Monday, September 29, 2008

Welcome to the United States of Europe!

EU must ensure quick accession of Western Balkan nations for its own interests
Kosovo’s declaration of independence has put stability in the Western Balkans back on EU’s agenda. Unless EU acts quickly, the whole region could slide backwards, with dire social, economic & security consequences. The EU needs a comprehensive regional approach, focusing on the remaining steps that would lead each country towards membership.

The Western Balkans - a term used only since 1999 - comprises Albania, Bosnia & Herzegovina, Croatia, Macedonia (FYROM), Montenegro, Serbia & Kosovo, with a combined population of roughly 22 million. Economic developments are promising, with almost all these economies posting high growth fueled by increasing industrial output and exports. Inward investment is steadily rising; business seems to believe that the remaining political & security challenges – the possible negative effects of post-independence Kosovo & Bosnia’s malaise – will be overcome sooner rather than later.

Much work has already been done. The EU-led Stability Pact for South Eastern Europe has, since 1999, successfully stimulated regional cross-border cooperation, for the first time since breakdown of Yugoslavia. Energy, transport infrastructure – roads, railways, & waterways – and crime prevention have benefited. This pact has now re-emerged as the Sarajevo-based Regional Cooperation Council to develop regional & multilateral standards for members. The recently revived Central European Free Trade Agreement (CEFTA) is meant to be the main regional engine for trade and business generally, and will adhere both to WTO rules and the parties’ obligations towards EU. Similarly, the South-East European Cooperation Process is one of the relatively new regional organizations that contribute to candidate & potential candidate countries’ preparations for EU membership. But these bodies must not be seen as substitutes for the far more comprehensive accession process, which only EU can initiate. Certainly, the pace of candidate countries’ approach to EU depends on the speed of their reforms.

And Europe, with the vital support of US, worked hard to stop the carnage of the 1990’s and subsequently to help rebuild the Balkan countries. But EU has so far failed to prepare the Western Balkans for accession, in line with its leaders’ promise at their Thessaloniki summit in 2003. That promise was not a matter of charity; the Balkans would add value to the EU. To be sure, the EU’s lengthy internal crisis over the proposed constitution was a major distraction, and damaged its reputation. Let’s hope the new Reform Treaty will help pave the way for a new, more robust phase of integration.

If not, one would have to ask what happened to the European spirit of the 1970’s and 1980’s, when countries such as Greece, Portugal, and Spain, which had just emerged from dictatorship and civil unrest, were welcomed into their fold. Political decisions taken then were relatively riskier, and the Greek and Iberian success stories justified that courage. What about today? The most recent EU members, Bulgaria and Romania, are both in the Balkans & both are countries with special needs. While the EU at first took their accession negotiations a bit too casually, it subsequently continued monitoring them even after accession to ensure that they develop effective administrative and judicial systems as required.

The EU must learn from this experience to develop an accession strategy for the Western Balkans. Their special needs should be taken into account in any new EU approach. A reinvigorated accession process would contribute to the EU’s consolidation, both territorially & politically, & strengthen its role in its wider neighborhood – the Mediterranean, the Middle East & around the Black Sea.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Saturday, September 20, 2008

Global ironing

With steel as the lynchpin of his global plans, Ratan Tata ensured a dramatic transformation of Tata Steel. By a. paul, s. nahata

Not being a historian and giving a commentary about any event that occurred in the year 1907 would have quite a tardy and drudging exercise, had it not been for a small little company called Tata Steel that was founded in that year. Come to think of it, for a better part of the century, this company remained in the shadows, lacking both hype and lustre, but still retaining its unique identity of being one of the most ethical and people-friendly companies the world had ever seen. But that, as Alice would have wonderously realised, was then... A 101 years later, the same company wins the B&E Most Global Indian Company Award! And the key credit for the same goes indisputably to India’s most global visionary, Ratan Naval Tata!

1962 was the year when this raring-to-go trainee joined the Tata Group! Through the subsequent years, he was shuffled between various companies within the group with the sole objective of making him completely conversant with the group’s operations. But it was perhaps the year 1971, which was the turning point in the history of Tatas, when the 34-year-old Ratan Tata was made the Director-in-Charge of Nelco, a top Tata group company. Exactly twenty years later, in 1991, he was made Chairman in the main holding company, Tata Sons Ltd., and in the other main group companies, namely Tata Consultancy Services, Tata Motors, Tata Teleservices, Tata Power, Indian Hotels and of course, the protagonist of our award, Tata Steel.

Ratan Tata’s visionary thought process has never been below outstanding benchmarks. Even competitors talk high of this head honcho. Aditya Mittal, CFO, Arcelor-Mittal, conversing exclusively with B&E, divulged, “I have great admiration for Mr. Tata. He is an entrepreneur with great vision.” But truly speaking, though Tata Steel has been exporting steel for many of those years (they formed their first structured global export cell way back in 1986), it was only in the past four years that the corporation’s global endeavours have attained noteworthy proportions.

Alison Richard, Vice Chancellor, University of Cambridge told B&E, “Whenever a company decides to go global, it has to start from the thought process of the leader. Very small details can play a major issue in playing globally.” It was in the year 2004 that the Ratan Tata led Tata Steel – which had at that time a steel producing capacity of 4 million tonnes per annum (MTPA) – took the most praiseworthy giant stride for any Indian steel corporation when it gobbled up the considerably significant Singapore based NatSteel Asia, a 2 MTPA steel producer, for $343 million. Ratan Tata’s shrewdest focus was on transforming the steel value chain dramatically. His tactic was to supply low cost steel produced in India to NatSteel, which would then churn out a high-value finished product to cater to quality-intensive global industries like aerospace, automobiles, construction etc. In 2005, the target for was the 1.7 MTPA Thailand based Millennium Steel, which Ratan Tata successfully negotiated for $130 million! In the same year, he also acquired a significant 5% stake in Australian Coal Mines.

But the most brilliant of all moves Ratan Tata has ever made came in the year 2006, when this exemplar leader bid for Corus – a mammoth 18.3 MTPA UK based steel corporation. He closed the deal at a whopping $12.1 billion in January 2007. Though he became an immediate toast of the nation, random criticism for the overly priced deal by experts and analysts alike came in from all quarters. In fact, Standard & Poors immediately downgraded Tata Steel’s credit rating from BBB to BB, a grading that holds even today for the firm because of the massive debt servicing levels due to the Corus buyout. Even the share price of Tata Steel suffered massively at that time, going down from Rs.537 on October 5, 2006, to Rs.419 on March 6, 2007, what with shareholders on a selling spree. But the ever-confident Ratan Tata had then told his detractors that shareholders, who’re thinking in the short term, will rue their decision to sell Tata Steel’s shares. Prophetically, exactly one year after the deal, the share value rose thunderingly to Rs.988, settling to more sensible levels as on February 3, 2008, to Rs.776.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
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B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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'This is one of Big B's best performances'
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Deccan Herald - IIPM ranked as top B-School in India
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