Pratibimb | June 2011
A Bi-Monthly Magazine
Volume II, Issue 1I
The Reflection of Management
June 2011 1
Pratibimb | June 2011
About TAPMI T.A. Pai Management Institute (TAPMI) is a premier management institute situated in Manipal and is well known for its academic rigour & faculty-student interaction. The Institute has been recently ranked amongst top 15 B-schools in India & 4th in the South Zone by The Week Magazine. Founded by the visionary, Late Shri. T. A. Pai, TAPMI‘s mission is to provide much needed impetus to the task of building professional management capability in the country. In the process, it has also played a role in strengthening the existing educational and health infrastructure of Manipal.
Mission We are committed to excellence in post-graduate management education, research, and practice by nurturing and developing global wealth creators and leaders. We shall continually benchmark ourselves against the best in class institutions. We shall foster continuous learning and reflection, achievement-orientation, creative interdependence and respect for diversity with a holistic concern for ethics, environment, and the society.
2
Pratibimb | June 2011
About Pratibimb Pratibimb – The TAPMI‘s e-Magazine - is the conglomeration of the various specializations in MBA (Marketing, Finance, HR, Systems and Operations). It is primarily intended to provide insights into the plethora of knowledge that relate to the various departments of Management and to give an opportunity to the students of TAPMI and the best brains across country to exhibit their creative cells. The magazine also strives to bring expert inputs from industries, thereby bringing the academia and industry together. Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The issue comprised of an interview of denoted writer Ms. Rashmi Bansal along with a series of articles by students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first rank globally for learning & development . It also included a hugely successful and engrossing game for finance geeks called ―Beat the Market‖ to bring out the application based knowledge of students by providing them the platform where they were expected to predict the stock prices of two selected stocks on a future date. The magazine is primarily intended for the development of all around management knowledge by providing unbiased critical insights into the modern developments. TAPMI believes that learning is a continuous process and is not limited to the four walls of the classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and contribute to create a refreshing learning environment outside the classrooms which eventually leads to a holistic development process. The magazine provides a competitive platform and opportunity to the students where they can compete with the best brains of the country. The magazine also provides a platform for prominent industry stalwarts to communicate their views and learning about and from the recent developments from their respective fields of business which in turn helps to create a collaborative learning base for its readers. Pratibimb is committed in continuing this initiative by bringing in continuous improvement in the magazine by including quality articles related to various management issues and eventually creating a more engaging relationship with its readers by providing them a platform to showcase their talent. We invite all the best brains across country to be part of this initiative and help us take this to the next level.
3
MESSAGE
DIRECTOR’S
Pratibimb | June 2011
I am pleased to state that the team members of PRATIBIMB have continued their sincere efforts to bring out this fourth issue in June 2011, despite the first year PGP students were busily engaged in their Summer Project work in April – May. The previous three issues had a number of management articles written by our students and faculty. This student magazine is also accessed and appreciated by our alumni and industry and business readers. The magazine provides a platform for our students to use their creativity, imagination and language skills to reflect upon various management areas i.e., operations, marketing, system, HR, finance and entrepreneurship as well as in areas of their interest. It also fosters research culture among students. Research orientation and sharpening analytical mind are crucial for their academic orientation. Generally literary work, research article writing and publication should become part of students’ learning goals while they are in the campus. This would perhaps sow seeds for pursuit for academic career by a few management students after their initial experience in industry and business. It has been observed that on comparison with fast developing country i.e., China in Asia, the focus on research and publishing from Indian students and faculty in management journals and pursuit of Ph.D. programme in leading universities has been moderate in recent past. This situation needs to be improved. To this extent our students and faculty can best express themselves about their creative thoughts, opinions, knowledge and interests by contributing to PRATIBIMB. Let PRATIBIMB grow in content and variety with thoughtful articles in months to come. I congratulate the persistence and continued efforts put in by the team members of PRATIBIMB for timely publishing this volume. I wish them higher performance, joy and success in their endeavor. Dr. A. S. Vasudev Rao
4
Editor’s Corner
Pratibimb | June 2011
Dear Readers, Presently, Indian economy is battling inflation along with its commitment to meet growth target. Among other problems being faced by India, the chief one is corruption which has become buzzword these days. Everyone is trying to gain mass popularity by showing their support for corruption. Corruption has been rampant in India since independence in the form of scams and bribes. The latest among these is the telecom scam. We are pleased to present you the June issue of Pratibimb which will analyze the telecom scam in detail and will show you its implication on various stakeholders like government, industry, consumer etc. Along with this, there are other interesting management articles that will also draw your attention. The highlight of this issue is the interview with Mr. Vinit Monga, Head & Finance Control, Technology Centre, Nokia Siemens Network, Bangalore who shared his views & experience in various areas of Finance with us.
Chief-Editor Creative Designer
Editor Branding
We are extremely happy to introduce a marketing game – ―Route To Market‖ for booming marketing managers of future. This will provide them with a platform to feel the challenge that they are going to face in this age of globalization in future. We are thankful to all the students from various colleges who put in great efforts in writing articles on various issues/topics and worked hard to send entries for ―Beat-The-Market‖. The articles have been selected by the Editor‘s Team whereas BeatThe-Market has been judged by Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com. We thank him for his precious time. We thank all those who helped us in improving Pratibimb through their feedbacks. We would like to take this opportunity to extend our gratitude to Dr. A. S. Vasudev Rao, Director InCharge & Dean-Administration, TAPMI, Prof. Chowdari Prasad and all other faculties at TAPMI for their continued support, guidance, motivation and inspiration to take Pratibimb to next level. Please continue to send in your valuable suggestions/feedbacks at pratibimb.tapmi@gmail.com so that we can make improvements in the coming issues.
Editor Correspondent
Special Thanks Mr. Vinit Monga, Head & Finance Control, Nokia Siemens Network Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com Dr. A S Vasudev Rao, Director In-Charge & Dean-Administration, TAPMI Prof. Chowdari Prasad, TAPMI Dr. Jaba M. Gupta, Associate Professor and Chairperson—eGPX, TAPMI
Happy Reading!!
Mr. Gautam Prasad, PGDM (2010-12) Cover Page Design
Rohit Kumar
5
Contents
Pratibimb | June 2011
The Telecom Scam and its Implications
7
Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI
Balancing The Horizon and Renaissance
14
Anuja Yadav, IIM Indore
Social Media As Means for Consumer Research
16
Nickhie Ann Antony, MICA
Attitude: It Matters
18
Paminderjit Sunner, TAPMI
Giant Awakening: Indian Manufacturing Sector
22
Deep Aggarwal, MBA(MS), FMS
Interview with Mr. Vinit Monga
27
Head of Finance & Control, Technology Centre, Nokia Siemens Network, Bangalore
Paradigm Shift in Optimal Media Mix Strategy
31
Akankasha Sharma, SIMSREE
Advertising Through Brand Extensions
34
Ramanuj Vidyanta, TAPMI
Talent Supply Chain Management
36
Aby John Kottukappally, MBA-HR, SCMHRD
Operations in Turbulent World Anish Bhattacharya, Goa Institute of Management
38
30 6
Pratibimb | June 2011
The Telecom Scam and its Implications Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI
INDIAN MOBILE SECTOR: OVERVIEW
Industry wide ARPU witnesses significant fall
Phenomenal subscriber growth in the mobile
While there has been significant subscriber growth,
segment
Average Revenue Per User (ARPU) has plummeted
The telecom services sector has grown rapidly over
due to intensifying competition between service
the past 5 years on the back of a meteoric rise in the
providers in the sector. Fall in call tariffs, initial
mobile services space. The mobile subscriber base
subscription costs as well as SMS and non-voice
soared from 99 mn in FY05 to 584 mn in FY10,
services rates, has led to a reduction in the average
making it the second-largest wireless market in the
ARPU of the industry.
world, next only to China. Increased affordability (due to continuous decline in tariffs, handset prices and reduction in initial subscription costs) and greater availability (with rapid expansion in coverage and wider distribution network) of mobile services has fuelled this buoyant growth.
(In Millions)
Total mobile subscribers base 600 500 400 300 200 100 0
584 392
The fall in ARPU has led to a reduction in the Revenue Per Minute (RPM) of service providers.
261
7
14
36
57
99
166
2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 200902 03 04 05 06 07 08 09 10
Mobile subscribers
Source: COAI, AUSPI and TRAI
The industry has witnessed phenomenal growth in the past eight years at a CAGR of 73.8% as is
With RPM for several players falling below the
reflected in the graph above. As of December 2010,
operating cost that the service provider is incurring
mobile subscribers in India had reached 752 million
per minute, survival in the industry has become
translating into an overall teledensity of 66.2%.
tough. 7
Pratibimb | June 2011 HISTORICAL SPECTRUM PRICING
3G pricing strategy employed by DoT
STRATEGIES
In the case of the 3G spectrum allocation,
In August 1995, Mobile services were launched for
government
the first time in India in the city of Kolkata. Under
interested parties for three-four slots of spectrum in
the National Telecom Policy, 1994, the policy‘s key
the 2.1 GHz range for service providers. As against
objectives included:
a budgeted Rs. 35,000 crores from 3G and BWA
conducted
an
auction
between
Universal service with complete coverage of
auction made in the Finance Minister‘s speech for
urban and rural areas
the 2010-11 budget, the exchequer collected Rs.
Availability of a wide range of services at
107,000 crores from the two auctions.
reasonable prices In the first phase in 1994, 2G spectrum was allotted
International pricing strategies
to four service providers per circle on the basis of
Varied spectrum allocation strategies have been
the lowest rental proposed in metros (to increase
employed in various countries with reasonable
affordability) and the highest fee quoted by service
International pricing strategies for spectrum
providers in Non metro circles (to maximize revenues). This was later extended in 2001 to
Country
accommodate more players in order to increase
Pricing strategy Auction
Australia
competition leading to a reduction in prices.
2004 onwards had been done by DoT in proportion
Singapore
to the number of subscribers that a service provider
Korea
Beauty content plus fixed fee Beauty content plus fixed fee Beauty contest plus fixed fee
UK
Auction
Malaysia
Moreover, the excess spectrum allocation from
had in the respective circle.
2G/ 3G 3G Both 2G & 3G Both 2G & 3G 3G 3G
Source:TRAI consultation paper issued 12th June 2006
Spectrum pricing strategies employed by DoT Key Selection parameter
1994 1999
Metros: Lowest Rental proposed to be charged from subscribers Non Metro circles: Highest license fee quoted by the bidders Shift from license fee to revenue sharing
Additional spectrum issued on the basis of 2004 number of subscribers 2008 New licensees selected on arbitrary FCFS basis 2010 3G & BWA spectrum alotted through auctions
success. The beauty content plus fixed fee pricing strategy have been employed on most occasions. Some of the international pricing strategies employed in various countries are given below: Having considered historic as well as international pricing strategies, the following criteria can be used for determining spectrum price: 1.
Demand supply situation reflective of scarcity
2.
Economic and social benefits emanating from 3G services
Source: TRAI recommendations on spectrum allocation 8
Pratibimb | June 2011 3.
Maximizing government revenue
demand drafts prior to the date of issue of
4.
Extent of competition in the market
application asking for Demand drafts 3.
Out of 232 applications received from 21 applicant companies till the changed cut-off
THE 2G SPECTRUM SCAM
date, 121 applications from 16 applicant
In September 2007, TRAI issued recommendations on capping the number of access providers.
Companies were found eligible 4.
Opaque & uncertain delivery system due to
Salient features of these recommendations were:
UAS licenses barely being issued from 2004-
1.
05 to October 2007
No cap to be placed on the number of access service providers in any service areas
2.
5.
Change in the method for applying FCFS
No additional spectrum to be allocated to
criteria from the date of receipt of application
licensees
to date of compliance of LoIs
without
fulfilling
the
rollout
obligations and failure of the same would lead
The Prime Minister, Minister of Law and justice,
to termination of license
Finance Secretary and the DoT Secretary were the
against the hasty allotment of spectrum at 2001
recommendations made by the regulator. However,
prices and believed that DoT had lost an
despite the recommendation, DoT issued a press
opportunity to discover the real economic value of a
release accepting applications only till 1st October,
scarce national resource - spectrum.
Later
that
year,
DoT
accepted
all
2007. DoT further accepted applications only till 25th September, 2007.
Irregularities in FCFS strategy adopted by DoT 1.
2G spectrum scam: New licenses Company
Arbitrary dates fixed as cut off for receiving applications in September 2007
2.
Criteria for allocation not met by new entrants
Selectively leaking out information to benefit
Shipping stop dot com now Loop Telecom
a few players who were ready with pre-dated DoT conveys no application to be accepted after 1st Oct, 2007
19th Oct, 2007
Policy for dual technology announced, LoIs issued to Rcom & 2other companies
2nd Nov, 2007
DoT decides that only 232 applications till 25th Sep, 2007 will be considered
2nd Nov, 2007 2nd Nov, 2007 31st Dec, 2007 10th Jan, 2008
PM writes to Telecom Minister to consider auction of spectrum in fair transparent manner Telecom minister writes back saying that sufficient 2G spectrum is available Secretary DoT and Member (Finance) DoT retired. Out of 232 applications received up to cut off date 121 LoIs were issued to applicants found eligible
Suppressed non - registration of alteration in the main object clause of MOA by ROC Authorised share capital only Rs. 5.20 crore against requirement of 128 crore
Request for Registration of increase in authorised share capital submitted 24 Oct. Suppressed non - registration of the resolution effecting alteration in the MOA
2G Scam : Timeline 24th Sep, 2007
Irregularities in the new licenses
Datacom Solutions Pvt. Ltd. (Now Videocon Telecom Ltd.)
Authorised share capital only Rs. 1 lakh against requirement of Rs. 138 crore Submitted false certificate from Company Secretary
S Tel
Suppressed non - registration of alteration in the MOA/AOA Authorised share capital only Rs. 10 lakh against requirement of Rs. 18 crors; Submitted false certificate from Company Secretary
Source: Various public releases on the website
9
Pratibimb | June 2011 Even ignoring the arbitrary FCFS methodology
major changes and from its infancy stage had
adopted by DoT in the issuance of articles, the real
zoomed forward. To realize the true value of
issue lies in the type of companies that were allotted
spectrum, we can consider the equity sales made by
spectrum to roll out 2G services. Most of the new
the following companies, most of whom did not
entrants who won spectrum were novices in the
possess any assets on their books, but a piece of
telecom field having no background in the industry,
paper – The 2G license.
existing only on paper. Additionally, most of the new entrants did not meet several criteria for the allocation of spectrum. In the table below, the irregularities with respect to the new licensees have been mentioned. IMPACT ON INDUSTRY In an already competitive environment, number of
Equity sales by new entrants to foreign players Seller Swan Telecom S Tel Unitech
Buyer Etisalat Mauritius BMIC, Mauritius Telenor, Norway
% Stake In Rs. Crores 50%
3,598
5%
239
67%
6,120
Source: Media releases on company websites
service providers were raised from 6-7 to 11-12 in
Little impact on competition in the sector
various circles, resulting in a hyper-competitive
While the allotment of 2G spectrum was expected
scenario.
to usher in a new wave of competition leading to a further reduction in tariffs, most of the new entrants
Preferential treatment for new entrants
failed to meet their roll out obligation norms.
While established players were waiting in line to gain spectrum, new players were offered spectrum within a few months of applying for the letter of intent. Idea Cellular had been in queue for more than 2 years for spectrum in the Punjab circle, while new entrant Unitech Wireless was issued spectrum in just 2 months, despite being much lower than Idea in the priority list for the Punjab circle.
Spectrum issued at throwaway prices The spectrum issued to new entrants was offered in the range of Rs. 1,500 to Rs.1,600 crores which was the same price at which most of the incumbent players had received startup spectrum post the implementation of the National Telecom Policy, 1999. In eight years, the industry had undergone 10
Pratibimb | June 2011 Moreover, the new entrants have failed to garner a
2.
significant amount of market share since their roll
On the basis of the 3G spectrum auction price which is Rs. 111,512 crores
out. In fact the top six players of the industry have
In addition, if losses due to dual technology specific
remained unchanged in the past several years. As of
losses and excess spectrum issued over and above
December 2010, six new entrants (Etisalat, Uninor,
6.2 MHz is considered, then the figures in the two
Sistema
Shyam,
S-Tel,
Loop
Telecom
and
Videocon) had managed just 4 per cent market
cases amount to Rs. 67,634 crores and Rs.1,76,645 crores respectively.
share translating into just one per cent revenue market share.
Estimates of loss due to 2G scamon Based Based on S 3G auction Tel's offer prices
IMPACT ON GOVERNMENT
Revenue expected Revenue through auctions
Non fulfillment of roll out obligation norms As per the roll out norms, new licensees were required to roll out services in 90% of metro service area and 10% District Headquarters in other service areas within 12 months of being allotted spectrum. Although the startup spectrum of 4.4 MHz was made available to all players in 2008, none of them
Loss
47,964
111,512
9,014
9,014
38,950
102,498
Burgeoning fiscal deficit
had rolled out services as per the earlier stated
In the year 2007-08, India ran a fiscal deficit of Rs.
provisions till January 2010. Therefore,
1,509 billion representing 3.1% of the country‘s
1.
DoT did not earn any spectrum fee from these operators in 2008-09 and 2009-10
2.
DoT
has
also
not
recovered
GDP. While in the union budget for 2009-10, this fiscal deficit had risen to 6.7 % of the country‘s GDP.
penalties
amounting to Rs. 700 crores from these new entrants
However, support was lent by the auctions conducted for 3G and BWA spectrum in 2010-11. Against a budgeted Rs. 35,000 crores expectation
Huge loss of revenue The notional loss suffered by the exchequer due to the 2G spectrum scam can be calculated in two ways: 1.
On the basis of S-Tel‘s offer to DoT of Rs. 13,751 crores for 6.2 MHz of spectrum for 10 years, leading to Rs. 47,964 crores for 122
by the government for 3G and BWA auction, the
licenses
exchequer made Rs. 107,000 crores through the sale 11
Pratibimb | June 2011 of spectrum. This helped in fiscal consolidation as
1.
Airtel brought down lifetime prepaid scheme
fiscal deficit came down to 5.1 %.
from Rs. 199 to Rs. 99 2.
Simply Reliance plan offering competitive tariffs to subscribers
IMPACT ON CONSUMERS When the Telecom Minister wrote to the Prime
3.
Tata DoCoMo‘s launch characterized by per second billing
Minister on 2nd November 2007, explaining the rationale behind issuance of spectrum on 2001
Subscriber additions in the past three years (In Millions) 20
18 16 14 12 10
Sustained growth due to incumbents perfroming well & new entrants chiping in
RCom’s GSM launch and Vodafone and Idea’s new circle launches
Lifetime prepaid scheme reduced to Rs 199,
Tata DoCoMo's GSM launch characterised by per second billing
8
Apr-10
Jun-10
Feb-10
Oct-09
Dec-09
Apr-09
Jun-09
Feb-09
Oct-08
Dec-08
Apr-08
Jun-08
Feb-08
Oct-07
Dec-07
Aug-09
More number of operators per circle will
Aug-08
1.
Jun-07
prices, he mentioned the following points:
Aug-07
6
Source: TRAI, COAI and internal research
bring down the tariff 2.
In order to increase affordability, if a high cost was imposed on the spectrum, service providers would have no option but to pass on the costs
The roll out of new licensees has led to competition further intensifying in the domestic mobile services space with the HHI falling from 1,590 to 1,394 as
In a nutshell, the impact on the consumers due to
of December 2010 (Considering subscriber market
overcrowding of 11-12 players in each circle has
share). However, it is imperative to note that the
been marginally positive, however, the new entrants
new licensees do not have a substantial amount of
have had little profits to show in this period.
revenue market share in the industry with the incumbents still being the dominators. Moreover, a high proportion of the subscriber additions that have been achieved in the past three years have been due to attractive schemes rolled out by the incumbents.
NEED FOR REGULATIONS Telecom Regulatory Authority of India (TRAI) was established in 1997 to regulate telecom services and for fixation/revision of tariffs and also to fulfill the commitments made when India joined the World 12
Pratibimb | June 2011 Trade Organization (WTO) in 1995. The formation of TRAI separated the regulatory function from
RECOMMENDATIONS The 2G scam has tarnished the reputation of Indian
policy making and operations which remained
politicians and bureaucrats and in the aftermath a
under DoT.
lot has changed. Despite the resignation of A. Raja
With reference to the 2G Telecom Scam, several
from the post of the Telecom Minister, questions of
issues have come to light.
corruption have also been raised against the Prime
1.
Disagreement in opinions of the regulator
Minister
TRAI and the Department of Telecom (DoT)
government.
Uniform decisions need to be taken by the
On the other hand, the scam has resulted in a
DoT, Ministry of Finance & Prime Minister‘s
gargantuan financial loss to the exchequer
office
amounting to more than Rs. 60,000 crores atleast.
2.
3.
Level of corruption and non-transparency in the Telecom Ministry
4.
Nexus
between
and
other
members
of
the
UPA
Irrespective of the exact financial loss made due to the 2G scam, the Department of Telecom lost accountability and transparency. Moreover, there
media
representatives,
has been a substantial loss due to the new entrants
lobbyists, politicians, bureaucrats as well as
not rolling out operations on time leading to lower
industrialists
revenue collections for the DoT.
The regulator needs to be offered independent
Going forward, DoT in accordance with the
authority and a larger responsibility in framing
Telecom Regulatory Authority of India needs to
policies for industry stakeholders. The regulator can
arrive at a uniform spectrum pricing policy to
go a long way in increasing transparency and
avoid similar discrepancies in the future. Also, in
accountability
offering
order to make the sector sustainable for service
recommendations for the designing of policies to
providers and to promote expansion into the
DoT.
hitherto neglected rural hinterlands, DoT needs to
With reference to the current industry scenario, the
relook at the Merger and Acquisition norms
regulator needs to design a uniform pricing strategy
currently prevalent in the industry.
for future 2G as well as 3G spectrum allocations.
With consolidation imminent in the sector, the next
Also, issues such as Spectrum trading, Mobile
phase of growth is expected to stem from the
Virtual Network Operator, change in merger and
expansion into the rural areas and revenue
acquisition norms need to be studied in detail and
generated from 3G services. The Indian telecom
relevant policies need to be designed in order to
sector has witnessed a honeymoon period till now
ensure the smooth functioning of the sector for all
and the good times can last going forward, if the
major stakeholders.
Telecom Ministry, can tinker the M & A norms
in
the
system
and
and make the industry environment more favorable for industry players.
13
Pratibimb | June 2011
Balancing the Horizon and Renaissance Anuja Yadav, IIM Indore
O
rganizations often find themselves at
strength of the giant (read push strategy) becomes
crossroads
the opportunity for the local retailer. Knowing the
when
faced
with
the
defining questions of bringing in a new
era of infinite possibilities and the horizon. Why do brilliant ideas crash? Is it the lack of vision and resources? Or is there something more than that? More often than not what‘s missing is the balancing act which could make or break deals. How smartly can the horizon be found? – The point where ground reality meets sky high vision. When David met Goliath, only an idea could have turned the tables around. That‘s the power, the essence, the true enigma – and David did win. Could this have been possible without the balancing act? Never and from this never- land one is tempted
buying pattern of the customer, engaging in tele-
to ask – what could have been done differently?
marketing and marketing the products which are the
Let‘s take the example of the retail industry. We all know the might of global powerhouses like WalMart etc. or our very own Future Group. These are
daily essentials which the customers might soon run short of; this could be something as basic as the daily groceries.
the Goliaths, what could David or the local Mom-
Don‘t expect the customer to come to you. Bring
and-Pop stores do differently to take on the might
the product to the customer; chances are that 1 out
of such giants? It is the close association with the
of 5 cases, you will succeed. And in that one, you
customer that is the USP of these stores compared
have a satisfied customer. A bird in the hand is
to the diversity of brands carried by Big Bazaar .
worth two in the bush. Based on the buying pattern,
KYC or Know Your Customer, direct marketing and customer segmentation are the winning horses to bet on. The inherent assumption here is that the customer is lazy. He has to be coerced and persuaded into buying what he needs, and if the need is not evident, it has to be discovered. So the
the next call becomes that much more effective. Categorize your customers according to brand preferences, buying timing, purchase volume and value of purchases. This calls for significant amount of investment and personalization which could only be catered to by the local retailer, but is
14
Pratibimb | June 2011 definitely a winning combination. After all,
accounts payable, on the other hand, is maintained
customer is the king.
at 32 days. They provide the best deals to their
In fact, predicting consumer behavior is highly
customers in terms of price and quality.
sought after in the retail industry and the retailers
Where could organizations find a balancing act
are willing to shell out huge amounts for business
here? The retail clubs provide a sense of exclusivity
intelligence and analytics. Retail analysts and
along with the guarantee of the best deals ever.
consultants are earning anywhere between $30-45
However, it‘s imperative to have inventory that
million annually in this space. The analytics tool
moves quickly else the implementation fails to live
helps in pricing, promotion, planning and decision
up to the concept of negative cash flow. This idea
making. This market is slated to grow to $60 billion
needs huge corporate muscle and bargaining skills.
globally. However, what they fall short of is the
The retail giants can take a page out of this from
lack of personalization and ease of reaching
Price Club, Cost Co and Sam‘s Club.
customer which a local retailer can manage.
Clubs can be opened up for high income groups
The home delivery mechanism of giant retailers
who would prefer exclusivity and an unmatched
hardly fits the bill with the model having its own
shopping experience contrary to the concept of Big
list of inherent flaws. What‘s more interesting is
Bazaar. With the growing per capita income in our
that retail chains have evolved over time to become
country, the high income group is on the rise. E-
more efficient and en-cash upon the plethora of
commerce can also be utilized as a channel for
opportunities out there. Enter retail clubs - an
targeting this group through websites and mailing
amazing concept which finds its implementation in
lists. This type of niche marketing, to cater to the
foreign countries; however the idea is yet to take off
need of exclusivity of this segment of customers is
on a large scale in India. The idea is as simple as
an under-explored area. Real estate products to
charging club members‘ annual membership and
holiday packages could also be marketed to this
giving them exclusive rights to shop in the stores.
segment by providing rented retail space to the
The beauty of the concept lies in its business model
vendors of these products in the stores ensuring the
which is based on negative working capital. To
deals offered are the best in the market. Hence,
quote John Millins – ―Negative working capital‖ is
finding the balancing act could be a useful strategy
a cash flow model in which stores can sell and
for not only the Davids but also the Goliaths. Both
deliver a product before they pay for it. Lately,
need their horizons well defined for the right
organizations have been moving towards zero
implementation.
working capital. The best of the lot knows how to do the unexpected. Costco works on the negative cash flow model. They bill their members annually
References
Strategy Review , Vol. 20, Issue 4, pp. 4-8,
and accept only cash, check or debit cards –
Winter 2009
maintaining only three days of accounts receivable. They maintain rapid inventory turnover. The
Mullins, John W., Capital is King!. Business
Economic Times dated 10th December, 2010 15
Pratibimb | June 2011
Social Media As Means For Consumer Research Nickhie Ann Antony, MICA
V
ery often we are told about the
their status messages with their purchases and their
importance of Consumer Research. Is
likes, dislikes, frustrations, delight etc. w.r.t. these
our marketing strategy better enforced if
purchases. Tweets, buzz etc. are now a key to
we have a deeper understanding of consumer
gaining more insight about one‘s audience. That
behavior? Consumer insight can help us understand
too, on the go. If a person is happy with a product
how products are bought and sold in the market,
or service it takes him just minutes to post it on his
what drives purchases, satisfaction levels etc. Many
Facebook wall or tweet it. Recently, a friend of
a times we will find that better consumer
mine, a loyal Vodafone customer, updated on her
understanding is the key to better analysis of the
wall her frustration over the fact that Vodafone had
trends that we sometimes find so hard to explain.
overcharged her for a call. Within couple of hours
Thus, in depth research in the field of consumer
of this post, Vodafone sincerely apologized and
behavior is absolutely essential. We also understand
promised to compensate her for the inconvenience
that this requires a lot of time and energy and most
caused through a post on her wall. Thus, they
importantly money. It takes months of research to
managed to save one of their loyal customers in full
understand what the consumers feel when they buy
public view. All her 456 friends had evidenced as to
or use or even throw your products. And money is
how Vodafone managed to retain a customer. That
not something that we can part with that easily; can
is the power of social media. Vodafone not only
we? And time? Do we have enough to keep
managed to retain a customer but also generated a
ourselves ahead of our competitors? The answer is
considerable amount of goodwill amongst the 457
NO.
―viewers‖ by typing in a few words, investing a
But something has changed in the recent years.
few minutes and no money spent at all .
Social media! Everything has turned around since
It has thus become much easier for marketers to get
the advent of social media. Keeping up with our
so called private data from their target customers.
friends has never been easier. We know everything
The information is all over the web, the only
that they do from morning till night. Tweets and
question is of going out and getting it. It may seem
status updates keep us updated. But social media
like searching for a needle in a haystack, but it is
has affected not just our social lives, but also on the
doable. Google claims that the next most sought
way companies view consumers. It has completely
after job will be that of a statistician who has to
changed the way they get information about
figure out how best to create algorithms to analyze
consumers. People these days constantly update
this mass of data available online. (Cantor, 2009)
16
Pratibimb | June 2011 Personal or private data is no longer private. It is
(Swain, 2009). Thus, social media has become a
there for everyone to see. All the research that is
key to direct communication with the intended
conducted is on this private data. So, when all this
customers.
data is available online, shouldn‘t the next step involve delving into this data with as much zeal as possible and extract as much information as possible.
FOR COMMUNICATION? this
INFORMATION? Can all this influx of information ever become too much? Will it all just lead to chaos or is it that there
HOW CAN THIS INFORMATION BE USED
All
IS THERE SOMETHING AS TOO MUCH
information
can
can be something out of all this information? My belief is that all this information can lead to
be
essential
for
disastrous consequences if not dealt with in a proper
understanding what the consumers want from the
manner. Every time a brand gets a like or a positive
market. This information will mostly be helpful to
comment, it may take it as a validation of
people who can change their tactics fast according
something that they have done well; which may not
to the trend in the market. For example, a TV show
always be true. Similarly, if they react too fast to
can use the reviews and comments received by it
comments that are negative or react without much
and use it to change the storyline as per the wishes
thought, they may do themselves much harm than
of its audience. Similarly, a service provider like
good. They should be able to see the bigger picture.
Vodafone or even a restaurant can continue with its
Adequate care must also be taken to see that even in
offer or stop it based on how people like it or accept
responding to these situations the company and its
it. What if McDonalds could gauge the success of
personnel does not deviate from the company‘s
its new McSpicy range of burgers? Wouldn‘t that
vision. It should not end up diluting the company‘s
help McDonald‘s as much as it would help the
values in trying to meet the consumers‘ demands.
consumer? Thus social media makes it far easier for
They have to understand that people will demand
marketers to gauge the reactions of its end
what they want. It is for the company to decide
consumers.
whether it is their cup of tea to deliver on the
However, the communication is not one sided.
wishes of all their consumers or not.
Consumers too are searching for the information they require on the online platform. And most of them are doing it on social media sites. In a
References
Matt Cantor, Today‘s Sexy Job: Statistician,
research conducted by OTX Research on the
newser.com,
―Impact of Social Media on Purchase Behavior of
www.newser.com/story/66223/todays-sexy-job-
People‖ it was shown that nearly 70% of the people
statistician.html
search for information related to products and
August
2009,
http://
Sampad Swain, Impact of Social Media on
service on social media websites, then followed by
Consumer
company websites at 68%. Online review sites and
January 2009, http://sampadswain.com/2009/01/
Wikis followed at 48% and 44% respectively
impact-of-social-media-on-consumer-behavior/
Behaviour,
Sampadswain.com,
17
Pratibimb | June 2011
Attitude: It Matters Paminderjit Sunner, TAPMI
Introduction
Now, what‘s this ‗right attitude‘, or before that,
Ever wondered, what makes life 100%?
what‘s an attitude?
Somebody has done some interesting calculations
An attitude is the way you perceive anything in your life. It is actually a continuous way of
to answer this.
thinking that is deeply rooted in your mind and drives your behavior and consequently your lives. If
A
B
C...
equals
1
2
3...
Then H+A+R+D+W+O+R+K =
8+1+18+4+23+15+18+11
As you know, there are always two sides to everything. Now, your choice of the side depends
=
98%
on your attitude. For example, if a jug contains water up to the half of its capacity, considering that jug to be half full or half empty depends on your
K+N+O+W+L+E+D+G+E =
11+14+15+23+12+5+4+7+5
=
96%
attitude. This seemingly meaningless selection actually tells a lot about your personality. There are two kinds of attitude: Positive and
L+O+V+E=12+15+22+5=54%
negative. In the above example, considering the jug L+U+C+K
=
12+21+3+11
=
47%
to be half full is a positive attitude, while considering it to be half empty is a negative
None of them makes 100%
attitude. Difference
What makes 100% is: A+T+T+I+T+U+D+E = 1+20+20+9+20+21+4+5 = 100
between
Positive
and
Negative
Attitude Having a positive attitude means you always tend to look at the brighter side of the things. It does not mean that you stop being practical; but it means that you can always
So, do you have an attitude? Of course, every one of us has one; but the right question to ask is: Do you have the right attitude?
spot
an
opportunity, even
if
disguised as an adversity. person
A with 18
Pratibimb | June 2011 positive attitude always thinks of solutions, while
with a chance to prove her/him. This way, the
that with a negative attitude keeps on whining about
positive person never loses the calm and keeps on
the problem. Positive attitude drives you to think
working towards the aim. Ultimately, she/he
about can do; while negative attitude pushes you to
performs really well and realizes the dreams of life
think about can‘t do. Positive attitude helps you to
and thus lives a meaningful and contented life.
adapt to the new situations easily, while negative
A positive person can see the good points of others,
attitude tends to keep you undesirably rigid, and
and thus can appreciate their qualities. Once you are
thus hampers your progress.
able to see something good in others and are ready
A person with a positive attitude is happier, but a
to appreciate that, you can have a good rapport with
negative person keeps on lamenting. A positive
the other person. A positive person thus can easily
attitude ensures the grooming of wonderful
be a good team player and have a good friend
relationships, both at personal and professional
circle. The positive attitude actually makes people
fronts, but a negative attitude creates troubles in the
good relationship managers. It is not that a positive
relationships.
person always ignore the negative traits of others
Positive attitude gives a forward push to your
and can accept any kind of people as friends; the
career, while negative attitude keeps pulling you
point is that the positive attitude makes the behavior
back. The positive attitude helps you to attain the
such that the positive traits of others dominate when
capability of doing what you desire and ultimately
they deal with you and this happens because of your
helps you to achieve it. On the other hand, the
positivity. Thus the situation is like you command
negative attitude does not even allow you to achieve
the goodness of others. Also, you can help them
what you are capable of at the present.
mitigate their negatives and build upon the
Importance of Positive Attitude Having a positive attitude means you have a positive outlook for everything in your life; you are a positive person. As agreed upon by many scientists and philosophers, this universe is all about energy. Everything is a form of energy. The positivity of your personality radiates positive energy, and positive energy leads to happiness and growth. Also, this positive energy attracts more positive energy from the universe, thus increasing your potential, performance and achievement.
positives, due to your appreciation and recognition of their positive traits. Thus, a positive person can help others improve. In the career, the positive attitude gives you the wings to dream and achieve higher. It makes you feel your intrinsic potential to achieve your career goals. It helps you to believe in your ideas. Thus, when you believe in yourself, the whole world believes in you. The positive attitude gives you loads of courage to face the challenges that confront you on the way towards your goals. This courage helps you to overcome those obstacles and be the
A positive person always believes in herself/
winners. Thus, whether you have to complete an
himself. As she/he believes in her/his potential, the
assigned project at an office or have to implement
challenges don‘t upset her/him but present her/him
your own idea in a new venture, positive attitude is 19
Pratibimb | June 2011 always there to make you persistently do the job
relationship troubles, you might be a victim of
and be the winner. A positive person never thinks
negative attitude. If you feel stressed, and feel the
of quitting but always finds a way out of a problem.
life to be a burden, it is high time to be positive.
Thus, positive attitude helps you in managing situations.
How to have a Positive Attitude? Now, the issue is that how to get this positive
A positive attitude makes you adapt to the
attitude? Is it something genetic, god-gifted or you
changing life situations with an ease. The positive
can cultivate it through the practice? The answer is
attitude is one thing that has helped the people like
that it can very well be cultivated through practice.
Bill gates, Sam Walton, Dr. Manmohan Singh, Indra Nooyi etc. to be what they are today. It is the positive attitude that helps people to scale the Mt. Everest, make airplanes, etc.; i.e. to do the things that were once considered to be impossible. It means the positive attitude has the power to convert impossible into the possible. With a positive attitude, you achieve; and with achievements, you become more confident and motivated. This confidence helps you to achieve
Being negative is easier than being positive. Although, to have and maintain a positive attitude is a gigantic task in itself; but once you start doing it, it is a lifestyle and makes life better. Even very small things can help. First of all, you need to decide that you really want to be a positive personality. Believe that it surely benefits you and you can become a positive person to the core of your mind.
more and be happier; and in turn makes you all the
Once decided, it is a lot easier to implement the
more motivated. Thus positive attitude drives a
behavioral changes that are needed to become
continuous growth process.
more positive, as the inner friction to this new
What about you?
course of life is mitigated. Start with simple things. Decide to have the positive energy around you.
What sort of attitude do you possess? Analyze
Clear up the mess in your room. The clutter attracts
yourself. You will get to know about your attitude.
negativity. Be an organized person. Be punctual.
There‘s no need to ask anybody else; an honest self
All this will help in channelizing the positive
-appraisal would do. If you are not happy or
energy inside you. See to it that you use the positive
successful, attitudinal problem might be the cause.
words while talking; for example, instead of saying
Think about what you do when you have a problem.
- I could not do it yesterday. Say, I am going to
Does your time get spent in being afraid of the
finish it today. Instead of using the vocabulary like
problem and getting stressed? If so, then you need
never, can‘t, don‘t; use positive words like yes, will,
to set your attitude right. If you find it really
do, can, etc.
difficult to find something good in others, but you are really very intelligent to judge all the negatives rightly, you need to be bit more positive. If you use a lot of negative words: can‘t, no, don‘t etc., you are not a desirably positive person. If you have always
Read good books. It makes your thought process positive. For example, by reading „The Secret‟ by Rhonda Byrne, one feels really motivated. You start believing in your capability of making things 20
Pratibimb | June 2011 happen. The core point in the book is „The law of
prove them to be right. This enhances the positivity
attraction‟ that prevails in this universe. According
of attitude.
to this law, whatever you think and feel, it gets
It is not that you can transform from being a
attracted to you; no matter it is positive or negative.
negative to a positive person overnight. It is a
The universe is like a powerful genie that keeps on
continuous process and needs a consistent and
repeating to each one of us—‗Your wish is my
sincere effort. Once you delve into the process, and
command.‘ Three simple steps to fulfill all your
start getting results, it is really enjoyable. Then,
desires have been given in this book— 1. Desire,
your achievements increase;
i.e., be clear of whatever you wish. 2. Believe, i.e.,
confidence and enjoy life.
take it as a fact that your desire has been fulfilled and have gratitude for the same. 3. Receive, i.e.,
you brim with
Conclusion
finally you actually see your desire manifested in
Attitude defines personality. Positive attitude
the real world. It provides an awareness of your
makes you get the best out of the life. Being human,
own self, its potential and its wonderful Another
nature. way
to
remain
positive is to have a deep faith in God. If you believe and
Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude. —Thomas Jefferson
you
have
a
tremendous potential. Positive attitude helps to tap this potential in a proper manner. It helps to achieve success
keep on reiterating to yourself
and happiness. On the other
that the God is there to support
hand, negative attitude hinders
you in every right deed; you will feel more
your
empowered and will perform better. There have
achievements. You can come to know about your
been several instances in the world when the people
attitude through self-analysis. By adopting a
have achieved the unexpected due to their deep
change in behavior and following some simple
faith in God. The book „The power of positive
ways, you can have a gradual change in the
thinking‟ by Dr. Norman Vincent Peale is full of
thought process and thus become master of
such examples.
positive attitude. A positive person is always a part
Another thing is that one needs to be in the company of positive people. Listening to them would motivate you while the company of negative people would demotivate you. So, choose your
holistic
development
and
limits
your
of the solution rather than being a part of the problem. With positive attitude, you can dream, perform and achieve higher.
Positive attitude
makes life lovable.
friends with caution. The support of family, teachers and the peer group helps; as being human, you have an intrinsic need for recognition. If the others show faith in your capabilities, you start believing in your potential and do the most effort to
References
‗The Secret‘ by Rhonda Byrne
‗The power of positive thinking‘ by Dr. Norman Vincent Peale 21
Pratibimb | June 2011
Giant Awakening: Indian Manufacturing Sector Deep Aggarwal, MBA(MS), FMS
O
ften in the context of developing nations, China has been equated to a manufacturing hub whereas India has
been treated as a center for services. But in the current scenario, these rigid lines are blurring. India is beginning to attract more and more companies to setup their manufacturing plants in the country. Manufacturing Industry has played a crucial role in terms of contribution to GDP of the nation with a current contribution of around 17%. Also, it has shown an average CAGR of 6.8% for the past
Thailand and Poland.
decade. With our economy growing at a rate of 7.4
India‘s GDP of $1.6 trillion is still dominated by
percent, it is believed that the manufacturing
the services sector with as much as 57%
sector‘s role in it should increase if India wishes to
contribution but the secondary sector enjoys a
be at comparative levels with the likes of China,
contribution of 26%. Manufacturing industry forms
22
Pratibimb | June 2011 a major component (17% of the total GDP) of this
in manufacturing industry is complimented by 2-3
secondary sector.
jobs in the service sector. So, the growth in the
India is a country where economic and political
manufacturing sector becomes all the more
polices
employment
important. Out of the current workforce of 500 mn,
generation in priority. Manufacturing sector offers
manufacturing industry employs around 12% i.e.
such an advantage that every employment created
approximately 60 million people .
are
developed
keeping
Manufacturing ( Percentage of total GDP- FY 2009) 23
Pratibimb | June 2011 Manufacturing Industry: India vis-à-vis The
people. The extent of unemployed yet capable
World
people who are available in India is
The Indian manufacturing industry‘s contribution of
unimaginable. So, this allows the companies
around 17% to India‘s GDP is comparatively lower
to employ these people at very competitive
than other rapidly developing nations. Hence, there
costs.
is a lot of scope for improvement.
Strong
engineering
/
manufacturing
Although, if we talk about the growth rate of the
capabilities: India‘s manufacturing quality
manufacturing industry in various countries, India
and
engineering
skills
have
improved
significantly over the year. India has the
has shown a robust rate of growth in comparison to the rest of the rapidly developing economies. India
largest pool of graduating engineers in the
stands second only to China. China reported a
world. In a bid to establish their quality
growth of 10.3% in the period of (1999-2009)
credentials, a number of factories in India
whereas India is a distant second with an average
began applying for the prestigious Deming Application Prize. Until 1997 not a single
growth rate of 6.8%, closely followed by countries
company from India had won the Deming
like Russia, Poland and Thailand.
award. But by 2006, a slew of 16 factories
Advantage at INDIA
from this nation—including Rane Brake,
India offers manifold advantages which other
Sundaram Clayton and TVS Motors—had
countries, including, but not restricted to, China,
swept the awards, accounting for more
fail to deliver. We have already seen the potential of
winners than any other country outside of
growth in manufacturing sector in India and why
Japan.
the government should pay more attention to it. The following advantages certify that if proper steps and measures are taken, then it is certainly possible to achieve those targets.
Large
Domestic
Markets:
India
distinguishes itself from other nations in terms of its large domestic market. Most developing countries account their rise in
Cheap raw materials: India is the lowest
GDP to growth in exports of manufacturing
cost producer of steel, cement and aluminum
industry whereas in India, the in-house
in the world and India can leverage this to
consumption of manufacturing products is
attract a lot of companies who are directly or
considerably high. In 2009, China saw a
indirectly related to these materials.
growth of 21% in its exports whereas India
Competitive labor cost: India has always
observed a growth of only 11%. This shows
been known for its population. Whether it is a
that India possess a very huge domestic
problem or a useful resource depends on how
market which attracts more manufacturers to
we look at it. But when it comes to labor,
India.
India definitely gains from it. Manufacturing
Apart from these factors, there are various other
sector in India already employs 60 million
factors like infrastructure and location advantage, 24
Pratibimb | June 2011 government policies and regulations, improving
she can cut down on the manufacturing cost.
competitiveness
India suffers on cost competitiveness because
of
manufacturing firms,
and
increasing foreign investments in India and well –
of
various
developed designing and machining capabilities.
productivity, inadequate infrastructure, high cost
Challenges Faced
of capital,
like
lower
labor
lower operational
and
functional efficiencies, higher incidence of
Indian manufacturing industry is not as appealing as
indirect taxes and higher import duties
it seems. It is currently facing a number of problems
including inverted duty structure.
and challenges, which need to be addressed in order to safeguard the industry and propel it to newer
factors
FDIs and their procedure: India lags way
heights. These issues need to be solved and treated
behind to other rapidly developing countries
urgently if the country wishes to have a growth rate
in terms of FDIs and FIIs. India attracted
comparable to other rapidly developing countries
$14.3 billion in 2010 whereas China got in a
like Thailand and China and to have the
much larger $80 billion in the same year. This clearly shows the difference between the two
manufacturing industry as the backbone of its economy instead of the agriculture and allied
countries. So, what exactly is the reason for
services which are plagued with inefficiencies and
such a huge difference in these figures? The
lack of technology.
major reason behind this is the complicated and the long procedure in getting clearances
Among various other reasons, the main problems
and setting up an industry in India. Although,
and challenges faced are:
Macro-economic
Indian government has completely opened up stability:
This
single
the manufacturing sector to FDIs with only
aspect alone stands as the major problem for
few restrictions on mergers & acquisitions,
the manufacturing industry. It is important to
the procedures be at the entry level, the
ensure long-term economic stability through a
operational level or at the exit level are so
framework which makes way for appropriate
laborious
monetary and fiscal policies and prevent large
investments are demotivated to invest.
fluctuations in the economic variables like output, unemployment and high inflation rate which have been undoing the majority of the efforts done in order to make this sector an attractive one.
and
long
that
the
foreign
Domestic Indirect Taxes: The indirect tax in India constitutes a group of tax laws and regulations. The indirect taxes in India are enforced upon different activities including manufacturing, trading and imports. Indirect
Cost Competitiveness: The two parameters
taxes influence all the business lines in India.
on which the cost competitiveness is judged
Some of the indirect taxes in India include
are: the quality of the material manufactured
stamp duty, excise tax, sales tax, expenditure
and the cost of the manufactured good. India
tax, etc. These taxes are often said to be the
can only compete with countries like China if
single
most
reason
for
making
India 25
Pratibimb | June 2011 unattractive to industrial development. The
example which other countries would like to
taxes charged in India are around 25% to 30%
emulate.
of the retail price as compared to around 15% in China.
Labor Laws:
References
Most of India's labor laws
make a law preventing it to happen again. So,
The
next
January 2010
Globalizing
Indian
Manufacturing:
Competing in global manufacturing
if unemployment was a cause of worry,
and service networks, a report by
Government made laws, which made firing
Deloitte and ISB,
people very difficult. But, the government forgot to take into consideration that each law
Manufacturing:
growth orbit, a report by BCG & CII,
were adopted as a reaction to an event. If a situation seemed bad, the first reaction was to
Indian
Enhancing Competitiveness of India
leads entrepreneurs and laborers to try and
Manufacturing Industry: Assistance in
find loopholes and manipulate the laws for
Policy making, a report by NMCC
their benefits to respond strategically.
Jayan Jose Thomas, ―A review of
The problems faced by the manufacturing sector, if
Indian
addressed properly would allow the sector to
Development Report 2002, Oxford
prosper and grow at a very fast rate. For that, we
University Press, New Delhi
need to understand these problems and then find the
manufacturing‖,
―Global
India
Competitiveness
right solutions, which can be implemented.
Report‖ (GCR), World Economic
Conclusion
Forum (WEF), 2010.
Keeping in mind the developments made in the
―Made in India – the next big
past, it is safe to assume that Indian manufacturing
manufacturing export story‖, a CII-
industry is showing signs of robust growth in the
McKinsey report, October 2004
future as well.
―Learning from China to unlock
The fact that the manufacturing sector in India has
India‘s manufacturing potential‖, a CII
the potential for tremendous growth and that it can
-McKinsey Report, October 2002
drive the economy forward cannot be over
Arvind
Virmani
and
Danish
A.
emphasized. It is just that proper planning and their
Hashim, Factor Employment, Sources
perfect execution is required for this to happen.
and Sustainability of Output Growth:
This will enable India to enter the next growth orbit
Analysis of Indian Manufacturing,
and squarely place itself as a leading player on the
April 2009
global manufacturing landscape. This will help India not only to compete with the rapidly
Shri Nilachal Ray, Unorganized vis-à-vis Organized Manufacturing Sector in India
developing economies but also to become an 26
Pratibimb | June 2011
An Interview with
Mr. Vinit Monga
Head of Finance & Control: Technology Centre – Bangalore, Nokia Siemens Networks
Telecommunications is perhaps the fastest growing sector in India riding primarily on the continued growth in customer demand. This has led to increase in competition amongst service providers which has been aptly supported with excellent infrastructure. The major telecom equipment manufacturer - NSN, Ericsson, Huawei and ZTE - are the underlying pioneers of this growth. However, with growth comes competition which eventually brings in the requirement of better control. In this issue we talk to Mr. Vinit Monga, who is Head of Finance& Control, Technology Centre— Bangalore, Nokia Siemens Networks Pvt. Ltd., India.
Management Studies, New Delhi. He has an experience of more than 15 years in Finance & Control/ Sales & Services Commercial in Telecom Equipment Company and 5 years of experience in Costing & MIS in Packaging Industry. He visited TAPMI during the first International Conference of Accounting and Finance (ICAF2011) organized by TAPMI in March, 2011. During his visit to TAPMI, he shared his views and experiences on various areas in Finance with us. We are extremely thankful to him for his precious time. Mr. Monga talked to Pratibimb about NSN, 3G and the broader role that Finance plays in a non –financial organization. Mr.Vinit Monga in conversation with Pratibimb:
He is a CMA/MBA (Finance) from Faculty of 27
Pratibimb | June 2011 Pratibimb: Can we start from the very beginning, tell us about your initial days in the corporate world?
Siemens share their experiences, and these are peo ple who have been with Siemens for the past 25 – 40 odd years.
Mr. Vinit: I am a graduate of Deshbandhu College, Delhi University, then I did my ICWA. My first job
Pratibimb: Tell us something about Nokia Sie-
was at Paharpur group of companies. I was working
mens Networks.
in the flex packaging unit and worked in various
Mr. Vinit: Nokia Siemens Networks is a ~13 Bil
capacities in various functions such as Costing,
lion Euro in Sales Global Company which is a sepa
Marketing etc. Then in 1995 I joined Siemens,
rate legal entity from the 50 / 50 parents Siemens
while working for Siemens I completed my Execu
and Nokia.
tive MBA from FMS, New Delhi. Then I moved to
but we are a global company for the wide presence
Nokia Siemens Networks post its formation.
across the globe and having various units headquar
In
We have HQ at Munich and Helsinki
2007 I moved to the Bangalore office, so basically I
tered out of various locations in the world.
have been a part of Siemens since the last 15 ½
in Bangalore we have a 2500 strong R & D center.
years. Pratibimb: 15 ½ years is quite a long time, tell us what has been keeping you in Siemens / NSN for such a long time?
Here
Pratibimb: Tell us about the industry that NSN operates in. Mr. Vinit: We are basically into the business of providing electronics for telecom network connec
Mr. Vinit: Whenever we are working in an organi
tivity; our main competitors in this business are Er
zation, we believe that Salary, the work, culture of
icsson, Alcatel – Lucent and Huawei. With the ad
the organization can retain employees, but I would
vent of multiple service providers and the growing
believe that it is not salary, not the work, not the
demand of cell phones in the country it has led to an
culture but an optimum mixture of all these that re
increased competition for NSN. Most competitors
sults in the satisfaction of an employee which is the
also have grown tremendously in the past few years
prime driving factor for employee retention. In Sie
in India.
mens / NSN these components have been in its opti mum mix, which is the main reason for my stay at NSN. Pratibimb: So is Siemens known for this elixir of retention?
Pratibimb: Tell us the Role of a Finance professional in a non – finance firm like Siemens / NSN. Mr. Vinit: In Siemens we used to follow a principle known as the ―Veir Augen Principle‖ which basi
Mr. Vinit: Siemens as a company has always be
cally stresses on the importance of collaborative
lieved in talent retention; once you join Siemens it
working of Sales and Finance in the organization.
is said that you will retire from Siemens. The testi
In the past as Finance professional I was personally
monial to this belief is a 6 monthly newsletter that
responsible for P & L along with Sales; Sales will
is published in Siemens wherein people working for
generally try to sell the product at any price, it is 28
Pratibimb | June 2011 our job to ensure that the deal is profitable for the
towards accepting new technology is? How fast
company. I had also served as the Business Lead of
will we adapt a 3.5 G or 4 G?
Sales in many deals.
Mr. Vinit: India is fairly quick when it comes to
At NSN, our role is more a strategic with providing
accepting new technology is concerned. The west
the best financial support towards achieving the
took the route of wired phone to broadband connec
business objectives. It could at times simply mean
tion to a mobile phone whereas in India we have in
making available the right set of financial data for
one way skipped the broadband stage and graduated
taking an informed business decision.
At present
from fixed lines to cellular technology, hence we
my responsibilities are more at a strategic level
will adapt 3.5 G much quicker than what the west
along with the Controlling function that the R&D
has taken to graduate from 3 G to 3.5 G.
unit performs. The responsibilities also included various investment decisions coupled with the func tion of sanctioning deals. Pratibimb: So how do you judge a deal? Is it only positive returns?
Pratibimb: How has mobile technology revolutionized the lives of individuals? Mr. Vinit: Mobile telephony has opened up multiple avenues for the consumers by providing them with technology through which they can be at two differ
Mr. Vinit: When we get into a deal there are basi
ent places at the same time. It has also opened up
cally two takeaways from it. Either it has to be
new and innovative modes of business. I will take
profitable or strategic. There have been instances
this moment to talk about Telecom has changed the
where we have done deals where the returns were
way we used to work and a perfect example is
negative but it had some strategic advantages for us
―TutorVista‖, a company providing private online
and of course there would be some deals which we
tuitions to children in US through teachers in cities
have to say ―no‖ to which is never an easy job.
connected now with wired Broadband and future
Pratibimb: Considering you are a secondary ser-
wireless broadband as well.
vice provider how does the increasing competi-
Pratibimb: Is NSN also working on providing
tion in the telecom service provider affect you?
VAS services. Can you tell us something more
Mr. Vinit: The telecom industry in India is growing
about VAS at NSN ?
at an amazing pace, and with growth competition
Mr. Vinit: Value Added Services (VAS) opens up a
increases. Competition has led to drastic price
new revenue model for telecom operators and also
drops; considering even 5 years ago we had to pay
equipment providers. The demand for VAS has
Rs 1.5 for a call whereas today the same call can be
been gradually increasing in India and all service
made in a couple of paisa. Since the operators are
providers are taking cognizance of this change and
our clients hence we too face the cost pressure from
implementing better network capabilities to provide
them which compels us to continuously innovate.
seamless VAS services. NSN is providing network
Pratibimb: How do you perceive India’s speed
support to the operators to provide better VAS ex perience to the end customers. 29
Pratibimb | June 2011 Pratibimb: Tell us about the financials of Nokia
Mr. Vinit: The IPO listing process starts quite some
Siemens Networks for the past couple of years.
time before the actual offer is floated. Currently we
How is the company performing?
are nowhere close to the start of that process; hence
Mr. Vinit: 2008 was an OK year for us. In 2009 we performed below par and I can term it as a bad year
I can definitely say that NSN has no plans for IPO listing anytime soon.
for us. We have made mistakes in the past, realized
Pratibimb: Finally, What advice would you like
those and worked on them hence I believe we have
to give young professionals like us?
seen the bottom and are currently on a turnaround journey. I believe the financials for the coming years would be much better.
Mr. Vinit: I believe the most important virtue to possess is dedication. No matter what is the job that you would be doing, it is of utmost importance to
Pratibimb: Is Nokia Siemens Networks planning
have dedication in the job. Sincerity would eventu
on an IPO anytime soon?
ally lead to success.
Beat the Market As Jim Cramer, a former hedge fund manager, and a best-selling author put it, “As long as you enjoy investing, you'll be willing to do the homework and stay in the game… I mean I'm not smarter than the market, but I can recognize a good tape and a bad tape. I recognize when it's right and when it's wrong and that's what my strength is.” Stock markets have never been predictable, you may apply the best of logic and reasoning, but there could be a possibility that you may falter if the emotions of the investors take control. The entries for this contest have been judged by Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com. The winning entry of ‘Beat the Market’, April 2011 edition is of Mr. Parikshit Vilas Loke, Welingkar Institute of Management Development & Research!! Congratulations!! We thank all the participants for their effort. Beat the Market is a game designed to prove your mettle in stock market analysis. This time onwards, we will provide you the name of two listed companies from NSE. You need to analyze stock movements of these companies till 25th July, 2011. On the basis of fundamental and technical analysis you need to give us your share price estimate of these two stocks as on 5th Aug, 2011. Fundamental & Technical analysis will carry 70% weight while 30 % weight will be given to Accuracy of the estimated prices in the final score. The winning entry will receive a letter of appreciation and prize money of Rs. 1000 /Rules: Companies to be analyzed are Tata Chemicals Ltd. (TATACHEM) and Idea Cellular Ltd. (IDEA) You may analyze in a team of not more than 2 members The file should not be more than 7 pages long including cover page, the cover page should contain the team name, team members name, Institute name, contact number File name should be BTM_JUNE_<TEAM_NAME>_<INSTITUTE_NAME> 30
Pratibimb | June 2011
Paradigm Shift in Optimal Media Mix Strategy Akankasha Sharma, SIMSREE
T
imes
are
indeed
changing…so
programs are complex and difficult to measure.
unbelievably fast and gathering speed
Reduced ad-spends on traditional media due to a
that a time would soon come when one
fall in effectiveness of such mediums, is causing
blinks and misses the train.
major
Around twenty years ago, big companies would subscribe to one advertising spot on three different television networks, and reach 80% of the US
restructuring
companies,
putting
of
marketing
plans
of
Rubik‘s
cube
of
the
segmentation, products, channels and media in jumbled disarray.
population. Now, they need up to 20 messaging and
Marketing paradigms have now begun to change, as
media programs to get that same reach.
focus has now shifted on a few of the available
In India, too, there has been a huge spurt in demand
customer segments and to serve them with fewer
for digital content, with an increase of over 120% in
brands, impeding less control over the way they do
Source: Internet users in India (Morgan Stanley, Mary Meeker internet report 2010)
the growth of Internet users over the last 3 years.
business with their consumers.
Today, India is poised to take its place as the
In order to take advantage of network-based
world‘s first truly mobile digital society; a
environments, organizations are now going digital.
remarkable fact in a nation where it took television
The challenge for organizing digital marketing is
13 years to reach an audience of 50 Million.
the ability to really get to the right consumers at the
As a result, sales efforts have further fragmented,
right time with the right message in ways that one
escalating the potential for channel conflicts. E.g.
couldn‘t use in the past.
telecom service providers today require up to four
According to a McKinsey report, there are four
channels to reach their diverse customer base. New
stages that a company goes through in the digital
communication mediums have increased marketing
marketing organization:
expenditures and costs of the company. The costs
1.
further
increases
because
digital
marketing
Ad-hoc Activity - Establish a basic online presence 31
Pratibimb | June 2011 2.
3.
4.
Focusing the effort - Create policies to focus
promotions were used as touch-points to the
and unify efforts; track what works and what
customer. On top of that, the addressing was done
doesn‘t
through a very fine-tuned geographically targeted
Formalization - Build the digital business;
online messaging. They made the creative elements
develop/gather appropriate skills
of the advertising very relevant to exactly where
Institutionalizing capability - Deliver against
people were in their neighbourhoods.
value proposition; manage organizational
Presently, enterprises like Yahoo! are performing
interdependencies
big shifts in spending by concentrating on
In order to cut through all the clutter and confusion
performance
marketing
and
customer
care
Four stages in the digital marketing organization
Source: McKinsey‟s Quarterly Report, 1996, by Andrew Parsons, Michael Zeisser, and Robert Waitman
with a deep understanding of the company‘s business objectives and who their target is, one needs to ask the right questions, such as: Who are the best consumers for this message? How do they
operations. Performance marketing uses channels like emails and search-engine marketing (SEM), since this is where people invariably search first for information on a product/service.
spend their time during the day? What are the touch
Marketing companies now don‘t consider it as a
-points where the company can make their message
marketing expense, but a cost of goods. It also
most relevant to them? And, using this great buffet
comes with an added advantage that it is easier to
of media choices that one now has, how does one
predict the returns from a given level of spending as
address that market in the most relevant way?
data is more concrete, and available.
For example, when Yahoo! started Yahoo! Local,
Customer care operations are also forming a critical
their business objective was to increase their share
part of the brand experience. Investing in great
Search Engine
Relative Market Share (%)
72.4%
Yahoo!
24.2%
Bing
13.6%
of searches for local businesses like florists, banks
brand experiences, especially when people have
and restaurants, by making it apparent that Yahoo!
concerns or questions is becoming increasingly
really understands the local environment. Local,
important, to woo new customers, and retain old
independent newspapers and a lot of outdoor
ones. 32
Pratibimb | June 2011 Organizations
now
are
exploring
means
of
tracked as it is generated with their marketing
measuring returns on their marketing investments.
programs in various channels that each business
Many maintain dashboards of metrics that go up to
unit spends in. Long-term health of the brand is also
the executive team and show how marketing
being predicted by examining changes for various
activities are focused on driving the business. User
demographic
engagement can be gauged by determining the
differentiation, its relevance to consumers, the
share of time spent online with the company‘s or
degree to which they know it; moreover, hold it in
brand‘s website, computing the average number of
high esteem.
media properties that a user consumes, which is
Thus, a holistic, optimal media mix strategy now
growing continuously in India. They are also
comprises of the traditional as well as, the digital
focusing on quarterly initiatives; for instance,
means of marketing. The shift is towards increasing
driving searches from throughout their site, not just
digital marketing spends, which comes with
from the front page.
effective metrics to measure returns.
segments
in
brand‘s
level
of
Customer lifetime value is being estimated and
Inviting Articles “Best Article”: Deep Aggarwal, MBA(MS), FMS
Congratulations!! The winner will receive a cash prize of Rs. 1000 & a letter of appreciation. We are inviting articles from all the B-schools of India. The articles can be on any field of business from Marketing, Finance, Operations, HR to Systems. You can send us articles on: Recent developments or trends in any of these fields Articles covering latest trends, innovative practices, strategies, etc. in the global perspective We also invite articles on management thinker similar to the current section Apart from above, creative works in relation to any of the fields will be equally appreciated The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file should be MS Word doc/docx. Articles should not be more than 2500 words.
The last date of receiving all entries is 25th July, 2011. Please send your entries marked as BAC_AUG_<ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to: pratibimb.tapmi@gmail.com
33
Pratibimb | June 2011
Advertising Through Brand Extensions Ramanuj Vidyanta, TAPMI
W
hen was the last time you walked
the government market scenario the control goes
past a ―Wills Lifestyle‖ outlet and
one step ahead – here the state not only controls
wondered how the name Wills was
distribution but the retail outlets are also controlled
into retail garments or wondered what was Jonnie
by the state. With this varied distribution networks
Walker trying to say when it carried the tagline
also comes varied control in terms of advertising.
―Keep walking‖? Well these are just some of the
E.g. the creative of a beer advertisement in
most prominent examples where Brand extensions
Maharashtra can bear the image of the bottle
have been successfully implemented in promoting a
however the word ―Beer‖ cannot be displayed
brand. In today‘s scenario, with the growing
whereas in Karnataka there are no such regulations.
limitations that marketers
are facing, brand
This variation increases the challenges of marketers
extension has emerged as the most preferred mode
considerably. The same creativity cannot be used
of advertising in industries such as alcoholic
universally which leads to the necessity of more
beverages, liquors and tobacco products.
innovative methods to communicate the brand
Let us consider the alco-bev industry in India; it is
story. Brand extensions come in handy in these
heavily regulated in terms of advertisement of
situations. Marketers try to communicate the
brands or the category in general. Alcohol being a
essence
state subject, every state has a different set of
communicating the USP of the brand through
legislation in terms of advertising and distribution
another product.
channel networks. The industry is basically
Are the marketers successful in this quest or are
comprised of three types of market – Open market,
they deviating from the actual message that they
Semi – Government Market and a Government
want to portray? When they say ―It‘s your life,
Market.
make it large‖, does the marketers from Seagram‘s
The open market is a replicate of a traditional
successfully convey the message of Royal Stag
FMCG market; the manufacturer can choose its
being a Whiskey meant for premium celebrative
preferred distributor and the retail outlets are
occasions? Or are they driving the consumer to
privately owned after obtaining the necessary
believe that Seagram‘s has diversified and entered
license
into the music industry.
from
the
Government.
The
semi-
of
the
brand
by
replicating
and
government market is a more regulated form of
The answer to the above dilemma would vary for
market as compared to the open market; here the
different customer segments. A consumer of
distribution is completely state owned whereas in
alcoholic beverages may receive the true message 34
Pratibimb | June 2011 however the same communication might fail to
advertising in most industries regulated by state &
convey the message to a non – consumer.
central legislation and going by the current industry
Considering this scenario, the next question that
trend and marketer‘s focus, this medium is here to
arise – Is this methodology of advertising through
stay unless the government drastically brings major
brand extensions good enough to drive growth in
changes to the advertising policy of the industry.
the industry or do the marketers need to put on their
However, one caution that marketers should also
thinking
another
take is to disallow the brand extensions to become
communication strategy? The answer to this
larger than the brand itself. If the company is using
question is contingent upon how the firm looks at
mineral water as a brand extension for premium
growth, whether the company is interested in
beer, then it is of utmost importance that the brand
growth within the consumers by trying to switch
name continues to be perceived as the parent
them from one category to another or the company
product rather than the brand extension.
is interested in increasing the overall consumer
So, the next time you come across a bill board
base.
reading ―Keep walking‖, remember to extract the
Despite all the above limitations, brand extensions
true essence of the message that Johnnie Walker is
has come out as the preferred candidate for
trying to convey.
hats
and
come
up
with
Route to Market The market has always been unpredictable for the companies. This holds more significance in the case of international brands trying to enter new developing markets. Every brand wants to be recognized globally so that they can tap the new markets easily. The role of marketing managers in this age of globalization becomes more important in providing the companies with correct strategy to enter new market. We give our readers a platform to experience this challenge through ―Route To Market‖. The primary objective that the participant is expected to fulfill is to provide a ―Market entry strategy‖ for an international brand/ product into the Indian market. The overall strategy would be divided into three stages:
1st Stage - Market Assessment (Weightage -35%) Key Deliverables: Customer Assessment (Segmentation, Targeting) Market Competitive Assessment Distribution Channel Assessment
2nd Stage – Communication strategy (Weightage -30%) Key Deliverables: Positioning Promotion (Creative required)
is
Strategy not
3rd Stage – Implementation & Go Live (Weightage -35%) Key Deliverables: Test market geography selection. Launch Price (Exact price to be mentioned) Performance measurement metric selection
Rules:
Document size should not exceed 5 pages & a maximum of 3 members are allowed in a team
The participant is expected to justify his stand – point in each deliverable
Each stage should be clearly mentioned under sub – heading
Send entries with file name as ―RTM_JUNE_<PARTICIPANT pratibimb.tapmi@gmail.com by 11:59 pm, 25th July, 2011
The winner will receive a cash prize of Rs.1000/-
NAME>_<INSTITUTE
NAME>‖
at
35
Pratibimb | June 2011
Talent Supply Chain Management Aby John Kottukappally, MBA-HR, SCMHRD
T
he post-recession period has been
add 23 million to the global workforce during the
characterized
same period.
by explosive
growth.
Most of the growth stories have come
When we consider the above factors, it makes sense
from the emerging economies of Asia like India &
for an organization to focus on acquiring talent so
China. All industrial sectors which belong to these
that its growth targets are not choked by inadequate
countries are witnessing heightened activity in
manpower. At this point, I would like to introduce a
terms of production and consumption of goods &
relatively novel concept in HR, viz. Talent supply
services. This level of industrial activity has thrown
chain management. It is a blend of the concepts of
up an unusual challenge - the shortage of talent to
supply chain management and talent management.
propel
As per Wikipedia, supply chain is defined as ―A
this
growth.
This
issue
gets
more
complicated if we consider the fact that the ―Baby
system
Boomer‖ generation (born in the post – WWII
activities, information and resources involved in
period 1945-1960) are nearing their retirement age.
moving a product or service from supplier to
It has also been proved that the generations which
customer.‖
succeed them have insanely different aspirations.
dimensions to the concept of supply chain, for the
Today‘s organizations are not in a position to
scope of this article we will restrict ourselves to the
address this issue. To make matters worse, the
above definition. So when we say ―talent supply
future distribution of working age population across
chain management‖, it essentially means procuring
the world has been found to be disparate. It is well
talent from variety of sources and delivering it to
known that Mr. Jim O'Neill, a global economist
the organizations so as to sustain its growth.
working for Goldman Sachs, is credited with the
Closely associated with the supply chain concept is
coining of the acronym ―BRIC‖ (Brazil, Russia,
optimization which essentially means getting the
India, China), the countries which will occupy the
most out of one‘s investment. This concept makes
center stage of world economy in the 21st Century. But when considering the talent shortage or surplus across the world, this acronym gets reduced to ―IC‖ (India & China). As per the International Labor Organization‘s estimates, the working age population between 15 and 64 years will increase by 212 million and ―over 64% of the increase will occur in only one country – India‖ and China will
of
organizations,
Although
there
people,
are
technology,
many
more
more sense if we consider the fact that the organizations themselves don‘t know what the future business scenarios are going to be. Optimization has become a key word in this era of information technology. The global firms are aiming to acquire the best talent at the least price. In doing so, they try to minimize the cost incurred in 36
Pratibimb | June 2011 sourcing a candidate. Of late, most of the MNCs
same time the scenario discussed above might
and recruitment agencies, have taken themselves to
happen. So the ideal solution would be to place the
the social media sites such as LinkedIn, Twitter etc.
training program for the new recruits and allow
These sites double up as a brand promotion and a
them to choose their preferred date of joining the
recruitment tool. A skeptic of the same might argue
firm from the options given to them. Reduction of
that those organizations which blindly follow on the
bottlenecks can also be addressed by the succession
footsteps of this i-generation might soon find it in
planning of the firm. A firm with a robust
troubled waters. But if we look at the social media
succession planning in place effectively address
recruiting through a different lens, it can be proved
talent optimization.
beyond doubt that there is no other medium through
Supply chain management is also concerned with
which a firm can reach to such a diverse audience at
reducing the forecasting errors as far as the demand
the lowest cost. Employee referral, which is also the
for a particular product is concerned. When we
next preferred tool for recruiting, reiterates the case
analyze MNC‘s with global operations, it has been
in point.
found that the recruitment mandate is handled
During the IT boom, organizations had hired
independently by the host country offices. The logic
employees from the universities and colleges across
of this move being that the recruitment function of
the country in large numbers. The idea behind this
that country is in better touch with the host country
practice was to ensure that the sufficient manpower
rules and regulations. But in this era of economic
was available to carry out future projects. So this
uncertainty, if we try and predict the manpower
being the case, the organizations failed to provide
requirements at the individual locations, we may
work to these recruited talent after their initial
land up either with too many or too few of them.
training. However, the company had to keep on
The ideal way out would be to forecast the
paying the salaries which was a kind of wastage of
manpower requirement on a global level and
much needed resources which could have been
designate the recruiting process to the host country
deployed elsewhere. It has been found that an
offices.
employee makes the decision to stay or not to stay
Although there are many other aspects of supply
with a firm within 6 months of his joining. If he is
chain which will find its applicability in the Human
kept on the bench waiting, more often than not, he
Resource function, the scope of this article limits
will resign soon thereby resulting in the wastage of
itself to the aspects discussed above. Hence, we see
the investment made by the company on the
that applying the concept of supply chain to talent
training of the resource.
management would provide a competitive edge to
The aim of supply chain is to reduce the bottleneck
the organizations of today. The importance of this
in the system. When an organization goes for mass
cannot be under estimated which is evident in the
hiring, it is quite evident that a mass training
saying ―People are not your most important
program needs to be undertaken. But if we do such
asset, the right people are” – Jim Collins.
a program, it will cost the firm a fortune and at the 37
Pratibimb | June 2011
Operations in Turbulent World Anish Bhattacharya, Goa Institute of Management
P
ost-recession of 2009, the industries
the fact that the long road from strategy planning to
world over including those in India are
strategy execution actually turns out to be labyrinth
still grappling with the forces of change
for the implementers who want to put the pieces of
in order to stay afloat in a hyper-competitive
the execution puzzle together. The disjointed
environment. Though some companies did manage
approach also reflects the methodology adopted by
to grow big yet their growth has not been up to their
the higher management who rates business success
potential and their expansion is based on a shaky
through top lines and bottom lines of individual
foundation. Though it may sound puzzling,
business units.
mismanagement of complexities which in turn are
While companies have tremendous experience in
the results of scalability has caused the bottom line
excellence for individual functions, what remained
to go in red. It is a glaring fact that the volatility of
mistreated is careful handling of individual
demand has risen permanently and all the
excellence
stakeholders in the value chain are struggling for an
organizational excellence which enables seamless
effective management between various functions of
operations cross-functionally and across business
business. Though IT investments are done with the
unit can be termed as inter-operability of the
motive of integrating the organizationâ&#x20AC;&#x2DC;s functional
organization.
verticals, improvements have helped only to a
organization to optimize their operations by
certain extent; yet they fall short on robustness.
reducing time of delivery, money and human
The companies are now heading to a dead end and
capital involved. According to a research report by
the prime reason is all the efforts have been tended
A.T. Kearney there are seven key dimensions which
to be in an isolated basis within the business units.
help in achieving this interoperability. They are
This generally happen in big organizations when
operations strategy, business systems, relationship
the members of the team become so short sighted
management,
that all their improvement efforts get concentrated
performance management, knowledge management
on their own functionality or business unit that they
and organizational culture & people development.
lose track of the holistic picture. The extent of
Each business unit needs to align itself to overall
damage that can be caused due to individual
organizational goals to swiftly respond to business
excellence is that they actually compete within
requirements and achieve competitive edge.
business units and hinder the overall organizational
The companies also need to refine their processes
excellence. This factor is further compounded by
and strive for consistency in their decision support
and
aligning
them
Interoperability
implementation
to
actually
attain
helps
management,
38
Pratibimb | June 2011 systems. The organization also needs to channelize
Thus on a concluding note, in the days to come, the
efforts towards building collaborative relationship
company profit margins will depend heavily on the
bound by common organizational values. There
competitive edge of the entire value chain
should be cautious effort by
Interoperability Dimensions (Source: A.T. Kearney)
ecosystem and not merely on
organizations to achieve complete and consistent
excellence of the function in a particular domain.
change implementation throughout the enterprise.
Though the markets have recovered and industry
Companies can define key
outlook is upbeat yet the industries need to address
performance indicators aligned with the overall
the above mentioned key issues if they want to be
strategy and cascade it from the top management so
resilient to business cycles and weather any kind of
that business units does not have conflict of interest.
crisis.
Seamless information sharing by investing in
References
information systems and implementing job rotation
ď&#x201A;ˇ
to realize job enlargement and enrichment can help in
achieving
interoperability excellence.
The
The Theory of Everything in Operations, A.T. Kearney. (2011)
ď&#x201A;ˇ
Dr. Reinhard Geissbauer and Michael D'heur,
companies need not be excellent in all the aspects in
2010-2012 Global Supply Chain Trends- An
terms of functional excellence & interoperability.
Annual Survey By PRTM Management
However what is more important is achieving an
Consultants, June 2010
equilibrium between corporate strategy and market conditions.
39
Pratibimb | June 2011
Join us on: Contact Us: pratibimb@tapmi.edu.in / pratibimb.tapmi@gmail.com Visit: http://linux.tapmi.edu.in/student-life/pratibimb/overview/ Team Pratibimb TAPMI Post Bag No. 9 Manipalâ&#x20AC;&#x201D;576104
40