If Amazon took six years to break even, so will they. [Will they?]

E-commerce’s fight against brick-and-mortar format is public enough. Especially with the rise in count of web-shoppers in India, dotcom outlets are fast becoming common nouns. But there is much left to overcome before they start making money By Bachan Thakur

The last two decades have seen a transformation in the Indian retail landscape. From mom-and-pop stores to supermarkets and malls to online buying; the change has been radical.

A busy lifestyle and the convenience that online space provides, is leading Indians to shop with their fingers. But, online shopping is still in its infancy in India. There are barriers that prevent it from becoming popular faster than it actually is. Questions regarding credibility of merchants, doubts over quality of goods, security regarding online payment gateways, and mostly the culture-based attitude of our cash-oriented society are only a few. But all this has not deterred a host of e-commerce players in India, like Flipkart, Jabong, Myntra, Indiatimes, Snapdeal, Homeshop18, Yebhi and others, from wooing the Indian customer with world-class services and products.

No surprise then that these players are investing heavily on product differentiation, technology, customer service and advertising. That these players want themselves to get heard and seen is good news.

In recent months, players like Jabong, Groupon, Snapdeal, Myntra and eBay have particularly become loud about who they are and what they have to offer. A recent market report by eMarketer shows that online advertisement spending in India has grown from $0.25 billion in 2010 to $0.48 billion in 2012. Online portals are thus working hard to build brand recall. Be it online marketing through social media sites like Facebook and Twitter or improving visibility on offline vehicles like TV, Print and Radio, these e-tailers are investing big bucks in promoting themselves.

So the fight is on – differentiate, impress buyers and get cash flow positive. But that is where the problem lies. E-tailers in India haven’t still learnt the trick of making money from this much-hyped virtual shop business. A 2012 Technopak Report confirms this. The frenzy to attain a critical mass of consumers through whom they can start to make money is leading to consumer acquisition through heavy discounting (even lower than costs) and mass media advertising, resulting in very high customer acquisition costs (about Rs.1,000 to Rs.1,400 per customer as per various industry executives). Thus, to differentiate and gain consumer loyalty, e-tailers are fighting it out on the pricing front.

As such, the e-commerce business in India is increasingly become a game where the last man standing may turn out to be the biggest loser! Little wonder that this space has already witnessed consolidations. According to data compiled by Microsoft’s India Accelerator Programme, of the 379 technology product start-ups launched until October 2012, 193 were e-commerce firms, and 87 of these – including Shopveg.in, Taggle.com and Letsbuy.com – have ceased to exist. Letsbuy.com was bought by Flipkart in February 2012, while Myntra acquired Exclusively.in. Online retailers like Lensstreet.com and Dealivore.com also saw closures in 2012.

In due course of time, strategic shifts will take place in the e-commerce space, and more smaller and non-serious players will get wiped out, leaving behind clear leaders. As per Rajesh Nahar, CEO and Founder, Cbazaar.com, “E-commerce businesses in India should have a very smart balance in planning organic and inorganic growth of customer acquisition and revenue. The moment a company tries to accelerate inorganic growth by acquiring customers at a high cost and offering products at discounted rates, it will get very hard for it to get into the profitable zone.”

The Indian e-tailing story has also appeared very promising to investors. These investments have enabled players to grow and scale up quickly. Investment in the online retail space exceeded $500 million in 2011. But failure rates of e-tailers is disheartening.

To stay alive in the business, e-tailers have already started tweaking their business models. One example is Flipkart. It started in 2007 as an online books retailer, but has today extended its portfolio to media (games, music and movies), mobile phones (and accessories), personal care products, home appliances, watches, belts, bags, luggage and toys. Unlike two years back when all you would have heard of in the name of Snapdeal was discount coupons for various services, today, 95% of its offering basket is filled with products!

Limited availability of brands in Tier-I and II locations is driving consumers to shop online. And e-tailers are paying attention. One of them is Jabong. The company has put in place 55,000 special packaging units (as on January 2013) to ensure the shortest possible time of delivery. At present, the company offers same-day delivery only across metros. In 2013, tier II cities would enjoy the facility. And by 2015, expect the company to replicate the same across tier III towns. Says Manu Jain, MD, Jabong.com, “In 2013, we will ensure that we follow the same day delivery concept in tier II cities as well.”

E-tailers are experimenting with new methods to engage end-consumers. Trends like cash-on-delivery (COD), replacement of goods if found unsuitable, delivery-post-trial et al are on a rise. States Sharat Dhall, President, Yatra.com, “We have invested aggressively in consumer-friendly processes...” This fight against brick-and-mortar has become loud already. But the traditional retail format is not going anywhere soon. Think of the challenges that online companies face. India has over 6500 e-commerce companies and most of them are struggling with problems relating to payment options, logistics, infrastructure and consumer service. An e-tailer can tempt a consumer once, but if the erosion of trust starts from the very delivery stage, that brand can expect little in the name of word-of-mouth marketing.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

Blank prescriptions!

There exists a huge shortage of doctors in rural areas

Every other day, a new government offers a building to open a private hospital – Max, Apollo, Fortis are just some of players to name a few. Many think that the emergence of private hospitals will fast replace the poor government health-care infrastructure and help improve the overall health care of the country. But statistics are not in support of that. India’s shattered health-care system proved again that it has yet to go far to claim it is shining. A few facts will remove the myths. 42% of the children are malnourished in India, which is worse than even the Sub Saharan Africa figure of 28%. Shockingly, even though the economy grew 50% over the period of 2001-06, the rate of malnourishment declined by only 1%. 1.72 million children die every year before reaching the age of one year. India has now the 3rd highest number of HIV patients in the world.

Indian hospitals have a poor infrastructure and are severely ill-equipped with poor technology. Indian doctors do not have access to modern technology for the health care system. Moreover, the doctor to patient ratio is abysmally low. India has one doctor against 1,953 people. The total number of registered doctors in the country is only 5.5 lakh against such a massive population. There are many reasons for that too. Firstly, limitation of medical seats is hindering the supply of doctors in good volumes. Secondly, there is a massive migration of Indian doctors abroad. While the cost of reform may seem high, the cost of non-reform, if one goes by the World Health Organization’s calculation, would be higher. The World Health Organization (WHO) estimates that India’s GDP could be pulled back by 5% by 2015 and the country would suffer this economic loss due to the deaths caused by the various diseases.

Healthcare expenditure remains barely above 1%, which should reach 2.5% as is the case with the developed nations. Even though India has planned to invest $86 billion (Rs 3.7 lakh crore) over the next 15 years, with past experience, it is quite possible that India would not be able to reach the present hospital bed density levels like Brazil, China and the current world average. In a 2008 study focusing on the Ujjain district, researchers found that about 61% (almost 1.1 million people) of that district’s population live in rural areas, served by only 39 professionally qualified doctors.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

Can monte carlo beat the Johnny-come-latelies?

The pioneer knitwear brand in the country has moved on to straddle other apparel segments catering to women, youth and kids' wear as it seeks to transform itself into a complete solutions provider for all our clothing needs. But can Monte Carlo beat the Johnny-come-latelies? By Angshuman Paul

Monte Carlo, the Rs 850-crore brand owned by the Ludhiana-based Nahar Group, has become markedly aggressive in the Indian apparel market recently. Though earlier known mainly in the woollens segment, the brand is now present in segments as diverse as knitwear, casuals, formals, sports and tweens’ wear. Though wollen wear still accounts for 75 per cent of its revenues, the company is aiming to change the ratio and take its share of non-woollen wear to 50 per cent in the next five years.

In focusing more sharply on youth and kids’ wear, the brand has extended itself into the emerging tweens’ wear market (catering to the age group of eight to 14 years) in India. With 30 per cent Indians aged below 15 years and kids demonstrating a heightened brand awareness, kids’ prêt-a-porter segment has emerged as the new playground for the Indian apparel bigwigs. Currently, the kids’ wear segment constitutes over 15 per cent of the overall apparel market in the country.

To capture the market, the group decided last year to wean away the Monte Carlo brand from Oswal Woollen Mills, under which the brand had till now been housed, paving its way to making its presence felt in the casual wear and fashion segments. But the company realises that to make this foray successful, it will have to come up with some innovative brand extension strategies. Quite a few apparel brands, like Raymond, have trod the brand extension route earlier. But when Raymond – perceived as a premium masculine brand catering to men’s clothing – made the brand extension into women’s wear, the gambit proved to be a failure. Raymond put the lessons of its failure to good use when it decided to enter the kids segment in 2006. Instead of thrusting its signature Raymond brand name to a new line of kids’ clothing, it created a new brand – Zapp. Monte Carlo has followed a similar strategy, christening its kids' wear brand as ‘Tween Monte Carlo’.

A look at recent trends in kids’ wear retail shows multiple players courting initial success before heading for a downward spiral. For example, brands like Koutons Junior, Raymond’s Zapp and Spykar’s Oyo are no longer in the business. The main reason for such reverses, analysts point out, is that the retailers did not pay heed to their pricing in an extremely value-driven segment. In the case of Raymond’s Zapp, the high pricing – the average price for an item of clothing was Rs 2,000, high by Indian standards – did not go down well with Indian shoppers. Other factors like poor positioning, indiscriminate expansion, not focusing on profitability and sometimes maybe more focus on valuations and therefore too strong an emphasis on expansion without putting adequate systems in place also played a part.

To avoid such pitfalls, Monte Carlo is making sure that its brand extension is supported with adequate branding. “If you have the right branding, then brand extension is never a bottleneck,” says Monica Oswal, Executive Director, Oswal Woollen Mills. She adds that apart from Monte Carlo, the company also has successfully managed other brands like Canterbury and women’s wear brand Alpha. “Unique pricing, supported by massive penetration and then giving a global touch to the brand have acted brilliantly for all our brands under Monte Carlo,” says Monica.

The company is also working to set up a separate manufacturing unit for kids' clothing. It also intends to target the metros and Tier 1 cities where kids and youngsters make their own purchasing decisions. Being easy on the pocket, Monte Carlo expects to make a good impact.

However, the going will not be easy. Brands like Catmoss, Mom & Me, Lilliput, Toonz Kids, Gini & Jony, Li’l Tomatoes and Ruff Kids are just some of the better-known players dominating the market. Not to be left behind, brands such as Benetton, Pantaloons and Reebok have roped in popular characters like Pucca, Ben10 and Power Rangers to lure their four to 14 age-group customers. Its major competition would be from retailers like Pantaloons. About 15 per cent of Pantaloons' annual turnover comes from teens and kids apparel. What’s more, even jeans manufacturing companies such as Spykar, Pepe Jeans and Killer are trying to climb on the kids’ bandwagon. International brands such as Tommy Hilfiger, Freelook Junior, and Adam Kids are also making efforts to expand their footprint.

Read more.........

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Consumption crunch? Blame debt-burdened households

How large debts carried by homeowners have led to low consumer spending and is therefore preventing a quick recovery in the American economy

At US Monetary Policy Forum (USMPF) in 2012, an annual gathering organized by the Initiative on Global Markets at Chicago Booth, academics, market economists, and policy makers discussed how a housing market collapse combined with a high level of household debt limits the effectiveness of monetary policy. For instance, though the Federal Reserve has lowered interest rates to help homeowners reduce their mortgage payments and avoid delinquency, banks remain unwilling to refinance mortgages on homes that are worth less than the amount owed on them. The ineffectiveness of this policy suggests that the recession and the weak recovery that followed are as much about the large debts carried by homeowners as they are about a decline in housing wealth.

Economists increasingly have recognised the role played by household debt in generating deep and prolonged recessions. Homeowners with large debts experience the sharpest reduction in net worth when a large asset such as housing loses value. This shock sets off the economic downturn, as highly indebted households drastically cut back on consumption. In theory, households with healthier balance sheets ought to pick up the slack by taking advantage of lower interest rates as monetary policy eases. But as nominal interest rates cannot fall below zero, interest rates effectively remain higher than they should be, exacerbating the recession.

The distribution of debt – the fact that some households are deep in debt while others are not – can turn a housing shock into a grave recession. If everyone carried moderate levels of debt instead, then more households would be able to refinance and fewer would default on their mortgage. The damage to households’ balance sheets would not be so large as to lead to a severe recession, despite a fall in house prices. Empirical evidence supports these arguments. The November 2011 study, “Household Balance Sheets, Consumption, and the Economic Slump” by Sufi with Atif Mian of the University of California, Berkeley and Kamalesh Rao of MasterCard Advisors shows that the dramatic accumulation of household debt in US – combined with the decline in house prices – is the primary reason for the onset, severity, and length of the subsequent consumption collapse. The study is the first to show convincingly at the county and zip-code levels how a shock to households’ balance sheets contributed to the Great Recession of 2007 to 2009 and the slow economic recovery that followed. A SHAKY FINANCIAL POSITION LEADS TO DEEP CUTS An increase in credit supply, partly because of relaxed lending standards, made it possible for more individuals and families to buy a home than ever before in the years prior to the housing crisis. This credit boom put upward pressure on home prices that, in turn, encouraged many homeowners to borrow against the increasing value of their homes.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

“There are too many airlines in India to form a cartel!”

Gordon Bevan, Aviation Expert & VP, UBM Aviation, tells why price-fixing isn’t enough a sign to prove a cartel in progress in the Indian aviation space

B&E: Instead of worrying about cartelisation by airlines in India should a regulator like DGCA or AERA not allow them sufficient time to heal their wounds, whichever way possible?

Gordon Bevan (GB): India must look at what airline competition has produced. Irresponsible market share wars have delivered massive passenger growth, driving down average fares, yet no profits have been made by a majority of India’s airlines. Now uncontrollable external costs are dampening passenger demand. This will hit those airlines that are able to survive low fares through high demand stimulation. Perhaps competition or monopolistic behaviour control needs to be extended to those sectors of industry – like OMCs – that supply the airlines.

B&E: About a month back, former Chief of the erstwhile Air Deccan complained that airlines in India are involved in price fixing and cartelisation, and that the It is quite easy to retell golf club chatter as fact. It is quite another to prove that both cartelisation has been executed in intention and deed, especially in a court of law. Capt. Gopinath’s assertion was that Indian airlines colluded to limit the ‘floor’ on airline ticket pricing. It is entirely possible that airlines would wish to limit the decline of yields and would wish to somehow influence this decline. Whilst this is possibly an aspiration, it is likely to be unenforceable.

B&E: So you don’t think there is a cartel operating?

GB: Cartelisation of an industry requires that all players abide by the informal rules. And there must be a payback. Each of India’s airlines has its own break-even as each airline has a different cost base. Set the floor at Spicejet’s rates and all airlines will lose money, set it at AI’s and everyone will make profits. There are too many airlines in India to conform to a cartel pricing regime.

B&E: In August, the DGCA had observed that the price differential between a FSC like Jet and an LCC like IndiGo is wafer-thin! Isn’t this enough proof of cartelisation?

GB: This gap may be true. It is not proof that cartels exist. It may be the lowest that airlines are prepared to drop their fares to. Wise companies understand their bottomline and know the cost of production. We have experienced the effects of airlines selling below cost in India – clearly a sign that no one was abiding by any commercial sense let alone a price-fixing deal. If cartelisation exists, then it has done a lousy job protecting ailing carriers thus far.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

It's time to get organized

Syria’s disorganized opposition forces cannot make an impact until they stand united to attract international community to a single platform to help them

Syrian opposition activists regularly express disappointment with the level of international support that they receive. Although the last meeting of the so-called “Friends of Syria” (a group of countries that convenes periodically to discuss Syria’s situation outside of the United Nations Security Council) brought more financial aid, the degree of genuine outside commitment to their cause remains questionable.

The US, the EU, Turkey, and most Arab countries agree that Syrian President Bashar al-Assad’s regime is no longer legitimate. They have intensified sanctions against the government, and have provided different kinds of support to opposition groups. Some states have delivered automatic weapons, ammunition, and rocket-propelled grenades. But arms deliveries have dried up, and the rebels’ pleas for anti-aircraft weapons remain unanswered.

Moreover, neither Syria’s neighbors nor Western governments are willing to intervene militarily. Indeed, despite expressions of solidarity, they have refused to establish a protection zone for Syrian civilians along the border of neighboring states, or to impose a no-fly zone for Syrian military aircraft. As a result, Syrian opposition groups believe that they have been left to confront Assad’s brutal regime alone.

But Syrian oppositionists must recognize that the lack of decisive international action is not only the result of Russia and China vetoing any meaningful action in the Security Council, or NATO countries’ unwillingness to enter into another war in the region. In fact, the international community is waiting for Syria’s disorganized opposition to transform itself into a coherent, effective force as much as the opposition is waiting for the international community. This entails forming a common platform that represents all relevant groups, including the Local Coordination Committees, the Syrian Revolution Coordinators Union, and the Free Syrian Army’s military councils.

The Syrian opposition needs to establish an umbrella organization accepted by all, including the de facto civilian and military leaders who have emerged locally over the last year and a half. These groups already share a common goal – to bring down Assad’s regime – and most of them (with a few ultra-militant exceptions) hope to build a peaceful, inclusive, and democratic state.

Influential opposition figures – such as former parliamentarian and political prisoner Riad Seif and the SNC’s former leader, Burhan Ghalioun – have proposed promising strategies for forming such an umbrella organization. For example, a “group of wise persons” who do not seek political positions could oversee the creation of a provisional council that includes all relevant political groups and coalitions, the military councils, the business community, and religious leaders.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Mind your language

India’s recent move to ban some Twitter and Facebook accounts to stop hate agenda might be a bark up the wrong tree, but still uses a valid rule

Many would see the Indian government’s recent decision to ban (and later ‘unban’) almost 309 URLs of Facebook, YouTube, Twitter et al in the wake of the unfortunate Assam riots as a blatant ‘violation’ of the freedom of speech ideology. Undoubtedly, the move by the Indian government – which now stands more or less revoked – was nothing but a knee-jerk and shortsighted reaction to contain a rapidly snowballing situation; almost akin to a doctor telling a cancer patient that the best way to cure the disease is to not talk about it to anybody else. Yes, clearly, the Indian government wound itself up trying to first identify which pages were encouraging hate speech, then trying to force foreign based social media sites to block these identified pages, then trying to justify the move to critical commentators and media.

Criticise the government as one may – for not understanding the real reason for riots – but what is quite clear in the midst of all this brouhaha is that the government was legally right in moving against various hate promoting sites. These steps by the government have invited huge criticism from every section of society; but the very intention of the government seems quite clear and unquestionable. India has never witnessed a situation where social media is being misused in such a condemnable manner. Regular hate speech can have a long term effect on sections of the society that are on the web and create negativity in their subconscious mind.

Undoubtedly, the government has taken these steps a bit late in the day, but it has the legal authority and duty to censor content, which might be detrimental to communal harmony. Not only India; the governments of many nations like United States of America, Australia and England have taken similar actions in the past to control violent and hate oriented speech on the web. In US, the House of Representatives recently introduced the “Rogue Websites” Bill that has been supported by many in the house, even though it would force the Service Providers to create a list of banned websites and prevent users of those websites from accessing them. This bill is a version of the Theft of Intellectual Property Act or Protect IP Act introduced in the US Senate earlier.

Minister of State for Communications and IT Sachin Pilot recently said, “India has been pushing for global internet governance at the level of the UN so that control of social media would rest in the hands of UN and its member nations.” But currently, only China supports India on this. In fact, the UN Human Rights Council in Geneva passed its first resolution on Internet freedom with a message for all nations to support individual and human rights online in July. Undoubtedly, freedom of expression is critical, but as is the case with the hate messages spread after the Assam riots, a line has to be drawn somewhere.

Cyber security has remained an area of huge concern for India. Mobiles have penetrated wide and deep in the Indian market, and the rapid rise of smartphones in particular indicates how spreading the right or wrong message has become so much easier. A mobile analytics research firm Flurry has concluded that smartphone adoption today is ten times faster as compared to the PC era in the 1980s. India saw a 171% growth in the number of active smartphone devices for the year ending July 2012 according to the Flurry report. As per eMarketer, social media globally is expected to reach 1.5 billion users in 2012 (1.2 billion in 2011). India is expected to see the fastest growth of51.7% yoy. This underscores the need for these sites to control their content and the government to crack the whip when necessary. The argument obviously gets turned on its head if the government misuses its rights to clamp down legitimate criticism of its own policies/agenda at any time.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

Indian CEOs’ perceptions of the business climate in China; an exclusive ICMR survey

Business & Economy magazine in association with the Cornell University, IIPM Think Tank and the Indian Council for Market Research (ICMR) conducted a survey to understand what doing business in China really means. The survey is aimed at helping Indian companies better understand not only the challenges and opportunities of doing business in China, but also the country’s policies with respect to Indian business. 109 CEOs and top executives from India participated in the survey. A structured questionnaire on the current economic & business environment in China was designed and telephonic interviews were conducted pan India. The sample included respondents across sectors/industries – pharma, IT, FMCG, manufacturing: automotive, auto components, electronics, steel, telecom, textile equipment and others.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

Challenging the protege

Lula's reviving ambitions could set him on a collision course with 'protege' Roussef in the coming months

The stocky and bald ex-president of Brazil, Luiz Inácio Lula da Silva, who has been the lynchpin of the ruling Workers’ Party (PT), seems to be ready to square up with his handpicked successor Dilma Rousseff for the presidential throne again. Although he has said that Brazil needs a mother (referring to Dilma Rousseff), his personal ambitions are on the ascent. He recently intoned, “I am not going to let some Tucano be President of Brazil again.” Tucano is the brash nickname for his arch rival from the opposing ‘Brazilian Social Democracy’ party. Further, he also drove home a point at a Brazilian TV show, where he said that he can contest the next election if Rousseff “doesn’t want to run.”

There is no denying the fact that Lula’s popularity in Brazil can daunt the staunchest of opposition. If he so desires, he can bring the entire country to a standstill and mesmerize voters with his charisma. After returning from successful cancer treatment, he has already started to flex muscles within his Workers’ Party. That Lula’s veto is valued by civilians was clear when Lula backed one Mr.Haddad for the Sao Paulo mayoral post, trampling the ambition of the more popular and currently serving Marta Suplicy.

So far, he has only presented himself as a back up to Rousseff. But considering that the elections are still some way off, it is quite possible that Lula is only playing himself in! But Rousseff has matched his performance and even taken some tough decisions. She has sacked eight ministers who belonged to Lula’s coterie.

These are writings on the wall that Lula cannot take his election for granted. He has to match the roll-off benefits of his protégé Rousseff. And lastly, Lula has to push back on some of his strong armed tactics; or else cracks in his relations with Rousseff could start becoming evident sooner rather than later.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

“Uncertainty compounds overtime”

Lubos Pastor, Charles P. McQuaid Professor of Finance and Robert King Steel Faculty Fellow at the University of Chicago Booth school of Business, believes that contrary to conventional wisdom, stocks are riskier in the long run. Therefore, it makes sense to hold fewer stocks as investors get older, but the reduction in the stock allocation should not be as steep as conventional wisdom suggests.

Investors are often told that stocks are highly risky for anyone investing for a period of five years or less. Extend that horizon to 15 years or more, however, and the risk of owning stocks falls dramatically – they are told – because a longer investment period allows more time for a bull market to cancel out a bear market. Thus, investors who hold on to stocks for a long time can expect to earn high real returns with low risk. This conventional wisdom has become the cornerstone of long-term investing. Popular target date mutual funds, for instance, start with a high allocation in stocks and glide toward a lower stock allocation as investors move closer to retirement.

The idea that stocks are less risky in the long run is supported by the historical performance of stocks. Indeed, the classic book, Stocks for the Long Run, by University of Pennsylvania professor Jeremy J. Siegel, shows that stocks have consistently outperformed bonds over various 30-year periods since the early 19th century. Investors might use this evidence as reason to put more stocks in their long-term portfolio. But according to a recent study, “Are Stocks Really Less Volatile in the Long Run?” undertaken by me along Prof. Robert F. Stambaugh of the University of Pennsylvania, investors should pay attention not only to historical estimates, but also to the uncertainty associated with those estimates.

What matters to investors is a measure of volatility that captures the uncertainty about whether the average future stock return will resemble its historical counterpart. This uncertainty compounds over time, so that its effect on the volatility of stocks increases with the investment horizon. In fact, the volatility of stock returns over long periods of time can be so high that it can overturn the conventional view, which is exactly what we find. When investors take the uncertainty associated with historical estimates into account, they discover that stocks are riskier in the long run.

Uncertainty Trumps Mean Reversion
From the 1950s to the 1980s, the view that dominated investors’ understanding of stocks was that stock prices followed a random walk; that is, stock price changes cannot be predicted based on past price movements. Because changes in stock prices are independent from one another, the volatility of stock returns is expected to be equal at all investment horizons. In other words, a person who invests in stocks for one year and another who invests for 30 years would face the same amount of risk on a per-year basis.

Beginning in the 1980s, people started to realise that it was somewhat possible to forecast stock prices – just enough to induce a slight “mean reversion” in stock returns. The idea is that bull markets tend to be followed by bear markets, so that stock returns end up close to the historical average. The concept of mean reversion makes stocks less volatile in the long run, a powerful idea that was popularized by Siegel’s book, which presents evidence of mean reversion using more than 200 years of stock returns. Today, almost anyone who wants to save for retirement or their children’s college tuition is given the same advice – to load up on stocks and hold on to them for a long time, because stocks are safer and the returns higher than bonds over comparable periods.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
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IIPM’s Management Consulting Arm-Planman Consulting
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Management Guru Arindam Chaudhuri
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IIPM : The B-School with a Human Face

Asian bond market report

Capital flows into emerging East Asian bond markets remained strong as investors chased yields during the first half of the year. Relatively strong economic fundamentals, interest rate differentials, and the potential appreciation of regional currencies acted as the key pull factors for these countries to offer higher yield on relatively longer tenure bonds.

Indices heading south again

Unresolved sovereign debt issues in the United States and the ongoing Eurozone debt crisis has jolted investors’ confidence on global asset markets. Rising risk aversion has sharply dragged down global equity markets, particularly in the aftermath of Standard & Poor’s (S&P) downgrade of US sovereign debt. However, considering the baseline scenario, MSCI indices show that the Emerging Europe stock markets have been the worst affected lot since the 2008 financial crisis. And the scenario has been further aggravated by the sovereign debt crises in mature markets and the potential impact on the wider economy. This has led investors to re-think their definitions of risk-free and risky assets and prompted safe haven flows into gold, the bonds of higher rated corporates.

Us stands tall at the top spot

As suggested by an Asian Development Bank report, demand for local currency (LCY) government bonds picked up in the middle of 2010 and remained strong throughout the first half of 2011. Overall, there has been a bullish flattening of yield curves in most markets; in many cases there has been a downward shift of the entire yield curve. Total LCY bonds outstanding in emerging East Asia grew 2.4% on a quarterly basis in 2Q11 to reach $5.5 trillion, with growth driven more by the region’s corporate markets rather than its larger government markets. The most rapidly growing corporate bond markets in 2Q11 were Indonesia (8.9%), the People’s Republic of China (PRC) (6.3%), Malaysia (4.9%), and Singapore (4.7%).

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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

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

“Bureaucracy is a huge Operational Hassle in India”

It was almost 12 years ago when Mark Wilson joined Siemens. And since then he has held various positions in finance and management within The Organisation. In 2002, he was appointed Managing Director of Fujitsu Siemens Computers in South Africa. In April 2007, he was made the Senior Vice President of the Middle East Africa and India Region. In an exclusive interview with B&E, Wilson throws light on the company’s growth trajectory.

B&E: What was it that motivated you to begin your career in the IT sector? Was the environment in South Africa conducive to this sector?
Mark Wilson (MW): It’s been more than 18 years since I took up the job, and as far as I can recollect the developments in information technology domain in South Africa motivated me to take up a job in this sector. It all began 20 years back when in college I was deciding on the right career path to tread on. The IT space then was at its budding stage and looked promising. Siemens, a technology innovator with a great track record had just set foot on the South African soil. I thought it was a good opportunity, knocked at the door and was lucky enough to bag a job with them that offered me a very good profile in the administrative department at one of their start-ups. So that’s where I started, and since then there has been no looking back. After my first promotion, I was made the management in-charge and was required to head the Service Division. Later, I was given a key position as the Financial Director at Siemens’ Service Division. My journey in this organisation has been a great learning experience.

B&E: As you venture into an alliance with Siemens Enterprise Communications (SEC) to offer integrated service in the IT and communication space, what leverage do you think customers in India will get from this association?
MW: Recognising the increasing convergence between telecommunications and IT, Fujitsu India is partnering with Siemens Enterprise Communications to ensure that our Indian customers can benefit from the best of German-Japanese IT platforms and communication capabilities. Together, we expect to redefine innovations and raise the bar in terms of customer offerings. We are certain that this relationship will broaden our scope, increase market share, and strengthen core areas of customer responsiveness.

B&E: What is the scope of these integrated communication services that you, along with SEC, are offering in India?
MW: In India, there is a growing market for unified communications. The services we offer are intelligent solutions to make life easy at the enterprise as well as personal level. For example, if you want to make a conference call and you are not sure of the ones available at that moment through online/voice/video/etc, the comprehensive software will determine who all are available and on what platform, thereby enabling a hassle free conference call experience. Similarly, if you are a celebrity and want to decide what calls you want to take and when, our IT-Communication integration service does that for you too.

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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

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)

Will they keep getting it right?

Post the recovery in the global economy, Indian IT firms have the opportunity to chart a new growth story. An analysis of their results provides valuable insights on the way forward

Even though he has got himself out of Infosys, it will remain hard for Infosys founder and former Chairman N. R. Narayana Murthy to stay out of public attention. And he makes it even harder due to some of the statements he makes, which may not win popularity awards, but bring us face to face with valid truths that we often try to sneak away from. In a seminar organised by the Project Management Institute a few days back, Murthy lamented on the laid back attitude of Indians, low focus on merit in society and how this affected our work. And around the same week, he was busy drafting a letter to FM Pranab Mukherjee on how delays at immigration were discouraging foreign clients from coming to India, and that IT firms should sponsor world class VIP lounges at airports.

Without a shadow of doubt, the Indian IT sector has been a study in contrast as compared to the economy in general. The sector has registered blistering growth (revenues of Rs.4.38 trillion in FY 2010-11 and growth of 19% yoy as per NASSCOM), generated high employment, developed a powerful export model and also delivered on creating benchmarks in terms of best business practices.

Normally, we describe India’s IT story as TCS, Infosys, Wipro & Cognizant (followed by Mahindra Satyam, HCL Technologies and the rest of them). These four have been often used as the barometers for experts to judge the entire sector and where it is headed.

By that yardstick, there have been a number of mixed signals in the results of these companies for the quarter ended June 2011. And not surprisingly, the ‘basics’ that the Indian IT sector swore by at one point in time are also losing some of their relevance over time and CEOs are often seen talking about inflection points. B&E analyses the broad picture that emerges from these results and also strategic implications for IT companies.

It is known how the results showed a surprising contrast between the performances of Wipro and Infosys on one hand and TCS and Cognizant on the other. Infosys revenues grew by 23% yoy to reach $1.67 billion for the quarter, but net income after tax grew by only 17.8% yoy and declined by 4.5% qoq to reach $384 million. Wipro, on the other hand, posted IT services revenues of $1.41 billion, an increase by 16.9% yoy while net income just increased by 1% yoy to touch $295 million. In the case of TCS, revenues increased by 34.4% yoy to reach $2.4 billion and net income increased by 30.6% yoy to touch $532 million. Cognizant, which beat Wipro in terms of revenues to reach the number 3 position in the quarter, saw revenue rise by 34.4% yoy to reach $1.48 billion and net income reach $208 million, a growth of 20.78% yoy.

Read more.....

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

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)

Is SEC Setting us up?

Out of 26 Odd People Under Trial in The Galleon case, Gupta is in The Few Facing Civil Instead of Criminal Proceedings. Is The SEC setting The Stage for an Escape Route?

The verdict is finally out, loud & clear. Good guys have won yet another round (apparently)! The nailing of Galleon Group hedge fund (managing over $7 billion before closing in October 2009) tycoon Raj Rajaratnam has been brandished around by SEC in an attempt to project the view that the US legal setup is still not a set-up in US when it comes to chasten influential financial-world figures. One has to accept to SEC’s credit, the Galleon case is the biggest blow against insider trading in a generation as the trial involved some of the most high-profile executives on the Wall Street. But hold on to your beer barrels, we just might have been had by the SEC.

First the empirical evidence. No doubt, there have been cases in the past where people have been caught for their crimes, but almost all of them (except a few; see chart) surprisingly escaped unscathed. Even the government has tried to curb cases and incidences of insider trading by putting in place laws like SOX (the Sarbanes-Oxley Act of 2002), but much in vain. According to data compiled by Bloomberg, while there were just 70 hedge funds managing $39 billion in 1990, the number had grown to a whopping 2,600 (managing $1.7 trillion) by the end of 2010. And so, one may presume, the cases of insider trading.

However, this time, thanks to the diligent prosecutors and FBI agents involved in the case that Rajaratnam, a Sri Lanka born US citizen, was finally found guilty of conspiracy and securities fraud on all 14 counts, and now awaits sentencing on July 29, 2011, which is most likely to put him behind bars for the next decade or so (or even more!). Rajaratnam is said to have made over $60 million by illegally trading on secret tips from bankers, consultants, traders, directors, and former employees of some big companies, including Goldman Sachs (GS) and McKinsey. Apart from Rajaratnam, there are more than 40 people who are now facing insider trading charges stemming from a nationwide investigation that has roots going back to 1998.

But now that Rajratnam is down, what awaits Rajat Gupta?
As one would know, the United States Securities and Exchange Commission (SEC), on March 1, 2011, accused Gupta of illegally tipping Rajaratnam with insider information about Goldman Sachs and Procter & Gamble while serving on the boards of both companies. For instance, in October 2008, Gupta apparently attended a Board meeting of Goldman Sachs where it was revealed that Berkshire Hathway, owned by the legendary investor Warren Buffett, would invest $5 billion in the company to bail it out of trouble. SEC has evidence that Gupta passed on this information to Rajaratnam, who in turn made a killing. In fact, wiretaps of phone conversations between Gupta and Rajaratnam released by prosecutors during Rajaratnam’s trial clearly show that Gupta discussed the details of Goldman Sachs board meetings with Rajaratnam, including the company’s plan to buy some other financial firms like Wachovia and AIG.

Read more.....

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

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)