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.

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).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
Why Study Abroad When IIPM Gives You 3 global Advantages!

The Jet-Kingfisher ‘deal’ has re-ignited the debate on how poor regulation leads to cartels and collusion at the cost of the consumer. By Aditi Prasad

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True! But the problems for these two players are largely self-imposed. Both Mallya and Goyal already knew the existing fuel policy of the government, yet they expanded faster than ever and expensively acquired rival airlines, Deccan and Sahara respectively. Route rationalisation was far from Mallya’s mind when he was busy re-painting Deccan’s planes with his Kingfisher red. Had he rationalised routes then, things would have never reached such a passé. Moreover, to stem their monetary bleeding, the two airlines could have as easily looked at other ways to raise capital (like selling their stake) instead of this hurriedly stitched alliance. “They are too clever to sell stake when valuations are low. Also, high interest rates are dissuading them from borrowing. So the only way out was to get together, reduce competition and eventually charge a premium from consumers,” points out management consultant Avinash Narula.

Section 10 of the MRTP Act, 1969, prohibits cartelisation in any industry and says it is a restrictive trade practice as it imposes an unjustified burden on consumers. So although belatedly, but the MRTPC woke up from its deep slumber and on October 17 ordered a probe into the Jet-Kingfisher tie-up. Yet, by the time, the commission submits its report (they are supposed to do so in 60 days, but we know our bureaucrats better) and suggests action; the two airlines would have possibly ridden over the present storm, with adequate customer money in their airbags.

Incidentally, last June, Google and Yahoo! had entered into a somewhat similar alliance globally. The alliance said that Google (with 80% share of the paid-search market) would supply Yahoo! (20% share) with search ads to supplement Yahoo!’s. Yahoo! would get a new source of revenue, while Google would get a new customer for its ad delivery service. But before the ‘deal’ could see the light of the day, antitrust regulators in the US got in the way, fearing that the deal may create a monopoly and lead to illegal price fixing.

The search giants’ lawyers may eventually win over antitrust hurdles, but unlike the Jet-Kingfisher ‘alliance’, at least someone took notice before the deal was signed and put a spanner in their works until further review!

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Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
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IIPM, GURGAON
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IIPM’s 36th Glorious Year of Academic Excellence
Why Study Abroad When IIPM Gives You 3 global Advantages!

It’s a catch-22 situation. Sales are falling and increasing ad spend seems to be the way forward for brands.

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Madison Avenue and Wall Street in juxtaposition may appear to be an oxymoron, but in the recent past they have turned into a cynosure for the world’s eyes. The graveyard of fallen American financial brands stands in silent testimony to the reverberating shockwaves emanating from the Wall Street, making their stark presence felt across Madison Avenue. Even as words like recession, bankruptcy and bailouts hog newsprint and the war between Citi and Wells Fargo for ownership of Wachovia continues, the US advertising Goliaths have begun to reel under their impact. The initial hiccups began no sooner than the House of Representatives rejected the bailout package (worth $700 billion). Both Dow Jones and the AdMarket crashed simultaneously. If the former plummeted by 778 points (largest single day decline in history), the latter also had its biggest crash ever - an unmitigated 6.4%.

For the uninitiated, a lot is at stake for Madison Avenue. Advertising elasticity is being put to the toughest test. The top 10 advertisers in the US may have combined spent a humongous $8, 4427 millions (H1 2008) on advertising, yet it marks a 3% decrease from last year. The picture becomes more worrisome when you compare ad spends of the top 50 companies in America, which have already declined by 4.7%. Don’t blame it solely on the September debacle; after all, the stirrings of the mayhem had already begun in March (remember Bear Stearns).

In a year marked by failures of behemoths, bailouts, acquisitions, credit crunch et al, corporates have cut back their advertising and marketing expenditure for the already over-saturated market. Data from TNS Media Intelligence reveals that the total measured advertising expenditure in the first six months of 2008 has declined by 1.6% as compared to the same period in 2007, while Nielsen Monitor Plus puts the drop at 1.4%.

Ford Motor’s comparative advertising expenditure is a classic case; it has cut its advertising budget from $798 million (H12007) to $554 million (H12008), a drop of 30.56%. Even General Motors – grappling with unsustainable losses – now plans to cut its digital media budget. In fact, the ad spending in real terms has come down by 11.2% in the entire automobile category. The rational for the cuts are obvious. Ed Yardeni, President & Chief Investment Strategist, Yardeni.com believes that the would-be buyers simply can’t get auto loans needed to make their purchases. “At 12.5 million units (saar) during September, monthly car and light-truck sales were the worst since April 1992, with both Toyota and Ford posting sales declines of more than 30% from a year ago,” he says, adding that auto sales peaked at 20.6mu (saar) during July 2005, and are now down 40% since then. Clearly, and if advertising spends cannot justify sales (revenues), it is but logical to put a cap on the outgoings.

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).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
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Why Study Abroad When IIPM Gives You 3 global Advantages!
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