The auto bloodbath

Going by how matters have been in the past year, there is little hope that India’s auto industry will grow beyond the single-digit mark in FY2013-14, even if macroeconomic indicators and economic sentiments improve substantially

This kind of brutal bloodbath was not witnessed even after the global financial meltdown of 2008 when it appeared as if Apocalypse and Armageddon had jointly invaded the global economy. From about 1.6 million domestic sales in 2007-08, passenger car sales fell marginally to about 1.55 million units in 2008-09. Not just that, the auto industry registered a spectacular turnaround almost immediately and kept growing at a very healthy pace. By 2011-12, passenger car sales had reached close to 2.68 million units. Something similar happened with sales of commercial vehicles that reflect even better the state of health of an economy. From about 490,000 units in 2007-08, sales crashed to about 384,000 units in 2008-09 in the aftermath of the global financial meltdown. But as with passenger cars, the recovery was swift and sure. By 2009-10, sales of commercial vehicles had recovered smartly to 532,000 units and crossed 800,000 units by 2011-12. The magic one million mark was looking very much within reach. And everybody was going ga ga over the brilliant prospects of the Indian auto industry. Some over optimistic souls even started predicting that the auto industry growth rates in India will keep outpacing that of China and that India could well emerge as one of the five largest auto markets in the world by 2020.

In 2010, the consultancy firm Ernst & Young conducted a study on behalf of Automotive Component Manufacturers Association of India. The E&Y study predicted that the Indian automobile market would clock the fastest growth rates between 2010 and 2020. Average annual growth rate for the Indian market between 2010 and 2020 was pegged at 14%. The average annual growth rate for the Chinese market was pegged at 8%; the forecast was 6% for other emerging markets and just about 4% for developed markets belonging to G-7 countries. According to the survey, domestic sales of cars and SUVs would jump to 5 million by 2015 and further double to 10 million by 2020.

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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

 

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

ExecutiveMBA

Who Says Modi Bhai and Rahul Baba are the only choices for Prime Minister?

Congress leaders were triumphant after results of the Gujarat assembly elections were announced. Senior leader P. Chidambaram said in virtually as many words that Congress had won because it had restricted Modi and BJP to barely 115 out of 182 seats. For Modi fans, the script was entirely different. His third successive election victory made him a strong contender to be the BJP candidate for Prime Minister. In Jaipur recently, nervous Congressmen heaved a sigh of relief and shed tears of joy when Rahul Baba finally agreed to lead the Congress in the 2014 Lok Sabha elections. Since then, we have seen an overdose of articles and columns comparing the two as potential prime ministers. If you go by excitable media reports, 2014 could well be an American Presidential style election where voters will have to choose between Modi Bhai and Rahul Baba.

But I most humbly disagree. If you look deep and hard, India has literally a wild variety of choices when it comes to who should be the Prime Minister. Come on, if Deve Gowda, the late I. K. Gujral and Manmohan Singh can become Prime Minister, surely almost anybody can. And I am not talking about the likes of Mulayam Singh Yadav, Nitish Kumar and Jayalalitha as strong contenders. In the true spirit of democracy, I cast my net wide and far and came up with a very rich catch of choices. Here is a not so comprehensive list of gifted, talented, visionary and messianic Indians who have superb qualifications to be the next Prime Minister of India:

Asaram Bapu: Who better than this fountain of Vedic Wisdom and champion of gender equality and female empowerment. I am not so sure about what his domestic and economic policy agenda would be. But I am absolutely convinced this great man will do a superb job of making all our borders safe and secure. You see, almost all his female devotees will be dispatched to our borders. Dancing to the tunes of devotional songs, they will all keep asking real and alleged enemies to treat them like sisters. The Pakistani soldiers will be so inspired that they will start beheading themselves. The Chinese would be so shell shocked that they would promptly give up all claims on Tibet. And there will commence a citizen movement in Bangladesh that will demand the return of all illegal migrants from India. Each cabinet meeting will be a Satsang where Asaram Babu will drop further pearls of wisdom.

Akbaruddin Owaisi: This mind blowing orator and contender for the Nobel Peace Prize will firmly have a simple domestic agenda. His first decision as Prime Minister will be to declare the birth anniversary of the last Nizam of Hyderabad as a national holiday. His second decision would be even more historic. He will decree that all police stations in India be shut down for 15 minutes once every week. That will enable the 25 crore Muslims of India to show the 100 crore Hindus of India who the real Boss is. Even as Hindus and Muslims indulge in a new national pastime and sport called This Week in Riots, the new age Nizam will go to London as a medical tourist. This will greatly improve relations between the former Imperial Power and the new Caliphate. Owaisi will also announce a weekly award worth Rs.100 million for a slogan writing contest where you will be encouraged to denigrate Hinduism. Hordes of media celebrities and secular activists and academicians will literally kill each other to become participants

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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

 

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

ExecutiveMBA

Productivity Unveiled – learning by doing

A look inside an auto plant reveals how learning by practically doing leads to higher productivity

For a period of 15 years beginning in the mid-1930s, the Horndal steelworks plant in central Sweden had been neglected. Except for minor repairs and replacement of broken equipment, no new investments were made to modernise the plant. Despite this apparent neglect, output per worker at the plant rose steadily at about 2% per year. Erik Lundberg, the Swedish economist who first observed the “Horndal effect” called it a case of “pure productivity.”

One oft-cited source of productivity is learning by doing, which is the ability of workers to raise productivity through experience. In fact, economists have credited the Horndal effect to learning by doing. The longer workers do the same type of job the better they get. The result is higher production without having to put in new machines or hire more workers.

Several studies have looked into the overall dynamics of the learning process - how fast productivity gains accrue, and whether knowledge acquired from experience can be forgotten over time and if it spills over to other areas of production. But partly because of lack of data, these studies reveal little about how learning occurs at a plant, making it seem as though productivity improvements from learning by doing arise spontaneously as production increases, without any scope for managers to affect outcomes.

To find out the specific mechanisms through which learning takes place, I along with Steven D. Levitt and John A. List, professors in the University of Chicago’s Department of Economics, analysed detailed production records from a major carmaker’s assembly plant. Beyond showing evidence of rapid learning by doing, our study, Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant, provides insights into how workers’ experiences at a plant can lead to greater productivity.

The study finds that the knowledge individual workers gained while working at the plant was quickly incorporated into the production process. Workers, together with plant managers, made adjustments to the assembly line based on what they learned, changes that benefited the next batch of workers and boosted overall productivity. It’s instructive as to how piecemeal, even mundane changes can add up to substantial improvements in the production process.

LOOKING UNDER THE HOOD

We measured productivity increases from learning by doing by looking at the assembly plant’s defect rates over the course of a year. The plant assembled three variants of a model built on a common midsize-car platform. The shared platform means the three variants had similar body frames and powertrains but required different parts and assembly procedures. Immediately before we started our study, large changes were made at the assembly plant. The platform had just undergone a major redesign that included both mechanical and aesthetic changes. The automaker also altered the assembly line’s physical layout, brought in new machines and equipment, and modified the production process to emphasize that teams, rather than individual workers, would carry responsibility for a particular task in the line.
 

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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

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

BBA Institute

DealBook: M&As this year

there has been a steady decline in the appetite of Cash stressed indian companies as well as their global counterparts for M&A deals in the last couple of years. Moreover big ticket M&As haven’t demonstrated expected synergies. Both, deal value and volumes have seen a tremendous downfall. B&E presents a snapshot of how the M&A landscape has panned out so far this year

M&A deals lose sheen

The number of M&A deals and the corresponding deal value for the first nine months of the year are on consistent decline. While in the year 2010 and 2011 deals valued at $42.5 billions and $37.6 billion respectively were completed in the first three quarters, the value fell sharply to $29.4 billion this year. On the other hand, number of deals have fallen sharply from 511 (9M 2010) to 438 for the corresponding period in 2012. The figures clearly indicate that M&As are loosing the sheen and have failed to deliver the promised value over the last few years. Further, with economic uncertainty looming large in and around India, the road ahead for such deals does not seem to be a smooth ride either. Unless organisations around the world demonstrate exceptional performance, the state of M&As is most likely to be dismal.

Cross border deals score well over domestic

82.56% of the M&A deals closed by India companies in the first 9 months of the year were across the border. This involved many big ticket deals like the $1.8 billion acquisition of RBS’ retail and commercial banking business by HSBC UK. Apart from this, Indian companies were also very active in looking out for small and medium acquisitions related to oil & gas and other natural resources. These acquisitions will eventually prove to be the backbone for the vertical integration of businesses and in the coming days, one can expect to see more such deals. On the other hand, foreign companies have also consistently engaged in buying out promising Indian companies. However, most domestic M&A deals have been undertaken to achieve operational and financial synergies between companies.

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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

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

BBA Institute

2 minutes of despair?

In the light of its harmful properties, the widespread use of maida in India must be banned at the earliest

It is almost impossible to find any eating joint in India that doesn’t use maida, which is the starchy white part of the wheat grain, as an ingredient in its kitchen. Maida is also been consumed directly or indirectly in Indian households. But the lesser known fact is that it is identified as a major source of diabetes & related diseases.

Maida causes blood sugar imbalance and has a negative effect on insulin. Besides, it contains anti-nutrients, which can affect the digestive process and make people more prone to heart and kidney diseases. Surprisingly, not many people know that maida is originally yellow in color and the hazardous benzoyl peroxide is added to turn it into white. This additive has already been banned in China and EU. But in India, maida – with benzoyl peroxide as an additive – is still one of the most highly consumed food products.

Today, maida constitutes a major chunk of the Rs.85 billion Indian bakery market, which is growing at 12-15% annually and is a cheap ingredient in breads and other eatables. Even popular FMCG companies use the ingredient. A case in point is the instant noodles category. Even though atta variant noodle categories are becoming prevalent, the consumer demand for the original maida noodles still persists. Not only do companies refrain from educating their consumers about maida’s ill effects, even the government strangely is ignorant. The government must urgently take steps to ban white maida and products that contain it.
 

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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

BBA Management Education

“No pharma company is in favour of price control”

Shakti Chakraborty, Group President India Region Formulations, Lupin Ltd, on why pharma companies are not in favour of pricing control on drugs

B&E: The National List of Essential Medicines includes the reference molecules only and not their “me too” versions that can be made by making minor tweaks. Does it make the list meaningful?
Shakti Chakraborty (SC): There is nothing like tweaking a molecule. So if you list Ibuprofen as a molecule under the NLEM then the molecule is covered. It doesn’t matter by which name it is sold in the market. Any new addition or subtraction to the formulation can be done by introducing a totally different molecule which may or may not be covered by the NLEM. By definition all the derivatives of a molecule are also covered under the list. For example, in Lupin’s case we have a molecule called doxophylline, which is quite different from theophylline (both are used for the treatment of respiratory diseases) Theophylline is listed under the NLEM but the department says that doxophylline is a derivative of theophylline and hence, is covered under the list.

B&E: The methodology to arrive at the price of a drug is by taking the weighted average of the prices of three top selling drugs in a particular category. What could be its implications on drug prices?
SC: As of now nothing has been finalized on the methodology. The health ministry is proposing to take the weighted average of the lowest three priced brands instead the highest three. If you ask me, no company would like to have this kind of control. For a top class company with good R&D effort, manufacturing facilities etc., you need to incur significant costs. By putting a price ceiling, there will be no incentive for a company to do R&D and bring out quality products. The lack of clear policy is also hurting the strategic planning of the companies. I feel that the market is smart enough to decide the price of a drug.

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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

B&E Infographics

Annual results: India inc.

India Inc. report card FY 2012

Events in the global arena kept india inc. in distress throughout the year. Gloomy macroeconomic conditions on the domestic front further added to their woes. though corporate India managed to save their topline during the past financial year, increased input costs played spoilsport for them as the bottomline shrank by over 8%, as suggested by the aggregate financials of 275 BSE 500 companies, which announced results by May 18, 2012.

Tough year on all fronts

Aggregate yoy revenue growth for BSE 500 companies (275 companies that announced their results by May 18) in FY 2012 remained at a healthy 23.9% with a marginal improvement over last year’s 23.03%. However, increased input costs have hit margins. Aggregate net profit after tax shrank by 8.79% for the above-mentioned period as compared to a superb growth of 24.39% in the previous year. With global markets still under pressure and the European epidemic getting worse by the day, the current fiscal, too, looks quite challenging and the key issue for India Inc. would be to keep their costs under check to safeguard their margins. Nevertheless, corporate India may soon get a breather from raw material costs as analysts expect commodity prices to settle down in the near future.

Banks post strong growth

The banking sector managed to achieve a 34.4% growth in revenues yoy, the highest among the sectors picked. Revenues for BSE IT companies increased by 25.58% yoy as compared to 19.73% recorded in the previous fiscal. However, a look at public sector companies shows a starkly contrasting picture. The aggregate revenues of all PSUs, which are part of the BSE PSU index, grew by 22.92% yoy in FY 2012 as compared to a growth of 25.87% in FY 2010-11. Both Banking and IT sectors surpassed the aggregate of Sensex constituents, which posted a revenue growth of 23.8% for the last fiscal. Going forward, considering the demand situation in India, analysts expect the situation with revenues to remain optimistic, but margins may continue to be stressed.

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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

International

facebook: ipo debacle

The sizzle and fizzle of the most hyped IPO

Apple’s co-founder Steve Wozniak had reportedly warned Mark Zuckerberg about the glitches he might face on taking Facebook public. But when the hottest and most awaited IPO finally made it to Nasdaq on Friday, May 18, the mood was ebullient. Facebook’s public debut seemed like the greatest coming-out party in Wall Street’s history. Nobody thought that the euphoria would come crashing down barely hours later. For all the frenzy and ecstasy that went into the making of the Facebook IPO, the stock’s performance on the bourse has been quite anticlimactic. In a portentous sign of all that could go wrong and take the whoop out of investors’ joy, the IPO’s execution of trade was delayed by nearly 30 minutes on the first day itself. And things have gone from bad to worse thereafter. The share price tanked by nearly 13.1% by day five of trading. Even earlier, by day three itself, it had become clear that the breathlessly hyped $16-billion IPO would face difficulty in living up to its giddy expectations. The fall in the stock’s value and the accompanying embarrassment turned decidedly disconcerting after news emerged that Morgan Stanley, the lead underwriter of the Facebook IPO, had played some hokey-pokey by not fully disclosing the company’s revenue forecast in the run-up to the IPO. As a result of these avoidable shenanigans, not only is the stock still trading well below its initial offering price of $38 over a week after listing, the company is also now having to contend with shareholder lawsuits and government investigations. The IPO, which was universally touted as the poster child of the business of social media, could well become the new whipping boy for more Wall Street reform. However, not all investors have lost hope. Many believe that the IPO can still take Facebook’s valuation to nearly $104 billion and churn out money in the long run. But the ranks of believers are fast diminishing.

Nokia: Troubled business

Can Nokia pull itself up again?

It has been more than two years now since Finnish handset maker Nokia began losing steam to players like Apple and Samsung. The company has lost nearly 23.8% in global handset market share. Nokia’s handset shipments stood at 82.7 million units in the 1st quarter of 2012 (down from 108.5 million units in Q1, 2011). Analysts fear that considering the rate at which Nokia is burning its cash reserves, it may not be able to ward off the risk of debt default. Just five years ago, Nokia had piled up a whopping $12.54 billion in cash reserves, but over the past five quarters, it has used up $2.7 billion to prop up its faltering business. And there could be another outgo of $2.51 billion in the next quarter. The company’s short-term bonds for 2014 have already been rated as junk by Standard & Poor’s and Fitch.

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

 

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

“Regulatory processes are complex & non-transparent”

Dr. Gopichand Katragadda, Managing Director, GE India Technology Center talks to B&E about how India can build a world class ecosystem for itself

B&E: What is your view on the ecosystem in India with respect to the R&D outcomes that GE seeks?
Gopichand Katragadda (GK): A research ecosystem was one of the critical considerations for GE to set up the John F. Welch Technology Center in Bangalore. A good intellectual property culture and law, the presence of several successful R&D establishments, and a good pipeline of talent are amongst the things working for India.

B&E: How does GE perceive R&D ecosystems from a strategic perspective, and what initiatives are you taking to from your end?
GK: GE has contributed to the Indian innovation ecosystem in multiple ways – interacting with academia through funded projects; funding students research through GE fund scholarships; awarding best Ph.D thesis with an environmental impact; funding innovative student run programs such as fuel-efficient cars; conducting and participating in thought leadership symposiums with topics in innovation and intellectual property; participation in policy development and advocacy. Our team members have written extensively, in books and journals, on innovation in the context of India. Over the past three years, the team has also focused on product delivery to the India market with specific focus on energy, healthcare & locomotives.

B&E: What sort of efforts and stakeholder collaborations are required to bring R&D in India at par with global standards?
GK: Focussing on a few areas might actually make this a century of Indian innovation.
• There needs to be greater collaboration between industries & universities. Today, there is enormous government support for research at some universities. However, it is now time for the government to mandate university-industry collaborations as a criteria to access some of these funds and then use strategic intellectual property as a metric of success on these projects. A good model to look at in this context is the Semiconductor Research Corporation (SRC). It was originally setup in 1981 in response to the US steadily losing integrated circuit market share to Japan. SRC’s charter was to provide a competitive edge to its member companies by sponsoring cutting edge university research. Over the past 24 years, SRC has channeled $854 million in cutting-edge semi-conductor research. Today, through the efforts of SRC & others, the market trend in the semiconductor industry is now in favour of the US.

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

 

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

Do ‘Megatrends’ mean ‘Megabucks’ for DuPont?

Post economic meltdown, Ellen Kullman, CEO – DuPont, has focused the company around innovation through science. The idea is to use DuPont’s formidable research capabilities to meet the needs of diverse growth markets. And that’s where the real challenge lies.

It’s not easy to manage a 210-year-old company – a company that is credited with having invented the modern business model. From an explosives maker to a chemical company, DuPont has reinvented itself twice since 1802 and is yet again in the process of doing it for the third time as it moves towards becoming what it calls “a science based discovery business”. But if one looks at the way employees are groomed at the Delaware-based innovation giant, it becomes clear how such a diverse conglomerate is stably managed.

Take the President, Chair and CEO – Ellen Kullman – for instance. Her ascent to the top has been quite unusual. As an amateur in the industry, Kullman joined GE where she got the chance of observing Jack Welch while working under the then GE Vice-Chairman Edward E. Hood Jr.. After selling CT Scanners for the US based multinational, Kullman moved on to DuPont in 1988. Within a decade, she was running the company’s titanium dioxide business. In fact, she became the first woman Vice President ever at DuPont, managing 6,000 employees and a business generating $2 billion. In August 1998, Kullamn was summoned by Chad Holliday (then CEO). He discussed the possibility of setting up a consulting business around DuPont’s safety practices and suggested that Kullman spearhead it. On the face of it, asking her to leave a key position and initiating something that was completely unrelated to DuPont’s core business areas was like saying, “We don’t need you here. In the meanwhile, try this new project till you get a real job.” After giving considerable thought (and despite her close associates advising her not to take the plunge), she accepted the offer and made the project a $6 million business. It is perhaps this sort of experience that made her an ideal candidate for the top job.

However, when Kullman became CEO in January 2009, the financial crisis had gobbled up growth prospects around the globe. In fact, the economic meltdown revealed that despite catering to a distinct set of customers, there were formidable cracks in the company’s business model. Net income for 2008 fell to $2 billion as against $2.98 billion in 2007. As the crisis unfolded, sales declined by more than 50% in some divisions. First quarter earnings per share in 2009 declined by 59% to $0.54 (compared to the same period last year) . From a high of $52.62 in July 2007, the stock fell to an all time low of $16.87 in March 2009. As a response, Kullman attempted one of the most radical restructuring initiatives in the company’s history. Through 2009, DuPont’s 23 business units were integrated into 13. The initiative resulted in a reduction of 2,500 jobs (primarily in the the motor vehicle and construction related businesses in Western Europe and US). By the end of the year, DuPont had achieved $1.1 billion in fixed cost productivity. Although it was a bitter experience, it gave management a chance to look at new opportunities. As Kullman puts it, “When we looked at the strategic level during the financial crisis we asked ourselves, where are we headed as a company?” One key observation was that the agriculture and nutrition business contributed $8.3 billion to revenues (amounting to 31% of total sales volume). Encouragingly, it was more or less insulated from the after effects of the financial crisis. As a result, DuPont decided to diversify from its key products – Kevlar fabrics (used to manufacture a wide array of blades) and titanium dioxide pigment – to heavily focus on the food and nutrition business by acquiring Danisco (a Danish producer of nutrition and health-related products and enzymes) for $6 billion. It also forayed into innovative markets like solar energy, enabling materials for electronic components, and enzymes that help turn crops, like switch grass, into energy. So what is it that is forcing a 210-year-old chemical giant to initiate such a big shift?

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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

Mindful leadership – When east meets west

In an exclusive B&E feature, Prof. William George, Professor of Management Practice at Harvard Business School, talks to sean silverthorne, editor-in-chief of hbs working knowledge, about how He looks to the East as a model for developing strong business leaders and how Leaders with low emotional intelligence (EQ), despite having a high IQ, often lack self-awareness and self-compassion, leading to a lack of self-regulation and loss of their very own jobs.

Prof. William George of Harvard Business School, an expert on leadership development, recently teamed with Tibetan Buddhist meditation master Yongey Mingyur Rinpoche to present a conference on “mindful leadership,” a secular process to explore the roles of self-awareness and self-compassion in developing strong and effective leaders. “To our knowledge, this is the first time that a Buddhist Rinpoche and a leadership professor have joined forces to explore this subject and see how Eastern teaching can inform our Western thinking about leadership and vice versa,” George says. For George, leaders who don’t develop self-awareness are subject to becoming seduced by external rewards, such as power, money, and recognition. They also have difficulty acknowledging mistakes, an Achilles’ heel that has crippled a number of CEOs who have appeared in the news recently. Excerpts from the interview:

Q: What is mindful leadership, and what are its benefits?
William George (WG): Mindfulness is a state of being fully present, aware of oneself and other people, and sensitive to one’s reactions to stressful situations. Leaders who are mindful tend to be more effective in understanding and relating to others, and motivating them toward shared goals. Hence, they become more effective in leadership roles.

Q: How does one become mindfully aware?
WG: I would not claim to be an expert in this area. Our Mindful Leadership seminar focused on the practice of meditation as one of those ways, with a variety of meditation techniques taught by Rinpoche. This was strictly a secular teaching, not a Buddhist one. In my experience I have observed that people become more mindful through prayer, introspective discussions, therapy, & the use of reflective techniques & exercises.

Q: You have said that few leaders lose their jobs because of lack of intelligence, but many do so because of lack of emotional intelligence. Can you talk about this a little more and cite a few examples?
WG: Leaders with low emotional intelligence (EQ) often lack self-awareness and self-compassion, which can lead to a lack of self-regulation. This also makes it very difficult for them to feel compassion and empathy for others. Thus, they struggle to establish sustainable, authentic relationships. Leaders who do not take time for introspection and reflection may be vulnerable to being seduced by external rewards, such as power, money, and recognition. Or they may feel a need to appear so perfect to others that they cannot admit vulnerabilities and acknowledge mistakes. Some of the recent difficulties of Hewlett-Packard, British Petroleum, CEOs of failed Wall Street firms, and dozens of leaders who failed in the post-Enron era are examples of this.

Q: The two essential aspects of effective leaders, you explain, are self-awareness and self-compassion. Could you please elaborate?
WG: An essential aspect of all effective leaders is authenticity; that is, being genuine and true to one’s beliefs, values, and principles that make up what we call someone’s True North. Authenticity is developed by becoming more self-aware and having compassion for oneself, without which it is very difficult to feel genuine compassion for others. Self-awareness starts with understanding one’s life story and the impact of one’s crucibles, and reflecting on how these contribute to motivations and behaviours. As people come to accept the less-favoured parts of themselves that they do not like or have rejected, as well as learning from failures and negative experiences, they gain compassion for themselves and authenticity in relating to the world around them.

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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

 

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

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%.

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

 

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
IIPM – FLP (Flexi Learning Program)

Direct Tax Code: A boon for IT Sleuths!

A Closer Look into The Provisions of The Proposed Direct Tax Code reveals India’s Digression from a Trust-Based system of Taxation to one which is Based more on The Element of distrust.

The existing Income Tax Act, which came into legislation in 1961, has often been criticised for being economically inefficient and incompatible with the current requirements and inequitable to all tax payers. Thus, to avoid this criticism and to replace archaic rules, the Ministry of Finance finally came out with the draft of Direct Tax Code (DTC) Bill in August 2009. But, the draft Bill, after being introduced in public domain, received a lot of criticisms on certain amendments in relation to removal of existing tax subsidies, and modifications in the tax rate structure that it sought to introduce. So, in June 2010, the ministry again issued a new revised DTC Bill and presented the draft to the Union Cabinet.

In what the government has claimed to be an attempt towards bringing path breaking changes to the existing tax regime in India, the DTC Bill, which is proposed to be implemented from April 1, 2012, will replace the five decade old legislation. In fact, in the foreword to the Tax Code, Union Finance Minister Pranab Mukherjee said that “the aim is to eliminate distortions in the tax structure, introduce moderate levels of taxation, expand the tax base, improve tax compliance, simplify the language and lower tax litigations.” Meanwhile, the Bill is being scrutinised by the Yashwant Sinha-led Parliamentary Standing Committee on Finance.

Personal income tax, as almost all salaried persons will agree, in our country is one of the highest in the world. More open and honest an employer is in terms of disclosing remunerations, worse it is for the employees because taxable income goes up. There is no denying that the present system is outdated and rewards dishonesty and non-disclosure of income by way of lower tax. The rationale for introducing DTC, government says, is to increase the efficiency and equity of the tax system by eliminating the plethora of tax exemptions or subsidies that create distortions. Its major policies include replacement of profit-linked exemptions with investment linked incentives, particularly for export units, and reduction in the tax rates to bring more people and companies under the tax net. Even the government wants a modern tax code in step with the needs of an economy, which is now amongst the largest in Asia. “In India, tax reforms have lagged behind growth. It is a big challenge for politicians and policymakers to keep the pace of reforms with growth,” Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration, said during a recent visit to New Delhi, adding, “Indian economy has transformed in the last two decades. Along with high growth, it has increasingly become the importer and exporter of capital. But tax regulations have largely remained the same. You have to change with the changing environment.” While the rationale behind the government’s proposals with respect to the DTC has been largely accepted as a right step in the right direction, a closer look into the provisions of the proposed tax code reveals India’s digression from a trust-based system of taxation to one which is based more on the element of distrust.

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

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
IIPM – FLP (Flexi Learning Program)

Do Outsider CEOs really Add Value?

Contemporary Evidence suggests that Outsiders may be likely to Excel and Outperform Insiders at Companies that are in crisis. But Historical and Empirical Research Suggests otherwise. Where does reality stand?

It was the spring of 1985, and the board of Apple Computer decided it no longer needed the services of one Steven P. Jobs. The main dramatis persona in the tech world’s biggest unfolding drama of a quarter-century ago was John Sculley, the Pepsi executive whom Apple’s board had brought in as CEO to oversee Jobs and grow the company — similar to Eric Schmidt’s role with Google founders Larry Page and Sergey Brin — in 1983.

Was Apple’s board right in bringing outsider Sculley to revive the waning fortunes of the company? The truth is that, depending on the company and its situation, it can be just as important to bring in outsiders as it is to develop homegrown talent. Around the time Sculley came on board, Apple was struggling with low Macintosh sales and there was a need to bring some order to the creative chaos Jobs had unleashed. Sculley got Jobs out of his hair two years after taking over Apple. In the course of undertaking his major reorganisation, Sculley fired 1,200 employees (20% of the total workforce) and put the broken parts of the company together to form one unified Apple and delivered its biggest growth, percentage wise, in its history prior to the return of Steve Jobs in 1997.

Like Apple, there are many global companies that are famous for promoting talent and grooming leaders from within but have all brought in outsiders when they needed to. According to analysts, the health, stability and competitive position of the company at the time of transition are the critical factors in determining whether an insider or an outsider is the best choice. Experts contend that insiders perform more consistently when their companies are in a healthy state at the time of appointment, whereas outsiders perform better when the company is in some form of crisis.

Ford CEO Alan Mulally, a longtime former Boeing executive, transformed an iconic American company that was on the brink of bankruptcy. Under Mulally, decision-making became more transparent, once-fractious divisions began working together, and cars of better quality started rolling faster from design studio to showroom. Mulally may be getting the rewards and accolades now, but who remembers what Ford was like in ’06, ‘07 and ‘08 when bold and difficult decisions were being made and people wondered if the aerospace executive could cut it in the automotive world. “Many doubted Mulally’s ability when he first came to Ford. There are doubters no more. He has proved to be an outstanding leader, and helped the company reach new heights,” said Michelle Krebs, an automotive expert and Senior Analyst for auto experts Edmunds.com. To get a sense of Mulally’s contribution to Ford’s turnaround, take a look at the increase in the value of the company from 2008 to 2011 as measured by its market capitalisation. During the period there has been over 1000% increase or an increase of $51.26 billion. A 1% share of that would be $512 million. The share price of the company has soared from a low of $1.26 on November 19, 2008, to $18.97 on January 13, 2011 and is currently trading around the $15 mark.

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

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
IIPM – FLP (Flexi Learning Program)

Towards More Globalised Highways

The Booming Indian CV market has been Seeing a slew of MNCs Lining up to be Among The Numbers. Can they do an Encore of The Script that played out in The Passenger Vehicle Segment?

Just months after the world saw the banking sector in developed countries in a hell bound state, slowdown blues made their way into the Indian market. However, much before the cautionary signals were made public, the commercial vehicle (CV) segment was already feeling the heat and the months ahead took the sector deeper into the woods. This gave credence to a well accepted viewpoint in the industry; that commercial vehicle sales are a barometer of economic activity.

The industry showed a decline in sales by 21.69% yoy for FY 2008-09 with the so-called highly profitable M&HCV segment dipping by 37.01% to record sales of 1.48 lakh units as compared to the 2.35 lakh units sold in FY 2007-08. While Ashok Leyland managed to sell only 47,632 vehicles in the same period with a decline of 37.34%, market leader Tata Motors also felt the heat and its sales declined by 22% to 2,33,843 units.

However, to the respite of CV makers and supporters of the ‘barometer’ analogy, the market took little time in taking a U-turn, as the economy stabilised and started moving back on the growth charts; well in time before the economy also made a strong rebound.

“There is a lot of scope in the CV segment and the projected healthy GDP growth rates also suggest the same,” says Rakesh Kalra, CEO, Mahindra Navistar. The recent budget highlighted the strong investment push needed to develop infrastructure in India and this would boost the demand for M&HCVs (16T & above) & LCVs (less than 3.5T). Domestic sales figures show a yoy growth of 34.18% for M&HCVs and 24.08% for LCVs for the period of April 2010-February 2011 as per SIAM. Three wheelers displayed a rise of 19.96% yoy for the same period. By all counts, such numbers do not hurt! In addition, taxes have not been increased on CVs in this year’s budget. It is not surprising, therefore, that a number of global players have made their entry recently, or are looking for a foothold in this space. Over time, MNCs have virtually dominated the passenger vehicles segment in India. Will they be able to do an encore in the CV segment?

When you look at the incumbents, it looks to be quite a daunting challenge, for the market is dominated by three large players. Tata Motors still holds the pole position with sales of 3,48,544 units and a growth of 22.36% during the April 2010-February 2011 period, followed by M&M that dispatched 92,768 vehicles towards Indian roads with a growth of 23.13%. So far, Tata Motors, M&M and Ashok Leyland account for more than 80% of the total market in India. When it comes to MNCs, the leading company is SML Isuzu (Swaraj Mazda’s alliance with Japanese player Isuzu) posted the best performance with sales of 10,444 followed by Piaggio with sales of 8,444 units. The Volvo-Eicher JV came next with 932 units, while Volvo Buses posted sales of 488 units.

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

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
IIPM – FLP (Flexi Learning Program)