IIPM Education: April 2013

Monday, April 29, 2013

How well can the takeovers be leveraged?

Godrej Consumer Products' deft acquisitions in the emerging markets and its sharp focus on select product categories have helped it pull off superlative performance in the FMCG space. But can GCPL transform itself into a truly world-class multinational?

Personal care and household goods maker Godrej Consumer Products has, over the years, continued to deliver high growth within the FMCG space, by acquiring new brands, entering new categories and building a robust market overseas. In fact, over the past three years it has managed 51% compounded annual sales growth and a net profit growth of 49% on a consolidated basis during the same period. Today, GCPL commands a 10.1% market share in the domestic soaps segment and is the leader in hair colours segment with a 29.4% share. With 100% acquisition of Godrej Sara Lee, GCPL is also the leader in household insecticide business, with 36.6% share in the domestic market.

The company posted a 36% increase in consolidated net profit for the fourth quarter ended March 31, 2012 at Rs.1.92 billion. In the year-ago period, the company’s consolidated net profit was Rs.1.41 billion. Net sales in the fourth quarter of 2011-12 increased 30.85% to Rs.13.23 billion as against Rs.10.11 billion in the same quarter in the year-ago period. For the fiscal 2011-12, consolidated net profit increased 41.19% to Rs.7.26 billion compared to Rs.5.14 billion in the previous fiscal. Its net sales grew 31.95% to Rs.48.50 billion during the fiscal, against Rs.36.76 billion in 2010-11. The strong numbers have helped move the GCPL scrip to new highs, and in past quarter it also outperformed the market, surging 22.48% as against 0.27% decline in the Sensex. Commenting on GCPL’s performance, Chairman of Godrej Group Adi Godrej said to B&E: “I continue to be very confident of the opportunities for GCPL both in India and overseas. We will continue to pursue a prudent but aggressive growth strategy through a blend of organic and inorganic initiatives.”

GCPL’s earnings have been strengthened by strong positive EPS (earnings per share) accretiveness of new acquisitions and excellent domestic business performance across all three categories of household insecticides, hair colour and soaps. While domestic business grew by 21% in the fourth quarter, the company witnessed healthy growth across core categories. Home care grew by 28%, more than 3x of the category growth of 9%, led by strong marketing investments and distribution synergies benefits. Soap sales growth was 30%, nearly 1.5x of the 20% value category growth and representing a volume growth of 17% against category volume growth of 4%. Sales growth of hair care products was 13%, led by Godrej Expert powder hair colours and Nupur natural mehendi.

Going ahead, the company apparently aims to continue seeking growth opportunities in these categories. “The macroeconomic environment is strong. We continue to explore opportunities to strengthen our presence and competitive position in the home care, personal wash and hair care space,” says Godrej. In line with this strategy, GCPL has set an ambitious target of growing 10 times over the next 10 years from its current turnover of over Rs.48.5 billion through acquisitions as well as normal expansion in both domestic and international markets. “We want to be 10 times bigger in size in 10 years’ time, which is a compound annual growth rate of about 26%,” says Godrej. Elaborating the strategy, he says: “We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth... We hope to achieve about 15% to 20% organic growth and the balance through inorganic growth.”

Besides strengthening its domestic presence in soaps, household insecticides and hair colours, the company is pursuing growth through overseas acquisitions in a major way. The acquired companies are mostly in emerging economies of Asia, Africa and Latin America. The company has identified Africa as a key market for growth and is aiming to be the largest Indian FMCG firm on the continent. Last year GCPL had expanded operations in Africa with the acquisition of a 51% stake in African hair care company Darling Group Holdings, which operates in 14 countries across Africa, selling hair extension products under brand names like ‘Darling’ and ‘Amigos’. For the fiscal ended March 31, 2012, Africa contributed 23% to GCPL’s international business. In FY 2011-12, GCPL’s sales from its main international markets of Asia (excluding India), Latin America, Africa and Europe stood at Rs. 5.13 billion.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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

Saturday, April 27, 2013

"Despite opportunities, the company faces several risks"

Rick Summer, Senior Stock Analyst, Morningstar, talks to B&E's Amir Moin about the future prospects of the world's largest online social network

B&E: Do you think Facebook will be able to innovate on its business model with all the money it has raised from the IPO. If yes, how?
Rick Summer (RS): Facebook announced a new service called Facebook Exchange that allows advertisers to capture information about users’ browsing history and employ real time bidding strategies for more relevant ads on the Facebook website. The service is set to launch in the next few weeks. In our view, this service signals the most consistent trend that we expect for Facebook’s future – the company will need to continue investing in deep technology solutions to maximize the value of its user base to advertisers. Moreover, the company will need to marry the capabilities of ad formatting, measurement, relevancy, and reach for advertisers in order to achieve our forecast growth rates and continue the shift of advertising dollars from offline media to Facebook.

B&E: In its disclosures before the IPO, Facebook made it clear that revenue growth had declined from 155% to 45% and will continue to decline. What are your views on Facebook’s current business model. Do you think Mark Zuckerberg rushed with the entire IPO thing?

B Facebook’s platform capabilities provide important assets for growth and competitive advantage. We believe optimism is warranted, but the market may not appreciate several near-term challenges facing the company. First, there is a lack of best practices for advertisers to measure the return on their advertising dollar. In our research, advertisers and agencies have commented that the lack of standards or clear returns on investment in running social advertising campaigns presents a challenge, although the massive user base is too compelling to ignore. However, if agencies and advertisers are not able to develop acceptable tools for measurement, growth in social advertising may stall and the value of Facebook will be as generic as any other website that drives traffic.

B&E: How do you value the stock at the moment. What do you expect from Facebook in terms of growth and profitability?

RS: We value Facebook at $32 per share, representing an enterprise value of approximately $71 billion. Our valuation represents a multiple of 59 and 71 times our 2012 earnings per share and free cash flow estimates, respectively. In modeling the company, we forecast 10 years of financial statements. Admittedly, there is a great deal of uncertainty about the ultimate growth trajectory and profit profile of the company, but the exercise is important to us for several reasons. First, we believe the company will reach its structural maturity within 10 years, whereby it has normalised operating margins and cash flow yields. Second, understanding the size of the revenue opportunity at the end of our explicit forecast period helps quantify our level of optimism about the firm’s revenue potential. While we would not feel comfortable about our level of precision in forecasting the absolute level of revenue in three years, we do think our 10-year forecast results in a fair representation within a range of possible outcomes.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Thursday, April 25, 2013

“There are advantages not challenges”

Debjani Ghosh, MD of Sales & Marketing Operation, Intel South Asia, talks to B&E’s Amir Moin about the opportunities in the smartphone segment

B&E: Intel is one of the most innovative corporations of our time. It has been a pioneer when we consider the computing industry. As such, one would have expected Intel to launch their first smartphone processor with a more established brand like Samsung or at least someone like LG or Sony. Why was Lava chosen?
Debjani Ghosh (DG): We work with a variety of partners across markets. A lot of other people have asked me this question and I say “why not Lava?” There’s a strong alignment between Intel and Lava in terms of business orientation, what we want to achieve and how we can make an impact on the market.

B&E: Intel is the dominant force when we consider the PC market. You have benefitted tremendously from the proliferation of personal computers in the last few decades. The fact that you have a massive R&D budget, sets Intel apart in terms of product innovation. But the mobile market which consists of tablets and smartphones is a relatively new area for you. What are the challenges of catering to the mobile platform?
DG: There are advantages not challenges. And the advantages clearly support us. No one knows better than us about delivering performance. The only challenge is to reduce the power consumption because unlike PCs, smartphones and tablets do not have a motherboard. All the elements have to be incorporated onto a SoC (System on a chip). To address that, we are prepared to tap into the entire technology Intel has right now.

B&E: Up until today, the processor market was pretty much simple. Intel was content with the notebook PC market while ARM singularly catered to smartphone manufacturers through ecosystem partner like Qualcomm, NVIDIA, Texas Instruments, Samsung et al. But by launching the Atom Z2460 on Lava’s XOLO X900, Intel has made a bold move. How do you plan to differentiate the user experience of an Intel chip from the ones which have an ARM core?
DG: The user experience is not defined just by the processor powering the smartphone. It depends on a lot of other factors like the specification of the device, the OS being used and its compatibility with a host of applications. There are many devices available in the market today which enhance the user experience in terms of browsing speed etc. If we consider the smartphone we just launched – the Lava XOLO X900, it definitely stands out when you compare it to other smartphones in the same price band. It is powered by a 1.6GHz Intel Atom processors and comes packed with 1 GB of RAM. The smartphone demonstrates the power of Intel’s Hyper Threading technology which allows phenomenal multitasking without slowing the device. That means you can leave apps running in the background without actually worrying about the speed. It is the ease of use which defines user experience and with the XOLO X900, I think we have succeeded in delivering the standards which Intel represents.

Read more......

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

In pursuit of happy capitalism

Policies should be directed at making the environment for entrepreneurship far more enabling in India than what it is today. However, entrepreneurs must also contribute to the larger social goal in their own interest

Eight out of the world’s top ten richest people on the Forbes’ The World’s Billionaires 2011 List are self-made, that is, people who have not simply inherited their fortunes, but have built them over time due to their entrepreneurial vision, exemplary leadership and years of hard work. And of course, a huge majority in this list hails from the US, a country that has successfully nurtured the spirit of entrepreneurship since ages; and is also the nation with the highest GDP in the world. These people are the perfect embodiments of leadership, who inspire millions to live their dreams and make them a reality, even in the most unfavourable of circumstances. But there is something more compelling that these entrepreneurs manage to achieve. Through employment generation and equitable wealth creation within masses, these entrepreneurs contribute immensely to nation building and to the subsequent upliftment of disadvantaged sections.

In other words, it cannot ever be overstated that promoting entrepreneurship is absolutely essential for progress – and more so if it’s the case of India that we’re discussing. The Economic Survey for 2011-12 laments that while India is the world’s 4th largest economy, it is also the poorest among G-20 nations in terms of per capita income, which was around $1,527 in 2011. It has been also estimated by the World Bank that India has more than 400 million people living below the poverty line; UN confirms that more than 700 million Indians live on less than $2 a day. These figures are shockingly mammoth.

Entrepreneurship could very well be the only real hope for India to create virtuous cycles of employment to ensure that a massive majority of these disadvantaged classes are uplifted in quick time. If China could manage this kind of a feat, then I fail to understand why can’t India? Between 1981 and 2004, China got more than 600 million people out of poverty – this is more than has ever been achieved by any nation in history. UNDP data estimates that the incidence of rural poverty in China went down from 30.7% in 1978 to 1.6% in 2007. These electrifying improvements correspond to the spectacular rise of Chinese manufacturing and the growth of hundreds of thousands of Chinese entrepreneurs throughout the nation – and all with the proactive support of the State, which ensured continued public-private coordination throughout this growth story.

Leave the macro story, even at the micro/corporate level, promoting entrepreneurship – even within an organisation – is critically essential, The most respected Peter F. Drucker strongly believed that no organisation can dream of being stupendously innovative unless its employees are die-hard entrepreneurs; warriors who live and die with the consistently burning desire to start something new! If I were to expansively summarise the import of his iconic book Innovation and Entrepreneurship, Drucker defined an entrepreneur as an innovator and vice versa. Indeed, that key character trait that separates these entrepreneurs and innovators from the rest is ‘passion’. In a path-breaking May 2007 official Microsoft research release (‘The Rich Have Money – And Passion’), the Harrison Group, a leading international research firm, showed how 70% of America’s big family fortunes are less than 13 years old (that is, they’re not ‘inherited’) and more importantly, that “the people who amassed those fortunes are primarily entrepreneurs – risk takers for whom wealth is a by product of pursuing their passion!”

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 22, 2013

Why Ms. Sandra Fluke is a slut

On February 29, 2012, Conservative talk-show host Rush Limbaugh panned Georgetown University Law Center law student Ms. Sandra Fluke as being a “slut” and “prostitute”. The series of abuse and vitriolic attacks on her continued over till March 2, 2012. The apparent reason for the same was the testimony she presented before US House Democrats supporting insurance coverage on contraceptives.

“What does it say about the college co-ed Susan Fluke, who goes before a Congressional committee and essentially says that she must be paid to have sex, what does that make her? It makes her a slut, right? It makes her a prostitute. She wants to be paid to have sex. She’s having so much sex she can’t afford the contraception.” The celebrity Conservative supporter Limbaugh followed up these statements in the nationally syndicated Rush Limbaugh Show with 45 more instances of direct attacks on the law student.

The resulting national furore was quite dramatic with international and national commentators lampooning Rush. But in as much as Democrats seized the emotion of the moment to slam Limbaugh (and gained galloping brownie points from women across America), the Republican response was mystically anaemic. While 75 Democrat lawmakers signed a covenant accusing Limbaugh’s comments as being “sexually charged, patently offensive, obscene [...] an abuse of public airwaves...”, Obama, who is looking at further improving his popularity among women, called up Sandra to comfort her. White House spokesman Jay Carney termed the attacks “reprehensible”. Minority leader Pelosi called the attack “obnoxious”. Republicans unfortunately capitulated. Mitt Romney simply said, “It’s not the language I would have used.,” Santorum even justified the attack, commenting, “An entertainer can be absurd.” Similar were the responses of other Republican leaders.

Undoubtedly, this was a defining incident for American women, irrespective of their religious ideologies, irrespective of their political orientations, and irrespective of their position on whether contraceptives should be covered under insurance or not. Republican leaders had deserted them, in principle if not in person. Limbaugh’s attacks on Ms. Fluke were not just about an issue of contraceptive insurance, but about an ad hominem argument that any woman who uses or requests contraception must have a questionable character. It was shocking that many Republican party members even justified the method in the madness. On that parameter, it lost a wide trust vote.

The AP-GfK poll for February 16-20 2012 shows Obama’s approval ratings among women at 53%, a gain of 10% since December 2011. The New York Times reported on March 10, 2012, “As per a New York Times/CBS News poll in mid-February 2012, women, who in a January poll had disapproved of Mr. Obama’s job performance by 48% to 46%, now approved of him by 53% to 38%... A Wall Street Journal/NBC News poll this month showed that... While the president trailed Mr. Romney by six points among men, he had an 18-point advantage among women.”

There’s a growing thought among the common fence-sitting Republican supporter that if Mitt Romney does not get the party nomination, then they would vote for Obama. Such a thought process has suddenly gained a stronger following amongst women Republican supporters across America.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

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 we feel we have got collectively smarter. The fact is, perhaps 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 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. 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 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 ensure that its top management was where its clients were. 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 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...”

One critical decision that Cognizant took in 1998 when it went public was to retain lower margins in favour of stronger growth and differentiation in organic terms as compared to its peers. However, it does have a cash reserve of around $2.2 billion and no debt on its balance sheet. Even when you look at net profit for the quarter ending June, Cognizant lags Wipro, whose net income was $295 million for the quarter. But the reinvestment approach has done a lot for the company, which has developed an extensive portfolio of offerings in areas like ERP, testing, IT infrastructure services, et al.

Read more......

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

Anything that doesn’t kill you makes you stronger!

The two-wheeler industry is doing far better in a high-interest and high fuel tariff era, and is in fact benefitting from slowdown in four-wheeler sales. At the same time, it is also suffering from declining disposable incomes, in particular, in rural India. pawan chabra discusses the revival prospects of the industry and deliberates on why they should take this current misery as a bright opportunity

Good times can be fodder for lasting pleasant memories as well as inspiration when the tide turns hostile. FY 2010-11 will be remembered by the automobile industry for better than expected growth just about across the board. On one end, the two-wheeler industry sold a gigantic 11,790,305 units, filing a growth of 25.82% yoy for a 12-month period and on the other, the passenger vehicle segment sold 2,520,421 units; growing at a pace of 29.16% as compared to FY 2009-10. Comparatively, FY 2011-12 is an year of dramatic reversals. While the growth in the two-wheeler market has moderated to 14.84% with 7,738,755 units sold during April-October 2011, a negative growth of 1.77% in the passenger vehicle segment (sales of 1,378,513 units in the same period) has already given mild shocks to many honchos in the sales teams of respective auto makers.

As it is already evident several times over, rising interest rates, high fuel costs and falling disposable incomes have taken their toll on passenger vehicle manufacturers. For the uninitiated, India currently has the highest borrowing costs in Asia after Pakistan and Vietnam. On top of that, the Reserve Bank of India has raised the central bank’s repurchase rate by 3.75% since mid-March 2010 to 8.5% in a bid to tame inflation, making things worse for auto makers.

Despite the lowered growth rate as compared to last year, the two-wheeler industry has reason for cheer. Since almost 70% of total purchases in the two-wheeler segment is on cash as compared to passenger cars, where the figure just stands at 30%, the interest rate hike has not impacted the segment as ruthlessly as passenger cars. However, analysts claim that the sector will go through some rough tidings in times to come. Two-wheeler sales rose by just 2% in October, extending consecutive monthly gains since January 2009; while passenger vehicle sales fell for the fourth month in October, dropping by 24% to 138,521 vehicles, the steepest monthly decline since December 2000. There are two possible scenarios being imagined – one says that the growth run will continue and the other says that two wheelers could head the PV way in the coming months.

Rise in fuel prices and interest rates hikes do not pressurise two-wheeler sales to a large extent, but the falling disposable income in rural India is a cause of concern for even two-wheeler makers. The slip in sentiment is also evident in moped sales, which are often considered as the first barometer for rural disposable incomes. Moped sales have been going up and down month-on-month as compared to the last year. From 52,862 units in January, they surged to 60,761 units in February and 64,159 units in March. Then they came down crashing to 59,351 units in April, revived spectacularly to 67,872 units in May and went down again to 63,449 units in June. The flip flop continued as sales went up to 65,933 units in July, slipped back to 58,818 units in August rose dramatically to 68,108 units in September and then skidded alarmingly back to 56,378 units in October. As most two-wheeler makers have been driving sales from a strong rural market for many months now, there are strong signs of tough times for the sector. Market leader, Hero MotoCorp roughly sells 45% of its total production in the rural parts of the country. The company has sold 3,492,737 units during the April-October period growing at 18.54% yoy and expects to close this financial year at a growth rate of 27%. But the hurdles in the rural segment may prove to make that a hard bargain.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 15, 2013

B&E Indicators

Private charity contributions rise in India
Although the human conditions in India remain difficult for many, the attitude towards giving has certainly started to change. In fact, as a percentage of GDP, private charitable giving in India has increased 50% since 2006. Today private giving totals 0.3-0.4% of GDP in India. However, the country still lags behind when compared with the developed world. For instance, private giving in US accounted for 2.2% of GDP in 2009.

But, it’s still below the global standard

A prime reason for the disparity is that individual donations in India still constitute only 26% of all private contributions, way below the global standards. While in US individual charitable donations total as much as 75% of all private giving, in UK, it’s 60%. Moreover, the wealthiest Indians are still donating much less than (1.5-3% of annual income) their US counterparts, who contribute about 9% of their annual incomes.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 13, 2013

Mining: The Game has Changed

Revenue up by 32% to $400 billion, profit up by 156% to $110 billion, total assets approaching $1 trillion... as the numbers suggest the global mining industry is on a roll once again. And that’s despite all words of caution from the experts. Escalating commodity prices and increased production to meet the rising demand from developing countries has certainly done the trick for the miners. by karan arora

Miners on a high
Despite short term fluctuations in the market, the financial results of the top mining companies remained spectacular in 2010. With a total of over $400 billion, cumulative revenue (Top 40) of the global mining industry witnessed its highest level in the past decade. However, the revenue composition of the miners definitely witnessed a change as commodity prices sky-rocketed last year. In fact, with a price rise of 111% last year, iron ore’s share in overall revenue of the industry increased from 15% in 2009 to almost 20% in 2010. Such price rise also helped miners to book higher margins as the bottomline of the Top 4o in the industry surged by a mind-boggling 156% during the year. A 51% rise in production too helped the miners.

Focus is back on exploration
With demand picking up in the global market, miners have again increased their investment in exploration. According to Metals Economics Group’s World Exploration Trends 2011, the total global spend jumped to $12.1 billion in 2010, up from $8.4 billion in 2009. And interestingly, the top 40 miners took lead in this as they contributed to just less than 50% of the total exploration expenditure last year. However, gold and base metals remained the highlight of the year as 84% of the exploration expenditure was made in them only. But then, a stiff price rise in these commodities motivated the mining companies to enter into a race in order to control more and more mines of these commodities to have a better future.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 12, 2013

B&E This Fortnight

INTERNATIONAL

BUSINESS, ECONOMY & FINANCE
Murdoch’s troubles

Well, there are legends and then there’s Rupert Murdoch. The media mogul who was also ranked the 13th most powerful person in the world by Forbes in 2010 inherited a newspaper from his father at the age of 23. That was the beginning and the rest was supposed to be history (till a week back). But now, Murdoch is caught in the middle of a contoversial phone hacking scandal, which threatens to sully his business reputation and legacy. Sean Hoarem, a former journalist at News of the World, was the first to reveal that unethical practices were being pursued at News Corp. The reporter was found dead on July 18, 2011. The hacking scandal has sent sent all of UK into a frenzy of rage. In fact, News of the World, which had been in publication for the past 168 years, shut down operations on July 10, 2011. The entire controversy is turning into an affair that might be too much for Murdoch (now 80) to handle. On July 20, 2011, Murdoch and his elder son James were called for a hearing before a bench of British lawmakers. Murdoch, who was grilled intensely appeared to be at a loss of words at times while acting defensively at other times. He was even attacked by a British stand-up comedian during the hearing. Given his current plight, Murdoch’s empire, which he built over the years, might just find itself collapsing under its own weight.

Zuckerberg’s wealth
Facebook founder Mark Zuckerberg recently trumped many tech billionaires to emerge the third richest person in the technology sector. After the investment fund GSV Capital bought 225,000 shares in Facebook at an average price of $29.28 each, Zuckerberg catapulted to the top ranks of the world’s wealthiest, with a personal fortune now estimated at $18 billion. Among technology moguls, only Microsoft founder Bill Gates worth $56 billion and Oracle’s Larry Ellison with $39.5 billion count ahead of Zuckerberg in the wealth sweepstakes. Zuckerberg, a Harvard dropout, has a higher worth than Google founders Sergey Brin and Larry Page, whose fortunes have now declined to $17 billion from $19.8 billion in March. The social networking site currently enjoys a valuation of $80 billion and is expected to go public next year.

Anshu Jain. CEO?
The suspense over who would succeed the current chief of Germany’s Deutsche Bank AG only keeps mounting. Anshu Jain, the 48-year-old head of investment at the bank, has long been regarded as one of the strongest contenders to replace current CEO Josef Ackermann. But despite his impressive credentials and his enviable track record, Jain has failed to emerge a clear favourite, presumably because of lack of business and political connections in Germany. But Jain has been a star performer at the bank for the past 16 years and it’s difficult to overlook his claims to the top job. The supervisory board of Deutsche Bank, tasked with the job of finding a successor to Ackermann, is now increasingly veering towards proposing a joint CEO model, which would accommodate both Jain and another candidate who can fit the bill for being both business savvy and capable of pulling strings in the corridors of power. But the bank needs to make up its mind soon, or else the succession issue runs the risk of denting its spiffy image.

Read more.....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Sunday, April 7, 2013

Yamaha: Can it fire on all cylinders?

The Japanese Bike maker plans to take its sales in India to a million bikes in another two years, but its ambition could come a cropper if it fails to rack up volumes in the base segment

Ask Hiroyuki Suzuki, MD & CEO, India Yamaha Motor, about his plans of relaunching the once iconic RX100 brand in the Indian market and you find his face crease into an impish smile. In case you haven’t caught on and are still waiting for more pronounced cues, he goes on to gently shake his head. For legions of bike lovers during the 1980s and the ’90s, the RX100 was the hottest bike in town, and the brand continues to evoke a warm nostalgic memory even 15 years after it went off the shelf. Known for its excellent pick-up and technological sturdiness, the brand not only was a bread-and-butter model for both Escorts and Yamaha (the then JV partners), but was also a wildly popular and successful showcase of Yamaha’s engineering virtuosity. However, changing technology and more stringent government pollution norms forced Yamaha to phase out its popular models like RX100 and RD350 in the ’90s.

A lot of water has flown under the bridge since Yamaha took the RX100 off its production lines. Subsequent models like RXG, RX-135 and RXZ failed to live up to the promise generated by the superb RX100. While these brands failed to make a splash, competitors like Hero Honda and Bajaj Auto kept relentlessly jockeying up their market share. Around 2006, things had turned downright bleak for the Japanese bike maker and it was losing money by the barrel. As per various market reports around this time, Yamaha incurred losses to the tune of Rs.10 billion in the last six years and it was seriously considering pulling out of India altogether. But thanks to its heady success earlier, Yamaha’s Japanese headquarters decided to give the second-fastest growing market in Asia a second shot.

In 2007, soon after launching superbikes like R1 & MT01 in the Indian market, Yamaha turned to what it best known for – making motorcycles that are technologically ahead of their times in terms of styling, performance and features. As a result, products like R15 and FZ series were launched in the Indian market. Their initial success spurred Yamaha to continue with its game plan of introducing models that successfully attract the Gen-Y biker. As a result, in subsequent years, Yamaha launched products such as Fazer, FZ-S, SZ-R and others. Today, the company sells 14 models in the Indian market and the company takes a lot of pride in claiming that it has over 15% market share in the premium motorcycle segment. The overall market share of Yamaha in India is just around 3% even today, but considering the intensified competition in the Indian two-wheeler segment, the comeback plan has worked well for the company so far.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 1, 2013

Global Development Horizons 2011

Amidst the transformative change that the global economy is witnessing, it is anticipated that within the next two decades the rise of emerging economies will inevitably have major implications for global economy and geopolitics. The world bank argues that a new world order with a more diffused distribution of economic power is emerging. B&E analyses the shift towards multipolarity.

The new Growth Poles

Over the course of two millennia, there have been several instances of shift in global economic powers. The period of China’s Tang dynasty to the Ming dynatsy (600-1600), saw to it that China was the dominant force in the global economy accounting for a quarter of the global growth. The Renaissance phase coupled with the advent of the industrial revolution saw the coming of age of the European economies (e.g. Italy, Spain, France , Great Britain). Post World War II, innovation and consumer demand propelled the United States to the position of world’s foremost economic power with Germany, Japan and the former Soviet Union playing pivotal roles. Post the financial crisis of 2008-09, the global economy is tilting towards new growth poles.

Dynamics of Growth Poles

In the wake of the financial crisis, the global macro-economy is apparently poised to follow a two-track course. Considering the baseline scenario, the World Bank estimates that the emerging economies’ share of global output will expand in real terms from 36.2% (in 2010) to 44.5% by 2025. A closer scrutiny reveals that China will lead this impressive rise in share of global output. What is interesting to note is the fact that despite the demography driven changes (the old age dependency ratio in China is expected to double between 2010 and 2025), China will be able to maintain its comparative advantage in manufacturing. Consistent with historical productivity trends, India’s annual growth in 2025 will be 5.4%.

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