Wednesday, December 12, 2012

Drink Up!

They were Pepsi’s 5 years of fame

Warren Buffet. It’s the name that markets would swear by to the death. And a name that Coca Cola loves to have on its list of investors. That should end the debate, right? But 2000 was the year when Coca Cola faced a not-so-Warren-Buffet moment. It was the time when both Pepsi and Coca Cola were struggling hard for a prized catch – US-based Quaker Foods, owner of Gatorade, the world’s most popular energy drink brand. The then Chairman and CEO Douglas Daft was not being ‘daft’ when he suggested that Coca Cola must do whatever possible to acquire Quaker, but Warren Buffet vetoed Daft’s proposal. Result: Quaker went to Pepsi. Then began a most dramatic turnaround unprecedented in the history of the long drawn Pepsi-Coke war. In year 2000, Pepsi was languishing with its Mcap at 1/3rd of Coca-Cola’s.

The situation changed in late 2005 to the extent that Pepsi overtook Coke in terms of market cap for the first time ever. The key to this turnaround lay in Pepsi’s more successful diversification strategy, of which Quaker was an important part. Pepsi stole the march from Coca Cola in terms of moving away from soft drinks into other territories. This was apt as the Carbonated Soft Drinks (CSD) sector is declining, primarily due to health concerns. In 2008, CSD case volume declined by around 3% yoy (Beverage Digest) to touch 9.6 billion 192-oz cases.


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

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Sunday, December 9, 2012

In dogged pursuit...!!

Is putting stray dogs to sleep the solution to the menace?

Somehow, since childhood, dogs always attracted my attention. Every time while returning from school, I would spare about half an hour playing and feeding the dogs in my colony. But it so happened that every night their barking, and also those of dogs from the other streets, would disturb my slumber. Perturbed with their presence, eventually, my most-awaited everyday activity took a permanent halt. The recent case of Mr. K E Mammen of Thiruvananthapuram, who was constantly disturbed, attacked and finally bitten by the stray dogs of his locality, took me back to my own troublesome experience which changed my love for stray dogs to indifference.

Many are of the opinion that dogs are adorable and harmless but if they turn out to be a menace to an extent to threaten one’s life, then what would one do? The one to face such a predicament, Mr. Mammen – a human rights activist himself – was perhaps right in voicing out an appeal to the Human Rights Commission to step in and also propagating the killing of stray dogs. Expressing his views on this issue, Jaya Simha, the Campaign Manager at PETA first explained the root cause of this problem. “‘The kill or not to kill’ issue has been lingering for long but we have to understand why stray dogs exist. Poor garbage management attracts stray dogs to make a habitat in residential localities and near shops. Their population is directly proportional to food, and since people usually have the habit of shooing them away, these dogs feel threatened, leading to attacks.” Calling the resentment of various animal rights groups with his agitation and appeal to kill the stray dogs, Mammen backed his argument by quoting Gandhi who propagated the killing of stray dogs and had also permitted so in 1926 in Ahmedabad where a pack of stray dogs had become a nuisance for a mill owner.


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

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Friday, December 7, 2012

SONY: KUNAL DASGUPTA

Dasgupta’s successor will not find the going very easy

Circa 1998: Rajesh Pant is recruited by Dasgupta himself. Circa 2001: Sony mulls over replacing Dasgupta with Pant but Dasgupta smartly convinces the board against it. Slowly he puts Pant out of the management of major channels and finally Pant quits in January 2002; realising that he doesn’t have a promising future at Sony till Dasgupta is there.

Circa 2002: Sunil Lulla (now MD of Real Global Broadcasting) is hired as business head of Sony. Soon the board of directors feel that Lulla has the ability to succeed Dasgupta. Dasgupta deploys the same strategy with Lulla and makes him head a relatively insignificant division – the ‘digital & licensing business’. Lulla quits Sony in 2005.

Circa 2009: Dasgupta is finally asked to resign from MSM due to his faltering decisions, even when there is no clear successor to him. “Dasgupta has been always very proactive in killing any possible competition at personal level. Wish he would have shown equal proactiveness for the channel,” said an ex-senior official of Sony on conditions of anonymity. Manjit Singh, Chairman, MSM will be looking after Dasgupta’s duties till a new CEO is finalised.

Dasgupta has left Sony at number four in the GEC category with a meager channel chare of 8%, while leader Star Plus has 25% channel share, the neonate Colors commands 22% and Zee TV corners roughly 17% channel share (source: TAM, first five weeks of 2009). So the biggest challenge for the new steward of MSM will be to bring Sony back at least in the top 3 list in GECs. Besides, other channels need to be reworked. Like for SETMAX, a combination of cricket and movies has blurred its positioning. But much before that, MSM will have to resolve the conflict with BCCI regarding Big TV’s withdrawal from IPL’s on-ground rights. Failing that, MSM will have to pay Rs.1.37 billion (worth of BIG TV-IPL deal) to BCCI. Irrespective of Dasgupta’s achievements, the task for the next CEO seems unusually daunting, just like it was for Dasgupta when he became CEO.


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

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Thursday, December 6, 2012

HARLEY-DAVIDSON: FUNDS INFUSION

The latest cash infusion has guaranteed Harley Davidson short term working capital; but it surely would need even more for a joyous ride!

Also, poor performance of its financing arm (HDFS) played havoc on it’s net earnings in Q4, 2008 (which deteriorated by a further 58%). The company then decided to cut 1,100 jobs and trim production considerably by 13%.

And what about the recent receipts? It plans to use the amount to implement its 3-pronged strategy – build a stronger brand, put a leaner cost-structure in place and infuse funds into HDFS. “This offering represents an important step in executing our stated strategy for funding the lending activities of HDFS,” states Tom Bergmann, CFO, Harley-Davidson, to which Christian Breitstrecher, Analyst, Sal Oppenheim adds, “HDFS required urgent funding and the recent investment is a boon for it...” For now, the company has to ensure maximum and quick ROI from any future investments, as it is bound to pay both the investors a high 15% interest on their bonds, scheduled to mature in 2014.

For now though, the biggest worry is that HDFS will require kindness from more multi-million dollar investors in the coming years, to be able to continue providing loans to its consumers. Needless to say, Harley-Davidson’s future depends on it! For now though, Buffett is taking the muscle-bike on a long ride, and he’ll be back five years later; be ready with the cash Mr. Harley!


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

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Wednesday, December 5, 2012

‘Intel’ligent Quotient!

Barrett led Intel from the front, but little did we realise, he was the masthead for the entire industry...

‘Intel’ligence is how many might refer to this 69-year-old leader, who upheld the sparkling semiconductor sceptre over this $75 billion isle, Intel. Yes, that’s Craig Barrett for you, the general who oversaw Intel’s transition from a simple vendor to a mammoth, having started his journey 35 long years back!

He completed his Ph.D. in Materials Science from Stanford University in 1964, and thence joined the University Department of Materials Science and Engineering, and served there for a good decade. Thereafter, he joined Intel Corp. as a manger in 1974. Ten years later, he was promoted to the position of Vice President of the Corporation and then to Senior Vice President in 1987 and Executive Vice President in 1990. Two years later, Barrett was elected to Intel Corporation’s Board of Directors and was named the company’s COO in 1993. That lead to him becoming Intel’s fourth President in 1997 and CEO in 1998. His final accomplishment at Intel came in 2005 when he was pronounced the Chairman of the Intel Board. So what does Barrett deserve credit for? Most experts and industrialists applaud his efforts for steering Intel clean and healthy through the ‘dot-com’ bust during the turn of the century. He was also responsible for restoring Intel’s manufacturing process, which included involved investments worth billions of dollars in new facilities, especially in emerging economies. Intel’s year-2006 ‘World Ahead Program’ launched in emerging economies called for a hefty investment of $1 billion. This initiative gave underprivileged people in emerging economies access to technology and education, and therefore proved Barrett’s strong belief in Creative Capitalism.


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

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Monday, December 3, 2012

Events that will shake up 2009

Dark humour has often been derided as the last refuge of the cynical hack. But look at the other side: it can also trigger a ghost of a bemused smile in these troubled and uncertain times. I plead guilty and provide you with my forecast of the major events that will define 2009.

l Ramalingam Raju will be given an award for corporate governance. After all, his company's name is 'Satyam'
l Mamta Banerjee will become the brand ambassador for the Nano. She will not charge anything and continue to wear crumpled sarees.
l Ratan Tata will launch a campaign called 'The Audacity of Hope' and Tata Motors will successfully take over Ford Motor Co. After a few months, they will approach Barack Obama for a bailout package.
l Kingfisher and Jet will merge to form a new entity and the chairman will be former Union Minister of Civil Aviation Praful Patel. Vijay Mallya will be in charge of air hostess' uniforms and cuisine.
l Mukesh and Anil Ambani will kiss and make up. They will put up a joint bid for the Union Finance Minister's portfolio in the new coalition government.
l Thanks to gifts from grateful subjects and devotees, Mayawati's assets will cross $3 billion by September 2009. Forbes will put her on the cover in a special issue on new Asian billionaires and tycoons.


l Bajaj Auto will change its ad campaign theme from ''Hamaara Bajaj'' to ''Bechara Bajaj'' with a special appeal to consumers to stop plummeting sales.
l George Bush will open a brand new petrol pump in Texas. Veterans of the Iraq war will get a free cowboy hat when they tank up.
l In the spring of 2009, terrorists will invade Brigade Road in Bangalore and massacre more than 300 Indians and foreigners. A. R. Antulay will call it a conspiracy by Hindutva forces. Secretary of State Hillary Clinton will fly down to Delhi and Islamabad and insist that Pakistan ''does something''.
l Real estate companies will sponsor the marriage and honeymoon of young couples who book their flats.
l Walmart will open in India and very soon, Sunil Bharti Mittal will be offering free Airtel connections to Indian shoppers who prefer to stay away from this abiding marvel of American capitalism.
l As the bulls go on a rampage again, the Sensex will accelerate past 25,000 points by October, 2009 and then Indian investors will suddenly wake up and realise that it was a pre-Diwali dream.


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

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Sunday, December 2, 2012

RUBBISH! we’re still the us sales leader

GM should file for bankruptcy -(JACK WELCH) RUBBISH! we’re still the us sales leader (RICK WAGONER)

Rick’s apology [read full text in the next section] was released exclusively in India to B&E on December 9, 2008, and is perhaps the first public acceptance about Rick’s and GM’s massive failures. This is a far cry from the confident Rick B&E had met last year, or the powerful Henderson [GM, Global President] whom we met a few weeks back. Evidently, for the first time, GM was ready to lower their highbrows and accept that the tried and trusted ‘legacy’ business strategy of GM had backfired like nobody’s business!

Unfortunately, Wagoner finds himself right at the top of the heap, getting clubbed by angry shareholders and disgusted critics during the most difficult times in the automotive behemoth’s 100-year history. But we should say, of his own (un)doing! “The only reason why the biggest tribes end is because they start dying from within...” This NatGeo epitaph could well have been superimposed on GM today! And even though Wagoner and his team are blaming “the volatile times,” they cannot but escape the blame of sidelining many ‘urgent and visible’ restructuring issues at hand that has brought the main troubles for the corporation. Today, just as he stands before the US Congress, requesting for a capital infusion of $18 billion, Wagoner – who took office in 2001 – is in the thick of a merciless sandstorm, and almost everybody’s baying for his blood! Well, almost... For strangely, we don’t want him out. In fact, we’d just love him to hang around and drop by the GM offices whenever he wishes. Umm, as we shallowly promised, here are the five reasons why we simply love Rick the Wagoner [did we get it right?]. Rick, these five are for you:


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

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Friday, November 30, 2012

Bring out the olive branches

Faced with political isolation, DMK is trying hard to woo PMK

Election time or not, Indian politicians must never forget basic arithmetic – addition and subtraction. And the octogenarian leader Karunanidhi is quite adept in this basic arithmetic? In a calculated move, Dravida Munnetra Kazhagam (DMK) has tried to woo the estranged Pattali Makkali Katchi (PMK) to its fold again. Union Minister for surface and transport, T. R. Balu met Ramadoss, Chief of PMK at his residence and conveyed his leader’s message of rapprochement. Ramadoss has now been invited for a face-to-face interaction with Karunanidhi. Meanwhile Murasoli Maran was continuing his tirade against PMK, unmindful of his boss’s efforts to enter into peace with PMK! Never a dull moment in Indian politics, we must say!

Things are tough for the ruling DMK nowadays. It fought the 2004 parliament elections as a comparatively much stronger unit in Tamil Nadu with Congress, PMK, CPI, CPM, MDMK on its side. Even smaller party functions were like mammoth rallies with all these parties at one side. But over the years, the alliance eroded. Now the only remaining partner is Congress whose members are peeved at not getting a share in the power even after repeated appeals to Karunanidhi to accommodate them in the ministry. Also they are upping the ante against DMK for its support to Lankan Tamils. In the assembly, DMK with 96 members is running a minority government with outside support from the Congress. So it has been forced to toe the centre’s line as far the situation in Lanka is concerned. With the general elections nearing, DMK’s voice in the UPA is not as powerful as it was earlier. Karunanidhi is plagued with problems. With Ramadoss not immediately ready to extend support, the political scene for DMK is volatile.


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

ZIMBABWE: POLITICAL CRISIS

Zimbabwe has failed to come out of chaos, thanks to its leaders

Currently some five million people in the country are in dire need of food aid and innumerable others need medical assistance. According to Zimbabwe Association of Doctors for Human Rights (ZADHR), "Water supply is irregular or completely absent in most urban areas, burst sewage pipes continue to be left unattended and there is a lack of refuse collection." Furthermore, the state water company has gone bankrupt so it is unable to pay suppliers and engineering firms, while infrastructure and government services including education too are in a sordid state of affairs.

Shortage of funds has compelled Zimbabwe's Parliament to adjourn until November 11, as it can't sustain further operations. At this time all eyes are on these two leaders, as only these two people can bail out the nation. Guess they are expecting stars to fall from heaven!
 

Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

‘Shock and Awe’ is still alive....

Low Intensity Conflict and the shift from mass destruction to precision-strikes are changing paradigms

The development of ICBMs necessitated the development of a deterrent to thwart the threat of incoming missiles and thus was the advent of the doctrine of minimum deterrent of which the development of an ABM or an Anti Ballistic Missile System was a critical part. During the development of the now rather famous Patriot ABM system, USA realised that it’s far more easier to develop a ballistic missile than to develop something which can destroy it before it hits the target.

The Patriot ABM was not so successful in the initial stages, especially during Gulf War I, when it could not even take down the otherwise obsolete Iraqi Scuds. Later on, the US started working on a more advanced version of Patriot system as part of a larger ABM programme known as Theatre Missile Defence System and the National Missile Defence System, with the former being aimed at protecting US from short range missiles while the latter includes in its paradigm protecting US from all kinds of missiles including the ICBMs. This system, which is known as Theatre High Altitude Defence System (THAAD), is yet to be operational. Today, probably every country among the top league is working on some or the other kind of ABM system. While the Russian S-300, S-400, S-500 and the Galosh, Gazelle series of ABM has been extremely successful, the Israeli Arrow ABM system, which works in tandem with the Green Pine Radars, have been successful too. Countries like India too have been working on endo-atmospheric and exo-atmospheric air defence systems. In fact, the very concept of ABM is an extension of the ambitious Star Wars programme initiated by the Reagan Administration in 1980s to protect USA from Soviet ballistic missiles. But the development of the ABM system did not mitigate the threat perceptions as it gave rise to the concept of Multiple Independent Re-entry Vehicles (MIRV), wherein an incoming ICBM would carry multiple warheads and before re-entering the atmosphere would disintegrate with each warhead going in a separate direction. The objective in this case was that even if some of the warheads would be destroyed by the incumbent’s ABM system, some others would still reach their designated destination. Thus, the doctrine of MAD continued with its prominence.


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

Corridors of uncertainty

It's the policies... obsolete, superfluous & unpractical policies

Just six months back, observers were ga ga about how EU would be able to withstand the global recessionary phase. But it only seemed to be a matter of time for some detractors. Unfortunately, they were to be vindicated. Come August and EU member countries are falling prey to the recessionary monster. Denmark has become the first EU country technically under recession and the gloom looms large over other 14. The Eurozone is in middle of stagflation and the US crisis is not the culprit. Oil and exchange rates are pulling down the economy and there is nothing that the EU policies can do.

Experts believe that the EU is faring worse than the US. While the current downturn is not expected to last for long, there are structural deficiencies within EU, which will continue to pull it down.


Source : IIPM Editorial, 2012.

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Sunday, November 25, 2012

Torque n’ Roll...

The middle-class customer never had it so good when it comes to four-wheeled toys... But will the two wheeler giants give up easy?!

“I wish I had a car for just a day like this,” Ramesh Pawar fretted and fumed while running for the bus stand shade in the torrential rains. Pawar like various middle-class Indians has an aspiration to own a car but like others, he too has an income which is just about enough to cover his basic needs. Even though he has saved enough to be soon able to own a bike, Pawar still longs for a car; at least for his family. The want to own a car has never been so strong in India, especially when only 8 people out of 1,000 own a car here! The most hyped car of the season, the ultra cheap Tata Nano is also trying to persuade millions of motorcyclists to upgrade to their first car. Many have already taken the bait and are anxiously waiting for the affordable car to hit the market!

Enticed by the prospects, now Renault-Nissan, Toyota and even scooter giant Bajaj are all set to unleash their own versions. It is said that the stagnant growth in primary markets like US, Europe and Japan has forced major manufacturers to look at colossal opportunities available in the emerging markets. Here, even though lower real income (but a high aspiration value) calls for small affordable hatchbacks (which carry lower margins), anticipation of huge volumes are forcing many to rethink their strategies. According to Roland Berger Strategy Consultants, the under $10,000 vehicle market is likely to touch 18 million cars by 2010. The study also indicates that about 1.6 million motorcyclists will upgrade to a car over the next five years.

Higher standards of living might run in favour of these carmakers, but the rising fuel prices and interest rates may spoil the party in the long run. Playing on a different tune, players like Hero Honda and TVS for instance are taking the tried and tested route instead of diversifying.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

EXPENSIVE SCHEMES: EXCHEQUER

The debate (!) has gone on ad nauseum. For the sake of the aye-sayers and naysayers, B&E gives a final spin

Samajwadi Party General Secretary, Amar Singh, expectably acerbic towards the ruling coalition, commented, “This is one country where subsidies are given to super-rich and that too clandestinely.” The pragmatic approach would have been to implement at least some of the recommendations made by the Radhakrishna Committee on Rural Indebtedness. Instead of waiving off the entire loan, rescheduling – as proposed by the Radhakrishna Committee – would have surely been a better option. Mridul Saggar, Chief Economist, Kotak Institutional Equities, commented to B&E, “Even supply side structural initiatives are required!” Required more than expensive schemes, we should add.

In a similar manner, if the recent government salary recommendation fructifies, government employees would see a substantial rise in their salaries and of course, the country will see a mammoth rise in its wage budget as well (Rs.431.2 billion). An Asian Development Bank research now shows that India pays to its government staff much more than what it can afford. Worse, it comments, “The higher relative government pay rates cost the country in terms of economic growth, while the higher employment share does not seem to have any economic growth impact.” Cutting words that might have made more sense to Ms. upper crest Veronica Lodge nestled in Riverdale; sadly, not to our politicians, our Uncle Scrooge politicians...


Source : IIPM Editorial, 2012.

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His country’s relationship with the world

From Gorbachev to Yeltsin to Putin, every new Russian president has drastically altered his country’s relationship with the world. How will President Dmitry Medvedev change it again? Here are the clues that reveal what the Kremlin is thinking, and, more importantly, what it really wants.

once a superpower...

Some look at Russia and see a wounded enemy readying itself for another round. They interpret Moscow’s new assertiveness as a simple overreaction to the humiliation of the 1990s. These realists are quick to blame NATO expansion and Western triumphalism after the Soviet collapse for the direction of Russia’s current foreign policy. What Moscow learned in its ‘decade of humiliation’ is that the West respects strength, not shared values. On the other hand, the liberals who shaped the West’s policies toward Russia in the 1990s are not in a self-critical mood. They tend to believe that Putin’s foreign policy is simply a new incarnation of Moscow’s traditional imperial policies. Plus, though they may concede that the West has lost some of its ability to shape Russian politics, they insist that the West can still focus on the rule of law – if not full democracy. In their view, Russia’s gains in the international arena are temporary and the Putin miracle is a mirage. In short, even the experts are far from unanimous in divining the motives of Russia’s recent turn.

It would be easy to assume Russia is simply grasping power for power’s sake, or to conclude that just as “there are no ex-KGB officers,” there are also no ex-imperial powers. But to understand why Kremlin acts the way it does, one must first recognise how haunted it is by uncertainty & paranoia. How Russia thinks is closely linked to how Russia’s political elites feel. Moscow’s current strategy is not merely a reflection of its new economic power or a geopolitical change. It is the expression of the traumatic experience of the collapse of the Soviet Union and the omnipresent political vulnerability of the current regime.


Source : IIPM Editorial, 2012.

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Tuesday, November 20, 2012

WEST BENGAL: EDUCATION

...Or rather, English is Greek to us!

India, being an English speaking country, has an enviable position in the world. Today more and more people are opting for English medium schools to educate their children. South India especially has a lead in this case where 60% of English-medium schools are located in the country.

If Partha De, Education Minister, West Bengal succeeds in the implementation of the policy in Bengal, it will prove a boon for the lower and middle income groups. Surely education receives only 2.5% of total budgetary allocation (the figure for developed nations being 6-7.5%) and moves like these are critical...


Source : IIPM Editorial, 2012.

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Mahathir’s closing gambit

While the former Malaysian Prime Minister has been out of power, he has support of the cadres

Malaysia could be in for weeks and months of political turmoil, instability and uncertainty about its future. For a long time, former Prime Minister Mahathir Mohamed has been criticising his successor Abdullah Ahmad Badawi. The war of words between the two has now resulted in a vertical split, with the 82-year-old Mahathri Mohamed quitting the ruling alliance United Malays National Organisation (UMNO). While resigning, Mohamed has levelled serious charges of incompetence, corruption and nepotism against Badawi. Analysts expect many members of UMNO to follow Mohamed and leave. This could jeopardise the future of UMNO that has been ruling Malaysia ever since the nation attained independence in 1957.

Mahathir has been waging a war of words against Abdullah for more than two years, repeatedly asking fellow party members to revolt against the alleged misrule of Badawi. It would now appear that Mahathir has finally burnt his boats with the political party which he ran with an iron fist for the 22 years that he served as Prime Minister of Malaysia. Of course, many senior leaders of UMNO think that the days of the 82-year-old leader calling the shots have gone. According to senior leader Ahmad Zahid Hamidi, the abrupt departure of Mohamed will hardly have any impact on the fortunes of the ruling alliance as he believes Mahathir Mohamed is a spent force who is acting petulantly because Badawi refuses to let Mohamed dictate terms.

Yet, Badawi and his associates will not find it easy to write off the ageing war horse. Mahathir Mohamed still enjoys the respect and admiration of many Malaysians who credit him for transforming the country from a poor, third world nation into a modern and prosperous economy. Many fondly recall the role played by the former Prime Minister during the East Asian financial crisis and melt down of 1997. Thanks to pragmatic steps taken by him, Malaysia and its citizens were the least affected by the crisis.


Source : IIPM Editorial, 2012.

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