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

For More IIPM Info, Visit below mentioned IIPM articles.


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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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