A Hong Kong holiday...

IIPM: An intriguing story of growth and envy

Hong Kong’s making some extra efforts to boost its tourist inflows. The country’s Tourism Board (HKTB) hosted a ‘Discwover Hong Kong fair’ in Delhi to create the additional buzz about its key tourist attractions. Hong Kong Disneyland Resort, Ocean Park Hong Kong, Madame Tussauds Hong Kong and Ngong Ping 360 were a key part of this mega marketing event.

Pallavi Srivastava

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
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Outlook Magazine's B School Ranking Scam Exposed
Don't trust the Indian Media!
IIPM exposes Career 360 and Mahesh Peri scam
IIPM - We will change your outlook : Career 360 and Mahesh Peri scam is exposed

Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎
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TATA NANO - AGENCY: LODESTAR

Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

CHALLENGE: Announced in 2004, launched in 2008 – in the meantime, the Nano buzz had waned. The challenge was to recreate the excitement around brand Tata Nano. Moreover, time on hand was a constraint. Due to the hush hush around the car before the launch, the agency was made aware of the launch just 3 weeks before D-Day...

SOLUTION: They decided to use conventional media in an unconventional way to create buzz. The agency turned the traditional lifestyle auto advertising concept on its head.

PRINT: The news-in-brief columns were renamed as Nano-News columns, while trivia sections were re-branded as Nano Corners. On the day of the launch of the car, a Nano cartoon appeared in R.K.Laxman’s popular cartoon section in The Times of India.

TELEVISION AND RADIO: Pop up ads of the Nano were used during popular sitcoms to catch the attention of the consumers. But the most interesting TV innovation came in the form of “Nano Breaks” in between popular shows. On radio too, Nano Breaks, Nano Destinations (weekend getaways) and Nano Smart Routes (to avoid traffic) were made popular by leading RJs.

AMUL BUTTER: More than 30 million 100 gm Amul butter packs were renamed and sold as Nano butter packs.

MEDIA STRATEGY: The only thing about this campaign that was not ‘nano’ was the use of various media. 35 publication with 380 editions, 80 television channels, 41 radio stations and top ten internet sites were used to create the big buzz for the small Nano.

RESULT: The innovative strategy paid off well. Within two weeks of the launch, the car got 5,00,000 bookings. The car website was flooded with 5.4 million visitors in 24 hours of its launch.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
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Outlook Magazine's B School Ranking Scam Exposed
Don't trust the Indian Media!
IIPM exposes Career 360 and Mahesh Peri scam
IIPM - We will change your outlook : Career 360 and Mahesh Peri scam is exposed

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B-schools expect higher rate of campus placements this year

...And AMCs need to rethink their push & pull strategies, says Deepak Ranjan Patra

IIPM 3-year full-time Integrated (MBA BBA) Programme

Without an established distribution network in place, most of the AMCs at present are dependent on distributors, agents who sell funds for a fee. However, the recent regulatory change, which banned the entry load levied by mutual funds on investors, has created a hurdle for the AMCs, particularly small and new, in becoming aggressive in the retail segment.

Meanwhile, as research reports suggest, the retail segment is expected to be the largest contributor to the growth of the asset management industry in India and is expected to grow at a CAGR of 35%-42% in the next five years. Moreover, during this period the mutual fund industry could see an addition of nearly nine million first time retail customers. If this is considered as a target that the industry is gearing up to meet, then very soon investors will see AMCs bombarding the market with new and innovative marketing initiatives, brushing aside their pre-historic strategy of depending on agents for sale. It will also highlight how different their product is and how it has delivered good returns in their advertisements. So, where will the AMCs be focused now?

Well, as per global consulting firm McKinsey, it’s branding. “Fund performance is necessary but not sufficient for driving the AUM growth. However, a positive perception of the brand induces a positive view of performance, even if the figures don’t bear this out. Strong brands influence perception of fund performance and hence spur growth,” suggests a McKinsey report (Indian Asset Management: Achieving broad-based growth). Agrees Waqar Naqvi, CEO, Taurus Mutual Fund. “Brand always has been a key aspect for the AMCs. But yes, earlier it used to get a little diluted because of the role of agents. But if the thrust shifts away from the old model of generating business, then brand will certainly take a front seat.”

However, distribution will continue to hold a lot of value for the AMCs. Most importantly, with banks, independent financial advisors and national distributors, all playing their roles, the AMCs have to be very careful in choosing their distribution partners. Because those partners will actually be the vehicles riding whom the AMCs can penetrate deep into the retail segment. As per Naqvi, “Owing to the change in regulations, we may soon see slight changes in the way the business happens today.” That certainly confirms the fact that the AMCs market itself will also see good amount of changes. So, don’t be amused if you get to see Shahrukh Khan selling XYZ fund on the idiot box.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
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Outlook Magazine's B School Ranking Scam Exposed
Don't trust the Indian Media!

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It’s time to spice it up!

IIPM 3-year full-time Integrated (MBA BBA) Programme

Once the target audience is chosen, then comes the next ‘P’ – Product and in service industry like restaurant the product comprises both food and ambience, which again has to be chosen as per the target audience needs. But be very sure to be unique in your product offerings. And if you can’t find such USP, in that case give service a personal touch, as much as it’s possible like remembering the guest name, his preferences, et al. To give personal touch, start highlighting your key chefs, who can personally mingle with the guest. But then, remember whatever USP you create, it can be easily copied by others. So constantly nurture it. For instance, organise food festivals. In fact, in The Oberoi School I train people specifically on how to organise food festivals cashing in on festivals like Diwali, Ganesh Chaturthi, et al.

But that’s not the only two crucial imperatives to create a successful restaurant brand. In fact, if that was the case then many entrepreneurs who had other ventures too would have been successful here as being expert in other business they would certainly know the art of creating USP with the right target audience. So, the next biggest challenge is to find a good location for your restaurant. In fact, 50% of Indian restaurants shut down because of the location problem as unlike other businesses here you can’t sell your product through other retail stores. All the five star hotels are very fussy in choosing their locations, but at the same time a five star hotel chain (like ITC) with two hotels at different locations in the same city, might end up having huge difference in revenues from both the hotels and all because of their locations. So choose your location carefully. Agreed that often cost of prime location is too high, in that case concentrate only on one restaurant and don’t think of expansion in the initial phase. Because remember, we are talking about a standalone restaurant concept and why shall people come to you if the location is not comfortable or is unattractive.

Locations, USP, target audience are something which Asian nations like Singapore have been stressing on and when I was working on creating restaurants like Kinara and Hazara, in this country I noticed that by banking on all these three attributes we were able to attract huge tourist from the very beginning. Also when it comes to India remember there’s another value addition that we can do to create a brand and that lies in another ‘P’ – People. Pay your employees more than the market rate and acknowledge their work so that they can feel for the brand. In service industry it’s very necessary that you sustain and nurture talent and see the wonders they do for the brand.

But once the brand is created the next challenge is to sustain its consistency and change menu to be competitive. This is where your people could be helpful, listen to them. Priya Paul is always open to suggestions and that’s the reason The Park restaurants in Kolkata are always full of people. So like any venture, creating a restaurant brand also depends on Ps like – Product (and its USP), Place (location), People (your team) and of course, the target audience.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
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Outlook Magazine's B School Ranking Scam Exposed
Don't trust the Indian Media!

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Management guru Arindam Chaudhuri’s latest blockbuster book, Discover The Diamond In You

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Most Glamorous Brands

• Kolkata Knightriders
• Force-1
• Louis Vuitton
• Filmfare Awards
• IPL

Two brands right on top of one single category? You should have known this is India and cricket is perhaps even bigger than religion in many cases. So both IPL and the Shah Rukh Khan promoted KKR have been the people’s choice when it comes to glamour. And how can you ignore film stars? No wonder Filmfare awards find a place right here.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
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IIPM ISBE Programmes
Follow Arindam Chaudhuri on Twitter
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Management guru Arindam Chaudhuri’s latest blockbuster book, Discover The Diamond In You
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IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
B-schools expect higher rate of campus placements this year
Arindam Chaudhuri (IIPM Dean) – ‘Every human being is a diamond’
IIPM Best B School – EVENTS
IIPM conceptualized the grand final of Dare ‘10 — the most prestigious of international B-school student quizzes

It’s called Newton’s 3rd law, Mr. Obama!

Ned Barnett is a Senior Political Media Analyst with experience of running media campaigns for former US Presidential candidates at state level. He writes exclusively for 4Ps B&M on why Obama’s PR campaign is backfiring...

America’s politicians are typically divided between two parties (there are other parties, but they seldom gain representation in Congress, and virtually never achieve real power, even in local or state elections); and typically, politicians “follow the party line.” However, because they are elected individually and are required to live in and come from the district they represent, they tend to oppose their own party when they fear for their own re-election. By pushing the American people so hard that they feel inclined to push back, the Obama administration has motivated hundreds of thousands of Americans to actually pay attention to politics, to get involved and to CARE.

During the Presidential campaign, Obama’s background as a “hardball” community organiser worked remarkably well – however, now that he’s governing, it is backfiring. Why? Because he seems to not be listening to Americans – and when Americans don’t feel that they’re being heard, they speak louder. Please remember, that in the US, the first element of the Bill of Rights allows us Freedom of Speech, Freedom of Assembly and the Right to Petition the Government for the Redress of Grievances. By not listening to people’s free speech and by ignoring their petition to redress grievances, the Obama administration is courting that backlash.

There is a group – once called “the Silent Majority” – of people who tend to not speak out. They often vote, but they don’t protest or demonstrate. They are used to doing things for themselves, and they are much more comfortable “writing a letter” to an elected official, or the local newspaper, than going out in public with their home-made signs. However, because of Obama’s community organising initiatives and his “Change” agenda during the campaign, they have found the courage to step out of their comfort zone and speak out in public. They are not career protesters or life-long political agitators-for-change – this is not their natural milieu, and because of that, they are more emotionally tied up in being heard (and much more prone to real, sustained anger when they’re not listened to).

I am not implying that America is on the verge of a real revolution (of the armed revolt kind), but please remember this from our history if we want to understand this backlash – that it was not the Stamp Act (taxation without representation) that caused the revolution in 1776 – it was the refusal of King George and his Parliament to listen with interest to the American Colonists’ legitimate grievances that led directly to the Revolution that created the American Republic.

There are indeed precedents where Presidents have used the power of organised supporters (union members for instance) to push hard for their programs – the most obvious example is President Franklin D. Roosevelt during the depths of the Great Depression. He was a master at twisting people into activism, and it was effective. However, without the alternative media of today (cable news, Internet), the opposition was unable to push back. His efforts in passing the Communications Act of 1934 (he became President in 1933) reinforced the mandate that broadcasters had to broadcast “in the public interest” which enabled him to monopolise the media as never before to reach people. However, the times were different – especially the technology – so it is hard to compare them directly.

This is especially important in light of the question about how Obama’s media handling is going to change – I don’t think it will. To date, President Obama has seemed to be “tone deaf” – he hasn’t learned from mistakes (he hasn’t even acknowledged his mistakes – he’ll apologise overseas for America’s past actions, but won’t acknowledge his own mistakes). This is, in fact, remarkable. Even Nixon acknowledged mistakes – only Obama among all of America’s Presidents has refused to admit his mistakes.

Clearly, he’s seen his poll numbers fall – he’s seen how his confrontational tactics, especially in the last few weeks, have only ramped up anger and activity of the opposition Yet, he’s only gotten more confrontational. So – unless he has a real “eureka” moment, he’ll continue as is – waiting out his opposition, seeing if they will continue or – like the opposition in Iran and China – fade out after the initial enthusiasm. That may indeed be the right strategy – in democracies, it’s hard to maintain the focus of the “silent majority” who have jobs to go to, bills to pay, families to raise and other life issues that take them away from politics and re-immerse them in what we call “real life.”

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Follow Arindam Chaudhuri on Twitter
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Priti Nair on why Cannes compels...

India has been shining bright at the Cannes lately. We have been picking up quite a few awards in the recent past and winning the right stuff. So, the hype that we are now seeing about Cannes and India making it big there is not unjustified. Our work is currently in focus and is being appreciated in the global advertising fraternity. Things have really changed for the Indian advertising agencies where 14 years ago people did not even know what you stood for and what you could showcase. They would come up to me and ask how can we speak such fluent English. Now they do not see India as one small country on the map and there eyes light up at our work. This is because they can now acknowledge what we are all about. I think it’s simply amazing. As for the people who get the chance to walk the red carpet and pick up some accolades, there life certainly changes as firstly, they become a focal point for attention and the adulation. There is an obvious celebration that happens for some time before getting back to work as usual. As Cannes happens only once a year, people usually push themselves to win and even our agencies encourage winners. Also, it’s a very nice feeling if you pick up an award for a regular brand; it pushes you in the right direction and encourages people to continue to do good work. Also, I think awards do add a lot of encouragement to the youngsters who are new in the industry, certainly more than the people who have been in the business for quite some time.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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1 lakh copies sold in less than 10 days of Arindam Chaudhuri’s “Discover The Diamond In you”
IIPM fights meltdown, places 2300 students By Education Mail Bureau
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UNLEASHING THE POWER OF THREE

To start operations in times of slowdown and quickly break into the top ten in the very first year of operations is indeed incredible. These guys can’t stop thanking their strong focus on bancassurance

You don’t just rise to be the numero uno within a year of operation do you? So why did we chose the Canara HSBC Oriental Bank of Commerce Life Insurance over other leading players (see chart) in the industry? Well, this new player’s performance has been exemplary, especially when the big bosses of the industry are facing a tough time. In just a year, this life insurer has climbed to the ninth position amongst India’s twenty one private life insurance players (in terms of market share on weighted premium income). Not only this, in April 2009, the company recorded its best sales performance over the previous month than any other private insurer. Guess that’s just one more reason to be counted as a success.

But, when listening to any success story, what strikes first is, how? For a conceptual product, which is actually sold rather than bought voluntarily by consumers, credit for the unprecedented response received by the company goes to its operations based on a bancassurance model, adequate capital, distribution capacity, strong distribution channel and innovative products. Certainly exclusive access to approximately 50 million potential customers and a pan India network of over 4,100 branches does give the insurer an ‘unfair advantage’ over some of its new peers. Explaining the success story, Harpal Karlcut, CEO, Canara HSBC Oriental Bank of Commerce Life Insurance Company, says, “Our success is based on HSBC’s in-depth know-how of bancassurance, coupled with the distribution of Canara Bank and Oriental Bank of Commerce. Our performance has been delivered entirely by bancassurance.” What is evident is the fact that bancassurance has played a pivotal role in helping the new entrant break the clout of the biggies. The CEO agrees, “Each aspect of our business model has been tailored to bancassurance and the specific needs of each of the three shareholding banks; including products, promotion, training, operational support et al.” But the real success of a marketing strategy for an intangible product primarily depends on its execution and the insurer has taken due consideration of this fact too.

Success has many parameters and it seems this insurer has focused on each of them albeit more on bancassurance. But then, they should not forget this is just the beginning. To reach the top they have a long and winding road to cover. That’s when they’ll need a lot more than mere bancassurance to fulfil any leadership ambitions.

Gyanendra Kumar Kashyap

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Management guru Arindam Chaudhuri’s latest blockbuster book, Discover The Diamond In You
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High Tech Computer Corp. ever heard about it?

Innovation lies at the heart of HTC, and as company officials claim, 25% of the total workforce is engaged in R&D. Though the company has managed to capture a sizeable presence in India, yet in terms of brand power, it has to make bigger and better marketing efforts, especially when the market has other well-established brands that had moved in much earlier than HTC. Another hurdle for HTC is that, given the fact that it operates in the price points above Rs.10,000, it is clearly gunning the upper crust of the market. Today, the only other player that operates in just the plus Rs.10,000 segment is Blackberry, but its brand is much more recognised and has thus already created a cult following amongst its target group. As Rajeev Makhani, a mobile handset expert and host of Gadget guru at NDTV states, “Blackberry has been widely accepted in the corporate circle, who have actually started a culture of Blackberries. In comparison to that HTC is still small in India.”

Another problem that occured with HTC in the recent past (read: the year 2008) is that, it had made a huge splash by marketing the fact that it has launched the cheapest touch phone, but then the global economic crisis followed and the company suddenly found itself faced against the wall. So where did it go wrong? “What happened with HTC was that it had not hedged against the dollar and was impacted quite adversely and because of that they were unable to launch any new handsets in the Indian market and hence could not keep up the excitement that they had earlier created,” says Ram Makhijani, a telecom analyst. Certainly, any keen observer would have noted the fact that today, HTC only offers 11 products, unlike during 2007, when it had as many as 17! But Sharma dismisses this as the truth as he proclaims, “We are evolving as a company, and what we were doing at that time was right then and what we are doing now is what the time demands from us now.” Defending its claims, HTC also points out that it grew by a whopping 300% during FY‘09 as compared to FY‘08. What’s more, the company plans to sell 1 million units by 2010!

HTC also claims that in its short span there have been a few learnings for them, which they are now applying to the market and is expecting to get good results out of the same. One such learning is that when a person is looking at buying a touch phone especially at such price bands, he/she prefers to get a feel of the same before paying for it and hence, just a dummy may not work. So, HTC has put in place a demo zone at high-end retail outlets to encourage experiential buying.

So, the question remains – will the HTC brand receive more favour in the eyes of Indian consumers? Well, going by Sharma’s confident approach, there is no need to worry for those 25% in HTC’s R&D labs; for the rest (75%) are doing their ‘smart’ selling & branding bit on the field. By the way, I guess HTC could start by disclosing what HTC stands for, as an acronym.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Nano will not affect the sales of Maruti 800

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The entire global auto industry is looking forward to the commercial launch of our own indigenously developed Micro Mini car – The Tata Nano

Ever since the wheel got invented, it has never stopped even in the hard days whether there was war or petrol hike or for that matter shortage of crude oil. Only cheaper options were used, from bigger automobiles they came to smaller ones, from four wheels to two, car pools used to tide over the hardship and people moved to public transport. Presently we are facing a sort of crisis although not so serious as happened during the world wars and in mid seventies when oil prices sky rocketed. In the last two quarters there has been a substantial increase in the sales of small cars. Since mid-2008, car sales in Europe have dropped drastically; huge pileups have been noticed outside the car manufacturing facilities, abandoned airstrips & cheaper parking lots taken outside city limits to store new cars by dealerships.

We are now heading for another grand entry into the World of Mini cars; the entire global auto industry is looking forward to the commercial launch of our own indigenously developed Micro Mini car – The Tata Nano! The timing of Nano launch couldn’t have been better. Even Nostrodamus could not have predicted this world wide recession & economic meltdown. Ratan Tata’s promise five years back to deliver to the world a car priced at hundred thousand rupees has indeed come true. The much awaited launch of the Nano has been announced for March 23. Though a lot of water has flown under the bridge in these five years and there has been a price escalation of 15-20%, it is now to be seen what the introductory price of Nano is going to be. Commitments made five years ago were based on pricing of raw material and other input costs at that time. How Tata plans to keep his word is something that one has to wait & see. This of course is compounded by the fact that how long would they hold the launch pricing even if they manage to announce the price at one lakh! Tatas have come a long way since they first introduced their passenger cars, almost two decades have passed and a lot of R&D has been done in critical areas of customer comfort, reliability, pricing and features, styling, etc. Collaborations with other automobile giants like Fiat, using well established technologies have allowed Tata to produce cost aggressive, well performing, decently styled vehicles.


There is often a discussion lurking under the shadow of Tata Nano – how will the Nano launch affect our own tried, tested & trusted Maruti 800? Actually speaking they are two different segments now. In fact the arrival of the Nano has virtually split the Mini A Segment further: Maruti 800 and Nano 600. Let me also add here that the Nano is not, I repeat, ‘not’ going to replace the two wheeler as the popular buzz word goes around. Two wheeler owners may have a Nano for weekend and other occasions use where the family has to move together but one definitely cannot afford to use the Nano to office and back in terms of maintenance and fuel economy. As predicted by the manufacturer, this car is going to give a fuel economy of 20 KMPL a consumption that has already been ‘endorsed’ by the ARAI in case of the Suzuki A-Star. Hence, the novelty and popularity of Nano is going to be the price factor and the small size! It’s going to be a popular second car option in the urban middle income group house-holds.

Already a lot of variants for the Nano are being thought of, hybrid, battery operated, diesel operated and any other researched power option. Because of its size & weight, Nano can be imagined with various innovative propulsion systems. This car’s arrival is going to turn around the future of Tata’s passenger car offerings in the domestic & global market. It may well get to be the hottest seller of the past and the next 25 years and is sure going to turnaround the fortunes of Tata! But then didn’t we hear Suzuki, GM and others planning a Nano beater for India? These car manufacturing boys love their toys and all of them, for a change, are going strategic saying ‘Mine is smaller than yours’ – one industry where Size Does Matter!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Must we dread the ‘N’ word?

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

The prime concern at this moment for Bernanke, as well as for the US, is to recover from the current recession. For that the financial sector needs to stabilise and the banking sector to normalise its lending. But in the prevailing environment banks are busy saving up for the rainy day (as if it hasn’t already come!). To counter the situation, apart from letting the economy die, the Fed is left with two more alternatives. First, as Paul Donovan, Managing Director, Global Economics, UBS Investment Research told 4Ps B&M, “The Japanese way of stabilising the growth at a sub normal level with a distressed banking system.” And the second option is the Swedish approach of short term nationalisation, which means taking over banks, cleaning them up, and then selling off as soon as possible. While the first one is not at all advisable for obvious reasons, the second option is impractical for the US. As Donovan explains, “The Swedish method is not directly applicable to the US banking system because the US has a large banking system comprising many small banks. It is unlikely that the US will guarantee all creditors of the US banking system as Sweden, which had a few large banks, did. Certainly there are lessons (positive and negative) that can be learned from the Swedish solution. However, each banking crisis has unique causes and requires unique and customised solutions.” Definitely, the US solution has to be unique and customised. It has to be far more punitive.

It’s true that the US cannot takeover all banks, so it must become harsh. Let a few of them close down, and at the same time pick up a few large ones, revamp and make them torchbearers in its fight against recession. This process is not at all alien to the US as Mark Vitner, senior economist, Wachovia Corporation, says, “We have a process that allows the federal government to take over and temporarily run financial institutions. This was done most recently with IndyMac Bank in California.” Bernanke must immediately take a cue from this and make sure that things are back on track as soon as possible; does not matter how.

With ever increasing examples of nationalised banks beating their private counterparts, we must stop throwing good money after bad money, and be bold enough to bolt those responsible for the bad money (losses). So there! If Bernanke fails to do it right this time, obviously to prove his ‘strong supervisory oversight’, who knows which way the cookie will crumble next!

The prime concern at this moment for Bernanke, as well as for the US, is to recover from the current recession. For that the financial sector needs to stabilise and the banking sector to normalise its lending. But in the prevailing environment banks are busy saving up for the rainy day (as if it hasn’t already come!). To counter the situation, apart from letting the economy die, the Fed is left with two more alternatives. First, as Paul Donovan, Managing Director, Global Economics, UBS Investment Research told 4Ps B&M, “The Japanese way of stabilising the growth at a sub normal level with a distressed banking system.” And the second option is the Swedish approach of short term nationalisation, which means taking over banks, cleaning them up, and then selling off as soon as possible. While the first one is not at all advisable for obvious reasons, the second option is impractical for the US. As Donovan explains, “The Swedish method is not directly applicable to the US banking system because the US has a large banking system comprising many small banks. It is unlikely that the US will guarantee all creditors of the US banking system as Sweden, which had a few large banks, did. Certainly there are lessons (positive and negative) that can be learned from the Swedish solution. However, each banking crisis has unique causes and requires unique and customised solutions.” Definitely, the US solution has to be unique and customised. It has to be far more punitive.

It’s true that the US cannot takeover all banks, so it must become harsh. Let a few of them close down, and at the same time pick up a few large ones, revamp and make them torchbearers in its fight against recession. This process is not at all alien to the US as Mark Vitner, senior economist, Wachovia Corporation, says, “We have a process that allows the federal government to take over and temporarily run financial institutions. This was done most recently with IndyMac Bank in California.” Bernanke must immediately take a cue from this and make sure that things are back on track as soon as possible; does not matter how.

With ever increasing examples of nationalised banks beating their private counterparts, we must stop throwing good money after bad money, and be bold enough to bolt those responsible for the bad money (losses). So there! If Bernanke fails to do it right this time, obviously to prove his ‘strong supervisory oversight’, who knows which way the cookie will crumble next!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“Real estate sector set for a realistic growth”

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After an explosive one-off boom period one can now expect Indian realty sector to stabilise and emerge as a better organised sector growing in line with GDP

The last five years in Indian real estate constituted a one-off boom period triggered by the emergence of India as a global investment destination. This is a general phenomenon that every sector goes through before maturity – we can compare it to the Dotcom boom of 2000-2001 or the stock market boom of 2007-2008. The end always comes as a surprise, and can never be accurately predicted.

This is not to say that the good times have come to an end - real estate is one of the basic industries of any economy and will always be an important component. In times ahead, we will see the industry revive and accelerate, though through smaller and shorter cycles. We already know that every industry has a life cycle of explosive growth, stabilisation and maturity, followed by moderate growth. Real estate used to be a niche industry in terms of stock market exposure and private equity funding, but now, it will emerge as a larger, more-organised industry with realistic growth in line with the GDP, and it will represent a better and more sustainable value proposition.

Over the past six months, the real estate industry in India has undergone various changes. Now that the popular myth of India being a de-coupled economy is finally broken, we are faced with new challenges that will see the progression of the industry into the next phase of a general industry cycle.

Consolidation
It is historically established that as an industry matures, it gives way to fewer and stronger players who help to bring some sense in the industry. The coming months will see consolidation in an industry that is on a journey towards equilibrium price discovery, resulting in a win-win for both the developer and the end-user. Developers may not get the high margins, which they were used to, but they can still make money through higher volumes and a faster cash cycle. Consolidation will happen at different levels. Such consolidation will mark the extinction of the fly-by-the-night operators who had entered the industry and had made it deviate from its fundamentals.

Economic Recovery
Both GDP growth and exports growth are slowing down; there is also a pain of rising unemployment. Post Satyam, questions are being raised about corporate governance in India. However, I do believe that India will be able to recover faster than other economies, since its people are inherently savings-oriented, subject to moderate leverage and typified by caution. In comparison to the rest of the world, our growth is still fairly fast, we have the maximum number of people in our collective skilled work force and our financial sector has maintained a cautious approach. We will see the results of this before too long.

Residential Revival
The projection of India needing approximately 22 million units still holds true. Therefore, demand still exists, and increasing affordability in housing will help tap this demand. Also, affordability has to transcend the current far-flung locations and kick in at the suburban levels, closer to CBD areas. Currently, developers must not only complete projects under execution but also re-strategise to sell them quickly. Once they get out of the existing inventory and execution pipeline, they can look at new land parcels and new business ideas.

2009, especially the second half, will bring excellent bargains for investors, as well as for those who have a medium-to-long term view on the industry and the necessary risk appetite. Much will depend on being bang on target in terms of location, product and entry valuation.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“Move over Mr. Big, this is my playing field!”

IIPM set to beat economic slowdown

From leaner, smaller and more flattened organisations to everything value-for-money and no-frills, the slowdown sentiment has marketers salivating over the rediscovered power of ‘small’ over Indian consumers. Small portions, small housing, small cars, small handsets, chhota recharge, budget travel, et al, are the new big boosters...

What goes around, comes around. Capitalism trounced the saving habit and steered consumers toward conspicuous consumption. But the fall from grace of capitalism’s most iconic symbols (read: Lehman, Merrill Lynch and others of their ilk) is making many cringe at their recent splurging - especially those in the US. Albeit lesser affected, but consumers in India have balked at the fate of their US counterparts. After all, India Shining, outsourcing, 9% growth rate and YouTube had most of India’s 300 million strong middle class happily married to the American dream, replete with plastic money and cheap mortgages. The crash is seeing many of them run for cover. Forced to acknowledge economic fear after almost a decade – Indian consumers are once again tightening their purse strings. And the effect is visible across myriad sectors and consumer segmentations. Read on...

Despite the economic gloom that seems to have cast a feverish shadow over conspicuous consumption globally, Ronald’s India journey is turning out to be a scrumptious ride by comparison. McDonald’s colorful clown character cum mascot simply can’t quit grinning in his various poses at the QSR chain’s 150 golden arches across the country. The optimism is part reflected in the growing number of burger-happy faces that continue to mill around McD outlets in India. Tough times notwithstanding, footfalls are on a rapid incline. Reason? Economic uncertainty is making consumers frugal, shifting their eating out options from fine dining to casual dining (like Pizza Hut) and from casual dining to QSR chains like McDonald’s. Small servings, meagre price tags (burgers at Rs. 20 anyone?) no-frills eating is clearly the way forward (at least for the near – if uncertain – future!). Ask the management at this burger and fries company about the slowdown effect and they feign total ignorance. “Slowdown? What slowdown?” Profitability, they say, has jumped 100% in 2008, with a 25-28% y-o-y. sales growth. System-wide footfalls have also increased simultaneously by 14-18%, and if the gloom persists, the management is expecting both sales and footfalls to increase even more dramatically in the first quarter of 2009.

So when most companies are in downsizing mode, this one’s on a hiring spree, with a plan to hire more than 2,000 new associates over the next two years. But McDonald’s hiring plans are simply an aberration in India Inc., with almost every business house – across financial services to infrastructure and realty – singing ‘small is beautiful’ (read: lay-offs and recruitment freezes). The fight for survival has companies retaliating via cost cutting measures and nimbler, meaner operations, believing that it will give them the ability to cut their losses in these tough times and come back stronger when the economy bounces back.

But that’s just the tip of the iceberg. The real power of ‘small’ is reflected in the recent going-ons in corporate India. When Tata announced his Rs.1,00,000 dream car Nano early last year, competitors merely sniggered. Indian consumers have moved up the value chain, they said, adding that the market has matured beyond small cars. By the beginning of 2009, however, a slew of carmakers had either launched or announced small car plans for the same (mature?) market! Similarly, aviation analysts who could not stop predicting the death of low cost airlines in India (no thanks to the bleeding losses that the carriers continue to make), are now busy heralding a new dawn for the no-frills sector. Agreed that the steep fall in ATF prices have also contributed their bit to this resurgence; yet, the optimism is more pronounced thanks to its value-for-money appeal for India’s slowdown-hit air travellers. Even the big man Anil Ambani is dreaming small these day. The initial tariff plans for his GSM launch specifically target subscribers with sub-Rs.300 mobile expenses. If you don’t listen to consumers you perish and today the Indian consumer has fallen in love with “small”..

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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DRAGON BREATHES FIRE AT THE OLYMPIAD!

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LEADING HIS TEAM OF 104 MEMBERS, LIU QI WORKED DILIGENTLY FOR SEVEN YEARS TO CREATE A ONE-OF-ITS-KIND SHOW TO BE CHERISHED FOR LONG

The summer of 2008 witnessed the 16 glorious days of the ‘Beijing Olympic Games 2008’ that kept spectators mesmerised at the glitzy venue in China and sports lovers around the globe glued to their TV screens. The unprecedented success of the 29th summer games highlighted the hard work put in by the people who toiled to make the event a memorable one. The real showman manning the magnum opus of the XXIX Olympiad was the President of the Beijing Organising Committee of the Olympic Games (BOCOG), Liu Qi. With him at the helm, the Olympiad reached its pinnacle in the Beijing Games, with record 11,000 athletes from 204 countries taking part. “BOCOG under the able leadership of Liu Qi has offered to the world 16 days of exciting Olympic sports competitions, supported by smooth operations,” avers Jacques Rogge, President, International Olympic Committee (IOC) to 4Ps B&M. Liu Qi had penned down the blue print of the entire preparation of the games into three phases. The first phase saw BOCOG roping in renowned marketing partners and sponsors like Volkswagen, Bank of China, McDonald’s, et al. The second phase (2004-2006) was assigned the completion of the construction of the Olympic projects (including 11 stadiums and gymnasiums) along with signing of contracts with the National Stadium, National Swimming Stadium, et al. Working out detailed plan of security, traffic and logistics were also its part. The third phase was devoted to testing the various events (37 pre-Olympic competitions were held to test the facilities) and fine-tuning of the last minute preparations.

A splendid Olympic Village (a 66-hectare compound), state-of-the-art venues, strict enforcement of anti-terrorist measures, et al, testify to the fact that BOCOG achieved the target it had set for itself. The success of the event can be attributed to the minute detailing, proper planning and apt implementation by BOCOG,” declares Rogge. While Liu Qi was honoured with Gold Olympic Order for his work, others in his team bagged Silver & Olympic rings.

At the face of the grand event lay several challenges facing China (from violent protests in Tibet aimed at disrupting proceedings of the Beijing Games, to related protests overseas against the torch relay). But this did not deter Liu Qi. In fact, a study conducted by Nielsen shows that the Beijing Olympic Games attracted a whopping 4.7 billion spectators. Furthermore, according to an assessment by IOC, Beijing Olympics brought change to China in areas as diverse as media freedom, environment and public health. So, do we already see London (the next Olympic venue) sweating and panting to outdo its predecessor’s success?

Ratan Lal Bhagat

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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IACOCCA BE DAMNED!

IIPM set to beat economic slowdown

In his autobiography, the legendary Lee Iacocca postulated downturns do not touch the entertainment & restaurant industries. Pallavi Srivastava refuses to blink...

If you are an ardent reader of Page three pullouts – in fact, we guess even if you aren’t – you would have easily noticed in the past few months the sudden absence of super-big announcements of new projects being rolled out and actors being signed on, factors that have kept Bollywood buzzing for the last few years. Is this an indication of the fact that even tinsel towns get affected by economic downturns, Iacocca be damned? Yes, there are reports about numerous films being shelved, put on hold or failing to get buyers, but the question is, are these indications purely of economic downturn? Weren’t there always cases of films being shelved or put on hold?

For current records, Nagesh Kukunoor (the director of films like Iqbaal, Dor et al) seemingly has no takers for his film Aashayein starring John Abraham. Two movies of Salman Khan (one of T-series and one from Tips) have reportedly been put on hold. Himesh Reshammiya’s Gujju Bhai has been shelved by Studio 18 for now. Vipul Shah’s London Dreams’ deal with the Indian Film Company (IFC) for an exorbitant Rs.120 crore is rumoured to be facing a time glitch. T-Series CEO Bhushan Kumar has asked Director Pooja Bhatt to reduce the budget of new film Kajra Re. Even the much hyped multi-billion dollar Hollywood deals of Indian companies have not been left untouched. Ripest grapevine gripe portends that this years’ most talked about deal between ADAG and Hollywood legend Steven Spielberg is on hold too. And ADAG camp’s package deals with Indian producers like Vidhu Vinod Chopra, Farhan Akhtar, et al are also under the scanner.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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MFs sink further into the red!

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All thanks to the global meltdown, MF industry in India has witnessed value erosion of Rs.759.96 billion in equity related schemes in the first seven months of FY 2008-09. According to the AMFI data, Rs.406.08 billion of this was lost in October alone. Notably, BSE Sensex and BSE-500 also recorded their single biggest monthly fall in October. BSE Sensex plunged by 23.9%, while BSE-500 fell by 27.1% in October. AUM in equity related schemes too declined from Rs.1,890.25 billion as on March 31,2008 to Rs.1,579.13 billion as on October 31, 2008. This fall in AUM is partly due to value erosion in equities & partly due to redemptions that followed them.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Maximize your wealth: Put on your m‘caps’!

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Where to invest to maximise your returns? Are large- cap companies the answer, or are mid and small cap companies the potential gold mine? Dinesh Thakkar tries to answer the perennial investor dilemma.


The stock market is synonymous with wealth creation and maximisation. So, for the purposes of this topic, I would like to confine myself to one criteria – market capitalization of the company. Selecting companies based on mcap is not easy: here one has to bear in mind that companies achieve size and scale only over a period of time. Thus, we can conclude that companies of a larger scale have been operating for several years and have weathered rising and falling markets and fluctuating economic cycles. In contrast to this, mid and small-cap companies would have relatively lesser experience.

Apart from this, most large-cap companies have an established track record of earnings because of their loyal base of consumers supporting their products, stronger balance sheets and cash flows and better credit ratings because of their market standing. In most cases, they also have a competitive advantage in the marketplace because of better cost controls, strong marketing capabilities, and so forth. In contrast to this, the non-large-cap companies not only have to compete on a much stronger level to sustain their market position, but they are also subject to higher risks generated by fluctuating industry cycles.

While large-cap companies have several advantages, their smaller or newer peers often have the advantage of greater potential growth prospects, as there is a greater possibility that these companies can double their revenues and profits over the next few years. Finding such companies may require a lot of research, and investing in them may also require insights into the way the company works, its long-term goals, and the mechanics of the stock market. Thus, the determination of one’s risk profile becomes an important element, and you should avoid such involvement if you are not a professional.

To conclude, investing is all about maximizing wealth (the relatively risk-free way) by investing in safe, potentially profitable corporates with a good reputation, a proven track record, and a future that seems assured. India is a land of constant new opportunities which are emerging as a result of the progressive growth of our economy, and the opening up of new avenues of business in the corporate sector. If we indeed have to put value on future opportunities, the sum would run into crores and crores of rupees, but to seize and realize these opportunities, corporates should be able to raise huge capital. They must also be capable of creating the right business model to generate profits from it. Who else than a big corporate house having large scale and size to be able to do this?

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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