IIPM ARTICLE AND PUBLICATION: April 2013

Tuesday, April 30, 2013

Is China fudging shamelessly?

Genuine concerns on manipulation of data cast serious doubts over the way the Chinese economy is progressing. Considering how this has serious implications for the world’s second largest economy, and consequently for the world at large, China must work together with international experts to sort this out at the earliest

Pundits call it ‘the’ case in point when it comes to superlative achievement in a holistic sense. Optimists insist that it is the next centre of power for the world. Pessimists call it the beginning of an end. China, in the past one decade, has quadrupled its GDP from $1.2 trillion to $7.3 trillion and ultimately became the world’s second largest economy – that too amidst the global economic slowdown (read this issue’s cover story on the Chinese story, which is a joint research between Cornell-IIPM Think Tank-B&E)!

Nobody can dispute China’s unparalleled progress, but the mysteries inherent in some of their official statistics are clearly discomfiting. Paradoxically, for this 2nd fastest growing economy, the overall electricity consumption is showing a reverse trend. It doesn’t require rocket science to establish a correlation between industrial growth (a vital part of national income) and electricity consumption. It’s more astonishing a fact since China was among the countries that, to protect industrial growth, rejected a proposal to contain electricity consumption to fight global warming.

According to a report by The New York Times, regions like Shandong and Jiangsu have seen a decrease in electricity consumption by over 10%. The report further revealed that the “coal stockpiled at Qinhuangdao port reached 9.5 million tons this month, as coal arrives on trains faster than needed by power plants in southern China. That surpasses the previous record of 9.3 million tons set in November 2008, near the bottom of the global financial downturn.”

Interestingly, local Chinese officials are known to keep two sets of accounting books as their performance is measured on economic targets. Apparently, officials often manipulate local data to show a rosy picture in their region. John Lee of Newsweek wrote in July 2010, “Statistics come in from all over the country. The provinces compile them with impossible speed – [in] around two weeks, or three times as fast as many developed economies with much more efficient processes of data collection.” US takes over a month to assimilate such information (with 1/4th of the Chinese population) and India takes more than a quarter.

The Purchasing Managers’ Index (PMI), which reveals financial activity with respect to trade of goods, further raises concerns. China’s official PMI (March 2012) was around 53 points (anything above 50 is considered a healthy economy), while the PMI projected by HSBC China was less than 48. More interestingly, the two figures have shown wider variations during global recession (and slowdown) as compared to normal periods.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Myths and truths about China...

China is rising, and it’s rising fast. From a cheap manufacturing hub, the mainland is now morphing into a consumer market for premium goods and services. In order to cope with this shift, the world needs to change its view about China. Here are three myths and truths that you ought to know about the dragon nation

In February, many Americans got their first introduction to Xi Jinping, the presumed next president of China, as he spent five days touring America. It was an important visit that will set the course of US-China relations which are already tense for the next several years.

Unfortunately, most of America’s conventional view of China is outdated or based on inaccurate information. America’s foreign policy establishment needs to rethink common myths about the dragon nation or else risk following the wrong strategies for dealing with China’s rise. Three Big myths about China Myth No.1: China is primed for an Arab Spring
When Americans see Xi Jinping hobnob with the political and business elite or catch a basketball game, they need to realise they are not seeing a man who is about to seize power over a tottering country and an officialdom ready to implode. There is no Arab Spring on the horizon, as Senator John McCain had declared. No, Xi Jinping is about to preside over a self-satisfied – perhaps overly smug – bureaucracy and a relatively happy population.

The major difference between China’s government and regimes like Mubarak’s in Egypt or Gaddafi’s in Libya is that there is far more diffusion of power than many Western observers realise. Unlike in Middle Eastern nations that have seen turmoil, where despots clung to power for decades, buttressed by corrupt family members enriching themselves from the country’s coffers, China has mandatory retirement ages for even its most powerful political leaders.

The offspring of the nation’s leaders tend to go into the private sector to make fortunes, and there the Communist Party does not control most aspects of their lives. Moreover, senior leaders, once they retire, are not allowed to publish memoirs freely, take jobs in private industry, or travel abroad in a private capacity. And with more than 60 million party members, nearly every Chinese has a family member or close friend who is part of the system. Even if anger arises, there is no single unifying person or family for people to aim at to topple.

Myth No.2: China is stealing American jobs by manipulating its currency
Many Americans believe the old line trotted out by analysts like Nobel Prize winning economist Paul Krugman that China is stealing American jobs by artificially keeping its currency, the Yuan, low. In reality, those arguments don’t hold up to even basic scrutiny. True, China has pegged the Yuan to the US dollar, which is a form of manipulation, but the low exchange rate is not the real reason why China is outcompeting America for manufacturing jobs. Quite simply, China has become the world’s manufacturing hub because of efficient labour forces and superior infrastructure.

Read more......

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 27, 2013

"Stagnancy in reforms is the top concern for most firms"

Director General, CII, discusses the general sentiment within India Inc. And the steps to be taken for revival with K. S. Narayanan of B&E

B&E: What is the general mood of India Inc. especially after the RBI not approving a rate cut? What is your view on RBI’s concerns related to inflation at present?
Chandrajit Banerjee (CB): India Inc. is unhappy with the RBI’s decision not to cut rates. It is not able to understand the RBI’s lack of concern about economic growth. CII believes that inflation is being driven by two factors. The first is the supply-side bottlenecks in the agricultural sector as a result of which food prices are rising especially for perishables. The second factor is the rise in the price of international commodities. Keeping interest rates high will not tackle any of these factors.

B&E: What are India Inc.’s key expectations in terms of reforms that can bring back growth in manufacturing and services?
CB: I would like to highlight two key reforms that would help bring back growth in manufacturing and services. Implementation of GST would rationalize the indirect tax structure and has the potential to raise India’s GDP growth rate by 1-1.5%. The other reform is to allow FDI in multi-brand retail, which will not only bring in investments and create jobs but also deal with the inflation problem.

B&E: Assuming the current scenario continues in terms of policy measures, what is your outlook on growth returning to 7% plus levels?
CB: If the current scenario continues, it will be hard for growth to return to 7% plus. However, we will continue to raise these issues with the government and hope that they will be resolved sooner rather than later.

B&E: Data on cash being retained by companies seems to indicate relatively lower risk appetite. What are the major factors affecting confidence and denting investment prospects?
CB: CII’s 79th Business Outlook Survey conducted earlier this year revealed that stagnancy in reforms is the top concern of most firms, followed by high interest rates and high raw material costs.

B&E: How is the situation back home influencing India Inc’s decisions w.r.t. investing in overseas markets?
CB: Indian companies will invest wherever opportunities arise and the business climate is positive. Indian companies are trying to diversify out of the traditional markets of US and Europe; and seeking destinations such as Middle East, ASEAN, Africa and Latin America. At the same time, developed markets will continue to be attractive, especially at current depressed valuations.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

"India has a world class resource belt"

The Economy is staring at a high degree of uncertainty, but Hindustan Zinc Ltd. (HZL) has posted strong numbers on the back of a strong demand environment in the domestic market as well as internal efficiency enhancements. Akhilesh Joshi, CEO & Whole Time Director, Hindustan Zinc Ltd., discusses the company’s outlook with Virat Bahri of B&E

B&E: On an year on year basis, Hindustan Zinc Ltd. has grown its zinc, lead and silver production by 6%, 56% and 35% respectively in FY 2011-12. How do you find the domestic demand environment currently for these commodities and what is the scope ahead?

Akhilesh Joshi (AJ): Developing countries, including India, will continue to outpace the rest of the world on the back of urbanization, infrastructure development, automotive industry growth and increase in the usage of coated steel. India, being a high growth-high demand market, is among the lowest ranks globally in terms of per capita consumption of zinc and therefore, the demand potential holds a lot of promise. Also, the global outlook for the zinc market is expected to be positive with the demand-supply gap expected to progressively widen on supply shortfall and robust consumption growth. Consequently, zinc prices are projected to be in a secular uptrend.

Growth in lead metal demand, similarly, is expected to be strong; driven by growth in replacement battery demand & the automobile market. India, along with the other BRIC countries, has become a sought after manufacturing hub for major OEMs. For the coming years as well, the lead market is expected to be strong; keeping in line with the growth in demand and the current supply-demand gap from the primary source within the country.

Indian demand for silver, in turn, increased by 12% to around 3,550 tonnes in FY 2012, as compared to the previous year. Indian silver demand is expected to grow further on the back of prospective growth in industrial segments and with silver becoming a preferred investment asset along with gold.

B&E: HZL posted revenue of Rs.114.05 billion (yoy growth of 14%) last year and net profits of Rs.55.26 billion (yoy growth of 13%). What critical challenges did HZL have to face during the fiscal with respect to maintaining bottomline growth?

AJ: Significant increase in input commodity prices has been one of the main challenges. However, we have more than offset the impact of increase in COP and have had a double-digit growth in profitability on the back of strong volume growth, improved silver prices as well as operational efficiencies.

B&E: The Indian economy posted a sub-7% growth in GDP in the previous fiscal, which has disappointed global investors. How does this slowdown in the economy affect your strategic direction? How do you expect to ensure continued growth in this scenario in the current fiscal?

AJ: Our world-class assets, cost effective operations, strong growth pipeline & strong liquidity position provide the backbone to our business and ensure our profitability & sustainability. We had done significant organic investment even during the global economic meltdown in 2008, since we believe that a slowdown in the economy is in fact the correct time for building an asset-base. We therefore continue to make investments in our business and also pursue aggressive greenfield & brownfield exploration. In the current fiscal, our revenue growth will basically be driven by the volume ramp up from our newly added lead-silver capacities.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

The road ahead for Asia

The economies of Asia are maintaining their impressive growth trajectories. Yet the global backdrop in 2012 is one of uncertainty: the eurozone is grappling with its sovereign debt crisis; and more generally, stagnation in the major industrial economies is stunting demand for Asia’s products. For these reasons, experts forecasts that growth in Asia will ease to 6.9% in 2012 (from 7.2% in 2011) before coming back to 7.3% in 2013.

More regional than global
From the collapse of Lehman Brothers in September 2008 through the initial stages of the global recovery in 2010, external factors generally dominated Asia’s growth outlook such that countries and subregions largely moved in sync. In contrast, 2011 has seen general factors give way to country-specific factors driving the outlook. For instance, for South Asia, growth in 2011 fell sharply to 6.4% from 7.8% in 2010. The fall was largely determined by the marked slowdown in India where growth fell to 6.9% from 8.4% in 2010, mainly reflecting its marked monetary tightening in the face of persistent inflation and slumping investment. Going forward, while East Asia’s growth will moderate to 7.4% in 2012, growth in Southeast Asia is seen picking up to 5.2% for 2012 and to 5.7% in 2013.

Inflation to moderate in 2013

Across subregions, higher food and fuel prices drove up inflation in developing Asia to 5.9% in 2011 from 4.4% in 2010. In Central Asia, South Asia, and the Pacific, average inflation rates reached around 9% in 2011 while it was more moderate in East and Southeast Asia, where inflation continued to be contained at around 5%. However, inflation in developing Asia is set to recede as economic activity softens. Assuming relatively steady global oil prices and easing food prices in 2012, regional average inflation is forecast to slow to 4.6%. Besides the external price developments, domestic policies may play a role in, for example, South Asia, where some reduction in heavy fuel and power subsidies are expected, and will set a floor for any reduction in inflation.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

“We see a significant potential in India’s supercar market”

The niche luxury car category is now becoming the new battleground in the Indian auto story. Over the past year, super premium sports cars like Bugatti Veyron, Ferrari, Aston Martin, Bentley, Jaguar, BMW, Porsche, Koenigsegg and Lamborghini have all hit the Indian roads.

This past November, Italian marquee Automobili Lamborghini launched its latest supercar Aventador LP 700-4 in India, priced at 36.9 million rupees ($750,000) and available at outlets of Exclusive Motors, the sole partner for selling the Italian supercar brand in India. James Page, Marketing Manager at Lamborghini SPA of South East Asia and Pacific, talks to B&E’s Deepanshu Taumar about how he sees the market for super luxury sports cars growing in India and the completely new level of performance and sets of standards that the Lamborghini Aventador offers in the sports car category.

B&E: What kind of strategy are you putting in place for selling a super expensive car like the Lamborghini Aventador LP-700-4 in India?
James Page (JP): Our strategy in India will definitely be aggressive and we will expand our network and ramp up our marketing. Our relations with Exclusive Motors have been good and Satya Bagla (MD of Exclusive Motors) has been a great partner. We believe the alliance will pay off handsomely and show up good numbers in terms of unit sales. Exclusive Motors has already got us 20 bookings of the car within days of its launch in the country.

B&E: How do you plan to create a market for a mega expensive sports car in the country? What kind of sales numbers are you looking at in India?
JP: We will do it step by step. We have already started delivering to our initial customers. From research and development at Lamborghini Houston (service centre) to bringing the car to market - it’s been pretty tiring so far but we are going about it in a surefooted manner. Right now getting the first few units out for our early customers is the company’s main priority. We will continue to deliver the units and take more orders on a year-on-year basis. Exclusive Motors has recorded 20 bookings of Aventador and new customers will have to wait for 18 months for the delivery of the car. Since March onwards – when Aventador LP700-4 was introduced to the world – 1500 cars have been booked worldwide. We are aiming to sell 100 cars annually in India.

B&E: Every country is different and unique in terms of consumer buying behaviour. What do you think Lamborghini has to offer that will win it potential customers in India?
JP: We want to meet the expectations of our prospective customers from different parts of the world. Basically our strategy is to be aggressive but in a good way. Our first step is to show the people our car. We get them on the wheels to experience the emotions that comes while driving the car. This makes them feel and experience the Lamborghini brand values. We are an Italian car brand with extreme and uncompromising value propositions. The design of the car is really aggressive and is based on aeronautics. This has been done so that our customers get to feel that owning a Lamborghini brings with it a whole lot of emotions that are different from owning any other supercar. This unique emotional bonding and identification with the brand is what Lamborghini is all about.

B&E: How has Lamborghini been performing in the Asian markets as compared to the developed markets?
JP: China is becoming the No.1 market for us in the world. Five years ago, we were able to sell only a handful of cars (five cars maybe). Now by this year-end, we are on course to sell more than 300 cars. So you can see the ground we have covered and the kind of growth we have been able to achieve in China. India may not grow that fast but we still see a significant potential in the country. This is evident from the success of Formula One and the kind of response we are getting from the market here.

Read more....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

Recession redux?

With Stress in European financial markets continuously getting worse amidst talks of bailout packages for greece, a sustainable solution is yet to be found. Real economic indicators are not yet indicating a recession, but markets remain unsettled due to deteriorating sentiments and speculations about the future of the European union.

Crisis beyond EU

Consistent with the other large industrialised European countries, UK’s growth has slowed down considerably in the second quarter of the year. There is little doubt that fundamentals in the economy are not very strong, but it has also been hampered by global macroeconomic environment. The European debt crisis or the fear of it is also adding to the existing bad sentiment. Confidence in global growth has waned. Consensus forecasts for GDP growth have declined across the industrialised world. The Deloitte Stress Index is also showing the highest reading in the last two years. Real personal disposable incomes have declined by around 3% yoy, the sharpest decline since 1976. Even the optimism in UK’s CFOs has dipped to levels seen during the recession in early 2009.

US under risk

During the global economic downturn of 2008-09, manufacturing in US went down by 15%, the highest decline since World War 2. In late 2009, it recovered significantly from depressing levels, but it is again fading in 2011 due to natural calamities in Japan and a poor domestic demand. If US businesses have been able to post record profits, it is all because of their strong overseas operations, but any recession in Europe can make its dent on the prospects of American businesses as slowdown in exports to Europe will slow down overall manufacturing. It seems like a turn of tables. In 2008, it was US that brought recession to the world. Now, Uncle Sam is hoping that the ensuing debacle in EU doesn’t precipitate a crisis in its economy.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 15, 2013

Is this Mallya’s last gambit to save Kingfisher Airlines?

Can this king make bad times good for an airline whose stock has shed 69.64% of its value since the year began? What can he do to make his call to close down Kingfisher Red work?

Conventional wisdom holds that Kingfisher Airlines (KFA) – which years back, was touted as one of the most promising private players in the Indian aviation circle for the next decade – is now toast. Mallya has had plenty of problems to tackle with – mounting losses, piling debt, fuel price woes and a cyclical demand being among them. He recently discovered another. And it came in the form of a fault-line in KFA’s very own hybrid operational model.

The airline declared on September 28, 2011, that it would discontinue its Kingfisher Red operations – its low-cost (LCC) arm – while continuing to serve the Indian market as a full-service carrier (FSC). Reason: the unviable passenger load factor and yields in its LCC business. Was the decision – about which Mallya and his CEO Siddhant Sharma seemed convinced about – received well by the market? No. Since the announcement, the stock is down 18.59% (as on October 11, 2011) – a clear indication that news of the culling of Kingfisher Red has not gone too well with the investors. This one was unexpected. The market seems to be turning its head away from a management that has ‘finally’ chosen to rationalise operations and restore order in a troubled house that during the past eight-and-a-half years has burnt cash to the tune of Rs.177.90 billion (including debt and acc. losses). But there is reason for it.

There is potential in this strategic decision to plug a gaping cash-eroding hole. But there is a downside to the tale. The company (through an official statement by CEO Agarwal on October 5, 2011) has clarified that despite the closure of the LCC business, “there will be no reduction in Kingfisher’s fleet size or its network”. This could prove a blunder, which could undo any good that might occur as an outcome of the strategy. Understood, at present, the airline’s fleet of 66 aircraft, is of the right size, given that the airline carries 1.13 million passengers every month (3.41 million passengers carried during Q1, FY2011-12, to 60 domestic and 8 overseas destinations). In other words, this amounts to a total annual passenger count to fleet (TPF) ratio of 205,455. If you look at the six most profitable airlines in the world – KFA is much better placed in this regard than most of them: TPF ratio of Delta is 218,569; United-Continental – 204,425; Southwest – 189,233; American Airlines – 168,531; Lufthansa – 175,632; and China Southern Airlines – 221,739. But here is the alarm bell: this ratio will not stand justified four months later, when KFA’s decision to drop its LCC arm comes into practice. Why? The airline cannot maintain the footfalls at the current levels, especially in the light of the fact that 75% of its seats during the past six months were sold in the “low-fare” category. In this sense therefore, to maintain a load factor (LF) of 83.6% and above going forward (making KFA’s LF amongst the highest in the industry, only behind IndiGo’s 84.3% during the January-July 2011 period), will prove the biggest challenge if this move is to make any economic sense.

Read more....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 13, 2013

Dubai: back from The Brink

The City that once Conjured visions of Grandeur and Globalisation is trying its best to shake off The Misfortunes inherited from its recent debt crush and property bust. Syed Khurram gives a ground-zero walkthrough report

First impressions usually leave a deep imprint behind. The first glimpse of a city — its buildings, traffic, shops, roads and numerous others things that are part of the urban ecosystem — can convey a lot about its mood and character. So the sight of a stately limousine immediately upon entering Terminal 3 of Dubai Airport only reconfirmed my notions about the city and its multi-splendoured riches. In all these years of living in India, I have never come across a limousine at any of the airports I have passed through.

Driving on Dubai’s smooth roads feels like cruising on a pleasure yacht. The difference is that instead of navigating the vast expanse of sea, you speed past ribbons of smooth asphalt and imposing skycrapers that can make your neck go stiff and your jaw drop. While driving down to the hotel, I couldn’t resist asking the driver: “How are things here?” The driver, a stoutly-built Peshawri Pathan replied in a matter-of-fact way: “Sab theek hai, pahle se ab achcha hai.” Was he hinting at something? Could it be that he was referring to the Arab uprising in the neighbouring Gulf countries, the political hot potato that many Muslim sheikdoms in the region are currently wrestling with? Or was it just a general observation about Dubai’s economy that had lately run up against a great debt wall but is now limping back to recovery?

A short while later, I was back on Dubai’s streets, intent on savouring its urban charms and feast my eyes on its many ravishing landmarks. If ever a traveller is searching for an immersing shopping experience, Dubai is the place to be in. Beyond doubt, Dubai’s array of exotic shopping malls and super-rich wonder stores are a hog-heaven of consumerism. And though one comes across people from all nationalities looking out for the best they can buy, Indians in particular are a common sight. Some places, like the Meena Bazar in Bur Dubai, feel straight out of India and you could be forgiven for thinking that you are taking a stroll in an Indian market.

As you amble along the streets taking in the sights and sounds of the city and its breathtaking cityscape, you cannot but marvel at the ingenuity of the builders for giving shape to magnificent dreams cast in marble and stone. The sheer scale and grandiosity of the edifices around makes you wonder about the kinds of resources and skills that went into their creation. At times such in-your-face opulence leaves you wondering about whatever happened to Dubai’s property bubble bust, and if the talks about the emirate’s once bustling economy now being laid low are just overblown apprehensions.

Dubai’s high rises and exquisite malls are still the cynosure of tourists’ eyes but they probably don’t reflect truly the economic sores that were inflicted in the wake of the property crash. About two years ago, after years of breakneck real estate expansion for which it relied on international borrowing, Dubai found itself on the edge of a precipice as debts swelled to well over 100% of GDP. The $110 billion debt burden and the real estate crash have since exacted a heavy price in terms of stalled economic growth and investors’ flight. And although Dubai has been able to avert a debt disaster, it has not yet fully recovered from the crisis and continues to pay the wages of its past profligacy and reckless property expansion. “The situation has improved slightly and things are not like it was in mid-2008 or 2009. But still there is no economic stability in the real estate and hotel industry” says V.B. Shetty, Group General Manager, Ramee Group of Hotels & Resorts.

Read more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 12, 2013

Huawei’s Smartphone Play

The $20-billion Chinese Company is a Leading Operator in The Telecom Equipment market in India, but it is for The First time making a Big Consumer push for Grabbing a share in The Handset Business.

Noticed that unmistakable trend in the handset market? Not only have smartphones become the most coveted and sought-after category in the handset business, many new players are also joining the fray. Also, customers are now spoilt for choice as they have more and varied options to choose from, which is leading to greater experimentation with new brands. As a result, top smartphone vendors such as Nokia, Samsung and LG now have a tough fight on their hands fending off competition from upstarts and new players in the game. Is it any surprise then that heavyweight telecom players like Nokia, Samsung and LG have collectively lost market share in the first quarter of 2011, while the share of lesser known players have climbed to 46.3% from 38.5% in the same period. According to technology research firm Gartner, Nokia’s market share in India fell to 25.1% in Q1 of 2011 from 30.6% in the corresponding quarter last year. Similarly, Samsung’s market share fell to 16.1% from 18% and LG’s to 5.6% from 7.6% in the same period. However, Research in Motion (RIM), maker of the BlackBerry phones managed to maintain its market share while Apple’s iPhones have been flying off the shelves. No prizes for guessing that both RIM and Apple are riding the crest of market success on the back of their smartphones sales.

Driving the demand for smartphones in India and the world has been the launch of 3G services and high speed data services. Worldwide, 427 million handsets were sold in the first quarter of the 2011 and out of that smartphones accounted for 23.6%, according to Gartner. While the industry grew by a bracing 19% YoY, the smart-phones segment grew by 85%. In India, the handset market is expected to touch 170 million units by the end of the year, as per various studies. Of that, smartphones are expected to corner more than 30% share. Analysts say that smartphones will continue to dominate the market and it’s the mid-tier market, which will lead to the mass adoption and growth of the smart-phones segment. In fact, the share of smartphones in the handset business would have been even higher but for the fact that many manufacturers who had announced a number of high-profile devices during the first quarter of 2011 could not ship their products until the second quarter of 2011. “We believe some consumers delayed their purchase to wait for these models,” says Roberta Cozza, Principal Research Analyst at Gartner.

The launch of some high-performance devices in the Indian market and also a change in the strategy by some telecom players have not gone unnoticed in the second quarter of 2011. Recently, Nokia launched its touch and type interface high-end device E-7 in the market. Similarly, HTC released its power-packed HTC Sensation for the high-end Indian customer looking for high performance phones. Research in Motion has slashed the price of its low-end BlackBerry Curve smartphone models to facilitate their mass adoption. The models are now available under Rs.10,000 price range.

Read more...

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 08, 2013

A SHAKY RECOVERY

The imprints of the financial meltdown are receding slowly & steadily from global economies and there is a visible recovery in capital and financial markets. However, the recovery is still uneven across geographies and asset classes. Also, With increasing concerns over sovereign debt in the Euro Area & S&P’s downgrade of US treasury bonds, the world economies could slip again .

Emerging again...
The unforgettable financial crisis of 2008 had put global financial markets in a tizzy. Now, that same growth seems to be coming back on track. As the trends clearly indicate, the growth of the world’s financial stock comprising of equity market capitalisation and outstanding bonds & loans has increased from $175 trillion in 2008 to $212 trillion in 2010. As a matter of fact, the resumption of growth trends is particularly because of the new equity issuances mainly coming from the emerging market companies in 2010, which totalled around $387 billion. Moreover, the increase in the IPO deal volume occurring in emerging markets and an 11.8% ($6 trillion) increase in the market capitalisation figures will also add to the future growth.

...But depth yet to arrive

Developed countries have much deeper financial markets than those found in emerging economies. Financial depth in the US, Japan, Western Europe & other developed countries is near or above 400% of GDP compared to around 280% in China, 209% in India & less than 200% in the other emerging markets. Moreover, every country has different components of financial depth. For instance, Japan’s financial depth is due to the size of its huge corporate bond market, while stock market capitalisation, corporate bonds, financial institution bonds & securitisation is the highest in US et al. While there is potential for growth in each and every individual asset class, the final share varies from country to country.

Read more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 02, 2013

This University is Under Siege!

Usage of Outdated tools, Wrong Analysis, faulty Reportage, Attrition of key Personnel, lack of Forward Integration – thanks to its Complacent Approach, IMRB risks Losing Ground very fast

The early birds do catch the worms, but in the corporate world, it’s really about how long you can keep them. Being born in a period (1970, to be precise) when Indian companies weren’t even updated on the real meaning of the word ‘customer’, does provide several advantages to IMRB, a company that’s well known for its customised researches. But when one looks at how it’s failing to set new benchmarks, one wonders how long it can continue to keep its competitive strengths intact.

For a company that claims to be the ‘University’ of the Indian market research industry, it would be quite appropriate to do a quick ‘research’ on the pioneering work by brand strategy guru David Aaker on Sustainable Competitive Advantage (SCA). Aaker had said that a company’s assets and skills will ultimately determine whether it can retain a sustainable competitive advantage.

For IMRB, development of the right kind of assets and skills appears to be the major challenge. A more embarrassing challenge is the fact that faults in IMRB’s reportage and findings have crept up faster than one could have ever expected or imagined – and it’s surprising that IMRB’s management could have overseen (and overlooked) these issues. For example, an IMRB report like the Internet Usage and Habits of Cyber Cafe Users (December 5, 2010) is riddled with numerical conflicts that could fox even the most intrepid analyst – 4Ps B&M has listed one such mistake in the graph at the right.

Some industry players put the blame for such lack of professionalism to be the result of their manpower challenges. Lakshmikant Gupta, Chief Marketing Officer at LG Electronics India, tells us from his experience and interactions, “IMRB is having a tough time retaining people, as they are moving to international MR firms or other sectors for better career options.” Numerous surveys point out lack of growth opportunities as the main reason for employee attrition. For an international MR company, it could be quite appalling if they were unable to provide their performers the right career progression, and it definitely has a worrisome bearing on growth prospects.

In general, the malaise starts from the top of the industry ladder. Dhiraj Chaddha, Marketing Head, Voltas Ltd. points out, “I think there’s a big room for improvement in the Indian MR industry. Most of them are following archaic models, which haven’t changed over the years.” Pioneers do have a role in shaping the best and worst in an industry. IMRB proves quite true to the stereotype.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles

Getting Back, Getting Even

From a Time when they were Playing for Survival Against MNCS, a select few Indian FMCG firms are Quickly Turning The Tables. Still, The Head-to-Head Score goes in Favour of MNCs

Even though some Indian FMCG players like Godrej and Dabur have a legacy of more than 100 years, yet they have traditionally been players with modest ambitions till the 1980s. But like other industries, the big churn came in post-liberalisation era. Over time, and especially post liberalisation, foreign players like Nestle, HUL, P&G and Reckitt Benckiser significantly grew in size and stature in the Indian market, and left the Indian firms behind by miles.

The domestic FMCG majors had to desperately play the survival game. Local companies like Dabur, Marico, Emami, Himalaya, Amul, understood that the market was changing and that they had to change with it. They shed their regional ambitions and started investing into distribution, packaging, product innovation & marketing. Players like Godrej went for a complete brand repositioning, and brought in a more professional management structure that emphasised on youth and looked to go global. But to what extent has their radical transformation helped Indian companies move up the steep learning curve that they largely stayed away from earlier? Are Indian firms taking the score back from the MNCs?

A Booz & Company and Confederation of Indian Industry (CII) report pegs the Indian FMCG industry at around Rs.1.3 trillion. The sector witnessed a CAGR of about 11% from 2001 to 2010. The last five years have shown a CAGR of approximately 17%. If the industry could continue to grow with a CAGR of 12-17%, it will become a Rs.4-6 trillion industry by 2020.

The real inflexion point for Indian players was 2001. According to the report, large Indian players grew sales by 12% from 2001-2005 and by 19% from 2006-2010. MNCs, in turn, saw sales growth of just around 2% in 2001-2005 before recovering to see growth of around 16% from 2006-2010. This has reflected in key market share gains as well. Godrej No. 1 is the leading soap brand in Northern India and third largest overall. Wipro’s Santoor holds sway in South India; ahead of the likes of Lux, Lifebuoy or Dove. ITC (well, if you were to consider it an ‘Indian’ company) is giving sleepless nights to HUL with innovations in personal care and food categories. The USP of Indian FMCGs – natural and herbal-based products – is attracting Indian customers, for whom ‘foreign’ ostensibly doesn’t carry the same attraction as before. In fact, differentiated products like Chyawanprash, Navaratna oil and Parachute have been immensely beneficial, as MNCs have consciously not invested in these products.

Consider the situation in personal care and home categories. According to Euromonitor International, Indian companies have been either holding steady or steadily gaining market share since 2005 in these segments. Even as Hindustan Unilever’s market share dropped marginally from 36.6% in 2005 to 33.3% in 2010 in the personal care segment, Dabur marginally upped its market share from 4.7% to 4.9%; while Godrej raising its share to 4.5% from 3.9%. ITC has doubled its market share to 1.4% in 2010 from 0.7% in 2008. But other international players have been gaining ground as well. Colgate-Palmolive’s market share rose from 6.4% in 2005 to 6.8% in 2010. P&G India’s share has also risen from 4.2% to around 5.4%. In these rapidly growing segments, MNCs have a clear edge over Indian players.

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