The analytics tool

helps in pricing, promotion, planning and decision

making. This market is slated to grow to $60 billion

globally. However, what they fall short of is the

lack of personalization and ease of reaching

customer which a local retailer can manage.

The home delivery mechanism of giant retailers

hardly fits the bill with the model having its own

list of inherent flaws. What‘s more interesting is

that retail chains have evolved over time to become

more efficient and en-cash upon the plethora of

opportunities out there. Enter retail clubs - an

amazing concept which finds its implementation in

foreign countries; however the idea is yet to take off

on a large scale in India. The idea is as simple as

charging club members‘ annual membership and

giving them exclusive rights to shop in the stores.

The beauty of the concept lies in its business model

which is based on negative working capital. To

quote John Millins – ―Negative working capital‖ is

a cash flow model in which stores can sell and

deliver a product before they pay for it. Lately,

organizations have been moving towards zero

working capital. The best of the lot knows how to

do the unexpected. Costco works on the negative

cash flow model. They bill their members annually

and accept only cash, check or debit cards –

maintaining only three days of accounts receivable.

They maintain rapid inventory turnover. The

accounts payable, on the other hand, is maintained

at 32 days. They provide the best deals to their

customers in terms of price and quality.

Where could organizations find a balancing act

here? The retail clubs provide a sense of exclusivity

along with the guarantee of the best deals ever.

However, it‘s imperative to have inventory that

moves quickly else the implementation fails to live

up to the concept of negative cash flow. This idea

needs huge corporate muscle and bargaining skills.

The retail giants can take a page out of this from

Price Club, Cost Co and Sam‘s Club.

Clubs can be opened up for high income groups

who would prefer exclusivity and an unmatched

shopping experience contrary to the concept of Big

Bazaar. With the growing per capita income in our

country, the high income group is on the rise. E-

commerce can also be utilized as a channel for

targeting this group through websites and mailing

lists. This type of niche marketing, to cater to the

need of exclusivity of this segment of customers is

an under-explored area. Real estate products to

holiday packages could also be marketed to this

segment by providing rented retail space to the

vendors of these products in the stores ensuring the

deals offered are the best in the market. Hence,

finding the balancing act could be a useful strategy

for not only the Davids but also the Goliaths. Both

need their horizons well defined for the right

implementation.

References

Mullins, John W., Capital is King!. Business

Strategy Review , Vol. 20, Issue 4, pp. 4-8,

Winter 2009

Economic Times dated 10th December, 2010

16


V ery often we are told about the

importance of Consumer Research. Is

our marketing strategy better enforced if

we have a deeper understanding of consumer

behavior? Consumer insight can help us understand

how products are bought and sold in the market,

what drives purchases, satisfaction levels etc. Many

a times we will find that better consumer

understanding is the key to better analysis of the

trends that we sometimes find so hard to explain.

Thus, in depth research in the field of consumer

behavior is absolutely essential. We also understand

that this requires a lot of time and energy and most

importantly money. It takes months of research to

understand what the consumers feel when they buy

or use or even throw your products. And money is

not something that we can part with that easily; can

we? And time? Do we have enough to keep

ourselves ahead of our competitors? The answer is

NO.

But something has changed in the recent years.

Social media! Everything has turned around since

the advent of social media. Keeping up with our

friends has never been easier. We know everything

that they do from morning till night. Tweets and

status updates keep us updated. But social media

has affected not just our social lives, but also on the

way companies view consumers. It has completely

changed the way they get information about

consumers. People these days constantly update

their status messages with their purchases and their

likes, dislikes, frustrations, delight etc. w.r.t. these

purchases. Tweets, buzz etc. are now a key to

gaining more insight about one‘s audience. That

too, on the go. If a person is happy with a product

or service it takes him just minutes to post it on his

Facebook wall or tweet it. Recently, a friend of

mine, a loyal Vodafone customer, updated on her

wall her frustration over the fact that Vodafone had

overcharged her for a call. Within couple of hours

of this post, Vodafone sincerely apologized and

promised to compensate her for the inconvenience

caused through a post on her wall. Thus, they

managed to save one of their loyal customers in full

public view. All her 456 friends had evidenced as to

how Vodafone managed to retain a customer. That

is the power of social media. Vodafone not only

managed to retain a customer but also generated a

considerable amount of goodwill amongst the 457

―viewers‖ by typing in a few words, investing a

few minutes and no money spent at all .

It has thus become much easier for marketers to get

so called private data from their target customers.

The information is all over the web, the only

question is of going out and getting it. It may seem

like searching for a needle in a haystack, but it is

doable. Google claims that the next most sought

after job will be that of a statistician who has to

figure out how best to create algorithms to analyze

this mass of data available online. (Cantor, 2009)

Social Media As Means For Consumer Research

Nickhie Ann Antony, MICA

17


Personal or private data is no longer private. It is

there for everyone to see. All the research that is

conducted is on this private data. So, when all this

data is available online, shouldn‘t the next step

involve delving into this data with as much zeal as

possible and extract as much information as

possible.

HOW CAN THIS INFORMATION BE USED

FOR COMMUNICATION?

All this information can be essential for

understanding what the consumers want from the

market. This information will mostly be helpful to

people who can change their tactics fast according

to the trend in the market. For example, a TV show

can use the reviews and comments received by it

and use it to change the storyline as per the wishes

of its audience. Similarly, a service provider like

Vodafone or even a restaurant can continue with its

offer or stop it based on how people like it or accept

it. What if McDonalds could gauge the success of

its new McSpicy range of burgers? Wouldn‘t that

help McDonald‘s as much as it would help the

consumer? Thus social media makes it far easier for

marketers to gauge the reactions of its end

consumers.

However, the communication is not one sided.

Consumers too are searching for the information

they require on the online platform. And most of

them are doing it on social media sites. In a

research conducted by OTX Research on the

―Impact of Social Media on Purchase Behavior of

People‖ it was shown that nearly 70% of the people

search for information related to products and

service on social media websites, then followed by

company websites at 68%. Online review sites and

Wikis followed at 48% and 44% respectively

(Swain, 2009). Thus, social media has become a

key to direct communication with the intended

customers.

IS THERE SOMETHING AS TOO MUCH

INFORMATION?

Can all this influx of information ever become too

much? Will it all just lead to chaos or is it that there

can be something out of all this information?

My belief is that all this information can lead to

disastrous consequences if not dealt with in a proper

manner. Every time a brand gets a like or a positive

comment, it may take it as a validation of

something that they have done well; which may not

always be true. Similarly, if they react too fast to

comments that are negative or react without much

thought, they may do themselves much harm than

good. They should be able to see the bigger picture.

Adequate care must also be taken to see that even in

responding to these situations the company and its

personnel does not deviate from the company‘s

vision. It should not end up diluting the company‘s

values in trying to meet the consumers‘ demands.

They have to understand that people will demand

what they want. It is for the company to decide

whether it is their cup of tea to deliver on the

wishes of all their consumers or not.

References

Matt Cantor, Today‘s Sexy Job: Statistician,

newser.com, August 2009, http://

www.newser.com/story/66223/todays-sexy-job-

statistician.html

Sampad Swain, Impact of Social Media on

Consumer Behaviour, Sampadswain.com,

January 2009, http://sampadswain.com/2009/01/

impact-of-social-media-on-consumer-behavior/

http://www.newser.com/story/66223/todays-sexy-job-statistician.html



http://sampadswain.com/2009/01/impact-of-social-media-on-consumer-behavior/

http://sampadswain.com/2009/01/impact-of-social-media-on-consumer-behavior/

18


Introduction

Ever wondered, what makes life 100%?

Somebody has done some interesting calculations

to answer this.

If A B C... equals 1 2 3...

Then H+A+R+D+W+O+R+K

= 8+1+18+4+23+15+18+11 = 98%

K+N+O+W+L+E+D+G+E

= 11+14+15+23+12+5+4+7+5 = 96%

L+O+V+E=12+15+22+5=54%

L+U+C+K = 12+21+3+11 = 47%

None of them makes 100%

What makes 100% is:

A+T+T+I+T+U+D+E

= 1+20+20+9+20+21+4+5 = 100

So, do you have an attitude?

Of course, every one of us has one; but the right

question to ask is:

Do you have the right attitude?

Now, what‘s this ‗right attitude‘, or before that,

what‘s an attitude?

An attitude is the way you perceive anything in

your life. It is actually a continuous way of

thinking that is deeply rooted in your mind and

drives your behavior and consequently your lives.

As you know, there are always two sides to

everything. Now, your choice of the side depends

on your attitude. For example, if a jug contains

water up to the half of its capacity, considering that

jug to be half full or half empty depends on your

attitude. This seemingly meaningless selection

actually tells a lot about your personality.

There are two kinds of attitude: Positive and

negative. In the above example, considering the jug

to be half full is a positive attitude, while

considering it to be half empty is a negative

attitude.

Difference between Positive and Negative

Attitude

Having a positive attitude means you always tend to

look at the brighter side of the things. It does not

mean that you stop being practical; but it means that

you can always

spot an

opportunity,

even if

disguised as an

adversity. A

person with

Attitude: It Matters

Paminderjit Sunner, TAPMI

19


positive attitude always thinks of solutions, while

that with a negative attitude keeps on whining about

the problem. Positive attitude drives you to think

about can do; while negative attitude pushes you to

think about can‘t do. Positive attitude helps you to

adapt to the new situations easily, while negative

attitude tends to keep you undesirably rigid, and

thus hampers your progress.

A person with a positive attitude is happier, but a

negative person keeps on lamenting. A positive

attitude ensures the grooming of wonderful

relationships, both at personal and professional

fronts, but a negative attitude creates troubles in the

relationships.

Positive attitude gives a forward push to your

career, while negative attitude keeps pulling you

back. The positive attitude helps you to attain the

capability of doing what you desire and ultimately

helps you to achieve it. On the other hand, the

negative attitude does not even allow you to achieve

what you are capable of at the present.

Importance of Positive Attitude

Having a positive attitude means you have a

positive outlook for everything in your life; you are

a positive person. As agreed upon by many

scientists and philosophers, this universe is all about

energy. Everything is a form of energy. The

positivity of your personality radiates positive

energy, and positive energy leads to happiness and

growth. Also, this positive energy attracts more

positive energy from the universe, thus increasing

your potential, performance and achievement.

A positive person always believes in herself/

himself. As she/he believes in her/his potential, the

challenges don‘t upset her/him but present her/him

with a chance to prove her/him. This way, the

positive person never loses the calm and keeps on

working towards the aim. Ultimately, she/he

performs really well and realizes the dreams of life

and thus lives a meaningful and contented life.

A positive person can see the good points of others,

and thus can appreciate their qualities. Once you are

able to see something good in others and are ready

to appreciate that, you can have a good rapport with

the other person. A positive person thus can easily

be a good team player and have a good friend

circle. The positive attitude actually makes people

good relationship managers. It is not that a positive

person always ignore the negative traits of others

and can accept any kind of people as friends; the

point is that the positive attitude makes the behavior

such that the positive traits of others dominate when

they deal with you and this happens because of your

positivity. Thus the situation is like you command

the goodness of others. Also, you can help them

mitigate their negatives and build upon the

positives, due to your appreciation and recognition

of their positive traits. Thus, a positive person can

help others improve.

In the career, the positive attitude gives you the

wings to dream and achieve higher. It makes you

feel your intrinsic potential to achieve your career

goals. It helps you to believe in your ideas. Thus,

when you believe in yourself, the whole world

believes in you. The positive attitude gives you

loads of courage to face the challenges that confront

you on the way towards your goals. This courage

helps you to overcome those obstacles and be the

winners. Thus, whether you have to complete an

assigned project at an office or have to implement

your own idea in a new venture, positive attitude is

20


always there to make you persistently do the job

and be the winner. A positive person never thinks

of quitting but always finds a way out of a problem.

Thus, positive attitude helps you in managing

situations.

A positive attitude makes you adapt to the

changing life situations with an ease. The positive

attitude is one thing that has helped the people like

Bill gates, Sam Walton, Dr. Manmohan Singh,

Indra Nooyi etc. to be what they are today. It is the

positive attitude that helps people to scale the Mt.

Everest, make airplanes, etc.; i.e. to do the things

that were once considered to be impossible. It

means the positive attitude has the power to

convert impossible into the possible.

With a positive attitude, you achieve; and with

achievements, you become more confident and

motivated. This confidence helps you to achieve

more and be happier; and in turn makes you all the

more motivated. Thus positive attitude drives a

continuous growth process.

What about you?

What sort of attitude do you possess? Analyze

yourself. You will get to know about your attitude.

There‘s no need to ask anybody else; an honest self

-appraisal would do. If you are not happy or

successful, attitudinal problem might be the cause.

Think about what you do when you have a problem.

Does your time get spent in being afraid of the

problem and getting stressed? If so, then you need

to set your attitude right. If you find it really

difficult to find something good in others, but you

are really very intelligent to judge all the negatives

rightly, you need to be bit more positive. If you use

a lot of negative words: can‘t, no, don‘t etc., you are

not a desirably positive person. If you have always

relationship troubles, you might be a victim of

negative attitude. If you feel stressed, and feel the

life to be a burden, it is high time to be positive.

How to have a Positive Attitude?

Now, the issue is that how to get this positive

attitude? Is it something genetic, god-gifted or you

can cultivate it through the practice? The answer is

that it can very well be cultivated through practice.

Being negative is easier than being positive.

Although, to have and maintain a positive attitude is

a gigantic task in itself; but once you start doing it,

it is a lifestyle and makes life better. Even very

small things can help.

First of all, you need to decide that you really want

to be a positive personality. Believe that it surely

benefits you and you can become a positive person

to the core of your mind.

Once decided, it is a lot easier to implement the

behavioral changes that are needed to become

more positive, as the inner friction to this new

course of life is mitigated. Start with simple things.

Decide to have the positive energy around you.

Clear up the mess in your room. The clutter attracts

negativity. Be an organized person. Be punctual.

All this will help in channelizing the positive

energy inside you. See to it that you use the positive

words while talking; for example, instead of saying

- I could not do it yesterday. Say, I am going to

finish it today. Instead of using the vocabulary like

never, can‘t, don‘t; use positive words like yes, will,

do, can, etc.

Read good books. It makes your thought process

positive. For example, by reading „The Secret‟ by

Rhonda Byrne, one feels really motivated. You

start believing in your capability of making things

21


happen. The core point in the book is „The law of

attraction‟ that prevails in this universe. According

to this law, whatever you think and feel, it gets

attracted to you; no matter it is positive or negative.

The universe is like a powerful genie that keeps on

repeating to each one of us—‗Your wish is my

command.‘ Three simple steps to fulfill all your

desires have been given in this book— 1. Desire,

i.e., be clear of whatever you wish. 2. Believe, i.e.,

take it as a fact that your desire has been fulfilled

and have gratitude for the same. 3. Receive, i.e.,

finally you actually see your desire manifested in

the real world. It provides an awareness of your

own self, its potential and its

wonderful nature.

Another way to remain

positive is to have a deep faith

in God. If you believe and

keep on reiterating to yourself

that the God is there to support

you in every right deed; you will feel more

empowered and will perform better. There have

been several instances in the world when the people

have achieved the unexpected due to their deep

faith in God. The book „The power of positive

thinking‟ by Dr. Norman Vincent Peale is full of

such examples.

Another thing is that one needs to be in the

company of positive people. Listening to them

would motivate you while the company of negative

people would demotivate you. So, choose your

friends with caution. The support of family,

teachers and the peer group helps; as being human,

you have an intrinsic need for recognition. If the

others show faith in your capabilities, you start

believing in your potential and do the most effort to

prove them to be right. This enhances the positivity

of attitude.

It is not that you can transform from being a

negative to a positive person overnight. It is a

continuous process and needs a consistent and

sincere effort. Once you delve into the process, and

start getting results, it is really enjoyable. Then,

your achievements increase; you brim with

confidence and enjoy life.

Conclusion

Attitude defines personality. Positive attitude

makes you get the best out of the life. Being

human, you have a

tremendous potential. Positive

attitude helps to tap this

potential in a proper manner.

It helps to achieve success

and happiness. On the other

hand, negative attitude hinders

your holistic development and limits your

achievements. You can come to know about your

attitude through self-analysis. By adopting a

change in behavior and following some simple

ways, you can have a gradual change in the

thought process and thus become master of

positive attitude. A positive person is always a part

of the solution rather than being a part of the

problem. With positive attitude, you can dream,

perform and achieve higher. Positive attitude

makes life lovable.

References

‗The Secret‘ by Rhonda Byrne

‗The power of positive thinking‘ by Dr.

Norman Vincent Peale

Nothing can stop the man

with the right mental

attitude from achieving his

goal; nothing on earth can

help the man with the

wrong mental attitude.

—Thomas Jefferson

22


O ften in the context of developing

nations, China has been equated to a

manufacturing hub whereas India has

been treated as a center for services. But in the

current scenario, these rigid lines are blurring. India

is beginning to attract more and more companies to

setup their manufacturing plants in the country.

Manufacturing Industry has played a crucial role in

terms of contribution to GDP of the nation with a

current contribution of around 17%. Also, it has

shown an average CAGR of 6.8% for the past

decade. With our economy growing at a rate of 7.4

percent, it is believed that the manufacturing

sector‘s role in it should increase if India wishes to

be at comparative levels with the likes of China,

Thailand and Poland.

India‘s GDP of $1.6 trillion is still dominated by

the services sector with as much as 57%

contribution but the secondary sector enjoys a

contribution of 26%. Manufacturing industry forms

Giant Awakening: Indian Manufacturing Sector

Deep Aggarwal, MBA(MS), FMS

23


a major component (17% of the total GDP) of this

secondary sector.

India is a country where economic and political

polices are developed keeping employment

generation in priority. Manufacturing sector offers

such an advantage that every employment created

in manufacturing industry is complimented by 2-3

jobs in the service sector. So, the growth in the

manufacturing sector becomes all the more

important. Out of the current workforce of 500 mn,

manufacturing industry employs around 12% i.e.

approximately 60 million people .

Manufacturing ( Percentage of total GDP- FY 2009)

24


Manufacturing Industry: India vis-à-vis The

World

The Indian manufacturing industry‘s contribution of

around 17% to India‘s GDP is comparatively lower

than other rapidly developing nations. Hence, there

is a lot of scope for improvement.

Although, if we talk about the growth rate of the

manufacturing industry in various countries, India

has shown a robust rate of growth in comparison to

the rest of the rapidly developing economies. India

stands second only to China. China reported a

growth of 10.3% in the period of (1999-2009)

whereas India is a distant second with an average

growth rate of 6.8%, closely followed by countries

like Russia, Poland and Thailand.

Advantage at INDIA

India offers manifold advantages which other

countries, including, but not restricted to, China,

fail to deliver. We have already seen the potential of

growth in manufacturing sector in India and why

the government should pay more attention to it. The

following advantages certify that if proper steps and

measures are taken, then it is certainly possible to

achieve those targets.

Cheap raw materials: India is the lowest

cost producer of steel, cement and aluminum

in the world and India can leverage this to

attract a lot of companies who are directly or

indirectly related to these materials.

Competitive labor cost: India has always

been known for its population. Whether it is a

problem or a useful resource depends on how

we look at it. But when it comes to labor,

India definitely gains from it. Manufacturing

sector in India already employs 60 million

people. The extent of unemployed yet capable

people who are available in India is

unimaginable. So, this allows the companies

to employ these people at very competitive

costs.

Strong engineering / manufacturing

capabilities: India‘s manufacturing quality

and engineering skills have improved

significantly over the year. India has the

largest pool of graduating engineers in the

world. In a bid to establish their quality

credentials, a number of factories in India

began applying for the prestigious Deming

Application Prize. Until 1997 not a single

company from India had won the Deming

award. But by 2006, a slew of 16 factories

from this nation—including Rane Brake,

Sundaram Clayton and TVS Motors—had

swept the awards, accounting for more

winners than any other country outside of

Japan.

Large Domestic Markets: India

distinguishes itself from other nations in

terms of its large domestic market. Most

developing countries account their rise in

GDP to growth in exports of manufacturing

industry whereas in India, the in-house

consumption of manufacturing products is

considerably high. In 2009, China saw a

growth of 21% in its exports whereas India

observed a growth of only 11%. This shows

that India possess a very huge domestic

market which attracts more manufacturers to

India.

Apart from these factors, there are various other

factors like infrastructure and location advantage,

25


government policies and regulations, improving

competitiveness of manufacturing firms, and

increasing foreign investments in India and well –

developed designing and machining capabilities.

Challenges Faced

Indian manufacturing industry is not as appealing as

it seems. It is currently facing a number of problems

and challenges, which need to be addressed in order

to safeguard the industry and propel it to newer

heights. These issues need to be solved and treated

urgently if the country wishes to have a growth rate

comparable to other rapidly developing countries

like Thailand and China and to have the

manufacturing industry as the backbone of its

economy instead of the agriculture and allied

services which are plagued with inefficiencies and

lack of technology.

Among various other reasons, the main problems

and challenges faced are:

Macro-economic stability: This single

aspect alone stands as the major problem for

the manufacturing industry. It is important to

ensure long-term economic stability through a

framework which makes way for appropriate

monetary and fiscal policies and prevent large

fluctuations in the economic variables like

output, unemployment and high inflation rate

which have been undoing the majority of the

efforts done in order to make this sector an

attractive one.

Cost Competitiveness: The two parameters

on which the cost competitiveness is judged

are: the quality of the material manufactured

and the cost of the manufactured good. India

can only compete with countries like China if

she can cut down on the manufacturing cost.

India suffers on cost competitiveness because

of various factors like lower labor

productivity, inadequate infrastructure, high

cost of capital, lower operational and

functional efficiencies, higher incidence of

indirect taxes and higher import duties

including inverted duty structure.

FDIs and their procedure: India lags way

behind to other rapidly developing countries

in terms of FDIs and FIIs. India attracted

$14.3 billion in 2010 whereas China got in a

much larger $80 billion in the same year. This

clearly shows the difference between the two

countries. So, what exactly is the reason for

such a huge difference in these figures? The

major reason behind this is the complicated

and the long procedure in getting clearances

and setting up an industry in India. Although,

Indian government has completely opened up

the manufacturing sector to FDIs with only

few restrictions on mergers & acquisitions,

the procedures be at the entry level, the

operational level or at the exit level are so

laborious and long that the foreign

investments are demotivated to invest.

Domestic Indirect Taxes: The indirect tax in

India constitutes a group of tax laws and

regulations. The indirect taxes in India are

enforced upon different activities including

manufacturing, trading and imports. Indirect

taxes influence all the business lines in India.

Some of the indirect taxes in India include

stamp duty, excise tax, sales tax, expenditure

tax, etc. These taxes are often said to be the

single most reason for making India

26


unattractive to industrial development. The

taxes charged in India are around 25% to 30%

of the retail price as compared to around 15%

in China.

Labor Laws: Most of India's labor laws

were adopted as a reaction to an event. If a

situation seemed bad, the first reaction was to

make a law preventing it to happen again. So,

if unemployment was a cause of worry,

Government made laws, which made firing

people very difficult. But, the government

forgot to take into consideration that each law

leads entrepreneurs and laborers to try and

find loopholes and manipulate the laws for

their benefits to respond strategically.

The problems faced by the manufacturing sector, if

addressed properly would allow the sector to

prosper and grow at a very fast rate. For that, we

need to understand these problems and then find the

right solutions, which can be implemented.

Conclusion

Keeping in mind the developments made in the

past, it is safe to assume that Indian manufacturing

industry is showing signs of robust growth in the

future as well.

The fact that the manufacturing sector in India has

the potential for tremendous growth and that it can

drive the economy forward cannot be over

emphasized. It is just that proper planning and their

perfect execution is required for this to happen.

This will enable India to enter the next growth orbit

and squarely place itself as a leading player on the

global manufacturing landscape. This will help

India not only to compete with the rapidly

developing economies but also to become an

example which other countries would like to

emulate.

References

Indian Manufacturing: The next

growth orbit, a report by BCG & CII,

January 2010

Globalizing Indian Manufacturing:

Competing in global manufacturing

and service networks, a report by

Deloitte and ISB,

Enhancing Competitiveness of India

Manufacturing Industry: Assistance in

Policy making, a report by NMCC

Jayan Jose Thomas, ―A review of

Indian manufacturing‖, India

Development Report 2002, Oxford

University Press, New Delhi

―Global Competitiveness

Report‖ (GCR), World Economic

Forum (WEF), 2010.

―Made in India – the next big

manufacturing export story‖, a CII-

McKinsey report, October 2004

―Learning from China to unlock

India‘s manufacturing potential‖, a CII

-McKinsey Report, October 2002

Arvind Virmani and Danish A.

Hashim, Factor Employment, Sources

and Sustainability of Output Growth:

Analysis of Indian Manufacturing,

April 2009

Shri Nilachal Ray, Unorganized vis-à-vis

Organized Manufacturing Sector in India

27


Telecommunications is perhaps the fastest growing

sector in India riding primarily on the continued

growth in customer demand. This has led to

increase in competition amongst service providers

which has been aptly supported with excellent

infrastructure.

The major telecom equipment manufacturer - NSN,

Ericsson, Huawei and ZTE - are the underlying

pioneers of this growth. However, with growth

comes competition which eventually brings in the

requirement of better control.

In this issue we talk to Mr. Vinit Monga, who is

Head of Finance& Control, Technology Centre—

Bangalore, Nokia Siemens Networks Pvt. Ltd.,

India.

He is a CMA/MBA (Finance) from Faculty of

Management Studies, New Delhi. He has an

experience of more than 15 years in Finance &

Control/ Sales & Services Commercial in Telecom

Equipment Company and 5 years of experience in

Costing & MIS in Packaging Industry.

He visited TAPMI during the first International

Conference of Accounting and Finance (ICAF-

2011) organized by TAPMI in March, 2011. During

his visit to TAPMI, he shared his views and

experiences on various areas in Finance with us.

We are extremely thankful to him for his precious

time. Mr. Monga talked to Pratibimb about NSN,

3G and the broader role that Finance plays in a non

–financial organization. Mr.Vinit Monga in

conversation with Pratibimb:

An Interview with

Mr. Vinit Monga

Head of Finance & Control: Technology Centre – Bangalore, Nokia Siemens Networks

28


Pratibimb: Can we start from the very begin-

ning, tell us about your initial days in the corpo-

rate world?

Mr. Vinit: I am a graduate of Deshbandhu College,

Delhi University, then I did my ICWA. My first job

was at Paharpur group of companies. I was working

in the flex packaging unit and worked in various

capacities in various functions such as Costing,

Marketing etc. Then in 1995 I joined Siemens,

while working for Siemens I completed my Execu

tive MBA from FMS, New Delhi. Then I moved to

Nokia Siemens Networks post its formation. In

2007 I moved to the Bangalore office, so basically I

have been a part of Siemens since the last 15 ½

years.

Pratibimb: 15 ½ years is quite a long time, tell us

what has been keeping you in Siemens / NSN for

such a long time?

Mr. Vinit: Whenever we are working in an organi

zation, we believe that Salary, the work, culture of

the organization can retain employees, but I would

believe that it is not salary, not the work, not the

culture but an optimum mixture of all these that re

sults in the satisfaction of an employee which is the

prime driving factor for employee retention. In Sie

mens / NSN these components have been in its opti

mum mix, which is the main reason for my stay at

NSN.

Pratibimb: So is Siemens known for this elixir of

retention?

Mr. Vinit: Siemens as a company has always be

lieved in talent retention; once you join Siemens it

is said that you will retire from Siemens. The testi

monial to this belief is a 6 monthly newsletter that

is published in Siemens wherein people working for

Siemens share their experiences, and these are peo

ple who have been with Siemens for the past 25 –

40 odd years.

Pratibimb: Tell us something about Nokia Sie-

mens Networks.

Mr. Vinit: Nokia Siemens Networks is a ~13 Bil

lion Euro in Sales Global Company which is a sepa

rate legal entity from the 50 / 50 parents Siemens

and Nokia. We have HQ at Munich and Helsinki

but we are a global company for the wide presence

across the globe and having various units headquar

tered out of various locations in the world. Here

in Bangalore we have a 2500 strong R & D center.

Pratibimb: Tell us about the industry that NSN

operates in.

Mr. Vinit: We are basically into the business of

providing electronics for telecom network connec

tivity; our main competitors in this business are Er

icsson, Alcatel – Lucent and Huawei. With the ad

vent of multiple service providers and the growing

demand of cell phones in the country it has led to an

increased competition for NSN. Most competitors

also have grown tremendously in the past few years

in India.

Pratibimb: Tell us the Role of a Finance profes-

sional in a non – finance firm like Siemens /

NSN.

Mr. Vinit: In Siemens we used to follow a principle

known as the ―Veir Augen Principle‖ which basi

cally stresses on the importance of collaborative

working of Sales and Finance in the organization.

In the past as Finance professional I was personally

responsible for P & L along with Sales; Sales will

generally try to sell the product at any price, it is

29


our job to ensure that the deal is profitable for the

company. I had also served as the Business Lead of

Sales in many deals.

At NSN, our role is more a strategic with providing

the best financial support towards achieving the

business objectives. It could at times simply mean

making available the right set of financial data for

taking an informed business decision. At present

my responsibilities are more at a strategic level

along with the Controlling function that the R&D

unit performs. The responsibilities also included

various investment decisions coupled with the func

tion of sanctioning deals.

Pratibimb: So how do you judge a deal? Is it on-

ly positive returns?

Mr. Vinit: When we get into a deal there are basi

cally two takeaways from it. Either it has to be

profitable or strategic. There have been instances

where we have done deals where the returns were

negative but it had some strategic advantages for us

and of course there would be some deals which we

have to say ―no‖ to which is never an easy job.

Pratibimb: Considering you are a secondary ser-

vice provider how does the increasing competi-

tion in the telecom service provider affect you?

Mr. Vinit: The telecom industry in India is growing

at an amazing pace, and with growth competition

increases. Competition has led to drastic price

drops; considering even 5 years ago we had to pay

Rs 1.5 for a call whereas today the same call can be

made in a couple of paisa. Since the operators are

our clients hence we too face the cost pressure from

them which compels us to continuously innovate.

Pratibimb: How do you perceive India’s speed

towards accepting new technology is? How fast

will we adapt a 3.5 G or 4 G?

Mr. Vinit: India is fairly quick when it comes to

accepting new technology is concerned. The west

took the route of wired phone to broadband connec

tion to a mobile phone whereas in India we have in

one way skipped the broadband stage and graduated

from fixed lines to cellular technology, hence we

will adapt 3.5 G much quicker than what the west

has taken to graduate from 3 G to 3.5 G.

Pratibimb: How has mobile technology revolu-

tionized the lives of individuals?

Mr. Vinit: Mobile telephony has opened up multiple

avenues for the consumers by providing them with

technology through which they can be at two differ

ent places at the same time. It has also opened up

new and innovative modes of business. I will take

this moment to talk about Telecom has changed the

way we used to work and a perfect example is

―TutorVista‖, a company providing private online

tuitions to children in US through teachers in cities

connected now with wired Broadband and future

wireless broadband as well.

Pratibimb: Is NSN also working on providing

VAS services. Can you tell us something more

about VAS at NSN ?

Mr. Vinit: Value Added Services (VAS) opens up a

new revenue model for telecom operators and also

equipment providers. The demand for VAS has

been gradually increasing in India and all service

providers are taking cognizance of this change and

implementing better network capabilities to provide

seamless VAS services. NSN is providing network

support to the operators to provide better VAS ex

perience to the end customers.

30


Pratibimb: Tell us about the financials of Nokia

Siemens Networks for the past couple of years.

How is the company performing?

Mr. Vinit: 2008 was an OK year for us. In 2009 we

performed below par and I can term it as a bad year

for us. We have made mistakes in the past, realized

those and worked on them hence I believe we have

seen the bottom and are currently on a turnaround

journey. I believe the financials for the coming

years would be much better.

Pratibimb: Is Nokia Siemens Networks planning

on an IPO anytime soon?

Mr. Vinit: The IPO listing process starts quite some

time before the actual offer is floated. Currently we

are nowhere close to the start of that process; hence

I can definitely say that NSN has no plans for IPO

listing anytime soon.

Pratibimb: Finally, What advice would you like

to give young professionals like us?

Mr. Vinit: I believe the most important virtue to

possess is dedication. No matter what is the job that

you would be doing, it is of utmost importance to

have dedication in the job. Sincerity would eventu

ally lead to success.

Beat the Market As Jim Cramer, a former hedge fund manager, and a best-selling author put it, “As

long as you enjoy investing, you'll be willing to do the homework and stay in the

game… I mean I'm not smarter than the market, but I can recognize a good tape and a bad tape. I recognize

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Stock markets have never been predictable, you may apply the best of logic and reasoning, but there could

be a possibility that you may falter if the emotions of the investors take control.

The entries for this contest have been judged by Mr. Mitesh Thacker, Head Research & Trading

Analyst, www.miteshthacker.com.

The winning entry of ‘Beat the Market’, April 2011 edition is of Mr. Parikshit Vilas Loke, Welingkar

Institute of Management Development & Research!! Congratulations!! We thank all the participants

for their effort.

Beat the Market is a game designed to prove your mettle in stock market analysis. This time onwards, we will

provide you the name of two listed companies from NSE. You need to analyze stock movements of these

companies till 25th July, 2011. On the basis of fundamental and technical analysis you need to give us your

share price estimate of these two stocks as on 5th Aug, 2011. Fundamental & Technical analysis will carry

70% weight while 30 % weight will be given to Accuracy of the estimated prices in the final score.

The winning entry will receive a letter of appreciation and prize money of Rs. 1000 /-

Rules: Companies to be analyzed are Tata Chemicals Ltd. (TATACHEM) and Idea Cellular Ltd. (IDEA)

You may analyze in a team of not more than 2 members

The file should not be more than 7 pages long including cover page, the cover page should contain the

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File name should be BTM_JUNE_<TEAM_NAME>_<INSTITUTE_NAME>

31


T imes are indeed changing…so

unbelievably fast and gathering speed

that a time would soon come when one

blinks and misses the train.

Around twenty years ago, big companies would

subscribe to one advertising spot on three different

television networks, and reach 80% of the US

population. Now, they need up to 20 messaging and

media programs to get that same reach.

In India, too, there has been a huge spurt in demand

for digital content, with an increase of over 120% in

the growth of Internet users over the last 3 years.

Today, India is poised to take its place as the

world‘s first truly mobile digital society; a

remarkable fact in a nation where it took television

13 years to reach an audience of 50 Million.

As a result, sales efforts have further fragmented,

escalating the potential for channel conflicts. E.g.

telecom service providers today require up to four

channels to reach their diverse customer base. New

communication mediums have increased marketing

expenditures and costs of the company. The costs

further increases because digital marketing

programs are complex and difficult to measure.

Reduced ad-spends on traditional media due to a

fall in effectiveness of such mediums, is causing

major restructuring of marketing plans of

companies, putting the Rubik‘s cube of

segmentation, products, channels and media in

jumbled disarray.

Marketing paradigms have now begun to change, as

focus has now shifted on a few of the available

customer segments and to serve them with fewer

brands, impeding less control over the way they do

business with their consumers.

In order to take advantage of network-based

environments, organizations are now going digital.

The challenge for organizing digital marketing is

the ability to really get to the right consumers at the

right time with the right message in ways that one

couldn‘t use in the past.

According to a McKinsey report, there are four

stages that a company goes through in the digital

marketing organization:

1. Ad-hoc Activity - Establish a basic online

presence

Paradigm Shift in Optimal Media Mix Strategy

Akankasha Sharma, SIMSREE

Source: Internet users in India (Morgan Stanley, Mary Meeker internet report 2010)

32


2. Focusing the effort - Create policies to focus

and unify efforts; track what works and what

doesn‘t

3. Formalization - Build the digital business;

develop/gather appropriate skills

4. Institutionalizing capability - Deliver against

value proposition; manage organizational

interdependencies

In order to cut through all the clutter and confusion

with a deep understanding of the company‘s

business objectives and who their target is, one

needs to ask the right questions, such as: Who are

the best consumers for this message? How do they

spend their time during the day? What are the touch

-points where the company can make their message

most relevant to them? And, using this great buffet

of media choices that one now has, how does one

address that market in the most relevant way?

For example, when Yahoo! started Yahoo! Local,

their business objective was to increase their share

of searches for local businesses like florists, banks

and restaurants, by making it apparent that Yahoo!

really understands the local environment. Local,

independent newspapers and a lot of outdoor

promotions were used as touch-points to the

customer. On top of that, the addressing was done

through a very fine-tuned geographically targeted

online messaging. They made the creative elements

of the advertising very relevant to exactly where

people were in their neighbourhoods.

Presently, enterprises like Yahoo! are performing

big shifts in spending by concentrating on

performance marketing and customer care

operations. Performance marketing uses channels

like emails and search-engine marketing (SEM),

since this is where people invariably search first for

information on a product/service.

Marketing companies now don‘t consider it as a

marketing expense, but a cost of goods. It also

comes with an added advantage that it is easier to

predict the returns from a given level of spending as

data is more concrete, and available.

Customer care operations are also forming a critical

part of the brand experience. Investing in great

brand experiences, especially when people have

concerns or questions is becoming increasingly

important, to woo new customers, and retain old

ones.

Source: McKinsey‟s Quarterly Report, 1996, by Andrew Parsons, Michael Zeisser, and Robert Waitman

Four stages in the digital marketing organization

Search Engine Relative Market Share (%)

Google 72.4%

Yahoo! 24.2%

Bing 13.6%

33


Organizations now are exploring means of

measuring returns on their marketing investments.

Many maintain dashboards of metrics that go up to

the executive team and show how marketing

activities are focused on driving the business. User

engagement can be gauged by determining the

share of time spent online with the company‘s or

brand‘s website, computing the average number of

media properties that a user consumes, which is

growing continuously in India. They are also

focusing on quarterly initiatives; for instance,

driving searches from throughout their site, not just

from the front page.

Customer lifetime value is being estimated and

tracked as it is generated with their marketing

programs in various channels that each business

unit spends in. Long-term health of the brand is also

being predicted by examining changes for various

demographic segments in brand‘s level of

differentiation, its relevance to consumers, the

degree to which they know it; moreover, hold it in

high esteem.

Thus, a holistic, optimal media mix strategy now

comprises of the traditional as well as, the digital

means of marketing. The shift is towards increasing

digital marketing spends, which comes with

effective metrics to measure returns.

Inviting Articles

“Best Article”: Deep Aggarwal, MBA(MS), FMS

Congratulations!! The winner will receive a cash prize of Rs. 1000 & a letter of appreciation.

We are inviting articles from all the B-schools of India. The articles can be on any field of business

from Marketing, Finance, Operations, HR to Systems.

You can send us articles on:

Recent developments or trends in any of these fields

Articles covering latest trends, innovative practices, strategies, etc. in the global perspective

We also invite articles on management thinker similar to the current section

Apart from above, creative works in relation to any of the fields will be equally appreciated

The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file

should be MS Word doc/docx. Articles should not be more than 2500 words.

The last date of receiving all entries is 25th July, 2011. Please send your entries marked as

BAC_AUG_<ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to:

[email protected]


34


W hen was the last time you walked

past a ―Wills Lifestyle‖ outlet and

wondered how the name Wills was

into retail garments or wondered what was Jonnie

Walker trying to say when it carried the tagline

―Keep walking‖? Well these are just some of the

most prominent examples where Brand extensions

have been successfully implemented in promoting a

brand. In today‘s scenario, with the growing

limitations that marketers are facing, brand

extension has emerged as the most preferred mode

of advertising in industries such as alcoholic

beverages, liquors and tobacco products.

Let us consider the alco-bev industry in India; it is

heavily regulated in terms of advertisement of

brands or the category in general. Alcohol being a

state subject, every state has a different set of

legislation in terms of advertising and distribution

channel networks. The industry is basically

comprised of three types of market – Open market,

Semi – Government Market and a Government

Market.

The open market is a replicate of a traditional

FMCG market; the manufacturer can choose its

preferred distributor and the retail outlets are

privately owned after obtaining the necessary

license from the Government. The semi-

government market is a more regulated form of

market as compared to the open market; here the

distribution is completely state owned whereas in

the government market scenario the control goes

one step ahead – here the state not only controls

distribution but the retail outlets are also controlled

by the state. With this varied distribution networks

also comes varied control in terms of advertising.

E.g. the creative of a beer advertisement in

Maharashtra can bear the image of the bottle

however the word ―Beer‖ cannot be displayed

whereas in Karnataka there are no such regulations.

This variation increases the challenges of marketers

considerably. The same creativity cannot be used

universally which leads to the necessity of more

innovative methods to communicate the brand

story. Brand extensions come in handy in these

situations. Marketers try to communicate the

essence of the brand by replicating and

communicating the USP of the brand through

another product.

Are the marketers successful in this quest or are

they deviating from the actual message that they

want to portray? When they say ―It‘s your life,

make it large‖, does the marketers from Seagram‘s

successfully convey the message of Royal Stag

being a Whiskey meant for premium celebrative

occasions? Or are they driving the consumer to

believe that Seagram‘s has diversified and entered

into the music industry.

The answer to the above dilemma would vary for

different customer segments. A consumer of

alcoholic beverages may receive the true message

Advertising Through Brand Extensions

Ramanuj Vidyanta, TAPMI

35


however the same communication might fail to

convey the message to a non – consumer.

Considering this scenario, the next question that

arise – Is this methodology of advertising through

brand extensions good enough to drive growth in

the industry or do the marketers need to put on their

thinking hats and come up with another

communication strategy? The answer to this

question is contingent upon how the firm looks at

growth, whether the company is interested in

growth within the consumers by trying to switch

them from one category to another or the company

is interested in increasing the overall consumer

base.

Despite all the above limitations, brand extensions

has come out as the preferred candidate for

advertising in most industries regulated by state &

central legislation and going by the current industry

trend and marketer‘s focus, this medium is here to

stay unless the government drastically brings major

changes to the advertising policy of the industry.

However, one caution that marketers should also

take is to disallow the brand extensions to become

larger than the brand itself. If the company is using

mineral water as a brand extension for premium

beer, then it is of utmost importance that the brand

name continues to be perceived as the parent

product rather than the brand extension.

So, the next time you come across a bill board

reading ―Keep walking‖, remember to extract the

true essence of the message that Johnnie Walker is

trying to convey.

Route to Market

The market has always been unpredictable for the companies. This holds more significance in the case of international brands

trying to enter new developing markets. Every brand wants to be recognized globally so that they can tap the new markets

easily. The role of marketing managers in this age of globalization becomes more important in providing the companies with

correct strategy to enter new market. We give our readers a platform to experience this challenge through ―Route To Market‖.

The primary objective that the participant is expected to fulfill is to provide a ―Market entry strategy‖ for an international

brand/ product into the Indian market. The overall strategy would be divided into three stages:

Rules:

Document size should not exceed 5 pages & a maximum of 3 members are allowed in a team

The participant is expected to justify his stand – point in each deliverable

Each stage should be clearly mentioned under sub – heading

Send entries with file name as ―RTM_JUNE_<PARTICIPANT NAME>_<INSTITUTE NAME>‖ at

[email protected] by 11:59 pm, 25th July, 2011

The winner will receive a cash prize of Rs.1000/-

1st Stage - Market Assessment (Weightage -35%)

2nd Stage – Communication strategy (Weightage -30%)

3rd Stage – Implementation & Go Live (Weightage -35%)

Key Deliverables:

Customer Assessment

(Segmentation, Targeting)

Market Competitive

Assessment

Distribution Channel

Assessment

Key Deliverables:

Positioning

Promotion Strategy

(Creative is not

required)

Key Deliverables:

Test market geography

selection.

Launch Price (Exact price to be

mentioned)

Performance measurement

metric selection


36


T he post-recession period has been

characterized by explosive growth.

Most of the growth stories have come

from the emerging economies of Asia like India &

China. All industrial sectors which belong to these

countries are witnessing heightened activity in

terms of production and consumption of goods &

services. This level of industrial activity has thrown

up an unusual challenge - the shortage of talent to

propel this growth. This issue gets more

complicated if we consider the fact that the ―Baby

Boomer‖ generation (born in the post – WWII

period 1945-1960) are nearing their retirement age.

It has also been proved that the generations which

succeed them have insanely different aspirations.

Today‘s organizations are not in a position to

address this issue. To make matters worse, the

future distribution of working age population across

the world has been found to be disparate. It is well

known that Mr. Jim O'Neill, a global economist

working for Goldman Sachs, is credited with the

coining of the acronym ―BRIC‖ (Brazil, Russia,

India, China), the countries which will occupy the

center stage of world economy in the 21st Century.

But when considering the talent shortage or surplus

across the world, this acronym gets reduced to

―IC‖ (India & China). As per the International

Labor Organization‘s estimates, the working age

population between 15 and 64 years will increase

by 212 million and ―over 64% of the increase will

occur in only one country – India‖ and China will

add 23 million to the global workforce during the

same period.

When we consider the above factors, it makes sense

for an organization to focus on acquiring talent so

that its growth targets are not choked by inadequate

manpower. At this point, I would like to introduce a

relatively novel concept in HR, viz. Talent supply

chain management. It is a blend of the concepts of

supply chain management and talent management.

As per Wikipedia, supply chain is defined as ―A

system of organizations, people, technology,

activities, information and resources involved in

moving a product or service from supplier to

customer.‖ Although there are many more

dimensions to the concept of supply chain, for the

scope of this article we will restrict ourselves to the

above definition. So when we say ―talent supply

chain management‖, it essentially means procuring

talent from variety of sources and delivering it to

the organizations so as to sustain its growth.

Closely associated with the supply chain concept is

optimization which essentially means getting the

most out of one‘s investment. This concept makes

more sense if we consider the fact that the

organizations themselves don‘t know what the

future business scenarios are going to be.

Optimization has become a key word in this era of

information technology. The global firms are

aiming to acquire the best talent at the least price. In

doing so, they try to minimize the cost incurred in

Talent Supply Chain Management

Aby John Kottukappally, MBA-HR, SCMHRD

37


sourcing a candidate. Of late, most of the MNCs

and recruitment agencies, have taken themselves to

the social media sites such as LinkedIn, Twitter etc.

These sites double up as a brand promotion and a

recruitment tool. A skeptic of the same might argue

that those organizations which blindly follow on the

footsteps of this i-generation might soon find it in

troubled waters. But if we look at the social media

recruiting through a different lens, it can be proved

beyond doubt that there is no other medium through

which a firm can reach to such a diverse audience at

the lowest cost. Employee referral, which is also the

next preferred tool for recruiting, reiterates the case

in point.

During the IT boom, organizations had hired

employees from the universities and colleges across

the country in large numbers. The idea behind this

practice was to ensure that the sufficient manpower

was available to carry out future projects. So this

being the case, the organizations failed to provide

work to these recruited talent after their initial

training. However, the company had to keep on

paying the salaries which was a kind of wastage of

much needed resources which could have been

deployed elsewhere. It has been found that an

employee makes the decision to stay or not to stay

with a firm within 6 months of his joining. If he is

kept on the bench waiting, more often than not, he

will resign soon thereby resulting in the wastage of

the investment made by the company on the

training of the resource.

The aim of supply chain is to reduce the bottleneck

in the system. When an organization goes for mass

hiring, it is quite evident that a mass training

program needs to be undertaken. But if we do such

a program, it will cost the firm a fortune and at the

same time the scenario discussed above might

happen. So the ideal solution would be to place the

training program for the new recruits and allow

them to choose their preferred date of joining the

firm from the options given to them. Reduction of

bottlenecks can also be addressed by the succession

planning of the firm. A firm with a robust

succession planning in place effectively address

talent optimization.

Supply chain management is also concerned with

reducing the forecasting errors as far as the demand

for a particular product is concerned. When we

analyze MNC‘s with global operations, it has been

found that the recruitment mandate is handled

independently by the host country offices. The logic

of this move being that the recruitment function of

that country is in better touch with the host country

rules and regulations. But in this era of economic

uncertainty, if we try and predict the manpower

requirements at the individual locations, we may

land up either with too many or too few of them.

The ideal way out would be to forecast the

manpower requirement on a global level and

designate the recruiting process to the host country

offices.

Although there are many other aspects of supply

chain which will find its applicability in the Human

Resource function, the scope of this article limits

itself to the aspects discussed above. Hence, we see

that applying the concept of supply chain to talent

management would provide a competitive edge to

the organizations of today. The importance of this

cannot be under estimated which is evident in the

saying ―People are not your most important

asset, the right people are” – Jim Collins.

38


P ost-recession of 2009, the industries

world over including those in India are

still grappling with the forces of change

in order to stay afloat in a hyper-competitive

environment. Though some companies did manage

to grow big yet their growth has not been up to their

potential and their expansion is based on a shaky

foundation. Though it may sound puzzling,

mismanagement of complexities which in turn are

the results of scalability has caused the bottom line

to go in red. It is a glaring fact that the volatility of

demand has risen permanently and all the

stakeholders in the value chain are struggling for an

effective management between various functions of

business. Though IT investments are done with the

motive of integrating the organization‘s functional

verticals, improvements have helped only to a

certain extent; yet they fall short on robustness.

The companies are now heading to a dead end and

the prime reason is all the efforts have been tended

to be in an isolated basis within the business units.

This generally happen in big organizations when

the members of the team become so short sighted

that all their improvement efforts get concentrated

on their own functionality or business unit that they

lose track of the holistic picture. The extent of

damage that can be caused due to individual

excellence is that they actually compete within

business units and hinder the overall organizational

excellence. This factor is further compounded by

the fact that the long road from strategy planning to

strategy execution actually turns out to be labyrinth

for the implementers who want to put the pieces of

the execution puzzle together. The disjointed

approach also reflects the methodology adopted by

the higher management who rates business success

through top lines and bottom lines of individual

business units.

While companies have tremendous experience in

excellence for individual functions, what remained

mistreated is careful handling of individual

excellence and aligning them to attain

organizational excellence which enables seamless

operations cross-functionally and across business

unit can be termed as inter-operability of the

organization. Interoperability actually helps

organization to optimize their operations by

reducing time of delivery, money and human

capital involved. According to a research report by

A.T. Kearney there are seven key dimensions which

help in achieving this interoperability. They are

operations strategy, business systems, relationship

management, implementation management,

performance management, knowledge management

and organizational culture & people development.

Each business unit needs to align itself to overall

organizational goals to swiftly respond to business

requirements and achieve competitive edge.

The companies also need to refine their processes

and strive for consistency in their decision support

Operations in Turbulent World

Anish Bhattacharya, Goa Institute of Management

39


systems. The organization also needs to channelize

efforts towards building collaborative relationship

bound by common organizational values. There

should be cautious effort by

organizations to achieve complete and consistent

change implementation throughout the enterprise.

Companies can define key

performance indicators aligned with the overall

strategy and cascade it from the top management so

that business units does not have conflict of interest.

Seamless information sharing by investing in

information systems and implementing job rotation

to realize job enlargement and enrichment can help

in achieving interoperability excellence. The

companies need not be excellent in all the aspects in

terms of functional excellence & interoperability.

However what is more important is achieving an

equilibrium between corporate strategy and market

conditions.

Thus on a concluding note, in the days to come, the

company profit margins will depend heavily on the

competitive edge of the entire value chain

ecosystem and not merely on

excellence of the function in a particular domain.

Though the markets have recovered and industry

outlook is upbeat yet the industries need to address

the above mentioned key issues if they want to be

resilient to business cycles and weather any kind of

crisis.

References

The Theory of Everything in Operations, A.T.

Kearney. (2011)

Dr. Reinhard Geissbauer and Michael D'heur,

2010-2012 Global Supply Chain Trends- An

Annual Survey By PRTM Management

Consultants, June 2010

Interoperability Dimensions (Source: A.T. Kearney)

40


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