Friday, April 19, 2013

“I’m not going away anytime soon”

When 2007 began, Ford Motor Company was in one of the worst shapes amongst automakers. Then Alan Mulally walked in, conceptualised his ‘One-Ford’ strategy and even today, is working hard to implement his masterplan to earn maximum dollars in fast-growth markets. mulally in a conversation with B&E’s Pawan Chabra

After working at Boeing for over 26 years, Alan Roger Mulally took charge as the President and CEO of Ford Motor Company in September 2006. While he wasn’t the first choice for the top job at the auto major, under him the company managed a remarkable turnaround. Today, with less than two years left at the automaker, all eyes are on Mulally’s ‘One Ford’ strategy, and what more he can achieve with his plan in the days to come, especially in fast-growth markets. In an exclusive interview with B&E, Mulally shares his thoughts on the road ahead of Ford in India and his retirement & new launch plans.

B&E: You have unveiled the EcoSport in India, making it the second product to be launched in India under the ‘One Ford’ strategy. When can Indian consumers expect to buy it and what expectations do you have from the product?
Alan Mulally (AM): We chose India for the global premiere of the EcoSport, our compact SUV, because this market is very important for Ford Motor Company. We believe that it will become one of the three largest automobile markets across the globe by the end of this decade. The EcoSport will be sold in the Indian market during the later half of 2012 and it will also be exported to 30 different markets worldwide from India. To start with, it will be produced in India and Brazil. In total, the EcoSport will be sold in over 100 markets and it will be powered by the Ford’s revolutionary 1-litre ecoboost petrol engine. It will be available in both the petrol and diesel variants. We believe it will create a new segment in India as it has the flexibility of an SUV with the fuel efficiency that the modern consumer is looking for. Obviously, it marks the start of the implementation of our SUV plan for the Indian market.

B&E: The ‘One Ford’ strategy has been key to the turnaround tale of Ford Motor Company. Does the plan only help you cut costs by delivering economies of scale or is there much more to it?
AM: ‘One Ford’ is all about making one product for all the markets that we operate in. For instance, a Fiesta sold in Chennai will be made exactly the same way as the one that is sold in the US market. This strategy not only helps us gain economies of scale on the end of the suppliers, but also empowers us to bring more affordable products to the market. This is a very important strategy for Ford as the consumer today is looking for vehicles that are best in safety, quality and fuel efficiency at an affordable price. Roughly, today by using the One-Ford plan, what we have achieved is that over 60-80% of our global platforms are the same for producing vehicles across markets. As far as launches are concerned, under the One-Ford plan, we started with the Figo in 2010 and including the Figo and the EcoSport, we plan to launch eight new models in India by 2015.

B&E: The US auto market has almost recovered from what we saw during the days of recession, But EU is still a big concern. On the other hand, almost all automakers are bullish on the future of India and China. How will the coming years turn out for the auto industry?
AM: Europe is still a concern, but the governments there are making constant efforts to improve the situation. As a company, we expect the global automotive sales to increase by 5% a year at least for the next two years. The driver to this growth will be the Asia-Pacific region and mainly markets like India and China. At the end of 2010, close to 74 million vehicles were sold across the globe. It is expected that this number will go up to 100 million vehicles by the end of 2015. As far as India is concerned, it is one of the most important markets for Ford. The consumer is terrific. He is looking for value and fun to drive vehicles.


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

“There is a clear need for consolidation”

B&E: Indian telecommunications industry may start consolidating by the middle of 2012 after the much-awaited National Telecom Policy, 2011, is unveiled in January 2012. How will this help the industry going forward?

Ranjan Mathews (RM): There are currently 12 operators or more in most of the 22 circles in the country. This has led to a situation of hyper-competition, fierce pricing battles, plunging profit margins, spectrum scarcity and oversupply. In fact, this situation has arisen as a result of the induction of five new operators in 2008 (the context of much of the 2G Scam) by the Department of Telecommunications (DoT). Further, between 2001 and 2007, there were many mergers and acquisitions (M&As) as older operators either exited the business or acquired other operators to cobble together a pan-India footprint. Significant of these were Bharti, Idea, Vodafone and TATA. Major operators who exited the business were BPL, Max Hutchinson, AT&T, Telstra, etc. Most experts now agree the market is ripe for another round of M&As to prune the market to a more sustainable six operators. This conforms to what is seen in most other international markets where there are no more than 3-5 operators. This is seen as more than sufficient to provide adequate competition in the market place. Thus, the benefits that will accrue as a result of such consolidation are many. One, we will have a healthier industry with adequate financial resources to invest in the technology advances (advanced networks, applications, etc) which are needed to keep the Indian mobile communications industry at the forefront of global advances. Second, one can expect affordable services for the customers. Expanded employment opportunities, reduction in the digital divide, increased rural penetration, more efficient use of scare spectrum, increased availability of loans and equity funding for needed roll-out of telecommunications infrastructure are some of the other benefits that one can expect from consolidation. Further, it will have a positive cascading effect on GDP as it has been established that a 10% rise in broadband penetration leads to a 1.3% increase in GDP.

B&E: But don’t you think it’s too late, in terms of safeguarding the industry?

RM: The initial flaw was that DoT ignored TRAI’s recommendation to not issue licenses in 2008 without ensuring there was adequate spectrum available. Further, due to the ensuing litigation surrounding the grant of licences, M&A activity could not proceed until the court cases are resolved. Once this happens, the new M&A recommendations made by TRAI will certainly help in facilitating M&A activity. However, another significant factor that will impact M&A activity will be the availability of additional spectrum, spectrum pricing and licence renewal terms for older operators that will see their licences coming up for renewal commencing 2014.

B&E: New players like Loop Telecom, which have invested thousands of crores in buying the spectrum licences, are now requesting the government for an exit. What, according to you, went wrong?

RM: The fundamental problem was that there were too many players in each licensed area. Contrary to all international norms, the number of operators went to 12. This caused a brutal price war as the new operators fought for market share. However, this only caused a downward spiral for all operators causing a serious decline in profitability. The scarcity of spectrum for the new operators led to many regulatory complaints and litigation. Finally, the eruption of the 2G Scam caused both international and domestic funding to freeze. This caused a liquidity crisis for the new operators who could not raise the required funds for network roll out and market expansion. The litigation also put the license of many of the new operators at risk which further exacerbated their business viability.


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

With a presence in over 140 countries, the Fortune 500 Avon Products Inc., is the largest direct-selling company in the world. And India is considered a critical market by the company. Hemant Singh, MD, Avon India, explains to B&E’s Steven Philip Warner how Avon fanatically believes in reaching out to the masses with the right investments in R&D and how, the company for now, is all about ‘Organic’ growth.

For the first twenty-seven years of his career, Hemant Singh worked at HUL, PepsiCo and Modicare (he was the CEO of Modicare, when he left the company). 2009 saw him being welcome aboard the $10.86 billion-a-year revenue-earning (FY2010) company – Avon Products Ltd., as its Executive Director (Business Development) for the APAC region. Today, he serves as the MD of Avon India. In an exclusive interview with B&E, this man who runs the show at a company which prides itself for being “The Company for Women,” reveals some geographical market-specific trade secrets.

B&E: India as a market contributes to less than 5% of Avon’s global sales. How important really is India for the largest direct selling company in the world?
HS: There is a reason for it. The company was started 125 years ago. In India, the industry is only 15 years old. So first, there is the time gap. Secondly, given the pace at which we are growing, India is fast becoming a huge grosser for us. Our rate of growth in this market has been phenomenal. In 2009, Avon’s India revenues grew at 46%. In 2010, we grew 56%. And as we speak, this year already, the growth has been 55% y-o-y. And our plan for the next 5 years is that we should grow at a CAGR of 60%. I don’t think any company in our business in India can even talk about such figures. So yes, India is very important for Avon.

B&E: So would India be a market more important than China?
HS: No. India and China, from the point of view of the population and the rate of growth, are both right up there amongst the two most important markets in the APAC region.

B&E: Jewellery is something that you added much later in your portfolio, globally. Did that call for any change in approach to your sales strategy?
HS: Whether it be skincare or colours or jewelry, they all fall in the same superset called beauty products. So the introduction of the jewellery range did not influence our sales strategy really. As far as India is concerned, jewellery is naturally a huge opportunity. It is a $13 billion market. Of that $10 billion is real jewelry, and the rest is all about gold & silver-plated jewellery, which is what we do. At present, this fast growing segment contributes to 17% of our sales, while colours (& cosmetics) and skincare contribute to 40% and 15% respectively. So that gives a good perspective of how fast we have grown in the jewellery segment.

B&E: Let’s talk about outsourcing. You currently have close to 1000 products in your portfolio. There must be a huge chunk of that being obtained through outsourcing of the manufacturing function. Right?
HS: Most of our products are made in-house. But that does not mean that in every country where we are present, we have a factory. In India, we have a plant in Dehradun, which has a multi-product manufacturing capability with a limit up to 50 million units a year. But having said that, we do outsource as well. In fact, for many of our products, we have a global sourcing strategy in place.


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

 
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Saturday, April 13, 2013

Do you trust your health insurer?

Many still do not, due to the prevailing high claim rejection rates in the industry. For a greater benefit, it’s high time insurers wake up to the fact and overcome the shortcomings present in their own processes.

When a medical insurance policyholder (the insured) enters into a contract with an insurer, it is primarily with an anticipation that eventually when the moment of truth (settlement of claims) comes, s/he would not be constrained by any problem; at least, not regarding the medical bills. This, in simple terms, explains the very concept of Uberrimae fidei or utmost good faith – the guiding principle of the contracts in insurance. But does this really happen?

Well, consider the following cases. Laxmi Subramanyam (based out of Mumbai) had carcinoma of her left breast; she got treated. She and her husband took a Mediclaim policy with New India Assurance. The policy excluded carcinoma of left breast, because it was pre-existing. Later, she was diagnosed with carcinoma of the right breast, which was not a recurrence according to the doctors but a new case. Despite that, when Subramnyam submitted her claim of Rs.80,000 to the Third Party Administrator (TPA) of New India Assurance Co. Ltd. (Raksha TPA Private Ltd.), they rejected the claim on the grounds that this was not included in the policy. Finally, Subramanyam had to take the help of a consumer forum to contest the claim.

Reshma Trivedi (Ahmedabad) had taken a Mediclaim policy of United India Insurance Company (UIIC). She had undergone a hernia operation for the second time, for which she filed a claim of Rs.27,500. But the insurer rejected the claim reasoning that Reshma had undergone caesarean hysterectomy, due to which she suffered from hernia for the first time, and subsequently for the second time too. The hernia, for which she was operated, apparently was existing while she took the Mediclaim and she had not specified the information under the pre-existing clause. However, hearing Reshma’s petition, the Consumer Disputes Redressal Forum, Ahmedabad (Rural), contended that the occurrence of hernia had no relation with her caesarean hysterectomy. The forum ordered the company to pay her Rs.30,000 towards her policy with 9% compound interest from the date of the complaint till realisation and Rs.5,000 towards cost.

Interestingly, these names are real, and so are the cases mentioned. Such cases are not rare occurrences and happen by the hundreds. There is no doubt that India – where barely 5% of the population have some sort of medical insurance, and where 80% of all health expenditure is from personal sources – offers huge potential to the providers of health insurance and allows them to grow at a mind boggling rate of 21% per annum (from Rs.66.25 billion in 2008-09 to Rs.80 billion 2009-10 in terms of premium collected). But keeping pace with the growth, cases of claim rejection and repudiation are also increasing causing higher grievances. As the IRDA annual report for 2009-10 reveals, while there were 4,525 grievances reported in FY 2009-10 (both life and non-life), the number of cases witnessed in Q1 FY2010-11 was 1,600. And going by settlement of claims, the most important factor for customer satisfaction, well, it’s a despicable sorrow state of affairs. While the best, LIC, is pegged at 96.54%, the same for the best private player, HDFC Standard Life, is only 91.14%. The situation for insurers like Canara HSBC and Future Generali, is as pathetic as possible, with only 38.71% and 38.85% of claims being settled respectively.
 

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

Getting Back, Getting Even

From a Time when they were Playing for Survival Against MNCS, a select few Indian FMCG firms are Quickly Turning The Tables. Still, The Head-to-Head Score goes in Favour of MNCs

Even though some Indian FMCG players like Godrej and Dabur have a legacy of more than 100 years, yet they have traditionally been players with modest ambitions till the 1980s. But like other industries, the big churn came in post-liberalisation era. Over time, and especially post liberalisation, foreign players like Nestle, HUL, P&G and Reckitt Benckiser significantly grew in size and stature in the Indian market, and left the Indian firms behind by miles.

The domestic FMCG majors had to desperately play the survival game. Local companies like Dabur, Marico, Emami, Himalaya, Amul, understood that the market was changing and that they had to change with it. They shed their regional ambitions and started investing into distribution, packaging, product innovation & marketing. Players like Godrej went for a complete brand repositioning, and brought in a more professional management structure that emphasised on youth and looked to go global. But to what extent has their radical transformation helped Indian companies move up the steep learning curve that they largely stayed away from earlier? Are Indian firms taking the score back from the MNCs?

A Booz & Company and Confederation of Indian Industry (CII) report pegs the Indian FMCG industry at around Rs.1.3 trillion. The sector witnessed a CAGR of about 11% from 2001 to 2010. The last five years have shown a CAGR of approximately 17%. If the industry could continue to grow with a CAGR of 12-17%, it will become a Rs.4-6 trillion industry by 2020.

The real inflexion point for Indian players was 2001. According to the report, large Indian players grew sales by 12% from 2001-2005 and by 19% from 2006-2010. MNCs, in turn, saw sales growth of just around 2% in 2001-2005 before recovering to see growth of around 16% from 2006-2010. This has reflected in key market share gains as well. Godrej No. 1 is the leading soap brand in Northern India and third largest overall. Wipro’s Santoor holds sway in South India; ahead of the likes of Lux, Lifebuoy or Dove. ITC (well, if you were to consider it an ‘Indian’ company) is giving sleepless nights to HUL with innovations in personal care and food categories. The USP of Indian FMCGs – natural and herbal-based products – is attracting Indian customers, for whom ‘foreign’ ostensibly doesn’t carry the same attraction as before. In fact, differentiated products like Chyawanprash, Navaratna oil and Parachute have been immensely beneficial, as MNCs have consciously not invested in these products.

Consider the situation in personal care and home categories. According to Euromonitor International, Indian companies have been either holding steady or steadily gaining market share since 2005 in these segments. Even as Hindustan Unilever’s market share dropped marginally from 36.6% in 2005 to 33.3% in 2010 in the personal care segment, Dabur marginally upped its market share from 4.7% to 4.9%; while Godrej raising its share to 4.5% from 3.9%. ITC has doubled its market share to 1.4% in 2010 from 0.7% in 2008. But other international players have been gaining ground as well. Colgate-Palmolive’s market share rose from 6.4% in 2005 to 6.8% in 2010. P&G India’s share has also risen from 4.2% to around 5.4%. In these rapidly growing segments, MNCs have a clear edge over Indian players.
 

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

B&E This Fortnight

INTERNATIONAL
BUSINESS, ECONOMY & FINANCE
Rip steve jobs

The legendary co-founder and Chairman of technology giant Apple Inc. passed away on October 5, in what will probably be remembered as one of the saddest days in corporate history. Jobs resigned as the CEO of Apple on August 24, 2011. The iPhone 4S was launched just a day before he died. Jobs will perhaps be the only business leader whose management style will never be emulated by others. During the early 1980s, the media presented Jobs as a maverick hero. And then the fateful day came in 1985, when Steve Jobs was forced to step down from his own company. Fortune did a cover story “The fall of Steve Jobs”. Any ordinary mortal would have resigned to his fate but Jobs instead went to William Hewlett and David Packard (founders of HP and Jobs’ mentors) and apologised for ending up so badly. But he was quick to rebound and shake off the adversity. What caught his fancy was the the potential that he saw in the Graphical User Interface (GUI) developed by Xerox. Whether by inspiration or imitation, Jobs decided to build computers with a rich graphic interface. Despite revolutionising the technology consumption pattern of an entire generation, his role as a technologist is largely underrated due to his obsessive focus on design. The speech that he gave at a Stanford convocation in 2005 was viewed online a record 8 million times the day he died. Jobs has truly been one of the most inspiring business leaders of our age.

Two tech titans in a court battle
The war between Google and Oracle over copyright infringement will come up for trial before a district court in San Francisco. Oracle sued Google last year, claiming the Web search leader’s Android mobile operating technology infringes Oracle’s Java patents and for which it claimed as much as $2.6 billion in damages. Oracle acquired the Java programing language through its purchase of Sun Microsystems in 2010. District Judge William Alsup had earlier asked Oracle to reconsider its damages claim and had suggested an alternative sum of about $100 million. On its part Google had moved a motion before the judge seeking to resolve the copyright claims in its favor before trial, which was also denied. After the initial hearings in the court where both parties presented their cases, the trial is set to commence this month. Many would be watching to see how the court drama will play out.


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


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Thursday, April 4, 2013

“Bureaucracy is a huge Operational Hassle in India”

It was almost 12 years ago when Mark Wilson joined Siemens. And since then he has held various positions in finance and management within The Organisation. In 2002, he was appointed Managing Director of Fujitsu Siemens Computers in South Africa. In April 2007, he was made the Senior Vice President of the Middle East Africa and India Region. In an exclusive interview with B&E, Wilson throws light on the company’s growth trajectory.

B&E: What was it that motivated you to begin your career in the IT sector? Was the environment in South Africa conducive to this sector?
Mark Wilson (MW): It’s been more than 18 years since I took up the job, and as far as I can recollect the developments in information technology domain in South Africa motivated me to take up a job in this sector. It all began 20 years back when in college I was deciding on the right career path to tread on. The IT space then was at its budding stage and looked promising. Siemens, a technology innovator with a great track record had just set foot on the South African soil. I thought it was a good opportunity, knocked at the door and was lucky enough to bag a job with them that offered me a very good profile in the administrative department at one of their start-ups. So that’s where I started, and since then there has been no looking back. After my first promotion, I was made the management in-charge and was required to head the Service Division. Later, I was given a key position as the Financial Director at Siemens’ Service Division. My journey in this organisation has been a great learning experience.

B&E: As you venture into an alliance with Siemens Enterprise Communications (SEC) to offer integrated service in the IT and communication space, what leverage do you think customers in India will get from this association?
MW: Recognising the increasing convergence between telecommunications and IT, Fujitsu India is partnering with Siemens Enterprise Communications to ensure that our Indian customers can benefit from the best of German-Japanese IT platforms and communication capabilities. Together, we expect to redefine innovations and raise the bar in terms of customer offerings. We are certain that this relationship will broaden our scope, increase market share, and strengthen core areas of customer responsiveness.

B&E: What is the scope of these integrated communication services that you, along with SEC, are offering in India?
MW: In India, there is a growing market for unified communications. The services we offer are intelligent solutions to make life easy at the enterprise as well as personal level. For example, if you want to make a conference call and you are not sure of the ones available at that moment through online/voice/video/etc, the comprehensive software will determine who all are available and on what platform, thereby enabling a hassle free conference call experience. Similarly, if you are a celebrity and want to decide what calls you want to take and when, our IT-Communication integration service does that for you too.


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

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