All about Change Management-Dibyendu's Blog

Cell Phone Utility Survey

2011-08-13T11:53:00.000-07:00

The engagement feedback through polling

2010-12-12T10:50:00.000-08:00

Entrepreneurship Quiz

2010-11-29T02:40:00.000-08:00

Are you smarter than a 5 Graders?

2010-10-06T04:40:00.000-07:00

Are you smarter than 5th Graders? » Quiz School

Life@ASBM

2010-08-16T22:47:00.000-07:00

A glimpse of some invaluable moments down the memory lane @ ASBM through my eyes....(All Mobile Uploads)

Case Study and Boardroom Discussion on Attrition and BPO

2010-08-02T05:26:00.000-07:00

John received the call from his client Bob from Parsippany, NY a small telecom company at around 6.30 AM IST at Kolkata on the way back to his home from office. “John” is his pseudo name and he could able to keep the same name for a while despite of changing several jobs in the BPO sector here at Kolkata. The EM Bypass actually looks like marine drive of Mumbai during this time of the early morning. The city is still sleepy and yet to get up from the bed. The fog is still curling on the road and very difficult to understand whether that’s a fog or smoke while driving. “Good Evening, Is it a good time to talk John?” Bob asked and continued “here this week end we’re now going on Thanks Giving Holiday and it would be quiet for the business during this time till the end of the year and this is the time John, we need to work hard to revamp the ops..” he paused. In the mean time John could manage to stop and park his car beside a lake on the side of the road. John answered “You’re correct John, we’ve an aggressive recruitment plan this year and I’ve hired a seasoned HR guy to recruit fresh graduates this time and would train them with the pilot which we would be running with you and would slowly ramp up the team”. “Excellent, but I need to make sure you’ve hired the right people for me this time John. The attrition is too high with your center and I really can’t afford to waste my management’s time any more on training, it costs us time, money and energy as well and once we train them they quit”- Bob finished his talk with a great concern over the phone. John somehow managed and ended the entire conversation with a promise to have a review meeting with the management team on Wednesday, after this long week end of Thanks Giving. John has grown up in this Industry and had gone through the entire cycle of the industry, even lost his job during recession 2008. He moved back from Mumbai to Kolkata with his family to his home town to do something on his own. Could open up the BPO set-up after 6 months with only 3 people initially and now its having 50 people. The set-up is a hybrid call center set-up with VoIP as well as IPLC backbone. He started rolling and he noticed that the lights of the streets are going off and the city started getting up slowly from the curling fog. John started rewinding his thought process while driving prior reaching home. “Business Process Outsourcing”, commonly known as “BPO” here in India and still accept general graduates or school going kids, both of this genre still didn’t find BPO jobs convincing in India, but one of the most booming sectors in the Indian industry, despite of the fact that the industry got affected really bad during recession, but not as bad as the IT sector though. Since its inception, the Indian BPO industry has grown at a constant annual rate of 40-50 percent and within a couple of years, India managed to secure the position of the most preferred and low cost destination for business process outsourcing. Despite the recent concerns about the nonviability of BPO due to the increasing cost and the emerging security issues, the Indian BPO industry is expected to generate one million jobs by the year 2010. The sector has also increased its revenue manifolds to $8.5 Bobion in 07-08 and is poised for higher growths. Ironically, in spite of the tremendous growth potential of the sector, attrition rate and the manpower crisis is dampening the growth of the sector. The human resource professionals of the BPO industry are facing various challenges like the attrition rates and its implications, skill shortages, retaining the employees etc. Its Wednesday evening and John is seating with his team in his cozy office in the conference room at sector V, Saltlake City, Kolkata. Within another 10 minutes the conference call would start with Bob. John has got Roby, the General Manager of the Center, Two Accounts Manager Shyla and Ricky and the newly hired GM-HR, Nishikant. Its around 6.30 PM evening at Kolkata India, Uma the head soft skills training manager, she was also looking after the recruitment previously for John. John: Well, Ladies and Gentlemen today we’re here and we all know the agenda, very soon Bob will also join us in this discussion and this meeting is really crucial for our business growth. John’s seriousness is also getting reflected through his voice. He continued.. This account “Starcom” is our flagship account may be the business is less, but they’re running their customer support as well as sales campaign with other 10 centers including us in all over India. Our goal is to get this account consolidated with us. Bob needs to have confidence on us and we need to actually give his a realistic plan and achieve our goal. Uma: Good Morning guys, we’ve the problem of attrition like all other center in India. The Attrition Problem according to NASSCOM data, the attrition rate for voicebased BPO’s is around 55-60 percent and 15-20 percent for the non-voice based processes. The attrition rates and the retention have become the major threat and the biggest challenge in this sector. In fact, the outsourcing industry is expected to face a shortage of 2,62,000 professionals by 2012. The phone started ringing and Bob entered in the meeting through the phone and greeted to all. John introduced all the team members with Bob and briefed Bob about the discussion they were having prior to his entry. Uma started again: See, The top ten reasons for employees to leave a BPO company are: • Monotonous work (repetitive nature of work and the average number of calls) • Physical strains because of long and odd working hours. • No growth opportunity/lack of promotion. • For higher Salary. • For Higher education. • No personal life • Problems with peers and managers. • Policies and procedures. • Conducive work culture or environment • Handling abusive calls. Bob straight came to the point and said- The Indian BPO industry, which established itself as the low-cost destination for business process outsourcing in just a couple of years, is losing its position as the low-cost destination because of the rising people costs. The IT-ITeS industries are struggling with the critical issue of acquiring and sustaining manpower in the industry. The BPO industry – one of the most rapidly growing sectors in the Indian industry- is grappling with the issues of skill shortages, high attrition rates and performance management along the confidentiality and security concerns. All these issues are having a negative impact on the BPO industry. He paused and continued- I don’t mind in consolidating the entire wok here with your center, but at the same time I won’t mind going to Philippines or any other place where I would get the same service in cheaper price. John: That’s true Bob, but let us see couple of data out here and let us discuss how we can actually trouble shoot this problem. The high attrition costs increases the costs to our organization too. We need to combat the amount of disruption due to unplanned exits. The more the people leave an organization, the more it is a drain on the company’s resources like recruitment expenses, training and orientation resources and the time. The high attrition rate also affects the productivity of the organization. The attrition cost has been estimated to be as high as 76 percent of the annual salary costs for us. The voice based processes, which are facing an attrition rate of 60 percent, are incurring the attrition costs of 27 percent of the total operating costs. Nishikant: Well, I think it is important to measure turnover correctly in this case. Many organizations do it inaccurately while measuring their turnover and “churnover”. To correctly calculate the turnover, we may need to take the total staff left the call center as a percentage of the total staff compliment. So if 50 staff left the center throughout the year and the center employs 50 staff, the turnover is 100%. Another situation is the positions been replaced, so for example might say that 25 staff who were in place at the beginning of the year are still there at the end of the year so only 25 positions were filled with new agents and therefore a 50% turnover level. This is an inaccurate result however. Other incorrect practices include not counting the staffs who left during the probationary period or who do not complete their training. Yet another method of artificially reducing the turnover is not including staff that move internally (churnover). It is important to accurately calculate our turnover, if we are to determine the real cost of turnover for our organization. Bob: Hey guys, attrition/Turnover is a result of the Selection, Recruiting, Hiring, and Training and Deployment process for new staff. Knowing where you experience turnover in this process can help to identify and then address ways and means to improve the affected process. With the cost of a new hire from selection, through hiring, training and deployment running from $5,000 (US) to $10,000 (US) it is of critical importance to understand where the process is dysfunctional and can be improved. Agents in any center will move through a productivity continuum from their first day on the job. In many centers it will be six months or more before a new agent achieves the productivity of an experienced (6 month plus agent). So in short it will take 6 months for a new agent to attain the productivity of the agent they are replacing. Uma: Exactly Bob, we have seen that from our past experience, if the cost for a new agent is $2000/month, then we need to budget an addition of $1000 in month 1 to deploy additional agent labor to maintain your expected service level. In Month 2 this cost declines to 40% and the incremental additional cost to hold your SL is $800, in Month 3 productivity is at 70% so the incremental productivity top up is at $600, Month 4 is $400 and Month 5 is $200. In month 6 the new agent performs as well as an experienced agent. Bob: Umm…Ok, that means you guys suggesting to revisit the cost structure and payments? John was listening to the entire discussion and was actually scribbling down the points in his note book. He said John: Bob, its not only revisiting about the cost structure. This exercise even we could do without involving you. The point is why we’re doing that with you jointly and keeping you also involved? See today, the point from where we’ve started in India of Call Center was a cost factor that was comparative advantages. But, mainly in US the customers have forgotten that its not only costs they also need the level of services and keeping the level of service we need to take advantage of economies of scale by virtue of which some costs saved while outsourcing to India. Its not that, just by outsourcing the costs of the call center get reduced to me by 70%. The people whom we’re serving on behalf of you are actually your customers. So, you can’t afford to just compromise the level of service even while doing outsourcing. Then the major part of the business, your customers becomes no one’s baby and eventually you get affected the most. Hence we gotta be partner because at any case you can’t deny the competitive advantage India has got on technology and the scale of economies. Bob: That I understand and that’s the reason today we’re here John. John: Exactly Bob and that we really appreciate here, actually we’re trying to build a collaboration with you and revisiting the fact that, how we can offer the better services to your customers keeping in mind about attrition/ turnover in India in this segment, because our organization is no more only our organization. Its your organization too. We’re your provider and you should also know the costs of operation on the ground reality. Bob (started talking after a brief pause ..): Well. (with a pause )..I see your point John but may be at the same time you can’t ignore the cost of operation in India is also going high. May be we need to tradeoff in between the low end jobs and high end jobs. The low end jobs should get out from India, to Philippines I guess…umm…let us get into the costs part pls. John: The reality is that each organization is different and will have different costs depending upon their business and more specifically their inputs; Agent rate, benefit load, recruiting costs, the impact on the center of back filling_ the agent position- this is the agent productivity costs to schedule an agent to cover the shift of the agent who has left or is in training. There is also an impact on the quality assurance team; new staffs are, in most centers the recipients of far more monitors than veteran agents, this represents a cost too. John looked at Roby and said so let’s complete an exercise to identify the cost for our own centers looking at the 1. First identify the starting agent hourly wage in our center. 2. Now add the recruiter, supervisory, Quality Assurance, and Contact Center Manager hourly rates 3. Identify the percentage of the hourly rate that reflects the cost of benefits offered. For example if the medical, PF, and all other employee benefits is $3.33 per agent hour and you pay agents $10 per hour then this is a 33% benefit load. 4. Next put in the number of hours our HR and/or recruiting staff will work on sourcing and hiring a new hire. This cost should be based on the following numbers of interviews/hr and the numbers of interviews per hire. 5. Extrapolate the number of hours for agents to back fill the agent position, the lost productivity times the hourly costs 6. Multiply the recruiter rate by the recruiter hours and the same for the Supervisor, QA and CC Manager and lastly the Training costs (hours * agent hourly rate + trainer costs (hourly rate * hours)) - be sure to include trainer prep time, HR staff time to complete forms etc. It is important to include all costs in this calculation such as Advertising or Posting costs; Interview costs- if there multiple interviews with multiple attendees, you must account for each of the attendees time for all of the interview meetings. Let us work this out and post it to Bob by tomorrow and Uma will also help Roby for this assignment, so that we all understand where we stand. Bob: The Quality Assurance cost needs also needed to be calculated. A center that completes 4 monitors per agent per month on an average may do 16 per month on “new‟ agents will need to adjust their QA labour and customize to fit your centers practices. Guys I need to discuss these issues with my partners and the board for the approval of the extra costs. Kindly send me the working sheet John. John: To be precise Bob, its our Center’s practices…and all started laughing and Bob had gone out from the teleconferences for the day. The meeting still continues. Shyla to John: But Sir…any increase in “churn‟ (attrition, turnover, churnover) will result in additional staff in the center. This new staff will bring in perceptions from outside of the center regarding wages paid etc. In addition the staff that remains will often feel that they should be paid more money if it appears to them that they are the experienced and veteran staff. Both these events create pressure to increase wages and compensation even though quality and productivity are declining. Roby to John: The addition of new staff will dilute both the production and quality. Productivity is diluted as new staff will not be as proficient of the staff that left. Quality will decline as the new staff will make more mistakes and they learn with time. These points are true at the same time continuous training is also true. John started speaking looking at all the people present at the conference room. (Sipped the lemon tea and continued speaking) “The new recruitment has got also impact on Morale and Quality of the organization and we need to be more cautious on all these. But, lets now get into work and we also need to hold the regular staff meeting”. This instruction particularly goes towards both Roby and Uma. John (verdict): Hold a staff meeting, review the situation, ask for their input and suggestions how we can improve. Be transparent if there have been layoffs or planned redundancies share this with the staff, including the timetable. Let the agents also know that we are working to solve the problem of turnover/people churn. Show our agents that we care about them, about the company and about the products and services and customers we support. Ask for their input. If you are at the bottom, there is nowhere we can go but up. (This study is published by the Author in Connections Magazine as white paper) Your Analysis and comments are welcome for the publication in magazine: 1) Bob would stick with John and his call center or find other cheaper one in Philippines? 2) What John should do for bringing his costs down? 3) Is it possible to become partner with the clients in reality?

R&D Activities within Indian Companies

2010-02-19T22:19:00.000-08:00

R&D Activities within Indian Companies

Innovation requires synergizing the energies of private enterprises, research institutes, think tanks, and government and private educational institutions. Currently, India not only provides a low-cost structure and massive pool of skilled human resources, but also offers cutting-edge R&D with high quality standards at competitive costs. After being recognized for its achievements in the IT and services sectors, India is rapidly evolving as an innovator of high-tech products of global stature and this is going to enhance the competitive advantage of India over coming years within emerging economies (BRIC).

R&D Investments in India

Domestic R&D investment is crucial for innovation. As innovation in India is still in its nascent stage, 80 percent of the domestic R&D is undertaken by the public sector, while the remaining is funded by private enterprises. The allocated science budget in India has increased at a CAGR of 12.3 percent between 2004 and 2008, to INR 242 billion.

Before economic liberalization, private sector companies in India did not invest significantly in R&D. A few notable exceptions were companies such as the Tata Group. Most R&D investments were largely made by central and state governments, and certain public-sector enterprises. However, the post-liberalization period witnessed a substantial increase in R&D investments by private sector companies. The corporate R&D intensity (R&D expenditure as a percentage of sales) increased from 0.07 percent in 1991 to 0.51 percent in 2004.

The growth in R&D spend has been led by foreign multinational companies, which have both established in-house centers in India and outsourced R&D activities to the country. However, there has been a substantial increase in the R&D spend of Indian private sector companies as well. Indian companies from IT, pharmaceutical and automobile sectors have started competing with foreign MNCs on a global scale and therefore seek to increase their R&D activity to keep up with the latest technology.

Leading Indian Investors in R&D

Several large-scale Indian companies across a range of sectors, such as Bharat Heavy Electricals Ltd., Bharat Electronics Ltd., Dr. Reddy’s Laboratories, Ranbaxy Laboratories, Tata Motors and Wockhardt, have begun investing substantially in R&D. In 2006–07, the total R&D expenditure of the top 20 R&D investors in India was about INR 49.2 billion. Table depicts the top 20 Indian R&D investors.

Table 1: Top 20 Indian R&D Investors by R&D Spend (2006–07)

From Untitled Album

Private companies had a major share in the industrial in-house R&D expenditure in 2006–07. Only four companies—Hindustan Aeronautics Ltd., Bharat Heavy Electricals Ltd., Bharat Electronics Ltd. and Oil & Natural Gas Corporation Ltd.—among the top 20 companies, were from the public sector. Eight among these 20 companies were from the pharmaceuticals industry. The total R&D spend of these eight companies was INR 15.78 billion.

Leading Indian Patent Applicants

Among the top 200 patent applicants worldwide (from January 2005 to December 2007), 22 are pure-bred Indian organisations. Among these 22 companies, 14 are private sector firms. Table 2 depicts the top Indian private sector companies that have published patent applications at the Indian Patent Office (IPO).

Table 2: Top Indian Private Sector Patent Applicants (January 2005–December 2007)

From Untitled Album

Among the companies listed in the table, nine are pharmaceutical companies. These companies collectively have 1,372 IPO-published patent applications. Figure 1 depicts the number of patent applications filed by different sectors in India.

Clearly, the pharmaceuticals sector has the maximum number of patent applications filed with the IPO, the US, the EP and the PCT.

From Untitled Album

Typical Areas of Research

Sectors that have witnessed significant R&D activity in recent years are as follows.

· Information and Communications Technology – Software and Hardware

· Life Sciences – Biotechnology, Pharmaceuticals and Bio Informatics

· Engineering – Manufacturing, Consumer Durables, Material Sciences and Infrastructure Construction

· Automobiles

· Energy and Chemicals

· Agriculture

· Others – Space, Aviation, Defence, Nuclear Technology

The estimated R&D activity levels in these sectors are provided in Table 3.

Table 3: Estimated R&D Activity Levels in Various Sectors (2006)

From Untitled Album

Activity levels cover various parameters, such as R&D expenditure, the number of employees, patents, technical publications, and product and process development. Process development is characterized by a high level of R&D activity in all the sectors. However, product development is marked by moderate R&D activity.

References:

1. India's Emergence as a Global R&D Center – December 2007 Working Paper

2. R&D India Newsletter

3. India's Emergence as a Global R&D Center December 2007 Working Paper

7 Ways to Use Social Media to Build Stunning Business and Personal Brands

2010-01-13T21:17:00.001-08:00

Check out this Presentation:

7 Ways to Use Social Media to Build Stunning Business and Personal Brands

View more documents from Jay Baer.

Entreprenuership Quiz for the End Term

2010-01-01T05:30:00.001-08:00

Entreprenuership Quiz for the End Term » Quiz Maker

2009-11-18T03:12:00.000-08:00

IN SEARCH OF A FINE BALANCE

Fair Foods Ltd is a popular retailer of foods, with prominent outlets in large malls in all the six major metros. It was promoted three years ago by Mukesh Dikshit, and has clearly established itself as the country’s market leader with almost 6,000 customers visiting its outlets on any given day. Fair Foods has a strong supply chain in place, and an ERP system which daily tracks what food items have been sold in each outlet, and calculates the items and quantities, which need to be stocked the next day. The sophisticated system combined with the management’s experience over the last three years enables Fair Foods to forecast demand with some degree of accuracy. The management team is young and computer savvy, and continuously looks for ways to automate operations in order to cut down on manual mistakes. Because of the push by credit card companies, many Fair Foods customers have begun to pay for their purchases by credit cards. Fair Foods’ CIO, Arvind Desai, wants to use this trend to refine the forecasting process and also use data mining techniques to increase wallet spend. Not so long ago he studied in London and experienced first hand the loyalty programs and CRM initiatives used by large chains such as Waitrose and Sainsbury. Arvind is convinced that both Fair Foods’ topline and bottomline would benefit tremendously from using these tried and tested management tools. He also sees the CRM initiative as a means to block competition. Mukesh however is not sure whether Fair Foods should plunge into a CRM program. He understands that a CRM initiative cannot be half hearted, and is worried about the large changes which would probably have to be made to the company’s back-end processes, as well as the costs involved. To clear the air, Mukesh calls the entire management team to a brain storming session. Arvind begins the session by outlining the benefits as he sees them. “Companies must innovate to add more value and ensure greater customer satisfaction,” says Arvind, “and the cornerstone of good CRM is enhanced value offerings to the customer. Companies that break away from the beaten track, that go beyond the typical plain vanilla offerings, become great successes. ICICI Bank was not the most favoured retail bank till a few years back. Today it boasts of more than 10 million customer accounts thanks to its enhanced value offerings. We are in foods, and hence can easily develop a range of enhanced value offerings just as in banking ICICI has developed the ATMs, phone banking, internet banking, 8 AM – 8 PM banking etc. Other banks are trying to emulate them but they’ll always play catch-up. Now none of ICICI’s offerings are really new – they are just new in India. In the west these are established offerings. Similarly, the offerings I am suggesting are also tried and tested. Even FMCG companies like Amul are using the Internet to practice CRM. By visiting Amul’s cyberstore- www.amul.com- customers can choose and order products and even specify the time and date when they would like it to be delivered to their home apart from enjoying the privilege of choosing from the entire range of the products. ” While Arvind is clear that CRM is the way forward, the team quickly splits into two camps, one for CRM and the other hostile to the idea. Marketing, headed by Kumar Sonu, and HRD head Shirin Batlivala tilt towards Arvind, but CFO Srinivas Pandu and operations head, Pranab Chowdhury are sceptical. “Of course we are interested in enhancing customer satisfaction,” agrees Srinivas smoothly, “but I am sure you must be aware of the fact that IBM has recently conducted a global survey of CRM projects, which discovered that only 15% of current CRM projects are fully successful. This fact is corroborated by other failure statistics in the ERP/MIS areas.” Arvind refused to be goaded. Keeping his expression amiable, he responds with, “Yes, I read the report thoroughly, and it also points out that the success rate can be improved to as high as 80% through proper business process methodology and prioritization. As Fair Foods IT head, I have to say that software technology can take us only so far in any CRM initiative. We can be an even larger and even more profitable company if we are committed to CRM through the points I have just outlined. Allow me to elaborate further.”

“You mentioned IBM. IBM turned itself around by becoming a one-stop shop for its customers, and selling complete business solutions, and not just its own hardware. We have seen how Airtel by tying up with Blackberry and adding email communication to its telephony services is fulfilling more customer needs. ICICI’s basket of offerings cover the whole gamut of needs that customers may have – banking, home loans, car loans, credit cards etc. Now because we are a food retailer, with thousands of SKUs, we can easily develop enhanced value offerings. The difference between today and three years ago is the quality of our data. Three years ago, we had a computerized system, which tracked every item we sold. Today, because more and more customers are paying by credit card and not cash, we can easily track them down and contact them. For example, we compete with the local kirana who can deliver more or less between 8 am and 8 pm. If we mine our data carefully, we can work out every customer’s weekly requirement pattern, and also make home deliveries.”

“Home deliveries! But if they don’t come into our outlets, how can we entice them to spend more?” asked Pranab heatedly. “India is not an evolved market. It has taken us years to introduce customers to variety, to break down the disinclination to try something new. We have spent so much effort in making our stores friendly for both servants that shop on behalf of rich housewives as well as the middle class male doing the big weekly shopping, and everyone in between. How will they know that something new is on offer if they don’t come into the shops?”

“We get considerable revenue from in-store advertising because media planners know that over 6,000 customers visit our outlets every day. If the footfall crashes, this revenue will disappear,” added Srinivas. “Moreover, we don’t really know whether databases truly work. Most databases are just a collection of names and contact addresses. I know of cases where credit card subscribers are inundated with subscription offers of sundry magazines most of which are of no interest to them. Mass mailing to all members of the database is the name of the game.” “I agree that there is blatant abuse and misuse going on around us and that this gives a bad name to database marketing besides being an appalling waste of a database. Needless to mention, the success rate of this effort is very low and demoralizing for the marketer,” chipped in Kumar who has been silent until now. “Therefore, one needs to refine and append the data in a database to ensure that critical intelligence is garnered from the database and put to good use. And as Arvind mentioned, we ourselves will be generating our database.” “I recently met the marketing head of Johnson & Johnson who uses a database of pregnant women to send them offers for the purchase of baby care products, and it makes perfect sense,” continued Kumar. “Likewise, a publisher of Hindu mythology related multimedia software gave away free Hanuman Chalisa CDs to create a database of people interested in Hindu mythology. Later, he sent them offers for purchase of a digital rendition of Bhagavad Gita. In this way, databases should be refined to generate significant leads. Looked at from another angle, it fits in with a basic tenet of CRM of choosing the right customers (and therefore being able to serve their needs better). I am confident that we can do this.” “Can we personalize the offers?” asked Shirin. “Surely the next logical step after landing a customer is to understand the individual customer? Each customer has a unique set of needs and demands.” “A mass marketer fails to distinguish the individual customer’s needs but in our case we can certainly mass customize,” answered Arvind. “Let me give you two very different examples. A bookshop treats all customers alike but firstandsecond.com treats each customer as a distinct individual. Say two visitors to the firstandsecond site are interested in books on marketing, the sophisticated site differentiates between them by quickly finding out that one is interested in Brand Management (and shows her books on brand management) while the other’s interest lies in CRM, and pulls those out for him. A traditional bookshop can have just shelves dedicated to management books (or at best Marketing Management).” “Further” added Kumar,”In a recent article in Business Express I read how even traditional companies are finding ways to personalization. To take on international majors like Revlon and Maybelline, Lakme started using CRM. It set up a dozens of beauty salons across the country where it has Lakme beauty advisors who interact directly with customers and advise them. This helps the company get first hand knowledge of customer preferences. As a result sales at the outlets are growing by 42%. This is way above the 10%-25% enjoyed by the 60,000 outlets that sell Lakme products sans advisors. “Everything sounds nice when it is on paper”, said Pandu. “All companies plan to deliver high value to customers but most of them fail when it comes to walking the talk. The factor that separates the good and bad companies is the value delivery process. Take the case of the popular cell phone company Reliance. It lured customers, by promising them the best services at the lowest possible rates. But in a recent survey conducted by IDC (quoted in www.cellphoneusers.co.za), 24 out of 100 Reliance subscribers had complaints with regard to billing. Despite the zany advertisements and high decibel promotions to entice customers, the value delivery process let the customers down. If Reliance, which has both infrastructure and financial support, failed in its CRM initiative, how will a small company like ours succeed?”

Mukesh who was patiently listening to the arguments, remembered something he had learned during an executive development program last year. The professor, an authority on CRM had suggested collaborating with suitable partners was sometimes a viable and better alternative than delivering shoddy services. Mukesh remembered successful partnerships that had worked in India such as rediff.com using Business Standard for the business news section of its portal. Should they follow the partnership route?

The professor also emphasized that the real challenge was to sustain value delivery and build a long lasting relationship with customers. He had raised the example of Fevicol, which reaches out to over 100,000 carpenters through its newsletter that also helps in carpenters bettering their craft.

Breaking off his reverie, Mukesh paid attention to Shirin’s arguments. “With customer attrition rates hitting the roof, the primary challenge for us is to ensure customer retention. It costs about ten times more to acquire a new customer than to serve an existing one. And the key to customer retention is to understand the individual customer’s behaviour and predict her needs and demands. With a proactive effort, we will be able to make the customer immune to competition’s offers at least most of them. “

The meeting was coming to an end. But CFO Pranab was not impressed. “A lot of CRM initiatives end up being glitzy and jazzy but make little impact to customer convenience”, he declared. Arvind felt frustrated listening to Pranab’s views. He thought he had a strong case for Fair Foods to implement CRM. Even though failures of CRM are much talked about, a number of success stories testify to the potential that CRM holds. With his team members not reaching a consensus, the onus was now on Mukesh to take a decision.

Solution

Customer Loyalty: 1. Memberships/ credit/ debit cards

2. having substitutes as options

3. Sticking to quality

With the latest CRM solutions, food service operators can:

•	Develop comprehensive guest profiles from reservation information and demonstrate that the operation is in touch with their needs.
•	Drive guest-centric data down to the transaction level, allowing employees using CRM technology to deliver greater value to the guest.

•	Generate an accurate profile of the spending patterns of guests, allowing the operation to create guest-centric marketing for increased loyalty and spending.

In the pre-Retail Boom days, consumers used to depend on the grocery shops in the neighborhood. Moreover they were more dependent on the shop owner, who were quiet familiar with the needs of his customers. So the customers used to rely mainly on his suggestions regarding new better products launched in the market. This association with the grocer used to bind the customers for years to come.

So in those days these grocers used to follow the same principles that retailers required to be successful: Loyalty, Good Quality and Right Price. But they used to manage this with their own intelligence. With the increase in market volume it has become impossible to a person or a group of persons to keep track of their customers while increased competition and market saturation has led to poaching of competitors’ customers. So came CRM which is nothing but an attempt to regain the customer intimacy. Goal of any CRM is to create and maintain customer loyalty which is less costly to serve and hence more profitable in the long run. Because it may be seen that 30 % of loyal customer may account for 80% of the sales.

Moreover, it helps in increasing operational and marketing efficiency by customizing database marketing, using different techniques like Data Cleansing and consolidation. It also helps in customizing pricing strategy and building offers for individual customers thus increasing interaction and loyalty.

As through CRM customer profiling can be done, so their behavior pattern can be studied in order to give value added service.

The use of such technology also increases the bar of competition, thus shielding the company from competition as customer loyalty thus gained requires a lot of effort from competitors to steal. And this helps the economy for the company better as it is always cheaper to retain than to win a new customer.

So CRM should be used in Fair Foods Ltd. for increasing the revenue per square feet of the stores. But also some more measures should be taken like introducing membership cards and customers should be encouraged to use them through different offers (e.g. discounts or lucky draws) or points given for their use and special prices for bulk purchase. It is through CRM the company should forecast the customers future requirement and plan to increase the product offerings in the stores accordingly.

CRM in place such a retail company can think of better technology like implementation of RFID based solutions in future for further operational efficiency.

Enterprenuership Development

2009-11-18T03:06:00.001-08:00

Enterprenuership Development » Quiz Question Maker

CRM for PGRM Students of ASBM

2009-11-18T01:01:00.001-08:00

CRM for PGRM Students of ASBM » Quiz Make

Case Studies Link Shared with Students

2009-09-15T03:12:00.000-07:00

This page is intended for those who want to explore beyond their bookish knowledge and having intentions to learn more about the external world. These articles are assorted for my own interests too and shared over here for the visitors. This page would be continuously updated and you may find new articles in regular intervals. This page is Labels as “Case Studies & Articles” in the right-hand pen.

(Click in the link, which download the document automatically for you).

A Student Feedback Survey

2009-08-21T23:02:00.000-07:00

Advertising is Dead.

2009-08-08T04:09:00.000-07:00

“Advertising is dead”…Sergio Zymann, Ex Vice president of Coca-Cola told this recently. Tell me honestly, how many advertisements you’ve watched carefully today and how many have caught your attention seriously so that it would influence your buying decisions?

Seriously, I’m not kidding, but I know in 90% cases the answer from you would be nothing, may be even at the time of recalling your memory, you would be amazed that, it’s a complete blank, nothing comes out in your mind. Now tell me, while buying anything starting from the weekly shopping to your daily grocery in some kind of retail format, is it possible for you to remember all those ads and buy stuffs matching your perceptions? At any case, while in transit or at home till we go to the bed, we’re all rushing through that time frame, everyday, though we’re getting bombarded with thousands of advertisements while starting our day by Radio, TV, Newspaper, Magazines, websites, SMS from everywhere. Hardly, I could remember an ad caught my mind and had changed my buying decision so far except may be few here and there, and those few I’ve appreciated mostly for their art form or the aesthetic values. That doesn’t mean the advertisement was great and it had accomplished its goal.

Today, common people are daily undergoing through most-probably billions of ad exposures and within those billions of exposures, hardly few get attracted by the people and create a spot in person’s mind. A person is exposed for an ad for just couple of seconds and within that frame a company needs to achieve its advertising goal and for that, company is spending billions from its marketing budget. Sometimes I feel recession is good, so that organizations rethink and reorganize themselves to survive in that tight market. Customers, who buy, will buy at any case irrespective of the good or bad quality of advertisements made by the companies. Advertising may be described as the science of arresting the human intelligence long enough as milking the cow. What happens when, there is recession like now? The first thing companies would cut the costs in every aspects of marketing, curtail advertisement costs, then lay off people and squeeze down operations and costs. Which we’re seeing now, name a company which had not seen such blood bath during this span. The bigger the organization, the bigger the cost cutting agenda. Amongst them, most of the cost cutting efforts have happened from the marketing department all over the world. That means, marketing is always been treated as the step child by the organizations, because mostly the organizations are run by the Financial people, and they always had seen marketing budget as the percentage costs of the total revenues earned. Recession means the revenue would be less, directly it would be impacting the revenue, hence curtail all the marketing costs. This fallacy had been severely criticized by Prof. Nirmalya Kumar of London School of Business or even Phillip Kotler.

In the real business world, marketing department always been treated as the step child, and as if, it’s the sole responsibilities of the marketing department only to earn revenues on behalf of the company; rest others would be only counting and spending them, and at the bad times when no one is buying or mostly deferring their buying plans, start squeezing the budget from the marketing department first. Human being is always been fascinated to pass the buck, marketing department is been treated so far so rough, that we may have to scrap the entire word “marketing” what we knew and learnt so far. May be this is the call to re-invent new marketing concepts to accommodate changes for the changes happening in the market, especially at the hard times like now. “Advertising” which is the small part of the entire Marketing concepts, I’ve chosen as our point of discussion.

Reverse is again true, recession is the good time when companies should do intelligent marketing, offer better deals to the loyal customers, offer more value of money to their customers and concentrate more on customer retention. Because, this is the time good for business development, making a long lasting friendlier brand value in people’s mind, which would pay off more in the better time.

A complete natural and spontaneous dance for an advertisement is still in my mind. The advertisement was of “Dairy milk”, but it’s not for that product, rather for that dance and may be for that beautiful and natural model.

In one of my article I’ve discussed about the change in consumer behavior in India and the allied brand awareness changes happening all round. There you may also find few of the advertisements clippings, how Multinational companies changed their ad to suit Indian consumers. Let us now discuss what’s the ad goals and objectives. As per Phillip Kotller, Guru of Marketing Management Ad objective is 5M’s.

1) Mission

2) Message

3) Media Vehicle

4) Money

5) Measurement

An ad has got a message and its needed to be conveyed very clearly to the consumers, that’s the mission of an ad. Also an ad could be the brand ambassador of an organization. Coke is an established brand of “Coa-Cola”, and they can’t continue for ever “The Real Thing”, “Coke is It” or “I’d like to teach the world to sing”. Generally its been calculated that 30% of the entire money spent for an ad, gets returned as revenue from the newer customers due to an ad and most probably rest is coming other loyal customers through the selling process. I don’t believe that this theory is true particularly at this stage of brand maturity of Coke, it can really add extra 30% of revenues from the new consumer acquisition. Mostly those ads are used for the newer product introduction or recycling of the older products in newer formats, kind of old wine in the new bottles. After doing market study coke introduced a new product with less sweet in taste as good as Pepsi, because they’ve found Coke is sweeter than Pepsi, and offcourse there was a latent demand for such taste, otherwise the Pepsi bottles wouldn’t have sold. Amazingly they’ve found loyal customers reacted by the taste change and their percentage sales fall rapidly. Immediately, Coke recognized the problem and after doing root cause analysis, Coke had to reinstate the older taste to the market with the name of “Coke-Classic”.

So sometimes, an ad can also kill a product, “Pepsi One” is the case of such. Below is the ad of “Pepsi One’, this ad killed this product line. Pepsi ONE is a cola-flavored soft drink made by Pepsi, with only one Calorie per 12 oz.-can. It was introduced in the fall of 1998 as an alternative to Diet Pepsi, with Pepsi's commericals stressing its superior flavor.

Pepsi ONE was largely a failure, and while it still is on the market in many areas, it is not advertised.

Because, may be the brand rivalry in-between Coke and Pepsi was very evident through this ad, but the message was never clear, so the mission remained un-accomplished. Hence, a detailed measurement process of an ad has to be there. Someone told that, its really hard something that can’t be measured. Ad agencies would always force and claim any positive changes goes for their credit and the ad commercials they’ve produced. After an ad, if you may find the company’s sales revenue is getting down, the ad agency would immediately justifies that the product sales at any case would have to be fallen due to the market condition or product life cycle etc, but their ad made the rate of fall little slower. So, any CEO, prior taking an Ad budget into consideration has to make sure to measure the ad effects to the market and link it directly with the pay per view mode, the way Internet advertising has evolved. May be the change of Media Vehicle decision also could be made for the particular ad on this expenditure and return issue. Particularly when, there’s recession a critical decision about spending money has to be made rightly. Ryanair the cheapest airline of Europe became very successful and the case study is given in the link, also you may see their ad below, while most of the airlines of the world are making loss currently.

Measurement of ad traffics from the Billboards to the SMS would be very hard, but imagine the way Google thought about the advertisement in the web. There, a traffic converted from an ad is measured, footfall due to an ad is tracked, source of the traffic is also tracked and for which Google charge money, keeping the ad idle and publishing to different sites Google don’t charge money. So, it works only on pay per view model, this concept would most probably change the conventional Ad World sooner or later. People spending now big money for the ad commercials will soon become history, most of the companies would get into below the line (BTL) activities in the ad world and only get paid for their performances.

Sometimes it happens that the zingle is so good, the entire ad message is been diluted, people remember the zingle than the video. Or even I've watched a Bike ad few days back (forgotten the company name), which is roaring at the speed of 120KMPH in a hilly terrain, before we put such stuff infront of the consumers, we need to ask few questions to ouselves. Think how much irrelevant such ads are, how many roads are there in India, where a person can ride a bike with 120KMPH and require such product?

I personally believe if companies spend more time, money and energy and bring innovation on products designing and focus more on catering customer expectations and satisfactions, a company won’t have to spend much money for the advertisements. Because, word of mouth and satisfied clients would act as their advertisements and would bring the viral effect. In the today’s world products and categories are more than people’s need, so marketer adopts the strategies to push the products through advertisements. The reverse would be always true, pull strategy by virtue of the product capability and service capability, consumers would be automatically attracted even without costly ad campaigns and buy the products with huge satisfaction.

So the conventional advertisement what we see now are already dead, the backlashes are going on. The new age of changed advertisement concept is getting cooked under this economic slowdown and would be evolving with its new shape very soon.

May be we need to ask certain questions next time prior writing a check to the advertiser for some ad commercial for our own organizations.

Whether we've liked the ad creativity/ the content?
What is the main message to be conveyed?
What do you think a consumer have to remember?
How likely the particular ad would influence to buy the product?
How the ad would influence your psyche to make you inclined for the product?
What works well and what not?
How does the Ad would feel like?

Inspired By: “Marketing A-Z- Phillip Kotler

No two countries that both had McDonald's had fought a war against each other since they each got its McDonald's.

2009-07-14T01:17:00.000-07:00

In Thomas L. Friedman’s 1999 book The ‘Lexus and the Olive Tree’ the following observation was presented: “No two countries that both had McDonald’s had fought a war against each other since each got its McDonald’s”. As if it’s the secret sauce. It lessens testosterone levels. After a Big Mac, large fry and a Diet Coke. Nobody wants to fight it seems, they just want to go to sleep.

While that statement was somewhat tongue-in-cheek, his point was that due to globalization, countries that have made strong economic ties with one another have too much to lose to ever go to war with one another. The global expansion of McDonald’s restaurants is a relatively recent phenomenon in the Indian perspective when we put this into the context of the history of warfare, and, with a few notable exceptions. India also proceeded into relatively a stable market after the economic slowdown and considering as one of the most prospective and emerging market which the entire world is eyeing on. I was going through an article where some of the people fearing that, by 2012 China might spread the threat of war against India. If this theory is true, then guys you can well understand that, we’ve no fear of war sooner or later, because both Indians and Chinese have became now brothers and sisters by the virtue of having Big Mc Mama’s and enjoying BigMac as the milk of Mc Donald’s big fraternity family.

The 2008 South Ossetia war between Russia and Georgia is a counter example to the theory though, both countries having McDonalds at that time (started in 1990 and 1999, respectively). Other conflicts that provide possible counterexamples, depending upon what one considers “a war”, including the 1989 United States invasion of Panama, the 1999 NATO bombing of the Federal Republic of Yugoslavia, and the recent Kargil War along with ongoing skirmishes between factions of India and Pakistan over the Kashmir region. Russia and Georgia, for example have McDonald’s. It seems that hostilities break out, skirmishes are conducted, and more, but only on a somewhat limited scale, without the formal declaration of war.

India and Pakistan both have McDonald’s. So do Greece and Turkey. Israel and several middle eastern countries that don’t get along have McDonald’s. China, Taiwan, Korea, and other Asian countries have McDonald’s. Several Central and South American countries have McDonald’s. The appearance of McDonald’s does not end an existing state of war: the states of Lebanon and Israel have been under a state of war since 1973, with South Lebanon occupied until May 2000 and a significant flare-up in 2006, which did not hinder the establishment of McDonald’s franchises in Israel and Lebanon in 1993 and 1998, respectively. The two countries engaged in a brief state of warfare in the summer of 2006.

Still, are McDonald’s investments a sign that countries are headed for freedom and peace? What do you think about Friedman’s views on globalization?

I personally feel that, McDonalds usually only exist in the areas with liberalized economies, which usually only exist in nations with liberalized governments and off course with liberalized society. States with liberalized governments usually do not go to war with each other because of United Nations and different Trade treaty to become the franchisees of the global supply chain. McDonald’s is a kind of sign that countries are becoming more interested in economic liberalization. Everyone understands that if people income level is good and happy, they won’t rebel. Sometimes this economic change is also associated with democracy and political freedom, but not always (see China). I think that if there is a relationship, it goes the other way around—first stability in a country, then McDonald’s. The same thing happened also in India.

As an indicator of relative stability, McDonald’s could be weakly correlated. As you point out, India, Pakistan, Israel, Palestine and others are counter examples. I think that perhaps we should increase our economic ties more. This has historically been a way of protecting oneself against bankruptcy. US owe China lots of money at this point of time, so they can’t afford to let United States go bankrupt. As we’ve seen recently, in the US, the government can’t afford to let certain monopolistic firms go under. Other way round, India is gaining confidence infront of the United States being emerging market with stable Government and skilled population. So, the entire supply chain of global economy is knitted well and firmly stable.

It’s not quite the same when we loan them money through the World Bank, and the IMF, but it does build ties, and it makes it more difficult for them to engage in wars. Plus US loans overseas go primarily to US companies who are building large infrastructure projects. Those ties are somewhat tenuous, but they are something. I’m sure McDonald’s follows soon after all those deals.

Mostly, though, I think that McDonald’s is a kind of stamp of approval rendered because a nation has attained a certain level of stability. Introduction of McDonald’s could indicate a willingness to adopt a more culturally homogeneous approach, which could be more encouraging of peace between previously differing nations too.

“When goods do not cross borders, soldiers will.”“ Frederic Bastiat.

US RECESSION AND ITS IMPACT ON AMERICAN CUSTOMERS

2009-06-28T22:26:00.000-07:00

Due to economic uncertainty, US customers have changed their mind in the purchase of expensive items. In fact this has been seen in the behaviour of the American customers in the purchase of products. Actually the American customers have decided to shift their purchase from now to the future in the case of expensive items. This becomes a concern for all the people who are related their purchase. Not to forget, American customers are considered as the backbone of the American economy. These are the customers whose spending decisions make up 70% of the economic activity. These customers’ moods are continuously assessed by the pollsters. Mainly their purchase decisions are deferred with reference to the house, cars, electronics, clothes and other expensive items.

2. US RECESSION

A recession is a decline in a country’s gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down. US economy is on the brink of or already in recession. During the first quarter of 2008, US economy managed to grow by 0.1% and is also likely to decline by 0.5% in the second quarter of 2008. The second quarter growth result is likely to come by 31st July 2008. It has also been seen that there was no growth in the last month of the 1st quarter. Not surprisingly, consumers are distinctly less confident now than they were just one quarter ago.

3. REASONS OF US RECESSION

Thus what could be the reasons for the slower economic growth in the US? As US has not declared that they are in recession, it can be written as slower economic growth. First reason could be the Bush administration which gave the economy before 2004 and 2006 elections, through a combination of large tax cuts and large increases in military outlays. Second could be the record budgetary and current account deficits have severely neutralized the fed’s monetary policy view as interest rates cannot be reduced substantially for fear of collapse of the US dollar. Third, all this is taking place at the same time that the construction industry is in confusion and housing prices are declining.

4. CONSEQUENCES OF US RECESSION

When the economy slows down, business activities decline and less money change hands. Businesses often find themselves in a more difficult environment. They spend less in the businesses and try to curtail their investment in the different expenditures such as reduction of the sales force size. According to reports, in March 2008, the US economy lost 80000 jobs. This is the biggest drop in five years. The economic analysts have also opined that the rising oil prices, the prolonged housing slump and continuous job losses in the first quarter of 2008 are the main reasons behind recession. “I think the key concern for a consumer in a recession is the worry that they‘ll lose their job, said Joel Naroff, Chief Economists at Commerce Bancorp. If it’s an extended recession, there will be fewer and smaller pay raises and bonuses, so they will be bringing in less income.” The rise in the global economy has prompted many us based companies to close factories and outsource the work to other countries. Some economists see debt and the current credit crises, as a significant threat to consumers in a recession.

5. INDUSTRY SALES AND INDICATORS

The monthly retail sales in the US increased by an average of 0.1% in the second quarter of 2007, 0.5 % in the third quarter and 0.13% in the fourth quarter over the corresponding period of the previous year. However in the first quarter of 2008 consumer spending declined by 0.03% per month. US Durable Goods Orders over the past year exhibit a similar pattern. These are items that have a normal useful life of more than one year.

Another indicator is Personal consumption expenditures (PCE), over the past year, the monthly average has been positive every quarter: Q2 2007-+0.2%; Q3 +0.43%; Q4 0.53%; Q1 2007-08 - +0.3% and April 2008 +0.2%. Retail Sales in the US over the same period added an average 0.1% in the second quarter of 2007, 0.5% in the third and 0.13% in the fourth. Only in the first quarter of 2008 did consumer spending reduced by 0.03% per month. In April Retail Sales fell by 0.2%.

The consumer confidence survey released by the conference board showed the consumer confidence index slumping to 64.5 on a 100 point scale in March, the lowest since 2003.JD Power & Associates predicts that total automobile sales in the US during 2008 will be 14.95million vehicles, which would be the lowest since 1995.

6. FACTORS INFLUENCING AMERICAN CUSTOMERS

The main factors which influenced American customers are as follows:

• Focus of purchase changes. With tighter budgets, customers concentrate purchasing on essential products and services. They tend to acquire fewer impulse items, and tried to shift their purchases. For marketers, this can have an impact on products they choose to highlight and how they're positioned.

• Product tradeoffs. Due to reduction in disposable income, consumers may make different product tradeoffs. Depending on the type of items involved, these options may vary. It may mean using things longer, being satisfied with what they have rather than buying new, or trading down to less expensive substitutes. It's important to consider how these behaviors impact customers' view of buying merchandise.

• Lead time increases on the purchase decision. Before going for a purchase Customers are likely to think more and try to get more information about their purchase, acquisition, assessing need, utility, alternate products, and price.

7. PROBABLE STRATEGIES OF THE COMPANIES DURING RECESSION

Companies should bear eight factors in mind when making their marketing plans for 2008 and 2009:

1. Focus of research on the customer. Instead of cutting the market research budget, they need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. “Must-have features of yesterday are today’s can-live-withouts”. Trusted brands are especially valued and they can still launch new products successfully but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.

2. Focus on family values. When economic hard times arrive, people tend to withdraw themselves. Firms should look for comfortable hearth-and-home family scenes in advertising to replace images of extreme sports, adventure and rugged individualism. Greeting card sales, telephone use and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts most to stay at home but also stay connected with family and friends.

3. Controlling the expenditure on marketing. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands--and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. If companies have to cut marketing spending, they must try to maintain the frequency of advertisements by reducing from 30-to-15 second advertisements, substituting radio for television advertising, or increasing the use of direct marketing, which gives more immediate sales impact.

4. Reviewing the product-mix strategies. Marketers must reforecast demand for each item in their product lines as consumers’ trade down to models that stress good value, such as cars with fewer options. During this time, people prefer multi-purpose goods over specialized products and weaker items in product lines should be pruned. In grocery-products categories, good-quality own-brands gain at the expense of national brands. Industrial customers prefer to see products and services unbundled and priced separately. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced but advertising should stress superior price performance, not corporate image.

5. Extending the help to distributors. In uncertain times, no one wants to tie up working capital in excess of inventories. Marketers can follow some policies such as early-buy allowances, extended financing and generous return policies to motivate distributors to stock your full product line. This is particularly true with unproven new products. Care should be taken while expanding distribution to lower-priced channels; doing so can jeopardize existing relationships and the brand image. However, this may be the time to drop weaker distributors.

6. Reviewing the pricing strategies. Customers will be shopping around for the best deals. It may not necessarily mean to cut list prices but may need to offer more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and mail-in offers.

7. Focus on the market share. Knowing cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies such as Wal-Mart and Southwest Airlines, with strong positions and the most productive cost structures in their industries, can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors.

8. Emphasizing the core values. Although most companies are making employees redundant, chief executives can strengthen the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees.

Economic recession can elevate the importance of the finance director’s balance sheet over the marketing manager’s income statement. Managing working capital may tend to dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a recession; they adapt them.

By: Dr. SUNIL KUMAR PRADHAN ASBM,BHUBANESWAR.

References: 1. Marketing mastermind,May,2008, 2. Portfolio organizer, June, 2008. 3. http://seekingalpha.com/article/79725-recession-isn-t-here-until-the-consumer-says-so 4. http://www.clickz.com/showPage.html?page=3628564 5. www.TheCodeForGlobalEthics.com

Six steps far from your desired Job.-Personal Branding II

2009-05-16T04:12:00.000-07:00

Six degrees of Separation- The art and the science in finding a job in this troubled market. Personal Branding-II

Imagine a kind of situation when you don’t have to apply for a job, but you’re landing up with all the good offers and employers are obliged if you join them. This is not the tale of Alice in Wonderland honey, this might be a possibility, because a person who’s highly visible by the head hunters in the Internet and networked with the right people at the right time might be needed at the right place, and you never know who might need you badly to join their company and might be pressing you hard to join them with a bigger and fatter pay checks with better benefits.

I always used to get amazed by a friend of mine who used to act as a scavenger. Hey, don’t get astonished by that term in the Internet world. How many of you generally go through those chain mails and forward to the people in your address book daily? Many of us, we forward to our friends and colleagues daily and then delete it without even seeing the matter well. Many like me delete it in the first shot to break the chain. We’re aware of some people in the net known as chain e-mail collectors known as scavengers and these mails are one of their weapons to collect the e-mail id’s of yours and mine. My friend collects those chain mails and makes database of e-mails for e-mail marketing once he does the right segmentation of those data. Right now we’re aware that, these e-mails are saleable and target marketing yields very good result inexpensive way. This is a part of Below the Line (BTL) activities while we talk about promotions.

Naturally the question comes now what, how and where this Six Degree of separation theory has got relevance with our topic of discussion. They say the world is small and round, Six degrees of Separation (also referred to as the "Human Web") refers to the idea that, if a person is one step away from each person they know and two steps away from each person who is known by one of the people they know, then everyone is at most six steps away from any other person on this planet named Earth. It was popularized by a written by John Guare.

Several studies, such as Milgram's small world experiment, have been conducted to empirically measure this connectedness. While the exact number of links between people differs depending on the population measured and the types of links used, it is generally found to be relatively small. Hence, the phrase "six degrees of separation" is often used as a synonym for the idea of the "small world" phenomenon.

So, there's this job that you really want. But, to get it, you'd have to find a way to get yourself in a direct dialogue with the hiring manager—the one person who can decide that you are precisely the right person for the job.

Initially, though, the outlook is grim because you don't know anyone—either in IT or the cafeteria—who works there. But, in all likelihood, if you know someone to your target company, you're a lot closer to that job and know that hiring manager than you think. You might be just six degrees away from making contact, according to recent research. I know you would now ask me, am I kidding? At this moment most of the job sites are repeating their jobs, in different consulting companies name, hiring been frozen last seven to eight months back in most of companies. What’s the point in getting connected with the hiring managers now? Can they hire now? Because, I may be needing a job right now.

Well, they say that, even a farmer has to wait for the entire season to get his crop back home safely. Not in the western world, now even in India, jobs are happening and happening at a very slower pace at this gloomy period. This is the right time for marketing, as I told you in my last article about personal branding. This is all about Social Networking. This exercise is also a part of personal marketing strategies, once the personal brand is slowly established in the market. Imagine a situation if you start doing it now, your visibility would be higher when this market moves upwards.

The other way round, most of the recruiters now try to get people for their client’s requirements from the social networking sites e.g. LinkedIn, SiliconIndia, Facebook etc because these are having more selective and quality people, far better than the job sites. Many talented people who’re stable with their current employers are naturally out from the job market. So, their visibility is much lesser through the job sites. Now, suppose a person’s skills and acumen just exactly matched with the client’s requirements, who might be not looking for a change at this moment, who knows he might change his mind by seeing the offer of your client. In the recruitment Industry nowadays its more of head hunting than finding suitable people for the requirements. They know their target companies and its more of aggressive poaching than anything else. It’s a competitive and small world.

What this means for today's job hunters is that getting in touch with the right person may only be a matter of tapping the friendship and professional wells dug throughout their career years. Instead of just the regularly hyped advice to network with peers and friends, the focus needs to be much more direct. Here's the basic three-step approach:

First, identify your dream job and two or three runners-up.
Identify the job title and be specific. For example, "Senior Technology Manager for Internal System Networking at Company C".You might have to research the specific title given for certain tasks at your dream companies.
Then start hitting your connections, both professional and personal, with all the specific information—from the company, location, title, and department, and ask them questions, such as:

"Do you know someone who works for a company that has an ongoing relationship with my target company?"
"Do you know anyone who used to work for my target company?"
"Do you know someone who works in the same general industry as my target company?"

Make it clear to all the contacts that you're trying to find out who hires senior technology managers at company C. If you can find the target person's name—the actual hiring manager—make sure you ask everyone if they can connect you to that hiring manager as well. If you can't find out the hiring manager's name, use some senior names at the company, such as the CEO or the CIO. Include your names in your request for insight from your peers and friends. Include every personal and professional tidbit you can scour in research—the hiring manager's alma mater, the CIO's hometown, the recruiter's personal interests etc. Nowadays to reduce the employee hiring costs, most of the companies are going for internal employee referrals schemes for any open position. The effort will be well worth it because sometimes it's just one piece of data that can open the door to an interview.

Personal Branding- I

2009-05-07T07:03:00.000-07:00

Personal Branding- a product named you and me….. It’s a new brand world. That cross-trainer you’re wearing — one look at the distinctive swoosh on the side tells everyone who’s got you randed. That coffee travel mug you’re carrying — ah, you’re a Starbucks woman! Your Tshirt with the distinctive Champion “C” on the sleeve, the blue jeans with the prominent Levi’s rivets, the watch with the hey-this-certifies-I-made-it icon on the face, your fountain pen with the maker’s symbol crafted into the end ... You’re branded, branded, branded, branded. The consumer behavior is changing and these products and branding is also changing to cope up the sarrounding changes. Big companies understand the importance of brands. Today, in the Age of the Individual, you have to be your own brand. Here’s what it takes to be the CEO of Me Inc. While I was drafting this article for publishing, I recalled a friend of mine, who just hear songs in the car very loudly or may be the other one who is always a busy man and keeps us waiting to talk with him while he takes other’s calls in cell phone and starts speaking and get involved in that conversation forgetting about our presence (In India talking/ taking calls of others in front of you/me are still widely culturally accepted and a kind of icon of a busy man no matter how much you feel ignored internally). Hence, we create an image of ours in others mind knowingly or unknowingly. If I ask my son which phone he wants, he'll promptly suggest me to get a Samsung for him because Amir Khan is the brand ambassador for Samsung phones in India, and he's a profound fan of his Ghajini movie made by Aamir. So brand and brand ambassador is very much important for a product to market and we're the product as well as our own brand ambassador for my Inc.com. It’s time for me — and you — to take a lesson from the big brands, a lesson that’s true for anyone who’s interested in what it takes to stand out and prosper in the new world of work. Regardless of age, regardless of position, regardless of the business we happen to be in, all of us need to understand the importance of branding. We are CEOs of our own companies: Me Inc. To be in the business today, our most important job is to be head marketer for the brand called You. It’s that simple — and that hard. And that inescapable. The real action is at the other end: the main chance is becoming a free agent in an economy of free agents, looking to have the best season you can imagine in your field, looking to do your best work and chalk up a remarkable track record, and looking to establish your own micro equivalent of the Nike swoosh. Because if you do, you’ll not only reach out toward every opportunity within arm’s ( or laptop’s ) length, you’ll not only make a noteworthy contribution to your team’s success —you’ll also put yourself in a great bargaining position for next season’s free-agency market. The good news — I'm back for my readers in a great way and it is largely good news — is that everyone has got a chance to stand out. Everyone has a chance to learn, improve, and build up their skills. Everyone has a chance to be a brand worthy of remark. Who understands this fundamental principle? The big companies do. They’ve come a long way in a short time: it was just more than a decade ago, April 2, 1993 to be precise, when Philip Morris cut the price of Marlboro cigarettes by 40 cents a pack. That was on a Friday. On Monday, the stock market value of packaged goods companies fell by $25 billion. Everybody agreed: brands were doomed. Today brands are everything, and all kinds of products and services — from accounting firms to sneaker makers to restaurants — are figuring out how to transcend the narrow boundaries of their categories and become a brand surrounded by a Tommy Hilfiger-like buzz. Who else understands it? Every single Web site sponsor. In fact, the Web makes the case for branding more directly than any packaged good or consumer product ever could. Here’s what the Web says: Anyone can have a Web site. And today, because anyone can ... anyone does! And that’s how we’re here. So how do you know which sites are worth visiting, which sites to bookmark, which sites are worth going to more than once? The answer: branding. The sites you go back to are the sites you trust. They’re the sites where the brand name tells you that the visit will be worth your time — again and again. The brand is a promise of the value you’ll receive. The same holds true for that other killer app of the Net — email. When everybody has email and anybody can send you email, how do you decide whose messages you’re going to read and respond to first — and whose you’re going to send to the trash unread? The answer: personal branding. The name of the email sender is every bit as important a brand — is a brand — as the name of the Web site you visit. It’s a promise of the value you’ll receive for the time you spend reading the message. Nobody understands branding better than professional services firms. Look at Accenture for a model of the new rules of branding at the company and personal level and how they’ve branded themselves with Tiger Woods. Almost every professional services firm works with the same business model. They have almost no hard assets — my guess is that most probably go so far as to rent or lease every tangible item they possibly can to keep from having to own anything. They have lots of soft assets — more conventionally known as people, preferably smart, motivated, talented people. And they have huge revenues — and astounding profits. They also have a very clear culture of work and life. You’re hired, you report to work, you join a team — and you immediately start figuring out how to deliver value your customers. Along the way, you learn stuff, develop your skills, hone your abilities, move from project to projects. And if you’re really smart, you figure out how to distinguish yourself from all the other very smart people walking around with $1,500 suits, high-powered laptops, and well-polished resumes. Along the way, if you’re really smart, you figure out what it takes to create a distinctive role for yourself — you create a message and a strategy to promote the brand called You. What makes You different? Start right now: as of this moment you’re going to think of yourself differently! You’re not an “employee” of General Motors, you’re not a “staffer” at General Mills, you’re not a “worker” at General Electric or a “human resource” at General Dynamics ( ooops, it’s gone! ). Forget the Generals! You don’t “belong to” any company for life, and your chief affiliation isn’t to any particular “function.” You’re not defined by your job titles and you’re not confined by your very job description or role you’re playing with your current company. Starting today you are a brand. Think that, you’re every bit as much a brand as Nike, Coke, Pepsi, or the Body Shop. To start thinking like your own favorite brand manager, ask yourself the same question the brand managers at Nike, Coke, Pepsi, or the Body Shop ask themselves: What is it that my product or service does that makes it different and give you competitive advantage over others? Give yourself the traditional 15-words-or-less contest challenge. Take the time to write down your answer. And then take the time to read it. Several times. If your answer wouldn’t light up the eyes of a prospective client or command a vote of confidence from a satisfied past clients, or — worst of all — if it doesn’t grab you, then you’ve got a big problem. It’s time to give some serious thought and even more serious effort to imagining and developing yourself as a brand. Start by identifying the qualities or characteristics that make you distinctive from your competitors — or your colleagues. We'll discuss more in the next one about this.

SCOPE OF RETAILING: FMCG II

2009-04-30T05:36:00.000-07:00

Its been too much silence from my end for my readers I guess. The last post was made by me in the last year and most probably the global economic meltdown made me mum. Was unable to get the motivation to back in this sphere. You may name it a 'Hibernation" phase of mine, where experienced many people at Chennai in a new work place and have learnt many lessons of corporate leadership and entrepreneurship. Honesty is not always the best business practices at India may be where, there would be always a status quo exists inbetween corporate ethics and corporate obligations towards employers v/s employees. We'll discuss this topic may be in some other forum again.

SCOPE OF RETAILING: FMCG 2 : In my last discussion we started a topic on retail management practices in India, which left unfinished and allow me to gain back my momentum. The word ‘retail’ is derived from the French word ‘retailer’, meaning ‘to cut a piece off’ or ‘ to break bulk’. In simple terms, it implies a first-hand transaction with the customer. Retailing can be defined as the buying and selling of goods and services. It can also be defined as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable. Retailing involves a direct interface with the customer and the coordination of business activities from end to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery service to the customer. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today. TYPES OF RETAIL OPERATIONS: Retail operations enable a store to function smoothly without any hindrances. The significant types of retail operations consist of: • Department store • Specialty store • Discount/Mass Merchandisers • Warehouse/Wholesale clubs • Factory outlet Retail Management System targets small and mid-size retailers seeking to automate their stores. The package runs on personal computers to manage a range of store operations and customer marketing tasks, including point of sale; operations; inventory control and tracking; pricing; sales and promotions; customer management and marketing; employee management; customized reports; and information security. THE EMERGING SECTORS IN RETAILING: Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores (Convenio, HP Speedmart) and fast-food chains. Though this economic melt down affected the retail businesses the most.

It is the non-food segment, however that foray has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo). The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats: • Hypermarts , typically about 10,00 sq.ft or more • Large supermarkets, typically 3,500-5,000 sq. ft. • Mini supermarkets, typically 1,000-2,000 sq. ft. • Convenience stores, typically 750-1,000sq. ft. • Discount/shopping list grocer The traditional grocers, by introducing self-service formats as well as value-added services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organized retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money' image. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society. RETAILING SCENARIO- GLOBAL VIEW: Retailing in more developed countries is a big business and better organized than what in India. According to a report published by McKinsey & Co. along with the Confederation of the Indian Industry(CII) the global retail business is a worth a staggering US$ 6.6 trillion. In the developed world, most of it is accounted for by the organized retail sector. The service sector accounts for a large share of GDP in most developed economies. Like we had seen in recent recession US Govt had spent USD 2 Billion to the people to promote their consumer market and bypass credit crunch and recession. And the retail sector forms a very strong component of the service sector. In short, as long as people need to buy, retail will generate employment. Globally, retailing is a customer-centric with a emphasis on innovation in products, processes and services. With total sales of US$ 6.6 trillion, retailing is the world’s largest private industry, ahead of finance and engineering. Some of the world’s largest companies are in this sector: over 50 Fortune, 500 companies and around 25 of the Asian Top 200 firms and retailers. Wal-Mart, the world’s second largest retailer, has a turnover of US$ 260 billion, almost one-third of India’s GDP.

RETAIL INDUSTRY IN INDIA: Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favourable and emerging technologies are facilitating operations.

Retailing in India is gradually inching its way to becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector. Big in size and turnover, Indian retailing industry is characterized by certain attributes. The network of retailers reaches every nook and corner of the country. So any product produced anywhere in the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian retailers is vary high. Secondly, in India the retailing industry is an unorganized lot consisting of, in most of the cases, small entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. The second attribute gives rise to the following characteristics – • Power of the retailers, as such is very less, and in many cases it is negligible. This weakness has been exploited by the manufacturers and the stronger partners of the marketing channel. The retailers, in general, abide by the terms and conditions set by the manufacturers and other "big brothers" of the channel. • The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the retailers, which in turn, makes management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote. • Therefore, the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. So the dependence of retailers on other channel members increases to a high extent. Thus the participation of retailers in the flows of marketing mix becomes lower than desired. • The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. • However, these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level. Retail Shopkeepers: India has sometimes been called a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in India, which totalled over 12 million in 2003. About 78% of these are small family businesses utilising only household labour. Even among retail enterprises that employ hired workers, the bulk of them use less than three workers.

India's retail sector appears underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere. There are only 14 companies that run department stores and two with hypermarkets. While the number of businesses operating supermarkets is higher (385 in 2003), most of these had only one outlet. The number of companies with supermarket chains was less than 10.

Retail Sales: Retail sales, which amounted to about Rs7,400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10%. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The remaining 29% of retail sales are non-food items. The share of food related items fell over the review period, down from 73% in 1999. This is to be expected as, with income growth, Indians, like consumers elsewhere, spent more on non-food items compared with food products. Sales through supermarkets and department stores are small compared with overall retail sales. However, their sales grew much more rapidly (about 30% per year). As a result, their sales almost tripled during this time. This high acceleration in sales through modern retail formats is expected to continue during the next few years with the rapid growth in numbers of such outlets in response to consumer demand and business potential. Government Policy: There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business, lead to the closure of many small trading businesses and result in considerable unemployment. Given the political clout of the small trading community, because of their enormous numbers, the government has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through franchising agreements. Growth of Retailing in India: Indian retailing industry has seen phenomenal growth in the last five years (2001-2006). Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of Indian retail sector. RNCOS’ “India Retail Sector Analysis (2006-2007)” report helps clients to analyze the opportunities and factors critical to the success of retail industry in India. • Organized retail will form 10% of total retailing by the end of this decade (2010). • From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per annum. • Cultural and regional differences in India are the biggest challenges in front of retailers. This factor deters the retailers in India from adopting a single retail format. • Hypermarket is emerging as the most favorable format for the time being in India. • The arrival of multinationals will further push the growth of hypermarket format, as it is the best way to compete with unorganized retailing in India. Technology Impact: The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organised retailer score over the unorganised players, giving both cost and service advantages.

Retailing is a `technology-intensive' industry. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters. Successful retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques - cross-docking and electronic data interchange. Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online. Besides vendors, the focus of the retailing sector is to develop the link with the consumer. `Data Warehousing' is an established concept in the advanced nations. With the help of `database retailing', information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured. Retailing, as discussed before, is at a nascent stage in our country. Most organized players have managed to put the front ends in place, but these are relatively easy to copy. The relatively complicated information systems and underlying technologies are in the process of being established. Most grocery retailers such as FoodWorld have started tracking consumer purchases through CRM. The lifestyle retailers through their `affinity clubs' and `reward clubs' are establishing their processes. The traditional retailers will always continue to exist but organised retailers are working towards revamping their business to obtain strategic advantages at various levels - market, cost, knowledge and customer. With differentiating strategies - value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behaviour, the ground is all set for the organised retailers. It would be important to note, however, that the retailing industry in India is still a `protected industry'. It is one of the few sectors which still has restrictions on FDI. Given the current trend in liberalisation, it will not be long before the retailing sector is also thrown open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. That will be when the real action will begin. Major retailers in India: • India’s top retailers are largely lifestyle, clothing and apparel stores. • This is followed by grocery stores. • Following the past trends and business models in the west retail giants such as Pantaloon, Shoppers’ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores. • These Wal-Mart wannabes have the economy of scale to be low –medium cost retailers pocketing narrow margin. RETAILING SCENARIO-INDIA: The retail scenario in India is unique. Much of its is in the unorganized sector, with over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than 500 sq.ft. in size, the per capita retail space in India being 2 sq.ft. Compared to the US figure of 16 sq.ft. India’s per capita retailing space is thus the lowest in the world. With more than 9 outlets per1,000 people , India has the largest number in the world. Most of them are independent and contribute as much as 96% to total retail sales.

Because of the increasing number of nuclear families,working women, greater work pressure and increased commuting time, convenience has become a priority for Indian consumers. They want everything under one roof for easy access and multiplicity of choice. This offers an excellent opportunity for organized retailers in the country who account for just 2% (and modern stores 0.5%) of the estimated US $180 billion worth of goods that are retailed in India every year. The growth and development of organized retailing in India is driven by two main factors – lower prices and benefits the consumers can’t resist. According to experts, economies of scale drive down the cost of the supply chain, allowing retailers to offer more benefits offered to the customer. The retail business in India in the year 2000 was Rs.400,000 crore and is estimated to go to Rs.800,000 crore by the year 2005, an annual increase of 20%.The contribution of the organized retail industry in the year 2000 was Rs.20,000 crore and is likely to increase to Rs.160,000 crore by 2005.

GROWTH OF RETAIL OUTLETS IN INDIA: India is rapidly evolving into a competitive marketplace with potential target consumers in the niche and middle class segments. The market trends indicate tremendous growth opportunities. Global majors too are showing a keen interest in the Indian retail market. Over the years, international brands like Marks & Spencer, Samsonite, Lacoste, McDonald’s, Swarovski, Domino’s among a host of others have come into India through the franchise route following the relaxation of FDI (foreign direct investment ) restrictions. Large Indian companies – among them the Tata, Goenka and the Piramal groups – are investing heavily in this industry. Organizations ready to take on this challenge can leverage the opportunities offered by a population of more than a billion. The prospects are very encouraging. Buying behaviour and lifestyles in India too are changing and the concept of “Value for Money” is fast catching on in Indian retailing. This is evident from the expansion of the pantaloons chain into a large value format, Big Bazaar, and the entry of new discount stores in food retailing in the South, namely, Subhiksha and Margin Free.

ccording to a report by the Centre for Monitoring Indian Economy (CMIE), investments in organized retailing – which include shopping malls, retail chains etc.- doubled from Rs.1,000 crore in January 2000 to Rs. 2,000 crore in January 2001. TRENDS IN RETAILING: The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non-store' shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the `store' frequenting traffic. Internationally, the concept of Net shopping is yet to be proven. And the poor financial performance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. Other forms of non-store shopping including various formats such as catalogue/mail order shopping, direct selling, and so on are growing rapidly. However, the size of the direct market industry is too limited to deter the retailers. For all the convenience that it offers, electronic retailing does not suit products where `look and see' attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved. Recent trends include: • Retailing in India is witnessing a huge revamping exercise. • India is rated the fifth most attractive emerging retail market: a potential goldmine. • Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion. • As per a report by KPMG the annual growth of department stores is estimated at 24%. • Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

Retail Industry in India and Modern Trade Formats….FMCG1

2008-08-02T05:29:00.000-07:00

I was talking with a friend few days back, formerly a CEO of a well reputed IT training school now in consultancy and recruitment. He was saying that, India Inc right now having huge demands in retail and banking sector for manpower, previously which is being only seen in the IT & ITES sector. It’s the boom time right now. Like any other supply and demand graph the IT and ITES demand is right now slowed down, moreover US slowdown squeezed that job market down in

India

. Well, its true for the banking segment in US too, then why is such demand is seen in banking sector in India, he couldn’t answer this question properly, but one thing for sure,

India

has got enormous emergence of consumerism and more than 1 Billion populations could become its potential buyers.

“No power on earth can stop an idea whose time has come” Dr Manmohan Singh, then Finance Minister of India, quoting Victor Hugo while presenting the Union Budget 1994-95, making a reference to the Indian economy's unlimited potential. If Dr Singh were to use the quote again today, he would probably apply it in the context of the promise contained in the Indian retail industry, and in particular, organized retail in India in the days to come. Retailing in India is currently estimated to be a USD 200 billion industry, of which organized retailing makes up 3 percent or USD 6.4 billion. By 2010, organized retail is projected to reach USD 23 billion.

India is witnessing an unprecedented consumption boom. The economy is growing between 7 and 8 percent and the resulting improvement in income dynamics along with factors like favorable demographics and growth in aspiration consumption are the drivers.

Retailing in India is currently estimated to be USD 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or USD 6.4 billion. Organized retail is expected to grow at 25-30 percent p.a., and is projected to attain USD 23 billion by 2010.1 At these levels, organized retail would constitute up to 9 percent of overall retail sales.

Indian retail – The right enablers are falling in place. There are multiple factors driving Indian retail growth. With roughly 60 percent of the total population below 30 years of age, favorable demographics are expected to drive consumption across categories. The purchasing power of a young consuming middle class has been talked of considerably since the time of economic liberalization in 1991. However, it is only today that we are witnessing the spending power associated with this consumer segment. For example 50 percent of the cellular phone purchases in the past year were by the under-30 age group2. This consumption is expected to continue due to the aspirational nature of spending associated with this consumer segment. Most of the retail malls in India are not yet urbanized and not profitable yet, struggling to get stabilized. Buyers are yet confused about the benefit of a specific mall format and value of a brand and special deal for a special mall. The footfalls are huge though, especially in week ends and malls are slowly becoming meeting points, but conversion is not yet that great proportionate to the entire footfalls. Certainly there’s a huge change came into the taste of people and consumer behavior though.

Role of Formats:-

In modern trade retailing, a key strategic choice is the format. Innovations in formats can provide an edge to retailers. A study of evolution of the largest retail market in the world, the USA highlights how formats evolved there. Till the 1940s, American retail was primarily centered around the city 'high street' or downtown areas, with an array of independent stores such as department stores, drugstores and coffee shops1. Post-World War II, the key demographic trend was migration away from the city-centre towards the suburbs. This led to the emergence of the 'shopping centre', a cluster of outlets in a location offering a range of merchandise catering to most needs of the immediate suburb,

offering a range of services from saloons to cafes, newsstands and grocery stores. The 50s saw the emergence of the 'enclosed' shopping mall, providing an end-to-end shopping and entertainment experience from food courts, theatres to shopping outlets.

The last major development in the American retail landscape was the discount stores along the lines of Wal-Mart and Costco. Discount stores are large stores with more than 100,000 sq ft of space situated at a distance from the city-centre or the suburb. Typically these discount chains gain significant market share in a relatively short span of time, and cater to the entire spectrum of household requirements such as grocery, apparel, household goods, do-it-yourself stores, books and even banking services.

Can Indian retailers learn from such experiences and leapfrog to the most successful formats abroad is a key question on everyone's mind. In the Chinese market, modern format stores such as hypermarkets and convenience stores have proved to be extremely successful. One of the key enablers for this popularity has been the high level of urbanization in the country.

Another unique factor in these hypermarkets is that they predominantly stock food. They also stock 'fresh produce' alongside groceries to cater to local consumer tastes.

An AC Nielsen survey across seven leading Chinese cities in July 2005 pointed to the popularity of modern formats in China. Up to 46 percent of respondents stated that hypermarkets/ convenience stores made up a significant part of their overall grocery expenditure, and 66 percent stated that they 'often' visited hypermarkets and convenience stores. In my next article I would discuss about that more vividly.

Format choices by Indian retailers:-

The respondents of the KPMG retail survey in India felt that specialty and supermarket format have the most potential for growth in India followed by hypermarkets. Understandably, with poor internet infrastructure (in terms of PC penetration and internet connectivity), e-tailing was identified as a channel with the least potential by most respondents, though personally I feel this would be another emerging area would evolve in India in some time ahead. Similarly, with traditional grocery stores offering an undisputed 'convenience' proposition till now, by virtue of malls these stores are also becoming their customers and still making good margin because of volume discounts, convenience stores may not grow as fast in the Indian context. The war is in-between the manufacturers to reaching end consumers via conventional channels v/s these malls reaching directly to consumers as well as road side grocery stores, sometime with higher mark-ups because of their volume discount facilities with the manufacturers.

Here, the interesting calculation I’m explaining. Suppose a manufacturer sets up some product with maximum retail price is Rs.20. The manufacturing cost is Rs.8, plus other charges ends up Rs.10 at the manufacturing point, which is the distributor buying price. Distributor keeps Rs.2 as margin and forwards the materials to the dealer points at the price of Rs.12. The dealer/retail point would purchase the item at Rs.18 and sales it at Rs.20 keeping 10% margin. So, the Rs.6 is the cost of the manpower, promotion plus some deals in the entire supply chain. Now, suppose a mall buys the item with the distribution price @Rs.12 and sells it to the retailer at the price of Rs.18 and the retailer at the price of Rs.16 it extends value of money in both the points with a discounted pricing. Hence, a grocery shop owner is making more profit and the buyer is also saving Rs.2. The mall owner is making more margin and controlling both the retail point pricing and MRP and manipulating buyer’s with the value deals because still he’s having volume margin at his hands from the manufacturer.

In India too, it may be difficult to transplant a successful international format directly and expect a similar performance. Local conditions and insights into the local buying behavior have to shape the format choice. A good point to note in the retailing industry today is the level of experimentation happening locally in terms of formats. Players like Subhiksha and Metro with Margin Free Markets are providing convenience with discount on goods, while internationally convenience formats typically charge a premium over the market prices.

Similarly, ITC is experimenting with a model which brings together a two way flow of goods in the retail outlet - farmers sell their produce and purchase goods to fulfill their consumptions needs. While the experience of these retailers as they scale up beyond their current geographies may provide new insights and lead to modification or fundamental re-engineering of their formats in future, such experimentation and identification of an appropriate format for the local conditions would differentiate winners from losers in Indian retail market of the future.

The retail supply chain in India – The weak link

The key imperative facing retailers in India is to have a robust and scalable supply chain that would facilitate rapid growth. One measure of efficient operations is the inventory turns ratio. The US retail sector has an average inventory turns ratio of about 18. The best global retailer like a 7-Eleven has over 50 turns of inventory.

Most Indian retailers KPMG surveyed have inventory turns levels between 4 to10. Another metric of efficient supply chain management is the stock availability on the retail shelves. Global best practice retailers achieve more than 95 percent availability of all SKUs on the retail shelves (translating into a stock out level of less than 5 percent). The stock out levels among Indian retailers surveyed ranged between 5 to 15 percent. Looking at the inventory turns and stock availability metrics, retailers in India clearly need to augment their operations. Clearly retailers in India have a significant catch-up act to do both in supply chain management and adoption of IT. The good point is that retailers can leverage the experiences of international retailers like Tesco, 7-Eleven and Wal-Mart to leapfrog to the latest practices in managing their supply chain and leveraging information technology.

Ref:

1. KPMG, 'Retail Outlook for China 2005'

2. KPMG, 'Trends in Retailing - Germany'

3. HSBC, 'Jumbo retailing - Organised retailing in India gets hyper'

4. Fitch Ratings, 'Indian Retailing - Investing for Growth'

Let our poor democracy also wait….

2008-07-25T00:09:00.000-07:00

In few of my earlier articles, I was trying to portray that India is going to be the super power in all sense. Few of my readers wrote me and told me that, I want to show the entire world only the gorgeous India, booming Indian economy not the actual miseries and struggles of our poor Indian life. Many argued and mostly are discouraged and left hoping on me and talked all negative about India and its political system and Infrastructure. Well…here I would like to say them, we all can see negatives and talk about it but there must be some light even in a dark tunnel…which might open up a fresh new world in front of us again, I’m sure we all know that darkness itself has got some light. Let us not be mourned and loose all the hopes rather, let us be hopeful and think positive in this political darkness of India, which would boost us again with all the spirits to fight against all the adverse situations. Let us talk what positives we have got out of this recent drama of Indian politics.

Recently, Indian ruling UPA Govt survived in the confidence motion in the parliament, and we mostly had seen or followed the coverage of the debate of confidence motion anxiously. The non-confidence been brought by left front which did the co-operation for last 4 years and just before the election, they lacked the right vision of leadership capability and have withdrawn themselves from the coalition just on the Nuke deal issue, whereas there was no dearth of a real political party e.g. inflation, poverty etc. Right front of this nation leaded by BJP also brought the non-confidence on this ruling party and the test is over by now. We all had seen the drama of money wading MP’s who accused the ruling Govt for the bribery, and the entire drama of the oppositions pressurizing the Prime Minister of the ruling party Dr. Manmohan Singh for the early resignation in many ways before even they can see the confidence motion. Both the oppositions had left no stone unturned including accusing the entire Govt including the misuse of power etc.

There are countless negative, the entire media got flooded with all kinds of negative comments about our false democracy, about our hypocrisies, about the chauvinism, about the greed for the dynasty, about the dictatorship emergence ended with the unfair removal of a loyal Speaker to the nation and capable person like Mr. Somnath Mukherjee from the left front party etc. I would try to reveal another perspective for my fellow country men through this article, and trying to find some light of hope within all these darkness…

Let me quote Dr. Singh from the year 1991 while he was the Finance Minister, prior going for the confidence motion like the same on the economic reforms issues when PM was Mr. Narshimha Rao. He was optimistic then also and said to the then PM

“It is possible we will still collapse, but there is a chance that if we take bold measures, we may turn around. We must convert this crisis into an opportunity to build a new India, to do things which many people before us have thought and said should be done, but somehow were never done”

He was never having a political background neither a common politician which we commonly see and discuss about in recent Indian politics, but when situation demanded he got converted into a great politician, which we had not seen in recent times in India. Basically a professor of Economics had immense contribution to the Indian economic reforms for which India started shining and we’re here today. He himself said many times that “Life is not free of Contradictions” and he had seen contradictions where he had no option of implementing most of the reforms in last four years e.g privatizations etc. despite of seating in the leadership role of UPA Govt due to the same Left Front and their oppositions remaining within the system including this Nuke deal.

He always thinks out of the box, the old power mongering politics never had attracted him. He had let the people to do politics around him like a true leader and kept his mind and vision straight for the nation to get the Nuke deal signed, which would give this nation and the future generation a new dimension he believed. Many of these people who had debated that day and were present in the house might not be able to see the good effects of this deal in the reality during their life time, including him. Time would only say whether this Nuke deal was good for India or not, but one thing I’m sure we’re in good hands who really think for a good change and are change agents for India and its common Indian people. That’s a positive change.

India had not seen true young, selfless leaders in recent times who’s dedicated for the nation and who thinks being neutral only for the people of the country not from the perspective of a narrow political rear view mirror. This debate revealed two young leaders in front of me per se, Rahul Gandhi and Omar Abdullah. Most of the old and selfish so called people’s representatives in the parliament house while debating had missed the points and topics of the debate. The monotonous drama of procrastination and accusation to each other suddenly changed when Rahul Gandhi started his speech. The video is given below which is most probably one of the very powerful speech I’ve ever heard for the growth of the future India in recent times with such a strong conviction.

Rahul Gandhi on Nuke Debate 2008

We all know there’re many Kalabati’s in India whom Rahul talked about, are single mothers fighting against all the odds in the villages of rural India with small kids. Their fight for daily living is tremendous and we’re hopeful Rahul that, not only this Nuke deal, many other deals you fight against all the odds for them and make the rural India prosperous, which in-turn would make this India a true super power.

“The enemies of Indian Muslims are not America or deals like these. The enemies are the same as the enemies of all those who are poor — poverty, hunger, lack of development and the absence of a voice.” said by Omar Abdullah another emerging young leader who could dare to say that, he don’t want to be the part of the Govt because of his support to the motion, but he thinks for the nation and is hopeful that this Nuke deal would make India prosperous in future. The entire speech is given in the link here, which is a must read and his conviction is to be realized with a very powerful oratory capability.

We had seen all these sparks of future hopes by the side of the selfish rotten politics and its existence is proven in India. Let us hope that the actual culprit would be found and would be prosecuted on this bribery crime in the parliament. Let us also hope a complete enquiry would happen and someday, the common people would know the actual culprit. Whether it was a set game plan to create last moment crisis in the parliament by the opposition to jeopardize the Govt and maximizing the pressure on the PM to resign? or it’s the fact, let us be hopeful that, we would know the facts someday. We all know its time to re-think about this age old constitution and its parliamentary system in India. Let us be hopeful that we would certainly see some changes in that too. "We need bipolar democracy like United States. Multiparty system has its own disadvantages."..Dr. Singh commented this long back. Let us keep our fingers crossed and be hopeful that, these young leaders could motivate and mentor more young people of India to construct the new foundation of the true developing India and could bring the necessary changes to the law and constitutions to fit the advanced need of the time. Let us be hopeful that this political stability would open up new vistas for the future road map of the growing India, where all the children of Kalabati’s don’t have to read books in oil lamps at night, and someday they get the benefit of cheap electricity produced by the N-Power. We can only hope for the best and work on it. Let our poor democracy also keep waiting and watching with us and be hopeful; about some positive changes to come…..

Why is so much turmoil for Nuke deal in India?

2008-07-21T08:57:00.000-07:00

Why is so much turmoil for Nuke deal? Is it a personal ego clash or does it have any political values kept in that question for the common people and larger rural population of India, for which now two major oppositions are fighting, ignoring inflation, and keeping other major development factors pending. Within few hours we’ would know the booming India would be hijacked by the sense of instability for another six months or not. Many experts already commented that, during this turmoil if this Govt goes for the election now, 2009 Q1 would be profitable for the entire India, or else at any case they’ve to go for election in 2009. The business men can’t afford to loose much, because 2008 had given enough pain in profit booking due to soaring oil prices and inflation. The equity market had also seen huge corrections. Hence, when things are going bad, let it be bad and finish it for all. So, we reach at today when most of the world is watching India tonight at this debate.

There’re several opinions available from the different sources in Internet.

In Favor: We don’t yet know the wonders a cheap and dependable energy can do to our lives, not because we lack education but because we tend to look back rather than look forward. The life in rural area improves if the urban area is thriving it is not true other way round. After all jobs are in the urban area not in rural areas. The law of prosperity seem s to a complete circle.

Look at the 15% rise in cost of the fuel, it has played havoc with the life of general public. Everything has gone dearer by more than 10%. Imagine if the cost of electricity comes down by 30% and the supply becomes dependable. It will change the way we live.

Even after the deal has been made, we can still go ahead with our nuclear weapon program. We just have to keep the facilities open for inspection. This is fine. We can have Pokharan -III.

When there is much benefit from the nuke deal, we have to be dependent upon the supplier. The law of nature is you always blown down to the giver ! Be it the Sun, the Earth the Water, the mother .

US Democratic presidential candidate Barack Obama said he would not seek changes in a controversial nuclear deal with India and hoped it would be finalised by year-end, a magazine reported Saturday.

"The existing agreement effectively balanced a range of important issues -- from our strategic relationship with India to our non-proliferation concerns to India's energy needs," Obama was quoted as saying by the weekly Outlook news magazine.

"I am therefore reluctant to seek changes," he said in the interview.

Indian Prime Minister Manmohan Singh and US President George W. Bush had in 2005 unveiled the agreement which if finalised will allow India in to the fold of global nuclear commerce after having been shut out for decades.

Singh argues the pact is crucial for India's energy security and continued strong economic growth.

But the Indian government's left-wing allies who are staunchly opposed to the agreement last week withdrew their support over the issue.

The government will now face a confidence vote on July 22, hich is within few hours of this posts and I was watching the learned members of parliaments, how they were fighting with each others forgetting the true faces of India.

Despite the political opposition, Singh's government moved forward on an agreement subjecting the country's civilian nuclear sites to international controls for the first time.

An approval by the UN atomic agency International Atomic Energy (IAEA) of the draft agreement is one of the several conditions India must fulfil to clinch the accord, apart from getting the nod from the Nuclear Suppliers Group.

"A final judgement on the deal negotiated by the Indian and US governments ... must await the IAEA's approval of a safeguards agreement with India and changes to be agreed by the Nuclear Suppliers Group," Obama was quoted as saying.

"At that point, the US Congress will decide whether to approve the agreement. I continue to hope this process can be concluded before the end of the year," Obama said.

Analysts have previously said that the agreement may face hurdles in finalising the agreement once Bush's administration ends in January.

For almost 30 years the U.S. has been at the fore of a global fight to deny India access to Nuclear power technology, because it developed nuclear weapons and tested them.(Cruel Hypocrisy really, considering that the U.S. were among the earliest nations to develop nuclear weapons and test them)

Now after nearly three decades India have been offered a golden opportunity to emerge out of their nuclear seclusion and be at par with the top nations of the world in terms of nuclear energy output.

At present nuclear power production in India accounts for only a measly 3% of the total generation of 120,000 MW. Large scale nuclear power production would also mean less dependence on traditional sources of non-renewable fuel such as coal, oil and petroleum. Abundant nuclear power production would obviously lead to a fall in fuel and electricity prices. It especially holds relevance as a promising new alternative in the face of price rise and fall in oil output.

The fruits of total privatization are seen in the telecom sector. Gone are the days when a cellphone was an item of luxury beyond the reach of the common man.

The nuclear deal could mean a similar privatisation in the energy. According to a report in Bloomberg,multinationals such as Westinghouse, Rosatom, GE and Areva have expressed a keen interest in operating a nuclear power plant in India, should the government encourage private investment. Indian companies such as Tata power and Reliance Energy are more than eagerly open to such a proposition.

But how does the U.S benefit from the deal?

A valid question. The U.S. would be supplying India with both nuclear technology and reactors, should the deal progress beyond endless chatter and talks. The U.S.A. is projected to mint over $150 billion of the deal.

That precisely is what the Left is worried about. The deal would mean that India is completely dependent on the U.S. for supply of technology and reactors. This places India in a vulnerable position, open to being exploited for the U.S. would be able to dictate the price, terms and conditions as they please.

Verdict

The pros outweigh the cons and hence India should go with the deal. They must however not haggle so much and must make a quick decision. In any case the deal will not bring change or improve the lives of the people who constitute the real India-India lives in small towns and villages, not metropolitan cities or big towns, and I’m afraid that the deal is going to benefit only the latter.

What is your take on the nuke deal? Is it a boon or a bane? We are open to all your views and criticisms. We encourage you to leave behind a comment.

Yes… No… Maybe… Wait –Investor’s dilemma

2008-07-03T23:33:00.000-07:00

"Give me a one-handed economist” Harry Truman, an ex American President once frustratingly remarked. "All my economists seem to say; On the one hand. On the other…”

The financial world too suffers today from an overload of information, many of which is pointing to conflicting directions. And depending on which of them you choose to rely on, the world appears to be sitting on brink of disaster (Economic, social, environmental… you take your pick) or as wall street historians would have you believe the fire sale of Bear Stearns was the bottom of the market and the worse is behind us.

The views are so divergent and sentiment so skittish with conviction levels low all around, that the world markets move up one day on a better than expected retail demand in the US and move down the other on falling employment or a weaker dollar and increasing crude prices.

2007 was the year of the Bull Climax. The world could just get nothing wrong. US, Europe, the shining BRIC economies, Japan showing signs of recovery at the end of a decade of difficult times. The rally across the world on real estate, commodities and stock markets had made people across the world have the illusion of being richer.

In July the cracks in the fairy tale came up with the mortgage loan-related losses being disclosed by financial giants. For a long time, the problem was thought to be much smaller and, in the subsequent months stories of spectacular debacles started emerging from the largest banks in the world.

When on their rampage, bulls tend to ignore reality and amidst rising discussions of the financial sector collapse in the US with "experts” falling over each other to put a number… $200 billion… $400 billion… $600 billion. With new losses being reported every day and banks which are pillars of world finance scrambling to raise capital to stay afloat; the collapse of confidence was near total and fear of recession in the US, a fed which had pushed itself into a corner by cutting rates to the bone and the ugly head of inflation raising its head along with a weakening dollar.

With the benefit of hindsight it is apparent that the Indian and Chinese markets completely ignored this reality; drunk on the theory of "decoupling” based on the strong domestic story in both markets. The BSE Sensex which was hovering around 15700 levels in July’ 07 had a gravity-defying ride to 21000 in January completely ignoring crude crossing $100 a barrel, world financial markets in disarray, real estate prices across the world correcting sharply, commodity prices, food prices. After all China and India seemed to have not only decoupled from the world, they also sadly decoupled themselves from reality.

India woke up on 18th January ’08 fresh from the hugely successful Reliance Power IPO and stock market pundits and fund managers went to office discussing the next high of the markets completely unprepared for the day that was to alter their reality for a long time to come. The market plunged 687 points; a minor blip; most dismissed it. It followed it through on 21st January ’08 with an all time high record fall of 1408 points and horrifyingly plunging to an intra-day record loss of 2273 points on Jan 22nd with BSE suspending trading within minutes of opening after the sensex reached the circuit of 10% fall in a day, the market recovered a little but still lost 875 points from the opening.

Suddenly the world; which till very recently could get nothing wrong, is now unable to get anything right! Crude jumps to $137 a barrel with a $11 increase in a single day. The predictions of doomsday are now out in full strength. In 2009, crude will reach $250 if you believe the Russian Oil Producer Gazprom, $200 if you are a Goldman Sachs fan and in three weeks it is out to cross $150 if you prefer Morgan Stanley research.

Food prices which were not even a matter of discussion in the world economic agenda all these years except in subsidies and starving African children is all of sudden center stage. The world just does not have enough food and since we have to find a theory to justify for the moment lets blame it in rising consumption in India and China.

India and China now seem to be re-coupled with a vengeance, a sneeze from Wall Street and we are under treatment for pneumonia! Just as water finds its lowest level, money has found play in commodities so logically commodity producers are in play. Sell India and China and Buy Brazil and Russia – both commodity producers.

From a benign inflation of around 4%, all of a sudden we are now staring at a double- digit reality! Infrastructure is not keeping pace, Fiscal deficit of center and states are now at 10% levels. Policy responses of not passing on crude price increase, the farm debt waivers, which will affect long-term credit discipline, and a reality where interest rate increase may not be the only solution to tame the hydra-headed inflation monster.

In between these crisis, I suddenly found this video given below, which is in little hilarious tune, but worth watching it with the tune of a famous song and the Wall street meltdown, to give my readers a little relief getting through this article.

Corporate growth in India peaked in December ’06 and the Indian companies have done a great job managing growth quarter on quarter but, on a rising base and fast escalating costs, the percentage growth is likely to slow further somewhere north of 15% which is very admirable but will bring the valuation of the market lower.

There is still one bubble left in this story, which must either be pricked or will burst causing greater damage – ‘The Real Estate prices.’ In the US, Ben Bernanke still warns of a possibility of 10% reduction in House Prices; which means a peak to trough correction of 25%. The cost of doing business in India is already paining retail and entertainment – two of the biggest consumers of commercial space, and houses are getting beyond reach as the gap between rising aspirations of the middle class and affordability is widening. Infrastructure in terms of roads, public transportation, much has got talked about, little has been done. This means that cities like Bombay are unable to expand, as time taken to commute gets unrealistic with distances. Across residential and commercial properties there needs to be a countrywide correction to align to reality. The stock markets have a better and more transparent system of price discovery while the real estate markets are opaque and the waiting game between holding power of builders and staying power of buyers is on. But, in the end real estate prices will have to wake up and smell the coffee.

From the romantic stories of the Bull, we have now moved to the grizzly reality of the Bear. From greed to fear, the pendulum has swung. While in the short-run the markets may still have some venom in them and may keep testing the bottom, each decline will provide an opportunity to buy sound stocks with good management at prices that will justify the risk taken to invest in them at these times. There will be no miracles and going back to the valuations we have seen is a long time away.

The FIIs are selling out, the bear drumming says. Numbers do not confirm this. Out of $250 billion, net sales are only in the region of $5 billion hardly substantiating the perception that is generally being built. Domestic Mutual Funds rushed in after what was generally thought to be the bottom post the January fall but it turned out to be a false one and now most of them are sitting on cash.

Governments across Asia are swinging between denial and despair as inflation in China, Vietnam, Indonesia, India, already far above the central banks tolerance limits is now galloping out of control – and mind you, governments in China and India have not passed on the full price of oil increase. This with the obvious signs of growth slow down is building up to a stagflation possibility. In Asia, unlike the west, wage price spiral is exacerbating the challenges. Central banks are buying time with monetary accommodation by keeping short-term interest rates below the current inflation levels. GDP growth, Interest Rates, Inflation and Currency Price Management are all said and done the most difficult to manage in these uncertain times.

The market as it stands today is still in a narrow trading zone with a negative bias as it is very close to various technical levels which if breached can take the sensex lower by 10% from these levels. The market may have to move sideways and consolidate before it finds momentum to go up. All in all, the markets are likely to continue being rough as they seek direction and confidence to trend directionally; everyone is nervously watching the cat walking on the narrow ledge looking for signs on which way it is likely to jump.

By: Asim Dhru, MD & CEO of HDFC Securities

Where’re we going with this soaring oil price?

2008-06-28T04:14:00.000-07:00

Everyday the slippery stock prices and different derogatory results regarding inflation etc is killing the investors in the Wall-Street. With the disturbing news like soaring oil prices, OPEC controversies and supply shortfall is showing enough blood sheds in any stock and equity market. Despite of the very good Q1 results most of the company’s stock prices are suffering and selling the cheapest at this present moment while I’m bringing this topic for my readers and the market is all about immense blood shed of investors while we’ve reached the highest crude price today of $142 which had broken its earlier high. Let us get into the problem and try to find the reason about this crude oil story, and find why its price is sky rocketing. This soaring price of light sweet crude’s demand is basically rising in all over the world because of growing population and economy, and supply to this demand is not rising proportionately. This would lead us to a long term problem.

In International market the price of a barrel of (1 Barrel= 139 Litres) crude has already reached to the level of 139$ (USD) and today its $142 while I’m finalizing this article, which is all time high so far. You’ll be amazed by knowing that, this price was $8 for a barrel in the year 1999. Last year September one barrel was priced $80. The investors, Government and most of the consumers are now looking shaky and mostly they’re expecting this price would reach to the level of $200 a barrel by the end of this year. If oil reaches to that level, most probably it would hurt any developed or developing economy to the worst. Without the oil, any economy is going to slow down and this oil resource for any country is dependent on imports. The quantity wise and price wise, this light sweet crude is the largest commodity in the world trade at the present moment. So if the oil prices rise, any economy gets the bad effect of recession, because of the commodity price goes high. See, Gold is now selling all time high. Almost like any commodity pricing is dependent on the transportation costs, and the prices of the basic food corp goes high due to the rising oil prices. In my February write-up, about recession and jobs, I've predicted this free fall.

Some experts are saying that in the oil market, traders are jacking up the prices and creating a false panic of soaring demand, which is leading people to gamble with the oil futures. Some are saying that in last one year the price of dollar had diminished enough so that, investors are perking most of their money into oil only and mostly trying to pile up the stocks to create the false shortage of supply and trying to sell it in higher price. There could be many schools of thoughts and many ways to contradict and I’m sure there would be many suggestions from the experts in this field would be also forthcoming too, but the gap between supply and demand is beyond any contradiction though.

The Supply & Demand equation:

In the market offcourse, the demand is much higher than the supply of light sweet crude. So the price is skyrocketing like anything. In last few years the rate of supply has not been increased as it was needed. In the last year, the total production capacity had been reduced by 6.5 Million barrels from all those top 15 oil producing countries from the previous year. OPEC (Organization of petroleum exporting countries) constituted by 13 top oil producing countries brought down the supply, while the cost of crude was decreasing in the year 2006. OPEC countries supply atleast one third of the total supply of the oil internationally. The instruction of production reduction is still unchanged by OPEC and some conflicts are looming up there with United States which might send the oil price to next record level. There’s another reason why the production could not ramp up just like that, just because except Saudi Arabia and Arab Emirates, no other country has got the capacity to enhance the production. The demand is soaring, India and china are the fastest moving growing countries with booming economy and are having enormous demand of oil at this present moment.

If we take a close look at the graph we can easily find that, how the oil price is rising just after Sept 2007 from $80/barrel to till now 27^th June, 2008 to $143/barrel. There’s a sharp rise. The demands of having personal vehicles are rising in these developing nations, so the resultant is the soaring oil prices. Though, the demand had been controlled in those developed nations in last two years, but at any case the resultant is the necessity of more supply of crude because developed and developing both these categories of nations need now enormous quantity of supply to continue the civilization. Or else, the demand rises and as the resultant the price rises, if the supply is less or diminishing.

How much Oil we get from the Crude ?

Mainly there’re two types of crude oil light sweet crude and heavy crude. We get more quantity of oil after refining light sweet crude than heavier one. From Heavy Crude the more quantity of Kerosene kind of output comes than gas or petrol. Moreover, the costing of refining is much higher for heavy crude. So the demand for light crude is more in the market than the heavier one. Right now, in the international market the supply of diesel is much lesser than the demand. Hence, the refined diesel price is much higher than the price in which we generally buy it from the market. But, fuels like kerosene’s supply are more than the demand for which the pricing is also less. There could be two ways to extract diesel, either from light crude or from the heavy crude. But the quantity we get out of the light crude is more than what we get out of heavier one. Once the diesel is being extracted from the heavy crude the refining cost would go up such an extent in which we cannot sell kerosene kind of fuels to the market within the marketable pricing, hence even if the heavy crude is cheaper than lighter one but as far as the productivity goes, the oil extracting companies cannot make profits out of it. So, the demand of sweet light crude is growing and its pricing is also sky rocketing.

Now major supplier of heavy crude to the world is Iran and they’re reducing the pricing of it. Most probably this is the crux of the entire story and key to protect this price sensitive market and which would eventually might try to confine this slippery oil prices within a limit. Oil refiners have to come out with a kind of new technology to extract more diesels from the heavy crude. If that process proves to be profitable for those oil companies, the supply of oil would raise, which would ultimately bring down the pricing.

Why the supply is not growing by now if the demand is looming up high?

This is a long term solution, cannot happen overnight. The new technology of extraction has to come but it may require some more time. If they try hard, they might cut down the time span of getting this new technology handy sooner. But, the resistance is actually somewhere else, these oil companies don’t invest so easily. Also, when the demand is high its been a long practice to raise the price and do the profit booking as fast as possible. Then what could be the possible solution?

Nowadays building a refinery needs huge amount of money which needs huge investments in turn. The return is very slow which comes out of market eventually, but it takes time, the life of a refinery is also long (40 Years) enough. In this long span of time, there could be a risk of very low oil pricing, where u may book enormous loss even. During 70’s there had been two of such instances, when the oil pricing spiraled up twice and been brought down to the minimum level within few days time frame. The price dropped to the maximum level. So one who is prepared enough and did good calculations of long term profit booking would only invest money into such activities. The refinery making costs had gone up by 76% more than what it used to be during 2000. Mining costs also gone high, approximately 110% by now. So despite of the fact that there’s a scarcity in the supply of oil in the market, none seems to be very interested to bring new investments here.

So now the reasonable question is, if the pricing is so high in the international market, then why we’re not trying to cut down the usage of it in the domestic market. Most of the common people don’t get effected by the regular price up down of crude in the International market. Most of the countries try to make a ceiling of oil pricing and try to stick to that, so that the regular up down of crude don’t make the domestic market so volatile. Take the example of India, though the oil price started growing in the beginning of the year, but just recently Government had to hike the price and we all had seen 48 hrs strikes from the two major opposition parties to the ruling party of the Government against this price hike. Basically Government takes that heat and deficit, which ultimately goes to the tax payers of the Nation. More than 50% of the entire population in this Earth gets this benefit of deficit balance by the Government. People of Germany pays the maximum oil prices, around $2.35/ lt and people from Venezuela pays the least around 79 cents per litre. United States is the major importers of oil at this present moment and the demand of oil is rising to the maximum level in China. So due to the Government, the rapid crude price volatility don’t affect the mass easily. So the demand never goes down neither the prices.

This is where we need to work out more and Governments must come out of different incentive programs, by which they promote the energy conservation ideas more. Also, world needs some magic at this moment to come out of this blood bath globally. May be some kind of alternative fuel like hydrogen or bio gas driven cars or may be the N-power driven vehicles, which we had only seen mostly in different science fictions. Because I trust that, some ending is the initiator of a new beginning, change is inevitable, that’s the bottom line.

East- A Millionaire Boom

2008-06-26T17:06:00.000-07:00

As go the billionaires, so go the millionaires. East, that is. As I’ve discussed earlier that East is emerging as super power.

In Forbes' annual list of the world's billionaires, published in March, we were stunned to find the population of Indian billionaires jumped 47.2% to 53 from 36 the previous year. Not surprisingly, a new survey shows millionaire population growth in countries like India and China is also rapidly outpacing growth in the U.S.

According to the World Wealth Report published by Capgemini and Merrill Lynch (nyse: MER - news - people ), India had the fastest growing population of individuals holding at least $1 million in financial assets during 2007. The affluent group jumped by 22.7% to 123,000.

Propelling the Indian millionaire boom was strong economic growth and hefty stock-market gains in the country. One hot spot continues to be the country's flourishing high-tech industries.

One of India's wealthiest, Wipro (nyse: WIT - news - people ) chairman and billionaire Azim Premji, attributed that particular strength to the nation's base of highly skilled workers. "We will graduate 580,000 engineers this year. The United States will graduate 75,000 engineers this year," he said in an interview with Forbes.com last month. (See: "Wipro's Azim Premji.")

According to the World Wealth Report, China had the second-fastest-growing millionaire population. It grew 20.3% to 415,000 last year. The billionaire population grew even faster, the March Forbes' list included 42 Chinese billionaires, up from 20 the previous year.

Another country where the billionaire growth outran the millionaire growth was Russia. Forbes' recent list included 87 Russian billionaires, a 64% increase from the previous year. The millionaire population grew a respectable but less dramatic 14.4% to 136,000.

The U.S. had much more modest millionaire growth rates than India, China and Russia. Its millionaire population ticked up 3.7% to slightly over 3 million.

The slowing U.S. economy hindered wealth accumulation. Also slowing prosperity is the American tendency to spend instead of save. Merrill reported that the U.S. had one of the world's lowest saving rates in 2007, just 10.9% of GDP. Many countries with emerging economies had savings rates that surpassed 20%.

The report highlights that wealthy populations are growing more rapidly in emerging economies than traditional economic powerhouses like the U.S. and Europe. High-net-worth populations in Europe grew 3.7% over 2007.

They climbed 10% in Africa, 15.6% in the oil-flush Middle East and 8.7% in the Asia-Pacific region. Merrill Lynch and Capgemini expect the trends continue. It predicts continued strong growth in those regions over the next five years.

There is a consolation for Americans though: The U.S. will continue to lead the world in billionaire population for the foreseeable future. It boasts 469 billionaires, 382 more than any other country.

(From Forbes Magazine)

Keep those bridges intact ……

2008-05-29T12:56:00.000-07:00

Recently I’ve been again on the verge of a transition and moving from a job to another and have observed my friends and colleagues and their behavioral changes during resignation process and/or getting fired and moving for the new job. Particularly, if you've spent months in an unhappy work situation, you might be tempted to unleash your bottled-up frustration with a take-this-job-and-shove-it resignation. In this particular point I remembered one of my recent ex-boss who used to regularly de-motivate me on writing Blogs, later I’ve discovered him as a fan of my articles. He disclosed later that, it’s been always better to read my mind through these articles because it has got true reflections of my mind. Now, we don’t work together, but he still keeps visiting.

But the damage you can always cause to your career easily outweighs the short-term satisfaction. Just because you've got one foot out the door does not mean you can sever relationships. In fact, your last few weeks on this transitions the job can be the most important. Rather than burning bridges, do as much mending as you can, even if a great new job awaits. Because, you never know how your future job would treat you, like this present one while you left the earlier one, and joined this with a great hope. Make sure your departure as easy for your employer as possible. No matter how hard and how long you worked there, if the last thing you do is leave a bad taste in your ex-employer's mouth, that's what they're going to remember you by.

The relationships you leave will matter after you're gone. Even if you don't list a ticked-off boss or co-worker as a reference, he or she could happen to know your future potential employers or clients. It's a small world, and a bad reputation will follow you. Professional courtesy in the final days can't erase months of poor performance though. On the other hand, a botched exit can overshadow your accomplishments too. One of my expert seniors often have told me that, both are carpets and both are having dusts beneath. In context with the present and future company, the difference of the present carpet looks very dirty to you, because you’re nearer and can see all of these and living within it for some time, and the other carpet looks dirt free because you’re watching it from a distance.

Mending 101

To avoid burning your bridges, you must follow protocol.

At a minimum:

Schedule a meeting with your supervisor to announce your resignation before you tell anyone else in the company. Let him or her determine how to inform the rest of the staff.
Write a resignation letter for your personnel file.
Give at least two weeks' notice.
Train your replacement, if possible.
Organize your files and workspace. Return all equipment.
Prepare a memo detailing the status of all unfinished projects; include instructions for completion.
Make yourself available to answer questions that might arise after you leave.

Beyond the basics

There's much to be gained by going above and beyond these requirements. Just as a bad reputation inhibits your career opportunities, a good one can certainly enhance them.

Whatever you do, avoid speaking poorly of the company or airing your feelings about someone. You have to bury the hatchet and you may have to swallow your pride for the long term benefit. Better yet, try to find something positive to say to your boss in your resignation meeting and letter. If your experience with the employer was positive, mention what you liked about your job and thank your supervisor for the opportunity.

If you can't think of anything praise-worthy about your past experience, phrase your compliments in terms of success to come. For instance, you could say, "I know this team will do great things. Your new project is really going to take off."

Expert mending

If you've managed to leave a favorable impression, build on the good feelings by keeping in touch with former managers and co-workers, who can prove valuable career resources.

Even if you can't envision returning to your former employer, past bosses are important resources for future job searches.

When looking for a new position, "the first thing you should do is call back your old bosses. No one is more familiar with your skills, experience, preferences and style. They're likely to know of opportunities that would be right for you, and they might give you contacts if you're on good terms. I still didn’t face such privileges through my past bosses or companies to join them back or giving good recommendations, but I believe strongly that these relations are worth keeping and nourishing them for the real bad times.

Plus, future managers may appreciate the fact that you've stayed in touch with those before them.

When new employer checks references and a former employer says he or she has just seen or heard from the candidate, he knows the employment ended on a positive note and the candidate understands that the importance of maintaining ties. That impresses the bejeebies out of me because it shows that person is a relationship builder.

Raising funds for your business or dream projects?

2008-05-23T14:52:00.000-07:00

It had been regularly haunting me for last couple of months, why few people can jump start a business and many people despite of having good business propositions fail in executing a successful business. Well, we all say them entrepreneurs. I was watching a job advertisement where the advertiser was also seeking the head of the business who needs to have the entrepreneur skills or business acumen. The question is why one is an employer and another is an employee, despite of the fact both are having business skills.

Well the answer is the person who is now an employer is having a tint of luck with some sourcing of funds. In both the cases hard work and perspirations are common though. Few uses it well with people management skills and gets success, few miss-utilize it by taking people for granted. So there are two variables a business minded person deals with funds and people. If people management skill we consider, both are having them equal, then the major difference which makes one an employee and other an employer is the requisite funds to run a business or even launch a new business. Both are taking risks. Now if we consider a case one has got tremendous people management skills but not having funds, can he be a business man? I guess, even if he tries, without having the source of solid funding he would fail eventually, where as a person who has not having that caliber to handle people, but having strong financial back-up, he can still hire a manager to manage the people and run the business.

So it’s all about money honey!!....”Funding” is the only variable which makes difference. This I’m saying from my experiences so far. Having very good business mind and ideas, I had seen many of my friends unable to jump start a business, at the same time some failed due to regular cash flow pressure. Whereas, seen also the other side of the coin, who don’t have any business acumen, just became a business man, due to the knowledge of the source of funding. Well…..we all know about Sabeer Bhatia and his hotmail acquisition by Microsoft. But very few are aware even Sabeer got his first seed stage funding from a Venture Capital named DFJ, which ultimately made him big. Here we’re only going to discuss about the private funding, not bank or other instrumental funding.

I started working in this aspect last few weeks back and started interacting with different VC's and Angel Funds in my network, and would like to share the knowledge with my readers.

Before even we think to start searching for a VC we need to be well prepared about few things e.g. you have to have a comprehensive business plan in place, with a complete executive summary, a summary of the proposal, a break down of the enterprise dynamics and the funding captures that will play within each silo of the enterprise, and its length of funding capture, that will allow the business to come to fruition. Very few VC’s fund the management consulting firms though, unless and until they’ve got some unique product or services.

These are minimalist, depending on the offering, you may be also required to even further break down of details ... not the least of which be sure that everything will be the risk analyzed and the competition that may or may-not already exist against your project / product / or offering. All what you are reading is correct when you are dealing with Conventional Banks or Financing and even the requisites could be stricter with due diligences etc. At the end of the road you have to spent a lot of money and invest time behind it. We’ll be only discussing here about the private non-institutional funding here.

There’re few angel funding available who can provide business loans successfully within 35 days and could be as fast as couple of weeks, in the terms of 5/10/15 years, no collateral, no lock out, interest only, non recourse funding. These are direct business loans who’re only interested for long term interests other than that they also evaluate the business risks. They don’t give business loans to all. They make a kind of escrow account arrangements where, you submit a refundable percentage of the total money transactions first, once they’re through and convinced with you project and agreed and signed the agreements. Then they start paying the amount in a staggered manner through that account and also they keep checking the interest receivables. At the end of the deal your advance is also returned. They never go for the equity of the business, but VC’s go for the equity.

Business plans are quite often do not match looking on a realistic approach of declining world economies. One fact of a question that has launched many books -- "once I'm ready to present, where can I find the professional investor?" It had also suggested to go for the professionals who prepare the business plans. If you engage specialists they charge 3-4% of the total funding, sometimes they charge in advance. I found one renowned professor from Stanford, who takes the money in advance and there’s no guaranty of funding. Very funny, I asked him a question, if a person can give you money in advance and engage with no guaranty of funds, then why he requires to find funding? Rather he would prefer to invest that money in his owned business.

In the Silicon Valley, it is an easy generalization to say that the CEO or Chairman is the leader of the fund raising effort. Since most entrepreneurs know few and no VCs or Angels, they need to seek introduction to appropriate parties. This follows the research stage of finding the funds, and the partner within the fund, that may be a match for your company. To seek introduction requires some creativity, but it is easily done through your attorney when you've hired a top tier firm to represent you such as Wilson Sansini or Fenwick & West. Angel Groups are organized collections of individuals. Angels are those who will invest in the very early stage companies, often too early for a VC. They may have strong ties to VCs. Again, your attorney or accounting firm may be able to introduce you. Also, a VC who likes you but feels you are too early for his fund may introduce you to an Angel group.

Once you've selected your targets, you need to determine that you are in their portfolio area without competing with any of their investments. You will also be able to discover which Partner is on the Board of these investments, as this Partner now is a prime target. Next you find the name of the CEO, and contact information for the CEO or company. Use different networks to reach him or her, to find out what it is like working with their investor, and hopefully learn the story of their funding.

If you are primarily the CTO, then consider either bringing on a CEO or at least a (E)VP of Corporate or Business Development. VC’s gives heavy weighting on the management profiles and the credibility of the members in the board. If your personal goal is to become a CEO, then you need a mentor for the process. This again can be an EVP, or it may be a member of your Board of Advisors working on a contract basis with your company with stock or options as their reward. (Make sure to cut a deal with them after the funds get released they get what you’ve negotiated to pay them).

This is a very tech-centric answer. But, it works for all kinds of startups in most industry segments, since there are VCs that focus on just about any business area. You just need to phrase the idea and the big problem that you are trying to solve with the right terminologies so that it meets the VC's investment area. For example, an agriculture company may be agribusiness, bioengineering or biotechnology, a distribution play, or a "Green" company that may be an opportunity in trading on the carbon-cap market.

While I'm looking for the right company to join, I did many consulting in different areas. Securing right funding for a needy company might be another interesting area on which I would love to work in future. The most important piece of advice I can give you about this process to remember that, you need to have your ducks in a row to get past the initial introduction. Anyone who tells you that they can "find" you capital, without being a direct investor, who has not examined your business plan in detail nor having performed any due diligence on your business assumptions, is likely going to waste your time and money. A good consultant will take you through the process of getting ready for the presentation through management consulting, not just presentation drafting. Yu may also check out The Indus Entrepreneurs at www.tie.org . This organization was founded in the Silicon Valley, but now has branches world wide, including India of course. They have a mentoring program and can be a great source for Angel and VC references.

R u part of Organizational Politics?

2008-05-01T10:44:00.000-07:00

According to an Ipsos-Reid survey published by RBC in November 2007, 36% of Canadian employees complain that office politics are one of the biggest roadblocks to productivity. Ten years prior only 19% of survey respondents felt that way.

Canadians have not been the only ones to notice the rise in office politics. According to research done by UK-based firm Roffey Park, organizational politics is now ranked as the number one cause of stress in the workplace. In 1998, the issue was at the bottom of the list of managers’ concerns. This had been recent problem noticed in Indian Organizations also, which had never been felt by the earlier generations.

What happened in between is that companies have considerably flattened their organizational charts and to save the costs of operations. In the old top-down management days, one would get mainly requests from their boss. Dotted-line chain of commands and matrix environments now mean everyone must become an expert at influencing, negotiating and networking.

Take Fatima (not her real name). The 32-year old manager works for a well-known multi-national conglomerate. To thrive in such an environment, or even just to survive, proficiency in office politics is a must, we can imagine easily.

If you need data to do your work, chances are you’ll need to ask someone working in another department or for another subsidiary. Sometimes this person doesn’t even work in the same country as you. If you just send an email requesting help, good luck to you. In school they tell you you’ll succeed if you’re competent at what you do. Truth be told, in big organizations, you’ll never get anywhere if you just do your job. The video below is about the awareness of the political situation of any Organization.

What you need is to know the right people and excel in the art of convincing them to help you. This isn’t done facing your computer screen and working hard on your deliverables.

Too many people live under the illusion that you can opt-out and stay away of the office politics, none can escape it. If you hold a job somewhere in some department, you’re already dealing with organisational politics and part of it.

At the start of one’s career, young professionals can expect to devote about 20% of their time to interpersonal issues, which is just another name for politics. The technical part of the job gets less and less important as you climb up the ladder. At the top the ratio is reversed. Upper-level executives spend 80% of their time dealing with people instead of technical stuff,” add Poirier.

Does this mean that shy people can never dream of having a prime career in the corporate world? Not necessarily, says Charles Larocque, a Montreal-based industrial psychologist with 30 years experience.

Fortunately interpersonal or political savvy can be acquired. Many universities, firms and professional organizations offer training in the field of human relationships and communications.

Besides, you don’t have to become everyone’s best friend, says Larocque. But you do need to become aware of what other people think, and interact with them. Ask coworkers for their help, and then return the favour when required.

Say you want to present a new idea to a big boss. Being good at politics can be as simple as asking their administrative assistant when is the best time to contact them. “She’ll probably be pleased to inform you that her boss is less rushed at some particular time of the day,” explains Larocque.

Here are other pieces of advice from our two experts. Use them to build up your political quotient:

Become a player. Realize that if you decide not to play the game of influence, you’re nonetheless part of the game. Those who withdraw from office politics are in fact relinquishing their power to somebody else. They’re bound to feel frustrated as decisions will always be imposed upon them.

Seek win-win situations. To do this, you need to understand other people’s objectives and motivations. Put yourself in their shoes. Try to find a common ground-solution which benefits everyone to some degree.

Master your emotions. Vulnerability can leave people flooded with negative emotions, which trigger a fight-or-flight response. Both fighting and fleeing are to be avoided since they create win-lose situations. One has to be able to take a step back, and think of a more political savvy solution.

Don’t burn bridges. If you can’t make friends with everyone, at least do your best to not become someone’s enemy. When negotiating, always allow the other person to save face. Try to look good, but not if it means making somebody else look bad, especially a higher-up.

Exchange services. You’ve heard the phrase « Scratch my back and I’ll scratch yours”? This is actually the best leverage you can use. Information doesn’t come free. Ask for something in exchange of your help. And don’t forget those who have helped you.

Don’t be a one-man show. Show you’re a team player by asking for feedback. Test your ideas on your peers and consider incorporating some of their input. They’ll feel valued and all the more willing to help you with your project.

Perk up your ears. Become of keen observer of office politics. To play the game you need to know the rules. Informal networks often hold an important key. Do you know who carpools with whom? Who eats together? Who got promoted recently? Choose your friends wisely but don’t forget that power can change hands quickly.

Don’t hide behind your computer screen. Take time to know your colleagues. This one tip is tricky, though. If you enquire about somebody’s plans for the weekend you have to really care about their answer. Fakes are promptly unmasked and create a sense of mistrust that can be hard to overcome.

Conceived by: Isabelle Laporte

True Leader Should Know How to Manage Failure

2008-04-27T01:58:00.000-07:00

" i have a dream... for some to see.... " Some people dream in the night, others dream during the day... Both of them are unaware that they are dreaming! And yet there are some who dream knowing very well that they are dreaming. And these are the people who make things happen. These are the people who act as change agents in society. Yes, we are talking of the dreams of Gandhi, Martin Luther, Dhirubai, Dr Kurien and Dr. APJ Abul Kalam ! We do have such people! Not that they are noted scientists or social architects , but they do deserve a special mention here in my blogging efforts - Lest their dreams & desires go unnoticed. They are the dreamers, the visionaries in their own rights! 'A Leader Should Know How to Manage Failure' (Former President of India APJ Abdul Kalam at Wharton India Economic, forum, Philadelphia, March 22, 2008) "Question: Could you give an example, from your own experience, of how leaders should manage failure? Kalam: Let me tell you about my experience. In 1973 I became the project director of India's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India's "Rohini" satellite into orbit by 1980. I was given funds and human resources -- but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal. By 1979 -- I think the month was August -- we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute later, the computer program put the launch on hold; the display showed that some control components were not in order. My experts -- I had four or five of them with me -- told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket. In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal. It was a big failure. That day, the chairman of the Indian Space Research Organization, Prof. Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference -- where journalists from around the world were present -- was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure -- he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as chairman of the organization. The next year, in July 1980, we tried again to launch the satellite -- and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, "You conduct the press conference today." I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience." Hence, true Leaders don't jump and get the credit of all the successes at the end of the day. In corporate world there are many leaders who can't share credits, moreover they change their behavior instantly as soon as they accomplish their own destination by using ladders or by changing their political house. Ultimately, this had been a true cliche "A rolling Moss never gathers mass".

The great unknown -Tiger Woods helped clear the way for Barack Obama?

2008-04-06T04:27:00.000-07:00

There's something happening here. When Tiger Woods won his first Masters, in 1997, most every story noted that he was the first African-American to win at Augusta. Back then, the exotic ancestral history of Woods — his black father, his Thai mother — was an engaging subject. But now, with Tiger in our living rooms one weekend after another, it hardly ever comes up. Familiarity breeds comfort. We've moved on.

We’re debating in many Blogs, websites that whether United States is ready for a Black President who would be known as the great “Change Agent” for the coming generations and world. Now, at warp speed and on a scale that dwarfs anything to do with sport, something similar is happening with Barack Obama. We know about his black father from Kenya and his white mother from Kansas. But when you watch Obama in a televised debate, or see him on the evening news, are you thinking about his race? The man won Iowa! Zach Johnson, the Masters champion, is from Iowa.

So the question here in the toy department is this: Has Tiger Woods — simply by conducting his business the way he does — helped make the country more tolerant? And if you believe he has, do you think Woods, in a way no CNN pie chart could ever capture, has helped pave the way for Barack Obama? Discuss.

I don’t expect Tiger to post a comment on my blog. He talks politics on his plane, not in the press tent. But he's following the presidential campaigns closely. John McCain is a decorated Vietnam veteran, as was Tiger's father, Earl. Hillary Clinton's husband, the former First Golfer, stood on a California stage with Woods at the opening of the Tiger Woods Learning Center in 2006. Obama, like Woods, knows that the continental drift is now in reverse. (Look how each got here.) The campaigns have approached Tiger's people, but none of the candidates has directly asked for his endorsement.

The act of endorsing is presumptuous, and Tiger is not. He's modest. Even with friends he doesn't say, "Look what happens to the TV ratings when I play. " The Nielsen numbers speak for themselves, just as his golf scores do. He likes precision. He'll tell you how many kids are enrolled at his learning center, but he would never try to analyze his impact on race relations. For that, to use a fancy Mitt Romney word, there's no metric.

As a rookie, Tiger appeared in a Nike spot in which he said, "There are still courses in the United States that I am not allowed to play because of the color of my skin. " He wouldn't recite that line today, chiefly because every last course would welcome him now — but also because Tiger has no use for grand and sweeping oratory. He's a golfer, not a pol.

Tiger in grand terms, that was his father's specialty. In '96, when Tiger was SI's Sportsman of the Year for the first time, Earl said, "Tiger will do more than any other man in history to change the course of humanity. " The father went on to say, "He'll have the power to impact nations. Not people. Nations. The world is just getting a taste of his power. "

At the time, it sounded like crazy talk. Actually, it still does. But less so all the time.

Extreme job hunting and H1

2008-04-02T19:48:00.001-07:00

As employers are slowing down on hiring, groups like The Five O'Clock Club are advocating a more aggressive approach to job searches.

At the same time, two senior Senators in the forefront of a bid to curb the H-1B visa programme have sent a missive to nine Indian tech giants, including Infosys, Wipro, Satyam and Tata Consultancy Services, seeking details of their use of this coveted work visa scheme over the last five years. They shot off their elaborate questionnaire on Tuesday - the day when the US government began receiving applications in their thousands for the new H-1B visas for the next American fiscal year, starting October 1, 2008. The Senators _ Democrat Richard Durbin and Republican Charles Grassley _ had sought information last year as well, but the questionnaire sent out this time is regarded as far-reaching, seeking details of how many visas they received over the past five years, with year-wise data on the number of tech professionals they hired within the US and outside, the average length of stay of the recruits and the median salary paid to them. “The H-1B programme cannot be allowed to become a job-killer in America. We need to ensure that firms are not misusing these visas, causing American workers to be unfairly deprived of good high-skill jobs here at home,” Durbin said in a statement. At the same time IT market scenario and jobs in demand is growing in India. The nine Indian firms are among the top 25 recipients, accounting for about 20,000 of the total 65,000 H-1B visas during 2007. Heading the list is Infosys Technologies, followed by Wipro, Satyam Computers and Cognizant Tech Solutions. The other five Indian firms asked to respond are Tata Consultancy Services, Patni Computer Systems, I-Flex Solutions, Larsen and Toubro Infotech Ltd and Mphasis Corporation. The questionnaire has been sent out to all the 25 companies. The 16 American firms and institutions quizzed include Microsoft Corporation, US Technology Resources, Accenture, Cisco Systems, Ernst and Young, Deloitte and Touche, Google Inc., J.P. Morgan Chase and Motorola. “I have no doubt that we’ll hear arguments all day as to why the cap on H-1B visas should be raised, but nobody should be fooled. The bottom line is that there are highly skilled American workers being left behind, searching for jobs that are being filled by H-1B visa holders. It’s time to close the loopholes that have allowed this to happen and enact real reform,” said Senator Grassley. Bill gates already let all these people know that he needs more H1 to be processed. A legislation, introduced by the two Senators last year to reform the H-1B and L-1 visa programmes “to prevent abuses and protect American companies and workers”, has not yet been taken up by the Senate. In their letter to the 25 companies, the Senators voice their concern that “these visa programmes, as currently structured, are facilitating the outsourcing of American jobs.” “We understand that many employers would like Congress to make more H-1B visas available. However, we must be mindful of the impact importing more foreign workers will have on American workers, especially in light of the recent economic downturn. We believe that before increasing the H-1B cap, Congress must close loopholes in the H-1B and L-1 programmes that harm American workers,” they said. The Senators speak of their added concern that some companies “may be circumventing the requirements of the H-1B visa programme by using other visa programs, such as the L-1, to bring in cheaper foreign labour”. Meanwhile, the US Citizenship and Immigration Services, which has already been flooded with petitions for new H-1B visas, will be receiving them till April 7 even if they go beyond the cap of 65,000 visas. A random lottery will be held subsequently to determine the visa recipients.

S RAJAGOPALAN read more | digg story

5 Tips for the First-Time Change Agent

2008-04-01T12:02:00.000-07:00

5 Tips for the First-Time Change Agent

If you are leading your first change management project, then you are quickly realizing that many situations were not outlined in your training. After all, each situation is different and real change happens one person at a time. Rather than constantly focusing on the big picture (a daunting challenge), you need to set your sights on the individuals within the company and follow these five tips:

Expect Chaos – People fear change, particularly when it concerns their source of income. Once you step into your role as a change agent within a company, you will embody what everyone fears, so chaos is inevitable at first. Let this run its course a bit, all the while ensuring people that you are there to make a positive difference within the business.
Be Empathetic – If you can empathize with the employees, then you can see things from their perspective. This helps you to determine the most efficient way to get the best out of them. Threats are far less effective in the long run than thoughtful reasoning.
Expect Setbacks – You can't expect a company, with all of its intricacies and various personalities, to head in the right direction from the moment you implement change. Yes, you will celebrate victories along the road, but you will see just as much backtracking. This is all part of the process and it is your job to minimize the setbacks.
Be Patient – You need to exhibit patience with both the project and the people involved. Things may seem straightforward and simple to you on paper, but not everyone thinks like you and Rome wasn't built in a day. Although you may be operating under some kind of time restraints, you must be somewhat flexible in the speed of change.
Admit When Something Isn't Working – If you have a series of processes planned out, yet something is going terribly wrong, it's time to change your game plan. Not all of your ideas will be successful, so don't feel you need to continue trying to make a bad idea work.

Three Gemba consultants described "A Technique to Meet a Change Management Challenge." You can see their responses here in the video below.

Change management isn't something you can simply learn from textbooks. It takes personal experience to become a top performer… a lot of it. However, remaining flexible and seeing the company from the eyes of its employees will certainly help you learn the ropes a lot quicker.

Author: Heather P. Johnson is a freelance writer, as well as a contributor for Credit Card Lowdown, a site for finding credit card reviews. Heather invites your comments and freelancing job opportunities at her email address: Email.

Obama Opens Up Biggest Gallup Tracking Poll Lead Ever

2008-03-30T20:16:00.001-07:00

Hillary Clinton's Bosnia flap may have served as the story to finally break the media out of their fantasy coverage that Clinton still had a chance to win the race. And now with the Rev. Wright stuff behind us, Barack Obama has opened up his largest lead ever in the Gallup daily tracking poll.

read more | digg story

IBM's Corporate Service Corps Heading to Six Emerging Countr

2008-03-26T09:42:00.001-07:00

One hundred IBM (NYSE: IBM) employees from thirty-three countries have been selected to participate in the company's new Corporate Service Corps program, part of the Global Citizen's Portfolio initiative announced by CEO Sam Palmisano, to develop leadership skills while addressing socio-economic challenges in emerging markets. The video shown below contains the history of IBM

Twelve teams of employees will be sent to Romania, Turkey, Vietnam, the Philippines, Ghana, and Tanzania in 2008 to work on projects that intersect economic development and information technology. The assignments were selected to use the skills IBM employees possess.

More than 5,000 high-potential employees applied to the program and only 100 employees were selected, making this one of the most competitive employee programs ever created by the company. IBM will select another 100 before the end of year and has committed to enabling 600 of its emerging leaders to participate over the next three years.

"It's a corporate version of the Peace Corps," said Stanley S. Litow, vice-president of corporate citizenship and corporate affairs, IBM. "What we as a company get is leaders with a broader range of skills that can function in a global context. What the individual participant gets is a unique set of leadership opportunities and development experiences. And what communities get are IBM's best problem solving skills. It's a triple benefit."

The program is part of IBM's Global Citizen's Portfolio announced last summer, a suite of investments and programs to help IBM employees enhance their skills and expertise in order to become global leaders, professionals and empowered citizens in the 21st century workforce. It includes matching accounts for lifelong learning and enhanced transition services to create second career opportunities.

After a competitive bid process involving 32 global non-governmental organizations (NGOs) focused on volunteer placement of private sector professionals, IBM teamed with three: Citizens Development Corps based in Washington, D.C., Canada-based Digital Opportunity Trust, and Australian Business Volunteers. The NGO partners are a key part of the program's success, helping to identify the right projects and local organizations where IBM's emerging leaders, and the skills they currently possess, can have the most impact.

"The difference that I've seen with this corporate program is that it's more than sending a handful of employees every year to a country. It's making a real commitment to send hundreds of employees, year over year, to the same country. I think that you have an ability to make much more of an impact with such focus," said Michael Levett, president, Citizens Development Corps. "In addition, the IBM volunteers will learn an enormous amount about how business is done in these countries and the cultural aspects, they also will learn a lot about themselves and how to challenge themselves."

Following is a list of countries and highlights of each mission:

--  Timisoara and Sibiu, Romania: identify small and medium enterprises
   with high growth potential requiring business training to tap into regional
   and global trade networks.
--  Izmir, in the Aegean region of Western Turkey: help local chambers of
   commerce and city councils to promote economic, social and democratic
   development.
--  Kumasi, Ghana: improve business processes and provide training for a
   network of small and medium enterprises trying to scale up their business
   models.
--  Arusha, Tanzania: assist a global microfinance organization with
   market research and strategic plan development for expanding operations and
   services to entrepreneurs seeking microloans and business training
   services.
--  Cagayan de Oro and Davao City, Philippines: create management
   information systems to track progress of loan and grant beneficiaries from
   the Philippine Development Assistance Program.
--  Danang City, Vietnam: support the rapid development of small and
   medium enterprises with the Danang Chamber of Commerce through the creation
   of training programs in information technology management.

Prior to departure, the IBM teams will engage in three months of preparatory work to learn about local customs, culture, language, project goals and the socioeconomic and political realities of their destination countries. After their country service, employees will share their experience in their home communities and with the company.

IBM employees will be grouped in teams of eight representing different countries and business units. An important design point for the program is to provide high performance employees the chance to build networks with people they might never interact with. This will also enable employees to bring different perspectives and expertise to solving problems, as well as encourage interaction with people from different cultural backgrounds and traditions. In today's globally integrated economy the most successful leaders will be global citizens, able to understand and effectively collaborate with people from a wide range of backgrounds and perspectives.

"I embrace challenges and want to learn new ideas, methods, and perspectives that I cannot imagine at the moment," said one of the program's participants, Roz Docktor, a Government Programs executive based in Washington, D.C., a former Peace Corps volunteer. "It is scratching the surface of some previous unknown and figuring out how to apply that knowledge back at IBM that will make me, this program and IBM successful. I plan not only to find ways to apply the things I learn to grow in my career, but also to find ways to share what I learn with my colleagues at IBM to help them grow, and hopefully, help us all serve our clients better."

Qing Xia Zhang, a client manager based in China, also is hopeful this project will not only broaden her business viewpoint, but also make a difference in the Philippines where she will be among eight IBMers addressing how rural small and medium businesses will tap into regional and global markets.

"Going out to the global community and volunteering to help others has been always deep in my heart," she said. "During 10 years of service at IBM, I gathered a lot of skills in sales, communication and leadership within the China market. Now, I would like to take on another challenge in helping different communities solve difficult business issues while also improving my skills as I begin to collaborate within a new culture."

For more information about IBM, please visit www.ibm.com

IBM has also hosted audio interviews with the three non-governmental organizations the company has teamed up with to identify the projects and areas of the world where IBM skills can best be applied. To learn more, listen to the interviews found on http://www.ibm.com/press/us/en/pressrelease/23743.wss with the following:

-- Deirdre White, VP and COO of Citizens Development Corps -- Janet Longmore, President of Digital Opportunities Trust -- Michael Lynch, CEO of Australian Business Volunteers

Made for bigger opportunities 2010-India Super Power II

2008-03-11T14:53:00.000-07:00

The Indian IT-BPO industry: Made for bigger opportunities 2010

NASSCOM’s Annual Study, Strategic Review 2008 shows the Indian IT-BPO industry to be in great health, but says, things could be even better. 2007 tested the resilience of the Indian Information Technology-Business Process Outsourcing sector, according to NASSCOM’s Strategic Review 2008, its annual study on the performance of the IT-BPO industry. The Study indicated that despite a slowing economy, financial sector crisis in the US, and sharp appreciation of the Rupee against the Dollar, the industry showed grit, logging in double-digit revenue growth. The robust performance was accounted for by more diversified geographic market exposure, continued expansion of the service portfolio of IT-BPOs, steady growth in scale by Indian-origin service providers as well as Multinational Corporations (MNCs) having operations in India and the sector’s strong and sustainable value proposition. Interview is taken by Charlie Rose with Azim Premji / Nandan Nilekani is given below. The Study showed that India was set to become the “nerve-centre” for global sourcing with over two-third of Fortune 500 and a majority of the Global 2000 firms leveraging global service delivery, now sourcing from India. It added that positive market indicators and a strong track record strongly supported the optimism of the industry in achieving its aspired target of US$ 60 billion in software and services exports and US$ 73-75 billion in overall software and services revenues, by FY2010. According to the Study, the size and scope of the opportunity for Indian IT-BPO, and the strategic advantages in realizing its full potential, were significantly larger. Though India was uniquely advantaged to best address these opportunities, they were not lost to other emerging competitors. The country, therefore, needed to tap this potential and maintain its lead. Strategic Review 2008 pointed to the following global trends: • Worldwide technology products and related services sector spends are estimated to have grown at 7.3 percent to nearly reach US$ 1.7 trillion in 2007, overcoming concerns of budgetary cutbacks due to an economic slowdown in the US and its spill-over effects on other key markets. • IT-BPO services, growing at an above-sector-average rate of nearly 8 percent, remained the largest category. • Outsourcing continued to be the primary growth driver, with increasing traction in Europe and Asia Pacific offsetting a marginal decline in share of the Americas. • Global sourcing of technology related services were estimated to have grown by about 30 percent to reach US$ 70-76 billion in 2007. • Increasing emphasis on innovation-led growth added to the secular trend in technology related spending, with IT-enablement and global delivery now being recognized as complementary means of effectively increasing productivity, reducing time-to-market and thereby increasing the returns on innovation investment. • Consequently, players with demonstrated global delivery capabilities continued to close-in on the market shares of the incumbents (US Big-Six and European Big-Five), with India-heritage players reporting the sharpest gains in their share of the total value of large outsourcing contracts awarded in the year 2007. The India IT-BPO picture As far as India is concerned, the Study showed that the country remained the nerve-center for any major global sourcing strategy. Growth by indigenous players, bolstered by MNC investments, had enabled India to take on a new, more crucial role in the new world order during 2007. Some of the other highlights of the report were as follows: • The overall revenues for the Indian IT-BPO sector were expected to grow by over 33 percent, touching US$ 64 billion by the end of the current fiscal year (FY2008). • Over the same period, direct employment in the sector was expected to reach nearly 2 million, an increase of about 375,000 professionals over the previous year. As a proportion of national GDP, the Indian technology sector revenues grew from 1.2 percent in FY1998 to an estimated 5.5 percent in FY2008. Net value-added by this sector, to the economy, was estimated at 3.3-3.9 percent for FY2008 • Contributing 64 percent to the overall revenue aggregate, exports remained the mainstay of the Indian IT-BPO growth story. • Software and services exports, accounting for over 98 percent of the total exports, were expected to cross US$ 40 billion and directly employ nearly 1.6 million professionals. • While the US and the UK remained the largest export markets (accounting for about 61 percent and 18 percent respectively, in FY2007), the industry footprint was steadily expanding to other geographies. • Exports to Continental Europe in particular witnessed notable gains, growing at a CAGR of more than 55 percent over FY2004-2007. • The industry’s vertical market exposure was well diversified across several mature and emerging sectors. Banking, Financial Services and Insurance (BFSI) remained the largest vertical market for Indian IT-BPO exports, followed by High-technology and Telecom. These sectors together accounted for nearly 60 percent of the Indian IT-BPO exports in FY2007. • Manufacturing and Retail followed, contributing 23 percent to the aggregate. Other key segments included Media, Healthcare, Airlines and Transportation, and Utilities. • IT services (excluding BPO, product development and engineering services), contributed 57 percent of the total exports, remaining the dominant segment. It was expected to cross US$ 23 billion, a growth of 28 percent in FY2008. • Complementing the strong growth in IT services and BPO exports was the continued expansion of the product development and engineering services segment, which also reflected India’s increasing role in global technology IP creation. • Export revenues from these relatively high-value-added services such as engineering and R&D, offshore product development and made-in-India software products was estimated to be growing at about 27 percent, and forecast to reach US$ 6.3 billion in FY2008. Domestic Indian market: impressive gains Technology adoption in the domestic market also reported steady gains in 2007. This segment was expected to cross US$ 23 billion in FY2008. According to Strategic Review, hardware remained the largest segment of the domestic market, and was expected to grow at 44 percent in FY2008. Domestic IT services spends were estimated to be growing at about 43 percent in FY2008, showing strong signs of increasing sophistication as building enterprise IT infrastructures and applications, networking and communication became key priorities for India Inc. Software and BPO spending growth in the domestic market was expected to jump by over 37 percent and 43 percent, respectively. India’s IT-BPO Value Proposition Strong fundamentals of a large talent pool, sustained cost competitiveness and an enabling business environment helped India sustain its position as the preferred sourcing destination. The reasons for this, according to Strategic Review were many: • India continued to deliver a significant cost advantage, driven by a wide differential in wages and other lower factor costs. • The country’s young demographic profile, complemented by a vast and growing academic system continued to add to its pool of educated talent. • In the current scenario, there was no other country that offered a similar mix and scale of human resources. While some gaps in talent suitability existed, they were being adequately addressed through strong provider-level initiatives, focused on skill development. • Additionally, industry-led initiatives such as the National Assessment of Competence (NAC), complemented by Government support, were helping further enhance India’s long term talent advantage. • The Indian IT-BPO sector had built a strong reputation for its high standards of service quality and information security, which had helped enhance buyer confidence. • Supportive policies and active private enterprise had helped in creating an enabling business environment to facilitate the rapid growth of Indian IT-BPO. Government policy played a key role in catalysing growth in the early years and continued to aid growth with progressive reform. • The private sector was now, in partnership with the Government, also beginning to play an increasing role in the overall infrastructure development in the country. • While the relative merits of STPI8/SEZ9 (for IT-BPO) continued to attract healthy debate, overall Government policies had prioritized education and infrastructure and were aligned with industry needs. Future outlook: a continuing success story Strategic Review indicated a positive outlook for Indian IT-BPO exports as well as the domestic market, going forward. At current levels of growth, the Report stated that the sector would employ around 2.5-3 million professionals, directly, account for direct investment of about US$ 10-15 billion, and contribute 7-8 percent of the national GDP. It added, however, that the scope of the opportunity, was significantly larger. At US$ 52 billion (excluding hardware), India accounted for around 4 percent of the worldwide spend on IT software and services. The global sourcing penetration, meanwhile, was estimated to be growing at nearly four times the rate of absolute technology spends. Together, these two trends signified a huge opportunity for the Indian IT-BPO industry. The Report indicated that in order to sustain India’s edge in the global markets and improve revenues, Indian IT-BPO service providers needed to shift towards more market-facing breakthroughs. They could additionally, foray new customer segments in intellectual asset-intensive service lines like engineering and R&D services, creating IP in emerging technology areas, developing and codifying specific domain expertize to target consulting and system integration services, technical innovations to develop their own standards for next generation of technologies. Finally, providers could enhance the role they were already playing in helping improve the quality of education, by working closely with the Government and academia to facilitate changes in the curriculum and pedagogy, which directly influenced the quality of graduate output.

Bridging the Divide Between Sales and Marketing

2008-03-09T10:40:00.000-07:00

Bridging the Divide Between Sales and Marketing

Marketing can increase the efficiency and effectiveness of sales reps, leading to shorter sales cycles, larger deal size and higher win rate. How else can marketing help sales? Marketing organizations typically invest a lot of money in creating the right tools needed by the sales force to move prospects forward in a sales cycle and close them. Despite this investment, salespeople still spend an average of 40% of their time preparing client-facing deliverables, while leveraging less than 50% of the materials created by marketing. By bridging this divide, marketing can increase the efficiency and effectiveness of sales reps, leading to shorter sales cycles, larger deal size and higher win rate. How can marketing address this issue? After creating sales tools, the marketing organization often uploads them on an intranet or a shared file server, so a sales representative can go there, search through the various documents, select the one they need and download them to their desktop/laptop. However, a number of issues exist with such a homegrown solution:

• Sales force spends too much of their productive selling time trying to find the right materials. Over time, the intranet or shared file directory begins to contain hundreds of marketing documents such as brochures, data sheets, sales tools, email templates, customer success stories etc. The names of the files may not be descriptive enough – as a result one cannot clearly discern the content from its file name. There is often no search available on this homegrown solution – when such a capability will allow sales representatives to find the right marketing content by entering certain attributes in the search field. Even when the search capability exists, the marketing documents may not be tagged well enough – so either the search returns with nothing or too many documents. Besides, some of the material may be outdated and no longer relevant. As a result, sales representatives then take it upon themselves to create the documents during their productive selling time instead of using it to meet other prospects. • There is very low awareness among the sales force of available marketing resources & tools. Sales representatives often ignore the emails they get from marketing about notification of new sales tools. However, when they need that content, they have no way of searching through old emails to find the right sales tool. • Inconsistent use of branded marketing materials at the local level. Often corporate marketing assets have to be localized or regionalized – such as replacing the corporate contact information in a document with local address/contact information. Assets created by marketing often cannot be easily localized by the local sales organization – as a result, regional sales organizations often end up creating their own material. However, the messaging on such locally created material may be ‘off’ or the branding elements often used incorrectly or look-and-feel consistency not maintained across documents. Such problems dilute the brand equity of the company. • There is lack of tracking and measurement capability on the homegrown solutions. With no usage metrics, marketing is not equipped to answer simple questions such as which content is performing well or which content is hardly being used. Clear visibility into such metrics may point to problems such as marketing not creating relevant material or inability of the sales organization to find potentially high impact material. Without good usage metrics, such problems remain hidden.

As a result of such issues, the ROI on sales and marketing tools tends to be lower than expected. Marketing often complains that sales representatives do not use the tools they have created and sales force complains that marketing does not create the content that is useful for them. Such finger pointing often leads to a divide between the two organizations. Simple technology investments such as Marketing Asset Management can break this logjam. Leading marketing organizations have significantly increased the usage of the content created by them and have enabled the local sales organizations to easily localize the content while preserving messaging and branding elements by using such technology. Marketing Asset Management solution enables marketing managers to organize the marketing content (such as brochures, data sheets, sales tools, email templates, customer success stories, logo treatments, advertisements etc) in a multi-level hierarchy of their choice. Once organized, such solutions offer intuitive navigation over the intranet, making it easy for the sales force and field marketing organizations to find and use the marketing content. It can also convert graphic files into thumbnails to enable easy viewing and referencing by the sales force. In addition, such a technology provides the ability to add multiple tags on the asset (called Metadata). These tags later enable the sales rep to find and retrieve an asset by searching for all assets that carry a certain tag. As a result, finding the right content among hundreds of marketing documents becomes very easy. Marketing Asset Management solutions typically support multiple media formats, including multiple formats of raster graphics and streaming video. Marketing managers can store different formats of marketing assets in a single repository, instead of maintaining separate repositories for different formats – making it easy for sales force to find and leverage the marketing content. In addition, marketing organization can create certain content as a template and allow the sales rep to localize certain textual and graphical elements by simply supplying textual information and selecting predefined images. Such templates and predefined images can also be stored in the Digital Asset library. The solutions also enable the marketing teams to build an internal brand, product or service websites without requiring any knowledge of HTML or Internet technologies. As a result, any marketing user can quickly set up a comprehensive and informative site that is packed with important and relevant information and downloadable digital assets that can be searched and accessed globally. Finally, the technology can provide usage metrics, which can be used by marketing to either identify assets that are not used and either purge them or make them more relevant or ensure that sales is aware of them. Marketing Asset Management has been used successfully by large and mid-sized marketing organizations to eliminate the traditional divide between sales and marketing and better enable the sales force to sell more efficiently and effectively. I invite you to take a closer look at it. ---Source: Chetan Saiya is the Founder, Chairman and CEO of Assetlink, a powerful marketing operations management (MOM) solution that serves Global 2000 companies worldwide www.assetlink.com.

Bill Gates 'Innovation by Immigration' plan hurts US Workers

2008-03-02T00:25:00.001-08:00

True, "we must demand strong schools so that young Americans enter the workforce with the math, science and problem-solving skills they need to succeed in the knowledge economy." Not true: "We must also make it easier for foreign-born scientists and engineers to work for U.S. companies."

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