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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