CONFUSED CONSUMERS!

And now for a very different re-positioning song – one that has left many customers confused. Yes, we are referring to Naresh Goyal’s third airline brand, Jet Konnect.

The slowdown-induced tightening of purse strings possibly hit the air travel sector the worst. The domestic market shrunk significantly and there was a significant shift of air travellers from full service carriers to low cost airlines. Given the changing market dynamics, and to cash in on consumer preference for low cost airlines – Jet Airways’ Naresh Goyal launched a third brand Jet Konnect, which became the second low cost brand from Jet’s stable (after JetLite). Jet Konnect is flying on specific routes to replace many of the Jet Airways (full-service) flights. Now the obvious question that pops up, why a third brand? Why not simply replace the Jet Airways flights by its low cost carrier JetLite? As K. J. Singh, Co-Founder and CEO, Evolve Brands says, “It makes more sense to fly with a single-brand rather than having two separate brands catering similar facilities. JetLite and Jet Konnect have nothing different apart from the routes.” Well Goyal thought of that option first but had to drop it due to the operational and regulatory hiccups, which would have complicated and in turn delayed the shift in the strategy. Thus, a third brand was a quick and easily deployable solution to battle the tough economic times. A smart business strategy!

So what went wrong? Well, Goyal failed to support its strategy with a right marketing plan! As a result, till date, the differentiation between Jet Konnect and JetLite in consumer mind is fuzzy. So much so that many fliers aren’t even aware that Jet Konnect is a separate airline. Many travellers believe that Jet Konnect is yet another scheme launched by JetLite. Binit Somaia, Regional Director, Centre for Asia Pacific Aviation explains, “The challenges which Jet faces is the potential for consumer confusion between the three brands, as well as the fact that Jet Airways and Jet Konnect fall under the same management.”

Ratan Lal Bhagat

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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
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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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Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

Life Plan ka irada

Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

After launching a series of comunication on Child Plans and Pension Plans, Max New York Life Insurance, under its refreshed positioning, ‘Karo Zyada Ka Irada’, has recently launched an ad campaign to promote its Life Plans. The communication revolves around the idea that even a short separation from our loved onesmakes us paranoid. But what if they were gone forever?

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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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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

The movers...

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

l Real Image Media Technologies recently announced the appointment of Arvind Ranganathan, currently Head of Strategy & Business Implementation, as its CEO. With a focus on the expanding operations and the potential transition to a Public company, Arvind has been chosen to spearhead the dynamic and aggressive growth phase of the company and and to lead the company through organic and inorganic growth.

l BIG 92.7 FM (owned by Reliance ADAG) has roped in Ram Kambhoj as its Director-Rural Actication in order to strenghten its rural activation offerings. The task ahead for Raj will be to optimise business opportunities available in the tier II and III cities tapping the 193 districts that BIG FM covers while touching almost 200 million Indians across the country. In another development, BIG 92.7 FM has also brought on board Sailesh Bijlani as its Cluster Head – Maharashtra & Goa.

l M. K. Anand, Business Head, Zoom has called it a day at the channel and is currently serving his notice period. The buzz is that Anand is joining UTV Global Broadcasting as its CEO.

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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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“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
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Business Standard Exposes the Outlook Magazine Money Editor
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What is One plus One really equal to?

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

That brings me to another version of this 1+1 mystery. Over the last few years, just before the recession hit, ‘valuation’ was in vogue! Every new start up or even existing organisations started talking ‘Valuation’. Rather than creating value for the customer, valuation became the buzzword. But, how do valuations shoot up like this? I really did not understand this new game. This was, when someone mentioned ‘Sum of parts is greater than the Whole’. Now what does this mean?

And then, after a long phase of close to depression, I saw the picture. The ‘Bonding Energy’ should be contributed willingly by constituent particles only, towards efficiently aggregating together in the collective selfishness of “a) We build greater value for the customer together and/or b) We operate in a manner that our operations gain from each other a) To create value for the customers & b) To create return on investment for the owners (in that order)”. That is the key towards ‘Whole is greater than the Sum of Parts’!

No wonder when businesses get reduced to being seen as distinct particles, with no ‘Bonding Energy’, when they have no reason for being together in the first place, ‘Sum of parts will be higher than the Whole’. It is this irony, driven by ‘Valuation’ rather than ‘Value Creation’, compounded by greed and short term results that lead to businesses being managed as MF portfolios rather than with an approach of ‘organisation building’ and ‘value creation for the customer’.

That is one flaw that the famous BCG matrix can lead to. Businesses are seen as delinked, independent entities in this approach, without looking at the ‘synergistic’ or ‘complimentary’ roles they may actually be playing in the ‘dance’. This race for ‘Valuation’ rather than ‘Value Creation for Customer’ in some cases gets particularly pronounced in the ‘portfolio’ treatment and approach followed by some PEs. However, it is an area of caution only. Airtel and Max are cases where PE support, without losing track of customer value creation led to extremely positive results. Quick valuations and selling off of parts of organisations like cattle or treating multiple organisations as merely elements of a portfolio, can be obstacles in organisation building or in creating value for the customer or even for the owners. This can be dangerous at any stage in an organisation’s development, but sometimes quick valuations expected in early growth stage can ring a premature death knell for your business... delivering a ‘still born’.

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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 ISBE Programmes
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Brands that swept the country

• Vodafone Zoozoos • Pepsi Youngistan • IPL • Honda City • Hyundai i-10

When Vodafone signed up for the sponsorship of the second edition of IPL, the telecom company decided that it needed another pug-like mascot push to rise above the clutter. The idea of Zoozoos with 30 different stories came up during a joint client-agency briefing session. The accompanying PR exercise pushed the brand to a cult like following, far surpassing even the much talked about pug craze.

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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!

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)
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Screening sunscreens

Sunscreens protect and damage your body... Here’s how chemicals like oxybenzone are turning sunscreens into one big oxymoron!

I don’t clearly remember since when I got habituated to using sunscreen, but I also can’t remember a time when I stepped out of home without applying a sunscreen lotion. I’m positive that there would be many like me who follow this routine. With the rate at which cosmetic brands, beauty experts and enthusiastic customers are increasing, it is no wonder that the present times is being referred to as the boom era of cosmetics. And amidst all these products that help one to glam-up from head to toe, one product which has won patronage from people around the world is the sunscreen. But beneath the heap of advantages offered by this product, is a word of caution recently planted by the Environmental Working Group (EWG). This watchdog organisation has brought to notice that some of the popular brands that make sunscreens contain hazardous chemicals, and at times do not provide the level of sun protection that they claim.

Oxybenzone is a commonly known culprit, and its traces have been found in the urine samples of 97% of Americans over the age of six by the US Center for Disease Control and Prevention (CDC). The chemicals in sunscreens penetrate the skin and make their way into a person’s bloodstream. Oxybenzone particularly has been found to cause allergies, hormone disruption and cell damage. Lax safety standards implemented by the FDA to determine UVA protection have triggered the EWG to tag the products as unsafe to use. Defying this research, Dr. Kandhari, a dermatologist, explains, “Ultra-violet rays are very harmful for the skin and can cause damage as grave as skin cancer. Many of the world’s renowned brands manufacture sunscreens and they definitely wouldn’t risk being sued because of failing quality checks and damaging the skin of its users.” On enquiring if sunscreens contain chemicals which can be harmful, Dr. Kandhari mentioned, “Yes, there are chemicals present to protect the skin and not to harm. Good brands are trustworthy and those who are exposed to the sun for long hours must protect their skin by applying sunscreens with UVA and UVB protection.” It is best to check and make sure that your sunscreen doesn’t contain more than 0.5% oxybenzone, since the chemical can be harmful to your body. Remember to also check your lip balms, moisturisers and lipsticks that provide SPF protection for your safety.

Over the years, with growing consciousness about beauty and skin-care, different varieties of sunscreens have been introduced. What initially was a jelly-like substance is now available as a spray-on, disappearing coloured sunblock for kids, and has a waterproof range too. With regular researches keeping a check on the cosmetic companies and helping us choose the right products, Baz Luhrman’s popular song still stands true... ‘If I could offer you only one tip for the future, sunscreen would be it…’

Spriha 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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LIFE AFTER CANNES

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

Indian ad-land’s tryst with Cannes is relatively new. A few Indian agencies did feature during the 1990s, but couldn’t make it big. The turning point came in 2003, when India bagged six lions. Good news is that for the last couple of years, India has been bringing home more than 20 metals from Cannes annually. The bad news (well, sort of!), say Neha Saraiya & Surbhi Chawla, is that winning a Cannes metal is now no more a career defining moment. Doing great work for big brands is the only career clincher that matters, at least in the cat-eat-cat world of Indian advertising!

Before they started Good Morning Films in 2004, Vikram Kalra (38) & Shashanka Chaturvedi (35) had tried their hand at a host of things, among them working for various agencies and ad film production shops. It was while working on a film for Hutch once (then with Adfilm-Valas) that the duo decided to go in alone. They cobbled together Rs.25,000 and launched their own film production house, bringing in Hutch as their first account. Their client list grew gradually to include Vodafone (Irfan Khan series), Limca and RCOM’s Muft ki Advice commercial. But even then, Kalra reminisces, “Good Morning Films had still not become a name to reckon within the industry.”

The year 2009 however came with its unique bag of goodies for them or what Vikram and Shashanka refer to as their “career defining moment.” The goodie bag brought with it two Gold Lions for them from the prestigious Cannes advertising festival for their ‘A day in the life of Chennai – Nakka Mukka’ commercial for The Times of India. The campaign, which won accolades for media & publication category along with the best use of music category, is the first Indian ad film ever to bring home a Gold at Cannes. Vikram can’t stop grinning, as with the trophy has come, instant fame and recognition. “Lot of friends are still dropping in to congratulate us. Accolades at Cannes have added value to our work and people take us more seriously,” he explains. Work is also pouring in. Post-Cannes, their film production outfit has also bagged some prestigious accounts, including that of Sony and Samsung. In fact, they’ve even got an offer from JWT China and negotiations are in final stages. So if Vikram & Shashank’s expectations, after the win at Cannes, are touching the skies, guess they have ample reason for it. Still gushing, Vikram exuberates, “Our next stop is Bollywood. We want to produce and direct a movie and are already scouting for the right script.”

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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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IIPM fights meltdown, places 2300 students By Education Mail Bureau
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HITTING THE RIGHT CHORD...

Even as Indian two-wheeler makers like TVS Motors and Bajaj Auto were registering falling sales month after month during the last financial year, Hero Honda was busy strengthening its base in the Indian market. The slowdown period has been the most lucrative one for the company. It even crossed the landmark of selling 25 million units (cumulative) in the last fiscal taking its market leadership to around 57% (60% currently). Moreover, Hero Honda’s bottom-line grew by 33% to Rs.12.8 billion during the financial year. But how did they manage it, when the whole industry was struggling, is definitely a big question.

Well, a right product at a right time is the trick that has clicked. In addition Hero Honda has also utilised the last fiscal to get closer to consumers. The company has built an extensive network of over 3,500 touch-points across the country, selling and servicing its two-wheelers. The company’s rural initiatives too have played a role in strengthening its presence in Tier-II & Tier-III markets, which contribute almost 40% of total sales. Explains Pawan Munjal, MD, Hero Honda, “An unprecedented share of 57% in the domestic market, when the industry has been witnessing a slowdown, is reflective of the strong fundamentals.”

Though auto experts like Murad Ali Baig say that “Hero Honda as a company is known for its continuity and stable approach,” they also accept that when it comes to the premium segment Bajaj Auto rules the roost. And that’s not baseless either. While Hero Honda sold about 185,000 units in the segment during the last fiscal, Bajaj sold 840,000 units. But then, the pace at which Hero Honda is catching up is noteworthy. What is more inspiring is its strong association with the youth and its effective campaigns in the rural markets. However, as Bajaj Auto plans to stage a big show in the executive segment, the days ahead may soon throw up more challenges for Hero Honda.

Pawan Chabra

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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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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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Fighting fat, but at what cost?

Stomach stapling might show results on the surface but it might be more than what you’ve bargained for...

The urge to lose weight, at any cost but hard work, has led surgeons to find out newer ways to cut fat. One of the popular ways is stomach stapling (or gastric bypass), a restrictive technique where the stomach is divided into two parts using a band and staples. The smaller part, the stomach pouch, is an egg-sized pouch that has very little capacity to hold food and therefore, leads to meager eating. A one-centimeter hole runs from the bottom of the pouch through which the contents flow into the other part of the stomach and from there to the intestines.

It takes a lot of guts to play with one’s natural system, and only when one is grossly overweight (Diego Maradona, the football legend, opted for the surgery when he weighed 121 kgs) or if a person is suffering from a compulsive eating disorder, would a person normally get their stomach stapled. But recent research at Sahlgrenska University Hospital in Sweden says that women who get their stomachs stapled reduce the risk of cancer by around 40 per cent. Experts are only astounded and confused to find no such benefit for men… But men can be happy since a stomach staple does add at least 10 more years to one’s life span. But, what about the side-effects of getting your stomach stapled? Well, considering cancer is a deadly disease and obesity leads to several other deadly ailments, one would think that the perks of stomach stapling would outweigh the side effects of the procedure used… not all the time though! It has been seen that ‘more than one-third of obese patients who have gastric surgery develop gallstones. Nearly one in three develops nutritional deficiencies. Patients could also be at risk for anemia, osteoporosis and metabolic bone disease.’ Though diet supplements can help, it’s best to avoid these side-effects.

Another method for losing weight that is being resorted to more commonly is cosmetic surgery (tummy tucks, body lifting etc.) since the treatment is only external. “We are dealing with the skin and mostly its structure, and at the most, you will have a scar which is hidden by the cosmetic surgeon in a way that it’s not obvious and heals really well too,” informs Dr. Ashish Davalbhakta, Cosmetologist at Aesthetics India. Though he talks of specific risks to be understood, he offers a different suggestion for the young who aspire to become a Jessica Alba or a Tara Reid the easy way. “I would tell them that their expectations are too high and they are more likely to be disappointed. One should aspire to be fit with exercise and a proper diet.”

The researches and conclusions in favour of gastric or cosmetic surgeries are not to highlight the possibility of losing weight this way but to, once again, draw attention to the power individuals have in altering their own risk factors. Resorting to these quick surgeries to get rid of the fat that can easily be tackled with is quite a bad idea. In fact, a recent Canadian research says that people who are a little above the normal weight actually live longer than those with normal weight. Not to mention that the underweight or the obese have much shorter life spans! Well, then, may be, it’s time to redefine the benchmark of normal weight...

Swati Hora

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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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DIVIDE AND RULE!

IIPM : One of the leading and most respected business schools

“I think we have a good opportunity to bring refreshment to the category and delight the customers,” avers Gurdeep Singh, Chief Operating Officer, Aircel. After all the company believes in ‘divide and rule’! In fact, this refreshment plan from Aircel comprises of offerings identifying distinguishable group of customers and designing specialised services catering to a specific target group. “The rationale behind this move is that in the recent past we have seen a slew of service operators launching their services and almost all of them have been pegging it on the price factor, which is a very ‘me-too’ kind of strategy,” reasons Singh.

Certainly, the underlying idea is to touch all target groups, but in a manner that is unique and apt for that particular group. For instance, while recently it added Delhi in its operational chart, the company realised that of the total population making use of mobile phones in the city, most of them are students or immigrants from other parts of the country in search of employment opportunities. So, to address the needs of students and immigrants, they have come out with separate tariff plans that would be relevant to these groups. In fact, Aircel has been applying this approach in almost every circle that it operates in. But then, there are many who feel that this is just a start up communication, while delivery will be a different thing altogether.

No doubt, it’s surely a novel way to lure customers and has already started turning heads, yet it would not be easy for Aircel to convert these raised brows into customers. Raison d’être: Markets like Delhi and Mumbai already have seven to eight players (RCOM too is present in both CDMA and GSM) fighting for a share in the pie that already boasts of a whopping 90-95% penetration level (almost saturated, wouldn’t you say!). In such a scenario, it would become difficult even for Aircel, with its differentiated approach, to actually persuade customers to switch their existing number or carry two cell phones. But the good news is that when we look at the bigger picture and see India as a whole, we find that the telecom penetration in the country currently stands at a meager 30%, which means a huge untapped market still waiting to be ruled. Moreover, the mobile number portability, which is expected to be implemented by early 2010, would give Aircel and others of its ilk a plenty of opportunity to really churn out some big bucks.

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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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On second thought, it really hurts!

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

Touted as the world’s cheapest car, Tata Nano aims to cater to the desires of the audience, who lack the financial support to own a highly priced four wheeler. Apart from forcing other carmakers to re-visit their business strategies, Nano has already started hurting the business prospects of the second hand car (currently standing over a million units) dealers like Maruti’s True Value, M&M’s First Choice et al. The adverse impact is visible even before Nano has hit the Indian road, as players of the used car market have been forced to slash their price rates by 30% in the Delhi-NCR region. The prevailing economic condition notwithstanding, consumers are holding back their precious pennies and thus Nano becomes an apt choice for the cash strapped buyers. However, Ravi Subramannian, AGM (Sales), Maruti Suzuki True Value differs, “The launch of Nano will hardly impact our business prospects, for the prospective car buyers would rather believe in purchasing a second hand high-end model rather than going for a never-tested-before vehicle.” N. Wadhwa, MD, SKI Capital Limited disagrees with Subramannian, “Used cars raise a lot of doubts in the mind of the buyers. Thus people would prefer buying a new car available at a lower rate rather than going for a second hand car.” Moreover, small cars form nearly 70% of the second-hand cars sold in the country; thus Nano is more likely to cut a hole in the pockets of second hand car dealers. But the future business dynamics of Nano having a larger share of the market pie and further hurting the second hand car dealers would depend on the success or failure after it goes through the buyers’ litmus test once it is launched.

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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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BASEL BEVEL... ...the next move

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

As the cut-off date for implementing the Basel II Accord draws closer, Indian banks are gearing up fast to be at par with their international peers. Are they on track? 4Ps B&M’s Manish k Pandey finds the answer...

“If Basel I could be compared with an old bi-plane, then Basel II represents an advanced jet, designed to transport its passengers in utmost comfort irrespective of the turbulence and extremes of weather outside,” says a White Paper on Basel II by PricewaterhouseCoopers (PwC). Certainly, considering the rewards of the accord that include introduction of new complex financial products, improvement in risk management system, availability of a range of options for estimating regulatory capital, et al, in the Indian banking arena, the statement by PwC, no doubt, marks out the real future of banking in India or rather banking across the globe. But what really confuses and haunts one is this perplexed transition – from the age-old bi-plane to a shimmering advanced jet.

Will it be a smooth one? Are the players ready for it? These are certainly some of the questions that need apposite answers as Indian banks enter the final lag of this transition matrix. No doubt, as the cut-off date for implementing the accord draws closer, Indian banks are gearing up fast to be at par with their international peers. But are they really on track considering that it’s just a month (April 1, 2009) before the new jet finally takes off? “Yes, the implementation is on track for Indian banks, within the context of the relaxation that the RBI has implemented in light of the ongoing crisis, such as reduction in risk weights. Majority of the banks are not facing any capital shortage at present and those public sector banks (PSBs) that need capital infusion, have already been promised the same by the government,” avers Vaibhav Agrawal, Sr. Research Analyst, Angel Broking. No doubt, so far, most of the banks are comfortably placed even after switching on to the Basel II accord in FY 2008. Though some of them have reported a reduction in the total capital to risk-weighted assets ratio (CRAR) or commonly known as capital adequacy ratio (CAR – the ratio of a banks capital to its assets) by around 30 to 80 basis points, primarily on account of operational risk, there are many who have reported a capital relief. All thanks to higher exposure to better rated corporates as well as savings on the regulatory retail portfolio.

In fact, if one goes by the latest numbers, the Indian banks already seem to have conquered this long row to hoe. According to a recent report on “Trends and Progress of Banking in India 2007-08” by the RBI, “the overall capital adequacy of all scheduled commercial banks (SCBs) was at 13% as on March 31, 2008, well above the Basel II norm of 8% and the stipulated norm of 9% for banks in India. Even on an individual bank basis, the CAR of as many as 56 banks was over 12%, of 21 banks was between 10-12%, while those of the remaining two banks was between 9% and 10%.” This is indeed comparable with most of the banks in emerging markets and developed economies where CAR varied between 10% and 28.7% in FY 2008.

However, if one goes by the desired level of CAR by the government, which is 12%, the situation seems to be a little tense for as many as 14 commercial banks (11 public sector banks and 3 private sector banks). In fact, a combined capital infusion in excess of Rs.50 billion is what is needed to shove them up to that level. No doubt, banks can use the capital market route to meet the capital requirements or can use private placement to garner the additional capital but then turning to capital markets to raise funds at a time when the markets are bleeding and investors are wary of planting money into them the option really doesn’t seem to be viable at all, particularly for the small and medium sized banks.

But, overall, out of 41 banks that migrated to Basel II Accord last March, 40 banks had CAR of more than 10% and one bank had close to 10% even at the time of transition. So considering this, no doubt the Indian banks are faring well as of now, but then going deeper into the Basel II matrix, one can easily figure out that the matrix is not just about CAR. The framework has three components or ‘Pillars’. While Pillar one relates to minimum capital requirements, Pillar two is the supervisory review process (SRP) and Pillar three is all about market discipline. Moreover, it is Pillar 2 that makes the Basel II Accord more comprehensive as it aims at eying the overall risk of an institution. But if one goes by Moody’s latest report on Indian Banking then the stress surely seems to be testing Indian banks. As per the report, while financial strength rating (BFSR) of most of the Indian banks was between C- and D+, baseline credit assessment (BCA) rating too ranged between Ba1 and Baa3.

Therefore, as it’s said by many critics that “fundamental to the successful implementation of the Basel II norms is an inconvenient but necessary marriage of two of unmatched horoscopes – qualitative tools and quantitative standards,” the task of implementing the accord surely appears to be a tough one for the Indian banks. In fact, this was the main reason for the delay in implementing Basel II Accord in the country (originally set for March 31, 2007). Though foreign banks and Indian banks with overseas presence have already incorporated Basel II Accord with effect from March 31, 2008, its full execution still remains a major challenge for them – all in terms of procedures, infrastructure requirement and capacity building.

Moreover, considering the technological advances and greater reliance on technology-based solutions by conventional Indian banks, a need for adequate safeguards against fraudulent activities automatically pops in and, this is an area where the Indian banks need to work the most in order to stand equal to their international peers. No doubt, the asset quality of banks in India has improved significantly in the recent years, efforts need to be made to ensure that the hard earned gains are not frittered away, particularly in the wake of the global slowdown. Further, for banks, the implementation of Basel II Capital Accord will certainly continue to be a challenge until the regulator acts as a facilitator rather than as any gregarious procrastinator. So, just watch out for the next move!

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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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How about making moolah the rice, atta and daal way?

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

With stock markets running out of gas, and equity becoming a property too hot – or cold – to handle, investors might see better prospect in commodity trading

When the stock markets the world over are biting dust, everyone is looking for a cover. And most of them are landing up buying gold and gilt-edged securities. No doubt, these two are the safest bets at the moment, but then they are just wealth preservers. So why not try something that can also offer you some return. Well, in this regard have you ever considered commodities? It’s true that many investors are still apprehensive in their attitude towards the commodity market, but then many others have joined the bandwagon for it’s not too different from trading in the equity market. And this is quite obvious from the fact that total monthly turnover of Multi-Commodity Exchange has almost doubled from Rs.2.1 trillion in January 2007 to Rs.4.1 trillion in January 2009.

Noted investment banker Jim Rogers tells us, “In the future, investing in commodities would be the most lucrative bet.” Reflecting this sentiment, 2008 has been a fairly good year for people who had invested in the market as commodities were the only thing moving up. However, the outlook for 2009 does not seem to be on the lines of 2008, especially if one is expecting to hedge their risks or are expecting similar returns. Arvind Bansal, Chief Investment Officer, ING Investment Management, informs 4PsB&M, “From a valuation and a price correction perspective, there has been a sharp correction in the commodity market like in real estate and equity.” The profits of various organisations have nose-dived, which has led to decreased production levels and in turn, a decline in the supply of these commodities. Therefore, much of the concepts in this market ride on how the ever illogical demand curve takes shape. With various governments trying all they can to revive the state of economy, it is expected that the demand for commodities would start to look up in the near future; and most analysts are pegging that the period post May-June might see some of the developing economies showing positive trends which would marginally shoot up the demand for commodities.

Though according to Amar Singh, the head of research at Angel Commodities, “For the year 2009, bullion will be the best bet.” Joseph Massey, CEO, MCX, accepts, “The most traded products on our exchange have been bullion, which continues to be a favourite.” But then, one must not forget agro products like sugar that yielded a good return for their investors in 2008. At the same time, investors also must be selective in picking up the commodities and become futuristic. Because living on past favourites can be deadly for them in the commodities market. Crude, perhaps, is the best example in this regard at the moment.

Having said all that, and more, allow us to sweetly warn you, whatever we write out here and in the other pages can come to nought, for though we may be smarter than what we think, the money is still yours honey.

Surbhi Chawla

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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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The great brand brawl

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Attack advertisement is the latest muse for the corporates but the success boils down to consumer satisfaction and avoidance of the regulatory scanner

Ouch! That must have hurt. It surely does, when the opponent hits you ‘below the belt’. And the blows are getting increasingly fast and furious. The trend is invariably visible with a number of global marketers openly declaring war by taking a direct pick on their arch rivals through attack advertisements or in polite terms comparative advertisements.

This ‘Smack Down’ of brands has become an all-out battle amongst some of the world’s top brands. From the Pepsi challenge to the endless knockout rounds between Dunkin’ Donuts vs. Starbucks, McDonalds vs. Starbucks, Dominos vs. Subway, Mac Guy vs. PC Guy (Apple vs Microsoft) et al, the strategy has found a number of followers. This current marketing strategy is far from the traditional concept of promotion and marketing where companies highlight the benefits that a consumer would derive from usage of their products or services. The concept of attack advertisement rather has the players using the negative mechanism and splashes out the misgivings of their competitor’s goods and services, thus trying to convince the target audience of their relative superiority.

The Dunkin’ Donuts attack commercial against Starbucks is an apt epitome of the aforesaid statement; the former tells the consumers that more ‘hard-working’ people prefer their coffee than the high-priced ‘elitist’ coffee of the latter. “Our marketing approach evolves based on what resonates with customers and is not driven by another company’s advertising campaign. We believe what truly differentiates us from our competitors is the daily, human connection between customers and store partners,” avers unscathed Wendy Pang, Communication Manager, Starbucks Coffee, to 4Ps B&M, taking the entire fiasco as a pinch of salt. The coffee brewer has become the punching bag for Dunkin’ Donuts and McDonalds of late. It’s always easier to point out some of the failings of a competitor but clearly it’s always about establishing a point of difference. “It’s going to come more from those sectors which are being impacted by the economical downturn such as auto, electronics and parts of FMCG; nevertheless, the downturn is not the main driver of the concept but because it is persuasive, the players are using attack advertisements,” explain Stephen Byrne Director, DIFFUSION Global brand strategist and commentator.

Attack or comparative advertising does work to an extent, as it definitely draws a number of eyeballs. But then everything finally boils down to meeting the promises made and the quality of products or services delivered, leading to consumer satisfaction. “The Mac vs. PC guy has been very successful for Apple; look at the evidence from new Apple computer sales into corporate markets to see how it’s changed how people think, but more of it is due to the quality product and the after sales service deliverance,” supports Byrne.

However, the tendency to mislead consumers generally creeps into this kind of strategy. So companies should be wary of the fact that watchdogs like courts and consumer protection bodies are looking very closely at the way advertisers and brand owners use this advertising. For the punch they deliver definitely hurts, no matter which side of the belt it lands!

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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YOU CAN CALL HIM THE ‘AXE’L BEHIND OBAMA!

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ARCHITECT OF MODERN POLITICAL ADVERTISING, DAVID AXELROD IS THE MAN CREDITED FOR OBAMA’S LARGER-THAN-LIFE IMAGE BUILD-UP

“If there’s anyone out there who still doubts that America is a place where all things are possible... tonight’s your answer.” As Barack Obama spoke these words on November 4, at the Grant Park in Chicago, Illinois, he crafted a notable moment in the history of the United States of America by becoming the first Afro-American President of the world’s most powerful country. The race was not easy for this man with a Muslim middle name. But what made his amazing feat possible were some perfect modern strategies devised by Obama’s long time friend turned Chief Strategist – David Axelrod. Having designed Obama’s campaign for the US Senate Elections in 2004, Axelrod’s camera had followed Obama like a sheep ever since, capturing all his public appearances. When Obama decided to contest for the Presidency, Axelrod was the first guy he hired for his team of strategists. With all the Axelrod accumulated footage, Obama’s first campaign was devised – a five-minute Internet video. “Throughout campaigning, Axelrod focused on Barack’s bio and people liked it,” says Rahm Emanuel, an Illinois Democrat. Axelrod’s personality-led strategy sold Brand Obama as an agent of change for the American people.

On the one hand, Axelrod focussed on building Obama’s image as a devoted family man, and on the other, as a well-read, confident leader. To win over racial prejudices, Axelrod roped in Paul Simon (an enterprising retired US Senator and a respected figure) to endorse Obama. But as luck would’ve had it, Simon died before the campaign shoot. Axelrod then convinced Simon’s daughter to appear in the commercial declaring that her father and Obama were “cut from the same cloth.” Axelrod also convinced Obama not to accept public finance for campaigning to avoid giving details of expenditure to the Election Commissioner. Obama raised close to $30 million in January alone and his total donations stood at $280,011,968 as on Oct. 15, 2008. Other approaches included community involvement, mobile marketing, product promotions, et al. Axelrod made Obama immensely popular with the youth by signing him up on social networking sites like Facebook, YouTube, MySpace, et al. “This enabled Obama to connect with all demographics of voters,” adds Emanuel.

As President-elect, while Obama will take on the task of getting the economy back on track; as his Senior Advisor, Axelrod will continue to polish his image in these turbulent times. As Obama said in his winning speech, “It’s been a long time coming, but tonight… at this defining moment, change has come to America.” God knows, that country needs it and how!

Savreen Gadhoke

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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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The final ball...

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After having immodestly discussed events and people, let us talk about a company’s excellent performance for a change during times when the nation was counting goosebumps on its (sweaty?) forehead due to the ongoing slowdown. Yes, Hindustan Unilever Limited (HUL) has repoted four straight quarters of amazing growth, averaging 19%. In fact during the last two quarter results (with average net sales growth of 20%) were positively electrifying for HUL, and perhaps the best in over a decade! Tushar Bhattacharya, Sr. FMCG Analyst, FICCI comments, “Interestingly, the substantive price increases did not disturb the sales of HUL as most of their brands have a strong brand proposition, because of which the consumer doesn’t mind spending more.” While explaining HUL’s rosy 2008 performance, Harish Manwani, Chairman, HUL states, “We have sustained volume growth in a high inflationary environment and offset the cost management…”

Even when the world was stuck in a sandstorm, for HUL, the year gone by looked simply ‘Fair’ & ‘Lovely’. So much for Super Six #6. Truly, ‘what a ‘great’ year bygone, was 2008!

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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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Motor insurance gets a makeover!

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Fed up of those nasty problems that your car gives you everyday & that too all of a sudden? Then here comes a good news for you! First party motor insurance is all set to undergo major changes in India. The insurers are now planning to come up with policies that will offer another vehicle for the period for which the insuree’s vehicle is unavailable, for instance, getting repaired. Even, if the car is not replaced, the insuree will receive allowance to recoup the rental of hiring a car during that period. Insurers in mature markets like US and UK are already offering such policies. Now with IRDA allowing it in India, almost all the major insurers have started working on it. IRDA has also allowed a waiver of depreciation.

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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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A silver streak...

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You’d definitely confuse it with a treasure island if you did not know it was Ravissant, a luxury goods store, displaying silverware designed by three of the world’s most distinguished designers – Simone Ten Hompel, Alistair McCallum and Michael Boy. The collection, aptly called ‘the Silver Lining’, shows off an array of magnificent treasures – a fusion of Indian, European and, at times, Japanese aesthetics in a unique blend of gilding metal with silver. Price on request.

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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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Touch down on the tarmac!

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The slow and steady sometime wins the race, but not all the time...

Siddhanta Sharma and Jeh Wadia really don’t have all that much in common. The latter is the scion of a business family that traces its roots back to almost 200 years, while Sharma can’t lay claim to that kind of hoary legacy. Yet, in moments of quiet introspection, or when they pick up a pink paper that announces the nth round of the war between Vijay Mallya and Naresh Goyal, the head honchos of Low Cost Carriers (LCCs) GoAir and SpiceJet must be sharing one common emotion: the unspoken agony of being left behind in the race; and the passionate dream of catching up with the big boys one day.

In the rapidly growing civil aviation industry in India, the big boys, without any doubt, are Vijay Mallya and Naresh Goyal. The former has leveraged a Richard Branson persona and loads of cash generated by his liquor empire, United Breweries, to make Kingfisher Airlines arguably the number one in the country. Mallya and Kingfisher catapulted from the margins to the numero uno slot by acquiring Air Deccan (OK, we won’t say acquiring if Mr. Gopinath of Deccan insists!). Naresh Goyal was even faster on the draw; he managed to acquire Air Sahara after a convoluted and controversial process and now straddles both the full fare (Jet) and LCC (Air Sahara now christened as Jet Lite) segment. Then there is the government owned behemoth – Indian - that is emerging bigger and stronger from the merger of Indian Airlines and Air India.

Do the smaller players have even a ghost of a chance to be one up on the big boys? Analysts will remain analysts and revel in hedging their bets, as Binit Somaia, Regional Director, Centre for Asia Pacific Aviation (CAPA) does when he pontificates, prevaricates and then pronounces, “The aviation sector is facing a phase of consolidation which in short term will be dominated by Kingfisher/ Deccan, Jet Airways/Jet Lite and Air India/Indian…” But it is also a fact that in the highly competitive market of the last couple of years, yields have been so low that for new entrants to pursue market share would have meant bigger losses. Small surprise that in the face of the biggies acquiring more and more aircrafts in a bid to expand their services, GoAir prefers to maintain a low profile, with lesser numbers.

Given the bleeding operating costs that the industry as a whole faces, would Wadia’s approach be more sensible in the long run? Who knows, Jeh Wadia might actually end up having the last laugh. At the moment, he is dead pan and dead sure that the frenetic expansion pursued by the big boys like Mallya and Goyal gives him the luxury of sitting back and watching the two go at each other. He intends to cash in when the bruised leaders will inevitably give him a window of opportunity. Who said also-rans did not have chutzpah and confidence?!


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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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For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

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