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Volume - 1, Issue - 2

February, 2011

A Bi-Monthly Magazine

A Student’s Initiative

DIRECTOR’S MESSAGE A remote village in Kerala is famous for a unique feat. The artisans in this village, Aranmula have perfected the craft of making a mirror without using any glass. Through one of the toughest and most skilful jobs humans have ever done, these gifted people have found the right mix of various metals which when alloyed together give one of the best mirrors in the world, a mirror that has zero convexity - one that reflects the truth – the real pratibimb. Going through the second edition of PRATIBIMB, the student magazine of TAPMI, I was reminded again of the skilful art that made the Aranmulakannadi, the world famous. Like that work of art, the magazine had taken extra pains to reflect the contemporary thoughts and action in management without any skewness or bias. It needs a lot of courage to look at things and form unbiased opinions. To a large extent the second edition of Pratibimb achieved the same. The magazine provides a holistic view to management, from the perspectives of various specializations offered. Not only does it include insights from our very own students, but also embraces ideas from the best brains across the country. The magazine also has expert inputs from across the industries, thereby bringing the academia and industry together. It gives me immense pleasure to congratulate the team members for their sincere and consistent efforts in bringing out this edition of Pratibimb and would also like to extend my heartfelt wishes for all their future endeavours. Saji Gopinath


Editor’s Corner We proudly present to you the second issue of Pratibimb. Pratibimb, as the word implies, is the “reflection” of management. It is the reflection of the latent creativity that exists in every sensitive human mind; a materialization of the desire to express oneself. The purpose behind Pratibimb would remain the same - to give a platform to individuals to express themselves in the best possible manner with ideas that would produce change. Continuing with the tradition of Pratibimb, we have added a new section called „INSIGHTS‟ which encapsulates the lives of renowned management thinkers of our era. The first article in this section is contributed by our faculty, Prof. Vijaya, who has interests in Individual and Interpersonal Dynamics. We thank all the students from various colleges who have put in their efforts to pen down amazing articles and have also poured in entries for our finance game „Beat-TheMarket‟. The entries for „Beat-The-Market‟ were judged by Mitesh Thacker, chief trading analyst, and Prof. S. N. Rao, Associate Professor of Finance at SJM School of Management, currently on sabbatical leave at T.A. Pai Management Institute .

outside which includes the vast Alumni base of TAPMI and organizations in the corporate world. At the end, I would like to congratulate all the members of Team Pratibimb who were behind the success of this issue. I would also like to thank to our Director Dr. Saji Gopinath for his inspiration and Prof. Chowdari Prasad and Prof. Jaba Mukherjee for their continued and valuable guidance. We thank all those who gave us feedback which includes many corporate wizards, alumni, faculty and students who tried to improve the issue. I‟m sure you will be able to notice the change. Please continue to send in your suggestions and contribution to Enjoy Reading!!!

Rahul Garg

Chief-Editor Rahul Garg

Editors Rohit Kumar Preetha D.

There are many more articles which we are sure will grab your attention and are aimed to tickle the grey cells in you..

Creative Designer

We hope Pratibimb would provide a standing ground for students to not just compete amongst their peers but also to show their skills, talent and knowledge to the world


Varun Sunil

Hima Sachdeva


Contents Marketing Brands in Rural India


Commercial Breaks: The Despised Hygiene?




Finance Will Chinese Yuan become the next reserve currency? 13 2010- The Year of Commodities



Interview An Interview with Professor Jagdish Seth




Opportunity recognition and project selection: Some approaches for small enterprises 24 Marvin Bower – The Management Thinker


Expectations from the new age employer


Systems Social Networking: Is it really social?



Operations Achieving competitive advantage through supply chain 38


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Pratibimb | Feb. 2011

Marketing Mania

BRANDS IN RURAL INDIA Shanu Singh | NITIE, Mumbai Brand, by definition, is an intangible entity which is designed and projected with the aim of striking a chord with the consumer behavior. This definition is true for most of the brands in the urban context, since, all the marketing drives for brands are designed specifically as per the demand and psyche of the urban customer e.g. DoCoMo branded itself as a service provider for the ―urban young‖ generation. But as we move to rural India, most of the marketing and branding gimmicks start to look out of place. Before understanding the cause, we must understand that a brand has got both behavioral and personality traits. Therefore, it is more of a dynamic entity whose character varies as the environment changes. In India, we have diverse demography where distinction is made not just on the basis of sex or age, but also on the basis of the background, culture and ethnicity. And this distinction complicates as we divide the population further into urban and rural India. We still have more than 60 percent of population residing in villages, hence forming the core part of our population, while remaining 40 percent resides in urban cities. Demography (middle and rich class) in the urban region is better educated along with higher

income in comparison to that of rural (BPL and middle class) region. Characteristically both the rural and urban demography can be positioned at different levels in Maslow‘s hierarchy of needs pyramid. Since the urban class look at brands as more of a status symbol or differentiator, it can be positioned at higher level in the pyramid, while rural majority can be positioned at a lower level since it looks at brands as an item of necessity. Since each different hierarchy level projects different kind of needs, application of the same branding practices will not work for people who live in altogether different worlds with different set of priorities and mindsets. Though the above analysis looks simplistic, some of the multinational corporations only learnt it hard way, by trial-failure and many, still, need to learn. If we talk about the FMCG sector specifically, on average 40-50% revenue comes from the rural market but as per the statistics, under this segment, organizations still don‘t have focused strategies to deal with rural market or they have a strategy, but allocate only a small part of branding expense quota to it. But now the scenario is changing. In today‘s urban market, organizations have to operate in intensely competitive low margin environment. This is


Pratibimb | Feb. 2011 forcing them to venture out into the untapped rural market. Since the same branding campaign couldn‘t be applied in rural India, organizations are coming up with new branding strategies, new product range and ingenious distribution network dedicated to rural consumers.

Scope for Innovation On the brand marketing front, though we have seen some magnificent early efforts which made brands synonymous to the product (Colgate for toothpaste, Lifebuoy for Soap), major innovations required to drive the rural demand are still lacking. A few attempts have been made in case of product segments like tractors and fertilizers, but very few are from the cross-market segments. Again, attempts have been made to localize the marketing campaign by translating them into local languages, but they couldn‘t strike a chord with people since the regional touch had been ignored. Rural marketing needs to be focused on, since majority of population there, is uneducated and highly sensible to culture as well as the value system. Thus, advertisements should be designed to project the product as an extension of local culture. For example instead of selling ‗Ghee‘ in cylindrical pet bottles, specially designed ‗Matka‘ shaped bottles could be used.

Marketing Mania leadership and organization by acting as facilitator for carrying out effective agro-trade. Since village leadership plays a vital role in word of mouth publicity at the village level, it can provide a conducive environment for launching a new product under the umbrella of facilitator organization. These are the perfect examples of using benevolent leadership along with combination of product profiling.

Product Re-designing: Brands can be launched in specially packed variant of its flagship items to suit the demand and purchasing power of rural India. Since these variant will be smaller and cheaper, people can easily afford to buy it. This is the perfect example of matching the brand personality with that of environment. Example: Specially packed biscuits or bread with fewer slices (3/4) could cater to huge rural market.

Rural Branding Strategy

Strategy to Connect: Brands like ITC and HUL have come up with the concept of E-choupal and Project-Shakti. These projects are launched to create symbiotic relationship between village

Ingenious Distribution: Lakhs of women in rural areas earn a living by selling brand products and thousands of enterprising young men and women are being enthused to become part of the vast distribution system as a means of starting on the ladder of entrepreneurship in their own right.


Marketing Mania

Pratibimb | Feb. 2011 Organizations can leverage upon this cheap, motivated and highly penetrated task force for grass root brand building and distribution. This model can be used as a pilot project for launching the new products at village level.

References 1. HUL plans major rural push,, June 2010, http:// stories/2010060952690500.htm 2. B. S. Raghavan, Rural India as growth engine,, June 2010, http:// stories/2010060450240900.htm 3. How India Earns, Spends and Saves – A Max New York Life-NCAER case study highlights the need for financial literacy,, Feb 2008, http:// 4. S.Jain, K.Swarup, Effect of advertising on enhancing brand personality and consumer buying decisions, Journal of International Management, v.6, July-Dec,2009 5. Rural marketing in India: A case study By G. Srinivas Rao 6. India Brand Equity Foundation (IBEF) study on Indian rural market


7. Unilever in India - Rural Marketing Initiatives, a case study. ICMR.

In nutshell, it can be said that currently in the rural market, a brand may be more like a myth, but the scenario is changing and organizations are working towards capitalizing the opportunity by creating brand awareness and hence vouching for brand realization at rural level.


Pratibimb | Feb. 2011

Marketing Mania

COMMERCIAL BREAKS: THE DESPISED HYGIENE? Rohit Arora | TAPMI ―Advertising may predispose individuals to respond positively or negatively towards a product or brand. Such elements, as the execution of the advertisement, the mood created by the advertisement, the degree to which the viewer is aroused, and even the context within which the advertisement is received, (e.g., television program or magazine), may affect their feelings about the advertisement, and in turn their feelings about the product or brand (Stern and Zaichkowsky,

1991).‖1 Another important variable which might affect the viewers‘ feeling, especially for a TV advertisement, that can be included in the list of variables given by Stern and Zaichkowsky, could be the time length of the advertisements or of the commercial break itself. In spite of being the costliest media for advertising, TV has always been regarded as one of the most efficient and economic media to reach consumers, due to the shear fact that it provides more reach, in terms of eyeballs grabbed, to the advertisers.2 Though there is a lack of statistics in this field in the Indian context, many reports suggest that the increasing clutter of advertisements has started creating a repulsion effect on the viewers for the advertisements. While the early 70s saw a norm of having a 60 second advertisement in America, the same for the present day has come down to around 30 seconds,

with more than 10% of the commercials booking spots for less than 15 seconds. The same trend seems to be followed in India as well. With the overall break time being increased over the period, the number of advertisements being aired has increased by a large amount, creating a feeling of irritation among the viewers. With time, the consumers have been empowered more than ever, by technology, and it has become imperative to know if the viewers, so sought after, actually watch the large number of advertisements or if the evolving technology has enabled the viewers to skip the advertisement by quickly changing the channel (known as channel grazing) to watch a recorded version (zapping or zipping)3, of the show, courtesy, the invention of DVR, just to ensure that they are not disturbed by the long chain of advertisements which sometimes continue for longer durations than the show itself. The increasing number of downloaded daily soaps does indicate that the consumers are shifting towards other technologies to watch things which were limited to T.V. till a few years back. A report by Morgan Stanley published in 2009, based on the experience of an intern, states that, there is a lesser inclination for television among teenagers or the younger generation; this is supported by a number of factors, one of which is, the large number of advertisements on T.V. which they want to avoid.4 Though many researchers mention the extent of clutter in their research, most of the studies still have been restricted to a general attitude of the viewers towards the advertisements, various factors or stimuli which they judge the ads on and their effectiveness. Kallem and Naved (2002) mention that ―There is a strong possibility of irritation on the part of the viewers when their popular program is interrupted by the commercials. Because of this, if a negative attitude


Marketing Mania

Pratibimb | Feb. 2011 develops towards the TV commercials, then the purpose of airing them will become self defeating.‖5 The first question to ask here should be – Is it really true that advertisements are driving the viewers away from television set or is it just a perception? At the end of the day, everyone might find advertisements intervening in their joyful expedition to their favorite program but as mentioned by Anthony Ulwick in his book ―What customers want‖, we, as consumers, never know what we really like and what we don‘t. It, hence, is important to first understand what makes the viewers change the channel during a commercial break. Viewers have more than one reason for changing the channel during a commercial break, and their tendency to avoid breaks, is just one of those many. Viewers also look at commercial breaks, as an opportunity for refreshment/change or even relief from the prolonged program, which they exploit by surfing through the channels and/or by indulging themselves in some other activity – a phenomenon which can be explained by the term - ‗Multitasking‘. Nelson, L. (2010, October), in his research paper ―Defend Your Research: Commercials Make Us Like TV More‖, exclaims the same by mentioning the cognitive importance associated with an advertisement during a movie or a TV show by the viewers. The research which studies the impact of advertisements on the likeability of a movie or a TV show among different viewers explains that even though the viewers when asked directly may prefer a commercial free program, they eventually enjoy a show more with commercial breaks. Where does the tradeoff come to an end then? Viewers need a break, even though they might not realize it and will not accept the intervention of

advertisements. The problem can further be subdivided and studied to find an optimal solution. What can be the reason of a stated aversion towards advertisements if the viewers enjoy the programs more with breaks? One possible reason might be the repetitive nature or lack of content in the advertisements. The present world‘s consumer wants to make the best out of the time and resources available and lack of any

new information demeans this desired outcome. Hence, may be campaigns with more creativity and a refreshing look might, will be able to break through the clutter. Can we use it to explain the success of the Vodafone campaign? May be not yet, not until the phenomenon is established but still, a slight relation can be observed for sure.

References: 1. Singh, R., Vij, S. (2008). Public Attitude Towards Advertising: An Empirical Study of Northern India. ICFAI Journal of Marketing Management. 2. Ronald, W., Whitewill, K., & Thomas, J. (2008). Advertising Procedure (16th ed.). Pearson Education, Inc. 3.

O‘guinn, T. C., Allen, C. T., & Semenik, R. J. (2003). Advertising and Integrated Brand Promotion (3rd ed.). Vikas Publishing House.

4. Khan, K.M., & Khan N.M. (2002). Facets of Indian Advertising and Consumer Behaviour: An Empirical Approach. Kanishka Publishers.


Marketing Mania

Pratibimb | Feb. 2011

CRICVERTISEMENTS Siva Harsha Karra & Ankur Gajjaria | TAPMI Cricket is an excellent sport where different teams play the battle of the bat and the ball on-field, but there also runs a parallel battle off-field where many companies play the game ADICKET to create an impression in the viewers‘ minds in the short time-slots available to air their commercials. The game fought here, depends on the batting order or the quick runs they make in those few balls. The batting order in ADICKET refers to the order of the

advertisements aired in the respective break; it may be just after the wicket or just before the next

over starts and the number of balls refer to the number of seconds available to telecast. With the changing game, the avenues to advertise on air, have grown dramatically. They can be broadly classified into ON-Field and OFF-Field. Many players across different industries have played the Advertising Premier League (APL) in IPL3. Some interesting findings about the different players‘ performances, strike rates and averages have come out in the research study conducted by us represented in the above graph. The most number of advertisements (Graph: Frequency) aired was by VODAFONE with the ZOO-ZOOs providing the entertainment which had already created their fan base. Others on the top were TATA PHOTON PLUS, LG INFINIA & KARBONN. TATA PHOTON PLUS was a ―boom boom‖ player scoring quick runs in few balls. The


Marketing Mania

Pratibimb | Feb. 2011 Advertisement just showed the price reduction to Rs 2499 in 7 seconds and was aired just before the bowler got ready at his mark to bowl the next delivery. The new IPL season has brought 93% new advertisements while some companies persisted with the old ones. The zoo-zoo advertisements, for instance, brought out the new ―Power to You‖ series of advertisements. Other companies, Maaza for instance, continued the same theme of ―Aam ki pyas bujhao‖ advertisements, but with a new ad launched at the time of IPL. Consumer electronics items like mobile phones, T.V. etc are the most frequently aired sector. The new low cost Mobile companies like Karbonn, Micromaxx and Lava etc. stole the show. The commercials varied across different types,

advertisements. Since IPL matches are considered family viewing, only 1% of the advertisements had sensual content with JK cement being a one OFF. The batting order i.e. the slot in the break had the opening batsman VODAFONE scoring most of the times and the pinch hitter being TATA photon plus. The batting order i.e. the slot in the break had the opening batsman VODAFONE scoring most of the times and the pinch hitter was TATA photon plus. The remaining players came at different slots. The slots in the break have different monetary costs associated with them and here comes the role of the advertising firm to select the right slot with its financial limitations. The other sectors included DTH, Insurance, Beverages, Automobiles and FMCG etc. Godrej‘s ―Go Jiyo‖ social campaign created a little curiosity initially, but faded away, as the tournament progressed. The key player in an advertisement is the Brand Ambassador be it the ZOO-ZOO, or a celebrity. Advertisements with Akshay Kumar were aired more frequently than any other celebrity based commercials. Abhishek Bachchan‘s advertisements were also recurrently aired. Among sports stars, Sehwag and Gambhir together had the maximum number of advertisements aired during IPL 3.

Figure 2. Types of AD's

from humor to Energy. Most of the advertisements (26 %) were informative (figure. 2) while 21 % were inspirational as they inspire the viewer and address the aspirations of the viewer, especially the youth. 18 % of the advertisements used humor to put the point across and the uniqueness of the content was the hallmark of 12% of the

The statistics showing each player are interesting, but the actual performance (Figure.3) was observed using a detailed market research survey which was conducted using a questionnaire with

Figure 3: Brand recall

some interesting findings coming out. Telecom ads like VODAFONE, AIRTEL and IDEA were one of the most highly advertised and had a high


Pratibimb | Feb. 2011 recall value. Viewers were looking for creativity factor in the advertisements followed by the emotional factor. The Realistic factor was the least important, according to respondents. There were only a few ads that reflected the emotional factor. Most of the viewers took a break or switched channels during the strategic time out and during the innings break. So, the advertisements shown during these times were less recalled. The Ticker advertisement had a very low recall.

Marketing Mania Now the time has come for the marketing companies to explore the OFF-Field opportunities. The most important player here is the spectator. The only way he‘s involved, as of now, is by holding the ‗4‘ and ‗6‘ placards, but he‘s going to play a major role in the time to come. Here‘s the challenge: To come up with

ideas where the marketing company makes him promote the brand directly or indirectly.

FACTORS to be considered by a Sports Marketing Firm 1) The viewer is mostly interested in an entertaining or an emotional commercial which catches his attention and thus high recall value is associated with high exposure. 2) The slots in the break have different monetary costs associated with it and here comes the role of the advertising firm to select the right slot within its financial limitations. 3) Another key factor in an advertisement is the Brand Ambassador may it be the ZOO-ZOO or a celebrity.

So, the challenge is to come up with creative refreshing short commercials with the right brand ambassador. The other prominent forms of commercials are the bottom of the screen Tickers and the Instadium screen commercials. The In stadium screen Ads which are aired during the over is an indication that the aired time of the game cricket is decreasing and the advertising time is increasing.

But, the question to be answered is whether ―WE‖ have any role in defining the rules of the game ADICKET.

The tickers used at the bottom of the screen was used by the sanitary ware company Jaguar and automobile company Hyundai which promoted all their brands from Santro to Verna with different taglines associated with different incidents like the fall of a wicket or a boundary etc. CBZ also promoted its Xtreme bike using a ticker, with every six hit.


Finance Frenzy

Pratibimb | Feb. 2011





Abhik Saha | BIM Trichy Introduction To begin with the first point let‘s see what the basic requirements are for a currency to become a global currency. The first and the foremost point is probably the confidence that most of the nations have on their own economy. All other reasons mostly revolve around this main factor. To illustrate this point let‘s take a virtual example. Say there is a basket of nation that exists like ‗A‘,‘B‘,‘C‘,‘D‘,‘E‘ and each of them have a distinct currency of their own. Now the country that is economically better-off has an edge over the others to position its currency as global currency, simply because of the reason that the other countries perceive that particular country to be the most stable, independent and as one, which is unlikely to make any drastic changes in its economy and more specifically, its exchange rates. Now what problems can arise due to sudden changes in exchange rate? Let‘s denote currency of each country like currency of ‘A‘ as ‗Ax‘ and so on. Also assume ‗A‘ is better positioned among the other 5 countries in terms of its economy. Now say ‗B‘ makes some export to country ‗C‘. In this trade, ‗B‘ would prefer to take ‗Ax‘ from ‗C‘ rather than the home currency ‗Cx‘. Simply because ‗Ax‘ is perceived to be more stable than ‗Cx‘ in terms of exchange rate fluctuations due to its strong economy. Now what signifies a strong economy and it‘s resiliency to disturbances in global phenomenon? The size of the economy is no doubt an important indicator of a strong economy. Also the country is presumed to have a current account surplus arising out of trade balances. The size, depth and openness of financial markets of the country are also very important parameters for becoming global currency. Another factor is the

free convertibility of the currency to other currencies.

The rise of Dollar as the global currency In 1944, after the collapse of Gold standard, the Dollar was made the global currency and other countries could exchange Dollar for a particular amount of gold. The United States was undoubtedly the largest economy with 175 billion dollars. A few countries had pegged their own currencies to the US dollar. Even a few countries like Panama adopted the Dollar as their own currency and rejected the proposals to have their own currency. Also the dollar has served as the most used medium of exchange in financial transactions from that time onwards until today across the globe. Trends in the volume of currencies across years stand as a testimony to the fact that the dollar had ruled supreme over the years. In fact it has been observed over the years that dollar consists of almost half of the global currency transaction through the years. (Share of various important currencies in foreign exchange market) Also the Dollar has been the most considerable part of foreign exchange reserves of various countries.

Challenges to the dollar & the rise of Renminbi The dollar has faced considerable competition since early 1980 when the Japanese yen was increasingly used, but the usage decreased with recession in 1990. Since 1999, Euro has provided stiff competition because of the large size of the economy and more number of countries adopting Euro as the national currency. But the recent Euro


Pratibimb | Feb. 2011 crisis has caused the Euro a huge setback on becoming the reserve currency. But recent developments in the currency warfare come from the second largest economy of the world, China, which has poised serious threats to the greenback. Last year, Russia had called for a supernational reserve currency which got considerable support from the Chinese counterparts. The Chinese currency on the other hand has posed a threat to the dollar. Let‘s see the condition of China, the second largest economy as of now very carefully.

For the last 20 years, when the USA and the other European nations were busy showing off their powers, China had been able to extract the production capacity of the west and positioned itself as the manufacturing house of the world. Hence when the United States and Europe have groped in financial crisis, China had been able to show a strong GDP growth figure, thus sustaining their wealthy condition. It has a huge trade surplus arising out of its marvelous export orientation and favorably devalued currency. It has a massive US$2.5 trillion in Forex reserves, thereby making the United States, the powerful nation, its debtor. China has also been able to set up its Sovereign Wealth Fund, China Investment Corporation, with a $200 Billion, to manage its Forex reserves of $ 2.5trillion. All these factors press hard for Yuan becoming the global currency.

Finance Frenzy But that is just the beginning of the story. The Chinese leadership is now opining to reduce its excessive dependence on dollar assets (estimated to be $ 2trillion) because of the mounting fiscal deficits of the USA which may weaken the greenback considerably. Also the Chinese are planning to take bold steps to bring the Renminbi into competition with the dollar as a medium of international trade by making the Renminbi a freely convertible currency whose value would be determined by the market, investors and companies around the world freely buying and selling it. As per analysts, the tentative date of free convertibility is 2020, though the Western world is pretty skeptical about the fact. But these perceptions have started to change since Beijing undertook a few measures like completing currency swaps i.e. providing Yuan to central banks of other countries, to be used in trade with China, like Argentina, Hong Kong, Indonesia, South Korea and many more. These arrangements ensure that these countries no longer need the US currency to transact with China. It had also denominated bilateral trade ties with Brazil in both the countries‘ currencies. All these are evidences of increasing faith of other countries towards the Renminbi. Emerging markets now account for 55% of China‘s trade, which is expected to increase further. A switch from the dollar to the Renminbi for trade settlement would be a lucrative option for the EU nations to deal with China as it will then require only one time Forex trade. China can actually do even more; it remains as one of the most preferred investment destination in the world. Large foreign institutions can already buy shares in mainland firms through a $30 billion qualified foreign institutional investor (QFII) program — but they must first invest in U.S. dollars, which are then converted into Yuan. A new plan known as the ―mini-QFII‖ extends that to Hong Kong brokerages, and lets them invest Yuan directly.


Finance Frenzy

Pratibimb | Feb. 2011 If Chinese corporations start selling Yuan denominated bonds, the Yuan may find increased acceptance due to its high return rates.

The way ahead But the path is not that easy for Yuan. Making the currency convertible would make the Yuan appreciate with respect to all other currencies, which might provide the exporters a real shock and cause social unrest, which could also reduce the GDP growth rate. China had been able to create a huge forex reserve by virtue of its current account surplus which in turn is due to its largely undervalued currency. Now, once the Yuan is made freely convertible, China may not be able to sustain its huge current account surplus. Also the bond markets in China are not too well developed and hence, it is unlikely that FIIs will be pouring huge money, in the near future. China‘s huge forex reserves are mainly believed to be in USD in the form of government treasury holdings. Yuan may also rise parallel to the Greenback and may become the reserve currency, instead of displacing the latter. The idea may seem a little counterintuitive, but a logical thought would perhaps make it clearer. Historically, the monetary system in the world did not have the idea of two global currencies, but that doesn‘t mean we would not see anything like that in the future. In fact the idea of two global currencies is very much feasible and there shouldn‘t be any theoretical or economic repercussions. We have to realize that America is an economic superpower and it‘s not so easy to dethrone its currency. In fact America would continue to purchase in terms of dollars and would not take up any other currency so easily. So in order to trade with America, other countries would have to keep the door to USD open. At the same time, countries may reduce their excessive dependence on dollar and accumulate Renminbi, due to increased opportunities of trade with China. In that case, both the Greenback and the Redback may serve as

global reserve currencies, at least in the near future. In this case, a new concept of ―Currency depending on trade‖ or ―Trade Circles‖ may come up. Every country would have some projections of their future trade requirements and accordingly they would maintain their forex reserves. This may result in some countries having huge Dollar reserves whereas on the other hand some countries having huge Renminbi reserves. This will bring the Dollar with direct confrontation with the Renminbi. This condition is likely to sustain for some time until and unless one of the two nations, China or America, evolve as undisputed leaders in each and every sense. Conclusion: The dollar‘s supremacy is no doubt challenged, and the strongest competitor is the Chinese Yuan. Now it‘s remaining to be seen what lies ahead. Philosophically, what has never happened before is waiting to happen now. So, Dual Reserve currency may be on the cards on a 10-15 years time horizon.

References: 1. The Bretton Woods Agreement (20 July, 1944),, July 1944, bretton_woods_agreement_20_july_1944020703828.html 2. World Currency,, http:// 3. Foreign Exchange Reserves,, Foreign_exchange_reserves

4. John Foley and Wei Gu, China‘s Yuan: A guide for the perplexed,, Sep 2010, columns/2010/09/10/chinas-yuan-a-guide-forthe-perplexed/

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Finance Frenzy

Pratibimb | Feb. 2011

2010 – THE YEAR OF COMMODITIES Prashant Rishi, Preetham N | IIM Lucknow Introduction After two years of the financial crisis, 2010 has been relatively a good year for the investors worldwide. There was an across-the-board rise in all the major asset classes – stocks, bonds, commodities and dollar. This is the first time since 2005 that all the four asset classes have closed in the green at year-end. However, among these, commodities were the star performers. The following indices give us the picture: 1. The Thomson Reuters/Jefferies CRB index, which tracks 19 materials, gained 17% in 2010. 2. MSCI All Country World Index (for stocks) went up 13%, dividends reinvested. 3. The Bank of America Merrill Lynch‘s Global Broad Market Index showed 4.88% global bond returns. 4. The U.S. Dollar Index gained 1.5%.

Figure 1: CRB Index December 29, 2010, Source: Green Faucet This is the first time since 2007 that commodities have outperformed the other asset classes. In 2007-2009, growths in all the asset classes were highly correlated with each other. This correlation

was observed due to the effect of global economic growth on the fate of assets, in the wake of recession & subsequent recovery. However, in 2010, this growth correlation of asset classes faded, with commodities accelerating ahead of stocks, bonds and dollar. In this article, we discuss not only some of the major drivers that drove the demand for commodities, but also some major classes of commodities which remained red hot in 2010. Finally, we conclude with an outlook of commodities for the year 2011.

Demand Drivers of Commodities in 2010 Some of the major reasons that drove the demand for commodities in the year 2010 are: 1. Emerging Market (EM) Economies: China is estimated to have grown by nearly 10% in the year 2010. As a major consumer of global commodities, it has largely driven the commodities rally in 2010. 2. ‘Financialization’ of Commodities: There was an increased interest from hedge funds, pension funds and other institutional investors which invested close to USD 60 billion in commodities in 2010. This rally sparked off an interest in retail investors who bought into commodities through the numerous Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN). 3. Environmental Hazards and Calamities: Floods in Pakistan destroyed the harvest of cotton contributing to a rise in its price.


Finance Frenzy

Pratibimb | Feb. 2011 Similarly, the drought in Russia & Kazakhstan sent the price of wheat soaring.

silver price ratio is at 59:1, as against the 200year historical average of 17:1.

4. Inflation: Negative real interest rate in the developed world, along with increased liquidity (in the wake of QE), has brought in heavy money supplies to commodities, as more and more people lose faith in fiat money.

3. Copper: Copper staged an impressive rally in 2010 from the commodity-wide sell-off that occurred when the global financial crisis hit three years ago. While copper demand in western economies were weak, it remained strong in emerging economies such as China, the world‘s largest consumer of the metal, driving up its prices by about 30.2%. Another factor that contributed to its rise is its diminishing worldwide supply, caused by a fall in its mining activity.

Growth Analysis Metals 1. Palladium: A metal used in automobile engines; it rose by 97.3% fueled by the growth in auto production in Asia and North America. 2. Gold & Silver: A 5% rate hike in China to curb inflation led to worries of overheating in the emerging markets. This turned the investors towards perceived safe havens

Agricultural Produce Continued imports by China, flooding of fields in Canada and dryness in Kazakhstan and South America curtailed the supply of agricultural produce in the international markets. This, along

Figure 2: Gold Price: Recent Trends Source: Business Insider leading to a rise of 29.8% in gold and 84% with the other factors discussed above, drove the in silver. Most commodity analysts are bullish prices of agricultural produce to record levels. For on silver to rise further in 2011, since gold to example, cotton & wheat rose by 92% & 47%

Figure 3: Gold/Silver Ratio, Source: Silver Prices.Net


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Pratibimb | Feb. 2011 respectively, while increased demand for coffee increased its price by 77% to 13-year high.

Oil and Natural Gas

Figure 4: Oil Prices – Recent Trends, Source: Calculated Risk Oil closed at USD 91.38 per barrel, recording a gain of 15.2%. The year started with a low demand for oil due to reduced manufacturing activity in the developed world (owing to recession). This led to stockpiling of oil, which was offset to some extent by robust demand from the developing countries. Towards the latter half of the year, manufacturing picked up its pace in the developed world. This, along with debasement of major currencies around the world, led to a rise in demand for oil, thereby increasing its prices. Oil moved in a band from USD 68 to 92 throughout the year. Natural gas, on the other hand, was a major loser closing 21% lower than its previous year‘s close. Low demand and increased production of shale gas from North America brought down its prices.

Commodities 2011 Outlook While the developed economies are on the path to recovery, demand from the developing countries is expected to remain strong. Growing populations with increasing middle class is expected to stimulate demand for infrastructure, housing, energy and improved nutrition (especially meat). Subsiding of the fear of double dip in the US and growth in manufacturing activities in the west, along with sustained growth in developing

countries is expected to reduce the inventory of oil from current mark of 60 days leading to an increase in its prices. Most analysts expect it to cross USD 100/barrel in mid-2011. Same is the case with precious metals. Most economists predict that increased printing of dollars by Fed (QE 2) will make investors lose faith in USD and will increase demand for metals like gold and silver. However, it should be noted that in case the expectation of dollar depreciation does not come true, precious metal prices might fall. This can be caused by many possible scenarios in 2011 (like a US stock market crash, trouble with other currencies like Euro & Yen and implosion of a country in Euro zone to name a few) & can make the precious metals cheaper. The overheating of the Chinese economy poses another risk to the estimated growth of commodities. The anticipated policy tightening by the Chinese government to curb inflationary pressures may slow down the growth in the economy thereby dampening the Chinese demand. At the end, we can say that commodities are expected to continue their rally in 2011, but this depends on a multitude of economic factors, like high inflation in US, weak dollar & continued growth in China.

References 1. Danske Bank, Commodities 2010: Five Themes to Drive Commodity Markets This Year,, January 2008, http:// commodities-2010-five-themes-to-drivecommodity-markets-this-year-2010010810624/ 2. Andrew Binet, Why Jeff Rubin Still Sees Triple-digit Oil Prices by 2011,, June 2010, http:// industry-news/energy-and-resources/why-jeffrubin-still-sees-triple-digit-oil-prices-by-2011/ article1598427/


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Pratibimb | Feb. 2011 3. Michael Checkan, Commodities 2011: The Road Ahead, December 2010, http:// checkan120710.html 4. Commodity Forecast for 2010, 2011,, December 2009,

5. Silver Investing Opportunity, October 2010, 6. Update: 2011 Outlook for Commodities Remains Positive,, December 2010,

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, and by Prof. S N Rao, Associate Professor of Finance at SJM School of Management currently on sabbatical leave at T.A. Pai Management Institute. The winning entry of ‘Beat the Market’, first edition is of Mr. Piyush Agarwal and Mr. Ankur Gupta, IIFT, Delhi!!! We thank all the participants for their effort. Beat the Market is a game designed to prove your mettle in stock market analysis. You have to pick any 2 listed companies from BSE and analyze their stock movements till 1st April, 2011. On the basis of fundamental and technical analysis you need to give us your share price estimate of these two stocks as on 24th April, 2011. Fundamental & Technical analysis will carry 70% weight while 30 % weight will be given to Accuracy of the estimated prices in the final score. Prize: Rs. 1000 /Rules:  You can pick any stocks but the stocks should be from different industry  You need to send us file by 09:59 AM, 4th April, 2011  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_<TEAM_NAME>_<INSTITUTE_NAME>  Mail the file at


Pratibimb | Feb. 2011


AN INTERVIEW WITH PROFESSOR JAGDISH SHETH Charles H. Kellstadt Professor of Marketing, Goizueta Business School, Emory University

Dr. Jagdish Sheth is the Charles H. Kellstadt Professor of Marketing in the Goizueta Business School and the founder of the Center for Relationship Marketing (CRM) at Emory University. Prior to his present position, he was on the faculty of the University of Southern California, where he founded the Center for Telecommunications Management, the University of Illinois, Columbia University and the Massachusetts Institute of Technology. Dr. Sheth is an expert on geopolitical realignment of nations, global competitiveness and strategic vision for global enterprises. Dr. Sheth has been conferred with the P.D. Converse Award, Charles Coolidge Parlin Award and the Irwin McGraw Hill Distinguished Marketing Educator Awards by the American Marketing Association. Dr. Sheth has worked for numerous industries and companies in the U.S, Europe and Asia, both as an advisor and as a seminar leader. He is an internationally recognized business consultant and

his clients include AT&T, BellSouth, Cox Communications, Delta, Ernst & Young, Ford, GE, Lucent Technologies, Motorola, Nortel, Pillsbury, Sprint, Square D, 3M, and Whirlpool. He has given more than 5,000 presentations in at least twenty countries. He is also on the Board of Directors of several public companies, including Norstan and Wipro Limited. A prolific author, Dr. Sheth coauthored a textbook with Banwari Mittal, Customer Behavior. In 2000, Dr. Sheth and Andrew Sobel published a best seller, Clients for Life and in 2001, the book Value Space, coauthored with Banwari Mittal, was published. Another book, The Rule of Three, was coauthored with Dr. Rajendra Sisodia and published in 2002. In 2007, Dr. Sheth published The Self-Destructive Habits of Good Companies... And How to Break Them. Dr. Sheth's most recent book is Chindia Rising. In this interview, we have posed various questions from his books and his previous research. To know the answers, read on !!!


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Sir, as you have done an extensive research on CRM practices, how do these practices differ in India as per your observations from the rest of the world? The differences are not as strong as the similarities. The processes, the infrastructure, i.e., the databases and the data-mining capabilities are very similar for CRM. The differences are probably on three fronts: i) The decision making processes‘ by customers is centralized in India. In foreign countries the decision making is decentralized to whoever is incharge. So we have to do both bottom-up and top -down selling there. ii) The gap between the customer and supplier in terms of technical knowledge is much greater here. So there is lot more need of education and awareness and not just selling. Over there the customer in B2B and even a consumer is lot more knowledgeable. We think that is going to be equalized with more online information. It is just a matter of time. iii) The third one is much more complex. It is because of very strong diversity here which means there is no such thing as a national thing, it‘s always local view. We are having lot more diversity at the state level which is basically the influence of sub-cultures.

How easy or difficult is it to maintain the relationship with customers in India? The relationship is maintained at multiple levels. The owner of the business has to make sure that their succession planning takes place. You have to establish continuity with your customers People still tend to start with a company and stay for a long time with the company, where as in the US, the churn of managers is much higher except on the technical side. There is lot more stability and predictability here.

You have given seven self-destructive habits of good companies in your book ―Why Do Good Companies Fail?‖ What about unethical conduct

Interview of the top management? Which category would this factor belong to? The company is akin to a living being. Therefore the leader of the company must be more like a medical doctor where his key skill lies in diagnosis and not cure. Whether a bad ethical aspect is really one of the seven bad habits is something to ponder over. It is out of arrogance that unethical habits tend to monopolize. There is an eighth bad habit for most companies having an uncanny naïve way of plateauing the potential of their own people. After paying mega bucks they don‘t allow them to do what they need to do. There is an old theory which is known as Peter‘s principle which states your rise to the level of incompetency. But this is just the opposite. The thinking is that the company somehow through processes, human resource reward system, always stuck you and gets less out of you and therefore is not good for the company.

Talking about arrogance, what about the cases of Enron and Satyam? Enron became very arrogant, GM became very arrogant and so do Satyam, they believed that nobody can touch them whether they commit ethical or unethical practices. Satyam thought that they knew everybody in Andhra Pradesh and therefore they can do whatever they want to do. Unethical behavior doesn‘t happen because people are unethical by nature but it‘s the opportunities and circumstances that create the temptation and an opportunity pretty much. When you are a listed company, you get into the trap of performing year after year.

In your book, ―Why Do Good Companies Fail?‖ you wrote about the dangerous habits (internal to the organization) that good organizations develop which eventually lead to their failure. What are the external factors that can make a good organization fail and how should organizations tackle these factors? The big habit that we have mentioned is called ‗denial‘. When you deny the new realities it is


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external and when you are not able to change as the environment change that‘s when you collapse. We have talked about six external factors in a paper titled ‗Why Good Companies Fail‘, when they change you must be more adaptable and if you are not able to adapt you don‘t do well or you collapse. One is regulation when you have new laws being passed. The second one is ‗capital markets‘, third is ‗technology‘, fourth is ‗competition‘, fifth is ‗globalization‘ and the sixth one is ‗customs‘. This is the same phenomenon that we saw happen when electronic engineers believed that analog technology was superior to its digital counterpart which might have been true at one point in time but not necessarily true always. The same thing happened in the movie industry when 70mm movies were considered superior due to their precision but they lacked any animation. I have seen denial of competition from emerging markets, we laughed at the Japanese when they were trying to compete, we laughed at the Koreans and now we are laughing at the Indians and the Chinese. When you deny external factors or a new reality, we often run into this problem.

But as with the case of Microsoft, they didn‘t expect that a new company like Google could beat them in the market. Google came up with technologies which MS could not fathom and eventually we see these technologies dominating the tech space. These are more of external factors which company can‘t think of and can‘t tackle from internal capabilities. Due to ‗internal competency‘, so I call it ‘competency dependence‘, often what you are good at actually becomes a liability, which is opposite to core competency. That‘s the problem with Microsoft. They are not able to do anything outside of the ‗Windows‘ framework. So they couldn‘t set standards for wireless technology or for cable. They spend trillion dollars to create a set-top box standard. They couldn‘t negotiate well with Nokia which is a dominant player, because MS would always want to control. They

Interview missed out on wireless technology. X-box, they tried on their own, because other players didn‘t want to play with them anymore. So they have not been successful at any access device except the PC. To me it‘s a core competency issue.

Considering that the birth rate in China is reducing while in India‘s it is still increasing, how would the demographics of India and China impact world politics in the next 20 yrs? The actual issue is that China of course is ahead in markets but not sourcing. India has several advantages; it‘s not just the language we were into legal and financial system which is more western whereas Chinese destroyed that to put communism in place. So they really have to get back to a global way of looking at the legal contracts and financial aspect, which they are doing, so that gives us an advantage for a long time. Chinese diasporas is very ethnic, Taiwan Chinese is different, they were very wide, and they are loyal to mainland China surprisingly but I don‘t see the level with which Indians have penetrated into mainstream society.

What do you think would be the major factor for the growth of the country; would it be increasing population or decreasing population? It depends on the optimal points which in turn depend on demand and supply issues. If you have a population that is growing but you create employment and wealth growing even more, then it‘s a very positive force. The other factor is that in the longer run, with the aging of society, it begins to create more obligations, either on the government, as in Japan, or with the private sector as it is true in America where GM has as many as 7-8 retirees, for whom they have obligations for pension plan and health, while there is only one new employee who contributes for them. So it‘s the productive wages and the demographics that are contributing factors towards the economy. Right now we are very worried about the baby boomers, as they will all become 65 and above which means at that age


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they can trigger the pension plan from the government over to the social security. The number is 10000 per day for 19 years. But we don‘t have enough money for that, because the new person who is contributing to our social security is not that large. We did fantastically well in the time of baby boomers as they became our net producer and contributed towards the wealth creation.

What is the view about Indian Population? Is it at a critical level or surpassed it? The Indian demographics used to be radically different between rural and urban. During my research on population control which I did on 68 year funded by the Ford Foundation, I found that if you go back to 1914, the number of children born was about the same - 4.1 per woman and the difference was very negligible between rural and urban. By 1950‘s -60‘s in urban areas the birth rate declined enormously to 2.7 only, but in rural areas it continued. In agricultural society, the children are assets for you but in industrializing society they become more of a liability. What we are watching right now is whether the rural demographics will be just like urban one with more job opportunities, new factories being built there, for construction work etc.

Indian Economic policies are comparatively open when compared to China. Indian organizations are going for mergers and acquisitions beyond the country`s border while China still has lots of restriction, most of the companies still concentrate on domestic demand. How will this work out for India and China in Future? Chinese started with exports by and large but now they are encouraged to focus on internal/ domestic demand. They are going to become global eventually because competition comes from foreign countries. My view is that Indian corporations would be using mergers & acquisitions as their strategy and because the rest of the world is receptive to selling to Indian companies than to most Chinese companies as

Interview other governments still have an uneasy relationship, with the Chinese government. Some governments still level them as communist country. In the long run there won‘t be a long term difference. In many industries, the Chinese and Indians are becoming dominant players, especially raw materials. In other places, Indian companies will sell out to somebody. In the short run there are significant differences, the majority of the Chinese corporations which are global are state-enterprises, privatized.

What strategy should Indian Companies adopt to gain a global brand image? There are three aspects to gain a global brand image: i) Brand as an asset: A brand should have good reputation in the rest of the world. In the garment, fashion and FMCG industry, we have seen that Indian companies are buying companies for the brand assets. ii) Many western companies have a lot more technology on the shelf. When you don‘t want to imitate and you want to innovate, acquisition becomes a good strategy. Technology invented there has more commercial potential in emerging markets like India. iii) These companies have organized processes and human capitals, so you can learn from them on how to manage businesses on a global level. Indians are trying to create brands on a global basis, especially in the B2B market for example names like Infosys, Tata etc. Wherever the profession is the brand name, it is relatively easy to go global. When you have a product brand name, you have to decide whether you shall take the product brand name or the company. Usually when you are a lower income economy, you begin at the lower end of the price quality ratio. It‘s a very reverse brand cycle compared to the Europeans and Americans where you invent something, brand it, charge premium prices. These are two different approaches.


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OPPORTUNITY RECOGNITION AND PROJECT SELECTION: SOME APPROACHES FOR SMALL ENTERPRISES Prof. A. S. Vasudev Rao, Senior Professor and Dean (Admin) at TAPMI “Profits are not made by differential cleverness, but by differential stupidity” (Attributed to David Ricardo, Economist, by Peter Drucker)

process identifies these key factors i.e., opportunity, resources and the entrepreneurial team, which result in preparation of a business plan for the project finally selected.


It may be noted that there are countless strategies for creating new ventures, but most of them have not yet been well conceived. Selection of a profitable and sustainable project idea is a very critical aspect in the venture launching stage for an entrepreneur. Some guidelines and approaches are available for new entrepreneurs to help them in identifying and selecting suitable projects, depending on their background, investment capacity and experience / qualifications. Many entrepreneurs have their dream projects too.

Opportunity is a situation in which a person can exploit a new business idea that has the potential to generate profit. There are several opportunities behind various problems and issues faced in the business, manufacturing, services and generally in the society and living conditions of people. The entrepreneur has to generate ideas using his creativity and innovative approach to recognize the opportunities that lie ahead of him. ―The bigger the problem, the bigger the opportunity‖. Ideas that have been through a sieve of analysis, by asking the right questions on market, technical and financial viabilities, hold up as opportunities. It is to be noted that the information resource an entrepreneur possesses, helps recognize opportunities when compared to a person having no or low level of information. Opportunities arise because of technological changes taking place, political and regulatory as well as social and demographic changes. They can result in not only new products / services, but also new methods of production, new markets, new ways of organizing business and new materials. It is important for the entrepreneurs to recognize the right opportunity that fits their background – experience, knowledge, skills and the uniqueness of the product / service. Level of competition and market and customer need assessment are also important. ―New venture strategies‖ is a frame work of old markets, new markets Vs old products and new products. Timmons model of the entrepreneurial

For selection of a suitable project, the market, technical and financial viabilities are most important factors. The project outlay in terms of capital cost, sources of finances, long term prospects of the project, associated business and financial risks are to be carefully considered. It is also very important to consider own preferences, attitudes and the family support available to the entrepreneur. Ultimately, project selection is a search and select process. The methods and procedure are partly structured and partly unstructured; partly subjective and partly objective.

Some Approaches for Project Selection A survey of small enterprises located in industrial areas and estate in coastal Karnataka revealed a few specific approaches adopted by some of the entrepreneurs. Using these approaches, the entrepreneurs had launched their projects and later tasted success. But a few of them also had to face failures. The learning from these incidences is useful. The approaches studied are as follows:


Pratibimb | Feb. 2011 I) A few entrepreneurs selected and launched projects in which they had extensive marketing experience. This was observed in case of an aluminium vessel manufacturing unit, as well as in an Ayurvedic drug manufacturing unit. In both the cases, the owners did not have relevant technical background in the production area. One unit is highly successful, whereas the Ayurvedic unit is making a turnaround. Branding of the medicine also was helpful in this case. The learning from this is that backward integration i.e., from marketing to production works well for small enterprises. Extensive knowledge of market and its finer details helped the owners to manage through the start up period which is normally a critical period for survival. The product may not be spectacular and innovative, but the market potential and / or niche were identified in these cases. II) In one or two cases, the entrepreneurs having succeeded in their first ventures set up outside their home States, tried their best to establish the second unit nearer to their home town / home district of D.K. and Udupi. This could be to foster a linkage to their home towns or villages and contribute to the socioeconomic development of the area. Their ethnic value and love for doing something worthwhile in their own soil was a strong driving force. One of the units, established in a rural area, is a nationally known lighting luminaire design and manufacturing company. It manufactures word-class products and probably is the number one company in India in lighting and luminaire design and manufacturing. The unit had employed local rural persons, trained them and made out of them a productive group of employees turning out quality products. In similar other cases, there were failures also, because the home town location were totally out of fit for the projects, considering the market or raw material availability. Yet another hi-tech product, the flame proof switch gears, was also set up at Udupi district, by

HR Buzz a promoter, who belonged to a village near Udupi. He had set up his first unit for manufacturing of the same product at Mumbai a few years back. Looking at the market potential based on likely demand from the mega projects of MRPL, BASF, proposed Power Company and Steel complex, the project was selected for establishing in Udupi district in an Industrial Area. During the operational phase, the unit did not get adequate market as anticipated for its products from local industries. But the unit still exists operating at low capacity for the reason best known to the promoter at Mumbai. It may be his desire to continue to have a unit near his hometown. The strategy has not been very successful in this instance. Possibly, such a unit needs a wider market and industrial customer base. III) Another significant factor, which helped entrepreneurs decide about the product, particularly in case of Gulf-returned NRIs, is the skills they possessed or the commercial experience they had gained in their Gulf jobs. In a specific case, where the promoter was highly experienced in tool and die designing and manufacturing, this strength was used to develop medical disposables, particularly for Urology applications. The manufacturing of these items required basic die designing and manufacturing capabilities using special stainless steel materials and extruding special polymer materials. In this case, the promoter networked extensively with professional doctors, overseas material suppliers for procuring critical materials such as stainless steel wires, tubes, teflon and PVC required to develop the products, using his die making capability as base strength. IV) Similarly another entrepreneur, Gulf returned, took over a sick unit for manufacturing of pilfer proof caps (P P caps). The reason was again the resource he had for getting the key item of production, the precision die. Good quality P P cap manufacturing requires precision die, to punch and form out of printed aluminium sheets. In this case the entrepreneurâ&#x20AC;&#x2DC;s family member at Mumbai


Pratibimb | Feb. 2011 was a reputed die maker, who knew complexities of manufacturing. This valuable resource was the key factor in decision making to take over the sick unit and achieve a complete turnaround. The unit is very successfully operating at present, achieving much higher capacity utilization. V) Some of the entrepreneurs have taken innovative products / services that they have seen or observed abroad for their projects in the coastal districts. Examples is the first unit set up in Udupi district for manufacturing of concrete interlock paving blocks, hitherto manufactured abroad. Though initially the product acceptability in the market was slow, later on it was overwhelmingly recognized as a good material suitable for paving application works, requiring faster completion and curing. Concept marketing was effectively employed by the entrepreneur. VI) In small enterprises, it may be difficult to develop a brand and niche in the early years of its operation. One of the entrepreneurs narrated that before launching his present unit which is now very successful, he had toyed with the idea of manufacturing an electronic component. This product however had new / replacement demand, requiring concept selling. The market growth was rather slow. His main criterion therefore was to identify and select a product which sells in a larger market area and is supported by adequate marketing effort. Having identified the product, he systematically examined the

HR Buzz viability of the project, and meticulously planned and implemented the same. Over the last 7-8 years the venture manufacturing electrodes for welding works has grown to be one of the leading units in the State in its category of products. VII) Highly innovative nature backed by the long years of work experience acquired as well as varying skills in operation, maintenance and machinery design and development has been the prime mover for a successful entrepreneur to launch a project for manufacturing of plastic twin head extruder. This new product was his invention and the outcome of his innovative design work. This new twin die head plastic extrusion machine, as reported by him, delivers nearly 2.5 times the output of a conventional single die head machine. It also conserves electric energy, reducing unit power consumption by nearly 60 percent. In this case intense development work, continuous effort to modify and improve the design of components and parts, as well as process parameters helped the entrepreneur to realize his dream of becoming a successful small enterprise ownermanager. He started his humble career as a shop floor worker in a plastic factory in his school going age. In this case, the product selection was a true reflection of his latent dreams of invention in plastic processing. VIII) The last case observed is yet another one of innovation and new product development. This time, it was the decision of a technocrat-entrepreneur (engineer), who had previous training and work experience of 2-3 years in an engineering workshop. He decided to leave the job and develop a microprocessor based color sorting machine for grains and coffee beans which were being imported till then. This


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Pratibimb | Feb. 2011 was therefore a challenge for him to indigenize, develop necessary design and drawings and manufacture the machine in the country for the first time. This was a stupendous task involving electronic system design, optics design, component sourcing, assembly, prototype development and testing. The sheer challenge in new product development, being an import substitution item, was perhaps the greatest factor for the entrepreneur to decide about launching the project. The above are some of the examples of product selection strategies used by the entrepreneurs. While the above examples reflect successful cases, there were failures also in cases where similar approaches were adopted. The reasons could be many and nature of problems resulting in failure of enterprise could be complex.

methodology. It is difficult to develop specific step-by-step methods or procedure for the process. There may not be a proven theory also to guide this critical task of would be ownermanager.

On overview of the approaches adopted by successful entrepreneurs, it is also important to know the specific motives behind their start up venture. The motives could be to be independent to gain higher economic status in life, to be innovative or to excel in his profession.

Opportunity is a situation in which a person can exploit a new business idea that has the potential to generate profit. Opportunity recognition and project selection is a process and for an entrepreneur, opportunities can be seen as hidden behind several problems faced in the society or environment

Motives for start ups are also important considering the linkage to growth objectives of entrepreneur, later in the project life cycle. While identifying and selecting project, a proper vision for the product range, product line and basic business idea should also be visualized. This vision is beneficial if entrepreneur considers these while selecting his product / service for the start up venture.

Consultancy Assistance Small Enterprise Consultants, Professionals, Managers of State Financial Corporations and Banks, CEDs, TCOs, DICs and other development organizations can act as the resource centers that can be tapped for project opportunity recognition, guidance, identification and selection. The process of selection is partly structured, partly unstructured and partly dependent on focused thinking, partly on divergent or lateral thinking. Project identification is often an outcome of a triggering process rather than an analytical and objective

The entrepreneur can seek information and consultancy assistance to cross check and support his decision making criteria. However, consultants and other agencies could show the broad direction and support the entrepreneur in viability analysis. But the hard task of decision making largely should rest with the entrepreneur, the risk taker and the anchor of the new venture.


The project identification is a search-and-select process. For this task environment scanning is necessary, besides understanding strengths, weaknesses, opportunities and threats of the entrepreneur himself. Close examination of viability aspects on marketing, technical and financial areas is critical for screening the project ideas. But the decision regarding which project to finally venture in is crucial for the entrepreneur. A few approaches adopted by successful entrepreneurs have been briefly presented. These approaches cannot be generalized. They can be used by the entrepreneurs desirous of selecting new ventures. Ultimate entrepreneurial success depends on the right selection of the project at the start up phase and on all -round capability to successfully manage the venture by an entrepreneur-manager during the operation phase.



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MARVIN BOWER, THE MANAGEMENT THINKER Prof. Vijaya | TAPMI McKinsey consulting is a name that spells pride with anyone who is associated with it, including the clients. We would like to present this piece on a man who helped build McKinsey, the man behind the mystical magic of this company – Marvin Bower – his visionary thoughts and perspectives on management. He was born in August 1903 and grew up in Cleveland. He graduated from Brown University, completed the degree of Law from Harvard Law School and also did his MBA from Harvard Business School. In 1933, Marvin joined a young firm of accountants and engineers founded by former University of Chicago professor, James O. McKinsey. He was associated with McKinsey for much more than half a century. He built it and nurtured it to the status of a well-acclaimed consulting firm, with engagements with a huge list of clients. In 1989, Marvin Bower got elected into the Business Hall of fame by Fortune, the other recipient being Thomas Alva Edison. Marvin was modest enough to say, ‗It is a mistake, I am not a business man, but a professional.‘ His book, The Will to Manage, in the 1960s, was cited as one of the world‘s best business reference books in, Business: The Ultimate Resource. He was awarded the Harvard medal and also named fellow of the International Academy of Management. The Marvin Bower professor of Leadership development was introduced at the Harvard Business School in 1995. He passed away in January 2003, leaving behind him, a legacy of leaders and perspectives. Marvin believed leadership can be learnt, but not taught. If there is one strong thing that he can be noted for, it is about translating strong basic values into management consulting; a strong commitment to anybody on the other side. He believed that a great institution was built on the skills and experience of its people and as much through their behaviors and conduct which was

even more important to his success. And succeed, he did.

THE PRACTICE: The nurturing of McKinsey & Company: ‗My vision is to provide advice on managing to top executives and to do it with professional standards of a leading law firm. In all successful professional groups, regard for the individual is based not on title but on competence, stature and leadership‘ claimed Marvin Bower, when he took over McKinsey consulting in 1933 , when McKinsey passed away at the age of 48 yrs. At a time, when management consulting was still equated with management engineering, he introduced a different methodology to expertise – young well trained minds ready to be analytical problem solvers as against only ‗experienced‘ executives lending their high charging consultancy services. These young consultants were ‗associates‘ in ‗engagements‘ in ‗practice‘ and not just jobs in business consulting. These had to be people who could work together within the context of the firm‘s personality and work well with clients. He valued imagination and analysis more than experience. He fostered a culture that encouraged



Pratibimb | Feb. 2011 rigorous debate over the right approach or answer, steering it as a necessary process independent of personal criticism. To act with integrity, inside and outside, Marvin called it professionalism. Being professional and leading to good wok increases the firm-level confidence. This has a positive influence and adds ‗tone‘ to the office. Further, making decisions on whether assignments can be properly executed and then acting accordingly helps build the firm level confidence and also morale. In anything that was within the scope of Marvin‘s thought or action, he had a compulsion of professionalism. Marvin believed that the ‗personality‘ of a professional firm, is similar to that of an individual, roughly defined as: the total impression that the firm makes on those, who come in contact with it or who hear or read about it. The total impression depends on the collective personal impressions made by each individual employee and the firm‘s objectives, policies and working approaches that guide how the people in the firm carry on activities, what they do, what they write etc. There was a conscious effort each time, to check whether, what the firm engaged in and how it engaged in, was consistent to the firm‘s principles. In one instance, one of the best performing associates at McKinsey was shown the door in 30 minutes flat because he violated the fundamental organizational principles. This was because Marvin wanted to communicate the importance of adhering to the fundamental principles of the organization. Marvin would say ‗I want them to be pulling out the McKinsey report, something to look at, and think about. They should understand the care we have given to the quality of work that we do. That is our signature‘. He launched the McKinsey foundation for management research in 1955. One of the objectives of doing this was to bring together the knowledge of business leaders, academics and expert business consultants, to connect the theoretical with the practical.

Client relationships: Marvin with considerable intuition sensed that getting clients to adopt recommendations requires client ownership. This led to a model of partnership with the clients. In client studies, James McKinsey, the founder, used to be always sensitive to the situations and view-points of the people in the client organization. He realized that recommendations are neither accepted nor implemented on the basis of rational factors alone. He was also independent with the client; spoke the truth, even though it risked discontinuance of the relationship. Marvin learnt these principles and continued the same. He never told clients what he thought they would like to hear and consciously ignored fads and fashions. He insisted on collecting every possible fact and view while he delved into any problem-solving context. He was always known for his tendency to ask questions; about how the problem fit into the bigger picture, not to leave out concrete action plans, for he believed that implementability of actions was the test to the effectiveness of problem solving through any study. When management consulting was still an evolving field, Marvin learnt the importance of industry trends, competitive positioning and the need to understand external economic factors- essentially defining the ‗top management‘ approach.

THE PERSPECTIVE: Management decision making: Marvin held that, management decisions differ from personal decisions. They should involve a logical process - a deliberate choice of means to ends. The test of a decision is in the meaningful action that can be taken through it. Through his vast experience in consulting and guiding company ‗partners‘ through problem resolution, here are a few steps that his wisdom has to offer us.



Pratibimb | Feb. 2011 Decide whether to decide

Determine procedures for carrying out decisions

1. Is the question pertinent now - does it fit in with management objectives, plans and streams of events?

1. Break required action into simple parts, putting first things first.

2. Can the decision be made now? Will it disrupt present plans? Are subordinates capable of carrying it out? Is enough information available to decide? 3. Have you the responsibility and the authority to decide? 4. Should higher authority decide/ should a subordinate decide? Should some other executive decide? 5. If decision is not to decide now, let those concerned know-and the reasons why. Size up the situation 1. Get all available facts bearing on problem or question- what, why, when, where, how and who. 2. Get opinions and judgments of persons concerned with questions or problems – if at all feasible. 3. Go to the heart of the matter. Determine which factor or factors limit or prevent achievement of the purpose with which decision is concerned. Subordinate parts to the whole.

4. Reject from consideration all events, objects, details and circumstances not pertinent to action now with means now available. Think the problem through

1. Develop alternative solutions. 2. Test alternative solutions for advantages and disadvantages from the standpoint of Underlying purpose (e.g. more profits in the long run through better service to customers), immediate objectives & policies, cost, effect on personnel and moral codes (Rightness and reasonableness in light of own and store‘s codes).

2. Get ideas from those concerned, especially subordinates. ‗Millions are lost through discouraging subordinates from expressing ideas‖. Use consultative management. Admit things you do not know and mistakes made. 3. Set a completion time or date and work backwards to get starting dates and proper timing. Fix responsibilities 1. See that every individual understands what he is to do and why and that he is capable of doing it. 2. Establish reasonable criteria for satisfactory performance. Follow up 1. Follow up to eliminate difficulties and see that the decision is carried out. 2. Review performance with subordinates concerned, so that they know how well they did. Be sure to emphasize points that will be helpful guidelines for future actions. On People management: Marvin was against the concept of hierarchy. Hierarchy, he stated, led to a perception of authority that each superior has over subordinates. The subordinates perceive certain constraints like, the reluctance to disagree with the boss, reluctance to provide information or offer opinions unless asked for and also the unwillingness to take independent initiatives. It is important to create a non-hierarchical work atmosphere throughout the firm so that anybody can talk freely to anybody else and disagree with anybody, without having to worry about any consequence. It is important for the leader to respond to anything told or written, never to be silent on those. These would earn positive outcomes.



Pratibimb | Feb. 2011 It is important for the leader to treat all the constituents, the owners and others with respect. Developing the constituent‘s self-confidence and self-esteem is of utmost importance. When there is loss of confidence, there is a feeling of defeat, failure, helplessness and even self contempt. Such a person is not able to take up purposeful effort, risks and cannot make use of opportunities within the organization. In order to develop the constituents in organizations, genuine praise for good work helps. Involving them in decision making and delegating responsibilities and following up is also important. Converting them into stakeholders creates a higher sense of ownership.

analysis of the facts involved, accompanied by an acute sensitivity to the feelings and attitudes of people involved in the context. 

Initiative, initiative, initiative- We might wonder why Marvin had coined this attribute this way. Yes, it is to highlight the point that acting is ‗the‘ behavior expected whether in the initial stages of problem solving or while implementing the recommendations.

A sense of urgency - Speed is important to facilitate improvements and growth.

Good judgment - This is about combining hard data as well as intuitive guesses to arrive at a conclusion that events prove to be correct. This is anything, but following the ‗fads‘.

Broad mindedness- It is being tolerant of varied views and being ready to condone minor departures from conventional behavior.

Flexibility and adaptability – This is about being ready for change when the situation demands it.

The capacity to make sound and timely decisions – This, when practiced will set an example for others. Setting time priorities will be useful exercise. Delaying decisions can hurt many.

The capacity to motivate - According to Marvin, in a leadership company, the best way to motivate people is by leading as an example and to allow them to perform which are seen as valuable contributions to the company. He would often talk about good things and good names. He never passed up an opportunity to celebrate success. He would give credit and praise to people when they did work.

On leadership and leading: Marvin had to offer us a lot on some important attributes or qualities of leading. They are – 

Trustworthiness - To get into detail, to be accurate about small things, even correcting smaller details that may not matter. This is called ‗high precision truthfulness‘.

Fairness – This is about treating everyone maintaining principles of equity.

Unassuming behaviors – To learn to be humble and not exhibit arrogance, haughtiness and egotism. He liked to be called Marvin, not Mr. Bower.

Listening and open mindedness - To be ready to hear what the other side has to say. It is paying close attention, and asking brief, nonleading questions that convey interest, not necessarily agreement.

Sensitivity to people – This is not only about people skills, or creating the ‗feel good‘ factor, but also about being genuinely interested in people. One should be able to discern what the other side is thinking or feeling, over time to guess what is on the other person‘s mind.

Sensitivity to situations- This means that you give as much importance to situations as much as to people. It is about a careful

To sum up, Marvin did not develop theories. However, he conceptualized management, and was a living example. Management begins with a personal strategy to live by values, ethics and rationality to reach our goals and a commitment to the other side. Each of us can definitely draw some inspiration from him.


Pratibimb | Feb. 2011

HR Buzz

EXPECTATIONS FROM THE NEW AGE EMPLOYER Gowri N Kishore | IMT Nagpur Conventionally, the core purpose of an organization is to increase the wealth of its shareholders. But today, this wisdom is being extended. Today, every organization – irrespective of size, domain and scale – must stand for something. There must be a corporate identity, a personality in the global space that justifies its presence. Organizations need a big vision to bind all the stakeholders together, more so because the new generation – of customers and employees – is more empowered and demanding than ever. They want more than value for money – they want values for money1. The coming decade will witness a paradigm shift in what employees seek in their prospective employers. Already, there is enough evidence of the changing trends in the results of many recent Best Employer surveys conducted in India and on a global scale. The employees of today want more than just money and job security – there are more emotions in play here than ever before.

Changing mindset Employees no longer want to be just ‗human resources‘ –they want to feel that they ―belong‖ to the organization, not as mere salaried personnel but as participants of the firm‘s value creation activities. They want to feel that they are a part of the bigger picture. ―I couldn‘t tell people exactly what I was doing because it was such an insignificant bit of the project! I didn‘t feel any pride in my work anymore‖, a software engineer who dropped out after a few years of work at a top IT firm to pursue an MBA degree said, on being asked the reason for her resignation2. There is increasing disgruntlement about job content, especially amongst knowledge workers. People are starting to realize their inner need for personal satisfaction – their emotional lives –need to make sense to them. They want to feel that they

are doing something worthwhile that will make a difference. This could also explain why there is a rising trend of candidates preferring to join smaller organizations rather than huge corporate houses where they have the opportunity to deal with identifiable, measurable wholes rather than undersized parts. Thus, employers must offer exactly this – a membership to jointly realize a bigger vision.

Autonomy and empowerment The next generation workforce demands more autonomy in their job – the freedom to experiment, to use their judgment in decision-making and in taking calculated risks. While they view accountability and responsibility favorably, authority and rigid control are perceived negatively. They want to work for employers who give them the leeway to act on their own while at the same time, be available for mentoring and guidance when the need arises. They seek a mutually beneficial, more productive working relationship with their seniors. There is also a higher need for independence amongst the employees of today. While three to five year employment bonds were viewed nonchalantly in the past, they are seen as deterrents today. Most young professionals choose to hold on to the option of moving out whenever they wish. More and more B-School graduates are taking up entrepreneurial ventures; to many, the idea of job creation seems more lucrative than job holding. This is also a manifestation of the next generation‘s inner need for autonomy at work and the desire to make a difference. Thus, the days of hierarchical organizations are fast approaching a close. Just as many MNCs insist on the abolition of titles like ―Sir‖ and ―Ma‘am‖, the notion of ―control‖ and ―command‖ as integrals


HR Buzz

Pratibimb | Feb. 2011 part of a manager‘s function is also disappearing, even from management literature. Organizations need to become flatter and more organic, discarding rigid functional or divisional structures for fluid, amoebic ones where teams are created based on current work requirements. Even traditional organizations like India‘s nationalized banks have been forced to reinvent themselves to attract youngsters. An example is Canara Bank, which spent millions in its rebranding venture to change its old-generation image and become more youth-friendly.

Work is Life

Career development

Accepting the truth that work will be a central part of their life in future, the next generation employees are demanding work that does not feel like work. A topper in most Best Employer lists, Google‘s USP to its employees is ―Work is Fun!‖ 4. For today‘s employee base, their work must be interesting, challenging and double as a definition of their lifestyle. To fulfill all these criteria, job roles must be rich in diversity and challenge. This is not an easy task to accomplish and many companies today are giving the onus of job enrichment to their employees to solve this issue. Other HR-led initiatives include job rotation, employee engagement activities, suitable training so that the work becomes more doable etc.

Job security takes a backseat in the minds of today‘s employee base where everyone seems to be on the lookout for a challenging and diverse career. Job switching, especially in high growth sectors like IT/ITES, financial services etc. is quite prevalent. While many of the older generation do not even possess a resume, most employees of today who have been working for four or more years have multiple employers listed in their CV. Often, job switching is caused not just for monetary incentives, but also for more lucrative career development opportunities. There is also an explosion in one-year and parttime executive education programmes being offered by many premier institutions in India and abroad, be it in management, law, media planning or design. These cater to the growing inclination of employees in their mid-careers who are looking for value-adding courses. In fact, many MNCs allow their employees sabbatical to pursue such courses and some even sponsor them. Many professionals also choose to become freelancers, consultants or take up part-time jobs. This way, they are able to juggle multiple jobs simultaneously, introducing variety in their work. All these trends stem from an inner need that this generation feels to learn, develop and contribute more on a personal and professional basis.

In the last half-decade, there has been a rising call to organizations to provide work-life balance. Many organizations like SAS which topped the Fortune 100 list of Best Employers in 2009, scored very high on this count3. But in the organizations of the future, there can be no full separation between work and life, for better or worse. Most professionals today spend more than forty hours a week at work and few things could be more demotivating than if this work was perceived to be uninteresting or mundane.

Organizational support Gone are the days when employees uncomplainingly accepted their superior‘s rejection of leave applications. To attract and retain the right talent, today‘s organizations need to unbend from rigid policies and form a safety cushion for their employees. They need to understand and empathize with the demands of the new generation workforce which includes flexi -timings, telecommuting, sabbaticals etc. Apart from helping employees maintain work-life balance, providing such options is also an organization‘s way of giving more freedom to its employees and showing them that they are cared about on more than just a professional basis. It is


HR Buzz

Pratibimb | Feb. 2011 a show of trust which the employees will gladly reciprocate.

Breaking glass walls The quantum of support that employers offer their female employees is also a decisive factor in their attractiveness as a preferred employer. It has been accepted that women are as competent as their male counterparts in most job roles that the society offers. In recent years, there have been more women pursuing graduate and post graduate degrees and their presence in the workplace is also

enormously inflated) CTC that the company quotes. Unlike the savings-oriented mentality of the previous generation, they prefer a fatter takehome pay to benefits and perks. Moreover, what each employee finds attractive in a compensation plan is different and as an acceptance of this truth, many companies have started to offer flexible compensation plans. Rather than the company deciding the best way to compensate an employee for his service, he can be given the freedom to choose his reward. For example, Oracle offers its employees a basket of options from which the employee can pick and choose to tailor his own compensation plan.

Work culture

increasing. A large number of women who took a break from their career for family responsibilities are making a comeback to the workplace. The employers of tomorrow need to acknowledge this phenomenon and make suitable provisions to make the work environment friendlier to the fairer sex. For instance, TCS offers employee-friendly policies to female employees embarking on their second career by providing them with special training, work-from-home, part-time options etc. Since the onus of child-care often falls on the woman in the family, employers can aid in this respect by offering crèches and child-care facilities in the workplace. The trend of providing paternity leave is also catching on as it focuses on the increased role that fathers have in raising a family.

Though this differs from one organization to another, there are some broad expectations that this generation has, from any organization. A competitive environment is inevitable in this dogeat-dog world but the work culture must not turn unhealthy. This is especially important because most of the organizations today have a team based structure where mutual adjustment and cooperation are vital in getting work done. If the environment is unhealthy, the team performance automatically suffers as does individual employee satisfaction. Employees are happier to work for organizations where they are treated with respect, where the channels of information and communication are open and unclogged. ―I don‘t want to work in a company where everyone is operating with a hidden agenda. Even if there is a crisis, I would appreciate it if the management comes out in the open and admits it. That shows that they consider us as part of the company‖, said an IT professional who has worked for a software company that was undergoing the repercussions of a takeover.



Young professionals today give more weightage to the take-home pay rather than the (often

The upcoming employee base has needs, aspirations and demands different from the past


HR Buzz

Pratibimb | Feb. 2011 generations. They seek meaning in their work, more autonomy and freedom at work, challenging job roles, rich and diverse job content, complete organizational support and empathy in maintaining their work-life balance and flexibility in everything from work timings to compensation plans. They are willing to become more than just salaried employees and become members of the organizational community who will strive to make a difference and hence contribute to the vision they share with their employers. Thus, the changing mindset of the imminent professional workforce has created a need for futuristic employers to reinvent themselves and change their USP to prospective employees, in order to attract and retain the best talent in the industry.

References 1. Jones R. (2009). The Big Idea -why every company needs one. Profile Books 2. All direct quotes are from interviews taken by the author with colleagues, friends and acquaintances within the past one year. 3. Unusual Perks – Fortune 100 Best Companies to work for,, January 2010, 4. fortune/1001/ gallery.bestcompanies_unusual_perks.fortune /index.html 5.

Inviting Articles “Best Article”: Gowri N. Kishore | IMT Nagpur They 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 10th April, 2011. Please send your entries marked as <ARTICLE NAME>_<SENDERS‟ NAMES>_<INSTITUTE> to:


Pratibimb | Feb. 2011

Systems Corner

SOCIAL NETWORKING: IS IT REALLY SOCIAL? Kumudini Manda | NMIMS The dictionary defines social networking as ―the grouping of individuals into specific groups like rural communities or neighbourhood subdivisions‖. Try telling this to someone today and you would get bewildered reactions like, ―Really? I thought it was only possible online.‖ Well they are not to be blamed; the concept was passed on to them only in the online mode. If anyone is to be blamed, then it is the ease of access to the internet and lightning fast speeds at which a message can be communicated from one corner of the globe to the other, which is responsible for limiting the scope of networking to the virtual world. Picture this: Rahul, the moment he wakes up announces to the whole world, the time at which he got up and how he is running late to work. But the same person does not find time to catch up with people at home because of his ―hectic‖ schedule. Far from being convivial with technology on our side, we are increasingly becoming non-communicating beings. One can go on at length about the latest happenings in one‘s life when it comes to posting it on the web. You can consider yourself fortunate if you get more than two words about one‘s disposition in the ―real world‖.

Ask me to give an online update at the rate of one per 10 minutes and I would give you 20. And then, ask me to strike up a conversation with the person sitting next to me and I would be caught dumbfounded. Social networking on Google would give you results running into millions in number, with services varying from dating to professional help to educational advise to just finding pals. It is actually enlightening to find a gamut of sites with each one claiming to be more popular than the other. And the regional affiliates are not far behind the race with a different set of platforms for every territory. An exhaustive list of such sites ensures that it keeps one occupied for hours together in a day without looking for alternative avenues to socialise. People have started living only for letting the world know what they are up to. It is actually amusing to see how one does not get tired of clicking oneself to glory to get that shot to be put on display. It is a display of the new skirt or the new pair of shoes or the funky piece of jewellery that you adorn for your list of friends to admire. It is actually scary to note that every move is guided by the motive to put up pictures or quotes for the world to like and comment on. In an endeavour to picture perfect the moment of


Pratibimb | Feb. 2011 savouring the dripping ‗gola‘, I am not sure how many of them actually remember to enjoy the gola. Where is it all heading? Has social networking only reduced to posting an update on the number of ‗sneezes‘ by someone and his/her friends to either ‗like‘ the thought on one‘s mind or go ahead and comment? Then there are some who take it to the next level by sharing it with their so called online friends. I am afraid all of this is not remotely close to the idea behind coining the term. We are losing out the essence of being social in being so uncommunicative and unresponsive to our surroundings. What discriminated us from the other species of the planet was our intellect and our ability to socialise and hence the name social being. We are now becoming a race of asocial species, aloof to the existence of any other mortal. We are all ready to wish a speedy recovery to some bloke in some part of the world who lets the world know about the 2 degree increase in his body temperature. At the same time, it becomes a task for us to find out the well being of people in the next cubicle or people at home. We are getting so mired by the virtual world that facing the factual world is becoming mission impossible.

Systems Corner It is no wonder that the corporate have begun taking charge of the alarming numbers of incompetent communicators. Industries today are being increasingly driven by soft skills and the lack of it is being looked at as a trade barrier. Soft skills training program was unheard of at the time of our fathers and the forefathers, thanks to our communication media today- we frantically need it now. Where do we draw a line to being candid about the new stuff bought or the state of one‘s mind and yet be brusque about the real affairs? It is high time we took a grip over the situation and put a restraint over the blatant exhibition of nothingness. I am not propagating a total withdrawal from the advances in technology and living the life of a hermit. I ask for nothing but moderation to the current practice and understanding the nuances of actual networking. I do not totally undermine the contribution of social networking sites in finding long lost friends and in getting messages to every nook and corner of the world in seconds. Communication being the standalone prerequisite for networking, it is imperative for us to start talking, expressing ideas, listening, empathising, not in the world of the ‗clouds‘ but right here on this terra firma.


Pratibimb | Feb. 2011

Operations Bonanza



Tejaswi T J and Ravish Kumar | TAPMI As the companies all over the world are starting to compete on price, differentiation between the brands/products is diminishing and more and more customers are becoming price sensitive. The leverage the companies have, in charging higher price to the customer, for their differentiated product, is reducing. This necessitates the companies to focus on their supply chain efficiency to, differentiate the brand. Supply chain efficiency can be utilized to:

Lower the costs, thereby increasing the margins.

Increase the responsiveness of the supply chain, thereby creating a differentiation in the customer services offered and creating a niche segment for the product, even though the product per se is not differentiated.

Give new service offerings to the customer or

create a new business model to meet the needs of the customer.

Food Processing Industry in India The Indian food industry is estimated to be worth over US $ 200 billion and is estimated to grow to US $310 billion by 2015, but it accounts for only 1.7% of total world‘s trade in this sector. Food processing industry, estimated at a value of US $ 70 billion, contributed 6.3% to India‘s GDP in 2003 and had a share of 6% in industrial production. While the industry is large in terms of size, it is still in a nascent stage in terms of development. Out of country‘s total agriculture and food produce only 2% is processed. Problems with existing supply chain (shown in the picture below)

Designing the supply chain to overcome these problems

Once a customer order is given, based on the forecast, the company estimates a demand of X Kg of particular product. Now company has two choices:


Pratibimb | Feb. 2011  It can procure from farmers who have already grown the particular product, by identifying areas where the crop is abundant

Operations Bonanza increasing the lead time without adding any value to the customer 

Though the transportation of greens from the farmer to the company is a necessary process, it does not add any value to the customer. So, the effort should be put to reduce the time taken in this stage

Wastages happening at various stages like harvesting, transportation

 It can establish its own linkages with farmers by forward integration, by getting into contract farming with farmers and establishing its own delivery and warehousing system The areas in which a company can become responsive, is the information flow from company to the farmer i.e. the time lag between the company receiving an order and farmer taking up sowing has to be minimized. The supply of products from the farmer to the company and from company to customer can be responsive through better coordination and integration between various partners in the supply chain. Value Stream Map

Anything that does not add value to the customer can be considered as waste and effort should be made to eliminate or reduce the waste. Non-value adding processes:

Time lag between customer placing an order and the time farmer takes up sowing e.g. analysis of the areas in which sowing has to be taken up, selecting the farmers, time taken for information flow between the company and the farmer are

Make the supply chain lean Variability in order fulfillment (from the supplier end to the focal industry) is a function of following variables:  Fragmentation of Suppliers (Number of farmers that constitute the total supplier base)  Dependence of the farmers on amount of rainfall and its timings

Non-scientific farming methods

 Wastage during harvesting, transportation and storage  Lack of visibility (Less information flow between the farmer and the company)

Steps to reduce the variability and make the supply chain responsive Fragmentation of supplier base In India, a large number of farmers have a land holding of less than 1 acre and when a company 39

Pratibimb | Feb. 2011

divides its demand among large number of farmers, it further increases the variability as output from each farmer may vary and company has very less control over them. But, on the positive side, it acts as a hedge against variability as the failure of some farmers to give the required output, will be counter balanced by output of remaining farmers.

Operations Bonanza Information technology can be further used to:

Maintain a database of farmers who are under the contract of the company and monitor his performance in terms of yield/acre and percentage of rejections. This database can be used to classify the farmers into A,B and C class which enables the company to concentrate on A and B class farmers for next sowing period and ways to improve the performance of farmers in class C. Farmers in class A should be incentivized to maintain their performance level.

Monitor the performance of each and every farmer and establish a feedback loop from the company to the farmer, which enables each farmer to be aware of his performance and the areas he should focus on to improve the performance.

The advantages of contract farming are:

Through contract farming, consistency in quality and quantity of greens can be achieved

More visibility in the supply chain as the company can choose areas and farmers from whom it can procure

Reduction in variability due to more control

Increased responsiveness as the company has direct linkages over the farmers

Reduction in lead time of information flow between the company and farmer

Feedback Loop

The time lag that exists between the customers placing an order and farmer taking up sowing should be minimized to ensure better responsiveness and reduction in variability. This can be achieved by connecting the company to the farmers directly using information technology. Company can establish its centers in major areas where it procures the greens from farmers and appoint area officers, with whom information from the company regarding quantity of greens to be procured will be directly shared through use of ERP and area officer, from the data base of the farmers in his area, can choose the farmers for particular sowing period. This ensures immediate information flow by minimizing the lead time for information flow between company and the farmer.

Conclusion By implementing all the steps mentioned above, the company can increase the yield, reduce the wastage at each stage and reduce the perish-ability rate, thereby reducing cost and increasing the margin. Along with increased margin, the company can gain sustainable competitive advantage by being more responsive to its customer needs through reduced cycle time and improved quality.


Inauguration of New TAPMI Campus By The President Of India

The 42 acres new campus of TAPMI has been inaugurated by Smt. Pratibha Devisingh Patil on 9th December, 2010. The campus is equipped with world-class state of the art facilities required for imparting high quality management education and has a built up area of over 1.2 lakh sq ft covering the Academic Building with 10 air -conditioned classrooms, Knowledge Centre, and residential facility for over 600 students and faculty. The campus is Wi-Fi enabled and has a most modern computer centre. The campus library is open 24/7 and has 33,000 books, 285 journals and 17 online databases in addition to Harvard publications (HBS). 5000 bound volumes of business and general magazines since 1984 have also been preserved in the library along with Project Reports spanning 25 years, Faculty working papers and other publications. The President unveiled the Plaque in three languages (Hindi, English and Kannada) and planted a sapling symbolizing the inauguration. The inauguration was also attended by Mr. H.R. Bhardwaj, Governor of Karnataka and Dr. V.S. Acharya, Minister for Higher Education, Planning and Statistics, Muzrai Government of Karnataka. Chairman and Members of TAPMI Trust and Governing Council were also present at the event.


Contact Us: Visit: Team Pratibimb T.APMI Post Bag No. 9 Manipalâ&#x20AC;&#x201D;576104


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February issue of Pratibimb