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Pratibimb | June 2011

A Bi-Monthly Magazine

Volume II, Issue 1I

The Reflection of Management

June 2011 1


Pratibimb | June 2011

About TAPMI T.A. Pai Management Institute (TAPMI) is a premier management institute situated in Manipal and is well known for its academic rigour & faculty-student interaction. The Institute has been recently ranked amongst top 15 B-schools in India & 4th in the South Zone by The Week Magazine. Founded by the visionary, Late Shri. T. A. Pai, TAPMI‘s mission is to provide much needed impetus to the task of building professional management capability in the country. In the process, it has also played a role in strengthening the existing educational and health infrastructure of Manipal.

Mission We are committed to excellence in post-graduate management education, research, and practice by nurturing and developing global wealth creators and leaders. We shall continually benchmark ourselves against the best in class institutions. We shall foster continuous learning and reflection, achievement-orientation, creative interdependence and respect for diversity with a holistic concern for ethics, environment, and the society.

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Pratibimb | June 2011

About Pratibimb Pratibimb – The TAPMI‘s e-Magazine - is the conglomeration of the various specializations in MBA (Marketing, Finance, HR, Systems and Operations). It is primarily intended to provide insights into the plethora of knowledge that relate to the various departments of Management and to give an opportunity to the students of TAPMI and the best brains across country to exhibit their creative cells. The magazine also strives to bring expert inputs from industries, thereby bringing the academia and industry together. Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The issue comprised of an interview of denoted writer Ms. Rashmi Bansal along with a series of articles by students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first rank globally for learning & development . It also included a hugely successful and engrossing game for finance geeks called ―Beat the Market‖ to bring out the application based knowledge of students by providing them the platform where they were expected to predict the stock prices of two selected stocks on a future date. The magazine is primarily intended for the development of all around management knowledge by providing unbiased critical insights into the modern developments. TAPMI believes that learning is a continuous process and is not limited to the four walls of the classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and contribute to create a refreshing learning environment outside the classrooms which eventually leads to a holistic development process. The magazine provides a competitive platform and opportunity to the students where they can compete with the best brains of the country. The magazine also provides a platform for prominent industry stalwarts to communicate their views and learning about and from the recent developments from their respective fields of business which in turn helps to create a collaborative learning base for its readers. Pratibimb is committed in continuing this initiative by bringing in continuous improvement in the magazine by including quality articles related to various management issues and eventually creating a more engaging relationship with its readers by providing them a platform to showcase their talent. We invite all the best brains across country to be part of this initiative and help us take this to the next level.

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MESSAGE

DIRECTOR’S

Pratibimb | June 2011

I am pleased to state that the team members of PRATIBIMB have continued their sincere efforts to bring out this fourth issue in June 2011, despite the first year PGP students were busily engaged in their Summer Project work in April – May. The previous three issues had a number of management articles written by our students and faculty. This student magazine is also accessed and appreciated by our alumni and industry and business readers. The magazine provides a platform for our students to use their creativity, imagination and language skills to reflect upon various management areas i.e., operations, marketing, system, HR, finance and entrepreneurship as well as in areas of their interest. It also fosters research culture among students. Research orientation and sharpening analytical mind are crucial for their academic orientation. Generally literary work, research article writing and publication should become part of students’ learning goals while they are in the campus. This would perhaps sow seeds for pursuit for academic career by a few management students after their initial experience in industry and business. It has been observed that on comparison with fast developing country i.e., China in Asia, the focus on research and publishing from Indian students and faculty in management journals and pursuit of Ph.D. programme in leading universities has been moderate in recent past. This situation needs to be improved. To this extent our students and faculty can best express themselves about their creative thoughts, opinions, knowledge and interests by contributing to PRATIBIMB. Let PRATIBIMB grow in content and variety with thoughtful articles in months to come. I congratulate the persistence and continued efforts put in by the team members of PRATIBIMB for timely publishing this volume. I wish them higher performance, joy and success in their endeavor. Dr. A. S. Vasudev Rao

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Editor’s Corner

Pratibimb | June 2011

Dear Readers, Presently, Indian economy is battling inflation along with its commitment to meet growth target. Among other problems being faced by India, the chief one is corruption which has become buzzword these days. Everyone is trying to gain mass popularity by showing their support for corruption. Corruption has been rampant in India since independence in the form of scams and bribes. The latest among these is the telecom scam. We are pleased to present you the June issue of Pratibimb which will analyze the telecom scam in detail and will show you its implication on various stakeholders like government, industry, consumer etc. Along with this, there are other interesting management articles that will also draw your attention. The highlight of this issue is the interview with Mr. Vinit Monga, Head & Finance Control, Technology Centre, Nokia Siemens Network, Bangalore who shared his views & experience in various areas of Finance with us.

Chief-Editor Creative Designer

Editor Branding

We are extremely happy to introduce a marketing game – ―Route To Market‖ for booming marketing managers of future. This will provide them with a platform to feel the challenge that they are going to face in this age of globalization in future. We are thankful to all the students from various colleges who put in great efforts in writing articles on various issues/topics and worked hard to send entries for ―Beat-The-Market‖. The articles have been selected by the Editor‘s Team whereas BeatThe-Market has been judged by Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com. We thank him for his precious time. We thank all those who helped us in improving Pratibimb through their feedbacks. We would like to take this opportunity to extend our gratitude to Dr. A. S. Vasudev Rao, Director InCharge & Dean-Administration, TAPMI, Prof. Chowdari Prasad and all other faculties at TAPMI for their continued support, guidance, motivation and inspiration to take Pratibimb to next level. Please continue to send in your valuable suggestions/feedbacks at pratibimb.tapmi@gmail.com so that we can make improvements in the coming issues.

Editor Correspondent

Special Thanks Mr. Vinit Monga, Head & Finance Control, Nokia Siemens Network Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com Dr. A S Vasudev Rao, Director In-Charge & Dean-Administration, TAPMI Prof. Chowdari Prasad, TAPMI Dr. Jaba M. Gupta, Associate Professor and Chairperson—eGPX, TAPMI

Happy Reading!!

Mr. Gautam Prasad, PGDM (2010-12) Cover Page Design

Rohit Kumar

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Contents

Pratibimb | June 2011

The Telecom Scam and its Implications

7

Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI

Balancing The Horizon and Renaissance

14

Anuja Yadav, IIM Indore

Social Media As Means for Consumer Research

16

Nickhie Ann Antony, MICA

Attitude: It Matters

18

Paminderjit Sunner, TAPMI

Giant Awakening: Indian Manufacturing Sector

22

Deep Aggarwal, MBA(MS), FMS

Interview with Mr. Vinit Monga

27

Head of Finance & Control, Technology Centre, Nokia Siemens Network, Bangalore

Paradigm Shift in Optimal Media Mix Strategy

31

Akankasha Sharma, SIMSREE

Advertising Through Brand Extensions

34

Ramanuj Vidyanta, TAPMI

Talent Supply Chain Management

36

Aby John Kottukappally, MBA-HR, SCMHRD

Operations in Turbulent World Anish Bhattacharya, Goa Institute of Management

38

30 6


Pratibimb | June 2011

The Telecom Scam and its Implications Annapoorni C S | Kriti Jain | Utkarsh Vikram Singh, MDI

INDIAN MOBILE SECTOR: OVERVIEW

Industry wide ARPU witnesses significant fall

Phenomenal subscriber growth in the mobile

While there has been significant subscriber growth,

segment

Average Revenue Per User (ARPU) has plummeted

The telecom services sector has grown rapidly over

due to intensifying competition between service

the past 5 years on the back of a meteoric rise in the

providers in the sector. Fall in call tariffs, initial

mobile services space. The mobile subscriber base

subscription costs as well as SMS and non-voice

soared from 99 mn in FY05 to 584 mn in FY10,

services rates, has led to a reduction in the average

making it the second-largest wireless market in the

ARPU of the industry.

world, next only to China. Increased affordability (due to continuous decline in tariffs, handset prices and reduction in initial subscription costs) and greater availability (with rapid expansion in coverage and wider distribution network) of mobile services has fuelled this buoyant growth.

(In Millions)

Total mobile subscribers base 600 500 400 300 200 100 0

584 392

The fall in ARPU has led to a reduction in the Revenue Per Minute (RPM) of service providers.

261

7

14

36

57

99

166

2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 200902 03 04 05 06 07 08 09 10

Mobile subscribers

Source: COAI, AUSPI and TRAI

The industry has witnessed phenomenal growth in the past eight years at a CAGR of 73.8% as is

With RPM for several players falling below the

reflected in the graph above. As of December 2010,

operating cost that the service provider is incurring

mobile subscribers in India had reached 752 million

per minute, survival in the industry has become

translating into an overall teledensity of 66.2%.

tough. 7


Pratibimb | June 2011 HISTORICAL SPECTRUM PRICING

3G pricing strategy employed by DoT

STRATEGIES

In the case of the 3G spectrum allocation,

In August 1995, Mobile services were launched for

government

the first time in India in the city of Kolkata. Under

interested parties for three-four slots of spectrum in

the National Telecom Policy, 1994, the policy‘s key

the 2.1 GHz range for service providers. As against

objectives included:

a budgeted Rs. 35,000 crores from 3G and BWA

conducted

an

auction

between

Universal service with complete coverage of

auction made in the Finance Minister‘s speech for

urban and rural areas

the 2010-11 budget, the exchequer collected Rs.

Availability of a wide range of services at

107,000 crores from the two auctions.

reasonable prices In the first phase in 1994, 2G spectrum was allotted

International pricing strategies

to four service providers per circle on the basis of

Varied spectrum allocation strategies have been

the lowest rental proposed in metros (to increase

employed in various countries with reasonable

affordability) and the highest fee quoted by service

International pricing strategies for spectrum

providers in Non metro circles (to maximize revenues). This was later extended in 2001 to

Country

accommodate more players in order to increase

Pricing strategy Auction

Australia

competition leading to a reduction in prices.

2004 onwards had been done by DoT in proportion

Singapore

to the number of subscribers that a service provider

Korea

Beauty content plus fixed fee Beauty content plus fixed fee Beauty contest plus fixed fee

UK

Auction

Malaysia

Moreover, the excess spectrum allocation from

had in the respective circle.

2G/ 3G 3G Both 2G & 3G Both 2G & 3G 3G 3G

Source:TRAI consultation paper issued 12th June 2006

Spectrum pricing strategies employed by DoT Key Selection parameter

1994 1999

Metros: Lowest Rental proposed to be charged from subscribers Non Metro circles: Highest license fee quoted by the bidders Shift from license fee to revenue sharing

Additional spectrum issued on the basis of 2004 number of subscribers 2008 New licensees selected on arbitrary FCFS basis 2010 3G & BWA spectrum alotted through auctions

success. The beauty content plus fixed fee pricing strategy have been employed on most occasions. Some of the international pricing strategies employed in various countries are given below: Having considered historic as well as international pricing strategies, the following criteria can be used for determining spectrum price: 1.

Demand supply situation reflective of scarcity

2.

Economic and social benefits emanating from 3G services

Source: TRAI recommendations on spectrum allocation 8


Pratibimb | June 2011 3.

Maximizing government revenue

demand drafts prior to the date of issue of

4.

Extent of competition in the market

application asking for Demand drafts 3.

Out of 232 applications received from 21 applicant companies till the changed cut-off

THE 2G SPECTRUM SCAM

date, 121 applications from 16 applicant

In September 2007, TRAI issued recommendations on capping the number of access providers.

Companies were found eligible 4.

Opaque & uncertain delivery system due to

Salient features of these recommendations were:

UAS licenses barely being issued from 2004-

1.

05 to October 2007

No cap to be placed on the number of access service providers in any service areas

2.

5.

Change in the method for applying FCFS

No additional spectrum to be allocated to

criteria from the date of receipt of application

licensees

to date of compliance of LoIs

without

fulfilling

the

rollout

obligations and failure of the same would lead

The Prime Minister, Minister of Law and justice,

to termination of license

Finance Secretary and the DoT Secretary were the

against the hasty allotment of spectrum at 2001

recommendations made by the regulator. However,

prices and believed that DoT had lost an

despite the recommendation, DoT issued a press

opportunity to discover the real economic value of a

release accepting applications only till 1st October,

scarce national resource - spectrum.

Later

that

year,

DoT

accepted

all

2007. DoT further accepted applications only till 25th September, 2007.

Irregularities in FCFS strategy adopted by DoT 1.

2G spectrum scam: New licenses Company

Arbitrary dates fixed as cut off for receiving applications in September 2007

2.

Criteria for allocation not met by new entrants

Selectively leaking out information to benefit

Shipping stop dot com now Loop Telecom

a few players who were ready with pre-dated DoT conveys no application to be accepted after 1st Oct, 2007

19th Oct, 2007

Policy for dual technology announced, LoIs issued to Rcom & 2other companies

2nd Nov, 2007

DoT decides that only 232 applications till 25th Sep, 2007 will be considered

2nd Nov, 2007 2nd Nov, 2007 31st Dec, 2007 10th Jan, 2008

PM writes to Telecom Minister to consider auction of spectrum in fair transparent manner Telecom minister writes back saying that sufficient 2G spectrum is available Secretary DoT and Member (Finance) DoT retired. Out of 232 applications received up to cut off date 121 LoIs were issued to applicants found eligible

Suppressed non - registration of alteration in the main object clause of MOA by ROC Authorised share capital only Rs. 5.20 crore against requirement of 128 crore

Request for Registration of increase in authorised share capital submitted 24 Oct. Suppressed non - registration of the resolution effecting alteration in the MOA

2G Scam : Timeline 24th Sep, 2007

Irregularities in the new licenses

Datacom Solutions Pvt. Ltd. (Now Videocon Telecom Ltd.)

Authorised share capital only Rs. 1 lakh against requirement of Rs. 138 crore Submitted false certificate from Company Secretary

S Tel

Suppressed non - registration of alteration in the MOA/AOA Authorised share capital only Rs. 10 lakh against requirement of Rs. 18 crors; Submitted false certificate from Company Secretary

Source: Various public releases on the website

9


Pratibimb | June 2011 Even ignoring the arbitrary FCFS methodology

major changes and from its infancy stage had

adopted by DoT in the issuance of articles, the real

zoomed forward. To realize the true value of

issue lies in the type of companies that were allotted

spectrum, we can consider the equity sales made by

spectrum to roll out 2G services. Most of the new

the following companies, most of whom did not

entrants who won spectrum were novices in the

possess any assets on their books, but a piece of

telecom field having no background in the industry,

paper – The 2G license.

existing only on paper. Additionally, most of the new entrants did not meet several criteria for the allocation of spectrum. In the table below, the irregularities with respect to the new licensees have been mentioned. IMPACT ON INDUSTRY In an already competitive environment, number of

Equity sales by new entrants to foreign players Seller Swan Telecom S Tel Unitech

Buyer Etisalat Mauritius BMIC, Mauritius Telenor, Norway

% Stake In Rs. Crores 50%

3,598

5%

239

67%

6,120

Source: Media releases on company websites

service providers were raised from 6-7 to 11-12 in

Little impact on competition in the sector

various circles, resulting in a hyper-competitive

While the allotment of 2G spectrum was expected

scenario.

to usher in a new wave of competition leading to a further reduction in tariffs, most of the new entrants

Preferential treatment for new entrants

failed to meet their roll out obligation norms.

While established players were waiting in line to gain spectrum, new players were offered spectrum within a few months of applying for the letter of intent. Idea Cellular had been in queue for more than 2 years for spectrum in the Punjab circle, while new entrant Unitech Wireless was issued spectrum in just 2 months, despite being much lower than Idea in the priority list for the Punjab circle.

Spectrum issued at throwaway prices The spectrum issued to new entrants was offered in the range of Rs. 1,500 to Rs.1,600 crores which was the same price at which most of the incumbent players had received startup spectrum post the implementation of the National Telecom Policy, 1999. In eight years, the industry had undergone 10


Pratibimb | June 2011 Moreover, the new entrants have failed to garner a

2.

significant amount of market share since their roll

On the basis of the 3G spectrum auction price which is Rs. 111,512 crores

out. In fact the top six players of the industry have

In addition, if losses due to dual technology specific

remained unchanged in the past several years. As of

losses and excess spectrum issued over and above

December 2010, six new entrants (Etisalat, Uninor,

6.2 MHz is considered, then the figures in the two

Sistema

Shyam,

S-Tel,

Loop

Telecom

and

Videocon) had managed just 4 per cent market

cases amount to Rs. 67,634 crores and Rs.1,76,645 crores respectively.

share translating into just one per cent revenue market share.

Estimates of loss due to 2G scamon Based Based on S 3G auction Tel's offer prices

IMPACT ON GOVERNMENT

Revenue expected Revenue through auctions

Non fulfillment of roll out obligation norms As per the roll out norms, new licensees were required to roll out services in 90% of metro service area and 10% District Headquarters in other service areas within 12 months of being allotted spectrum. Although the startup spectrum of 4.4 MHz was made available to all players in 2008, none of them

Loss

47,964

111,512

9,014

9,014

38,950

102,498

Burgeoning fiscal deficit

had rolled out services as per the earlier stated

In the year 2007-08, India ran a fiscal deficit of Rs.

provisions till January 2010. Therefore,

1,509 billion representing 3.1% of the country‘s

1.

DoT did not earn any spectrum fee from these operators in 2008-09 and 2009-10

2.

DoT

has

also

not

recovered

GDP. While in the union budget for 2009-10, this fiscal deficit had risen to 6.7 % of the country‘s GDP.

penalties

amounting to Rs. 700 crores from these new entrants

However, support was lent by the auctions conducted for 3G and BWA spectrum in 2010-11. Against a budgeted Rs. 35,000 crores expectation

Huge loss of revenue The notional ­loss suffered by the exchequer due to the 2G spectrum scam can be calculated in two ways: 1.

On the basis of S-Tel‘s offer to DoT of Rs. 13,751 crores for 6.2 MHz of spectrum for 10 years, leading to Rs. 47,964 crores for 122

by the government for 3G and BWA auction, the

licenses

exchequer made Rs. 107,000 crores through the sale 11


Pratibimb | June 2011 of spectrum. This helped in fiscal consolidation as

1.

Airtel brought down lifetime prepaid scheme

fiscal deficit came down to 5.1 %.

from Rs. 199 to Rs. 99 2.

Simply Reliance plan offering competitive tariffs to subscribers

IMPACT ON CONSUMERS When the Telecom Minister wrote to the Prime

3.

Tata DoCoMo‘s launch characterized by per second billing

Minister on 2nd November 2007, explaining the rationale behind issuance of spectrum on 2001

Subscriber additions in the past three years (In Millions) 20

18 16 14 12 10

Sustained growth due to incumbents perfroming well & new entrants chiping in

RCom’s GSM launch and Vodafone and Idea’s new circle launches

Lifetime prepaid scheme reduced to Rs 199,

Tata DoCoMo's GSM launch characterised by per second billing

8

Apr-10

Jun-10

Feb-10

Oct-09

Dec-09

Apr-09

Jun-09

Feb-09

Oct-08

Dec-08

Apr-08

Jun-08

Feb-08

Oct-07

Dec-07

Aug-09

More number of operators per circle will

Aug-08

1.

Jun-07

prices, he mentioned the following points:

Aug-07

6

Source: TRAI, COAI and internal research

bring down the tariff 2.

In order to increase affordability, if a high cost was imposed on the spectrum, service providers would have no option but to pass on the costs

The roll out of new licensees has led to competition further intensifying in the domestic mobile services space with the HHI falling from 1,590 to 1,394 as

In a nutshell, the impact on the consumers due to

of December 2010 (Considering subscriber market

overcrowding of 11-12 players in each circle has

share). However, it is imperative to note that the

been marginally positive, however, the new entrants

new licensees do not have a substantial amount of

have had little profits to show in this period.

revenue market share in the industry with the incumbents still being the dominators. Moreover, a high proportion of the subscriber additions that have been achieved in the past three years have been due to attractive schemes rolled out by the incumbents.

NEED FOR REGULATIONS Telecom Regulatory Authority of India (TRAI) was established in 1997 to regulate telecom services and for fixation/revision of tariffs and also to fulfill the commitments made when India joined the World 12


Pratibimb | June 2011 Trade Organization (WTO) in 1995. The formation of TRAI separated the regulatory function from

RECOMMENDATIONS The 2G scam has tarnished the reputation of Indian

policy making and operations which remained

politicians and bureaucrats and in the aftermath a

under DoT.

lot has changed. Despite the resignation of A. Raja

With reference to the 2G Telecom Scam, several

from the post of the Telecom Minister, questions of

issues have come to light.

corruption have also been raised against the Prime

1.

Disagreement in opinions of the regulator

Minister

TRAI and the Department of Telecom (DoT)

government.

Uniform decisions need to be taken by the

On the other hand, the scam has resulted in a

DoT, Ministry of Finance & Prime Minister‘s

gargantuan financial loss to the exchequer

office

amounting to more than Rs. 60,000 crores atleast.

2.

3.

Level of corruption and non-transparency in the Telecom Ministry

4.

Nexus

between

and

other

members

of

the

UPA

Irrespective of the exact financial loss made due to the 2G scam, the Department of Telecom lost accountability and transparency. Moreover, there

media

representatives,

has been a substantial loss due to the new entrants

lobbyists, politicians, bureaucrats as well as

not rolling out operations on time leading to lower

industrialists

revenue collections for the DoT.

The regulator needs to be offered independent

Going forward, DoT in accordance with the

authority and a larger responsibility in framing

Telecom Regulatory Authority of India needs to

policies for industry stakeholders. The regulator can

arrive at a uniform spectrum pricing policy to

go a long way in increasing transparency and

avoid similar discrepancies in the future. Also, in

accountability

offering

order to make the sector sustainable for service

recommendations for the designing of policies to

providers and to promote expansion into the

DoT.

hitherto neglected rural hinterlands, DoT needs to

With reference to the current industry scenario, the

relook at the Merger and Acquisition norms

regulator needs to design a uniform pricing strategy

currently prevalent in the industry.

for future 2G as well as 3G spectrum allocations.

With consolidation imminent in the sector, the next

Also, issues such as Spectrum trading, Mobile

phase of growth is expected to stem from the

Virtual Network Operator, change in merger and

expansion into the rural areas and revenue

acquisition norms need to be studied in detail and

generated from 3G services. The Indian telecom

relevant policies need to be designed in order to

sector has witnessed a honeymoon period till now

ensure the smooth functioning of the sector for all

and the good times can last going forward, if the

major stakeholders.

Telecom Ministry, can tinker the M & A norms

in

the

system

and

and make the industry environment more favorable for industry players.

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Pratibimb | June 2011

Balancing the Horizon and Renaissance Anuja Yadav, IIM Indore

O

rganizations often find themselves at

strength of the giant (read push strategy) becomes

crossroads

the opportunity for the local retailer. Knowing the

when

faced

with

the

defining questions of bringing in a new

era of infinite possibilities and the horizon. Why do brilliant ideas crash? Is it the lack of vision and resources? Or is there something more than that? More often than not what‘s missing is the balancing act which could make or break deals. How smartly can the horizon be found? – The point where ground reality meets sky high vision. When David met Goliath, only an idea could have turned the tables around. That‘s the power, the essence, the true enigma – and David did win. Could this have been possible without the balancing act? Never and from this never- land one is tempted

buying pattern of the customer, engaging in tele-

to ask – what could have been done differently?

marketing and marketing the products which are the

Let‘s take the example of the retail industry. We all know the might of global powerhouses like WalMart etc. or our very own Future Group. These are

daily essentials which the customers might soon run short of; this could be something as basic as the daily groceries.

the Goliaths, what could David or the local Mom-

Don‘t expect the customer to come to you. Bring

and-Pop stores do differently to take on the might

the product to the customer; chances are that 1 out

of such giants? It is the close association with the

of 5 cases, you will succeed. And in that one, you

customer that is the USP of these stores compared

have a satisfied customer. A bird in the hand is

to the diversity of brands carried by Big Bazaar .

worth two in the bush. Based on the buying pattern,

KYC or Know Your Customer, direct marketing and customer segmentation are the winning horses to bet on. The inherent assumption here is that the customer is lazy. He has to be coerced and persuaded into buying what he needs, and if the need is not evident, it has to be discovered. So the

the next call becomes that much more effective. Categorize your customers according to brand preferences, buying timing, purchase volume and value of purchases. This calls for significant amount of investment and personalization which could only be catered to by the local retailer, but is

14


Pratibimb | June 2011 definitely a winning combination. After all,

accounts payable, on the other hand, is maintained

customer is the king.

at 32 days. They provide the best deals to their

In fact, predicting consumer behavior is highly

customers in terms of price and quality.

sought after in the retail industry and the retailers

Where could organizations find a balancing act

are willing to shell out huge amounts for business

here? The retail clubs provide a sense of exclusivity

intelligence and analytics. Retail analysts and

along with the guarantee of the best deals ever.

consultants are earning anywhere between $30-45

However, it‘s imperative to have inventory that

million annually in this space. The analytics tool

moves quickly else the implementation fails to live

helps in pricing, promotion, planning and decision

up to the concept of negative cash flow. This idea

making. This market is slated to grow to $60 billion

needs huge corporate muscle and bargaining skills.

globally. However, what they fall short of is the

The retail giants can take a page out of this from

lack of personalization and ease of reaching

Price Club, Cost Co and Sam‘s Club.

customer which a local retailer can manage.

Clubs can be opened up for high income groups

The home delivery mechanism of giant retailers

who would prefer exclusivity and an unmatched

hardly fits the bill with the model having its own

shopping experience contrary to the concept of Big

list of inherent flaws. What‘s more interesting is

Bazaar. With the growing per capita income in our

that retail chains have evolved over time to become

country, the high income group is on the rise. E-

more efficient and en-cash upon the plethora of

commerce can also be utilized as a channel for

opportunities out there. Enter retail clubs - an

targeting this group through websites and mailing

amazing concept which finds its implementation in

lists. This type of niche marketing, to cater to the

foreign countries; however the idea is yet to take off

need of exclusivity of this segment of customers is

on a large scale in India. The idea is as simple as

an under-explored area. Real estate products to

charging club members‘ annual membership and

holiday packages could also be marketed to this

giving them exclusive rights to shop in the stores.

segment by providing rented retail space to the

The beauty of the concept lies in its business model

vendors of these products in the stores ensuring the

which is based on negative working capital. To

deals offered are the best in the market. Hence,

quote John Millins – ―Negative working capital‖ is

finding the balancing act could be a useful strategy

a cash flow model in which stores can sell and

for not only the Davids but also the Goliaths. Both

deliver a product before they pay for it. Lately,

need their horizons well defined for the right

organizations have been moving towards zero

implementation.

working capital. The best of the lot knows how to do the unexpected. Costco works on the negative cash flow model. They bill their members annually

References 

Strategy Review , Vol. 20, Issue 4, pp. 4-8,

and accept only cash, check or debit cards –

Winter 2009

maintaining only three days of accounts receivable. They maintain rapid inventory turnover. The

Mullins, John W., Capital is King!. Business

Economic Times dated 10th December, 2010 15


Pratibimb | June 2011

Social Media As Means For Consumer Research Nickhie Ann Antony, MICA

V

ery often we are told about the

their status messages with their purchases and their

importance of Consumer Research. Is

likes, dislikes, frustrations, delight etc. w.r.t. these

our marketing strategy better enforced if

purchases. Tweets, buzz etc. are now a key to

we have a deeper understanding of consumer

gaining more insight about one‘s audience. That

behavior? Consumer insight can help us understand

too, on the go. If a person is happy with a product

how products are bought and sold in the market,

or service it takes him just minutes to post it on his

what drives purchases, satisfaction levels etc. Many

Facebook wall or tweet it. Recently, a friend of

a times we will find that better consumer

mine, a loyal Vodafone customer, updated on her

understanding is the key to better analysis of the

wall her frustration over the fact that Vodafone had

trends that we sometimes find so hard to explain.

overcharged her for a call. Within couple of hours

Thus, in depth research in the field of consumer

of this post, Vodafone sincerely apologized and

behavior is absolutely essential. We also understand

promised to compensate her for the inconvenience

that this requires a lot of time and energy and most

caused through a post on her wall. Thus, they

importantly money. It takes months of research to

managed to save one of their loyal customers in full

understand what the consumers feel when they buy

public view. All her 456 friends had evidenced as to

or use or even throw your products. And money is

how Vodafone managed to retain a customer. That

not something that we can part with that easily; can

is the power of social media. Vodafone not only

we? And time? Do we have enough to keep

managed to retain a customer but also generated a

ourselves ahead of our competitors? The answer is

considerable amount of goodwill amongst the 457

NO.

―viewers‖ by typing in a few words, investing a

But something has changed in the recent years.

few minutes and no money spent at all .

Social media! Everything has turned around since

It has thus become much easier for marketers to get

the advent of social media. Keeping up with our

so called private data from their target customers.

friends has never been easier. We know everything

The information is all over the web, the only

that they do from morning till night. Tweets and

question is of going out and getting it. It may seem

status updates keep us updated. But social media

like searching for a needle in a haystack, but it is

has affected not just our social lives, but also on the

doable. Google claims that the next most sought

way companies view consumers. It has completely

after job will be that of a statistician who has to

changed the way they get information about

figure out how best to create algorithms to analyze

consumers. People these days constantly update

this mass of data available online. (Cantor, 2009)

16


Pratibimb | June 2011 Personal or private data is no longer private. It is

(Swain, 2009). Thus, social media has become a

there for everyone to see. All the research that is

key to direct communication with the intended

conducted is on this private data. So, when all this

customers.

data is available online, shouldn‘t the next step involve delving into this data with as much zeal as possible and extract as much information as possible.

FOR COMMUNICATION? this

INFORMATION? Can all this influx of information ever become too much? Will it all just lead to chaos or is it that there

HOW CAN THIS INFORMATION BE USED

All

IS THERE SOMETHING AS TOO MUCH

information

can

can be something out of all this information? My belief is that all this information can lead to

be

essential

for

disastrous consequences if not dealt with in a proper

understanding what the consumers want from the

manner. Every time a brand gets a like or a positive

market. This information will mostly be helpful to

comment, it may take it as a validation of

people who can change their tactics fast according

something that they have done well; which may not

to the trend in the market. For example, a TV show

always be true. Similarly, if they react too fast to

can use the reviews and comments received by it

comments that are negative or react without much

and use it to change the storyline as per the wishes

thought, they may do themselves much harm than

of its audience. Similarly, a service provider like

good. They should be able to see the bigger picture.

Vodafone or even a restaurant can continue with its

Adequate care must also be taken to see that even in

offer or stop it based on how people like it or accept

responding to these situations the company and its

it. What if McDonalds could gauge the success of

personnel does not deviate from the company‘s

its new McSpicy range of burgers? Wouldn‘t that

vision. It should not end up diluting the company‘s

help McDonald‘s as much as it would help the

values in trying to meet the consumers‘ demands.

consumer? Thus social media makes it far easier for

They have to understand that people will demand

marketers to gauge the reactions of its end

what they want. It is for the company to decide

consumers.

whether it is their cup of tea to deliver on the

However, the communication is not one sided.

wishes of all their consumers or not.

Consumers too are searching for the information they require on the online platform. And most of them are doing it on social media sites. In a

References 

Matt Cantor, Today‘s Sexy Job: Statistician,

research conducted by OTX Research on the

newser.com,

―Impact of Social Media on Purchase Behavior of

www.newser.com/story/66223/todays-sexy-job-

People‖ it was shown that nearly 70% of the people

statistician.html

search for information related to products and

August

2009,

http://

Sampad Swain, Impact of Social Media on

service on social media websites, then followed by

Consumer

company websites at 68%. Online review sites and

January 2009, http://sampadswain.com/2009/01/

Wikis followed at 48% and 44% respectively

impact-of-social-media-on-consumer-behavior/

Behaviour,

Sampadswain.com,

17


Pratibimb | June 2011

Attitude: It Matters Paminderjit Sunner, TAPMI

Introduction

Now, what‘s this ‗right attitude‘, or before that,

Ever wondered, what makes life 100%?

what‘s an attitude?

Somebody has done some interesting calculations

An attitude is the way you perceive anything in your life. It is actually a continuous way of

to answer this.

thinking that is deeply rooted in your mind and drives your behavior and consequently your lives. If

A

B

C...

equals

1

2

3...

Then H+A+R+D+W+O+R+K =

8+1+18+4+23+15+18+11

As you know, there are always two sides to everything. Now, your choice of the side depends

=

98%

on your attitude. For example, if a jug contains water up to the half of its capacity, considering that jug to be half full or half empty depends on your

K+N+O+W+L+E+D+G+E =

11+14+15+23+12+5+4+7+5

=

96%

attitude. This seemingly meaningless selection actually tells a lot about your personality. There are two kinds of attitude: Positive and

L+O+V+E=12+15+22+5=54%

negative. In the above example, considering the jug L+U+C+K

=

12+21+3+11

=

47%

to be half full is a positive attitude, while considering it to be half empty is a negative

None of them makes 100%

attitude. Difference

What makes 100% is: A+T+T+I+T+U+D+E = 1+20+20+9+20+21+4+5 = 100

between

Positive

and

Negative

Attitude Having a positive attitude means you always tend to look at the brighter side of the things. It does not mean that you stop being practical; but it means that you can always

So, do you have an attitude? Of course, every one of us has one; but the right question to ask is: Do you have the right attitude?

spot

an

opportunity, even

if

disguised as an adversity. person

A with 18


Pratibimb | June 2011 positive attitude always thinks of solutions, while

with a chance to prove her/him. This way, the

that with a negative attitude keeps on whining about

positive person never loses the calm and keeps on

the problem. Positive attitude drives you to think

working towards the aim. Ultimately, she/he

about can do; while negative attitude pushes you to

performs really well and realizes the dreams of life

think about can‘t do. Positive attitude helps you to

and thus lives a meaningful and contented life.

adapt to the new situations easily, while negative

A positive person can see the good points of others,

attitude tends to keep you undesirably rigid, and

and thus can appreciate their qualities. Once you are

thus hampers your progress.

able to see something good in others and are ready

A person with a positive attitude is happier, but a

to appreciate that, you can have a good rapport with

negative person keeps on lamenting. A positive

the other person. A positive person thus can easily

attitude ensures the grooming of wonderful

be a good team player and have a good friend

relationships, both at personal and professional

circle. The positive attitude actually makes people

fronts, but a negative attitude creates troubles in the

good relationship managers. It is not that a positive

relationships.

person always ignore the negative traits of others

Positive attitude gives a forward push to your

and can accept any kind of people as friends; the

career, while negative attitude keeps pulling you

point is that the positive attitude makes the behavior

back. The positive attitude helps you to attain the

such that the positive traits of others dominate when

capability of doing what you desire and ultimately

they deal with you and this happens because of your

helps you to achieve it. On the other hand, the

positivity. Thus the situation is like you command

negative attitude does not even allow you to achieve

the goodness of others. Also, you can help them

what you are capable of at the present.

mitigate their negatives and build upon the

Importance of Positive Attitude Having a positive attitude means you have a positive outlook for everything in your life; you are a positive person. As agreed upon by many scientists and philosophers, this universe is all about energy. Everything is a form of energy. The positivity of your personality radiates positive energy, and positive energy leads to happiness and growth. Also, this positive energy attracts more positive energy from the universe, thus increasing your potential, performance and achievement.

positives, due to your appreciation and recognition of their positive traits. Thus, a positive person can help others improve. In the career, the positive attitude gives you the wings to dream and achieve higher. It makes you feel your intrinsic potential to achieve your career goals. It helps you to believe in your ideas. Thus, when you believe in yourself, the whole world believes in you. The positive attitude gives you loads of courage to face the challenges that confront you on the way towards your goals. This courage helps you to overcome those obstacles and be the

A positive person always believes in herself/

winners. Thus, whether you have to complete an

himself. As she/he believes in her/his potential, the

assigned project at an office or have to implement

challenges don‘t upset her/him but present her/him

your own idea in a new venture, positive attitude is 19


Pratibimb | June 2011 always there to make you persistently do the job

relationship troubles, you might be a victim of

and be the winner. A positive person never thinks

negative attitude. If you feel stressed, and feel the

of quitting but always finds a way out of a problem.

life to be a burden, it is high time to be positive.

Thus, positive attitude helps you in managing situations.

How to have a Positive Attitude? Now, the issue is that how to get this positive

A positive attitude makes you adapt to the

attitude? Is it something genetic, god-gifted or you

changing life situations with an ease. The positive

can cultivate it through the practice? The answer is

attitude is one thing that has helped the people like

that it can very well be cultivated through practice.

Bill gates, Sam Walton, Dr. Manmohan Singh, Indra Nooyi etc. to be what they are today. It is the positive attitude that helps people to scale the Mt. Everest, make airplanes, etc.; i.e. to do the things that were once considered to be impossible. It means the positive attitude has the power to convert impossible into the possible. With a positive attitude, you achieve; and with achievements, you become more confident and motivated. This confidence helps you to achieve

Being negative is easier than being positive. Although, to have and maintain a positive attitude is a gigantic task in itself; but once you start doing it, it is a lifestyle and makes life better. Even very small things can help. First of all, you need to decide that you really want to be a positive personality. Believe that it surely benefits you and you can become a positive person to the core of your mind.

more and be happier; and in turn makes you all the

Once decided, it is a lot easier to implement the

more motivated. Thus positive attitude drives a

behavioral changes that are needed to become

continuous growth process.

more positive, as the inner friction to this new

What about you?

course of life is mitigated. Start with simple things. Decide to have the positive energy around you.

What sort of attitude do you possess? Analyze

Clear up the mess in your room. The clutter attracts

yourself. You will get to know about your attitude.

negativity. Be an organized person. Be punctual.

There‘s no need to ask anybody else; an honest self

All this will help in channelizing the positive

-appraisal would do. If you are not happy or

energy inside you. See to it that you use the positive

successful, attitudinal problem might be the cause.

words while talking; for example, instead of saying

Think about what you do when you have a problem.

- I could not do it yesterday. Say, I am going to

Does your time get spent in being afraid of the

finish it today. Instead of using the vocabulary like

problem and getting stressed? If so, then you need

never, can‘t, don‘t; use positive words like yes, will,

to set your attitude right. If you find it really

do, can, etc.

difficult to find something good in others, but you are really very intelligent to judge all the negatives rightly, you need to be bit more positive. If you use a lot of negative words: can‘t, no, don‘t etc., you are not a desirably positive person. If you have always

Read good books. It makes your thought process positive. For example, by reading „The Secret‟ by Rhonda Byrne, one feels really motivated. You start believing in your capability of making things 20


Pratibimb | June 2011 happen. The core point in the book is „The law of

prove them to be right. This enhances the positivity

attraction‟ that prevails in this universe. According

of attitude.

to this law, whatever you think and feel, it gets

It is not that you can transform from being a

attracted to you; no matter it is positive or negative.

negative to a positive person overnight. It is a

The universe is like a powerful genie that keeps on

continuous process and needs a consistent and

repeating to each one of us—‗Your wish is my

sincere effort. Once you delve into the process, and

command.‘ Three simple steps to fulfill all your

start getting results, it is really enjoyable. Then,

desires have been given in this book— 1. Desire,

your achievements increase;

i.e., be clear of whatever you wish. 2. Believe, i.e.,

confidence and enjoy life.

take it as a fact that your desire has been fulfilled and have gratitude for the same. 3. Receive, i.e.,

you brim with

Conclusion

finally you actually see your desire manifested in

Attitude defines personality. Positive attitude

the real world. It provides an awareness of your

makes you get the best out of the life. Being human,

own self, its potential and its wonderful Another

nature. way

to

remain

positive is to have a deep faith in God. If you believe and

Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude. —Thomas Jefferson

you

have

a

tremendous potential. Positive attitude helps to tap this potential in a proper manner. It helps to achieve success

keep on reiterating to yourself

and happiness. On the other

that the God is there to support

hand, negative attitude hinders

you in every right deed; you will feel more

your

empowered and will perform better. There have

achievements. You can come to know about your

been several instances in the world when the people

attitude through self-analysis. By adopting a

have achieved the unexpected due to their deep

change in behavior and following some simple

faith in God. The book „The power of positive

ways, you can have a gradual change in the

thinking‟ by Dr. Norman Vincent Peale is full of

thought process and thus become master of

such examples.

positive attitude. A positive person is always a part

Another thing is that one needs to be in the company of positive people. Listening to them would motivate you while the company of negative people would demotivate you. So, choose your

holistic

development

and

limits

your

of the solution rather than being a part of the problem. With positive attitude, you can dream, perform and achieve higher.

Positive attitude

makes life lovable.

friends with caution. The support of family, teachers and the peer group helps; as being human, you have an intrinsic need for recognition. If the others show faith in your capabilities, you start believing in your potential and do the most effort to

References 

‗The Secret‘ by Rhonda Byrne

‗The power of positive thinking‘ by Dr. Norman Vincent Peale 21


Pratibimb | June 2011

Giant Awakening: Indian Manufacturing Sector Deep Aggarwal, MBA(MS), FMS

O

ften in the context of developing nations, China has been equated to a manufacturing hub whereas India has

been treated as a center for services. But in the current scenario, these rigid lines are blurring. India is beginning to attract more and more companies to setup their manufacturing plants in the country. Manufacturing Industry has played a crucial role in terms of contribution to GDP of the nation with a current contribution of around 17%. Also, it has shown an average CAGR of 6.8% for the past

Thailand and Poland.

decade. With our economy growing at a rate of 7.4

India‘s GDP of $1.6 trillion is still dominated by

percent, it is believed that the manufacturing

the services sector with as much as 57%

sector‘s role in it should increase if India wishes to

contribution but the secondary sector enjoys a

be at comparative levels with the likes of China,

contribution of 26%. Manufacturing industry forms

22


Pratibimb | June 2011 a major component (17% of the total GDP) of this

in manufacturing industry is complimented by 2-3

secondary sector.

jobs in the service sector. So, the growth in the

India is a country where economic and political

manufacturing sector becomes all the more

polices

employment

important. Out of the current workforce of 500 mn,

generation in priority. Manufacturing sector offers

manufacturing industry employs around 12% i.e.

such an advantage that every employment created

approximately 60 million people .

are

developed

keeping

Manufacturing ( Percentage of total GDP- FY 2009) 23


Pratibimb | June 2011 Manufacturing Industry: India vis-à-vis The

people. The extent of unemployed yet capable

World

people who are available in India is

The Indian manufacturing industry‘s contribution of

unimaginable. So, this allows the companies

around 17% to India‘s GDP is comparatively lower

to employ these people at very competitive

than other rapidly developing nations. Hence, there

costs.

is a lot of scope for improvement.

Strong

engineering

/

manufacturing

Although, if we talk about the growth rate of the

capabilities: India‘s manufacturing quality

manufacturing industry in various countries, India

and

engineering

skills

have

improved

significantly over the year. India has the

has shown a robust rate of growth in comparison to the rest of the rapidly developing economies. India

largest pool of graduating engineers in the

stands second only to China. China reported a

world. In a bid to establish their quality

growth of 10.3% in the period of (1999-2009)

credentials, a number of factories in India

whereas India is a distant second with an average

began applying for the prestigious Deming Application Prize. Until 1997 not a single

growth rate of 6.8%, closely followed by countries

company from India had won the Deming

like Russia, Poland and Thailand.

award. But by 2006, a slew of 16 factories

Advantage at INDIA

from this nation—including Rane Brake,

India offers manifold advantages which other

Sundaram Clayton and TVS Motors—had

countries, including, but not restricted to, China,

swept the awards, accounting for more

fail to deliver. We have already seen the potential of

winners than any other country outside of

growth in manufacturing sector in India and why

Japan.

the government should pay more attention to it. The following advantages certify that if proper steps and measures are taken, then it is certainly possible to achieve those targets. 

Large

Domestic

Markets:

India

distinguishes itself from other nations in terms of its large domestic market. Most developing countries account their rise in

Cheap raw materials: India is the lowest

GDP to growth in exports of manufacturing

cost producer of steel, cement and aluminum

industry whereas in India, the in-house

in the world and India can leverage this to

consumption of manufacturing products is

attract a lot of companies who are directly or

considerably high. In 2009, China saw a

indirectly related to these materials.

growth of 21% in its exports whereas India

Competitive labor cost: India has always

observed a growth of only 11%. This shows

been known for its population. Whether it is a

that India possess a very huge domestic

problem or a useful resource depends on how

market which attracts more manufacturers to

we look at it. But when it comes to labor,

India.

India definitely gains from it. Manufacturing

Apart from these factors, there are various other

sector in India already employs 60 million

factors like infrastructure and location advantage, 24


Pratibimb | June 2011 government policies and regulations, improving

she can cut down on the manufacturing cost.

competitiveness

India suffers on cost competitiveness because

of

manufacturing firms,

and

increasing foreign investments in India and well –

of

various

developed designing and machining capabilities.

productivity, inadequate infrastructure, high cost

Challenges Faced

of capital,

like

lower

labor

lower operational

and

functional efficiencies, higher incidence of

Indian manufacturing industry is not as appealing as

indirect taxes and higher import duties

it seems. It is currently facing a number of problems

including inverted duty structure.

and challenges, which need to be addressed in order to safeguard the industry and propel it to newer

factors

FDIs and their procedure: India lags way

heights. These issues need to be solved and treated

behind to other rapidly developing countries

urgently if the country wishes to have a growth rate

in terms of FDIs and FIIs. India attracted

comparable to other rapidly developing countries

$14.3 billion in 2010 whereas China got in a

like Thailand and China and to have the

much larger $80 billion in the same year. This clearly shows the difference between the two

manufacturing industry as the backbone of its economy instead of the agriculture and allied

countries. So, what exactly is the reason for

services which are plagued with inefficiencies and

such a huge difference in these figures? The

lack of technology.

major reason behind this is the complicated and the long procedure in getting clearances

Among various other reasons, the main problems

and setting up an industry in India. Although,

and challenges faced are: 

Macro-economic

Indian government has completely opened up stability:

This

single

the manufacturing sector to FDIs with only

aspect alone stands as the major problem for

few restrictions on mergers & acquisitions,

the manufacturing industry. It is important to

the procedures be at the entry level, the

ensure long-term economic stability through a

operational level or at the exit level are so

framework which makes way for appropriate

laborious

monetary and fiscal policies and prevent large

investments are demotivated to invest.

fluctuations in the economic variables like output, unemployment and high inflation rate which have been undoing the majority of the efforts done in order to make this sector an attractive one. 

and

long

that

the

foreign

Domestic Indirect Taxes: The indirect tax in India constitutes a group of tax laws and regulations. The indirect taxes in India are enforced upon different activities including manufacturing, trading and imports. Indirect

Cost Competitiveness: The two parameters

taxes influence all the business lines in India.

on which the cost competitiveness is judged

Some of the indirect taxes in India include

are: the quality of the material manufactured

stamp duty, excise tax, sales tax, expenditure

and the cost of the manufactured good. India

tax, etc. These taxes are often said to be the

can only compete with countries like China if

single

most

reason

for

making

India 25


Pratibimb | June 2011 unattractive to industrial development. The

example which other countries would like to

taxes charged in India are around 25% to 30%

emulate.

of the retail price as compared to around 15% in China. 

Labor Laws:

References 

Most of India's labor laws

make a law preventing it to happen again. So,

The

next

January 2010 

Globalizing

Indian

Manufacturing:

Competing in global manufacturing

if unemployment was a cause of worry,

and service networks, a report by

Government made laws, which made firing

Deloitte and ISB,

people very difficult. But, the government forgot to take into consideration that each law

Manufacturing:

growth orbit, a report by BCG & CII,

were adopted as a reaction to an event. If a situation seemed bad, the first reaction was to

Indian

Enhancing Competitiveness of India

leads entrepreneurs and laborers to try and

Manufacturing Industry: Assistance in

find loopholes and manipulate the laws for

Policy making, a report by NMCC

their benefits to respond strategically.

Jayan Jose Thomas, ―A review of

The problems faced by the manufacturing sector, if

Indian

addressed properly would allow the sector to

Development Report 2002, Oxford

prosper and grow at a very fast rate. For that, we

University Press, New Delhi

need to understand these problems and then find the

manufacturing‖,

―Global

India

Competitiveness

right solutions, which can be implemented.

Report‖ (GCR), World Economic

Conclusion

Forum (WEF), 2010.

Keeping in mind the developments made in the

―Made in India – the next big

past, it is safe to assume that Indian manufacturing

manufacturing export story‖, a CII-

industry is showing signs of robust growth in the

McKinsey report, October 2004

future as well.

―Learning from China to unlock

The fact that the manufacturing sector in India has

India‘s manufacturing potential‖, a CII

the potential for tremendous growth and that it can

-McKinsey Report, October 2002

drive the economy forward cannot be over

Arvind

Virmani

and

Danish

A.

emphasized. It is just that proper planning and their

Hashim, Factor Employment, Sources

perfect execution is required for this to happen.

and Sustainability of Output Growth:

This will enable India to enter the next growth orbit

Analysis of Indian Manufacturing,

and squarely place itself as a leading player on the

April 2009

global manufacturing landscape. This will help India not only to compete with the rapidly

Shri Nilachal Ray, Unorganized vis-à-vis Organized Manufacturing Sector in India

developing economies but also to become an 26


Pratibimb | June 2011

An Interview with

Mr. Vinit Monga

Head of Finance & Control: Technology Centre – Bangalore, Nokia Siemens Networks

Telecommunications is perhaps the fastest growing sector in India riding primarily on the continued growth in customer demand. This has led to increase in competition amongst service providers which has been aptly supported with excellent infrastructure. The major telecom equipment manufacturer - NSN, Ericsson, Huawei and ZTE - are the underlying pioneers of this growth. However, with growth comes competition which eventually brings in the requirement of better control. In this issue we talk to Mr. Vinit Monga, who is Head of Finance& Control, Technology Centre— Bangalore, Nokia Siemens Networks Pvt. Ltd., India.

Management Studies, New Delhi. He has an experience of more than 15 years in Finance & Control/ Sales & Services Commercial in Telecom Equipment Company and 5 years of experience in Costing & MIS in Packaging Industry. He visited TAPMI during the first International Conference of Accounting and Finance (ICAF2011) organized by TAPMI in March, 2011. During his visit to TAPMI, he shared his views and experiences on various areas in Finance with us. We are extremely thankful to him for his precious time. Mr. Monga talked to Pratibimb about NSN, 3G and the broader role that Finance plays in a non –financial organization. Mr.Vinit Monga in conversation with Pratibimb:

He is a CMA/MBA (Finance) from Faculty of 27


Pratibimb | June 2011 Pratibimb: Can we start from the very beginning, tell us about your initial days in the corporate world?

Siemens share their experiences, and these are peo­ ple who have been with Siemens for the past 25 – 40 odd years.

Mr. Vinit: I am a graduate of Deshbandhu College, Delhi University, then I did my ICWA. My first job

Pratibimb: Tell us something about Nokia Sie-

was at Paharpur group of companies. I was working

mens Networks.

in the flex packaging unit and worked in various

Mr. Vinit: Nokia Siemens Networks is a ~13 Bil­

capacities in various functions such as Costing,

lion Euro in Sales Global Company which is a sepa­

Marketing etc. Then in 1995 I joined Siemens,

rate legal entity from the 50 / 50 parents Siemens

while working for Siemens I completed my Execu­

and Nokia.

tive MBA from FMS, New Delhi. Then I moved to

but we are a global company for the wide presence

Nokia Siemens Networks post its formation.

across the globe and having various units headquar­

In

We have HQ at Munich and Helsinki

2007 I moved to the Bangalore office, so basically I

tered out of various locations in the world.

have been a part of Siemens since the last 15 ½

in Bangalore we have a 2500 strong R & D center.

years. Pratibimb: 15 ½ years is quite a long time, tell us what has been keeping you in Siemens / NSN for such a long time?

Here

Pratibimb: Tell us about the industry that NSN operates in. Mr. Vinit: We are basically into the business of providing electronics for telecom network connec­

Mr. Vinit: Whenever we are working in an organi­

tivity; our main competitors in this business are Er­

zation, we believe that Salary, the work, culture of

icsson, Alcatel – Lucent and Huawei. With the ad­

the organization can retain employees, but I would

vent of multiple service providers and the growing

believe that it is not salary, not the work, not the

demand of cell phones in the country it has led to an

culture but an optimum mixture of all these that re­

increased competition for NSN. Most competitors

sults in the satisfaction of an employee which is the

also have grown tremendously in the past few years

prime driving factor for employee retention. In Sie­

in India.

mens / NSN these components have been in its opti­ mum mix, which is the main reason for my stay at NSN. Pratibimb: So is Siemens known for this elixir of retention?

Pratibimb: Tell us the Role of a Finance professional in a non – finance firm like Siemens / NSN. Mr. Vinit: In Siemens we used to follow a principle known as the ―Veir Augen Principle‖ which basi­

Mr. Vinit: Siemens as a company has always be­

cally stresses on the importance of collaborative

lieved in talent retention; once you join Siemens it

working of Sales and Finance in the organization.

is said that you will retire from Siemens. The testi­

In the past as Finance professional I was personally

monial to this belief is a 6 monthly newsletter that

responsible for P & L along with Sales; Sales will

is published in Siemens wherein people working for

generally try to sell the product at any price, it is 28


Pratibimb | June 2011 our job to ensure that the deal is profitable for the

towards accepting new technology is? How fast

company. I had also served as the Business Lead of

will we adapt a 3.5 G or 4 G?

Sales in many deals.

Mr. Vinit: India is fairly quick when it comes to

At NSN, our role is more a strategic with providing

accepting new technology is concerned. The west

the best financial support towards achieving the

took the route of wired phone to broadband connec­

business objectives. It could at times simply mean

tion to a mobile phone whereas in India we have in

making available the right set of financial data for

one way skipped the broadband stage and graduated

taking an informed business decision.

At present

from fixed lines to cellular technology, hence we

my responsibilities are more at a strategic level

will adapt 3.5 G much quicker than what the west

along with the Controlling function that the R&D

has taken to graduate from 3 G to 3.5 G.

unit performs. The responsibilities also included various investment decisions coupled with the func­ tion of sanctioning deals. Pratibimb: So how do you judge a deal? Is it only positive returns?

Pratibimb: How has mobile technology revolutionized the lives of individuals? Mr. Vinit: Mobile telephony has opened up multiple avenues for the consumers by providing them with technology through which they can be at two differ­

Mr. Vinit: When we get into a deal there are basi­

ent places at the same time. It has also opened up

cally two takeaways from it. Either it has to be

new and innovative modes of business. I will take

profitable or strategic. There have been instances

this moment to talk about Telecom has changed the

where we have done deals where the returns were

way we used to work and a perfect example is

negative but it had some strategic advantages for us

―TutorVista‖, a company providing private online

and of course there would be some deals which we

tuitions to children in US through teachers in cities

have to say ―no‖ to which is never an easy job.

connected now with wired Broadband and future

Pratibimb: Considering you are a secondary ser-

wireless broadband as well.

vice provider how does the increasing competi-

Pratibimb: Is NSN also working on providing

tion in the telecom service provider affect you?

VAS services. Can you tell us something more

Mr. Vinit: The telecom industry in India is growing

about VAS at NSN ?

at an amazing pace, and with growth competition

Mr. Vinit: Value Added Services (VAS) opens up a

increases. Competition has led to drastic price

new revenue model for telecom operators and also

drops; considering even 5 years ago we had to pay

equipment providers. The demand for VAS has

Rs 1.5 for a call whereas today the same call can be

been gradually increasing in India and all service

made in a couple of paisa. Since the operators are

providers are taking cognizance of this change and

our clients hence we too face the cost pressure from

implementing better network capabilities to provide

them which compels us to continuously innovate.

seamless VAS services. NSN is providing network

Pratibimb: How do you perceive India’s speed

support to the operators to provide better VAS ex­ perience to the end customers. 29


Pratibimb | June 2011 Pratibimb: Tell us about the financials of Nokia

Mr. Vinit: The IPO listing process starts quite some

Siemens Networks for the past couple of years.

time before the actual offer is floated. Currently we

How is the company performing?

are nowhere close to the start of that process; hence

Mr. Vinit: 2008 was an OK year for us. In 2009 we performed below par and I can term it as a bad year

I can definitely say that NSN has no plans for IPO listing anytime soon.

for us. We have made mistakes in the past, realized

Pratibimb: Finally, What advice would you like

those and worked on them hence I believe we have

to give young professionals like us?

seen the bottom and are currently on a turnaround journey. I believe the financials for the coming years would be much better.

Mr. Vinit: I believe the most important virtue to possess is dedication. No matter what is the job that you would be doing, it is of utmost importance to

Pratibimb: Is Nokia Siemens Networks planning

have dedication in the job. Sincerity would eventu­

on an IPO anytime soon?

ally lead to success.

Beat the Market As Jim Cramer, a former hedge fund manager, and a best-selling author put it, “As long as you enjoy investing, you'll be willing to do the homework and stay in the game… I mean I'm not smarter than the market, but I can recognize a good tape and a bad tape. I recognize when it's right and when it's wrong and that's what my strength is.” Stock markets have never been predictable, you may apply the best of logic and reasoning, but there could be a possibility that you may falter if the emotions of the investors take control. The entries for this contest have been judged by Mr. Mitesh Thacker, Head Research & Trading Analyst, www.miteshthacker.com. The winning entry of ‘Beat the Market’, April 2011 edition is of Mr. Parikshit Vilas Loke, Welingkar Institute of Management Development & Research!! Congratulations!! We thank all the participants for their effort. Beat the Market is a game designed to prove your mettle in stock market analysis. This time onwards, we will provide you the name of two listed companies from NSE. You need to analyze stock movements of these companies till 25th July, 2011. On the basis of fundamental and technical analysis you need to give us your share price estimate of these two stocks as on 5th Aug, 2011. Fundamental & Technical analysis will carry 70% weight while 30 % weight will be given to Accuracy of the estimated prices in the final score. The winning entry will receive a letter of appreciation and prize money of Rs. 1000 /Rules:  Companies to be analyzed are Tata Chemicals Ltd. (TATACHEM) and Idea Cellular Ltd. (IDEA)  You may analyze in a team of not more than 2 members  The file should not be more than 7 pages long including cover page, the cover page should contain the team name, team members name, Institute name, contact number  File name should be BTM_JUNE_<TEAM_NAME>_<INSTITUTE_NAME> 30


Pratibimb | June 2011

Paradigm Shift in Optimal Media Mix Strategy Akankasha Sharma, SIMSREE

T

imes

are

indeed

changing…so

programs are complex and difficult to measure.

unbelievably fast and gathering speed

Reduced ad-spends on traditional media due to a

that a time would soon come when one

fall in effectiveness of such mediums, is causing

blinks and misses the train.

major

Around twenty years ago, big companies would subscribe to one advertising spot on three different television networks, and reach 80% of the US

restructuring

companies,

putting

of

marketing

plans

of

Rubik‘s

cube

of

the

segmentation, products, channels and media in jumbled disarray.

population. Now, they need up to 20 messaging and

Marketing paradigms have now begun to change, as

media programs to get that same reach.

focus has now shifted on a few of the available

In India, too, there has been a huge spurt in demand

customer segments and to serve them with fewer

for digital content, with an increase of over 120% in

brands, impeding less control over the way they do

Source: Internet users in India (Morgan Stanley, Mary Meeker internet report 2010)

the growth of Internet users over the last 3 years.

business with their consumers.

Today, India is poised to take its place as the

In order to take advantage of network-based

world‘s first truly mobile digital society; a

environments, organizations are now going digital.

remarkable fact in a nation where it took television

The challenge for organizing digital marketing is

13 years to reach an audience of 50 Million.

the ability to really get to the right consumers at the

As a result, sales efforts have further fragmented,

right time with the right message in ways that one

escalating the potential for channel conflicts. E.g.

couldn‘t use in the past.

telecom service providers today require up to four

According to a McKinsey report, there are four

channels to reach their diverse customer base. New

stages that a company goes through in the digital

communication mediums have increased marketing

marketing organization:

expenditures and costs of the company. The costs

1.

further

increases

because

digital

marketing

Ad-hoc Activity - Establish a basic online presence 31


Pratibimb | June 2011 2.

3.

4.

Focusing the effort - Create policies to focus

promotions were used as touch-points to the

and unify efforts; track what works and what

customer. On top of that, the addressing was done

doesn‘t

through a very fine-tuned geographically targeted

Formalization - Build the digital business;

online messaging. They made the creative elements

develop/gather appropriate skills

of the advertising very relevant to exactly where

Institutionalizing capability - Deliver against

people were in their neighbourhoods.

value proposition; manage organizational

Presently, enterprises like Yahoo! are performing

interdependencies

big shifts in spending by concentrating on

In order to cut through all the clutter and confusion

performance

marketing

and

customer

care

Four stages in the digital marketing organization

Source: McKinsey‟s Quarterly Report, 1996, by Andrew Parsons, Michael Zeisser, and Robert Waitman

with a deep understanding of the company‘s business objectives and who their target is, one needs to ask the right questions, such as: Who are the best consumers for this message? How do they

operations. Performance marketing uses channels like emails and search-engine marketing (SEM), since this is where people invariably search first for information on a product/service.

spend their time during the day? What are the touch

Marketing companies now don‘t consider it as a

-points where the company can make their message

marketing expense, but a cost of goods. It also

most relevant to them? And, using this great buffet

comes with an added advantage that it is easier to

of media choices that one now has, how does one

predict the returns from a given level of spending as

address that market in the most relevant way?

data is more concrete, and available.

For example, when Yahoo! started Yahoo! Local,

Customer care operations are also forming a critical

their business objective was to increase their share

part of the brand experience. Investing in great

Search Engine

Relative Market Share (%)

Google

72.4%

Yahoo!

24.2%

Bing

13.6%

of searches for local businesses like florists, banks

brand experiences, especially when people have

and restaurants, by making it apparent that Yahoo!

concerns or questions is becoming increasingly

really understands the local environment. Local,

important, to woo new customers, and retain old

independent newspapers and a lot of outdoor

ones. 32


Pratibimb | June 2011 Organizations

now

are

exploring

means

of

tracked as it is generated with their marketing

measuring returns on their marketing investments.

programs in various channels that each business

Many maintain dashboards of metrics that go up to

unit spends in. Long-term health of the brand is also

the executive team and show how marketing

being predicted by examining changes for various

activities are focused on driving the business. User

demographic

engagement can be gauged by determining the

differentiation, its relevance to consumers, the

share of time spent online with the company‘s or

degree to which they know it; moreover, hold it in

brand‘s website, computing the average number of

high esteem.

media properties that a user consumes, which is

Thus, a holistic, optimal media mix strategy now

growing continuously in India. They are also

comprises of the traditional as well as, the digital

focusing on quarterly initiatives; for instance,

means of marketing. The shift is towards increasing

driving searches from throughout their site, not just

digital marketing spends, which comes with

from the front page.

effective metrics to measure returns.

segments

in

brand‘s

level

of

Customer lifetime value is being estimated and

Inviting Articles “Best Article”: Deep Aggarwal, MBA(MS), FMS

Congratulations!! The winner will receive a cash prize of Rs. 1000 & a letter of appreciation. We are inviting articles from all the B-schools of India. The articles can be on any field of business from Marketing, Finance, Operations, HR to Systems. You can send us articles on: Recent developments or trends in any of these fields  Articles covering latest trends, innovative practices, strategies, etc. in the global perspective  We also invite articles on management thinker similar to the current section  Apart from above, creative works in relation to any of the fields will be equally appreciated The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file should be MS Word doc/docx. Articles should not be more than 2500 words. 

The last date of receiving all entries is 25th July, 2011. Please send your entries marked as BAC_AUG_<ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to: pratibimb.tapmi@gmail.com

33


Pratibimb | June 2011

Advertising Through Brand Extensions Ramanuj Vidyanta, TAPMI

W

hen was the last time you walked

the government market scenario the control goes

past a ―Wills Lifestyle‖ outlet and

one step ahead – here the state not only controls

wondered how the name Wills was

distribution but the retail outlets are also controlled

into retail garments or wondered what was Jonnie

by the state. With this varied distribution networks

Walker trying to say when it carried the tagline

also comes varied control in terms of advertising.

―Keep walking‖? Well these are just some of the

E.g. the creative of a beer advertisement in

most prominent examples where Brand extensions

Maharashtra can bear the image of the bottle

have been successfully implemented in promoting a

however the word ―Beer‖ cannot be displayed

brand. In today‘s scenario, with the growing

whereas in Karnataka there are no such regulations.

limitations that marketers

are facing, brand

This variation increases the challenges of marketers

extension has emerged as the most preferred mode

considerably. The same creativity cannot be used

of advertising in industries such as alcoholic

universally which leads to the necessity of more

beverages, liquors and tobacco products.

innovative methods to communicate the brand

Let us consider the alco-bev industry in India; it is

story. Brand extensions come in handy in these

heavily regulated in terms of advertisement of

situations. Marketers try to communicate the

brands or the category in general. Alcohol being a

essence

state subject, every state has a different set of

communicating the USP of the brand through

legislation in terms of advertising and distribution

another product.

channel networks. The industry is basically

Are the marketers successful in this quest or are

comprised of three types of market – Open market,

they deviating from the actual message that they

Semi – Government Market and a Government

want to portray? When they say ―It‘s your life,

Market.

make it large‖, does the marketers from Seagram‘s

The open market is a replicate of a traditional

successfully convey the message of Royal Stag

FMCG market; the manufacturer can choose its

being a Whiskey meant for premium celebrative

preferred distributor and the retail outlets are

occasions? Or are they driving the consumer to

privately owned after obtaining the necessary

believe that Seagram‘s has diversified and entered

license

into the music industry.

from

the

Government.

The

semi-

of

the

brand

by

replicating

and

government market is a more regulated form of

The answer to the above dilemma would vary for

market as compared to the open market; here the

different customer segments. A consumer of

distribution is completely state owned whereas in

alcoholic beverages may receive the true message 34


Pratibimb | June 2011 however the same communication might fail to

advertising in most industries regulated by state &

convey the message to a non – consumer.

central legislation and going by the current industry

Considering this scenario, the next question that

trend and marketer‘s focus, this medium is here to

arise – Is this methodology of advertising through

stay unless the government drastically brings major

brand extensions good enough to drive growth in

changes to the advertising policy of the industry.

the industry or do the marketers need to put on their

However, one caution that marketers should also

thinking

another

take is to disallow the brand extensions to become

communication strategy? The answer to this

larger than the brand itself. If the company is using

question is contingent upon how the firm looks at

mineral water as a brand extension for premium

growth, whether the company is interested in

beer, then it is of utmost importance that the brand

growth within the consumers by trying to switch

name continues to be perceived as the parent

them from one category to another or the company

product rather than the brand extension.

is interested in increasing the overall consumer

So, the next time you come across a bill board

base.

reading ―Keep walking‖, remember to extract the

Despite all the above limitations, brand extensions

true essence of the message that Johnnie Walker is

has come out as the preferred candidate for

trying to convey.

hats

and

come

up

with

Route to Market The market has always been unpredictable for the companies. This holds more significance in the case of international brands trying to enter new developing markets. Every brand wants to be recognized globally so that they can tap the new markets easily. The role of marketing managers in this age of globalization becomes more important in providing the companies with correct strategy to enter new market. We give our readers a platform to experience this challenge through ―Route To Market‖. The primary objective that the participant is expected to fulfill is to provide a ―Market entry strategy‖ for an international brand/ product into the Indian market. The overall strategy would be divided into three stages:

1st Stage - Market Assessment (Weightage -35%) Key Deliverables:  Customer Assessment (Segmentation, Targeting)  Market Competitive Assessment  Distribution Channel Assessment

2nd Stage – Communication strategy (Weightage -30%) Key Deliverables:  Positioning  Promotion (Creative required)

is

Strategy not

3rd Stage – Implementation & Go Live (Weightage -35%) Key Deliverables:  Test market geography selection.  Launch Price (Exact price to be mentioned)  Performance measurement metric selection

Rules: 

Document size should not exceed 5 pages & a maximum of 3 members are allowed in a team

The participant is expected to justify his stand – point in each deliverable

Each stage should be clearly mentioned under sub – heading

Send entries with file name as ―RTM_JUNE_<PARTICIPANT pratibimb.tapmi@gmail.com by 11:59 pm, 25th July, 2011

The winner will receive a cash prize of Rs.1000/-

NAME>_<INSTITUTE

NAME>‖

at

35


Pratibimb | June 2011

Talent Supply Chain Management Aby John Kottukappally, MBA-HR, SCMHRD

T

he post-recession period has been

add 23 million to the global workforce during the

characterized

same period.

by explosive

growth.

Most of the growth stories have come

When we consider the above factors, it makes sense

from the emerging economies of Asia like India &

for an organization to focus on acquiring talent so

China. All industrial sectors which belong to these

that its growth targets are not choked by inadequate

countries are witnessing heightened activity in

manpower. At this point, I would like to introduce a

terms of production and consumption of goods &

relatively novel concept in HR, viz. Talent supply

services. This level of industrial activity has thrown

chain management. It is a blend of the concepts of

up an unusual challenge - the shortage of talent to

supply chain management and talent management.

propel

As per Wikipedia, supply chain is defined as ―A

this

growth.

This

issue

gets

more

complicated if we consider the fact that the ―Baby

system

Boomer‖ generation (born in the post – WWII

activities, information and resources involved in

period 1945-1960) are nearing their retirement age.

moving a product or service from supplier to

It has also been proved that the generations which

customer.‖

succeed them have insanely different aspirations.

dimensions to the concept of supply chain, for the

Today‘s organizations are not in a position to

scope of this article we will restrict ourselves to the

address this issue. To make matters worse, the

above definition. So when we say ―talent supply

future distribution of working age population across

chain management‖, it essentially means procuring

the world has been found to be disparate. It is well

talent from variety of sources and delivering it to

known that Mr. Jim O'Neill, a global economist

the organizations so as to sustain its growth.

working for Goldman Sachs, is credited with the

Closely associated with the supply chain concept is

coining of the acronym ―BRIC‖ (Brazil, Russia,

optimization which essentially means getting the

India, China), the countries which will occupy the

most out of one‘s investment. This concept makes

center stage of world economy in the 21st Century. But when considering the talent shortage or surplus across the world, this acronym gets reduced to ―IC‖ (India & China). As per the International Labor Organization‘s estimates, the working age population between 15 and 64 years will increase by 212 million and ―over 64% of the increase will occur in only one country – India‖ and China will

of

organizations,

Although

there

people,

are

technology,

many

more

more sense if we consider the fact that the organizations themselves don‘t know what the future business scenarios are going to be. Optimization has become a key word in this era of information technology. The global firms are aiming to acquire the best talent at the least price. In doing so, they try to minimize the cost incurred in 36


Pratibimb | June 2011 sourcing a candidate. Of late, most of the MNCs

same time the scenario discussed above might

and recruitment agencies, have taken themselves to

happen. So the ideal solution would be to place the

the social media sites such as LinkedIn, Twitter etc.

training program for the new recruits and allow

These sites double up as a brand promotion and a

them to choose their preferred date of joining the

recruitment tool. A skeptic of the same might argue

firm from the options given to them. Reduction of

that those organizations which blindly follow on the

bottlenecks can also be addressed by the succession

footsteps of this i-generation might soon find it in

planning of the firm. A firm with a robust

troubled waters. But if we look at the social media

succession planning in place effectively address

recruiting through a different lens, it can be proved

talent optimization.

beyond doubt that there is no other medium through

Supply chain management is also concerned with

which a firm can reach to such a diverse audience at

reducing the forecasting errors as far as the demand

the lowest cost. Employee referral, which is also the

for a particular product is concerned. When we

next preferred tool for recruiting, reiterates the case

analyze MNC‘s with global operations, it has been

in point.

found that the recruitment mandate is handled

During the IT boom, organizations had hired

independently by the host country offices. The logic

employees from the universities and colleges across

of this move being that the recruitment function of

the country in large numbers. The idea behind this

that country is in better touch with the host country

practice was to ensure that the sufficient manpower

rules and regulations. But in this era of economic

was available to carry out future projects. So this

uncertainty, if we try and predict the manpower

being the case, the organizations failed to provide

requirements at the individual locations, we may

work to these recruited talent after their initial

land up either with too many or too few of them.

training. However, the company had to keep on

The ideal way out would be to forecast the

paying the salaries which was a kind of wastage of

manpower requirement on a global level and

much needed resources which could have been

designate the recruiting process to the host country

deployed elsewhere. It has been found that an

offices.

employee makes the decision to stay or not to stay

Although there are many other aspects of supply

with a firm within 6 months of his joining. If he is

chain which will find its applicability in the Human

kept on the bench waiting, more often than not, he

Resource function, the scope of this article limits

will resign soon thereby resulting in the wastage of

itself to the aspects discussed above. Hence, we see

the investment made by the company on the

that applying the concept of supply chain to talent

training of the resource.

management would provide a competitive edge to

The aim of supply chain is to reduce the bottleneck

the organizations of today. The importance of this

in the system. When an organization goes for mass

cannot be under estimated which is evident in the

hiring, it is quite evident that a mass training

saying ―People are not your most important

program needs to be undertaken. But if we do such

asset, the right people are” – Jim Collins.

a program, it will cost the firm a fortune and at the 37


Pratibimb | June 2011

Operations in Turbulent World Anish Bhattacharya, Goa Institute of Management

P

ost-recession of 2009, the industries

the fact that the long road from strategy planning to

world over including those in India are

strategy execution actually turns out to be labyrinth

still grappling with the forces of change

for the implementers who want to put the pieces of

in order to stay afloat in a hyper-competitive

the execution puzzle together. The disjointed

environment. Though some companies did manage

approach also reflects the methodology adopted by

to grow big yet their growth has not been up to their

the higher management who rates business success

potential and their expansion is based on a shaky

through top lines and bottom lines of individual

foundation. Though it may sound puzzling,

business units.

mismanagement of complexities which in turn are

While companies have tremendous experience in

the results of scalability has caused the bottom line

excellence for individual functions, what remained

to go in red. It is a glaring fact that the volatility of

mistreated is careful handling of individual

demand has risen permanently and all the

excellence

stakeholders in the value chain are struggling for an

organizational excellence which enables seamless

effective management between various functions of

operations cross-functionally and across business

business. Though IT investments are done with the

unit can be termed as inter-operability of the

motive of integrating the organizationâ&#x20AC;&#x2DC;s functional

organization.

verticals, improvements have helped only to a

organization to optimize their operations by

certain extent; yet they fall short on robustness.

reducing time of delivery, money and human

The companies are now heading to a dead end and

capital involved. According to a research report by

the prime reason is all the efforts have been tended

A.T. Kearney there are seven key dimensions which

to be in an isolated basis within the business units.

help in achieving this interoperability. They are

This generally happen in big organizations when

operations strategy, business systems, relationship

the members of the team become so short sighted

management,

that all their improvement efforts get concentrated

performance management, knowledge management

on their own functionality or business unit that they

and organizational culture & people development.

lose track of the holistic picture. The extent of

Each business unit needs to align itself to overall

damage that can be caused due to individual

organizational goals to swiftly respond to business

excellence is that they actually compete within

requirements and achieve competitive edge.

business units and hinder the overall organizational

The companies also need to refine their processes

excellence. This factor is further compounded by

and strive for consistency in their decision support

and

aligning

them

Interoperability

implementation

to

actually

attain

helps

management,

38


Pratibimb | June 2011 systems. The organization also needs to channelize

Thus on a concluding note, in the days to come, the

efforts towards building collaborative relationship

company profit margins will depend heavily on the

bound by common organizational values. There

competitive edge of the entire value chain

should be cautious effort by

Interoperability Dimensions (Source: A.T. Kearney)

ecosystem and not merely on

organizations to achieve complete and consistent

excellence of the function in a particular domain.

change implementation throughout the enterprise.

Though the markets have recovered and industry

Companies can define key

outlook is upbeat yet the industries need to address

performance indicators aligned with the overall

the above mentioned key issues if they want to be

strategy and cascade it from the top management so

resilient to business cycles and weather any kind of

that business units does not have conflict of interest.

crisis.

Seamless information sharing by investing in

References

information systems and implementing job rotation

ď&#x201A;ˇ

to realize job enlargement and enrichment can help in

achieving

interoperability excellence.

The

The Theory of Everything in Operations, A.T. Kearney. (2011)

ď&#x201A;ˇ

Dr. Reinhard Geissbauer and Michael D'heur,

companies need not be excellent in all the aspects in

2010-2012 Global Supply Chain Trends- An

terms of functional excellence & interoperability.

Annual Survey By PRTM Management

However what is more important is achieving an

Consultants, June 2010

equilibrium between corporate strategy and market conditions.

39


Pratibimb | June 2011

Join us on: Contact Us: pratibimb@tapmi.edu.in / pratibimb.tapmi@gmail.com Visit: http://linux.tapmi.edu.in/student-life/pratibimb/overview/ Team Pratibimb TAPMI Post Bag No. 9 Manipalâ&#x20AC;&#x201D;576104

40

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