Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Thursday, April 25, 2013

“We are not distracted by scooters and mopeds!”

K. Srinivas, President – Motorcycles, Bajaj Auto Ltd., speaks to B&E about how Bajaj Auto made inroads into the motorcycle industry and how it plans a bigger tomorrow with a strong back-end unit

B&E: How has the transformation from scooters to motorcycles been for Bajaj Auto? Do you believe that the company took the right call by completely moving away from the scooters segment?
K. Srinivas (KS): Last month, Fortune magazine, while naming Rajiv Bajaj, MD, Bajaj Auto, as one of the most influential Asian CEOs, commented on Bajaj Auto being the motorcycle powerhouse. This statement in a nutshell defines the goal of Bajaj Auto which is to be a dominant player in the global motorcycle market. Our first milestone was achieved last year when we became the third-largest motorcycle manufacturer in the world after being the most profitable. How did a “scooter manufacturer” become a “Powerhouse of motorcycles”? It starts with our strategy of focus. With a global market of 60 million motorcycles each year, we have enough head room to grow. Focus demands sacrifice, hence we have freed ourselves from being distracted by mopeds and scooters. We believe that strategy is not only about what one does, it is also much about what one doesn’t do.

B&E: Even when the Pulsar was launched, most experts didn’t give Bajaj much of a chance with motorcycles. The reason being that your first bike wasn’t “conventional” enough to suit pockets or heads in the Indian mass-market. What do you have to say on this?
KS: Even within the motorcycle industry, one can make a choice to compete in all segments with “me too” products or to differentiate oneself. We believe in sharply positioning our brands. For example, in 2001 when we introduced the Pulsar, we did exactly opposite of what the motorcycle industry was doing during that time. The market was fuel-efficiency and 100cc. We introduced powerful 150-180cc engines. The market was conservative bikes. But the Pulsar was aggressive and sporty. The market was small bikes. The Pulsar was a big bike. The market was economical bikes. The Pulsar was expensive. Even then, industry experts never gave us a change, and we didn’t listen to them!

B&E: And similar was the reaction to the launch of the Discover in the 125cc category?
KS: Yes. When we introduced the Discover in 2004, we pitched it against boring bikes. Discover was a 125cc commuter bike, with a sporty styling, DTSi engine, alloy wheels, self-start, nitrox suspension, LED tail lamps. It had all features which were reserved for sporty bikes. Then, manufactures were telling commuters – “You need fuel efficiency, then you will get boring bikes. If you want exciting bikes, buy a sports bike.” Discover created the “Sports commuter” category in India. And just like Pulsar, it recreated the “sports” category in India. It’s no surprise that we are market leaders in both these categories today.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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Tuesday, March 12, 2013

B-SCHOOL INTERVIEW: IIM-LUCKNOW

Prof. Pankaj Kumar, Chairman, MDP, IIM Lucknow talks to Bhuvnesh Talwar of B&E about what makes IIM-L Unique, The Challenges that B-School Education faces in India and the need to Encourage Entrepreneurship...

B&E: And what do you feel are the challenges to the growth of management education in India as a whole?
PK: There have been challenges in the past, and they are here to stay. In fact, the challenges will only grow more in count and bigger in size. Management education needs to go through further transformation; I would rather say “radical change”. The gap between theory and practice needs to be narrowed down tremendously. And for this to happen, industry interface is a must. The concepts of ethics and balance, which I personally believe should be the biggest priorities in the management education system, have to be evaluated at length, so that they add value to the learnings that we impart to students. We also increasingly need to focus more on personality and soft skills development programmes.

B&E: Somehow, even the top Indian B-schools have failed to produce entrepreneurs who can contribute to the economy and help create jobs. Don’t you think so?
PK: Let us look at the situation this way – all the management schools in India, including the premier league of B-schools, are today focussing more on enhancing skills to make students effective and brilliant managers and not leaders, which ideally should have been the case. All the IIMs have only been producing enormous premium quality workforce for the industry. But thankfully, today we can sense a change in the air, with the students taking entrepreneurship seriously. They are opting out of the regular corporate jobs and are trying their hands at new ventures. And the B-schools are also taking notice.

B&E: Do you think we need more B-schools considering that there is a huge demand for management education in the country?
PK: You need to view India as a population and take notice of both the demand and supply sides. While we necessarily need to keep stringent checks on various factors – like the quality of education being imparted by the institutes, the faculty being provided, the global exposure, et al – I firmly believe that we need more number of quality management institutes in India, as there still exists a big visible gap between demand and supply of quality MBA education.

B&E: Any advice for the youngsters who aspire to become future CEOs?
PK: The new generation is well informed and is very practical. They are thriving in the present era of entrepreneurship. I just feel that they should be focussed on what they want to achieve and not get influenced unnecessarily. They should above all stick to their value systems – and this is most important.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Thursday, December 13, 2012

SOUTH KOREAN CHAEBOLS: FRADULENT ACTS


They ignored the potential of ‘Clean capitalism’ ; they were wrong...

And so were the thieves caught, one after another. In 2000, the much discussed multi-billion Chaebol-cheat Daewoo, collapsed! Getting cheap credits from banks was never an issue, and Daewoo used this to snap up companies… [It’s not very known that founder & former CEO of Daewoo, Kim Woo-choong’s father had been dictator Park Chung Hee’s teacher.] The company cut several secret deals with the government to bail out his shipbuilding unit and it is also believed that during 1997-98, Kim masterminded Asia’s biggest accounting fraud that inflated Daewoo’s stock by $32 billion! Ultimately, post-Daewoo, he fled... 

Three years later, another Chaebol, SK Global’s accounting scandal erupted! SK Global, the sister firm of South Korea’s largest oil refiner, SK Corp, was involved in two cases – one, an accounting fraud (profits of FY 2001 were inflated by $1.25 billion), and two, for funnelling funds during the 2002 presidential elections. Weeks later, SK Corp’s Chairman Chey Tae-won – the eldest son of the group’s founding family and son-in-law of a former President of South Korea – was sentenced to 3 years in prison. 

After a break of 3 more years, more worms wriggled out of the can… and this time, it was Chung Mong-koo, Chairman of South Korea’s largest automaker, Hyundai Motor Co., who was arrested on charges of embezzling company funds to create a $105 million slush fund in order to clandestinely bribe government officials. [Did you know that the current South Korean President, Lee Myung-bak, had worked in Hyundai for 27 years and was its Chairman & CEO when he quit to enter politics?]. February 2008 saw more action in this regard – only this time it was the turn of the largest Chaebol, Samsung Electronics. Chairman Lee Kun-hee, alongwith his son, Lee Jae-yong resigned amidst allegations of financial irregularities and charges of hiding slush funds (a whopping $4.5 billion, used to bribe government officials). On July 26, 2008, Lee Kun was fined $109 million & sentenced to 3 years of suspended jail term… 


 Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.


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Tuesday, December 4, 2012

Barack Obama’s election could mean for business

People have been overwhelmed by his victory but business leaders are guarded in optimism. Virat Bahri & Pallavi Srivastava of B&E analyse what Barack Obama’s election could mean for business

his business voice

So far, Obama’s egalitarian stance on various issues facing the economy hasn’t exactly kept him in the good books of business. It is well evident from his statement, “We cannot have a thriving Wall Street while Main Street suffers.” His focus seems to be more bottom up; first the people and then the big fish; i.e. businesses. Obviously, that is not what corporate leaders would appreciate. Thomas J. Donohue, President and CEO, US Chamber of Commerce, which represents over 3 million businesses, commented on what he felt should be Obama’s priorities, “Restoring the nation’s economic health must be our top priority. Any successful and sustainable recovery will involve the business sector, which creates the jobs, the growth, and the revenues on which all Americans and our government depend.” His mandate was: Get economy and business on its feet first; and then we can take care of controversial issues. One of them is the Employer’s Free Choice Act, which takes away an employer’s rights over a secret ballot to decide whether workers may form unions. He has also talked about reforming bankruptcy laws to protect employees and to ban executive pay for executives of such companies.

In particular, the issue of CEO compensation has been a thorn in the flesh. The US President elect has clearly given the top honchos of big American businesses nightmares with his backing of the ‘Say-on-pay’ bill which will give shareholders a nonbinding proxy vote on executive pay. It is believed that Say-on-pay will become a legislation within first 100 days of Obama’s administration. Now that clearly is bad news for the big guys but Anjan Roy, Economic Advisor, FICCI argues, “If Lehman Brothers is falling apart, why can’t shareholders decide to cut on the exorbitant expenses on CEO pays. It will only be good for business.” Well, a CEO does hate to see his company go down; and if his cheque follows suit, you can imagine his plight!

The new President elect has also suggested supporting small businesses by offering more lending for them and cutting taxes. For the corporate sector on the whole, the plan is to cut tax rate to below 35% and act stringently to broaden the corporate tax base & reduce loopholes; like special interest loopholes for large companies as well as wealthy individuals. He is also advocating removing tax cuts for oil companies. He has anyway repeatedly lamented America’s reliance on Middle East oil; and the need to bring in a new ‘alternative’ energy economy. So oil companies may see their ‘windfall’ profits getting threatened.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.



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Tuesday, July 24, 2012

When Can they Move On?

Founders are The Most Critical Pillars of a business. The Question in The Corporate world, though, is how long should they Continue as CEOs. And if they leave, should they Come Back? \

Howard Schultz isn’t exactly the founder of Starbucks, but one cannot deny that he was the one who reinvented America’s most loved coffee chain to what it is today. When he took back the CEO post from Jim Donald in 2008, his strongest, self proclaimed agenda was to bring back the ‘emotional attachment’ for Starbucks. Michael Dell would nod in agreement, since he came back as CEO in similar circumstances; when Dell was taking a beating from HP under Kevin Rollins.

Of all the people who are part of an organisation, the founder will always stand apart on the emotional front, even if he is no longer part of day to day operations of the business. The company, before it even began being formed on paper and on bank accounts, existed in his mind. He defined what it would (or would not) stand for. He formulated the values, the operating philosophy and did the first few rounds of strategic planning. It’s his baby before anyone else. Yet, when logic comes to play, one of the most debatable issues is on the longevity of founder CEOs. While many experts favour the opinion towards a professional executive, as it helps keeping business and emotions in the right place, a lot of experts believe that it is right for the company if its promoter remains as its CEO. Undeniably, both views have been proved right and wrong at different times, locations, situations and companies.

For instance, when Jerry Yang, Founder and ex-CEO, Yahoo! took over as the CEO again in 2007, his short stint of over a year gave a lot of heartache to the search engine giant. Yang not only led a hit to revenues by not being able to seal an advertising deal with Google, but also rejected the sale of the internet company to Microsoft for $47.5 billion (which was more than thrice Yahoo’s market value then). The months that followed saw Yang coming back to the post of Chief Yahoo! and Silicon Valley veteran Carol Bartz taking over the reins. The company is still trailing its counterparts, but the valuation of the share price has improved drastically since Bartz took over. The stock of Yahoo! was trading around $12 in January, 2009 when Bartz took over as CEO and the share price today stands close to $17, an improvement of 41.6%.

Similarly, ever since Bill Ford handed the control of Ford Motor Company to ex-Boeing executive Alan Mulally in 2006, he not only pulled the company out of its one of the biggest crisis ever, but also maintained its position as the second largest auto maker in the US. At the end of February 2011, Ford holds a 15.6% market share in US following GM, which still stands tall with 21.3%. In fact, Ford’s EPS growth rate over the past five years is much ahead of its peers at 14.04% against the sector’s EPS growth of 2.00% and S&P 500’s growth of 4.58%. “Alan Mulally has done an outstanding job of impacting the culture of Ford. He improved the leadership and most importantly, left key leaders in their roles for a longer period of time in order to allow them to make a significant impact,” comments Laurie A. Harbour, President, Harbour Results Inc. from Michigan. Mulally also proved critics wrong, that it will be a bad choice for the company to put a man from a different industry on top.

Ironically, attachment does go against the founder’s case at times. Google has seen its co-Founder Larry Page becoming CEO in January as Eric Schmidt moved on to ‘just’ being Executive Chairman of the company. Considering that the share price of Google has just moved up by 3% against the 12.6% growth filed by the S&P 500 over the past year, the shake-up at the top was much needed at the internet major. While analysts are convinced over Page’s ability as a leader and his efforts to streamline the R&D projects of the company, there are still doubts on whether he’ll be able to make Google a good investment as there are hardly any returns on its R&D activities till now. Undoubtedly, a change in leadership at Google has happened at a very apt time, but Page will have to ensure that he keeps an eye on the results on a quarter-to-quarter basis rather than just focussing on a ten-year horizon for Google. Remember, besides being one of the founders, he is also an engineer at heart!

In fact, if required, Page may even learn this skill from another iconic founder CEO and one of the biggest visionaries in business today – Steve Jobs. In his case, the company would constantly dread the thought of life without him. His continuous efforts to keep innovating and coming out with products that lead to consumer delight have made Apple what it is today. But Jobs may even have a learning session with Page on how to help build the company’s image among its audience.

Clearly, Apple suffers from over-dependence on the founder and it may not prove to be a very beneficial proposition going forward. It may be recalled here that as people queued up to get their hands on the new sensation in the technology circuit – iPhone in 2007, Apple hardly got a boost in its share price. However, as it has been seen time and again in the past, even a rumour of its founder Steve Jobs leaving the building can give its share price a sound hiding. “Apple has a very high dependence on Steve Jobs as far as innovation is concerned and whenever there is even a speculation, its repercussions can be seen on the share price,” says Alex Guana, analyst at JMP Securities from San Francisco. The stock lost over 10% in January 2009 after Jobs, suffering from cancer, went on a medical leave and the stock has lost over 1% in March this year on speculation of Jobs stepping down as CEO. As it seems, it will be better for Apple to push itself back a little from the name of Jobs much sooner than later.


Untitled Document
Source : IIPM Editorial, 2012.

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

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
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IIPM: Indian Institute of Planning and Management
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Monday, July 16, 2012

Laying the ground for a second coming

After years of struggling with its CDMA technology in India, Qualcomm is looking for business avenues in the smartphone space. However, its real potential seems to lie elsewhere.

The Indian telecom industry has been witnessing an unprecedented fall in subscriber additions of late. For the last 4 months, the net additions have been less than 10 million every month and still descending on monthly basis; taking the total to 611.75 million by August 2011 (COAI). However, low cost handset makers are getting upbeat about revolutionising the 2nd largest telecom market in the world even after over half of it is taken.

Riding on the wave created by Google’s free operating system Android, which surpassed Nokia’s outdated operating system Symbian in 2010, even chipset manufacturing companies like Qualcomm are eager to have their share of the pie in Android’s feast, which is all set to cross 49% market share by 2012 (Gartner). The worldwide smartphone market is expected to grow by more than 55% yoy in 2011 and around 472 million phones will be shipped through the year. It is projected that shipments will reach 982 million by 2015 with Apple’s iPhones & Samsung’s Galaxys leading the segment currently.

Many OEMs naturally believe in the low cost handset market for an emerging market like India. Qualcomm CEO Paul Jacobs shares the view. After facing significant reversals in India due to the far lower success rate of CDMA services, due to which even its largest customer RCom switched a few years back to a dual service portfolio, Qualcomm is looking to make amends. In 1990, Qualcomm pioneered the designing of CDMA-based cellular base stations, which has been its forte. Being the OEM of mobile phone chipsets, (Qualcomm CDMA technologies contributed 61% of its revenues in FY 2010), Qualcomm was once able to derive huge royalties from the companies it served with CDMA (globally, LG and Samsung contributed over 10% each in the same period). But India is very low in contrbution despite significant investments by the company.

The San Diego-based company’s strategy is to leverage the expanding availability of 3G services (as its core competency is producing 3G compatible chipsets) and after successfully tapping the biggest handset market of the world (China accounted for 29% of Qualcomm’s revenues of $10.99 billion for the year ending September 2010), the company has now decided to follow the footsteps of its Chinese competitors and bring out a sub-$100 phone with a Qualcomm chip in order to cater to the needs of the price sensitive yet feature conscious Indian market. Huawei and ZTE have already launched Qualcomm chip powered Android handsets in that range in China.


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Friday, July 13, 2012

“New licenses will not help, it is consolidation that we need”

Romesh Sobti, MD & CEO, IndusInd Bank talks to Deepak Ranjan Patra on the performance and growth plans of IndusInd and shares his views on what the larger gameplan for the Indian banking sector should be

B&E: While a few of the Indian bank’s struggled to maintain their higher profits between 2009 and 2011, bottomline of IndusInd Bank surged by nearly 300%. What have been the biggest contributors to this performance?

Romesh Sobti (RS):
It was more of a restructuring story. So I would say, there were multiple factors involved in this. Recapitalisation of the bank was certainly one of them and so was the restructuring of the balance sheet, which resulted in increased profits in the bank’s profit and loss account. For example, a change in our structure helped us in reducing our cost of credit, helping our bottomline by some margin. Recapitalisation certainly played a great role in this. The third factor, and perhaps the most critical one, was of course, retalenting of the bank. The bank took steps to ensure that it had the best in class people to run the business. The fourth was perhaps the re-organisation of the bank. We organised it to give special importance to different segments like principal segment & public segment including different product categories. The fifth major factor I would say was the productivity element. We reworked on our infrastructure including technology, adopting better measures to reduce mismanagement & improving the quality of the premises. At the same time, we attempted to change the way we used to look at our business – the coordination between our front offices and back office. This helped us a lot in improving our productivity. I think these are the critical factors that we implemented and executed during our restructuring period and it delivered the goods for us.

B&E: When you are talking about increase in your productivity, there is no doubt that IndusInd has come a long way over the past few years. But on a comparative basis, while your current profit-per-employee figure is at Rs.0.8 million, industry big-wigs Axis Bank, ICICI Bank and Yes Bank are at Rs.1.4 million, Rs.1 million and Rs.2 million respectively. How are you planning to bridge the gap?
RS: I don’t think that the profit-per-employee is a true measure of productivity. For me, revenue per-employee and cost per-employee are much more critical productivity measures. Profit is a function of probability. For instance, even after you put a lot of effort, a bad debt may just take your profit away from you. So we look at measures like revenue per employee, because it’s the employee’s effort, which generates that revenue. And in this regard, we have our own set standards. You can call it like we are at point A and we have to go to point B. When we manage to reach there, we definitely see our improvement.

B&E: Recently, you have bought the credit card division of Deuschte Bank. How critical was the move for your growth aspirations? Do you have any more such plans ?
RS: The credit card business is a growing segment in India. And it was kind of missing in our bouquet of products. As a universal bank, we aspire to offer a wide range of products and services to both the corporate segment as well as the consumer segment. But a few of them were still missing, like credit cards and home loans till the recent past. So to include those two in our offerings, while we took over Deutsche Bank’s credit card business, we also tied up with PNB, which is one of the most efficient providers of home loans. The target is to widen our product portfolio. So as and when we come across such opportunities, which allow us to increase our portfolio and help us to serve our customers better, we would definitely look at those opportunities with a positive mind set.

B&E: One of your very recent initiatives is your first ever solar ATM in Maharashtra. Was it just an experiment off the book or IndusInd has some serious and consolidated thoughts about green banking initiatives?
RS: We have a very strong belief in the green concept and it is embedded in our slogan – Good ecology is good economy – that we use both internally as well as externally. What drives us to green banking is the fact that it adds to our sustainability platform. You tend to do sustainable business when you are efficient in that business. That’s why green projects not only involve power ATMs, but are also into thin computing. We even have e-learning as a part of our training program. Training on green banking is imparted at all of our branches. So our future sustainable business model is focused on the whole green banking initiative for we believe that it increases productivity in our bank. In fact, we have also published a report on the whole green banking initiative.

B&E: Though the Indian banking industry might have escaped the global meltdown, a noticeable fact is the increasing NPA levels. In the case of a few banks, it has gone up seriously, if not alarmingly. Do you this is a bigger problem that’s just setting in for the Indian banking industry?
RS: I think that there are good times or bad times and that is the truth and reality of doing business. However, I think that the overall quality of the loan books of Indian banks still looks decent and it is quite strong at some of the banks. But there are a few overriding concerns and I am sure that banks are quite alert about these facts. And we still do not see a delinquency wave hitting the banking sector in the near future.

B&E: There are some growing concerns around global economic conditions with Europeans economies falling prey to debt traps one after the other and US still not showing much resilience. If the situation moves from bad to worse, would Indian banks be in a situation to face a second global recession the way they did last time?
RS: Oh yes! Indians banks are still remarkably resilient. There are concerns on reduction in margin and growth. It might have been witnessed partially, but it is more because of the fact that they are stepping up for better risk management. They are bringing in more credit and risk compliances. So, it’s a right step in the right direction and I believe that they are strong and vibrant enough to be able to go through any such environment if the need arises.


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