Monday, September 10, 2012

Raju hasn’t yet left the building!

In a little over a year post takeover, Mahindra Satyam finally declared its past two fiscals’ results on September 29, 2010. B&E jumps inside the numbers and brings you the analysis!

“Good judgment comes from experience, and a lot of that comes from bad judgment.” When Will Rogers made this statement historic, he wouldn’t have expected the corporate world to make this the basis of their pristine learning. Well, they did, and the top examples are in the M&A world, where the most profitable bets are generally not made on the best performing companies, but rather the worst performing ones – as they’re undervalued, yet have intrinsic worth. Recession left a number of such companies in the global economy, ripe for the picking.

Satyam was one such firm alright, undone by the malpractices of its own founder, Ramalinga Raju. When Tech Mahindra acquired the company on April 13, 2009 for Rs.58 per share (in fact, the Satyam stock had once reached below Rs.10 levels), it was quite obviously a purchase that was done with the future, rather than the present in mind. Satyam had a promise surely. But apart from the fact that the company had been underperforming its peers, there was the huge accounting muddle to solve. Revenue was overstated by Rs.53.62 billion from April 2002 to September 2008. Profits, more so. Given that, when Mahindra Satyam decided to finally declare it’s ‘true’ results for the past two years, apprehensions were clearly on their inflated high.

The good news is that Mahindra Satyam’s results for FY 2008-09 and FY 2009-10 (released on September 29, 2010) are, in one word, not shocking. Revenues for 2008-09 stood at Rs.88.12 billion and dropped to Rs.54.81 billion by 2009-10, a telling fall of 37.8%. Net loss was a far more relieving statistic for the last fiscal at Rs.1.25 billion compared to Rs.81.746 billion for 2008-09, which would give the impression that the company has just about bottomed out with respect to its financials; and the liabilities are on their way out. A class action suit is still pending from US investors and there are 37 Indian companies claiming unpaid liabilities to the tune of Rs.12.3 billion from the Raju family. But the company claims the liabilities are done and over with. Vineet Nayyar, Chairman, Mahindra Satyam, commented on the results, “With this announcement, we have fulfilled an important commitment and kept to our promise of transparency and agility. It also marks the beginning of a more significant journey of growth and the future.”

One of the biggest contributors to the reduced loss is the reduction in employee costs by 34.45% to Rs.39.81 billion. There was a mass exit across the hierarchy over FY 2009-10. The headcount stood at 27,000 at the end of the year compared to 44,000 in the beginning. Just like employees, Tech Mahindra also faced an exodus of customers, even large ones like Coca Cola, Novartis, Pfizer, BP and Telestra. In all, it lost around 194 clients and added 44 clients in FY 2009-10.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , ,

Saturday, September 8, 2012

“2010 has been Audi’s most successful year in India”

Michael Perschke, who took over Benoit Tiers, as the head of Audi India’s operations in July this year talks exclusively to B&E on how the three pronged strategy has helped them increase Audi’s market share in India

Audi India witnessed a change of hands in July this year as 42-year-old Michael Perschke took over as the head of the luxury car brand in the domestic market. He succeeded Benoit Tiers (promoted to Head of Audi in France) who started India operations for Audi in 2007. Perschke, who hails from Germany, began with Audi AG in 2008 and has worked extensively in Europe and Asia. Interestingly, his earlier stint in India was as General Manager for Audi’s rival Mercedes-Benz between 1997 and 2000 when he was in charge of network development and regional sales. Here, in a candid conversation with B&E, Perschke shares his deep insights about the company’s rapidly growing India operations and how it is gearing up to fight the onslaught of other luxury car makers.

B&E: Audi has always been a surprise package and has proved to be an eclipse for the other luxury car makers across the globe. How has been the experience when it comes to India?
Michael Perschke (MP): Audi is currently one of the fastest growing luxury car brand in India, with an impressive year-to-date growth of 63%. In fact, 2010 has been Audi’s most successful year in India. We have clocked a total sale of 2,178 cars during January-September 2010, recording an exceptional growth over 2009 when we sold 1,333 units during the same period. We have also surpassed our last year’s annual sales of 1,658 cars. This exceptional sales performance has led to the revision of our annual sales target from 2,300 to 2,700 units for 2010. We are confident that the consistent growth that we have been witnessing will ensure that Audi India achieves its goals for the year.

B&E: So, what was it that actually helped Audi increase its market share as well as profitability in India?
MP: Audi India operates on a three pronged strategy. First, to spread awareness about Audi’s brand image and products among its target audience. Second is to offer its customers an energetic product line and service offering and third, to establish an efficient infrastructure and strengthen its dealer network across metro and non-metro cities. It’s actually this three dimensional strategy that has worked for Audi in India. Currently we are present in 13 locations across India, with showrooms in Mumbai (West), Ahmedabad, Bengaluru, Chandigarh, Delhi, Gurgaon, Jaipur, Hyderabad, Kochi, Kolkata and Pune. In fact, this year we have already opened new showrooms in Jaipur, Mumbai (West), Kolkata and Bengaluru, while Chennai and Ludhiana are on the horizon. Further developments include Lucknow, Coimbatore and Nagpur. We are also offering support to our customers in locations where we are not formally present at the moment through our customer care initiative – Audi Top Assist – a 24x7 road side assistance programme which includes our nearest located dealers. After-sales support too is provided by the nearest Audi authorised workshop and the same is communicated to the customer at the point of sale. Our innovative customer-centric approach, attention to detail and superior after-sales services differentiate us from competition and creates experiences for our customers that are in sync with our brand values globally.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , , ,

Thursday, September 6, 2012

Can Elop become Nokia’s Dream CEO?

Can Elop become Nokia’s Dream CEO?New CEO Stephen Elop is on a mission to restore Nokia’s pride amidst many challenges. Steven Philip Warner writes on How Elop could experiment with new strategies and Pan-Fry a Panacea for the Finn
 
When Stephen Elop, the erstwhile President of Microsoft’s Business Systems division, showed up for one of his job interviews at Nokia early this year, he had an iPhone 3GS and a BlackBerry Bold clipped to his belt and a Windows Mobile device tucked in his jacket. Then, he showed little love for a Nokia gadget. He cannot afford to do so now. On September 10, 2010, it was announced that he would carry on the gig to save Nokia, the world’s largest cellphone maker, as its new President & CEO. His climb is rather an uphill one, as complexions of Nokia’s recent popular blueprints have appeared rather swarthy.

It is ironical that sceptics talk about saving a company that is still the world no.1 in terms of handset sales, with a global market share of 34.2% (as of Q2, 2010). But take a look at its stock performance in the past decade and you realise that the market is not all pleased with the Finnish giant. It takes some heart for long-term investors to bear the pain of an 85.33% erosion in Mcap in a dozen years, worse than even the most criticised Microsoft, which lost a lower 23.28% during the same period. Nokia’s shareholders have undergone that agony. At the same time, its market share is on a constant course of descent, having lost as much as 2.6% in just a matter of four quarters (market share figure for Q2, 2010, as per Gartner)! Elop is out to save a ship whose sides are being chiseled away by the sharp edged icebergs of misfortune. While speaking to B&E from Colorado, Rick Sturm, CEO of Enterprise Management Associates Inc. (EMA), explains Nokia’s performance at the bourses as thus, “As CEO Elop’s predecessor (Olli-Pekka Kallasvuo) has to take the blame for the dramatic decline in Nokia’s stock prices. The company’s Mcap is a reflection of investors’ collective assessment of the future performance of the business. If their assessment of Nokia’s prospects for future performance is to change, they must have some basis to lead to that shift. Revenue growth, increased margins, better market share, successful penetration of new markets, new technologies et al, are all key to recovering Nokia’s market value.”

In the past four years, total quarterly sales of Nokia have increased by 43.33% to touch 111.47 million units (figures for Q2, 2010). Considering that this growth came despite the slowdown and the first iPhone bomb, it deserves a congratulatory pat in the back. [But if it were so, why was Kallasvuo booted-out?] However, the fashion in which its competitors have danced to its wrong chords, have also been memorable sights. Here’s a comparison: in contrast to Nokia’s 43.33% rise in sales, the current world #2 Samsung (which holds a 20.1% market share) grew volume sales by 153.6% during the past four years, while the #3 LG (market share of 9.0%) saw a 100.6% rise. And what about Blackberry (RIM) and iPhone (Apple)? The duo managed some magic and grew their global unit sales by 3,202.4% and 4,024.3% respectively. And they have a lesson for Nokia too – innovate or wilt away. While speaking to B&E from Hong Kong, Gavin Byrne, IT Analyst, Informa Telecoms & Media says, “Nokia’s weaknesses in recent years have been innovation and then the execution of that innovation, i.e., bringing it to market in appealing consumer oriented products. The company has not really had a market leading smartphone since the launch of the N95, and that was quickly eclipsed by the iPhone.” Even Sturm of EMA doubles up saying, “Innovate. Innovate. Innovate! It is the key to protect Nokia’s market share.” 
 

Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , , , ,

Wednesday, September 5, 2012

Millennium Development Holes

UN can’t do it alone, MDG requires a cumulative and concerted effort

2001 was a landmark year in the global war against the scourge of poverty. Under the initiative of erstwhile UN Secretary General Kofi Annan, the world identified the urgent need to address egregious social and economic conditions in impoverished nations and remove them substantially under the Millennium Development Goals (MDG); to be achieved by 2015.

If these goals are achieved, the world’s poverty will be reduced by 50% and billions of people will benefit from the fruits of development accomplished from it. However, with only 5 years to go, the progress is far behind schedule. It started off well, with financial aid from developed countries coming handsomely, but recession brought the aid down. The US donated only $598 million in 2009; EU offered $1.3 billion in 2010.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , , , ,

Tuesday, September 4, 2012

Sanctions or no sanctions?

Sanctions have mostly proved counter productive! But the jury is still...

The concept of sanctions dates back to 431 BC when Athens imposed a ‘Megarian’ sanction on Megar, resulting in the prolonged Peloponnesian war. It didn’t work then; it doesn’t work now! As a study by the Institute for International Economics at revealed in 2003, sanctions have only succeeded 33% of the time globally. In 2010, the Institute further reported that US had achieved its foreign policy objectives only in 13% of the cases where it imposed sanctions from 1970 to 1997!

The US has been the lead runner in this sanction imposing race since long, even in the previous decade. From 1995 till 2001, the US had imposed around 85 economic sanctions on other countries. A New York Times review showed how, even in 1996, US firms were losing more than $95 billion. The US has continued from thereon. On June 9, 2010, the Obama administration slapped harder sanctions on Iran; banning delivery of major military equipment and prohibition on international transactions of finance and assets of Iranian corporations.


Posted by at
Labels: , , , , , , , , , ,

Monday, September 3, 2012

What is the price of motherhood?

Head-hunters believe that breaks in women’s careers due to motherhood could be costing them dearly. Could that be true?

Priyanka is an expecting mother and a mid-level employee at one of Gurgaon’s MNCs. As an organisation concerned for its employees’ wellbeing, the company is allowing Priyanka, who stays at Faridabad (a good 2-hour drive away), to work from home on three days of the week. All she needs to ensure is to login at the right time and be available over the phone. “Good companies now extend numerous benefits and support to their female employees during their maternity period,” says Shalini Tewari, Head – Strategic Resource Management, ValueFirst. “Even for purposes like performance evaluation, the complete work term is taken into consideration. Employees also extend the benefit of remote operations from home and flexi-timing to women employees,” informs Shalini. Yet, most ladies do not reach the top hierarchies of companies. Recently, a survey was conducted among the top 100 head-hunters of UK, and more than half of them believed that ladies ought to skip motherhood if they wish to see themselves among the top brass of a company one day. They felt that women lose out on opportunities during their career breaks.

Where three months is the time the government allows the ladies leave with pay and to get back in working shape, six months is the more accepted break in India. Ladies with lesser support system at home even return to work only once the baby is old enough for the crèche – a good two to three years later. Companies are usually happy to take them back into their fold, especially those they know are hardworking employees. Archana Kashyap is one who believes that performance is what really counts. “My son was born shortly before 9/11 happened, and when I joined back work I was one of the few people who were not given the pink slip, in spite of me joining back after maternity leave.”


Posted by at
Labels: , , , , , , , , , , , ,

Saturday, September 1, 2012

ENTREPRENEURSHIP: CRITICAL FOR GROWTH

John Danner, Senior Fellow, Lester Center for Entrepreneurship, Haas School of Business, UC Berkeley

ENTREPRENEURSHIP IS CRITICAL FOR FUTURE “POWER 100S”. BUT FOR THAT, MANAGERS NEED TO THINK LIKE ENTREPRENEURS & B-SCHOOLS NEED TO NURTURE CREATIVITY


It’s not big corporations that are the lifeblood and future of most modern societies. It’s the entrepreneurial venture that most often drives real innovation and growth, whether in jobs, technologies or economic competitiveness. Our current business education needs to produce individuals who will create tomorrow’s jobs and opportunities, not just manage today’s established businesses.

Perhaps, the biggest challenge mature businesses face in the present scenario is how to integrate and optimise their own existing operations (the execution necessity) while simultaneously encouraging creativity in new products, processes and services bold enough to withstand the onslaught of new market entrants (the innovation imperative). Too often, managers cling to the familiar at the expense of the novel, and watch impotently as insurgent entrepreneurs take over markets they once dominated. Future company executives need to be educated to better guard their defensive perimeters as well as accelerate growth offensively; in short, to think and act more like the entrepreneurs their companies once were. After all, most big companies didn’t begin BIG.

This is where entrepreneurship education takes centre stage: helping impatient dreamers convert their business visions into successful enterprises, and preparing more cautious students to strengthen their own managerial repertoire as they join major companies. Indeed, it is the conflict (and occasional collaboration) between these two groups that animates, distinguishes and even inspires market-based societies.

Entrepreneurs – whether they want to get rich, change the world, or both – initially need to understand how to identify emerging opportunities to serve customers, assess and manage the risks of designing and building new solutions and business models, assemble resources based on future prospects of their vision, while remaining flexible enough to adapt to surprises in the marketplace. Yet, they need to be fluent enough with the techniques and systems big businesses use, so they can adapt to the rigours of growth.


Posted by at
Labels: , , , , , , , , , ,
Subscribe to: Posts (Atom)