Tuesday, April 30, 2013

“We expect to build our market share step by step”

Victor Shan, President, Huawei Devices, India, speaks to Anirudh Raheja on how Huawei plans to build a sustainable position in the Indian mobile handsets space

B&E: How do you plan to consolidate your position in the handset market in India?
Victor Shan (VS): Globally, we are no. 2 amongst telecom equipment manufacturers and also hold the number 6 position in the list of biggest handset manufacturers in the world. For now, we don’t manufacture handsets in India as it does not make sense to support the weak share that we have over here, but the telecom sector here has been growing at a phenomenal pace. Riding on the same, we expect to reach among the top mobile phone manufacturers in India. Primarily, our focus will be to gradually increase our share through metro cities with the wide range of smartphones that we have lately turned up with, and then we would change our branding and positioning according to tier 2 & tier 3 consumers at a later stage. We sold nearly 1 lakh smartphone devices in FY11-12, and expect to sell up to 3.5 million handsets (including feature phones) in India in 2012-13.

B&E: Talking about your commitment to the Indian market, what has been your strategy for building brand Huawei in India?
VS: Initially we did launch our handsets in India by bundling with service providers, which can be termed as co-branding, since the same has been successful for Huawei across different markets. But realizing the needs of the Indian customer, we then launched our handset range directly into the open market, pre-loaded with social media features like Facebook and Twitter for the style and feature conscious youth, and to stay competitive with other handset players in the market. Adding to that, we also launched the world’s 1st cloud-based phones in India in November last year, since India has always been a market with tremendous potential and we are pretty aggressive on increasing our product range here for a better reach over the next 3 years.

B&E: In the Indian context, can you name some major challenges that you expect to witness moving forward in 2012?
VS: India is a market where localisation plays a very important role. People here prefer local applications, and handsets customised to regional languages in your product range. So the major part of our branding depends upon the region we are focusing on. We have been focusing heavily on promoting our handsets across organised retail chains in India, but we are also pushing our private channels for an increased sales numbers. We have grown by 30% in FY ‘11, and expect to build our market share step by step.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Saturday, April 27, 2013

Can Indian banks stay shock proof?

The Indian banking industry survived the first phase of the global financial meltdown without much damage. But the aftermath of the European crisis and sluggish domestic economic conditions indicate that even Indian banks cannot sit pretty anymore
 
Addressing a meeting organised by the Indian Institute of Corporate Affairs, Union Corporate Affairs Minister M. Veerappa Moily stated, “Indian banks have proved their mettle time and again as their regulations align with international standards, while they remain conventional in approach.”

Although the hagiographic statement of Mr. Moily could be dismissively ignored by critics, the fact is that there is some weight to his view. The top banks that are regularly a part of the B&E Power 100 list have performed relatively well (24 banks in the B&E Power 100 list this year). State Bank of India increased its PAT by 41.66% to Rs.117.01 billion (rank improved by two positions to 3 this year). ICICI Bank saw PAT growth by 25.5% to Rs.64.65 billion (rank improving by two positions to 13). HDFC Bank grew its PAT by 31.6% to Rs.51.67 billion (rank improving eight positions to 15), while Bank of Baroda saw PAT grow by 18.4% to Rs.50.07 billion (rank up by 4 positions to 15).

However, Moily’s eulogy is clearly only one side of the story, as these performances silhouette a larger potential crisis that could hit the Rs.64 trillion (assets) industry, if not nipped in the bud. Indian banks (private & public), which have been high fliers in terms of growth in profits for years, have registered their lowest growth rate for the past six years in the last fiscal. They could grow only by 15% in FY’12 as compared to a 4-year simple average growth rate of 24%. To add to that, the Net Interest Margin (NIM) for the banks has dropped (for private banks from 2.99% in FY’11 to 2.94% in FY’12; for public sector banks from 2.65% to 2.56%). And that comes at a time when the quality of assets itself is a concern. For FY’12, the Net Non-performing Assets (NPAs) of public sector banks, which control the bigger share of the asset pool, have gone up from a 1.01% of total advances in FY’11 to 1.47% in FY’12. But this is just the beginning.

Stressed. That’s the word that describes the industry at this moment, more so for the brisk pace at which the industry’s exposure to Small & Medium scale Enterprises (SMEs) is getting potentially toxic. The seriousness can be well understood from a stress test done by equity research firm Prabhudas Lilladher. As their report suggests, “Valuations for ICICI/Axis (two of the councountry’s strong & leading private sector banks) are approximately 15% lower than their long-term averages after considering a 15-17% hit to book values.” The test on public sector banks revealed a hit of around 30% on book values, given NPA shortfalls and higher restructuring.

More often than not, the SMEs with relatively shallow pockets face the brunt of economic deceleration. SMEs in a large number of Indian sectors like textile, real estate, steel and shipping are losing their debt servicing capacity at a pace that may not be comfortable for banks; more so when they form a sizable part of the latter’s loan book. As per analysts Adarsh Parasrampuria and Parul Gulati from Prabhudas Lilladher, “While interest coverages for small cap companies are back to their 2008-09 levels; for mid-cap companies, it has been below that level for the last three quarters. In case of mid-caps currently, the interest coverage ratio is at a new low of 1.6 compared to 1.9 during 2008-09.” Additionally, around 18% of mid-cap companies are struggling with an interest coverage ratio less than one.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Wednesday, April 24, 2013

What it takes to wipe off your smug smile

Uncontrolled operational expenses and lack of a sustainable business model have left Indian insurers gasping for air. With huge accumulated losses, they are already in a big mess. Although everyone agrees that the industry has a great growth potential, the question remains: How many of the existing players will even survive?

Imagine having your insurance firm declare bankruptcy just when you were about to file your insurance claim. In other words, have you ever thought of how it would feel to have lived smug under the illusion of insured safety and having that illusion destroyed without notice? A look at the present financial misery of Indian insurers, and the thought simply can’t be ignored any longer. More so when one sees that the glitzy private insurers who never fall short of making a new promise to customers everyday are now struggling with combined accumulated losses of over Rs.150 billion (of all private life insurance companies as on December 31, 2011). Interestingly, as of May 2012, 19 out of 22 private players are in the red. The scenario is more or less the same for the non-life players. Although some may argue that accumulated losses of non-life insurance companies have still not entered the danger zone, the fact remains that they have a market penetration rate of only 0.78% as compared to 5.21% for the life insurance players. Hence, their losses as compared to the size of their businesses are actually big and in turn threaten their existence.

For records, until recently, the life insurance companies have been the driving force for growth in the insurance market. But at the same time they were the ones that jeopardised the future of the industry by relying heavily on unit-linked insurance policies (ULIPs). So when the norms related to ULIPs got restructured in Q3 2010, life insurance players suddenly found themselves in a big mess. Data from the regulator show first-year premium of life insurers fell 19% for the first eight months of the FY2012 to Rs.624.3 billion. Even private sector market leader ICICI Prudential saw its annual premium equivalent sales falling by 56% to Rs.5.8 billion in the first nine months of 2011, compared with Rs.13.3 billion in the same period of 2010. The fall in topline comes at a time when almost all private insurers are suffering from high operating losses. “Almost 75-80% of the capital requirement (for life insurers) has been to fund operating losses and not for solvency requirements,” points a joint report by Boston Consulting Group (BCG) and industry body FICCI.

Further, the entry of more players, which initially was considered as a boon, has ended up initiating a price war affecting the players. For instance, for a 30-year-old, non-smoking male, the premium for a 25-year term policy has come down drastically from about 70 basis points (bps) in 2001 to about 20 bps today – almost 70% reduction in price for the customer. With margin already being a problem, fall in topline due to increased competition has increased problems for private insurers. While Reliance Life’s accumulated losses (Rs.27.77 billion) now stand at 258% of the first year premium underwritten (as on December 31, 2011), for Tata AIG and Birla Sun Life it stands at 216% and 107% respectively.

Non-life insurers too face a similar challenge. While the combined ratio (operating expenses plus claims plus commissions as a percentage of net earned premiums) of all the non-life insurance companies for the past five years has been around 120%, the underwriting losses for the industry have grown at around 13% CAGR in the past five years. IRDA data reveals that underwriting losses of non-life insurance companies shot up 67.72% in FY2011 to Rs.99.69 billion, from Rs.59.44 billion in FY2010. So, who is to be blamed?
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Saturday, April 20, 2013

What multinational firms need to do to succeed in the 21st century

Giving importance to strategic intelligence and the need to sense disruptive innovation in the external environment is extremely critical for companies today. People should be tasked with scouting such intelligence (they are called Bridgers), which can be built into performance metrics and reviews in a meaningful way

Quote 1: “The firms that can best scout and implement valuable strategic intelligence from environments that are not their native terrain…will be the clear winners.”

Quote 2: “Firms must operate better in unfamiliar environments. The Bridger Strategy is key.”

This is a new world with new dynamics. We are seeing dramatic rises in emerging market economies and, in response, an acceleration of interest in re-tooling for these new realities by mature market firms. Both require a dramatic redoubling of how strategic intelligence is sourced and implemented by firms. Leading edge firms realise that those who best scout and implement valuable strategic intelligence from environments that are not their native terrain will be the clear winners. How well strategic intelligence is scouted and acted on is a great measure of overall organisational health – and a powerful predictor of a firm’s performance.

Our research spans several years and began with the observation that the many critical strategic insights, particularly when sourced from the external environment, do not get implemented by firms. We tested this across a larger sample of firms and identified that less than 10% of firms excel at scouting great strategic intelligence in the environment and getting these ideas implemented across the business unit. Those that do, however, experience exceptional results compared to their peers. Naturally, we became curious as to what they do differently. Our work highlights specific patterns that make it more or less likely that a valuable idea survives from being identified in the environment to being implemented by the firm. The irony is winning in the new world dynamic relies extensively on the firm’s ability to do this, yet the majority of companies are structured to deliver the opposite – to leave these innovations untapped and to deflect them if proposed to headquarters.

Three things have to happen for a great idea to get implemented: it needs to be scouted in the environment, it needs to be accepted by the firm, and the firm has to apply the appropriate resources (both people and capital) to give it life. While that seems straightforward, it is actually three ways a great idea can die before the firm realises its full value. Let’s look at scouting, for example. First, the idea must be intentionally observed in the environment. Most firms, however, send people into the environment exclusively to implement strategies. They are wasting half of that resource. It is in primary observation at the local level that some of the best transformative ideas are discovered, not through distant studies and aggregated surveys.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, April 19, 2013

Will Ford’s compact SUV trick work?

Alan Mulally, CEO of Ford, has a new job at hand in India. Revive Ford’s sales and increase market share. And he has chosen to lay out the totally-new-for-India compact SUV dish for starters.

It was Alan Mulally’s first field trip to an auto-testing facility, four months after he had joined the Ford Motor Company as its new CEO in September 2006. Mulally, had till then proven many-a-time to the Ford management and the world, why he was all about “gut-feel”. That morning of February 2007, he was out to prove the same. His Falcon single-aisle jet landed on the airstrip of a 330 acre facility in East Haddam in Connecticut. With him were two engineers from the company. Mulally spent 4 hours at the facility, gathering feedback about his company’s cars from third-party experts. One complaint that was thrown across to him was that the new Ford Edge SUV not only lacked an electronic opener, but also a handle on the rear hatch. His engineers put forward wise arguments why the company made what it made. Mulally’s gut told him otherwise. Today, the Ford Edge SUV not only comes with an electronic keypad enabled opener option, but also with a universal hatch door opener!

Mulally has never hesitated from taking steps that he has been completely convinced about. From pledging all of Ford’s assets in November 2006 (including the logo for $23.6 billion) to dumping famous brands (Volvo, Jaguar, Land Rover & Aston Martin), to postponing his plans to launch the new version of the record-selling F-Series in early 2009, this former Boeing veteran has never been bothered by the disgust-filled grunts of his board of management. He knows: rescue a company, only an autocratic leader can. He has.

Besides following his gut, and being authoritarian, there is a third dimension to Mulally’s character. That he is wisely unconventional. A year after he had taken over at the company, Mulally decided to place his bet on small cars, and in the year that followed burnt 61% of the company’s cash reserves in the process. Ford was by then considered a champion of the trucks and pick-up category, and spending more than half of the company’s resources on small cars was an act of self-humiliation for the Ford management. Mulally didn’t care. The result: Ford bounced back as the second-largest car seller in US and EU markets in 2009 and 2010 – thanks to its changed small car strategy. Call it unconventional, but this CEO taught a money-losing maker of gas-guzzling-trucks to focus more on small cars and make profits! Today, 48% of Ford’s global sales are accounted for by compact cars and in the 11 quarters since the start of 2009, has made profits totalling $15.88 billion.

Talking about small cars, we can’t miss Ford’s ‘very late’ entry in the Indian small car market. Despite being the second foreign carmaker to enter India, Ford became only the tenth to launch a small car in India. Experts believe that during the pre-Mulally days, not many in the Ford camp were convinced that the company should experiment with its image in India by trying to attempt a small car. Again, the gut told otherwise and you had the “Made in India” compact car unveiled in March 2010 by none other than Mulally himself! Understandably, the Figo was the first chapter of his “One Ford” strategy.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Monday, April 15, 2013

International

China to help asean

China will help Asean countries to launch infrastructure projects, which aim better connectivity and communication in the region. Leaders of China and Indonesia agreed on the proposal during a closed door Asean-China summit held in Bali recently. The Chinese prime minister Wen Jia Bao said that China wants to establish Asean-China committee for connectivity for closer collaboration between the two entities and is looking to set aside $10 billion in credits and $4 billion in loans for the same. China also provided a $15 billion credit to Asean in 2009, which helped over 50 infrastrusture-related projects. The China-Asean centre, focused on enhancement of trade and investment, was also inagurated to mark two decades of formal relationship between the two sides, during this Bali visit of the Chinese premier. The two sides hope to see bilateral trade reach $500 billion by 2015, up from $350 billion currently. The summit also focused on collaboration in the fields of science & technology, sustainable development, maritime co-operation and co-operation in social areas and areas important to people’s livelihood. The Asean leaders adopted a master plan for Asean connectivity last year, which includes extensive plans to improve roads, railways and maritime and port infrastructure in preparation for an Asean community by 2015.

Not many takers for anti-piracy law

The Stop Online Piracy Act (SOPA), which was introduced in the US House of Representatives in late October in a desperate attempt to stop theft of copyrights and intellectual property, has not gone down well with big technology companies like Google and Facebook. The companies are of the view that the provisions of the law are too strict and might have unforeseen consequences. Google’s executive chairman Eric Schmidt has gone to the extent to call this a “draconian bill”. The Act gives the copyright holder the right to register a complaint with an enforcement agency, if they find their content displayed without permission on some website and can get the website shut. Google, AOL, eBay, Mozilla, Facebook, LinkedIn, Twitter, Zynga, etc, have lodged a formal complaint against it in the form of a letter sent to key Senate members.Currently, the US follows the Digital Millennium Copyright Act, which asks companies to “work in good faith” to drop content, which they find are in violation of intellectual property and copyrights. SOPA, if it becomes a law, will target websites like Torrent, which offer tonnes of pirated content free. The bill has received major support from the Motion Pictures Association of America, Netflix, Macmillan Publishers, Recording Industry Asociation of America and a lot of trademark dependent companies like Nike, L’Oreal, et al.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
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“It’s India, not Botswana!”

Chander Mohan Sethi is a Reckitt veteran (he has been with the company since 1984), whose love for its brands, especially Dettol, is evident every time you converse with him. He has ensured an excellent track record for Reckitt Benckiser in India, taking it to various segments on health, personal care and hygiene. His focus on power brands has ensured that brands like Dettol, Veet, Durex, Vanish, Lizol, Harpic became household names especially in urban India. Rural is still a tough nut for the company, where its high price points are proving a deterrent. In this interaction with onkar pandey, Sethi talks about the road ahead for the company in India, and strategic importance that India has in Reckitt’s global roll call.

B&E: Today, Dettol is your star brand in India contributing almost 50% of your revenues. It has successfully extended into soaps as well. How do you look at the brand’s future ahead?
Chander Mohan Sethi (CMS): Dettol has been there for 75 years in India. It’s one of the most trusted brands in India in the health and hygiene segment. Today, it has an 86% market share of antiseptic wash liquid and a 52% share of the liquid hand wash segment. It has crossed the Rs.10 billion annual sales mark by far. But we don’t give much importance to numbers; the consumer is most important.

B&E: What’s the product penetration of the soap category in India?
CMS: Today soaps have a 96% penetration level, but if you take antiseptic soap category where we play, the penetration is roughly about 62%. If you then take Dettol antiseptic liquids, the category penetration again comes to about 70% in urban India, and 40% in rural India.

B&E: You promote Dettol as an antiseptic product, but today it’s being increasingly getting popular as a body wash as well. So how do you straddle the two segments simultaneously?
CMS: There are different products in the area of hygiene that we make. For liquid handwash, we have a different product. Then we have the soap as a personal body wash. Dettol antiseptic liquid is used not just for cuts and wounds but also for surface cleaning, surface disinfection, clothes disinfection in the wash, and even in the water we use for wash. Not just that, even for shaving purposes, it’s used over cuts and wounds if any. So there are different products for different usage. So the point which comes across is that for the health and hygiene habits we follow, Dettol is there at every step.

B&E: How is your rural penetration faring and how are you going about your rural strategy?
CMS: If I take Dettol soap, the total universe of outlets in the country is about 5.5 million shops including paanwalas and mom-and-pop stores. Dettol soap is distributed in 2.3 million stores. And that is between urban and rural. In rural India, we have a 40% distribution reach. Of course, no company is able to reach all the villages. So like many others, we too use the wholesale channel, where we go to more than 3000 towns. In those towns, we have distributors, retails and wholesale operators who act as suppliers to other smaller markets in their vicinity. In terms of business from rural India, it’s different for different products.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

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Saturday, April 13, 2013

Creating an impact that achieves goals of equity as well as Economic Growth

As a new field of investing, impact investing uniquely gives the best of two worlds to the investor – financial returns as well as social equity. Linda L. Darragh, Director of Entrepreneurship Programs & Clinical Associate Professor of Entrepreneurship and Nurkholisoh Aman (Research Assistant) of the Booth School of Business analyse the developments and stumbling blocks for impact investing in India

Impact investing is an emerging investment field that is gaining increasing popularity as people look for ways to grow sustainable businesses. The recent global financial crisis is often cited as an example of how the capitalist model has failed to generate equitable and sustainable economic growth. On the other hand, philantropic activities alone cannot provide long-term solutions to what are the world’s most pressing challenges such as poverty, renewable energy, and the lack of basic health care.

Impact investing occupies a unique position between the extremes of pure for-profit businesses and charity/grantmaking. Through the promise of getting the “best of the two worlds”, impact investing presents a new alternative in the world of investing. In a 2010 study, JP Morgan defined impact investment as “investment intended to create a positive impact beyond financial return.”

Generally, impact investments target the population at “the base of the pyramid” (BoP). They aim to improve the lives of the poor by providing products or services that are otherwise unavailable or unaffordable. Another point of view of impact investments places the focus on respecting the environmental impact of business activities. At Chicago Booth, we recently conducted a study to understand the landscape of impact investment in six emerging economies. In India, we found that there is an increasing interest in investing in entrepreneurs who pursue both social and financial objectives. A few years ago, micro finance lenders represented the breadth of social entrepreneurs in India. Now, impact investors have significantly broadened their definition of social investing due to the emergence of potentially scalable ideas in other sectors.

Given the sheer size of the Indian population at the base of the pyramid, there are almost unlimited opportunities for impact investing. Additionally, India now faces big challenges to protect its fragile environment – air, water, forests, and bio-diversity – from the rising pressures created by economic success.

Interviews with impact investors and agencies that work with social ventures identified the sectors that are most popular amongst social entrepreneurs in India. These are:

a. water & sanitation – There is a huge need for companies that offer customers safe, affordable drinking water through community water systems. Approximately 170 million people in India currently lack access to safe, clean drinking water. Water-borne diseases are estimated to cost US$600 million annually in lost production & medical treatment.

b. renewable energy – According to the Acumen Fund, 579 million people in India lack access to electricity. Even though a village is considered electrified if only 10% of its households have access to electricity, national electrification rates are still low.

c. agriculture – There is plenty of room to improve productivity and increase efficiency in the agriculture sector. Intellecap research estimates that 30% of Indian fresh farm produce becomes spoilt due to a lack of logistical support.

d. health care – Opportunities exist to reduce costs and increase access to quality preventive and curative healthcare facilities, especially in tier-2 and tier-3 towns and rural areas. According to the Acumen Fund, only 43% of Indian women are cared for by a skilled attendant during birth, and more than 100,000 women die every year from pregnancy-related issues.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, April 12, 2013

B&E Indicators

Heading for growth
The year 2010 saw the Indian capital market bouncing back. During the year, 40 new companies were listed on the exchange (both NSE & BSE) at a consolidated value of Rs.330.68 billion, as against 39 companies with a reported value of Rs.246.96 billion in 2009. However, the amount of capital mobilised through private placement plunged massively, from Rs.2,126.35 billion in 2009 to Rs.1,474 billion in 2010.

Getting bigger and better
In fact, price appreciation is clearly reflected in the market capitalisation (of BSE) to GDP ratio and the traded value (of BSE and NSE together) to GDP ratio, which increased from 55.4% and 69.1% in 2009 to 100% and 89.5% respectively in 2010. Further, resources mobilised through capital markets also witnessed a significant jump, from Rs.162.20 billion in 2009 to Rs.575.55 billion during 2010.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Monday, April 8, 2013

Making sense of the incorrigibly Cognizant!

Cognizant’s ability to consistently achieve astronomical revenue growth has surprised many. Will it’s new strategic outlook be able to keep the ‘shock & awe’ coming?

While debating on a particular strategy related to employee & customer orientation in a technology company with a top CEO, I gave the logic that works best when you are trying to escape an argument – the proof of the pudding is in the eating, and the particular company was doing well. The CEO smiled at me and nodded his head, saying that even the most unconventional strategy looks great when someone successfully applies it. The whole world then analyses why the strategy worked for that unique organisation and feel we have got collectively smarter through the entire process. The fact is, perhaps that next time too, we will only identify the merits of an unconventional strategy when it has met the benchmarks of success.

Though Cognizant is not the company I was discussing, there is no doubt that the successful rise of this company which has become the flavour of the season in the IT space. Cognizant, which beat Wipro in terms of revenues to reach the number 3 position among Indian IT players in the quarter, saw revenue rise by 34.4% yoy to reach $1.48 billion and net income reach $208 million, a growth of 20.78% yoy. And the surprising part is that IT experts weren’t really counting on the company delivering these numbers, as it still got 77.8% of its revenues from North America, a region that the IT world is looking to slowly derisk from. Annually, the company is showing a growth of 40% on an average over the past five years, which also include the recessionary phase. It makes sense to understand what makes the company stand amidst this environment, and whether the growth is indeed sustainable.

There were a number of things that Cognizant, a relatively young upstart did that made it different from its peers since it commenced operations in 1994 as the IT development and maintenance services arm of Dun & Bradstreet. The first was its initiative to shift headquarters to the US within two years of commencement of operations and ensured that its top management was where its clients were. Linked to this decision, it also pioneered and trademarked the ‘Two-in-a-box model’, which combined the global delivery model with the relationship manager onsite to give clients a differentiated service experience.

Cognizant is extremely dependent on employees in India, which account for over 75% of the workforce. In that sense, it ensured an effective utilisation of both worlds, and other Indian companies, even though their business is also largely driven by US and Europe, developed a global positioning much later. In fact, Cognizant is also lobbying for change in H1B visa norms, and CEO Francisco said at the CEO Council recently on outdated immigration laws, “Millions of foreign skilled professionals are in legal limbo due to a massive backlog for permanent resident visas, hampering their ability to fully contribute to the US economy & discouraging talented foreign professionals to consider working or starting a new business in US.”

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

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Thursday, April 4, 2013

“No news channel today, is purely a news channel.”

Ambika Soni, Union Cabinet Minister of Information & Broadcasting, talks to Anuradha Preetam about the need for self-regulation in the Indian Television Industry and how the government’s policies are helping people to fight corruption and seek greater empowerment.

B&E: Within this decade there has been a proliferation of 24x7 news channels. How is that affecting our lives today?
Ambika Soni (AS): In India, we have 800-odd channels at present. Half of them are news channels. The pressure is on broadcasters to stay ahead in the scramble for eyeballs. It is not always easy. The media has become very intrusive. It has entered our living rooms. But the fact is that it is having a huge impact on forming opinion, influencing mindsets, generally by setting agendas through repetitive news. So I think the responsibility is on the broadcaster to ensure that what is put out is thoroughly investigated.

B&E: How do you judge the content currently available on Indian television?
AS: There are systems in place and we are only trying to fine-tune the existing systems. There is an inter-ministerial committee, which takes a call whenever complaints come in. It either sends an advisory to the broadcaster or orders the programme to be taken off the air. In a worst case scenario, a channel’s uplink-downlink facilities could be terminated. Since there are no broadcasters in the panel, there is no question of favouritism.

B&E: But the public perception about the committee’s functioning is that it is not very effective. What is your take on this?
AS: Yes. There is a feeling, especially amongst elected representatives, that this system is not effective enough. But then, how would another committee work? After all, people in that committee would be human beings too. And there would still be protests each time an advisory is sent out, no matter the kind of committee that is put in place.

B&E: Regulation for broadcasters is quite talked about. And we hear that you support “self-regulation”. Your comments...
AS: The mandate to me from the PM is that we should impose self-regulation. I have always felt the same way, and the directive from the PM has made my task easier. In June 2011, we put in place a self-regulatory apparatus – the Broadcasting Content Complaints Council. It is a task force headed by the Information & Broadcasting secretary and includes broadcasters and representatives of cable operators along with government officials.

B&E: So you think “self-regulation” is the best way to keep some channels from going overboard?
AS: No news channel today is purely a news channel. It is news-based entertainment. There are some who air a thought-provoking documentary here or raise a social issue there. But then, they don’t get the TRPs. So I must try to help resolve the issue of TRP mechanism. Or the industry must do it. If the government does something, there is resentment. Either we all have to make our little contributions or it will take much longer. But I do appreciate the role of the broadcasters in self-regulation.

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