Wednesday, December 12, 2012

GENERAL MOTOR CO.: FAILURE

...and the shareholders get their pants walloped!

Swing & Miss #3: GM’s premature focus on hybrids cost the company too much. Despite being in the news for over 15 years now, hybrids only contribute to about 2.15% of all vehicle sales! Then there are reports which prove how by 2020, oil production will cross a smashing 1,600 million barrels annually – 6667% more than what was produced in 2003! In other words, hybrids are not required in the near future year, but Wagoner still believes it, for he has to swing!

Swing & Miss #4: Wagoner’s confused branding strategies have ensured that high-end sports cars (like the Corvette Z01) & small cars (like the Spark) are sold under the same tag, Chevrolet? Apparently, he skipped branding management lectures too! Swing & Miss #5: During his tenure, this “easy-going” CEO destroyed a blood-freezing 98% of GM’s Mcap, shaving-off of a clean $90 billion of shareholder wealth. And just before he was booted-out by the Obama administration last month, he had the most wonderful gift for all at GM – a record $52.8 billion in losses for FY2008!

Well, today, Wagoner’s out, but GM has to live on. But will it? “A lot of things depend on the survival plan that GM will present but filing for bankruptcy makes sense as of now,” claims Christian Breitsprecher, Industry expert, Sal Oppenheim. Well, June 1 is not far away. Fingers crossed...


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

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Monday, December 10, 2012

Putting stray dogs to sleep

Is putting stray dogs to sleep the solution to the menace?

Also, some months back, a five-year-old boy was attacked and killed by a pack of stray dogs in Meerut when he walked into an area which had carcasses of dead animals and a huge dump of garbage.

Some might debate that it is inhuman to kill animals, but in situations like these, when animals start posing a threat to man, isn’t man left with just one solution? “Not at all!” said Jaya. “It is a failure on the part of the municipalities which haven’t been able to take care of the stray dogs. For about 40-50 years, stray dogs were being killed in Bangalore. Has that reduced the number of such dogs there? Sadly, no.” Giving solutions to tackle such problems, Jaya suggested, “One has to eliminate the root cause of the problem. Firstly, garbage should be managed and all illegal meat shops, etc., should be removed. Secondly, stray dogs must be sterilised. Dogs, especially during the mating season, become aggressive. Sterilisation makes them docile. It is the best scientific way to control their population and avoid community disturbance.”

The problem of these roving creatures is doing nothing but creating hatred between man and man’s best friend, leading to inhuman solutions instead of propagating a peaceful co-existence. The only solution to problems is putting the solution into action. Let us hope that Mammens call for brutal slaughter of dogs leads people to call for implementing the real solutions to the problem. 


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

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Saturday, December 08, 2012

Lonely Knight

Dasgupta’s successor will not find the going very easy

Aleader can be as great as can be, but he cannot ever be larger than his team. That’s exactly where Multi Screen Media’s (MSM) now ex-CEO Kunal Dasgupta faltered. Undoubtedly, Sony grew leaps and bounds in India under his stewardship. But unfortunately, insecurity and the fear of being overshadowed by new blood gripped him so badly that his prime focus shifted (from ensuring the channel’s success) towards chucking out his possible successors.

Dasgupta joined Sony as CFO in 1995 and was promoted as CEO in just three years (in 1998). Over his 14-year-long stint, he build the Sony network from one entertainment channel to a bouquet of six channels. With his visionary leadership, he has not only led Sony but the entire genre. He brought the concept of cricket as entertainment by telecasting it on SETMAX. He started telecasting new movie flicks to get glued eyeballs on weekends. He also managed to displace Zee TV from its number one position in 1999. This time, his weapon was horror show ‘Aahat’. Andy Kaplan, President – International Networks, SPTI acknowledges Kunal’s contribution, “Kunal has played an instrumental role in growing our channels business... His experience and leadership will be greatly missed.”

Maybe. But ten years later, Kunal hasn’t exactly been the image of visionary leadership that he was when he started off. For he is the man who has also led Sony on the downtrodden path to a poor number four in the GEC category in the latter half of 2008. So where did this media maverick go wrong? “I think Kaun Banega Crorepati (KBC) should have never ever happened… because I had a chance to buy it but I felt a quiz format will not be that appealing to the audience. I refused it...”, is what Dasgupta himself admitted earlier to B&E. And that exactly was the turning point. In July 2000, KBC was launched on Star Plus along with K-packed soaps. Within months Star Plus became number one in the GEC category. Since then, Dasgupta has been on an erring spree and Sony kept falling on expectations. And as he started faltering, his fears of being replaced became stronger, with alarming consequences.


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

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Friday, December 07, 2012

Shareholder wealth? (Which language?!)

You can curse him a million times for emptying your pockets; you can praise him a billon for saving other companies... Call him a ‘hero’; call him the ‘Don Quixote’ who led The Bank of America!

Many still ponder over how he could ‘give-in’ to his hidden penchant for the half-dead loss maker, Merrill Lynch (ML) on New Year Day (a cumulated net loss of $37.85 billion during FYs 2007 & 2008). Many still ponder over why he was booted out by Time from its list of the ‘World’s 100 Most Influential Leaders’ in 2008. Many still ponder over whether Bank of America (BofA) will beg for more than ‘just’ the $45 billion Fed-aid (and a further $118 billion worth of guarantees against bad assets). But none ponder over whether Kenneth Lewis, Chairman & CEO, BofA has been credible enough to steer the great American financial ship... He’s done his job well, and despite the fact that February 4, 2009, marked the ‘worst valuation day’ in decades for BofA (with the bank eroding close to $125 billion in Mcap since September 14, 2009; its shares touching a 25 year-old low of a paltry $3.77!), there is no denying that Lewis is the man of the hour for BofA (what?!?).

So what makes us put forward such a claim? Let’s do some reality check here – weren’t the very same critics showering hymns of praises upon Lewis, as recently as 5 months back, when he stepped in boldly to save Countrywide Financial and ML from the vagaries of the meltdown? Yes, the move backfired, but can we so very easily cast that heavy tattered hat of shame on his head, while all he did was to make an effort, even putting his hard-earned reputation on the firing line of all earnest shareholders?

“There were others that wanted to make an investment in ML. Even now, on a longer-term basis, that brand has a lot of value,” is how Lewis publicly defends his act. Shame, we even question him on a decision that only cost BofA ‘way-too-dearly’ in stocks. And in reaction, investors of BofA filed a proposed class action against the entity, on January 20, 2009, charging its top officers on grounds of incomplete information sharing about the health of ML.


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

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Thursday, December 06, 2012

B. K. MODI: SATYAM BID

Satyam is an attractive buy, but Modi has to be careful about how he values his latest acquisition target

Spice Corp. is not the only one in the fray. Given the low valuations for Satyam, there have been many suitors. The most aggressive has been Larsen & Toubro (L&T), which has already increased its stake in the company to 12% from 4%. However, an analyst on conditions on anonymity cautions, “The cost of acquiring and restructuring Satyam in this time of liquidity crunch would be more than the worth of the business.” Ditto for other suitors like Tech Mahindra, iGate and Hinduja group. Not for Modi, who proudly proclaims, “We have some Rs.20 billion in the bank!” So Satyam needs Spice but is the reverse also true? Definitely, even a much subdued Satyam would be worth much, considering current valuations (a person investing Rs.100 in the company 1 year ago would see his investment drop in value to Rs.12.45 on February 3, 2009!).

However, Spice Innovations would have a lot of work to do. The latest controversy has already cost Satyam four major clients – Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline, a loss of some $200 million in topline. Fortunately, there are a few like GE still in Satyam’s kitty. Another obstacle would be that there is no top rung of management in the organisation at the moment and employees are facing a crisis of confidence. Modi counters, “We have a good leadership team and are confident that we would be able to steer the new company in the right direction.” Well, considering how his previous big ticket venture Spice Communications went into losses, one wonders if Modi’s cadres can really manage to rescue Satyam from crisis to conquest. Moreover, this is an acquisition where a critical element – that of brand goodwill – is virtually non-existent! Although Modi has the cash, he needs to be careful with regard to how he (over)values Satyam


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

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Tuesday, December 04, 2012

Wealth Creation or Crony Capitalism?

from nano to sezs; from aviation to telecom, india inc. is a tale of state patronage

Some time during 1998, the media went into a tizzy. For the unthinkable had happened. First, the Delhi Police raided the office and residence of the Group President of Reliance Industries Ltd. V. Balasubramaniam. There were allegations that Balasubramaniam (or Baalu as the legendary lobbyist of the late Dhirubhai Ambani was famously known) had ‘violated’ the Official Secrets Act. Then again, officials of CBI raided the office of Reliance at Nariman Point in Bombay and even the fabled residence of the Ambanis called Sea Wind. All sorts of rumours flew thick and fast at that time. There were dark whispers that Baalu was in trouble because someone finally had the guts to nail him for getting access to the Union Budget even before it was presented to the Parliament. Most business journalists presumed that to be true; even though the allegations have never been proven. More than the raids, it was the political context of the time that had raised eyebrows across all and sundry. A government led by the BJP with Atal Bihari Vajpayee as Prime Minister was ruling India. Hacks, lobbyists and pundits were writing and talking extensively about how the rise and rise of the BJP and the decline and fall of the Congress had dealt a crippling blow to the ‘connections’ that Dhirubhai Ambani could boast of in New Delhi. Many had thought that the salad days of Reliance Industries, when it comes to getting ‘favourable’ back door benefits from the government at the centre were over.

They were conclusively proven wrong. It was under a BJP-led government in 2001 when Reliance made a classic back door entry into the mobile telephony sector of India – without a valid license! Mobile phone service providers like Bharti cried foul and loudly complained against this unfair treatment and asked for a level playing field. The matter went to the Supreme Court and Reliance was effectively given a back dated license after it agreed to pay a license fee. Then again in 2008, rivals cried foul when Reliance Communications, now led by Anil Ambani, was given licenses for launching GSM services across India. This time under the UPA government, but as we said, that debate is no longer relevant. 

Read more.....

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

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Monday, December 03, 2012

...And 5 REASONS WHY GM INDIA WOULD THRIVE!

“Nothing’s gonna change my love for you...” says GM to India! They seem to be getting along quite fine. And it seems, quite ironically, that while GM missed out on the key basics in its home market, it seems to have gone by the book and achieved quite considerable success in India. It has been said that the child is the father of the man. Irrespective of whether the parent ever regains, or even hopes to regain its former glory, amidst all the muddle it has gotten itself into, GM in India has smartly got itself into a position where it can catapult itself into the next league and in fact use India as a hub to expand its ambitions into other emerging markets. We proceed to explain the five basic reasons why we firmly believe that GM India is definitely slated for a bright future.

reason #1: getting taller and fatter by the day! Interestingly, staying away from the gloomy picture back home, GM’s India division believes that its fate does not rely on the approval or denial of the bailout package by the White House, as P. Balendran, Vice President, General Motors India, asserts, “All our product programmes are met by internal accruals and ours is a debt free company. The chaos in the US will not hit the India division of the company.” And the sheer optimism of Balendran seems to be backed by a lot of figures.

Some time back, the company was not looking very promising with its India operations. Its American lineage was placing it at a considerable disadvantage with Indians perceiving its cars as fuel guzzlers. People were writing the company off based on its sales performance with respect to Japanese brands, particularly Honda and Toyota, which had a perception of being best in class, thanks to the Japanese image. At that time, B&E had carried a feature on the company (in 2005) and said that the small cars would help the company gain a strong footing in the market. Sure enough, mainly after the launch of the compact Spark and Aveo’s variant U-VA, the company gained momentum in the year 2007 and then there was no looking back.

The company has used the premium brand image of the Chevrolet brand and extended it quite effectively in the small car category, as the brand communicates a ‘best in its class positioning’. After the company registered a figure of 60,000 units in the year 2007, moving ahead at a growth rate of 63% as compared to 2006, GM India has already attained a sales figure of 65,000 units till the month of November, 2008 (SIAM). “We expect to sell close to 75,000 to 78,000 units this year, registering a growth of about 20% in 2008,” asserts Balendran. Well, at a time when the overall auto industry is growing at a meagre rate of 2-5%, GM India is pacing past all others with a 20% growth rate and this is surely raising many eyebrows towards GM in the sector.


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

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Saturday, December 01, 2012

VISION 2020: CITIES IN INDIA

Don’t be surprised, there’s Karachi too! Read on... this is an eye-opener

Indian cities lose on almost all factors. Delhi scored low on ‘Business activity’ and ‘Information exchange’. This is evident from the scores we received in ‘Ease of doing business’ and ‘Bureaucratic hurdles’ and ‘Lack of transparency’. In case of Mumbai, we find low scores on parameters like ‘Cultural experience’ and ‘Political engagement’, and why not? Today, the whole of Maharashtra is burning because of regionalism and ill politics! Bangalore, out proud IT epicentre received low scores on almost every parameter. And here’s the worst of them all – a global comparison. Indian cities couldn’t rank higher than even crime-plagued cities in like Mexico or the totally non-fashionable capital of Bangladesh, Dhaka or even the conflict-torn Pakistani city of Karachi! We have an advise for our administrators – take a holiday to Dhaka or Pakistan... you all need a break!

Source : IIPM Editorial, 2012.

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Friday, November 30, 2012

From CM to PM in one jump?

Mayawati is now eyeing to become the Prime Minister. Her records show that it would be difficult to stop her

Uttar Pradesh Chief Minister, Mayawati was never known for her courteous or suave behaviour. She always had a reputation of being an arrogant and ruthlessly ambitious politician. She recently added another chapter to her reputation by refusing to lend land for construction of a Rail Coach Factory (RCF) in Rae Bareli Рthe parliamentary constituency of UPA Chairperson, Sonia Gandhi Рbarely two days before Sonia Gandhi was supposed to lay its foundation stone. Though she returned the land to railways five days later Рprimarily because of a new legislation that authorises Railways to acquire any land for development purpose Рshe once again demonstrated she cared two hoots if she needed to prove a point. In fact, she baffled political observers in 2003, when after falling out with coalition partner, BJP, within a year of taking over as CM, she decided to dissolve the State Assembly. The BJP then propped up her b̻te noire, Mulayam Singh Yadav as CM. An unfazed Mayawati, bereft of trappings of an official post Рcampaigned hard for three years and secured a clear majority on her own in 2006. People might wonder about sagacity of her political decisions, but she is never in doubt about what she was doing and the consequences.

Her fourth innings as CM was bound to be stormy and more ruthless than ever since this is the first time her government didn’t need BJP’s crutches. She started off by ordering inquiries into decisions taken by Mulayam Singh. But that was just the beginning. As Left Front withdrew support from the UPA government at the Centre and Mulayam’s party extended support to the UPA, Mayawati seized the “opportunity of her life.” In the run up to the Vote of Confidence at the Centre, she found a host of leaders – from Left stalwarts Prakash Karat & AB Bardhan to TDP’s Chandra Babu Naidu and from Janata Dal (S) Chief, HD Deve Gowda to Rashtriya Lok Dal Chief, Ajit Singh, queuing up at her doorstep.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

WAR DOCTRINE: THE EPIC ERA

Or, how to intelligently brainwash highly skilled, educated, yet ill-educated youth to do their own people

>President Harry S Truman, announcing the news from the cruiser, USS Augusta... said the device was more than 2,000 times more powerful than the largest bomb used to date... The British Prime Minister Clement Attlee read out a statement... “By God’s mercy, Britain and American science outpaced all German efforts...”< Mark those words: “God’s mercy!” Merciful god is used appropriately to give justification to Americans and British to prove to humanity that our own humankind is not, well, ‘our own people’.

Similar justifications have continued through this millennium when stealth bombers like B-1 or B-2 [commonly known as Batwings] or the ubiquitous B-52s drop bombs from 40,000 feet on the dispensable souls of Serbia, Iraq or Afghanistan, vaporising humanity with impunity. ‘Not our kind!’ And with that justification, a human can kill a human, of course with honour and pride. The same philosophy has been used quite effectively even by terror institutions attempting to induct new ‘trainees’.

Why would a skilled and educated human [terrorists, over the years, have been mostly educated] agree to go beyond the emotion of patriotism – which, believe us, can be an extremely strong feeling – and bomb his own country or kill his own countrymen? The answer is obviously simply. Once it is proved to the trainee, through focused training material and workshops, that the country he/she considers his own is actually not so, and the countrymen he considers ‘family’ are similar pieces of rag, the clearly ill-educated trainee – who in reality doesn’t have any real grievances – is inspired by shameful religious dogmatism to plant bombs all around and take lives.

Having said that, the fact is that probably every doctrine of contemporary warfare can find its root in every word uttered by the cleverest and most manipulative God of all times, Krishna, in Bhagavad Geeta. And why do humans choose to follow God’s examples? Well, firstly, it allows easy justification to the ill-educated, who choose to kill under “God’s mercy”. Secondly, there’s this tiny little motivation that one day you might strike gold and end up with 16,008 wives!!! Actually, even a fraction of that should do, we guess...


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

Divinities we could do without

RBI's moves with respect to bonds for oil companies are only a temporary solution to the problem

To err is human, to persist in error is divine. When the government should be bringing in a dose of realism to oil prices vis-à-vis international trends and moving towards mass transportation, it chooses to continue to perpetrate the lopsided trend of protecting both consumers and oil companies through the self destructive policy of issuing bonds. What a divine state of affairs indeed! So divine, that even our apex bank can't keep out of it now! In an unprecedented move, the Reserve Bank of India (RBI) had opened a window to buy oil bonds in order to compensate for the cash requirement of the cash-starved, loss making Indian oil companies. Oil companies could sell the oil bonds issued to them and buy foreign exchange from the RBI, which was much lower than the existing market price of the dollar. The government had promised to issue bonds worth Rs.245 billion by June 2008 to help the companies who needed around $300 million daily to fulfill their daily requirement of oil. In fact the RBI also bought bonds from IOCL, BPCL and HPCL and gave them cash of $4.5 billion.

But now, the window has been closed and the oil companies are forced to buy foreign exchange (mainly dollars) from the open market. By squeezing the flow of dollars in the market, they are creating a situation where the demand for dollars is continuously rising and the value of rupee is falling.

Such a situation is particularly critical for the Indian capital market since it is already facing capital outflows and a falling rupee. In the first place, the issuance of oil bonds is nothing more than a stop gap solution. For companies, which are making losses to the tune of Rs.6.5 billion on a daily basis, such bonds were nothing more than a false reprieve.


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

But will the two wheeler giants give up easy?!

The middle-class customer never had it so good when it comes to four-wheeled toys... But will the two wheeler giants give up easy?!

Hero Honda for instance, expanded 18% between April-July 2008-09 and sold 1,149,753 two-wheelers and is confident of the two-wheeler segment. “Interesting developments, but there is no competition from small cars.

This is because the cost of ownership of bikes is less than that of a car, which includes fuel cost, insurance cost, maintenance cost etc.,” explains Anil Dua, SVP, Hero Honda to B&E. TVS on the other hand is betting big on its progressive two-wheeler product range. “Our focus remains on two-wheelers even if Bajaj and the others are launching low-cost cars,” opines Venu Srinivasan, Chairman, TVS Motor on questions concerning threat from small cars. Like them, there are a number of players in the market for whom two wheels remain the mainstay despite the hoopla.

It is interesting to note that while many new patrons have been added to the car segment, many more are making their way into the motorbike segment! Last year, the two-wheeler segment alone recorded a growth of 38% with at least 700,000 two-wheelers being sold every year. According to Yezdi Nagporewalla, of KPMG, “In volumes the motorbike segment is 7 million units strong and the competition from Tata’s Nano and others will at best be around 1 million units.” Interestingly, even though both the sides (two-wheelers & ultra-cheap cars) have their own take on the possible outcome of the battle, neither has the consumer figured-out for sure. Maybe that’s why they say, ‘Consumer is King’!


Source : IIPM Editorial, 2012.

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Friday, November 23, 2012

How to hit the bulls eye

C.K. Prahalad and M.S. Krishnan present DART – Dialogue, Access, Risk and Transparency Benefits

Through the four years of concerted effort, C.K. Prahalad, distinguished University Professor of Strategy, Ross school of Business, University of Michigan, named ‘The world’s most influential management thinker’ in 2007 by the Times of London & M.S. Krishnan, Hallman fellow and Professor of Business Information & Technology, Ross School of Business, University of Michigan have prescribed the agenda for senior managers to successfully compete on the battlefields and on the various fronts during the following centuries. They have to re-invent their processes and cultures to sustain innovative solutions. The new culture of innovation is a strategic plan for achieving transformation to meet the needs of the customers of the future.

The New Age Of Innovation builds on the Future Of Competition and The Fortune At The Bottom Of The Pyramid, presenting a unique perspective on the essence of innovation. It focuses on the nature and strategy in the new competitive context and builds the hidden links between business processes and analytics, innovational business models, and day-to-day operations.

The authors discuss various strategies for building teams that are capable of providing high-quality, low-cost solutions rapidly, & treating all involved individuals as unique. They discuss how to improve flexibility in all customer-facing and back-end processes, measure individual behaviour, and systems to co-create value with customers. The authours offer us the DART model which is an acronym for the building blocks of co-creation– Dialogue, Access, Risk and transperancy.

They’ve used examples to describe N=1, which they define as getting the customer to decide what he wants and access to resources from multiple sources. For this, various on-ground examples have been furnished like iGoogle, which is about co-creation of value and personalisation of experience where Google provides the platform to individual consumers; The Ponds Institute measures skin conditions and seeks customers’ view about how they want to look and feel; at Starbucks, a customer can decide whether to pick up his coffee and run, or stay and read the newspaper.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

The more we are, the harder we...

Did you say ‘fall’? India’s population grows, and JSK is the new tactic

Art Hoppe had once rightly said, “We all worry about the population explosion, but we don’t worry about it at the right time.” With the population of India hovering at around 1.3 billion, this sure is a time to deter the exponential growth of the Indian inhabitants. Well, isn’t that something people knew already? But what people do not seem to know is that India has managed to attain this burgeoning population figure despite the incorporation of various Population Stabilisation Programmes. In fact, India was very much a signatory to the Improved Pyramid Construction Design programme, by the virtue of which various family planning programmes were implemented, and consequently imploded and destroyed.

One forgets that India was supposed to be a nation of 1.26 billion by 2015; a figure we’ve crossed already. And now, there’s a new initiative round the block, the Jansankhya Sthirata Kosh (JSK). This programme, which is an outcome of Government and civil society put together, seeks to achieve its goals through different social sectors.


Source : IIPM Editorial, 2012.

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Wednesday, November 21, 2012

Sky above them!

And that’s the only roof they know...

‘India is shining’ is the advertisement punch-line used by the erstwhile NDA government showcasing India’s potential to the world. Around 70% of our population live in rural India [which are not growing as fast as our glittery urban lands are] and a major portion of rural population live in mud houses, which under the government’s own admission is an unsatisfactory way to live.

The government has a wonderful scheme called ‘Indira Awas Yojana’, where credit is given to the SC, ST, free-bonded labourers and non-SCs/non-STs who are under poverty line (BPL), to build houses on the land they own. There lies the cruel paradox that more than 13 million families do not own any agricultural land! And to make matters worse, eight million do not even own a plot. To neutralise this disparity, the Union Government has extended a helping hand of Rs.1 billion to state governments so that they can buy lands to be distributed to the landless. This is the first such step in many years from the Union Government, which can benefit 100,000-200,000 rural families straight away. Considered that this is a real noble gesture from the Union Government, ensuring proper utilisation of funds will pose a challenge.


Source : IIPM Editorial, 2012.

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