PCMRD DR. VIKHE PATIL FOUNDATION’S PRAVARA CENTRE FOR MANAGEMENT RESEARCH & DEVELOPMENT Off Senapati Bapat Road (Permanently Affiliated to University of Pune, Recognized by Govt. of Maharashtra and Approved by AICTE, New Delhi) A compendium of Research Papers National Seminar on Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario February 09, 10 &11, 2010 Venue: YASHADA Auditorium, Raj Bhavan Complex, Baner Road, Near Sakal Nagar, Pune 411007 Keynote Speakers : : : : Marketing Strategies : HR Strategies : Padmashri Dr. Vijay Bhatkar Chairman ETH Ltd. Member ACM Fellow IEEE Fellow CSI, INAE, NASI Maharashtra Bhushan Padmashri Dr. A. S. Pillai - Distinguished Scientist and CCRD- DRDO, CEO & MD of Brahmos Aerospace Delhi Dr. Dinesh Paliwal - Member Secretary, AICTE New Delhi Prof. Y. K. Alagh - Chancellor Nagaland University & Former Member Planning Commission. Dr. Chandra Viswanathan - Sr. Vice President, Regenerative Medicine, Reliance Life Sciences Mr. Ashutosh. Khosla - Director Marketing & Sales Piaggio Vehicles Pvt. Ltd. Mr. Prashant Ahir - Head HR (CVBU) TATA Motors Ltd. National Seminar on Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario February 09, 10 &11, 2010 A compendium of Research Papers II National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario ABOUT THE INSTITUTE Set-up in 1984 under the aegis of Dr. Vikhe Patil Foundation and presently led by Dr. Ashok Patil, Pravara Centre for Management Research & Development (PCMRD) recently completed two decades of imparting management education par excellence. PCMRD is permanently affiliated to the Pune University and is also approved by theAICTE. PCMRD offers the MBAprogramme. As a testimony to its constant industry interface, PCMRD is one of the only two postgraduate institutions in Maharashtra chosen under the Young Indians Programme by the Confederation of Indian Industry (CII). Effective management requires decisions based on contextual analysis and insights. To stimulate the intellects and enhance intellectual capabilities, the case method of learning is extensively used. Case discussions are supplemented with lectures, seminars, games, role-plays, industrial visits and group exercises. This, coupled with a judicious mix of academic and extra- curricular activities has enabled PCMRD to consistently deliver well-groomed managers competent enough to fulfill the corporate demands. In constant pursuit of its vision to emerge as a leader in the field of value-centred management in India, PCMRD's mission is to impart quality education and conduct socially relevant research in the field of modern management while retaining traditional values. ISBN: 978-81-909897-0-1 Published by Prof. Sunil Kumar, Director, PCMRD, Pune on behalf of Dr. Vikhe Patil Foundation's, Pravara Centre for Management Research & Development, Near Patrakar nagar, Off Senapati Bapat Road, Pune 411016. Printed at Anupam Creations, 2/14, Marwa, 10/2A Kothrud, Pune 411029 and published at Dr. Vikhe Patil Foundation's, Pravara Centre for Management Research & Development, Near Patrakar Nagar, Off Senapati Bapat Road, Pune 411016. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario III OUR PATRONS Dr. Ashok Patil Chairman, Dr. Vikhe Patil Foundation Education plays a fundamental role in shaping up of individuals. As a rapidly growing Management Institute, we strive to harness the hidden potential through meeting the global needs of all our students . With this intention PCMRD is striving to achieve highest quality on the academic forefront and versatility in approach that will meet the ever increasing demand of students. We emphasise on creating an environment in which students get to explore and opportunities both in the area of academics and industry. National level Seminar organised on “Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario” is a reflection of the same. Prof Sunil Kumar Director, PCMRD To provide Knowledge, with an endeavour to empower the students to become assets and contribute meaningfully to the nation and Society, PCMRD has been setting high standards in the field of education and has emerged as a premier academic institute in the field of Management. At PCMRD we sincerely believe in taking education to new heights and take education beyond the four walls of the classroom and explore our untapped potential and get the best of students and thereby prepare them to tackle the corporate world. It is with this intention that we organised a National Seminar on “Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario”. The main objective of seminar was to analyse the current economic situation and identify potential opportunities & challenges. The main aim of the seminar was to get on a common platform the academia and Industry together and thereby initiate a discussion on the contemporary issues faced by the business and economy. I present before you this compendium, which is a rich compilation of Research work of various experts who graced the event. IV National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Glimpses of National Seminar National NationalSeminar Seminaron - Challenges Challenges&&Strategies Strategiesfor forthe theIndian IndianIndustry Industryininthe theEmerging Emerging Global GlobalEconomic EconomicScenario Scenario 3 V VI National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Resource Persons from Industry Dr A Sivanthanu Pillai Distinguished Scientist & Chief Controller, Research & Development, DRDO, Ministry of Defence, New Delhi. & Chief Executive Officer & Managing Director, Brahmos Aerospace, New Delhi He was born on 15 July 1947. He graduated in Electrical Engineering from University of Madras (1969), Advanced Management Development Program at Harvard Business School (1991) and obtained PhD from University of Pune (1996). Dr. Pillai joined Space Science & Te c h n o l o g y C e n t r e , Thiruvananthapuram in 1969 and worked in Systems Engineering of Launch Vehicles. He assisted Dr. Vikram Sarabhai in the evolution of 10-year space profile for the country. He was a core team member of SLV3 (the first Satellite Launch Vehicle of India) under the leadership of Dr. APJ Abdul Kalam. In SLV3, the contribution of Dr. Pillai was in the development of four stage rocket motors and rocket systems. SLV-3 first stage later became the booster of Agni missile. After the successful completion of SLV3, he was the member of the PSLV (Polar Satellite Launch Vehicle) study team in the evolution of PSLV mission and a senior scientist in Aerospace Dynamics & Design Group. Later, he became Technical Advisor to Prof Satish Dhawan, Chairman ISRO (Indian Space Research Organization) at its HQrs, Bangalore for Launch Vehicle Programmes. Dr. Pillai joined Defence Research & Development Organization (DRDO) in 1986 in the Integrated Guided Missile Development Programme (IGMDP) at Hyderabad under the leadership of Dr. APJ Abdul Kalam. He played a key role, introducing innovative management systems and made significant contributions for the development of Agni, Prithvi, Nag, Trishul & Akash Missiles, as Programme Director of IGMDP. He was also Associate Director, DRDL He was appointed as Chief Controller (Research & Development) at DRDO HQrs at New Delhi in 1996, responsible for missile technologies & projects, ranges naval systems and certain international collaborations. Dr. Pillai became Distinguished Scientist from September 1999. Padmashree Vijay Bhatkar Thinker and thought leader, researcher and innovator, scientist and philosopher, educator and educationist, author and articulator, policy architect and institution builder. Dr. Vijay Bhatkar is one of the i n t e r n a t i o n a l l y acknowledged scientists and IT leaders of India. Dataquest magazine has acclaimed Dr. Vijay Bhatkar amongst 25 pioneers who shaped India's celebrated IT industry (US$ 60 Billion in 1998) during the last 25 years. Dr. Vijay Bhatkar is best known as the architect of PARAM upercomputers and bringing IT to the masses through a wide range of path-breaking initiatives, such as GIST multilingual technology, MKCL's MS-CIT omputer literacy program and Education To Home (ETH) initiative. He is truly an institutional builder and is credited with the creation of several national institutions such as C-DAC, ER&DC,Techno Park, IITMK, I2IT, ETH Research Lab and Multiversity. He led the development of several innovation-based products and systems and in this process nurtured many creative minds, enterprises and start-ups including ETH, MKCL, Divinet, Dishnet, Multiversity, Know-IT and others. For advancing the concept ofintegrative education through the synthesis of science and spirituality for service of society, Dr. Bhatkar has founded a new generation university called Multiversity. Dr. Vijay Bhatkar is one of the most acclaimed and decorated scientists of India in terms of national and international awards, fellowships of professional societies and public recognitions including PADMASHRI & Maharashtra Bhushan Awards, the highest recognitions of Government of India and Government of Maharashtra, respectively. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Dr Chandra Viswanathan MD(Pathalogy), Ph.D(Applied Biology),DPB,DTM At real life sciences, she heads Regenerative Medicine initiative that includes the cord blood stem cell banking operations, and research on embryonal and adult stem cells. She has the responsibility of taking all stem cell products from bench to the bedside. Earlier, she was responsible for plasma fractionation project at the RLS, from R&D to production. Plasma products like Albumin, Immunoglobulin, Fibrin Sealants are still enjoying good popularity at Market place. Dr Chandra Viswanathan has been the director of transfusion medicine at the L.T.M Medical College and Hospital and Associate professor of pathology in the same institute for over 20 years. She was the director of the only blood plasma fractionation Facility at K.E.M hospital with additional charge as chief Coordinating officer of all Mumbai Municipal corporation based Bllod banks for over seven years. With an experience of almost 24 years, she has several publications in various Scientific journals Dr. Anil Lamba Dr Anil Lamba is a practising chartered accountant holding degrees in commerce and law and a doctorate in taxation. He is a prolific writer and has contributed close to a thousand articles to leading newspapers and magazines on topics ranging from finance to taxation, investments and company law. He is also the founder director VII of Lamcon School of Management, a renowned business school located at Pune, India. He has done pioneering work in distance education and is the author of a series of audio visual products (capable of delivery across diverse media), on finance management, titled “figure out the world of figures”. Dr Lamba is a trainer of international repute. He teaches extensively and his clients comprise several hundred large and medium sized corporations across different countries of the world Ashutosh Khosla (Director,Sales and Marketing, Piaagio) His strength is his focus. His values as firm as his Conviction that anything is possible. At 45,Ashutosh khosla Director, Sales and marketing, Piaggio with his 25 years of experience in sales and marketing dimensions of 2,3 and 4 wheeler segment believes in working on basics rigorously to achieve bigger targets. He joined piaggio four years ago as a 375 crore company. Today it stand apart as a Rs 2000 crore company with over 57 per cent market share in cargo vechile section. Born and brought up in chandigarh, khosla's early days in marketing and sales field began as Escorts.There has been no looking back as his rising career graph illustrates. A stint with hero motors when he worked on conceptualising and engineering Hero Puch Shakti, a move to Kinetic Engineering Limited where he launched the Nova, Zing among others, Later he moved to piaggio. As a leader he believes in empowering his people to make their own decisions. The key to success, he shares, is in setting long term and short term goals and ensuring that you stick to them."I never give myself a chance to say I forgot. Once you have your goals in front of you, you are bound to get passionate which makes your work easier”. VIII National Seminar on Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Schedule of National Seminar National Seminar on Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 1 Seminar Report PCMRD successfully conducted the 3 day National Seminar on “Challenges and Strategies for the Indian Industry in the th th th Emerging Global Economic Scenario on 09 , 10 and 11 February 2010 at Yashada, Ganeshkhind Road, Pune The Seminar consisted of many eminent personalities from the field of science, Finance, Marketing and HR Day 1 · The event kick started with the address by Padmashri Dr. A. S. Pillai - Distinguished Scientist and CCRDDRDO, CEO& MD of Brahmos Aerospace Delhi. · It was a rare opportunity for all of us to have Padmashri Dr A S Pillai who shared his valuable thoughts of how transformation of India happened through ages. · He spoke about the available natural resources, bio diversity and human resources as an asset. · He spoke about the available resources for Atomic Energy in India. · These are the ones who have found opportunities and incentives lying under the recession period and have utilized the same optimally · And In the end we concluded by a dance form as a depiction of PCMRD's strong belief in the creating and grooming the spirit of enterprise in every student of PCMRD Day 2 · To initiate this discussion today we kick started the session by analyzing the Business Opportunities and Challenges from a Marketing perspective by Mr. Ashutosh Khosla Director Marketing and Sales Piaggio Vehicles Pvt. Ltd. - an Industry Expert. · He spoke about various strategies that one needs to implement and factors that need to be considered to create a competitive edge like o PLC, o Media explosion, o Unique customer purchase experience, o Innovation, o Customization, o Innovation Our next speaker for the day was Dr. Chandra Viswanathan- Sr. Vice President, Regenerative medicine; Reliance Life Sciences who addressed us all on “Regenerative Medicine- the vanguard of 21st century”. Dr.Anil Lamba, Director Lamcon was our next speaker for the day. He emphasized on how low interest rates all over the world are now impacting our interest rates in India. Day3 It started with Hon'ble speaker Padmashree Mr. Vijay Bhatkar, Chairman ETH Ltd. wherein he stated that India is already on its way to becoming a Global leader The educational reforms that Mr. Kapil Sibal, the education minister has proposed are revolutionary and would enable us in creating many more knowledge based individuals. He also conceptualized the journey of India from Brain in the drain to Brain Drain, Brain Gain and Brain Chain. The last speaker for the day was Mr. Prashant Ahir - Head HR (CVBU) TATA Motors Ltd who spoke about the role of HR as a strategic business partner, he shared his personal experiences to illustrate how he could make a significant difference in his organization by reducing costs and making people more productive Paper presentations were followed by the research scholars post each speaker sessions. 2 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario From the Editor's Desk: Education nourishes an individual and gets the best out of him and makes him competent to face the dynamic world. At PCMRD, we strive to provide highest quality of education and set high standards for ourselves. The National Seminar on “Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario” was a part of this effort. I must mention our deep sense of appreciation for all the eminent speakers for giving an excellent coverage to the facts and figures of various sectors. As the Seminar was conducted at a National level we had Research papers coming in from all corners of the country and it was indeed a challenging task to select the best amongst them. I would like to extend my hearty thanks to Mr. Abhishek Bandodkar, who was instrumental in quick and successful compilation of this edition. I am very happy to inform you that the National Seminar was successfully concluded and we present to you this compendium of Research Papers presented by eminent experts from various fields during the National Seminar. Dr. Puja Bhardwaj National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Research Papers On “Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario” Edited by: Dr. Puja Bhardwaj 3 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 4 Contents Marketing 1. Convert India brands to global brands Prof. Shraddha Khoje, PES's Modern College of Engineering, Pune . . . . . . . . . . . . . . . . . . . . . 6 2. A study on globalization and its effect on consumer perception of newspapers Prof Vishwas Pendse IBMRD, Ahmednagar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3. Develop multiple applications of core products to extend product life cycle Dr. Shubhangi Walvekar, Prof. & HOD, Modern College of Engg, MBA Dept. . . . . . . . . . . . 15 4. Social media: (an opportunity for market promotion) Mrs. Zeenat Khan, Instructor, JBIMS, Mumbai & Mr. P. Manjreker Professor, D.Y. Patil Institute of Mgmt. Studies, C.B.D. Belapur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5. Challenges & strategies for the Indian industry in the emerging global economic scenario Manish Tayade, Student MBA II ((Production) , Vikhe Patil's IBMRD Ahmednagar. . . . . . . 23 6. Convert “Indian Brands” into “Global Brands Abhishek Bandodkar, Student PCMRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Prof. Sunil Kumar, Director, PCMRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 8. Challenges and strategies of IT industry in emerging economic scenario Ms Vishakha Bhide and Mr. Ranjan Kumar, IBMRD, Pune. . . . . . . . . . . . . . . . . . . . . . . . . . 35 Finance 9. Cost benefit analysis for long term investments w.r.t infrastructural projects Mr. Aniruddha Vilas Thuse, Lecturer , MKSSS's Smt.Hiraben Nanavati Institute of Management and Research for Women, Karvenagar, Pune . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10. Merger and acquisitions to exploit future opportunities Asstt. Prof. Vimala Ramsinghani and Asstt. Prof. Reena Joshi Vyas Institute of Management, Jodhpur (Rajasthan). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 11. MERGERS & ACQUISITIONS (M&A) A Tale of Indian Telecom Industry Prof. Khan M. A. Imran, Vice Principal,Dr. Rafiq Zakaria Campus, Millennium Institute of Management, Aurangabad & Dr. Syed Azharuddin Reader, Dept of Commerce Dr. Babasaheb Ambedkar Marathwada University, Aurangabad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 12. 5 Strategic cost management Dr. Kalyani Srinivas C., Modern College of Engineering, MBA Department, Pune . . . . . . . . 56 13. Strategic Compensation Management Dr. Puja Bhardwaj, Prof. Anagha Kalay and Jatin Joshi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Human Resource 14. Managing the top executives to face the challenges of the upturn Ms. Sakshi Satkar, Shinu Varghese, Leena Gaidhani, Mr. Vinod Malkar, Placement Officer, Pravara Institute of Research and Education in Natural and Social sciences (PIRENS), Institute of Business Management and Administration (IBMA), Loni(Bk), Tal: Rahata, Dist: Ahmednagar, Maharashtra. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 15. Managerial Challenges Under Globalized Industrial Economy Prof. Kalpana Chordia, Lecturer, PCMRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 16. “Positive Organizational Outcomes With Strategic HRM” Kalpana Chordiya and M. Swati . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 17. Talent acquisition: an unstoppable global trend Mr. Gaurav Khandelwal and Mr. Vikas S Gaundare, Lecturers, Department of Management Studies, SSVPS BSD College of Engineering, Dhule- Maharashtra . . . . . . . . . . . . . . . . . . . . 84 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 6 Convert Indian Brands into Global Brands Prof. Shraddha Khoje PES's Modern College of Engineering, Pune Introduction India is the fastest growing free market democracy in the world. India has the largest knowledge workforce in the world and with more and more people moving to the higher income strata, India is a market that the world cannot ignore. The opening up of the Indian economy has given a level playing field for foreign brands against Indian brands. Several multinational companies have begun to focus their attention on Indian markets. Global brands are threatening the existence of several Indian brands. These brands have strong presence in the minds of the customers globally and have performed consistently for a long time. The current brand strategy followed by business houses in India need a dramatic makeover. In this paper we will try and understand the minds of the Indian consumers and try to evolve a strategy that will closely resemble the Indian outlook. We think that the Indian companies need to fight hard by changing the rules of the game. It would be impossible to challenge the mighty global brands, which have made their way to India, through traditional advertising, market communication and branding. The Indian companies have to respond to these challenges with better strategies and by delivering the brand promise to the customers. The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. Therefore it makes sense to understand that branding is not about getting your target market to choose you over the competition, but it is about getting your prospects to see you as the only one that provides a solution to their problem. Branding can be rational or irrational. Customers buy brand not only for the intrinsic values associated with it but also because the brand has surprised them in the past with newer and more novel experiences. Branding is a promise made to the customer that will deliver values beyond expectation. Branding strategy hence should also involve continuously communicating to the customer of the novel experiences that he/she has had with the brand. The proposed brand strategy can be explained by the following framework: Experimental Marketing Experimental marketing gives customers an opportunity to engage and interact with brands, products, and services in sensory ways that provide the icing on the cake of providing information. Personal experiences help people connect to a brand and make intelligent and informed purchasing decisions. The term "Experiential marketing" refers to actual customer experiences with the brand/product/service that drive sales and increase brand image and awareness. It's the difference between telling people about features of a product or service and letting them experience the benefits for themselves. When done right, it's the most powerful tool out there to win brand loyalty. The customers demand experiences instead of products or services today. This creates a challenge to the organizations to find new ways to involve the customers in the value chain so that they themselves can decide the product features and uniqueness that they expect from the brand. For example, Eli Lilly, one of the largest pharmaceutical manufacturer, involved visitors on the website to solve the issues related to the new product development. Marketing is going through a paradigm shift. Today's customers are more focused than their predecessors and better informed due to a process accelerated by the internet. They want to know more about the details of the brand. They remove the shells and get into the core of the processes to understand the real value of the brand. They not only want to know the quality of the product but also the policies and practices of the organization. The ethics, production processes and quality are taken for granted by the customers. This demands transparency in the systems of the organizations and involving the customers in the process to deliver value. The Saffola health care initiative by Marico was one such experience delivered to the customers. The customers were allowed to come together and discuss the major issues while Marico hired cardiologists and other experts to brainstorm on the quality improvements in Saffola. The results were increase in sales substantially and definitely a better customer loyalty. The Saffola brand enjoys a price premium of 10% over other brands and large market share in the market today. Siddhivinayak Temple decided to offer services of e-Puja (Prayer) to the devotees on the website. Any one can visit the website and book the e-Puja (Prayer) and purchase the prashad (ceremonial sweet) online. This suggestion was implemented to take care of devotees who could not reach the temple because of physical disability. That's how a traditional organization decided to deliver value to the customers by involving them into the value chain of the business. Modern organizations have to learn to involve the customers in a similar way to create value together. This synergy will lead to better experiences for the customers and better customer loyalty and financial results for the businesses. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Effective Branding Many companies start from humble beginnings and grow organically without any solid plans for brand development. As these companies reach a certain point in their growth, they often come to realize that, in order to break through to the next level, they must proactively define their brand. Without taking this important step, these companies risk stagnating and failing to break through to higher brand awareness. The development of a solid brand begins with a discovery phase, in which the company reviews its strategic materials, conducts consumer research, and conducts manager interviews to collect information about what the company stands for and where it is headed. After the discovery phase, the company can move on to the brand definition phase. This entails a structured set of meetings held among a core team of senior managers from diverse functional areas. This Brand Team reviews the findings from the discovery phase, brainstorms elements of the new brand, and generates commitments throughout the company to abide by the Team's decisions. Here are the 5 dimensions of brand definition that are essential steps in building a successful brand: 1. Develop a vision for your brand: The vision for a brand consists of a broad statement of what the brand aspires to be. The vision should take a long-term perspective, in recognition of the fact that building a powerful brand does not happen in weeks or months. A solid brand vision defines the business in terms the customer can understand and relate to. It must be original, motivational and inspiring. And, the vision must get buy-in by senior management if it is to be successfully implemented. 2. Position your brand in order to differentiate yourself from competitors: Brands are multidimensional in that they usually carry with them a number of images and associations in the minds of the company and customers. However, all successful brands have a particular focus that differentiates it from those of competitors. A properly-positioned brand must transcend demographics and clearly identify likely prospects. The Brand team identifies prospects based on which needs and motivations the brand addresses. 3. Create a personality for your brand: Ultimately, your brand must be something with which people can identify. It has to have its own personality, its own character. Your brand will likely evolve over time, but its essential character should endure. 4. Articulate the benefits your brand delivers to customers: In time your brand must come to represent a set of functional benefits in the minds of your prospects and customers. Thus, during brand definition your team must clearly articulate the set of benefits - the value - that it represents to customers. It is important to note that strong brands also carry with them a set of emotional associations. The emotional benefits of a brand are often supported by the functional benefits, and they form the basis of the brand's positioning. 7 5. Define the values your brand represents: Finally, your brand must represent a particular set of values. This is because your target customer base is composed of human beings, and humans are value-motivated. If you successfully articulate the values your brand represents, you have a better chance of getting customers to associate the values of your brand with their own values. Value definition can create long-term bonds between your brand and your target customers. When your company decides it is ready to put the effort into developing its brand it should start by undertaking the processes of brand discovery and brand definition. Every brand definition process, in turn, should include developing a vision, determining effective positioning, creating a brand personality, articulating the benefits of the brand, and defining the values that your brand represents. Effective branding involves working on four important dimensions, The functional dimension concerns the perception of benefit of the product or service associated with the brand. The Social Dimension concerns the ability to create identification with the group. The Spiritual Dimension is the perception of global or local responsibility The Mental Dimension is the ability to support the individual mentally. Airtel The Functional Dimension-The role of the technology is to make thing easier for the consumers. Airtel has been very successful in simplifying the use of mobile services by modifying the technology to suit the common users. Even the simplest of the consumer can use the products and services. Airtel says, "Your world of communication just got simpler." The Social Dimension-Airtel is a recognized brand to be associated with. I satisfy my esteem and it gives me opportunity to be a part of the culture. It is associated with high level of social value. The Spiritual Dimension- "Building telecom, building relationships." It is important to be in touch with the relatives and dear ones but this is possible today through the mobile communication. Airtel encourages everyone to be more involved in building relationships and spread the happiness. The Mental Dimension-Airtel gives me the opportunity to "Express Myself." The message is very clear to be open and daring to express. The expression gives me a lot of pleasure and an opportunity to think that I am a separate individual and have the right to communicate and express myself. Novel Brand Strategies includes Customers Own the BrandIt should always be kept in mind that it is the consumers who own the brand. Take the example of Monsanto. Monsanto had the 8 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario resources and the competency to become a successful brand in Europe, but failed to recognize how strongly consumers felt about genetically modified organisms in the agricultural system. No amount of scientific data and evidence could dislodge this negative perception that people had against GM food. This clearly shows that the value perception of consumers sees little logic once established strongly in their minds. How can business learn from and incorporate spirituality? By understanding it and respecting it, we can create a better commercial world, because we'll be incorporating not just values, but values with true belief behind them. Product Service Challenges for Indian Organizations A sale is never the ending of a transaction but the beginning of a beautiful relationship. Lexus and Disney have become synonymous with loyal customer services. Some customers are treated with breakfast buffets, free lifetime car washes, etc. Lexus was the first company to provide the customer with a replacement car while his/her car was being serviced. These examples go to show that the customers don't like being sold a product but like being serviced. The delivery of the value and experience that we talked about depends upon the employees and the quality of the delivery of value by them .The management of the company has the responsibility to ensure that the brand becomes the culture of the organization. What customer service does is to create a positive effect on the minds of the customer and this positive influence on the mind of the consumer makes them more open to new ideas and reduces their skeptism towards the brand. A new product launch can leverage on the strength and success of the previous product and ensure that the trust that has been created with the customer is carried forward. The future success of a brand lies in the strategy of involving the existing customers and making them brand ambassadors. More specifically this involves making the customer believe that he is getting the best service in the industry. As Malcom Gladwell says, "The best form of marketing is not from the marketer to the consumer but the 21st century involves marketing from consumer to consumer." Buzz Marketing Branding increasingly nowadays is moving into Internet-based applications. Online blogs and forums have reinforced the concept of buzz marketing. The "Wow Factor" which was previously associated with the product is increasingly taken over by the advertisement campaign but engaging in this viral campaign strategy has its drawbacks. The case in point is fords viral campaign involving the sport car "Evil Twin Cat" in which the car's sun roof decapitates the cat that is featured in the ad. Though it cannot be debated that such a controversial ad has helped raise a lot of brand awareness but this kind of ad can have a negative branding effect in countries like India where animal are worshiped and hold religious significance. Hence it's very important to understand the culture and values that people associate with symbols in order to involve in the right buzz marketing. Religious Branding Religion is a way of life in India. Brand management has always exploited the emotional quotient of people and in India people treasure their religion and culture to a great extent. If religion has the power to bind people and unify them under one common ideal then an effective brand strategy must take into account this powerful force which plays on the minds of the Indian consumers. A brand that reveals authenticity, values and humanity's drive toward conscientiousness, offers a powerful strategic advantage in a country like India. This is a big change and challenge for the management as the employees are typically associated with the products and delivery of products in the organization. The attitude change to delivering experience will attract a lot of resistance among the employees. The role of human resources and all managers is to bring about this change smoothly so that the delivery to the customers can be ensured. The success of the brands and organizations will be determined by their ability to train the employees to ensure that the differentiation is created in the experience provided to the customers. The 20th century business scenario created the profession of "brand building". Branding helps in differentiation, creating loyal customer base, insulating a product from obsolescence and competition, helps command a premium in the market place, reinforces trust with customers and delivers value to customer and company alike. An exciting brand development in the contemporary business scene is the extension of Kingfisher a beverage brand to an exciting airline brand, from a 'product brand' to a 'service brand'. If the 'service airline brand Kingfisher' establishes firmly, the multiplier effect on the brand Kingfisher will be magical! The total brand value of Kingfisher will be literally flying high!! Today, the Indian pharma industry is a leading light in the global healthcare scenario. The Indian pharma industry is a well entrenched global manufacturer and marketer of APIs, formulations, herbal extracts and nutraceuticals. Moreover, medical tourism and health resort industry is lending wings to the image of India as a quality and value-for-money service oriented healthcare destination. Healthcare products and healthcare services together have over Rs 1 lakh crore business potential. The robust challenge and opportunity ahead is building global Indian brands - brands that dominate domestically and internationally. In fact, brands like Wockhardt and Himalaya juxtaposed in the 'healthcare service sector' and 'pharma manufacturing and marketing sector' have a solid opportunity to exponentially increase brand value, a-la-Kingfisher. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Acurious desi phenomenon Domestic pharma brand building has an odd challenge: The Indian Patents Act, 1970, which allowed reverse engineering has created a fragmented market with brand clutter. This has led to rising power of retailers and stockists. In at least one Southern Indian state (Kerala) NOC is not given to more than 25 brands of a molecule, by the stockists association. Decades of "me-too new introductions" has commoditized products and lent a character of "promotional differentiation" in the field of pharma marketing and sales. This has also led to a need for "brand variety" by a prescriber, who also zealously guards "prescription secrecy". The cumulative effect of the above scenario is a curious desi phenomenon - prescriber fatigue, an obstacle to brand building, evergreening of brands and product life cycle management. 9 petrol khatam hi nahin hota' (What should I do? The petrol never finishes). '2599' offer In 2004, MUL introduced the '2599' offer under which a consumer could buy an M-800 by paying an EMI of Rs 2,599 only, for a period of seven years. The down payment was fixed at Rs 40,000. MUL entered into an agreement with the State Bank of India (SBI), the largest bank in India, to promote this scheme. With market liberalisation, increasing consumerism and the entry of more foreign players, Indian markets are seeing revolutionary changes. The Indian consumer is rapidly evolving and is spoiled for choice by a host of international brands selling their products at competitive prices. Several factors are responsible for this curious 'desi' phenomenon including brand clutter, commoditization of products, heavy focus on 'new introductions' and new technological developments. India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm A T Kearney in its entity's Global Retail Development Index (GRDI) 2009. Prescriber fatigue is indeed a challenge to marketers involved in brand building and product life cycle management. Rural Market: The Next Big Opportunity Contrary to popular perception that liberalisation stifles the growth of domestic manufacturers, Indian auto components industry has evolved to compete with global companies. During this process of evolution, the industry produced some of the world-class component manufacturers like Sundaram Fasteners and Bharat Forge Ltd. Not just domestic manufacturers, even global giants like Delphi and Visteon have set up their manufacturing bases in India. But the industry had its own challenges in terms of meeting quality norms, sound logistics and the like. These problems were further coupled by the fewer number of tier1 suppliers. IndianAutomobile Industry-Maruti Udyog Limited MUL's M-800 was ideally suitable for Indian customers as it was reasonably priced, fuel efficient and was sleek and easy to drive when compared to the models then available. With the success of its M-800, MUL soon replaced Hindustan Motors as the leader in the passenger car market. Despite analysts predicting that the M-800, the bread and butter model of MUL, would be phased out, the company asserted that it would take necessary steps to maintain its leadership position. MUL had three compact car models -- Alto, WagonR, and Zen -competing with Hyundai Santro, Tata Indica, and Fiat Palio. 'Change Your Life' campaign In 2003, MUL launched novel offers like "Change Your Life" campaign and also offered vehicle insurance 'for Rupee One only', to attract customers. Television campaigns In 2003, MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message. The advertisement depicted a child playing with a toy car. When reprimanded by his father the child replies, 'Kya karoon papa Rural India makes up 40 per cent of India's US$ 280 billion retail market and offers alluring opportunities for retailers. The rural market offers great untapped potential. In 2008, the rural market grew at an impressive rate of 25 per cent compared to the 7-10 per cent growth rate of the urban consumer retail market. Further, according to international consultancy firm Celent, the rural market will grow to a potential of US$ 1.9 billion by 2015 from the current US$ 487 million. Today, the rural market accounts for a hefty share in most market segments 55 per cent of LIC policies, 70 per cent of toilet soaps, 50 per cent of television, fans, bicycles, tea and wrist watches. Also rural India is less affected by the global slowdown. Consequently, an increasing number of marketers are targeting it across fast moving consumer goods (FMCGs), cars, twowheelers and consumer durables. The US$ 18.58 billion FMCG industry is expected to register a 15 per cent growth in 2010 as compared to the previous year. Further, the industry is likely to witness a spate of acquisitions and mergers in the year 2010. Players like Wipro will continue to tap the rural market in the year 2010. Most FMCG companies are now working on increasing their distribution in smaller towns and focussing on marketing and operations program for semi-urban and rural markets. For instance, Godrej Consumer Products intends to increase revenue from rural areas from 38 per cent to 55 per cent in the next three years by increasing its distribution network substantially. The products will reach out to 50,000 villages in the next couple of years from the present 18,000 villages while the number of towns covered will double from 3,300 to almost 6,500 in a year. Similarly, GlaxoSmithKline Consumer Healthcare is not only launching smaller packs at lower prices but is also developing products at appropriate price points for rural consumers 10 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Brand Extensions sized product while also building brand image. In a bid to garner higher market share and sustain long-term growth, FMCG companies such as Coca-Cola, Nestle, PepsiCo, Dabur, Marico and Godrej have adopted a brand extension strategy amid negative factors such as high inflation and the global financial crisis. Conclusion Nestle launched a record number of variants in 2008 from its Maggi Cuppa Mania, Maggi Pichkoo to Maggi Bhuna Masala. Dabur too unveiled a pudina variant of its popular Hajmola brand apart from extending its Gulabari skin-care range. In terms of categories, brand extensions in personal-care, household-care and processed foods drove growth in the FMCG sector. Media and Communication Channels Word-of-mouth remains the most important influence in the buying decision of the Indian consumera fact confirmed by 85 per cent users who participated in a recent global Nielsen Internet survey. Among the top ten countries that attach maximum importance to the recommendation of the fellow consumer, India ranks fourth while Hong Kong tops the list. BRAND is a promise made to the consumers by the company. Brand, not only has Functional and Mental dimensions but also Social and Spiritual dimensions. The challenge in front of Indian organizations today is to first understand and then satisfy the needs of the customers. The needs of the customers today are experiences and not just the products. The Indian Organizations have to concentrate on delivering the experiences to the customers leading to satisfaction and association with all the dimensions of the brand. These experiences can be delivered by involving the customer in the supply chain which demands improvement from the organization in terms of training the employees and aligning the culture to deliver value to the customers. The participation of the customers can be ensured by using novel methods of communication and branding. The Profit and Sustainability of Indian Brands will depend on how efficiently and quickly the organization can adapt to these new demands of the customers. Packaging and Design References: Both packaging and design are increasingly being seen as potent marketing tools for product differentiation and communication with the consumer. Convenient packaging assures consumers of the product quality and helps boost sales. The recent Asian Paints campaign marks a new trend among advertisers, who are now looking to attract consumers with try-vertisingor mainstream advertising that encourages them to try the sample or smaller- 1. Website of Dabur India Ltd. 2. www.Maruti Udyog 3. www.pharmabiz.com 4. Marketing Management by Kotler and Koshi 5. Product and brand management by 6. www.eznierarticles.com National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 11 A Study on Globalization and its Effect on Consumer Perception of New spapers Prof Vishwas Pendse BE (Production), MBA (Marketing), IBMRD Ahemadnagar Abstract The Indian print media “industry” according Price Water House Coopers, recorded a growth of 16 percent in 2007 to reach an estimated Rs.13000 cores. Within print media, newspaper publishing constitutes more than 80 percent and this segment grew at 17 percent. Present study aims to investigate the factors influencing consumer purchase of newspaper and effect of globalization on these factors. However, globalization process is likely to take some time with the respective governments of various countries still protecting their domestic media industry. This is largely on account of the politically sensitive nature of this medium. With the liberalization process gathering momentum across the globe, time has now for the media owners not only to confront internal challenges and competition but also changing consumer behavior and new forms of media such as internet and mobile news etc. Study also investigates the strategies adopted by print media to cope up with this challenge. Introduction Globalization in its basic economic sense refers to the adoption of open and unfettered trading markets the current wave of globalization has been driven by the new set of factors, such as, deregulation of financial services, emergence of modern transportation and communication technologies. Psychological Impact of Globalization: According to Jeffrey Arnett (2002), there are four major issues related to identity, which develop due to globalization. The first is the development of a bicultural identity or perhaps a hybrid identity, which means that part of one's identity is rooted in the local culture while another part stems from an awareness of one's relation to the global world. Media such as television and especially the Internet, which allows for instant communication with any place in the world, play an important part in developing a global identity. Yet, along with this new global identity people continue to retain and develop their local identity for daily interactions with their family, friends and community. Television is arguably the most dominant gateway of globalization affecting India today. As for women, the impact of globalization has been interesting. On one hand, it has allowed women to become a larger part of the workforce, with opportunities for higher pay raising their self confidence and independence. Overview of India newspaper and media scenario & NRS 2006 : There are approximately 5,525 newspapers in India every major newspaper has an internet edition and you can read an India newspaper online. Each week, National Readership Survey (NRS) says, the print news media reaches 242 million readers. These enormous numbers, the survey suggests, represent a chain of growth, driven both by expanding literacy and improved living standards. Four important factors could be attributed for the growth trend of newspapers. First, the spread of television particularly news channels. This unwittingly created a base for newspapers. Second, the competition - between television channels for viewer ship and between newspapers for readership and, then, between new channels and newspapers. Third, economic and demographic aspects to do with literacy and lifestyles. Fourth, the wide gap in readership, between regions of the country and male-female, urban-rural, started declining although the differences are still glaring, constantly reminding the potential for growth. Broadly, NRS shows that newspaper and magazine readership have continued to grow in both urban and rural areas of the country. During the last 5 years, the percentage of adults who read a newspaper or magazine grew by four percentage points, from 45 to 49. The number of adults who read a daily overall grew by one percentage point from, reaching 42 per cent of all adults or some 260 million people. By contrast, eveningers, popular in urban centers, showed a decline in circulation. The largest publications in the country, true to the findings of earlier NRS surveys, are regional language publications, not their more high-profile English counterparts Literacy as measured in the NRS has risen from 69.9% to 71.1% over the last year. One would expect this to boost the market for the press medium. Satellite TV has grown considerably in reach from 207 million individuals watching in an average week in 2005 to as many as 230 million individuals in 2006 further expanding its lead over the number of readers. Radio reach has increased from 23% to 27% of the population listening to any station in the average week. Radio FM has driven this explosion in reach from 76 million individuals listening in an average week in 2005 to as many as 119 million individuals in 2006 a 55% increase The Internet as a medium seems to have paused on its growth trajectory As proportions, these represent 0.9% and 1.2% of India's 12 years plus population. However, urban India has shown faster growth in internet reach from 2.3% to 3.4%. 12 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Reach of Mobile phones. As measured by the proportion of the population accessing value-added-features (VAS) at least once a week has grown from 1.1% last year to 2.7% - 2. Most of the population consider content (72%) as deciding factor for purchase and hence need for media planers to concentrate on content planning If there is one overall conclusion, it is that the press medium must watch emerging media closely. Changing lifestyles and increasing disposable income levels has facilitated the increasing penetration levels of the media and entertainment industry. Recent estimates indicate that around 68.0% of total adult population has access to the conventional forms of media. 3. About 69% of respondent's donot find considerable difference in existing print media Major developments post globalization In the long term some of the major developments likely to have a deep impact on the global media and entertainment industry include, ·Shifting Preference for Internet-Based Content and the Emergence of Interactive TV Proliferation of Wireless Application Devices · Development of Sophisticated Telecommunication Technologies · Faster Globalization · Growing Popularity of Mega- Theaters, Super Stores Concept etc · High Degree of Consolidation in the Industry · Increasing Digitization in the Industry · Convergence of the Entertainment, Information and Telecommunication Segments and · Rapid De-regulation in the Industry Revolutionary changes in the information technology, communication and printing and the spiraling cost of various inputs for publications are important factors impacting the circulation, quality and financial viability of newspapers. To maintain their economic stability at the present level with expectation of growth at the reasonable rate, the newspapers have perforce to adopt the most modern technology in communication and printing, requiring huge investments Research Methodology The questionnaire used for this study is structured and non disguisable. It focused on capturing consumer perception of traditional media versus emerging media such as net and mobiles For this study the total number of respondents interviewed was 300. Out of which 100 belonged to age group above 30 and the rest below them. Majority of the respondents were students who belonged to the age group 20 and mid twenties. The respondents are expected to have an opinion as they must have been exposed to one or other form of emerging media. Along with primary data collection SWOT analysis was conducted with the help of secondary data and first hand observation. Data analysis 1. As already mentioned majority of respondents belong to the age group below 30. Also about 40% of the total sample size was women 4. 75% though consider newspaper a trustworthy source approximately equal number (67%) treats T.V and internet as primary source of information 5. Also interesting is the fact that most of respondents (57%) considered mobile news and 15% consider internet as a close substitute to newspaper SWOTANALYSIS New Threat Internet search leader Google on 31.8.2007 began hosting material produced by major world news agencies on its own web site instead of only sending readers to other destinations. The change affects hundreds of stories and photographsdistributed each day by AP, AFP. It could diminish internet traffic to other media sites where those stories and photos are also found a development that could reduce the online ad revenue of newspapers and broadcasters. With convergence of communication technologies giving birth to a host of new media services, it may soon become “Communication & Broadcasting” sector unconcern of content dimensions. The Increased interest in India as a potential market for foreign investors in media sector has also caused a realization within the country of the potential for growth of media and the opportunities there in. It is this optimism which is driving newspapers in India and has given a new impetus and confidence. With market surveys becoming a yardstick as never before, newspaper marketing, pricing, design, distribution and promotional schemes have become strategic variables. The coming of regional channels . The satellite television and software (content) industries are all set to witness a surge in demand in the coming years. Increasing emergence of regional channels is the major growth driver behind this likely growth. Furthermore, factors such as a decline in the pricing of color televisions, technological Advancements etc have resulted in a wider audience base. This has resulted in regional advertisers clamoring for a bit of the action yet, at the same time, newspapers were “exploiting to the full all the new opportunities provided by the digital distribution channels to increase their audiences”,he added. (The Times of India, New Delhi dated June 5, 2007) Credibility increased, but slipped as primary source A 2007 CMS survey on “sources of information” and their reliability has brought out that the overall credibility of newspapers has relatively gone up. This survey however indicated that television news has now surpassed newspapers as “primary source” as the “most relied first source” for political and sports news. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario STRATEGIES Per-copy readership Growth in readership and circulation of dailies did not keep parity. In fact, growth in Readership has declined in the case of leading dailies although their circulation increased, marginally or significantly. Spread of Publishing Centers Prior to proliferation of news channels, “district edition” approach in the earlier decade had given impressive results and triggered both growth and expansion of dailies. OPPORTUNITIES News channels have expanded market for dailies The States that witnessed growth of newspaper circulation and readership in the last couple of years are the same where television news channels have proliferated. For sure, it could be said that TV had no significant adverse impact as apprehended, on the levels of readership of daily newspapers in the country or their growth, particularly of the big ones. Competition triggered growth Newspaper competitiveness and growth in the last couple of years has been in those states or regions w here the scene was dominated mostly by a single daily -- with half or more of readership and circulation. It is these states or regions which witnessed emergence of new dailies or and catching up of older dailies FDI into media Since change in Government policy in 2002 on foreign direct 13 participation in newspapers allowing 26 percent FDI, the number of enquires from, and deals under negotiations with foreign investors was unprecedented Also, as the cap on foreign syndication in Indian newspapers has been increased from 7.5 to 20 percent of total editorial content, the extent of foreign content by way of supplements, etc Has significantly increased since 2005. And now there is also talk of Govt. allowing foreign news and current affairs magazines to be printed in India despite criticism of certain sections of the media itself and also political parties. More than a dozen closely held family run newspaper groups either has gone or are going public or are seeking foreign capital participation or raising private equity. A couple of them are exploring opportunities abroad by getting listed in New York or London stock exchanges. UndeterredAdvertising through newspapers Increased advertising outlays have been one of the key factors creating momentum in the growth of mass media which in turn is a result of over all growth of economy. It is this growth in advertising expenditure which will drive the growth of Newspapers. Advertising accounts more than 65 percent of revenue of newspapers and in fact even higher in the case of most English dailies. Prospects No state or corner of India could be said as saturated with newspapers. In fact, a simple analysis of “opportunities and challenges” for newspapers in India of a billion people reminds that it is miles to go. REACH OF MASS MEDIA WHERE IS THE GROWTH? 14 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario “Citizen Journalists” is a new concept being promoted by one or two news channels since 2007. Some big English dailies have experimented with the idea of “guest editor” by inviting a well known expert or celebrity. In the case of newspapers the space devoted for “Letters to Editor” and for reports on certain disadvantaged sections or regions had come down or replaced with SMS based opinion polls Business Models Despite no increase in cover price of daily newspapers, most of them have been expanding. Earlier managements were concerned about advertising revenue apart from readership and circulation, now they are also concerned about “market value” in the share market. About a dozen media houses are already listed in the stock market and as many are expanding by raising money from the public. In fact, some of the leading newspapers have started “private treaties division” to set up deals under which equity stakes could be picked up in companies in return for promoting them through long term advertising and publicity deals, including by way of editorial coverage. There are already instances of “no bad news” about companies involved in such deals. that process to the “national endeavors”. APPENDIXA Questionnaire 1. Name of Respondent 2.Address 3.Age 4. Occupation 5. Which factor do you consider as influencing your decision to purchase newspaper? 6. How would you rate newspaper as source of information as compared to other sources namely television? 7. What would you like to see at the front page of your newspaper? 8. How would you rate credibility of newspaper compared to other sources namely TV? 9. What is prime purpose of your newspaper purchase? 10. Which one of the following would you consider as the nearest substitute for your newspaper? Conclusion 11 Do you have access to any media? While the continued growth of newspapers in the immediate years is not in doubt, to what extent the momentum will be kept up after 2012 depends on several factors external and internal and initiatives taken now. The internal factors are far more critical. These include, first and foremost is the “Content package” and how distinct the newspapers are going to be from one another and in contrast to the model of news channels, the second is how well newspapers integrate and adopt online media. 12 Do product promotions induce you to purchase products advertised? 1. National Readership Studies Council Press Release The third factor is to do with priorities of newspapers in their reach and targeting. The fourth one includes marketing strategies as to cover price, delivery efficiencies, competitive collaborative, initiatives and innovations in the very promotion of news media. 2. http://www.researchandmarkets.com/reports/4022/ 3. Press Council of India Annual Report (April 1, 2007 - March 31, 2008) 4. Measurement of Globalization and Its Variations Among Countries, Regions and Over Time Amit K. Bhandari and Almas Heshmati 5. State of Newspaper Scene 2007 Submitted to Press Council of India New Delhi 6. Research Methodology, Kothari 7. Indian Newspaper society 8. World association of newspapers-Annual reports extract The external factors are to do with economy which in turn determines the flow of advertising outlays, political uncertainties and of course Govt. policies particularly with regard to globalization, foreign investments, etc. In the meanwhile projections of foreign/global consulting firms continue to offer optimistic scenario for the next couple of years. These estimates are motivated more to prompt and facilitate investments, synergies, mergers, acquisitions, and collaborations. Nevertheless they should help further the interests of news media in maximizing reach potential notwithstanding implications in 13. Do you find considerable difference in existing newspapers? REFERENCESAND BIBLOGRAPHY National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 15 Develop Multiple Applications of Core Products to Extend Product Life Cycle Dr. Shubhangi Walvekar Prof. & HOD, Modern College Of Engg, MBA Dept,Pune The current competitive marketing environment during the new millennium is forcing managers to understand the needs of modern consumers and re-evaluate the changing opportunities and threats in an evolving global marketing place. The concept of Product Life Cycle (PLC), since its inception in the early 1950s, gained significant recognition as a tool for effective marketing strategy in understanding the behaviour of product on sales, profits, 4P's of marketing and consumer approval. The Products usually go through the following Life Cycle Stages: According to Theodore Levitt, Product Life Cycle should be seen as trend of sales over time that suggests different opportunities at different phases of a product's existence. He further states that planning for extension should begin at the prelaunch itself which generates proactive product policy; it lays out long term plan to infuse new life into the product at the right time with the required degree of care and efforts. The goal of marketer should be to alter the shape and duration of life cycle by implementing creative marketing strategies These are ways that sales may be given a boost. Some possible ways businesses might extend the life cycle of their product are as follows: Introduce new variations of the original product, e.g. a children's version , use a new advertising campaign, sell into new markets, e.g. export the product to another country, introduce a new, improved version of the product, sell through additional, different retail outlets, modify the 'augmented product'. Services can be added where none existed before adding free set-up and delivery are good examples. Market introduction stage: Costs are high, slow sales, volumes to start, little or no competition - competitive manufacturers watch for acceptance/segment growth /losses, demand has to be created, customers have to be prompted to try the product, makes no money at this stage. Growth stage: Costs reduced due to economies of scale, sales volume increases significantly, profitability begins to rise, public awareness increases, competition begins to increase with a few, new players in establishing market, and increased competition leads to price decreases. Mature stage: Costs are lowered as a result of production volumes increasing and experience curve effects, sales volume peaks and market saturation is reached, increase in competitors entering the market, prices tend to drop due to the proliferation of competing products, brand differentiation and feature diversification is emphasized to maintain or increase market share, Industrial profits go down. Saturation and decline stage: costs become counter-optimal, sales volume decline or stabilize prices, profitability diminishes and profit becomes more a challenge of production/distribution efficiency, than increased sales. Repositioning: When products reach maturity they are well known, however, as competing products enter the market; mature products can begin to look old and tired. Action must then be taken to refresh the product's image. Repositioning can create new appeal for existing consumers or attract new consumers. Repositioning strategies need to be used to respond to changes in consumer tastes or market conditions, or a change in competitor strategy. The extent of the repositioning will depend on the level of change in tastes, lifestyles and technologies, and also on how well competitors are doing. 'Promoting more frequent usage of the product among existing customers.' This concept could be explained with the help of several examples: Proactive strategies like relationship management should be practiced and creative strategies to reward the existing loyal customers need to be implemented. The hard core and soft core loyal customers should be provided incentives for their loyalty. Reliance retail stores as well as Tata's Westside, Airlines (Frequent Fliers Program) offer loyalty programs by awarding certain points on every transaction. Most of the FMCG products are available in small sachet packs to cater to the needs of the segment at bottom of the pyramid, both in urban and rural area. Tissue papers, both dry and wet are now available in small packs to be used anytime, anywhere. Tooth paste marketers emphasize the use of toothpaste after 16 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario every meal. Kissan jam's latest advertising campaign is targeted at kids, to eat the jam by mixing it with dalia, “Turn it into mix fruit delight and than watch it disappear”. Initially ponds had only two basic products i.e. Vanishing and Cold Cream, however understanding the competition in skin care category it introduced an array of products like: Ponds Age Miracle, Ponds Flawless White, Daily Cream, Daily Lotion, Facial Foam, Foundation Powder, Lightening Mask, Under Eye Cream, All day Oil Control Cream, Ponds Daily Face Wash thereby successfully pushing its brand for every possible skin care products. The 'DuPoint' has been adept at sustaining mature products such as Teflon and Lycra fiber. Lycra is a fiber invented by Dupoint in 1959. Since then the company is successful in generating continuous interest by developing improved versions of it. The product is now used in a variety of clothing, ranging from hosiery to women's and men's fashion to cycling shorts. After establishing Maggi Noodles as an instant staple meal for kids it has also introduced several other allied food products under the Maggi Flagship brand. Recently Nestlé has moved fast to plug any flank that could be attacked by rivals. It first launched Maggi rice noodles targeted at consumers in the east and south, where rice for the staple meal. Next, it came out with instant noodles in a cup which is ready to eat after pouring some hot water in it. This was meant for consumption on the go, including offices. It was a product for the urban markets. The volumes might be low but it has a wide lead over any company which might target these categories. Now the present positioning of Nestlé's instant noodles is to be consumed right through the day by all members of the family, young and old. Some Maggi ads clearly show that it is targeted at all family members. In order to promote frequent use of their products, companies are also resorting to indirect marketing through providing different variety of receipes on the packages as well as supplying recipe books on demand. Some of these companies can be identified as Nestle - sweetened condensed milk, Amul - Milkmaid or Mithaimate for making a variety of dessert preparations at home. Monaco - biscuits with different toppings' as snacks food. For developing more users or varied usage of the products among current users, shampoo marketers are introducing a lighter version for daily use and also emphasizing use twice rather than using once at each wash. Organizations introduce new uses for the product by expanding the market. Burnol anti septic ointment is now promoted as not only to be used for burns but as an anti septic for all occasions. Extension strategy: Businesses can develop the life of their product further if they use "extension strategies". For example, Kit Kat has developed the life of their product by offering chunky Kit Kats, Kit Kat ice cream, white chocolate Kit Kats and so on. The result is that the Kit Kat brand appeals to a much wider consumer group and existing consumers are buying more Kit Kat branded snack foods. Cadbury Dairy Milk has been the market leader in the chocolate category for years, holding 30% value share of the Indian chocolate market. In the early 90's, chocolates were seen as 'meant for kids', usually. In the Mid 90's the category was redefined by shifting the focus from `just for kids' to the `kid in all of us'. More recently, the 'Kuch Meetha Ho Jaaye' campaign associated Cadbury Dairy Milk with celebratory occasions and today is used extensively to express joy in a moment of achievement / success. Consistent in Lifebuoy's 110 plus year history has been its championing of health through hygiene. To promote understanding of the importance of hand washing, Lifebuoy launched the first ever Global Hand washing Day in 2008, To date, 70 million people in rural India along have experienced the pioneering, Lifebuoy sponsored Health Education program the single largest private hygiene education program in the world. Lifebuoy has become more than just a red bar of soap today the brand provides hygiene and health solutions for families, including a range of bar soaps, hand wash liquids and liquid shower gels. One of the most recent Lifebuoy innovation addresses the number one skin hygiene and health concern for teens: oily and acne prone skin. Lifebuoy Clear Skin is a bar soap formulated using radical new technology that is clinically proven to reduce even severe acne, by 70% in 6 weeks. Regular use, twice a day is proven to prevent and reduce the recurrence of acne. The computer itself is a good example how a product can be used for multiple applications. The origin of computer is from a calculating machine which was supposed to do simple calculations. However the whole world knows today the applications which a Personal Computer can do. Another case is an internet. It was developed by us army as secret messaging system which has now become public. The origins of the Internet reach back to the 1960s when the United States funded research projects of its military agencies to build robust, fault-tolerant and distributed computer networks. This research and a period of civilian funding of a new U.S. backbone by the National Science Foundation spawned worldwide participation in the development of new networking technologies and led to the commercialization of an international network in the mid 1990s, and resulted in the following popularization of countless applications in virtually every aspect of modern human life. As of 2009, an estimated quarter of Earth's population uses the services of the Internet. Today the Internet has become part of our life which was once upon a time a military based application. There are several machines which were created keeping specific functions in mind and have become universal as far as applications are concerned. One another example would be a photocopier. The concept was to make photo copy of the National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario document but the technology has changed the face of the product. Today we can not only replicate the copy but also scan and email the same, send fax (originally Facsimile) and what not. XEROX machine from RANK has become a generic name for photocopies and has introduced a number of additional features with support of technology. Maruti Udoyg caters to all segments and has a product offering at all price points. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. Their pricing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India. Here is how every price point is covered. Amazon.com to promote their books, magazines etc. has extended the facility of convenience in reading any time/ any where by introducing Original Wireless Reading Device Kindle e-book reader, utilizing the same 3G wireless technology as advanced cell phones; it wirelessly downloads books magazines etc. Several other strategies could be enumerated: Up selling is the practice where you offer an additional product to the customer on top of what they have already purchased from you. Here some of the examples: This works well in fast food restaurants, but also works great with membership sites when you offer them 6 or 12 months at a discount. If you have an online business, before the prospect leaves your site, provide an extra complimentary item for an inexpensive price. You can offer your online customer an item that compliments what they have already signed up for, such as a free membership site where the up sell gives them more features. The practice of deliberately designing products to require replacement after a specified length of time is the objective of forcing higher sales of the product. For example, machines might be designed with synthetic gears and cams which wear out in a matter of years, rather than metal ones, which generally last decades. Singer sewing machines, and Dodge transmissions are cases in point. Often, a high quality product will contain a single cheap and cheesy part which, once broken, is more expensive to replace than the newer version of the entire product. Also, the practice of genetically designing seeds for agricultural crops so that the resulting plants in turn produce seeds which do not inherit or maintain all of the desirable qualities in the original seed. Rather than reserving a portion of the crop for the next year's planting, the farmer must purchase new seed from the supplier. Also, the practice of re-designing perfectly satisfactory products so that they have different superficial features, prompts the consumer to discard serviceable products in favor of newer ones. Typically, the new features are driven by fashion and marketing design, rather than by true functional requirements. In an ironic turnaround, another example is the recent resurgence of "retro" home appliances. Consumers are abandoning their 1970's and 17 80's white plastic toasters and avocado green blenders in favor of the same toasters and blenders repackaged in 1950's chrome and bakelite. Also, the practice in the software industry of designing increasingly rich sets of functionality and user options into popular products, but failing to provide full backward compatibility for the data formats produced by earlier versions. Lack of support for older data formats presents a ready market for IT consultants in eventual legacy data migration projects which will be required as the intellectual property and historical records currently committed to electronic media continue to age. In case of Watches, psychological positioning is adopted. Watches are made from different materials, studded with precious stones is more of fashion accessory attracting fashion / status conscious segment. Jaguar and Hindware Sanitary Ware are extending their product line by offering bath spa experience at residence. Private bath spa, to transform bath area into a luxury spa, a hydrotherapy centre or a wholesome retreat In this high paced world, the communication has become all the more easy, thanks to mobile phones. With the help of convergence technology these gadgets facilitate faster communication. These are not just communication devices but they serve so many different purposes also. The new age handsets come loaded with numerous useful features which fulfill the basic demands of calling, messaging, gaming, Internet, camera, music player and FM radio and all. As per the growing demand, these gadgets allow the users to store data in their favorite devices. For data transferring, the latest mobile phones come packed with technologies like GPRS, EDGE, Bluetooth and USB. These high-end applications help to exchange data and files at a very higher speed. 'Move' pain killer ointment was initially targeted at super efficient house wives for back pain due to overexertion, now the positioning has been extended to both the genders emphasizing on neck and shoulder pain. Most of the ladies and especially the housewives have the same problem and that is the back pain. One of the most extensively researched drugs in the world, with a 110-year track record of safety and efficacy, aspirin has been lifetested by generations, Aspirin an OTC drug, known to give immediate relief from headache is now been prescribed by Physicians who treat adult patients with the flu often recommend aspirin to help relieve symptoms such as headache and body pain, sore throat and fever. Also Use aspirin daily as a medicine for reducing chances of stroke. Vicco Narayani, an ayurvedic cream made from herbs for quick relief from any kind of body aches, advocates prevention by regular use in old age to prevent joint pains Vicco Narayani does give that extra bit of care required specially for growing people. Massaging daily with the cream gives the joints the extra care which people at this age normally require keeping them away from all sorts of problem. Vicco Narayani can also be used by 18 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario anyone else in case of body aches and other external injuries. It provides a warm effect which helps in easing out the pain and giving quick relief. The concept of selling in the passenger car industry is changing from original sales towards lifecycle value generation, encompassing financing, repairs & maintenance, cleaning, provision of accessories, and so on. Service providers like Banks are trying to get more business from their existing customers for which they have widened their horizon and provide variety of services like bank assurance, link deposit schemes insurance, financial products ,pay utility bills, file tax return and even get PAN card made for their customers. It can be concluded that the challenge and immense opportunity for companies, is in extending their presence in the “Customer Experience Lifecycle” by providing value beyond the standard company touch-points. The customer lifecycle, from marketing and CRM perspectives, describes a process through which the customer discovers and evaluates the company through marketing, selects and purchases its products or services, uses it, and maybe interacts with customer support. If the experience throughout the customer lifecycle was great and relevant, the cycle may repeat itself with loyalty. Bibliography ! Marketing Management by Philip Kotler, Kevin Lane Keller, Abraham Koshy Mithileshwar Jha; Pearson Prentice Hall ! Brand Management by ICFAI University Press ! Case Folio from The IUP Journal of Management Case Studies ! Marketing Management by Philip Kotler ad Kevin Lane Keller; Pearson Education ! Business Marketing Management: B2B by Michael D Hutt and Thomas W Spen; Hutt & Spen ! Services Marketing by Christopher Lovelock, Jochen Wirtz and Jayanta Chaterjee; Pearson Education ! Marketing Concepts and cases by Michael J Etzel, Bruce Walker, William Stanton, Ajay Pandit; The McGraw-Hill Companies ! Marketing Management Text and Cases by Tapan K Panda; Excel Books ! http://www.campaignindia.in/news/2009/12/18/cadburydairy-milk-refreshes-its-packaging ! www.nestle.in ! www.ponds.co.in ! www.mithaimate.com ! www.viccolabs.com National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 19 Social Media : An Opportunity for Market Promotion Mrs. Zeenat Khan, Instructor, JBIMS, Mumbai Prof. P. Manjreker, D.Y. Patil Institute of Mgmt. Studies, C.B.D. Belapur. India is poised to become the third largest Internet user in the world by 2013 as predicted by forester report.. The country of snake charmers and small retailers, has made a frog leap to put Asia as the world's largest internet users at 704.2 million, followed by Europe at 402.4 millions users. Though internet penetration is far from good in India compared to developed countries US, UK & Germany. the number of internet users in India may far exceed the entire populations of some countries. The reach of the internet is no doubt phenomenal, but it is far behind that of other medium used traditionally. The net-work of radio, telephone and television is far denser and established. In the next five years the penetration of internet is said to double and then it will have a wider reach than all traditional media. If we compare the old model of business which required physical delivery of information i.e. through books, newspapers,& magazines and hence become a burden on the company's resources to the new model, through the internet (digital information), the costs of processing, storing and transporting information is negligible, and huge data can be transferred in a short time which is a distinct advantage. Most of the traditional media deliver electronically, but through digital technology these media can be delivered from numerable sources to numerable destinations. Because of these advantages the internet attracts a lot of marketers who wish to use it to achieve their marketing goals. Marketers have already launched interesting sites on the internet which offer products ranging from travel to entertainment, education to news. Millions of surfers get logged and spend endless hours seeking information or entertainment. It is therefore interesting to know, the activities internet users indulge; What do internet users do online Top 10 Online Activities % Undertaking Search for Travel products Job search Search for non-travel products Instant messaging/chatting Check general news Dating/Friendship Check cricket content/score Check sports other than cricket Matrimonial search English info search engine 84% 71% 68% 67% 62% 55% 53% 52% 49% 49% All members use email by default, hence not shown separately Source: - Indian online 2009 by Juxtconsult It is clear from the above table that the internet has emerged as A good resource for information, on general and personal related issues. The table below shows the most popular sites visited: Most Visited Sites Websites % Use it the most Google 35% Yahoo 25% G mail 11% Orkut 7% Rediff 4% Indiatimes 1% Source: - India Online 2009 by Juxtconsult The Indian Digital Media Market A lot of optimism is associated with the Internet as an advertising medium in India. With global trends indicating continuing decline of ad spends in the traditional media, budget spends on interactive media continue to grow and deliver quantifiable results for the brand advertisers. Given the surge of interest in digital advertising in 2008, many consider 2009 to be the year when digital advertising finally gets the spotlight in the 4 billion dollar India advertising and marketing space. The Internet in India is still at a nascent stage with 47 million users (India Online 2009 by Juxtconsult) and a relatively low penetration level of 4.2% with reference to the Western world and other smaller countries. The urban rural divide, between the 'haves' and the 'have-nots' is hard to ignore in the Indian context. However, access to the Internet is slowly falling into place with declining prices that are likely to go down even further. Computing devices are becoming affordable, though prices need to fall further. Mobile/handheld devices are emerging as the 'next biggest thing' with the 3G licensing in place. In an entertainment seeking consumer market like India, which has multiple regional languages and scripts, it is surprising to witness growth in Internet growth without a local language computing environment. The development of such properties and executions would be hard to ignore for long. There are many positive signs and reasons created by stakeholders to engage the 47 million Internet users, who represent the 'regular Indian consumer' today. 20 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario The purpose and role of the Internet as a 'medium of effective branding and communication' becomes clear when markets realize that 'reaching the consumer' is inadequate without 'staying top of mind'. And in this game, any medium which offers 'selective' targeting by creating an exciting, engaging consumer experience at the modern day integrated marketing and communication plan (For instance, interactive/display advertisement of a personal grooming product for users on a dating websites). As it is evident from the data given below, Internet advertising constitutes a very small part of the total advertising pie; this is sometimes attributed to the low internet penetration which is close to 6% (I Cube 2008). But it may be noted that the Indian internet user base is huge in sheer numbers 6 crores which represents an opportunity to marketers to reach them effectively. INTERNETADVERTISING IN INDIA interoperability, user-centered design and collaboration on the World Wide Web. Examples of Web 2.0 include web-based communicates, hosted services, web applications, socialnetworking sites, video-sharing, wikis, blogs, mashups and folksonomies. A Web 2.0 site allows its users to interact with other users or to change website content, in contrast to noninteractive websites where users are limited to the passive viewing of information that is provided to them. The term Web 2.0 can easily be understood with this example. Web 1.0 Web 2.0 Double Click --> Google AdSense Britannica Online --> Wikipedia Personal Websites --> Blogging Web 2.0 means the democratization of the internet, the content of Domain name speculation --> Search optimization 'web 2.0' sites is not generated by the sitesengine owners, but by the Publishing --> Participation users of these sites, who use the site as a platform to either, Contentnetwork, management Systems --> Wikisdating/friendship. Thus inform, review or for business, these sites are collectively called as the social media. SOCIALMEDIA Wikipedia describe Social Media as: Share of Internet Advertising in The Indian Advertising Pie 1.Television - 51.4% 2.Radio - 0.9% 5. Others - 14.9% 4. Internet - 5.4 % 3.Print - 27.4% Base : 445 Top 500 Marketers ad-spends (2008-09) Source: - Digital Media Outlook 2009 by Webchutney 'Traditional' Internet Advertising that used banners and pop-up ads is slowly losing its effectiveness and fails to generate the desired results. This is because the entire landscape of internet has changed post the proliferation of what is known as 'web 2.0' technologies. Marketers therefore need to re-learn the rules of the 'new' game and adapt themselves with the new world of Web 2.0. LIFEAFTER WEB 2.0 The term Web 2.0 suggest a new version of the World Wide Web especially after 2003-2004. However, it does not refer to an update to any technical specifications, but rather to cumulative changes in the ways software developers and end-users use the Web. The term “Web 2.0” is commonly associated with web applications which facilitate interactive information sharing, Social media are media designed to be disseminated through social interaction, created using highly accessible and scalable publishing techniques. Social media supports the human need for social interaction, using internet- and web-based technologies to transform board cast media monologues (one to many) into social media dialogues (many to many). It supports the democratization of knowledge and information, transforming people from content consumers into content producers. Business also refer to social media as user-generated content (UGC) or consumer-generated media (CGM). Social media can be said to have three components. Participation Social media encourages contributions and feedback from everyone who is interested. It blurs the line between media and audience. Openness Most social media services are open to feedback and participation. They encourage voting, comments and the sharing of information. There are rarely any barriers to accessing and making use to content. Conversation Whereas traditional media is about “broadcast” (content transmitted or distributed to an audience one way social media is better seen as a two-way conversation. Community Social media allows communities to form quickly and National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario communicate effectively. Communities share common interests, such as a love photography, a political issue or a favourite TV show. 21 communities. Micro blogging Most kinds of social media thrive on their connectedness, making use of links to other sites, resources and people. Social networking combined with bite-sized blogging, where small amounts of content ('updates') are distributed online and through the mobile phone network. Twitter is the clear leader in this field. TYPES OF SOCIALMEDIA SOCIALMEDIAMARKETING Social Networks The meaning of the term 'social media' can be derived if we examine both of the words which constitute it. Media generally refers to advertising and the communication of ideas or information through publications/channels. Social implies the interaction of individuals within a group or community. Connectedness Sites that connect friends and their peer networks together spurred by user generated content of all forms. These networks are growing by the day to become habitual platforms for people to stay in touch. Often thought of as 'interactive address books', big players in social networking include Hi-5, Mixi, Friendster, Orkut, Facebook, Bebo and My Space. Blogs. Blogs and Bulletin Board Systems (BBS) continue to be a major source of social media providing platforms for communities to come together, opinions to be voiced (often anonymous) and discussion on a range of topics. These have evolved from the modern day form of a 'public dairy' to a 'broadcast platform' for individuals to share their news and connect. The personal nature of blogs continues to remain popular particularly for entertainment and educational purpose as well as for citizen journalism. Today bloggers have credibility as public informers and as a result of RSS (A technology by which links to latest posts delivered to subscribes), are highly inter-connected and collaborative. Key enablement platforms include blogger, blogspot, typepad and wordpress. Content communities These are communities which organize and share particular kinds of content. There are a number of sites that are considered the forefathers of 'Web 2.0' by making it easy to create, store and share content by putting that power in the user's hands. These entitles essentially host and store proprietary content of all forms, and because of their richness are becoming destinations in their own right. They also become the source of a lot content that users are publishing back into their social networks and include FlickR, You Tube and application developers such as slide.com. Wikis These Websites allow people to add content to or edit the information on them, acting as a communal document or database. The best-known wiki is Wikipedia the online encyclopedia which has over 2 million English language articles. Podcasts Audio and video files that are available by subscription, through services likeApple iTunes. Forums Forum is a common platform for online discussion, often around specific topics and interests. Forums came about before the term “social media” and are a powerful and popular element of online Ta k e n t o g e t h e r, s o c i a l m e d i a s i m p l y r e f e r s t o communication/publication platforms which are generated and sustained by the interpersonal interaction of individuals through the specific medium or tool. Wikipedia has a general definition of the term : Social Media is the democratization of information, transforming people from content readers into content publishers. It is the shift from a broadcast mechanism to a many-to-many model, rooted in conversations between authors, people, and peers. Social media uses the “wisdom of crowds” to connect information in a collaborative manner. Social media can take many different forms, including Internet forums, message boards, weblogs, wikis, podcasts, pictures, and video. SOCIAL MEDIA MARKETING HAS THREE IMPORTANTASPECTS : 1.Creating buzz or news worthy events, videos, tweets, or even blog entires that attract attention, and become viral in nature. Buzz is the piece that makes social media marketing work; it replicates a message not through purchase of An ad, but through user to user contact. 2. Buildings ways that, fans of a brand or company can promote it themselves in multiple online social media venus. Fan pages in Twitter, MySpace of Facebook are exactly this. 3.It is conversational. Social media marketing is not fully controlled by the organization, it allows for user participation and dialogue. Potentially a badly designed social media marketing campaign can backfire on the organization that created it. That is the reason that social media marketing (SMM) campaigns must fully engage and respect the users. HOW DOES SOCIALMEDIAMARKETINGWORK Think of Social Media Channels as Attention Funnels. People gather together to use social media. They are usually segmented by their choice of a community, their interests and the way they use the social site/tool. Natural peer recommendations, editorial links or paid advertisements on social media sites will send you interested individuals and potential customers. 1. Face book With 300,000 million members (as of July 2009) Face book is a National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 22 tremendously popular social networking site. Its massive reach provides compelling opportunities to connect with customers, both current and future, through fan pages, news feeds, groups, and throughout the site. 2. You Tube A well executed video with the right title and content can have huge viral impacts for your brand, especially if your video reaches the most viewed pages. There are also numerous other ways to optimize your videos, but coming up with an interesting concept and being aware of title, tagging, and thumbnall image, should each key components of your strategy. 3. Wikipedia Wikipedia has an active community that's quick to remove self promotional or spammy content, but for those who have relevant, authoritative content, it can be a great place to acquire new visitors to your site. 4. My Space Though rapidly losing market share to Facebook, MySpace remains a highly trafficked social media site that can be effective for marketing especially if it concerns music and art. In addition to creating profiles and getting friends, connecting with groups interested in relevant topics and using group bulletins can each be great ways to connect with both customers and potential customers. 5. Twitter customers in real time, the micro-blogging service is a great way to carry on conversation in 140 or fewer characters. Advantages of SOCIALMEDIAMARKETING: Social media is the next evolution in marketing. It's next after direct mail campaigns, after TV or radio advertising, and after ads in your newspaper. In fact, it's better than all of the above. Instead of the one way communication of traditional advertising, social media has made it a conversation. No longer do you have a 30 second piece to convince consumers to use your product, but now you have a community at your disposal. Build a relationship and convince customers to stay with you and advertise for you. However, it's important to know that social media's true power is not lead generation. Instead, it shines in pushing along the “selling funnel”, i.e. SALES-customer advocacy, customer loyalty, purchase, purchase intention. About 450 million consumers are engaging the social media, and when social media goes mobile the number will run into billions hence marketers cannot ignore the size of social media. Consumers are talking about the brands they use, seeking recommendations on new brands everyday and every hour. Social media is creating a platform within the internet for exchange of views on products and services. Reaching consumers through traditional methods of advertising could be insufficient to reach the target, rather an integrated approach in communication including social media would make brands connect with a larger consumer base. Twitter has quickly become popular platform for consumers and advertisers alike. For brands looking to communicate with The Key Findings: Social networks are becoming the dominant platform for content creation and content sharing. u Passive activities are reaching their saturation point but active participation through blogging, uploading, and creating networks continues to grow even in highly penetrated markets. u Content is becoming more personalized than ever with more people expressing themselves and sharing their lives and their views online. u Social networking sites are now the single largest source of friend networks either on or offline. Source: Lodestar Universal McCann,The Economic Times,13 Jan.2010 u National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 23 Challenges & Strategies for the Indian Industry Challenges and Stratergies for the Indian Industry in the Emerging Global Economic Scenario Mr. Manish Tayade Student MBA II ((Production), Vikhe Patil's IBMRD, Ahmednagar The Emerging Global Economy Although we have come to take it for granted, virtually everything we do is directly or indirectly involved with the international economy. To understand how this economy affects your life, just look around. Take five minutes and list things that surround you in your room - shoes, clothes, stereo, furniture, radio, TV, VCR, lamps. Even a quick listing likely shows how truly interdependent the global economy has become. This trend is expected to accelerate in the coming years. The process of technological change and innovation is bringing the world closer and closer together every day. Without international economic and business concepts and their perspective, it would be hard to understand much of your daily life. Indeed, the changes taking place right now are creating a new global economy that will determine not only how you live, but also the kind of work you will be doing. Most experts suggest that you will have not one but several distinct careers in the future, each largely shaped by the new global economy. The global economy emerged in the post-World War II period, from 1944 to the mid-1970s, but it has undergone a fundamental transformation since then. Much of this change has been driven by technological developments. Technological advances have altered industries and careers, generating new jobs and making others obsolete. At the same time, growing resource use has created tensions among policy makers, producers, and environmentalists. Globalization: Making a World Smaller The decades of the 1980s and 1990s brought transitions in the political, economic, technological, and environmental arenas. Some of these changes continue to reshape our work and non work lives. Globalization has made a big world smaller. Globalization affects trade, finance, production, communications, and technological change. When we look at a world map, we need to think about how this global community of people and nations is being systematically drawn closer together. At Distributed Service Systems, a small full-service computer company located in Reading, Pennsylvania, a technical consultant sits at a terminal and solves assembly line production problems at Carpenter Technology steel plants in India, China, Mexico, and Taiwan. Since 1980, world exports (goods leaving a country) have increased 194 percent, and U.S. imports (goods coming into the country) have more than tripled. Nations have found it cheaper and more efficient to trade more with each Other than to produce all their products at home Indian Economy Overview Indian Economy Overview: The Indian Economy is consistently posting robust growth numbers in all sectors leading to impressive growth in Indian GDP. The Indian economy has been stable and reliable in recent times, while in the last few years it's experienced a positive upward growth trend. A consistent 8-9% growth rate has been supported by a number of favorable economic indicators including a huge inflow of foreign funds, growing reserves in the foreign exchange sector, both an IT and real estate boom, and a flourishing capital market. All of these positive changes have resulted in establishing the Indian economy as one of the largest and fastest growing in the world. Recent Growth Trends in Indian Economy For four years running, excluding 2005, the Indian economy has produced annual growth rate of 8.8%. The growth rate of 2006 was phenomenal, when the country achieved a record 9.6%, the highest rate attained in the last 18 years. The structural transformation that has been adopted by the national government in recent times has reduced growth constraints and contributed greatly to the overall growth and prosperity of the country. Industrial expansion in different parts of India has also been crucial to this end. During this period of stable growth, the performance of the Indian service sector has been particularly significant. The growth rate of the service sector was 11.18% in the financial year 2006, whereas the industrial sector experienced a growth rate of 10.63% in the same period. Growth in the manufacturing sector has also complemented the country's excellent growth momentum. The growth rate of the manufacturing sector rose steadily from 8.98% in 2005, to 12% in 2006. The storage and communication sector also registered a significant growth rate of 16.64% in the same year. Additional factors that have contributed to this robust environment are sustained in investment and high savings rates. As far as the percentage of gross capital formation in GDP is concerned, there has been a significant rise from 22.8% in the National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 24 fiscal year 2001, to 35.9% in the fiscal year 2006. Further, the gross rate of savings as a proportion to GDP registered solid growth from 23.5% to 34.8% for the same period. The Indian Economic Survey for 2007 has set the target growth rate of GDP to be 9% for the period from 2007-2012. Challenges The positive effect of the globalization of the Indian manufacturing sector can be corroborated from the following facts · The Indian industrial growth exceeded 10% · Manufacturing and processing industry growth rate exceeded 12 % The globalization of the Indian manufacturing sector has brought down the percentage of Indians living below poverty line from 40% to 25%. The Indian manufacturing sector is successfully competing in the global marketplace and registering high . Although, the process of globalization of the Indian manufacturing sector have contributed immensely for the overall development of the Indian economy but India is not at par with the global standards of the manufacturing goods. India Agrowing economy It still suffers from some challenges like the following Comparision of Indian economy and Chinese economy Making an in depth study and analysis of India vs. China economy seems to be a very hard task. Both India and China rank among the front runners of global economy and are among the world's most diverse nations. Both the countries were among the most ancient civilizations and their economies are influenced by a number of social, political, economic and other factors. However, if we try to properly understand the various economic and market trends and features of the countries, we can make a comparison between Indian and Chinese economy. Going by the basic facts, the economy of China is more developed than that of India. While India is the 12th largest economy in terms of the exchange rates, China occupies the third position. Compared to the estimated $1.209 trillion GDP of India, China has an average GDP of around $7.8 trillion. In case of per capital GDP, India lags far behind China with just $1016 compared to $6,100 of the latter. To make a basic comparison of India and China Economy, we need to have an idea of the economic facts of the countries. India Facts GDP around $1.209 trillion China around $7.8 trillion GDP growth 6.7% 9.1% Per capital GDP $1016 $6,100 Inflation 7.8 % -1.2 % Labor Force 523.5 million 807.7 million Unemployment 6.8 % 4.3 % ! Improper utilization of technology and resources Inadequate infrastructure ! Improper implementation of quality management ! Undeveloped manufacturing and processing ! Waste which occurs during the manufacturing and processing. India is slowly shedding its image from being an agriculture based country to a manufacturing based country and thus the above-mentioned bottlenecks should be immediately arrested to ensure further growth of this industry. To ensure meeting of such challenges in the Indian manufacturing sector India must focus on areas like quality improvements, increased investment in R&D. References ! India is one of the world's major food producers but accounts for less than 1.5 per cent of international food trade. Food exports in 1998 stood at US $5.8 billion whereas the world total was US $438 billion. Reason --This is due to nonstandard processing of Indian food industry. ! Indian sea food is banned by international sea food association (US). Reason -- Due to nonstandard water used for washing purpose of sea food. ! Indian mangoes were banned for about 10 years by US food organization. Reason nonstandard treatment at post harvesting Strategies for Indian manufacturing and processing industries. Indian manufacturing and processing industry has to make some strategies for surviving in the globalization trend National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 25 To improve any organization with respect to globalization, activities are deployed for all of the objectives, namely: ! Quality improvement (QI) ! Total employee involvement ! Process management ! Developing the process ! Minimizing the waste ! Cost effective process In Ripening section Indian manufacturing and processing industries is lacking behind due to the above reasons. If we try to achieve the above then definitely Indian manufacturing and processing industry will have a greater share in global economy than china. In chopping/slicing section, the mangoes are manually chopped /sliced on the conveyor belt. After chopping, the chopped mangoes are passed in pulper machine. Pulper machine is having toner and brusher which take out pulp from chopped mangoes. The conveyor belt is 40 ft long on which mangoes are sliced by the labor on each belt there are 40 labors (20 on each side). Conclusion Out of 4000 kg mangoes wasted in ripening section, 2000 kg mangoes are used in process as half cutting. Half cutting is nothing but the half infected mangoes which can be used in the process by removing the infected portion. The remaining 2000 kg is of no use. In chopping section In this research paper I have find out the challenges faces by Indian manufacturing and processing industries in global scenario ! Improper utilization of technology and resources ! Inadequate infrastructure ! Improper implementation of quality management ! Undeveloped manufacturing and processing ! Waste which occurs during the manufacturing and processing. On one belt there are 500 kg mangoes sliced each time in 2.5 minutes (150 sec). This means that 40 labors has to cut 500 kg of mangoes in 150 sec. but due to this limit 50 kg mangoes left unchopped in each batch of 500 kg. These unchopped mangoes mix with the chopped mangoes and affect the quality of mangoes in pulper machine. And I have also find out the strategies needs to be implemented for meeting the challenges In receiving section: ! ! ! ! ! ! Quality improvement (QI) Total employee involvement Process management Developing the process Minimizing the waste Cost effective process Answer Suggestion for case study Labor practice:! During unloading at receiving section, proper handling should be done. Wt. of the crate is 25-30 kg. To reduce workload and time, labors throw the crate filled of mangoes to reach the crate at destination. But during such operation the mangoes which are at the base of crate get damaged. Case study ! Though the manual sorting is done by 10 labors on each belt, error occurs. So each time care should be taken. We are taking this case study because jain irrigation system had lost a contract of about 80 crores of mango pulp due to insufficient quality standard. ! On sorting belt labors should be provided with hand gloves to avoid infection by hands. The nails of labors should be well trimmed while sorting. Jain Irrigation System, situated at jalgaon in 1962 by Shri B. H. Jain. Jain Irrigation System is the only multinational company in the region. Jain Irrigation has been named as one of the eight Indian companies expected to emerge as challengers to the World's leading companies by Standard and Poor recently in May 2007. The product of jain irrigation system is mango pulp. The processing is carried out in following section wise manner While giving hot water treatment, temperature should be strictly maintained at 53- 57* c. because hot water treatment is helpful for initiating the activities of enzyme responsible for the process of ripening. By following above steps we can reduce the waste during sorting by 0.2% to 0.1%. In Receiving section Drain In receiving section, mangoes are sorted out manually. But error occurs during manual sorting. Labors sort mangoes with naked hands which cause a major source of infection. Wt. of crate is 30 kg due to which labor throw the crate to save time and energy. There is a drain near the crate filler. And due to bad practices by worker the mangoes in the crate came in contact with the water situated on the ground near the drain. This cause infection on the mangoes. Major infection caused by bacteria and fungus so drains should be covered with proper covers and water near drain should be wiped out regularly. And the labor should be provided with the wheel tray so that they can move a maximum number of crates each crate weighing about 30 kg. In this way we can minimize the risk of infection and at the same time we can move maximum number of crates in time. This will help the labors in There is a drain near the crate filler. And due to bad practices by worker the mangoes in the crate came in contact with the water situated on the ground near the drain. This cause infection on the mangoes. Major infection is caused by fungus. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 26 2 their work. In Ripening section Alternative In ripening section I had carried out experiment to check the infection in presence of fungicide. I have found that by using fungicide company can reduce the infection level of 0.8 % to 0.2 %. I had selected 2400 kg mangoes out of which only 5 kg mangoes are infected instead of 19 kg mangoes. As I have discussed earlier that 4000 kg of mangoes are infected by fungus, If company use fungicide as part of there process the figure will goes down to 1000 kg. That means we can avoid waste of 3000 kg per day. In chopping section by increasing 5 labors on each belt the daily labor cost increases from Rs 28,800 to Rs 32,400 ; an increase of Rs 3600 per day In chopping section By implanting semi-auto-slicing machines Cost benefit analysis clearly shows the purchase of the semi-auto-slicing machine is justified. The company will have profit of Rs 22,500 per month In chopping section for unchopped mangoes we can use any one alternative Cost benefit analysis Comparative Cost Benefit Analysis - Purchase of New semiauto-slicing Machine and adding total 20 labors on 4 belts. (Costs shown are per month and amortized over five years) Alt 2 Alt 1 Particulars Implanting semi- auto Slicing M/c Adding 5labors Purchase of machines (including interest and tax) (-) 0 50,000 Installation of machine (including screen and removal of existing machine) (-) 0 2000 Quality increase revenue (calculate at 0.1 % of current error rate) (+) 80,000 80,000 Reduced material cost (+) 0 0 Reduced labor cost (+) 0 0 New operator/ additional Labor cost (salaries and overheads) (-) 1,08,000 4000 Utilizes (power consumption) (-) (-) Insurance Savings/Loss 0 0 1000 500 (-) 28,000 (+) 22,500 From above analysis alternative 1 which is addition of labors show loss of Rs 28,000 While alternative 2 which is implanting semi-auto slicing m/c show a saving of Rs 22,500 Cost benefit analysis clearly shows the purchase of the semiauto-slicing machine is justified. The machine will save your company over 22,500 per month Total saving from 3 section perAltmonth Section 1 Alt 2 Implanting semi -auto Slicing M/c (+) 8,40,000 / month (+) 8,40,000/ month Adding 5 labors From receiving and ripening section From chopping section (-) 28,000 / month Total saving / month (+) 22,500 / month (+) 8,12,000 / month (+) 8,62,000 / month The monthly profit is Rs 8,40,000 from receiving and ripening section. The cost benefit analysis of chopping section shows loss of Rs 28,000. Therefore total saving is Rs 8,12,000 per month Alternative II The monthly profit is Rs 8,40,000 from receiving and ripening section. The cost benefit analysis shows profit of Rs 22,500. Therefore total profit is Rs 8,62,000 per month From above two alternatives, alternative 2 is best because it give maximum saving of 8,62,000 Rs. Conclusion: From above discussion we conclude that the operations which are done manually are major source of errors. Also we need improve the process and to eliminate the source of infection of mangoes in whole plant. For waste minimization and optimum yield by using fungicide company can minimize waste in the process. Because in ripening section maximum damage is due to fungus infection. And to reduce that company should use fungicide and at the same time company can get optimum yield. Improve labor work practices and develop the process. If we implement improved labor work practices then company can minimize the waste. Which include delicate handling of crates, using hand gloves during sorting, hairs covered, tremed nails etc. This need clear observation by the supervisor of kind and manner of working by labor. Good and improved working practices, developing the process also leads to waste minimization. Improving the quality Company should concentrate on quality of the pulp. To improve quality if it requires small scale investment then company should do that, because by improving the quality company can increase the reliability among the customer. Because company had lost two big contract in the past due to unsatisfaction of customer with the quality of mango pulp. It is also helpful to remain in the competition. Semi-automation of chopping process It is also advised to set up an auto-slicing machine for unchopped mangoes this will reduce excess labor cost and will gives optimum saving in the form of money and labours, at the same time it will solve the problem permanently National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 27 Convert “Indian Brands” into “Global Brands” Mr. Abhishek Bandodkar MBA I Year, Student, PCMRD, Pune Abstract In order to make Indian brands a truly powerful brand on the world map, we need a winning marketing strategy for branding them. The present paper attempts to highlight the key differences between consumer branding and what are their expectations from the brands they consume.It also explains the benefits of what it is to play on a global stage. The paper speaks about the current position of Indian brands in the global scenario. The core discussion of present paper involves the various brands that have come to existence from the local market and what it requires to go global. The paper also discusses why it is so difficult to global and where is India facing a question mark in taking a leap. The paper also deals with the fact that how some of the global market players has been able to beat the local players in their market by pushing and capturing the consumer to think for the change. Going global is not easy especially with high level of expectations and quality and the consequences one might have to face if the venture fails. But opportunity present today is like never before with the world looking up to a “Rising India” and some of the brands making a impact and space in the global market it has come as a blessing in disguise for other brands to rise to the occasion and make a difference. Introduction We have entered into state of flux where everything is so fast and only constant thing is change. We have entered into a digital era where digitalization is not limited to communication and commerce but it touches each and every sphere of our life, even it is used for global collaboration. In this highly new inevitable competitive environment, government, industry leaders and business associations have realized one thing at the right time that they cannot survive without playing big and thinking large, because business is fast expanding in this new world. INDIAUNBOUND Indian industry is on a never-before global high. But are the good times here to stay? Shantanu Guha Ray analyses the homegrown MNC's coming of age. For two successive weeks, two images reflected the mood of a triumphant India. A smiling Ratan Tata, alighting after an F-16 sortie on the outskirts of Bangalore, days after he clinched the $11 billion Corus deal. And a confident Kumarmangalam Birla at a packed press conference, hours after the successful $6 billion Novelis bid. There's another in the wings to complete the troika: Suzlon's Tulsi Tanti is poised to acquire RE power Systems AG of Germany with a premium-laced, allcash $1.3 billion deal. If it comes through, it will be a triple whammy, marking India's decisive break with Socialist-era insularity Let the world buy in, let us buy out India has not become very hot with global brand merchants. Not yet, at any rate. No one is saying that the world will now instantly recognize an Aditya Birla Group logo on a billboard in Manhattan or a Tata logo in the periphery of Hyde Park. Too many in the US and Europe, names like Reliance, Ranbaxy and Mahindra probably do not even ring a bell. But neither, for that matter, do other relatively new global giants like Cemex, Galanz or Embraer. Let's discuss Novelis. Coming out of Atlanta read 'Hotlanta', the city synonymous with sizzling business growth it is still low in the rankings. Its shares jumped almost 13 percent after the buyout but it didn't make front-page news. According to CNN, even the lowly Atlanta Journal Constitution barely took notice. But the success, say experts, lies elsewhere. There will now be a tinge of Indian money on every six-pack, food can and screw cap Novelis supplies to customers across four continents. Hindalco will get access to new technologies and a beverage container market that kicks around 200 billion cans across the world, not to speak of bottle closures of every conceivable type. And there lies the royal highway to capturing the traditionally bottle-oriented Indian market. The new Breed of Indian Multinational does not need Western acceptance to create History. “It has the confidence to raise funds from international bankers, the expertise to acquire companies and the capability to manage large-scale business.” says economist Bibek Debroy. Grant Thornton estimates Indian outbound deals, which were valued at $4.3 billion in 2005, crossed the $15 billion mark in 2006. And in 2007, they could cross the $35 billion mark. “Indian companies are high on organic growth and are going global also because the home markets do not have the scale or the resources to allow them to deliver the levels of shareholder value and competitive advantage they want to achieve. Hence, they need to tap new profit pools,” says Assocham head Anil K. Aggarwal, adding: “The Indian MNC has one big advantage. It is the cost edge, which is the key driving factor that helps produce the right products for the times and ensures value for the dollar for 28 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario the global consumer.” The experts are unanimous. Corporate India is on a roll and Indian companies can now expect a situation somewhat similar to what the Japanese and the Koreans faced in the 1960s and 70s from the developed world, which summarily dismissed them as no-hopers stories will come from a host of Indian companies, all of them with low-cost, high-quality products and services on offer not surprisingly, India has 21 such companies with names like Tata Consultancy, Infosys, Wipro, Suzlon, Ranbaxy, Hindalco, Reliance, Bharat Forge and Mahindra & Mahindra on the list. China has 43, including Lenovo, which recently acquired IBM's PC business, and the China National Offshore Oil Corporation (CNOOC), which made headlines last year in its bid to acquire the California-based Unocal. Together, along with a few other Asian companies, these form nearly 70 percent of the list of entities poised to become important 21st-century multinationals, radically transforming markets and changing trends India wants to do Business with the World. Read the mind of Suzlon Chairman Tulsi R. Tanti. Last December, Fortune 500 Tanti that's his nickname told a few friends at his home in Pune that he wanted just one-fifth of his business to happen in India. The rest, he was convinced, would come from the US, China, Europe and Australia. If the REpower acquisition comes through, it will be Tanti's second in less than a year Suzlon acquired Belgium-based gearbox manufacturer Hansen for 465 million euros in March 2006. The Magic of the Gen Next Indian Entrepreneur. In India, no one had heard of Tanti till Suzlon hit the capital markets with a Rs 1,500-crore initial public offering. Today, the Pune-based company has a market cap of Rs 37,000 crore and expected sales of Rs 7,000 crore for 2006-07. India's outbound aggression is the spin-off of a still very new but increasingly more easy-going domestic atmosphere. “India has made significant improvements in reducing the amount of red tape entrepreneurs' face,” says Caralee McLeish, one of the coauthors of the World Bank's 'Doing Business in South Asia 2007' report. “It now takes, for example, 35 days to register a business in Mumbai, compared with 71 days a year ago and 89 days in 2004. But, despite clear improvements in five out of 10 'Doing Business' indicators, India can do much better.” According to McLeish, if India adopted best practices, its global ranking would go up to 79 from the current 134. Investment bank Mape calls it the coming of age of the Indian multinational company, a syndrome where Indian buyers have become a force to be reckoned with in many industries such as pharma, auto components, oil and gas. Suddenly, no one is talking of the great Indian middle class. That was what they did in the 1990s. “This is the time to take advantage of low costs and widely-available natural resources to make India the ideal exports hub. And, if you look around you, you'll see that's what is happening across the country,” says Debroy. “Global giants are shopping in India, so are Indian companies abroad.” Indian Brands have Global market potential A study undertaken by McKenzie projected the potential in the confectionery industry in India at over Rs 5,000 crore per annum whereas the current turnover is around Rs 3,000 crore. "For achieving this potential there is a need to upgrade the technology in the confectionery industry. Presently, the industry is not viable. The main issue before our industry is the very high rate of excise duty, which could not be passed on to the consumers because the products are sold in the price range of 25 paise, 50 paise and one rupee. The reservation of the industry to the small-scale sector and imports at much under-valued prices are allowed freely under Open General License, seriously impacting the domestic players," M N Rao, Secretary, Indian Confectionery Manufacturers Association (ICMA) told Food & Beverage News. Rao also said that it is very important that the industry should have reasonable margins. Unfortunately, the industry is not doing very well because of the high excise duty. In an interview with Food & Beverage News Stefano Pelle, VicePresident and COO, Business Unit Russia and South Asia, Perfetti Van Melle said, "In the past, most of the Indian confectionery companies were local players with the unorganized units dominating the market. Entering the Indian market in 1994, we have come a long way by becoming the undisputed market leader in the Indian sugar confectionery market with the widest range of products in our portfolio with the largest distribution network. At present the domestic market is extremely intense in competition. The presence of multinational companies, global leaders in confectionery, large Indian companies and small-time manufacturers have added to the competitive spirit in the Indian market. In this situation we look forward to strengthening our existing brands and adding new brands to the list. We intend to improve our existing realization, introducing high price packs and enriching our product mix." Indian Brands Impacting Foreign Market "We have created some brands here in India such as Cofito, which is being exported to Italy. Also, we are manufacturing this brand in Vietnam. There is a potential to export Indian confectionery brands to the global market provided the quality of the brands has international certification of ISO 14001, HACCP, etc. Indian manufacturers will have to equip themselves with these certifications. We are, at present, exporting to South-East Asian countries, Philippines, Afghanistan and Myanmar from India," Pelle added. He also believes that the Indian confectionery industry has the capabilities in respect of quality to meet the international standards. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 29 About the export potential of Indian confectionery products in the competitive global market, Rao says that the country is a major producer of sugar in the world, the basic raw material of the confectionery industry. bid to that of Japanese companies: “perhaps the most important ingredient in the success of Japanese companies was their ability to think global and create entities and brands that could scale up to global size.” This is a very positive aspect for manufacture of confectionery items, which could compete in the global market. To be a regular exporter of confectionery there is need for up gradation of technology as well as addition of new capacity to attract the deregulation of the confectionery sector and restructuring of the excise duty will go a long way in achieving the objectives and create capacity for export. The “Made in India” Brand Where are Indian Brands on the Global Stage? I believe its not the right time for an Indian company to explore the potential of global market because at first these Indian companies need to leverage and capture opportunities created within Indian economy. Once this huge opportunity created by burgeoning middle income group backed by increasing level of disposable income is fulfilled, then only it makes sense to enter global arena. That's why branding exercise is restricted to Indian boundaries only. Undergoing such an exercise will even help Indian companies to study various facets of consumer behaviors, technological expertise and scale of operations required to serve global markets. Hence, it's a learning curve for Indian organizations which will help them in creating solid information base to face competition from other global players. Though a few brands have started making their presence felt significantly in their respective sectors, e.g. Infosys, WIPRO in IT sectors, but a lot more is required to be done in other sectors. Had the survey been done on specific sectors, many Indian organizations would have been there in study outcomes specifically in IT and petrochemicals. The day is not far away when Indian companies will make other global organizations a run for their money Can Indian Brands make it Global? Bollywood, Bangalore, IT and ITES, Ranbaxy, Infosys, Hero Honda, all are Indian brands with international presence. The segment does not matter; it's the India brand that seems to be catching on. Or is it? With leading industry players like Mukesh Ambani, Kumar Manglam Birla and many others espousing the notion of “Brand India” and Indian global brands leaving footprints across segments spanning services, manufacturing, culture and knowledge, consensus is that time has never been more right for Indian brands to debut on a global stage. Can Indian companies take on the challenge to build brands that scale up to global eminence? Charles Berley Jenarius, group CEO, Carat India says, “We do not have a culture of creating brands. It is simply a case of lack of imagination and ambition”. Years of closed economy led to inefficiencies and a lack of brand building mindset, he says. Sandeep Goyal, CEO, Dentsu India, compares the Indian global Historically, the “Made in India” brand has been associated with poor quality and inefficiency. Strategic use of the country of origin is an enabler. For instance, brands out of Italy are instantly identified with art and design making it much easier for a Bulgari or Armani to gain global acceptance as international style czars. Alternatively, as Professor LD Mago, IIFT points out China's low cost, low quality image has made it difficult for Chinese brands to gain global acceptance as being high quality, high technology brands. When, for instance, he went to Malaysia TV sets with the same attributes and quality and with the same brand name sold at vastly different prices of $ 235 and $527. The cheaper one had been assembled in China, while the other had been assembled in Malaysia itself. “The image of the Indian pharma industry abroad was not very good at the time we started our expansion,” DS Brar, CEO and MD, Ranbaxy has said. He had a tough time convincing foreign companies to do business with an Indian company. He recalls how a CEO of a global pharma company kept him waiting for over 6 hours before granting an audience. That was largely how global companies treated brands from India those days. Today, however, when Deepak Kapoor, executive director, PWC attended the international meet for employees, the officially allocated time of 7 minutes for a Q&A session extended to over 35 minutes till paucity of time and waiting presenters forced organizers to ask those asking questions to call it a day. Fortunately, Indian brands like Hero Honda, Bajaj and Tata have started gaining acceptance in international markets for their quality products. Indian service sector too has started transforming its work profile from being low quality BPOs to high quality Knowledge Process Outrsourcing (KPO) centres. But the Indian government can do more to promote Brand India as a credible brand. Distinction and Differentiation are key parameters for creating global brands. But Indian companies have been pushing “Mass” labour advantage more over its “Distinct” knowledge advantage. Going ahead, the focus needs to be more on innovation and knowledge. Says Mr. Kapoor of PWC, “India is perceived to be better on the innovation curve than China. We need to leverage this factor more.” Mr. Jenarius gives the example of Korean brand LG and Samsung as pointers to customer focus: “LG and Samsung, adapted to the needs of the Indian customer to emerge as market leaders. They have beaten the domestic Indian companies like Onida and Videocon, once market leaders, in their own markets.” Quality is an issue as well. S.C.Sehgal, MD, Ozone Ayurvedic, whose Nomarks brand is sold in 30 countries, points out: “The 30 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario customers in western countries are more demanding in terms of quality. One cannot get away in international markets by providing substandard products.” Herbals and VLCC have announced big expansion plans and are looking at investing anything between Rs 150-300 crore (Rs 1.5 to 3 billion) within the next three years. India's internal environment vis-à-vis, infrastructure, regulations and ethical practices are also impediments to making our brand global. Even though Shahnaz Husain admits to having lost "leader place" in the beauty products segment in India, hers is the only Indian company to find place in UK's Harley Street where she recently opened the ShahnazAyurvedaAesthetic clinic. Take the case of out IT city brand, Bangalore, or travel brand, Incredible India. Both are struggling due to poor quality of infrastructure in India. Most travelers to Bangalore complain of the time consumed in traveling via the city's congested road network. Tourists, too arrive to find infrastructure that takes the credible out of “Incredible”. With almost 100 overseas centers, she now plans to open a chain of Shahnaz Forever Beautiful lifestyle shops across Britain and with the estimated $100 million turnover a year, that shouldn't be a very tough task. The company is in talks with three foreign companies for further investments. FEW IMPRINTS TO QUOTE: Expectations from global brands M&M Expands Overseas Business Consumers all over the world associate global brands with three characteristics and evaluate them on those angles while making purchases. MAHINDRA & MAHINDRA (M&M) has entered into a contract with the Government of Gambia to supply tractors along with matching implements. The company is going to set up a satellite plant that will assemble these tractors and to offer sales and after-sales service. It is the first commercial venture that the tractor company has signed with anAfrican country. The company has also expanded its tractor business in China (acquiring 80 per cent stake in Jiangling Motors to set up Mahindra China Tractor), set up a branch office in Australia and launched its East European operations starting with Serbia and Montenegro. Expanding their automobile business on the global front, the M&M has introduced the Scorpio range in Sri Lanka ENERGY & POWER Suzlon Bags Two Orders worth Rs 345 cr from Italy and Portugal SUZLON Energy AS (SEAS), the Denmark-based international business headquarters of wind turbine energy manufacturer Suzlon Energy Ltd. has bagged two orders worth Rs 345 crore for a total of 61 MW from Italy and Portugal. The company is now all set to focus on untapped European markets such as France and Greece for potential business, the Chairman and Managing Director, Shri Tulsi R. Tanti, said adding that 40 per cent of the company's revenues would come this year from export business. The company has signed a contract with Maestrale Green Energy of Italy for 21 MW and has already signed a contract with Portugal's Technologies Energeticas, SA, for 39.9 MW of wind turbine capacity, for a wind farm project in the Penamacor region. The orders will be delivered from the last quarter of the current fiscal with all supplies, barring the tower, to be from India, Shri Tanti said. Indian beauty brands eye global markets Beauty and India are almost synonymous. With India going places, Indian beauty brands are also eyeing the global market and also creating greater demand in the domestic market. With that in mind, beauty and wellness majors Shahnaz Husain Quality signal Consumers watch the fierce battles transnational companies wage over quality and are impressed by the victors. One likes [global] brands because they usually offer more quality and better guarantees than other products.” That perception often serves as a rationale for global brands to charge premiums. Global brands “are expensive, but the price is reasonable when you think of quality,” say consumers. Consumers also believe global companies compete by developing new products and breakthrough technologies faster than rivals. Global myth Consumers look to global brands as symbols of cultural ideals. They use brands to create an imagined global identity that they share with like-minded people. Transnational companies therefore compete not only to offer the highest value products but also to deliver cultural myths with global appeal. “Global brands make us feel like citizens of the world. They somehow give us an identity,” say consumers. “Global brands make you feel part of something bigger and give you a sense of belonging,” Local brands show what we are; global brands show what we want to be,” were some other views.” Myths are now spun by virtually all global brands, in industries as diverse as IT and oil. Social responsibility People recognize global companies wield extraordinary influence, both positive and negative, on society's well-being. They expect them to address social problems linked to what they sell and how they conduct business. Consumers vote with their checkbooks if they feel that these companies are not acting socially responsible. “I still haven't forgiven Shell for what they [did] with that oil rig, says a consumer. While consumers don't demand that local companies tackle global warming, but they expect giants like BP and Shell to do so. People may turn a blind eye when local companies take advantage of employees, but they won't stand for transnational National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario players like Nike and Polo adopting similar practices. Going Global is Tough The main reason what stops the local players from playing big in the global market could be listed down as following: Perceived loss of control first cater to domestic market and then take on foreign ones. And for our brands to create a global impact the market is already open but do we have it in us to take the leap and go the distance still remains a mystery unsolved. References: 1. Research and Development Statistics: 2004-05, Department of Science and Technology. Existing market structures Response of entrenched competition 2. India Brand Equity Foundation Report on “Going Global Indian Multinationals”. Political risk 3. Anholt Simon (2004), Nation Brands, Chiefly speaking, Strategic Marketing, Vol.III, no.III, May-June, p.27. No deep understanding of local markets Cultural issues Conclusion: We have the potential and global perception has also started falling in place. But do we have it in us to nurture this opportunity and make the world our oyster to capture. It is not necessary to 4. Keith Fletcher (1995), Marketing Management and Information Technology, Europe: Prentice Hall, second edition, pp 138-139 FEEDBACK T 31 he National Seminar theme “Challenges and Strategies for the Indian industry in the Emerging Global Economic Scenario” was very relevant. To be honest the organization of conference and the various arrangements (Registration Counter/Technical Sessions & other) done by the team of PCMRD were very professional and perfect. The email correspondence with participants was very prompt and perfect. Besides everything the hospitality and food (especially lunch) was excellent. Thank you, Khan M. A. Imran Vice Principal, Millennium Institute of Management, Aurangabad 32 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Sensory Branding Prof. Sunil Kumar Director PCMRD, Pune Abstract Branding plays a very vital role in today's competitive environment. It has emerged as the face of any product; it is the brand that makes the consumer connects to the product. With market pacing up due to rapidly increasing technological changes and providing the consumer with a wide array of choices, it has not only become essential for the brands to be unique to attract customers but also to retain them . The World of Sensory Branding has emerged as a powerful tool by which a brand can clearly distinguish itself from other brands and position itself appropriately. The important aspect is that Sensory Branding creates an impact in the minds of the customer that is difficult to erase and it is this impact which makes them “Brand Loyal” and the “Brand Royal” Introduction The impact of branding is quite evident especially with the fact that the consumer today is becoming very brand conscious. The most important issue remains to be addressed is - What makes the brand so essential? Brand is valuable both- the “Marketer” and the “Consumer”. The marketer makes sure that he potrays his brand in the best possible way to the consumer. The role that Brands play is to enable a company's products to come out of the Brand clutter in an increasing competitive environment. Why do Brands matter? Brands impact the customer in such a way that customer feels that the brand is an integral part of them. Some customers are so brand conscious that they demand the brand irrespective of the price at which it is available because they start associating themselves with the brand. There are a large no. of advertisements and promotions and to make things more complex for the Marketer there are a large numbers of media outlets also that are made available to both - the Consumers and Marketers. advertising has to be backed up by a strong message strategy and a sound message is the one that conveys a benefit which the consumer can experience- which again takes us back to the realm of competition where there is hardly any perceivable difference between one branded product and the other ! Role that Brands play Brands impact two players the most, it's the manufacturer and consumer. Let us look at this situation from two different angles and see how brands affect them. From the Manufacturer's view point- Brands have the following important roles to play:! ! ! ! ! ! Means of Identification to simplify handling or tracing Means of legally protecting unique features Signal of quality level to satisfy customers Means of endowing products with unique associations Source of competitive advantage. Source of financial returns From the Consumer's view point- Brands have the following important roles to play:! ! ! ! ! ! It helps in Identifying of the source of the product Helps in reducing the risk during a purchase process Reduces search cost Acts as a Promise, bond or pact with maker of the product. Acts as a symbolic device and It becomes a signal of quality Marketers must therefore identify and execute creative ideas that are ! ! unique and attractive Brand-builders need something NEW!!! World of Sensory Branding! Breaking this cluttered environment is extremely difficult. It is hard to pay any attention to your brand and harder still to form a meaningful association. Having seen how a brand can impact the consumer and the market, one would have realized by now that it is essential that the brand creates a lasting impact in the minds of the consumer. When you feel any product and if your experience is good the brand creates an attachment for the product. To Stand Out - Brands need to be Focused and Unique The five senses that play a vital role in branding are: One of the ways is to have a clear positioning. But is it really sufficient? ! ! ! ! ! In reality, Brands need to be creative in the market to attract attention. Another way is to argue that good advertising can possibly provide the real solution.But we know that good Sound Sight Smell Touch & Taste 33 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Sensory Branding Sound We open Jars/Cans of packaged food in full expectation of hearing the 'click'. It signifies hermetically sealed contents being opened for the first time. Our senses inform us of our surroundings. They inform and influence our entertainment and buying experiences. Much of our understanding of our environment is informed by our senses. In turn, our experiences inform our senses, the senses being linked to memory. Our senses play a major role in our experience and choices of brands / products. Sensory branding is the idea which states that brands should engage consumers on a variety of touch points. Lately, “Sound” has become an important aspect for Sensory Branding. A sound strategy in which the customers react with feelings when music and voices are present. Examples of Sound expressions are jingles, music and voice Intel - The BRAND sense research revealed a 56%awareness of the Intel tune worldwide!! 7 Up - The sound of opening your 7Up can changes your warm sunny environment into a cool and fresh, rainy place!!! Coke - Consider the Familiar sound of fizzing Coke being poured into an ice-filled glass..!!! Lays - Lays focuses on the enormous crack of the chips- in their TVAds Often it is also the consumers' ability to recall scents and odors that leads to increasing brand equity. This is what prompts marketers for very famous companies to create what are called the “corporate smells” to fit the “corporate logo”. Here are a few examples to quote: SingaporeAirlines Asia's leading airline -Singapore airlines introduced Stefan Floridian water (aroma designed especially for Singapore airline). Scent blended in the hot towels served before take-off, kaleidoscope of smooth , comfortable memories, reflecting the more obvious customer service and quality efforts of the SingaporeAirlines. Shopper's Stop If you go to the Ladies Floor in Shoppers' Stop there is a distinct smell that comes that makes an impact on the customer, and attracts the customer towards the counters. As a result, the women end up spending more time in that area. Other Examples Samsung, for instance, has a signature scent in its corporate offices in New York, High-end retailers such as De Beers Diamonds have their own unique scents. Automotive manufacturers spraying cars with concocted smellRolls Royce now emits a scent of “Old Rolls” from under the seat of its new cars. Sensory Branding Taste A Taste strategy differentiates a brand and offers surplus values to customers. Therefore the advertisements for food are very much focused, next to the visual image. Taste and smell are closely interlinked The sound impact is so effective it feels like cracking your television screen !! Crispy sounding chips become the embodiment of a fresh and tasty product !!! Kellogs - Kellogg's has spent years experimenting with the synergy between crunch and taste Kellogg's has invested in the power of auditory stimuli, Testing the crunching of cereals in Danish sound laboratories in order to upgrade their product's 'sound quality' and link it with the brand signature. Sensory Branding Smell Smell is one of the most important of five senses. Teenagers' sense of smell is 200% stronger than that of adults beyond middle age. Given the fact that the children influence an amazing 80% of parents' purchases, appealing to the senses of smell becomes increasingly important. AFew Examples to quote: Colgate has patented their distinct toothpaste taste. Coffee / Tea / biscuits which is being given to customers can be custom made in taste…. If you are a food retailer, then you can look at 1000 ways to make your taste stay in the customer's HEAD Sensory Branding Sight A sight strategy requires some different look when all visual changes are discovered by the viewer. Sight is generally held to be the most powerful of the 34 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario human senses. It is the sense that brand builders and marketers have traditionally concentrated on. Shapes, sizes, colors, intended to differentiate the product, and impart a particular emotional feel to the product. Little blue, diamond-shaped pill becomes jewel in the Pharmaceutical company Pfizer's crown. In Auto industry also shapes play a vital role.In many car models shape has become the defining feature. Beetle, Mini and military inspired Hummer are some such examples. in 1915, the brief was simple. The bottle should be distinctive enough to be recognized. The outcome - the classic curved coke bottle which is still used in the markets the world over, and has been posing the smash test for almost 90 years now. Sensory Branding - Touch This is the only sense which has physical connection with your product! Skin is the largest organ in the body which alerts us to a sense of well being or pain. One major reason online clothes shopping never took off . General rank order of sensory importance (varies by category ) 60% Recognize these brands ……. 50% 40% 30% Sensory Importance 20% 10% 0% Taste Sight Smell Sound Touch Conclusion: Branding plays a vital role in today's market especially when a wide range of choice is provided to the consumer. Other Examples Coke T h e classic example is of Coke. When the c o k e bottle was designed The purposeful design and deployment of interaction between the senses, to stimulate a consumer's relationship with a brand, and to foster a lasting emotional connection that optimizes purchasing and brand loyalty. There are a large no. of advertisements and promotions. Large numbers of media outlets are now available to consumers. Sensory branding has therefore emerged as a vital field because when you feel with your senses, it registers in your mind permanently and leaves a lasting impact on an individual. Be it the taste of a particular consumable commodity or fragrance of a particular deodorant or the sound of a mp4 player, it's the feel good attitude which your senses experience that makes you brand loyal towards that particular brand and it makes the consumer come back to it again and again. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 35 Challenges & Strategies of IT Industry In Emerging Global Scenario Ms. Vishakha Bhide, (B.E. MBA 1st year) I B M R D Mr. Ranjan Kumar, (B.Sc. MBA 1st year) I B M R D Abstract ! Employess(Sep 09) 105,453 from 73 Nationalities Globalized production of IT hardware and software led to lower prices during the 1990s, prompting IT investment and transformation. While IT was disruptive to businesses and workers alike, its influence on them and their successful response to that influence were key to higher trend productivity growth and the associated “trifecta” of faster income growth, lower inflation, and more employment “Globalization” refers to quantitative and qualitative expansions in transborder flows of activities and ideas. These include financial flows, such as the one trillion dollars of finance capital that circulates daily or cultural ones. ! Market Cap(Sep 09) $27.80 Billion ! GlobaL Presences: 58 Sales Offices The stock prices of leading Indian tech companies have been battered in recent weeks. Investors are skittish over rising inflation and higher interest rates that could tap the brakes on growth globally. But there's no sign India's companies themselves are losing strength. Software Services including business consulting and outsourcing through ongoing processes and frameworks. Infosys is uniquely positioned to be your enabling partner in the journey toward global sourcing and achieve high returns on your IT and business process investments in global scenario. INTRODUCTION TO INFOSYSASACASE STUDY Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario is based on the Regionalism,Liberalisation,Government policy of the particular country. In this paper , largest IT company in India with 105,453 professionals as of Nov 9, 2009 ; Infosys Technologies Limited is a information technology services company headquartered in bangalore, India. It has offices in 22 countries and development centers in India, China,Australia, UK, Canada and Japan. According to Global Business VISION Infosys Technologies (China) Company Ltd. will be the best-inclass provider of business solutions to Global 2000 companies and large North Asian corporations by leveraging the technology and talent base of China. MISSION Infosys strive to be a source of pride to its employees and a partner of choice for their clients. An Overview ! LTM Sept 2009 Revenues /5 Year CAGR $4.57 Billion/29% ! LTM Sept 2009 Net income /5 Year CAGR$1.28 Billion/32% 57 Global Development Centres Operating in 31 Countries Business Model: Next Generation Business Model Combining best of consulting & Global delivery REASONS FOR CHOOSING INFOSYS The audited financial statements have been taken on record by the Board of Directors at its meeting held on April 15, 2009. There are no Qualifications in the auditors' reports for these periods. The information presented above is extracted from the audited financial statements as stated. financial statements as set out in the Accounting Standard on Consolidated Financial Statements mandated by Rule 3 of the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. The financial statements of the parent company and its subsidiaries have been combined on a line-by-line basis by adding the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and transactions and resulting unrealized gains / losses. The consolidated financial statements are prepared by applying uniform accounting policies. 36 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Strategy and approach to market Strengths Strategy: Since the company is based in India its competitive advantage is enhanced. The Indian economy, despite weak economic indicators such as relatively high rates of inflation, has low labor costs. The workforce has relatively high skills levels in Information Technology. Couple these two elements together and you have an operational basis that offers low-cost based, highly skilled competitive advantage. Trained Indian personnel often speak very good English and are sensitive to Western culture, underpinned by India's colonial past. To have superior revenue growth and margins relative to the industry. ! Have end-to-end service capability, deep vertical penetration, and broad geographical footprint. ! Increase revenue productivity and build long-term scalability by creating industry specific solutions, platforms, IP etc. Approach to market: ! Cross-selling of services ! Vertical focus to create industry specific competencies ! Investing in the business Infosys is in a strong financial position. The business turned over more than $4 billion in 2008. This means that it has the capital to expand, and also the basis to leverage potential investors. ! Cross currency movement The company has bases in 44 global development centres, most of which are located in India, although the company has offices in many developed and developing nations. This means not only that Infosys is becoming a global brand but also that it has the capability to support the global operations of multinational clients. Long-term challenges Weaknesses ! Resource availability Infosys on occasion struggles in the US markets, and has particular problems in securing United States Federal Government contracts in North America. Since these contracts are highly profitable and tend to run for long periods of time, Infosys is missing out on lucrative business. Added to this is the fact that its competitors do well in terms of securing the same Federal business (and one should also take into account that many of its competitors are domiciled in the US and there could be political pressure on the US Government to award contracts to domestic organizations). Challenges Faced By Infosys: Short-term challenges ! Uncertain economic environment ! Ability to expand addressable market ! Wage inflation ! Stronger rupee ! Increase in tax rate MAKING BRAND GLOBAL Infosys tapping niche markets by dividing their product into industries, BPO services, Consulting services, Engineering Services, Products and Platforms etc. Infosys has office across the globe: Atlanta, Bangalore, Beijing, Bellevue, Bridgewater, Bhubaneswar, Brussels, Charlotte, Chennai, Detroit, Frankfurt, Fremont, Hong Kong, Hyderabad, Lake Forest, Lisle, London, Mangalore, Mauritius, Melbourne, Milano, Mohali, Mumbai, Mysore, New Delhi, Paris, Phoenix, Plano, Pune, Quincy, Reston, Shanghai, Sharjah, Stockholm, Stuttgart, Sydney, Thiruvananthapuram, Tokyo, Toronto, Utrecht, and Zurich. SwotAnalysis of Infosys Infosys is one of the largest businesses in India with a turnover in excess of $4 billion in 2008. The company specializes in Information Technology (IT) and consulting. N.R. Narayana Murthy and six others started the company in 1981, and it is now the largest IT Company in India with its headquarters in Bangalore (although it was started in Pune). It employs more than 90,000 IT professionals and was famously rated 'Best Employer in India.' It operates in a number of business sectors from banking to retail, and its services tend to encompass end-to-end IT solutions which includes a whole bundle of added-value solutions from infrastructure to software engineering. Despite being a huge IT company in relation to its Indian competitors, Infosys is much smaller than its global competitors. As discussed above, Infosys generated $4 billion in 2008, which is relatively low in comparison with large global competitors such as Hewlett-Packard ($91 billion), IBM ($91 billion), EDS ($21 billion) andAccenture ($18 billion). It is sometimes argued that Infosys is weaker when it comes to high-end management consultancy, since it tends to work at the level of operational value creation. Competitors such as IBM and Accenture tend to dominate this space. IMPACT ON BANKING SECTOR The business impacts of information technology (IT),deregulation and globalisation on the structure and profitability of the international banking industry is analysed. Information technology creates new opportunities for the banks in the way they organize product development, delivery and marketing. However ,IT also allows other financial and even non-financial organisations to start offering bank services. Deregulation both within countries and across national boundaries allows increased international competition between banks, financial and non-financial organisations. Bank markets, in general, are also becoming more international(Ref. to IEEE National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Computer Society). ! Enhance ROI DEMOCRATICANDAUTHORITARIAN BALANCE ! 4.Global 500 and Fortune 1000 IT Spending One of the biggest unknowns and one of the greatest concerns is whether IT enhances or eviscerates democracy. Writers like Toffler believe that the “Third Wave” Information Revolution brings widened and positive potentials for citizens to be interconnected to one another and to their government (Toffler 1980). For developing ! Trend setters for the rest of the business world 37 ! Combined It spend represents 40%of global IT spending ! IT budget constitutes 2.3% of $20 trillion combined revenues ! (Source : Gartner 2007;Deutsche Bank Securities;NASSCOM) Which things making Infosys Successful? countries especially, where the hidden hand of corruption and manipulation is so corrosive, some argue the Information Revolution can make government internal processes more transparent to the citizenry (Talero 1997). Brand Extension IT seems to affect democracy and bottom-up political expressions in a variety of ways. In summary, new IT seems to: ! Brand extension is using the leverage of a well known brand name in one category to launch a new product in a different category. multiply the channels through which groups can express themselves (faxes, E-mail, etc.); evade government controls; promote competition among different channels; encourage the easier and cheaper creation of content which can be produced by local or grass roots groups; and permit linkages among geographically separated groups that may share a common political ideal, objective, or interest. (Ref. to Rockfeller Brothers Fund via project on World Security) . Opportunities At a time of recession in the global economy, it may appear that some companies will reduce take up of services that Infosys offers. However, in tough times clients tend to focus upon cost reduction and outsourcing - with are strategies that Infosys offers. So hard times could be profitable for Infosys. There is a new and emerging market in China as the country undergoes a huge industrial revolution. The strategic alliance between Infosys and Schlumberger gives the IT company access to lucrative business in the gas and oil industries. 1. Global Mega Trades ! Asia-New “center of gravity” for the world ! Brand Extension refers to the use of a successful brand name to launch or modified product in a same broad market. ! Brand extensions are a critical growth strategy and source of revenue for the firm. It is one of their most valuable assets. ! This is important in the Indian context where the media and related communication costs are escalating significantly. Abrand name can be extended in three ways: i) Extended to other items in the same product line. ii) Extended to items in a related product line. iii) Extended to items in unrelated product line. Brand extension of Infosys a) Industries b) Consulting services c) Engineering services d) BPO services e) IT services f) Products and Platforms etc. Line Extension ! “Geography becomes History” with reduced telecommunication costs Line extension provide a convenient route for infusing new values into an ongoing brand and gaining presence in new market segments; extensions thus bring new incomes. ! Technology-the supreme enabler Line extension of Infosys:- 2.Infosys Transformation Partner A) Line Extension of Industry ! Differential access to highly educated, cost-competitive human capital. ! Aerospace &Automotive ! Leading the next-generation Business Model and investing in innovations and business solutions. ! Automobile ! Airline ! Reducing scalability with modular global infrastructure. ! Banking and capital market 3.Outsourcing Benefits ! Communication services ! Convert fixed costs to variable ! Consumers packaged goods ! Reduce TCO ! Discrete manufacturing ! Improve competitiveness ! Education ! Improve time-to-market ! Energy 38 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario ! Health care ! Legal Services ] ! High technology ! Sales and Fulfilment ! Hospitality & Leisure ! Sourcing and Procurement Outsourcing ! Insurance Conclusion: ! Life sciences ! Publishing ! In the word of globalisation of IT Industry, Infosys plays a role model for earning more profit during recession. Making new source for end-to-end service capability, deep vertical penetration, geographical footprint etc. to overcome globalise market challenges. ! Resources References: - ! Retail 1. Marketing Management By Philip Kotler(12 edition) ! Studios & Networking 2. M a r k e t i n g M a n a g e m e n t B y V. S . R a m a s w a m y, th S.Namakumari (4 edition) ! Manufacturing ! Logistics & Distribution ! Utilities th B) Line Extension of Function 3. Business Strategy by ICFAI ! Business Platforms 4. www.infosys.com ! Customer Service Outsourcing 5. www.google.co.in ! Finance andAccounting 6. www.wikipedia.org ! Human Resource Outsourcing 7. Business Standard Reviews ! Knowledge Services 39 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Cost Benefit Analysis for Long Term Investments w ith Respect to Infrastructural Projects Prof. Aniruddha Thuse MKSSS's Smt.Hiraben Nanavati Institute of Management and Research, Pune ! The costs and benefits considered under CBA are tangible as well as intangible. Abstract Key Words: *Strategic Finance * Financial Performance Criteria *Social Cost Benefit Analysis. Investment * Investment*Returns on An investment in Infrastructure projects is the long term investment made by the Government. Cost Benefit Analysis is a tool of strategic cost management which enables organization to determine Returns on long term investments in more efficient manner. The technique helps to identify the costs and the benefits of the projects in detail. CBA also considers the costs and benefits which are intangible and uncontrollable. However the expenses and revenues which are intangible by nature are extremely difficult to estimate, the CBA makes this manageable through the application of sensitivity analysis and some other tools. CBA focuses on decision making of costs which have to be incurred on the long term investment projects. The decision making is either 'to incur' or 'not to incur' a particular cost in that project. This research paper is inclusive of the following key objectives. ! It is a strategic tool of cost management which performs as a path of getting high revenues at the low cost. ! It enables to differentiate the costs as 'necessary' and 'unnecessary'. CBAand Cost Classification Tangible Costs: These types of costs can be easily identified and more or less controllable. Intangible Costs: Which are difficult to identify and due to this uncontrollable. E.g., Physical hazards arising due to flood, fire, strike, lockout etc., Economic risks such as competition, change in fashion, import restrictions, higher prices of inputs etc, Political risks such as change in Government policy, political unrests, wars etc, Technological risks such as change in design, knowledge and application. Cost Classification w.r.t Long Term Investments 1. To check the feasibility of present techniques of CBA for the performance analysis of long term investments say investments in infrastructure projects. Tangible Costs Purchase/Acquisition Cost. 2. To determine the financial performance measurement criteria by way of Returns on long term investments, by using the CBA technique. Installation Cost. 3. Conceptual understanding of the concept- Social CBA Introduction What is CBA? Cost Benefit Analysis (CBA) is the sophisticated technique in the cost management. CBA is defined as, 'An analytical tool in decision making which enables a systematic comparison to be made between the estimated cost of undertaking of project and the estimated value and benefits which may arise from the operations of such a project'. In simple words, CBA is the technique of evaluating the expected benefits which are to be derived from the expected costs associated to that particular project. The technique builds up close relationship between expenditure and revenue. About CBA ! It is a monetary assessment of the project. ! It is a comparative tool of costs and benefits. Intangible Costs Cost incurred due to change in technology of operations or change in market trend. Maintenance Cost. Processing Charges. Project Valuation Cost. Cost related to Working Capital of investment. Cost arises due to delay in completion of the project. Other costs (depending upon the type of investment). Five Step Model of CBA In order to introduce CBA in the operations of the corporate, the following procedure has to be adopted. It is called Five Step Model of CBA Step 1: In this step, all the costs (especially activity wise) have to be listed and analyzed. It is a Cost Analysis. Step 2: In this step, the activity wise Contribution in terms of benefits (income) has to be done. It is a Contribution Analysis. Step 3: It is essential to clarify the exact cause behind the costs National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 40 which have to be incurred. (to which we are saying 'necessary costs'). In such a case, the questions can be asked like, Scope of CBAin Long Term Investment 1. To decide investment criteria. 1. Is it really essential to incur this/these cost/s? 2. To forecast future risk and uncertainty. 2. If essential, what are the expected Benefits from the incurring? 3. To focus on problems like environmental and social. 4. To determine transfer price and opportunity cost of the project. 5. To determine proper cost of capital and cash flows of the project 3. If not essential and to be eliminated (to which we are saying 'unnecessary costs') would it affect the productivity/quality/output/revenue of the project? 4. If partially essential, what would be the portion of partial? It is called Benefit Analysis. Step 4: The Cost Reduction Program has to be developed specifically for the unnecessary costs, which considers the following, ! These costs do not contribute anything in the Benefit of the project ! These costs do not show recovery feature. ! These costs do not show output feature. ! It is called a step of Cost Reduction. Step 5: The Profit Improvement Program has to be developed. The supportive in this program are About Infrastructure Projects 1. Highly capital intensive 2. Huge sunk costs 3. Long operating life Procedure and Techniques of CBA 1. Discounted Cash Flows: In simple words, cash flows are the estimated revenues of the investment proposal over the expenditure (cost) to be incurred on the same. The future cash flows are always uncertain and due to this, these cash flows have to be estimated by considering the time value of money which is reducing as the period passes on. The formula for estimating the Discounted Cash Flows is, ! Sources (existing and new) which generate additional income., Estimated Net Cash Flows * Present Value Factor ! Costs which are reduced in existing activities. The Cash Outflows are more or less tangible and are estimated easily up to certain extent. If we see the following list of Cash Outflows, we could test their nature with subject to their tangibility. ! It is called a step of Profit Improvement. CBAApplication to Long Term Investment Proposals The corporate and public sector undertakings usually go for long term investments in the following types/areas of projects. 1. Buying of fixed assets like plant, building and machinery. 2. Buying of financial assets like bonds, debentures and shares for longer tenure and of huge amount. 3. Undertaking of projects like road or bridge constructions and other infrastructure projects. 4. Providing economic services like electricity, gas, telecommunication and water. 5. Corporate combines like mergers, acquisitions etc. 6. Other programs undertaken by the corporate such as advertisement, research and development, warehousing chain etc. for which the long term strategic decision making is essential. CBA is to be applied in case of the long term investment proposals to decide, 1. Which would be the best alternative proposal of investment among multiples? 2. Which time duration or period is the best for investment? 3. Whether to or not to invest in particular proposal? (Cash Inflow over Cash Outflow) Cash Outflows in Long Term Investment Proposals. Items Nature Acquisition Cost Tangible Research and Development Intangible Government Expenditure Manpower Expenditure Expenditure on Electricity, Water, Land etc.(for physical assets investment) Installation, Maintenance etc. Tangible Tangible Tangible Tangible Benefits can be derived by way of Selection of proper mode Proper survey and study Subsidies and others Hiring skilled people Selecting proper location Proper supervising Cash Inflows in Long Term Investment Proposals Items Nature Physical and monetary output Unsystematic derived from the use of fixed assets Disposal of fixed assets Systematic Returns on financial investments Systematic in certain types (shares, bonds etc.) (bonds, fixed income securities etc) Loans and advances granted Systematic Receipts from Future, Forward and Relatively Systematic Options contracts Net Working Capital recovered Unsystematic National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 2. Internal Rate of Return: An ascertainment of Internal Rate of Return (IRR) is significant in long term investment decisions. The time value of money method may be used to ascertain IRR of the project. In simple words, IRR is the rate at which net cash inflows become equal to net cash outflows (expenditure = revenue). *Suppose, Rs.100000 are invested in a project, then what rate equalizes Rs.100000 as cash inflow?, that rate has to be calculated. It is IRR. It should be noted that the IRR is the trial and error type of technique as different discounting factors have to be tried out for its calculation. For accepting the project, the IRR should be more than the cost of capital of the project (which has to be calculated separately.) The IRR technique is used to prove the efficiency of the funds invested in the project. When IRR is equal to Cost of Capital of the project, the marginal efficiency of it is proved Graphical Interpretation of IRR Periodic Cash Inflows 41 equity and preference shareholders and the company itself (in case of retained earnings.) The earnings of all these groups are in form of interest and dividend. But in case of equity finance and retained earning, the exact estimation of cost of capital is not possible as these sources may not provide any fixed returns over a period of time. In fact, the cost of retained earnings itself is the main determinant of cost of equity finance. The cost of capital indicates the risk-return relationship of the investment. A degree of risk defines and demands the degree of returns on the investments. The financers of the investment always expect minimum benchmark returns on their investments. In fact, the long term investment projects should yield more cash inflows than the Weighted Average Cost of Capital (WACC, the overall cost of capital of all the sources which used to finance the project). Risk Return Relationship in various long term investments Investment- Rs.100000 Rs.15000 CoC IRR Rs.12000 Rs.25000 Rs.35000 Rs.43000 10% 12% 0 Discounting Rates (trial and error basis) Cost of Capital: In case of the long term investments, the term cost of capital refers to the minimum required rate of return (RRR) from that investment. It is the rate, the investment must earn in order to cover the cost of funds which are financed for that investment. Let us see an example. A company has to acquire machinery worth Rs.500000 and for this purpose; it has taken a bank finance of Rs.500000 @ 11% p.a. Here the company incurs Rs.55000 p.a (11% to Rs.500000) as interest on loan borrowed. It would be the benchmark cash inflow that the machinery must provide by way of its output to the company. The flow can be expressed as follows, Bank Firm (Investor) (Borrower) Machinery (Investor) Interest (Cash Inflow) - Interest (Cash Outflow)- Output (Cash Inflow) Cost of Capital Otherwise the investment in machinery should be terminated. The firm can raise funds for its investment through various sources of finance such as bank finance, debt finance, equity finance, preference share capital and through internal sources (retained earnings) also. So the cost of capital can be defined as the minimum rate of return which is expected to be earned by the financers of the company like bankers, debenture holders, The above graph shows the risk return relationship in various modes of long term investments. 1. The financial assets (shares, bonds, securities etc.) show relatively less but systematic risk and the returns. The cost of capital is in well control. 2. However, in case of the physical assets, the cost of capital is high, the returns are unsystematic and due to this the risk factor is also high. 3. The investment in Infrastructure projects takes longer period for generating the returns. The same thing is experienced in case of the investment in mergers and acquisitions (corporate combines). Both these types of investments are future oriented investments (start getting returns in future period) and the speed of returns is slow. 4. Net Present Value (NPV): NPV can be considered as the true measure of the profitability of investment. For accepting the project, the NPV must show positive recovery of discounted cash inflows over a period of time. If Rs.100000 are to be invested in a project for a period of 5 years, then the discounted cash inflows during that period should be more than Rs.100000. Otherwise the project should be rejected. The simple formula of NPV is, National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 42 NPV = Present Value of Cash Inflows (-) Net Cash Outflows Where,Present Value of Cash Inflows = Net Cash Inflows * Present Value Factor charges (periodically payable for raising the funds externally.), Mortgage costs, Insurance cost etc. While implementing these 4 techniques in the long term investment, one should not neglect the realistic assumptions attached to the techniques. The implementation of Cost of Capital, IRR and NPV can be proved accurate only after considering following assumptions, 5. Contingencies: The investment in long term projects (say Infrastructure projects) is based on certain assumptions. These assumptions are mainly concerned to the cash inflows and returns on the investment over the period. The presence of such assumptions makes CBA application more difficult. The contingencies have to be ascertained through proper research and survey in order to minimize the negative variances, which may arise in the forecasted cash inflows. 1. The investor is able to ascertain the exact cash inflows for the future period. 2. The techniques like IRR are based on trial and error working. 3. The certainty of Cost of Capital is guaranteed. It is the same rate to be used as the discount rate for calculating the present value of cash inflows. There are some other costs which are unavoidable and have to be considered in the ascertainment of cash inflows. The costs like taxes, depreciation and interest on loan are the key areas in this ascertainment. These 3 costs affect the amount of forecasted cash inflows up to great extent. 4. Working Capital Margin The major difficulties take place in the application of CBA is due to the contingencies. The contingencies are more in case of the 'complex' investment projects. Now days, the investments in insurance and mutual funds show a complexity (as far as the returns criteria is considered). Such a complexity has taken place due to the multiple choices of portfolios. CBAModel for Contingencies. (-) Depreciation Suppose Rs.500000 to be invested in a project for over a period of 7 years with uniform cash inflows of Rs.85000 p.a at expected return @10%, then by calculation, IRR is approximately 5% (trial and error basis) =Profit after Depreciation before Interest and Tax (PADBIT) Here two assumptions are, (-) Interest on Loans =Profit before Tax (PBT) 1. Cash inflows are forecasted on uniform basis and on aggregate basis. (-) Tax 2. No impact on inflation on the cash inflows. =Profit after Tax (PAT) If we consider the inflation factor in this example, then we take inflationary rate at 5% (which is the standard expected rate of inflation in India). Now the cash inflows are forecasted as follows, Profit before Interest and Tax (PBIT) (+) Depreciation = Net Cash Inflows The impact of these items on the net cash inflows can be expressed as follows, A B C D E Profit Depr. Depr. Interest Tax @50% on Loan 50000 50000 50000 50000 3000 2500 1500 4500 11250 4500 2000 0 17875 21500 23250 22750 3000 2500 1500 4500 F Impact of item on Net Cash Inflow Net Cash Inflows (A-B-C-D+E) 20875 24000 24750 27250 High Interest High Depreciation The long term investment projects involve some costs in case of which the CBA application becomes very vital but at the same time very difficult. These costs are the managed costs (the budget of which is decided by the management of the organization) 1. Knowhow and Consultancy Charges. 2. Expenditure on special training to workers for using new technology. 3. Preliminary and Pre-operative Expenses: These expenses include Investigation fees, Service charges, Commitment Years Cash Inflows (Rs.) 1 85000 2 85000 3 85000 4 85000 5 85000 6 85000 7 85000 Inflation Rate compounded 1.05 1.10 1.16 1.21 1.28 1.34 1.41 Cash Inflows at Inflation (Rs.) 89250 93500 98600 102850 108800 113900 119850 After considering the inflation rate, the aggregate net cash th inflows at the end of 7 year are Rs.726750. Here IRR would be (after trial and error) 10%. During the period 2008-09, India have experienced 'Cost induced Inflation' (continues rise in price level of goods and services without any strong reason). In such type of inflation, the input costs are always increasing but the productivity is stagnant. The long term capital investments (plant, machinery, land etc.) have to be managed by considering two vital factors i.e depreciation 43 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario and cost of capital. During the inflation, attractive commercial returns in financial sense. But the costs incurred are always financial. The goal of such kinds of projects is national profitability and not the commercial profitability. 1. Cost of capital increases. 2. Depreciation provides additional tax benefits. The social CBA is termed as the technique of ascertaining the national profitability of the projects. Concept of Capital Rationing When multiple projects are to be undertaken for investment, the capital rationing process provides justification about the allocation of funds to all these projects in such a way that the returns on investment could be maximized. The capital rationing can be explained as follows. Social Cost Benefit Model for Public Sector Undertakings Costs Borrowings and Interest costs for projects The Capital Rationing Model for different projects in one organization Sr.No Investments 1 2 3 Net Cash Outflow (Rs. In Crore) Net Cash Inflows IRR Cost of Capital NPV (Rs.in Crore) % % (Rs.) Ranking Nature Benefits Direct Direct Construction Direct Fixed Asset Financial Assets Other Innovative Projects Governments contribution by financial help Nature Power and other charges Employment can be generated through the projects Indirect Direct Other costs to be incurred for pollution control, environment maintenance etc. Indirect Total Growth and development in inter region businesses In the given example, the organization has following options for ranking. Indirect 1. Select only one project. (1 or 2 or 3of the above) with criteria of, In Social CBA, the costs and benefits are classified as direct and indirect. A) High NPV The benefits in these types of investments are of two types, B) Positive NPV 1. Benefit to the promoter in monetary sense. C) IRR and Cost of Capital are equal or IRR > CoC 2. Benefit to community in real sense. 2. Select any combination of 2 projects. The social CBA gives weightage to the indirect and hidden costs and benefits. This is the key feature of social CBA. The costs can be further classified clearly according to their tangibility, significance and value. (1 and 2, 1 and 3 and 2 and 3) Criteria and Combination NPV 1 and 2 1 and 3 High Positive 2 and 3 Negative IRR to Cost of Capital Equal IRR > C.o.C IRR < C.o.C Ranking Infrastructure Projects CBA Accept II Accept I The cash outflows and cash inflows (categories) in infrastructure projects are listed out as follows, Reject Land/area acquisition Business/communication development Government formalities Employment generation It means, the combination 1 and 3 is acceptable for investment as it gives positive NPV, and IRR is excess to Cost of Capital. The minimum returns are possible in inflationary situation also. To conclude, capital rationing is a useful technique in contingencies and in complex investment decisions. Concept of Social Cost BenefitAnalysis (Social CBA) The Government and public sector undertakings like infrastructure development, transportation and irrigation are the key areas on which the focus is given in current year's Union Budget program. These are the long term (very long term) investment projects. The returns on these types of investments are to be ascertained by keeping in mind the social welfare, social growth and social development. The commercial profitability has second ranking. These types of projects may not offer Land development and erection Savings in time and transport Natural environment damages Pollution increase Scope of Social CBA in Community Development in India (with reference to Union Budget Program 2009-10) The scope of Social CBA applied in the Government projects can be explained as follows, 1. The Government has planned to invest significant funds in the infrastructure projects. 2. The Government is looking for additional opportunities of employment particularly in rural and semi urban areas. 3. The current fiscal deficit is declared 6.7% to GDP and it is proposed to reduce in subsequent years to 4%. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 44 Scope of Social CBAin Micro Finance Institutions (MFI) Indian MFIs are planning to raise Rs.1000 crore Debts in current year through Non Convertible Debentures (NCD) and Commercial Papers (CP). It would the good opportunity of investment for Indian mutual funds and insurance companies. The MFIs cannot collect direct savings from people so they have to depend upon financial markets for their funding. The banks, on the other hand, charge relatively high interest on loans to MFIs. The NCD rates are lower (upto 11-13%) than the bank interest rates. Likewise the MFIs are looking for Private Equity (PI) also. Very recently Bajaj Allianz have announced strategic investment of Rs.50 crore in SKS MFI. So Bajaj Allianz is the first insurance company to invest in MFIs. References: ! Financial Management-(Text and Cases) by Brigham and Ehrhardt ! Cost Management by Ravi Kishore ! Projects by Prasanna Chandra FEEDBACK H ats off to PCMRD team for conducting such a brilliant National Seminar, right form the selection of Topic, which was on current issues. The Planning of seminar was good especially the resource persons right from Mr. Vijay Bhatkar to others, Specialists always prove to be an asset in motivating the students/researchers attending the event. I hope such events become a regular affair with PCMRD. I on behalf of Dept. of Commerce,Dr. Babasaheb Ambedkar Marathwada University, Aurangabad wishes you very best of luck in your furture endeavours. Thanking you, Dr. Syed Azharuddin Associate Professor, Dept of Commerce; Dr. B A M University Aurangabad, (m) 9422214865 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 45 Merger and Acquisitions to Exploit Future Opportunities Prof. Vimala Ramsinghani Prof. Reena Joshi Vyas Institute of Management, Jodhpur (Rajasthan) Introduction Mergers andAcquisitions in India Mergers and acquisitions are two broad types of restructuring through which managers seek economies of scale, enhanced market visibility, and other efficiencies. A merger occurs when two companies decide to combine their assets and liabilities into one entity, or when one company purchases another. The process of mergers and acquisitions has gained substantial importance in today's corporate world. This process is extensively used for restructuring the business organizations. In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. The term is often used to describe a merger of equals, such as that of Daimler-Benz and Chrysler, which was renamed DaimlerChrysler (see case study). The term “acquisition” simply refers to one company's purchase of anotheras when a smaller target firm is bought and absorbed into a larger acquiring firm. Patterns The worldwide M&A market topped US$4.3 trillion and over 40,000 deals in 2007. Figure 1 depicts the growth of M&A activity, quarter by quarter, over the last five years. There are different factors that played their parts in facilitating the mergers and acquisitions in India. The nature and scope of M&A activity has changed substantially over time. In the United States, the Great Merger Movement (1895 to 1905) was characterized by mergers across small firms with little market share, resulting in companies such as DuPont, Nabisco, and General Electric. More recently, globalization has increased the market for crossborder M&As. In 2007 cross-border transactions were worth US$2.1 trillion, up from US$256 billion in 1996 Figure 2. Global M&A market 2007share by region. (Source: Thomson Financial) The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. Till recent past, the incidence of Indian entrepreneurs acquiring foreign enterprises was not so common. The situation has undergone a sea change in the last couple of years. Acquisition of foreign companies by the Indian businesses has been the latest trend in the Indian corporate sector. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Transnational M&As have seen annual increases of as much as 300% in China, 68% in India, 58% in Europe, and 21% in Japan.1 The regional share of today's M&A market is shown in Figure 2. 1. Favorable government policies, 2. Buoyancy in economy, additional liquidity in the corporate sector, and 3. Dynamic attitudes of the Indian entrepreneurs are the key factors behind the changing trends of mergers and acquisitions in India. Mergers andAcquisitions in different sectors in India Sector wise, large volumes of mergers and mergers and acquisitions in India have occurred in finance, telecom, FMCG, construction materials, automotives and metals. In 2005 finance topped the list with 20% of total value of mergers and acquisitions in India taking place in this sector. Telecom accounted for 16%, while FMCG and construction materials accounted for 13% and 10% respectively. In the banking sector, important mergers and acquisitions in India in recent years include the merger between IDBI (Industrial Development bank of India) and its own subsidiary IDBI Bank. The deal was worth $ 174.6 million (Rs. 7.6 billion in Indian currency). Another important merger was that between Centurion Bank and Bank of Punjab. Worth $82.1 million (Rs. 3.6 billion in Indian currency), this merger led to the creation of the Centurion Bank 46 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario of Punjab with 235 branches in different regions of India. In the telecom sector, an increase of stakes by SingTel from 26.96 % to 32.8 % in Bharti Telecom was worth $252 million (Rs. 10.9 billion in Indian currency). In the Foods and FMCG sector a controlling stake of Shaw Wallace and Company was acquired by United Breweries Group owned by Vijay Mallya. This deal was worth $371.6 million (Rs. 16.2 billion in Indian currency). Another important one in this sector, worth $48.2 million (Rs 2.1 billion in Indian currency) was the acquisition of 90% stake in Williamson Tea Assam by McLeod Russell India In construction materials 67 % stake in Ambuja Cement India Ltd was acquired by Holcim, a Swiss company for $634.9 million (Rs 27.3 billion in Indian currency). M&A activity is on the rise in the Indian IT industry with the last couple of years having seen a few large mergers and acquisitions. Whether it was the merger of Polaris with OrbiTech or Wipro's acquisition of Spectramind and GE Medical Systems Information Technology (India) or Mphasis BFL's acquisition of a Chinese firm, mergers and acquisitions in the Indian IT industry are here to stay and more are expected to follow in the near future. Why do Indian IT companies opt for M&A? The size factor Many companies have undertaken M&A to grow in size by adding manpower and to facilitate overall expansion. The Polaris-OrbiTech merger saw a spurt in the merged entity's revenues from $60 million to $125 million. The merger also added 1,400 employees to Polaris, taking the total employee strength to 4,000. Similarly, for Bangalore-based vMoksha Technologies, the logic behind the acquisition of two US-based companies, Challenger Systems and X media, was to increase in size by widening its customer base. Pawan Kumar, chairman and CEO of vMoksha Technologies says, “The size of a company does matter when interacting with customers and clients. These acquisitions added 120 people to our staff.” The acquisition of China-based Navion software helped Mphasis BFL increase its employee strength by 85 people and expand its business in the region. Similarly, when software services giant Wipro acquired BPO player Spectramind, it helped the company expand into the BPO space. In the same vein, Bangalore-based Mascot Systems' acquisition of US-based eJiva and Hyderabad-based Aqua Regia enhanced the company's value proposition and made it globally competitive. With the acquisition of eJiva and Aqua Regia, the total employee strength of Mascot Systems increased from 1,700 to 2,000. To gain new customers One likely reason behind M&A has been to gain new customers. Polaris Software had six major customer wins after it acquired the Intellectual Property Rights (IPR) of OrbiTech's Orbi suite framework of banking solutions. vMoksha also saw a rise in the number of its customers (four new customers) due to acquisitions as it expanded considerably in the US market and leveraged on the existing customer base. Mphasis also added new customers in the Japanese and Chinese markets after the acquisition of Navion. The need for skill set enhancement The need for skill set enhancement seems to be a major reason for companies to merge and make new acquisitions. The PolarisOrbiTech merger helped in combining skill sets of both companies, which in turn led to growth and expansion of the merged entity While Polaris Software was looking for a specialised product suite, OrbiTech was looking forward to efficient marketing and service support for its products. Post-merger, Polaris got the Orbi suite framework and combined it with its service expertise to win more customers. After the merger, Polaris has become a large, specialised company in the banking, financial services and insurance (BFSI) space, offering solutions, products and transaction services. Polaris has had some recent post-merger wins, including ABN-AMRO Bank, Kuwait Commercial Bank and Deutsche Leasing. Wipro acquired GE Medical Systems Information Techno-logy (India) to leverage its specialisation in the health science domain. The intellectual property that Wipro acquired from the medical systems software company provided it with a platform to expand its offerings in the Indian and the Asia-Pacific healthcare IT market. Similarly, when Wipro acquired the global energy practice of American Management System and the R&D divisions of Ericsson, it acquired skilled professionals and a strong customer base in the areas of energy consultancy and telecom R&D. vMoksha Technologies' acquisition of two US-based companies helped it to increase its size, and leverage on the expertise of the acquired companies. Says Kumar, “One of the acquired companies is very strong in banking and we leveraged this factor to gain some good banking customers.” Likewise Bangalore-based Mascot Systems was benefited by the technical expertise of eJiva and Aqua Regia, the two companies it recently acquired. The acquisition also helped Mascot to extend its offerings through a portfolio of complementary services, technologies and skills. Expand their market reach into new geographies Many Indian companies have carried out acquisitions and mergers to expand their reach in international markets and to spread across different geographies. Mphasis BFL, through its acquisition of Navion software wants to expand its operations into the Chinese and Japanese markets. Ravi Ramu, Mphasis BFL's group chief financial officer of says, “The need for developing a near-shore centre for the Japanese market triggered this acquisition. Besides this, we plan to tap the skilled labour force in China to improve our prospects in the region. We also plan to tap the local market at a later stage and use National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario the Chinese base as an alternative centre for our offshore services in the region.” Similarly, vMoksha Techn-ologies after acquiring the two USbased companies has cemented its base in the US market and plans further expansions from here. Adds Kumar, “With the acquisitions, we also expanded our reach in the US market besides India. Since the majority of workforce in the acquired companies was Indian, integration was much easier and smooth” 47 achieve economies of scale, as well as garner market share. Mergers and acquisitions in the banking sector have the capacity to ensure efficiency, profitability and synergy. They also help to form and grow shareholder value. In some cases, financially distressed banks are also subject to takeovers or mergers in the banking sector and this kind of merger may result in monopoly and job cuts. As study shows due to globalization & liberalization, merger & acquisition are very important method for the future of companies who want to increase their market access and desire to present itself globally. Deregulation in the financial market, market liberalization, economic reforms, and a number of other factors have played an important function behind the growth of mergers and acquisitions in the banking sector. Nevertheless, there are many challenges that are still to be overcome through appropriate measures. Future perspective for banking sector Future perspective for Pharmaceuticals For example Mergers and acquisitions in banking sector have become familiar in the majority of all the countries in the world.A large number of international and domestic banks all over the world are engaged in merger and acquisition activities. One of the principal objectives behind the mergers and acquisitions in the banking sector is to reap the benefits of economies of scale. There are a number of opportunities for the major pharmaceutical products and services providers in the Indian pharmaceutical sector as the price controls have been relaxed and there have been significant changes in the medicinal requirements of the Indians. The manufacturing base in India is also strong enough to support the major international pharmaceutical companies from the performance perspective. Future Perspective With the help of mergers and acquisitions in the banking sector, the banks can achieve significant growth in their operations and minimize their expenses to a considerable extent. Another important advantage behind this kind of merger is that in this process, competition is reduced because merger eliminates competitors from the banking industry. Mergers and acquisitions in banking sector are forms of horizontal merger because the merging entities are involved in the same kind of business or commercial activities. Sometimes, non-banking financial institutions are also merged with other banks if they provide similar type of services. Through mergers and acquisitions in the banking sector, the banks look for strategic benefits in the banking sector. They also try to enhance their customer base. In the context of mergers and acquisitions in the banking sector, it can be reckoned that size does matter and growth in size can be achieved through mergers and acquisitions quite easily. Growth achieved by taking assistance of the mergers and acquisitions in the banking sector may be described as inorganic growth. Both government banks and private sector banks are adopting policies for mergers and acquisitions. In many countries, global or multinational banks are extending their operations through mergers and acquisitions with the regional banks in those countries. These mergers and acquisitions are named as cross-border mergers and acquisitions in the banking sector or international mergers and acquisitions in the banking sector. By doing this, global banking corporations are able to place themselves into a dominant position in the banking sector, This may be said as the Indian pharmaceutical market is varied as well as economical. It is expected that in the coming years the Indian pharmaceutical companies would be executing more mergers and acquisitions. It is expected that the regulated pharmaceutical markets in the United States and Europe would be the main areas of operation. The pharmaceutical sector offers an array of growth opportunities. This sector has always been dynamic in nature and the pace of change has never been as rapid as it is now. To adapt to these changing trends, the Indian pharmaceutical and biotechnology companies have evolved distinctive business models to take advantage of their inherent strengths and the "Borderless" nature of this sector. These differentiated business models provide the pharmaceutical and biotechnology companies' the necessary competitive edge for consolidation and growth. In the recent years the Indian pharmaceutical companies have been venturing into mergers and acquisitions so that they can gain access to the big names of the international pharmaceutical scenario. 48 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Mergers and acquisitions can be accretive in that they increase financial performance, or dilutive in the reverse case, where a measure such as earnings per share (EPS) actually falls. In implementation, M&As typically face the following critical issues: Incompatible corporate cultures: The cultures of the two companies may be inconsistent, resulting in resources being diverted away from the focal synergies. Business as usual: The target company may allow redundant staff and overlapping operations to continue, thwarting efficiency. High executive turnover: The target company may lose critical top management team leadership. A recent study reports that target companies lose 21% of their executives each year for at least ten years following an acquisition (twice the turnover experienced in nonmerged firms). Neglect business at hand: A recent McKinsey study reported that too many companies focus on integration and cost cutting, and neglect the daily business at hand and customers. Before the Merger 1. Begin by formulating a clear and convincing strategy. Strategists must first develop a compelling and sustainable strategy. Key questions include: What is your firm's strategy? What role does the M&A play in this strategy? What is the vision of the strategy of the new entity? 2. Focus on target & the deal. Prior to signing a memo of understanding, managers should examine operational and management issues and risks. Seek answers to the following questions: Is this the right target? What is the compelling logic behind this deal? What is the value? How would we communicate this value to the board of directors and other key stakeholders? What will our strategy be for bidding and negotiations? How much are we willing to spend? If we are successful, how can we accelerate integration? 3. Do your due diligence. Executives must acquire and analyze as much information as possible about potential synergies. In addition to managers across key functional areas in the firm, outside experts can be brought in to help appraise answers in the preassessment, and especially to challenge assumptions, by asking questions such as: Are our estimates of future growth and profitability rates reliable? Are there aspects of the company history/culture or of the environment (for example, legal, cultural, political, economic) that should be taken into account? when executives can convincingly discuss integration plans, both internally and externally. Managers should be prepared to answer the questions identified above, as well as: How can we prepare our people psychologically for the deal? What value will be created? What are the priorities for integration? What are the primary risks? How will progress be measured? How will we address any surprises? After the Deal 6. Establish leadership. The new entity will require the quick identification and buy-in of managers, especially at top and middle levels. Ask: Who will lead the new entity? Do we have buy-in and support from the right people? 7. Manage the culture and respect the employees of the merged/acquired company. An atmosphere of respect and tolerance can aid the speed and ease of integration. Executives should formulate plans that address the following concerns: How can we encourage the best and brightest employees to stay on in the new entity? How can we build loyalty and buy-in? 8. Explore new growth opportunities. Long-run performance is linked to identifying and acting on both internal and external growth opportunities. Managers should seek out any untapped growth opportunities in the new entity. 9. Exploit early wins. To build momentum, the new entity should actively seek early wins and communicate these. To identify them, consider whether there early wins in sales, knowledge management, or the work environment. 10. Focus on the customer. To survive, firms must create value for customers. Managers must continue to ask: Are we at risk of losing customers? Are our salespeople informed about the new entity? Can our salespeople get our customers excited about the new entity? Conclusion: During the last two decades, the financial landscape around the world has undergone dramatic changes following a wave of financial liberalization, globalization and removal of restrictions on cross-border trading activities. Analysis Analysis suggests that only 19% of the respondents state that they do not believe in M&A and 81% look at it as a part of strategy or will look at it opportunistically. M&A is definitely a key agenda for India Inc 4. Devise a workable plan. Formulate plans that take into account some of the following: What is our new entity's organizational structure? Who is in charge? What products will be taken forward? How will we manage company accounts? What IT systems will we use? M&A transactions are often pursued in order to acquire a larger share of an existing market, enter new markets, eliminate competitors, acquire expertise or assets, transfer skills, save costs, increase efficiencies or capitalise on synergies.As technologies mature and high rates of growth become more difficult to achieve, many companies include acquisitions as part of their strategies to maintain growth, augment their product lines, obtain new technologies, and remain vital. 5. Communicate. M&A transactions tend to be viewed favorably M&Aas a part of Business Strategy National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario No, We do not believe in inorganic Stragegy 19% 49 Tools to Support M&A Integration at Every Level. San Francisco, CA: Jossey-Bass, 2007. Miller, Edwin L. Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide. Hoboken, NJ:Wiley, 2008. Sadtler, David, David Smith, and Andrew Campbell. Smarter Acquisitions: Ten Steps to Successful Deals. Harlow, UK: Pearson Education, 2008. Yes 49% Websites: It is Opportunistic 32% References: Google Scholar articlessearch on terms “mergers and acquisitions” or “M&A”: scholar.google.com Yahoo! Finance M&Anews: biz.yahoo.com/topic/m-a Books: Bruner, Robert F. Deals from Hell: M&A Lessons That Rise Above the Ashes. Hoboken, NJ: Wiley, 2005. Notes 1 Firstbrook, Caroline. “Transnational mergers and acquisitions: How to beat the odds of disaster.” Journal of Business Strategy 28:1 (2007): 5356. Galpin, Timothy J., and Mark Herndon. The Complete Guide to Mergers and Acquisitions: Process FEEDBACK I t was indeed a commendable effort by PCMRD to organise a National Seminar on such a large and grand Scale. The Speakers were very Knowledgeable and from varied Backgrounds, which made every talk quite Interesting one and kept us waiting for what is coming next. The entire arrangement was Excellent. Right from day one the Organisation, hospitality, food was quite apt and it was a great pleasure for me to be a part of such a grand Seminar. I congratulate PCMRD on successful completion of this Seminar and look forward to many more such events from them. -Dr A K Vashisht Prof. University business School, Punjab University, Chandigarh National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 50 MERGERS & ACQUISITIONS (M&A) A Tale of Indian Telecom Industry Prof. Khan M. A. Imran Vice Principal, Dr. Rafiq Zakaria Campus, Millennium Institute of Management, Aurangabad & Dr. Syed Azharuddin Reader, Dept of Commerce,Dr. Babasaheb Ambedkar Marathwada University, Aurangabad Abstract Even though mergers and acquisitions (M&A) have been an important element of corporate strategy all over the globe for several decades, research on M&As has not been able to provide conclusive evidence on whether they enhance efficiency or destroy wealth. There is thus an ongoing global debate on the effects of M&As on firms. Mergers and acquisitions have become common in India today. However, very little appears to be known about the long-term post-merger performance of firms in India, and the strategic factors that affect this performance. Our study attempts to fill this gap in knowledge about M&As in India. Even though mergers and acquisitions (M&A) have been an important element of corporate strategy all over the globe for several decades, research on M&As has not been able to provide conclusive evidence on whether they enhance efficiency or destroy wealth. There is thus an ongoing global debate on the effects of M&As on firms. Mergers and acquisitions have become common in India today. However, very little appears to be known about the long-term post-merger performance of firms in India, and the strategic factors that affect this performance. Our study attempts to fill this gap in knowledge about M & As in India. The paper focuses on the following: 1. Scope of Merger &Acquisition, be known about the long-term post-merger performance of firms in India, and the strategic factors that affect this performance. Our study attempts to fill this gap in knowledge about M&As in India. The phrase "Mergers & Acquisition" refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combination of different company that can assist, finance or help a growing company in a given industry, grow swiftly without having to create another business entity. In case of a merger, two firms come together to form a new company. The operations of both entities merge as a single operation. Besides this, the customer and employee base also unify, as in the case of Arcelor-Mittal, the world's largest steel manufacturer. The company was formed in 2006 after the merger ofArcelor with Mittal Steel. In the case of acquisition, one company takes the ownership of another company after paying the price for it to the owners or shareholders of that company. The acquired company becomes the subsidiary of the buyer company. Thus the company that acquires, gains complete control of the firm it buys. “In case of an acquisition, you are a big company and you are acquiring a small company. For instance, if A buys B, then A will remain, B will vanish. Take the case of HDFC purchasing Centurion Bank of Punjab. 2. Mergers & Acquisitions (M&A) In Indian Telecom Industry 3. M&A Case Studies 4. Whether M&A In Indian Telecom Were Successful 5. When Merger And Acquisition Promise Fails To Deliver 6. Trends in Telecom Merger andAcquisition Introduction Even though mergers and acquisitions (M&A) have been an important element of corporate strategy all over the globe for several decades, research on M&As has not been able to provide conclusive evidence on whether they enhance efficiency or destroy wealth. There is thus an ongoing global debate on the effects of M&As on firms. Mergers and acquisitions have become common in India today. However, very little appears to Every company aspires to grow both organically and inorganically. The M&A is considered by many as a quick way to expand by adding new customers and more revenues and profits. It could also emanate from the desire to enter newer geographies that are more promising. It is important to have compelling reasons to go in for an M&A and that it would meet the desired results. Sometimes, a poor performance by a company could make its promoters feel that an M&A could help them rake in National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario profits. This would be one of the worst reasons to acquire or merge with another entity. Sometimes just to take on the competition, one might want to go in for M&A. This strategy might work but only if it is supported by other good reasons such as a significant value addition to the current business. “One should not do an acquisition only for the sake of doing it. Every M&A should mean something. It should either bring in new technology or new customers or footprints into new geographies, a new market or a better team,” says Thunuguntla of SMC Capitals. “Most M&A (98 percent of them) globally have failed,” he adds. This is because most of them are done in haste and without assessing proper synergies, he adds. Scope of Merger &Acquisition M&A has become a daily transaction now-a-days. Mergers and acquisitions are vital part of capital market activity in restructuring a corporation and had lately become one of the preferential routes for expansion and consolidation. The reasons to merge, amalgamate and acquire are diverse, ranging from acquiring market share to restructuring the corporation to mount up global competition. One of the largest and most complicated parts of a business merger is the successful integration of the enterprise networks of the merger partners. The main objective of each firm is to gain profits. M&A has a great scope in sectors like steel, aluminum, cement, auto, banking & finance, computer software, pharmaceuticals, consumer durable food products, textiles etc. Mergers & Acquisition have become very popular throughout the world in the recent times. This has become popular due to globalization, liberalization, technological developments & intensely competitive business environment. Mergers and acquisition are a big part of corporate finance world. This process is extensively used for restructuring the business organization. In India, the concept of mergers and acquisition was initiated by the government bodies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Mergers & Acquisitions (M&A) has developed into the mainly vital strategic element driving business growth and intensity. Mergers and acquisitions will continue to be an ever-present attribute of the current corporate landscape. Merger and acquisition (M&A) hold uniformly diverse sets of people, processes and technologies with the common aim of creating a larger, unified organization. The organization aims to benefit from the synergies of mixing organizations by consolidation, rationalization and incorporation of the people, processes and technologies of both organizations. But the interesting point here is that upwards of 60% of these mergers fail to deliver on share holder expectations. The reasonable and prudent question then becomes why these 51 mergers fail to deliver on the promised or projected results. The logical and sensible issue then becomes why these mergers fail to deliver on the promised or projected results. The answer often times is quite simple; it is a direct result of the amalgamation process not being carefully thought with respect to the indirect impacts of changing a business unit. The mindset here is often that when companyAbuys company B that they rush in to change all policies and procedures to more closely meet their business model. At face value that would appear to be the intelligent course of action however little thought is given to what they are about to change and the implications that follow. Mergers &Acquisitions (M&A) In Telecom India has become a hotbed of telecom mergers and acquisitions in the last decade. Foreign investors and telecom majors look at India as one of the fastest growing telecom markets in the world. Sweeping reforms introduced by successive Governments over the last decade have dramatically changed the face of the telecommunication industry. The mobile sector has achieved a teledensity of 14% by July 2006 which has been aided by a bouquet of factors like aggressive foreign investment, regulatory support, lower tariffs and falling network cost and handset prices. M&A have also been driven by the development of new telecommunication technologies. The deregulation of the industry tempts telecom firms (telcos) to provide bundled products and services, especially with the ongoing convergence of the telecom and cable industries. The acquisition of additional products and services has thus become a profitable move for telecom providers. Although India's teledensity has improved from under 4% in March 2001 to over 36% by the end of March 2009, we are still way behind other developing nations. Cellular telephony has emerged as the fastest growing segment in the Indian telecom industry. The mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of FY00 to touch 391 m at the end of March 2009 (compounded annual growth of nearly 80% during this nine year period). Tariff reduction and decline in handset costs has helped the segment to gain in scale. The cellular segment is playing an important role in the industry by making itself available in the rural and semi urban areas where teledensity is the lowest. As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base of 6.4 m, which is higher by 50% as compared to the figure in May 2008. The subscriber base stood at 2.5 m in May 2007. M&A CASE STUDIES The first M&A deal in India was the sale of Mumbai licence by Max group to Hutchison Whampoa group of Hong Kong. The deal fetched over half a billion dollars for Max group and was touted as a major success for Indian entrepreneur in telecom venture. This followed a series of M&A in subsequent years as stated hereunder. Some of the other high profile deals were Vodaphone's acquisition of 10% equity in Bharti in 2006 for US$ 1 billion, Maxis acquisition of Aircel at enterprise value of US$ 1 52 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Billion, Birla Group's acquisition of Tata's stake in Idea Cellular. Interestingly some of the high profile investors who had sold their stake around year 2000 are now reentering India like Telekom Malaysia (exited India in 2000 from Kolkata licence and recently acquired 49% stake in Spice Telecom) and Vodafone (exited India in 2003 from RPG Cellular Chennai and recently acquired stake in Bharti). Similarly, valuation also suffers if the target company is not listed and hence has lower liquidity (as in case of Idea, Hutch etc). As a thumb rule, suggested by one economist, the differential for non liquidity of non listed entity could be as high as 20% -25%. While most of the GSM operators resorted to M&A in order to achieve growth, Reliance Infocomm did not go for inorganic route and instead rolled out a green field project. This was also due to the fact that Reliance had adopted CDMA technology and was able to roll out the network at much lower cost as compared to GSM network. Whether M&A in Indian Telecom were Successful The table gives a bird's eye view of major M&Adeals in India and the key indicators like per sub value, enterprise value etc. The author also closely followed the sell-off, acquisition, resale and reacquisition by Indian Promoters as a case study. In April 1998, Max group had sold its stake in Mumbai licence to Hutchison Telecom for US$ 560 million. Somewhere along the way Max group again picked up a small stake of 3.16% in Hutch and resold it to Essar Group in October 2005 for US$ 147 million. Max India has staged another comeback in Hutch by acquiring an 8.33% from Kotak Mahindra Bank for Rs. 1,019 crore in 2006. This second return to the telecom business reflects the buoyant conditions in telecom sector. The valuation of state owned Bharat Sanchar Nigam Limited (BSNL) is estimated to be US$ 30 Billion one of the highest in India. On a global scale, China Mobile has emerged as the world's most highly valued telco with enterprise value of US$ 131.46 billion, followed by Vodaphone at US$ 123.11 billion as on July 2006. From the table, readers can find that average valuation per subscriber ranges from US$ 400 to US$ 550 which in turn is based on a variety of factors including Average ARPU, type of circle, competition in the circle, Category of operator whether only a Mobile service provider or an integrated telecom player (like Bharti and Reliance) etc. Valuation is generally lower in case the acquirer takes a minority stake as against controlling stake. A merger to be successful should create new capabilities, offer better value proposition to the combined entity's customers and above all enhance shareholders' value. Empirical studies prove that M&A brings with it the advantage of synergies to the operators and in majority of cases results in immense increase of shareholders value. M&A in Indian telecom industry has also benefited other stakeholders i.e. customers, Indian economy and society at large. M&A have acted as catalyst to stupendous growth in teledensity to 14% in 10 years (1995 2006), as against 2% in 48 years (19471994) of independence. According to a study conducted by the reputed international agency, OVUM on “The economic benefits of mobile services in India” on behalf of Cellular Operators' Association of India, it was found that mobile sector has generated 3.6 million jobs directly or indirectly and the same will rise by at least 30%. Similarly the Mobile industry contributes over Rs. 145 billion per annum by licence fees, spectrum fees, import duties, taxes, etc. Taking the OVUM findings on the base of 48 million subscribers in January 2005, COAI has estimated that at a mobile subscribers base of 200 million in 2007, the industry would contribute over 10 million jobs and over Rs. 500 billion annual revenue to the Government. From foreign investors' perspective, they have immensely gained from investing in India. As per recent news, out of Hutchison's total global revenue of Rs. 13440 crores, over 45% comes from India which is no mean achievement. Indian promoters who commenced their telecom operation on a small scale in few circles, gained immensely on sale of their stake to foreign investors. In fact, some of the world's largest telecom companies, who have left India with a bitter experience a few years ago like British Telecom, Vodaphone, France Telecom, Telekom Malaysia, Telestra Australia are all set to return even as minority shareholders on witnessing telecom success story. When Merger andAcquisition Promise Fails to Deliver Every merger, acquisition, or strategic alliance promises to create National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario value from some kind of synergy, yet statistics show that the benefits that look so good on paper often do not materialize. Unfortunately, many mergers and acquisitions fail to meet their objectives, which are typically to accelerate growth, cut costs, increase market share or take advantage of other synergies. In simple way I can say that "Merger & Acquisition is just like a marriage, interesting point here is that upwards of 60% of these mergers fail to deliver on share holder expectations. But when M&As succeed, they can lay the foundation for a company to be the leader in its sector." Trends in Telecom Merger andAcquisition India's telecom regulator is unlikely to recommend any significant changes easing the tough norms relating to mergers and acquisitions in the sector, regardless of lobbying by phone firms, according to a senior Telecom Regulatory Authority of India (TRAI) official. Trai is likely to submit its recommendations to the government by the third or fourth week of January. The regulator will also comment on sharing and trading of airwaves, limiting the number of service providers in a telecom circle, auctioning of second generation (2G) spectrum, and delinking spectrum from licences. One big regulatory concern is that larger telecom firms may end up buying smaller rivals based on the spectrum they hold rather than the overall business of the target firm, said the Trai official, who didn't want to be named because he isn't authorized to speak to the media. “One company should not be allowed to buy another company based on the spectrum that they have,” he said. “The spectrum was given to them in order to grow the sector and they should do that before selling out. That is why things like the roll-out obligations and lock-in for promoter equity were introduced.” The roll-out obligations mandate that mobile phone operators cover at least 10% of the district headquarters in their licensed areas within the first year of receiving a licence, and 50% within three years. “This clause was specially implemented to the licensing agreements with the new operators after it was felt that many would buy the licence and then sell out for higher valuations based on the spectrum that they are allotted without actually creating a business,” the official said. There is also a clause on the lock-in of promoter equity, put in by the government to prevent so-called fly-by-night operators from entering the country's telecom sector. Norway-based Telenor ASA, the world's seventh largest phone firm by customers, announced in October 2008 that it would invest Rs6,120 crore for 60% equity in Unitech Wireless in an all-cash, four-tranche deal, extending its reach to India, the world's fastest growing and second-ranked mobile phone services market by users. This was later increased to 67%. Earlier in September last year, the second largest Arab telecom company by market value, Emirates Telecommunications Corp., or Etisalat, announced that it had agreed to buy a 45% stake in 53 Swan Telecom Pvt. Ltd for cash up to $900 million (Rs4,221 crore now). “There has been no decision as yet. But it is unlikely that we will change much for now. Maybe some things here and there,” said a second Trai official, who also requested anonymity because he is not authorized to speak to the media. “A decision will be taken in the next eight-nine days,” he said. The department of telecommunications (DoT) committee on 2G spectrum, chaired by Subodh Kumar, additional secretary, DoT, had recommended in its report completed in May that 2G spectrum should be auctioned, as is done in most countries, and not allocated as per the subscriber-linked criteria, as is done currently. It also recommended that telecom companies be allowed to buy, sell and transfer spectrum for a fee. The committee, which included representatives of the government, Trai, telecom technology experts and industry executives, was formed in June 2008 to resolve a number of controversies surrounding the government's 2G spectrum allocation policy. DoT sent the report to the telecom regulator on 7 July asking for its recommendations on the 2G spectrum report. In earlier recommendations, Trai had suggested that in case of windfall gains, 50% of the profit should remain locked in with the company for use towards building infrastructure and 50% should be directed to the licensor or DoT. The present policy governing mergers and acquisitions for India's telecom service operators does not allow the number of players to go below four in any telecom operating area or circle. In addition, the market share of any merged entity cannot cross 40% in any circle by both subscriber and revenue. Spectrum trading and sharing is not allowed at present and crossholding restrictions limiting the equity held by an operator in another operator in the same circle to 10% are also applicable. After a merger or acquisition has taken place, the combined entity has to return the excess spectrum unless it fits the eligibility criteria for the combined quantum of spectrum. The three-year lock-in clause applies to the promoter and promoter group's equity, which cannot be divested for three years. “Despite some of the companies that acquired licenses last year for Rs1,651 crore and then sold stake to global companies at substantial premiums, it does not appear to be a direct concern, as long as the capital is locked in the business venture,” according to a report prepared by Sachin Gupta and B. Roshan Raj, analysts with Nomura Singapore Ltd, on Trai's ongoing consultations on the spectrum management. “The regulator appears to think this premium is perhaps necessary for them to expand, and hence investment remains a key criterion for them,” the report adds. “We also think that the government is contemplating ways of getting a share of the M&A (merger and acquisition) cut, especially if deals are done at large premiums just for spectrum. It could be in the form of capital gains tax, etc,” says the report 54 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Some highlights for the financial year 2009 are: ! ! ! FY09 saw the continuance of strong growth for the Indian telecom market, which witnessed a 49% Year on Year increase in its subscriber base during the 12-month period. At the end of March 2009, the country's total telecom subscriber base (fixed plus mobile) stood at about 429 m. The tele-density level stood at about 36% by the end of the fiscal. Growth remained robust in the GSM mobile space, with the same growing its subscriber base by 96 m, thus contributing to about 70% of the total incremental subscriber addition for the entire Indian telecom market. After a strong 76% Year on Year increase in subscriptions during FY08, the GSM industry recorded another good performance during FY08, growing subscriber base by 50% Year on Year to about 289 m. During FY09, India's mobile subscriber base grew by 50% Year on Year, from 261 m to 391 m, while the fixed subscriber base declined by about 4%, from 39.4 m to about 37.9 m. What will be the telecom scenario in India in 2020? To look forward, from now on, the growth momentum in the expansion of fixed line network is likely to be sustained. This is the current phase of expansion developing countries are passing through. In 2000, three out of four fixed lines were installed in developing countries. China alone installed more fixed lines in 2000 (35 million) than the entire developed world in 1999 and 2000 . Once fixed line market is matured, mobile will crossover fixed line market. India is still much below the crossover point even by the standard of the low-income countries. A mobile revolution is in the offing in India. The next points of crossover will be between data and voice , and between mobile and fixed-line Internet . This is going to take some time because this is yet to occur even in high-income countries. The process of technical consolidation and system integration of different competing standards in a single platform will by itself take some time. The process of commercial consolidation will start thereafter. In order to guess the time frame over which such technological and commercial cycles may run their courses in future it may be of interest to look at the past experiences. Going by the history, commercialization of cellular mobile telecommunication services began in late seventies, when Japan took the lead in 1979. Many developed countries have reached saturation point only now though developing countries are far from it. Similarly, market for Internet in the developing countries is yet to mature though the service commenced in late 1960s, when USA took the lead in 1969. As rightly observed, 'But for both these innovations, the full extent of their impact on businesses and consumers is probably still to come. E-commerce, for instance, is still in relative infancy and is expected to boom in coming years as “old economy” firms re-orient their business processes around it. Similarly, the true potential of a mobile phone, as an integrated communications, entertainment and positioning device, is only beginning to be realized' . If past trend were any guide, it would be reasonable to hope that by 2020 India would complete transition into digital switching and transmission, VoIP, broadband and 3G. Though there would be always a small niche market in India, which would catch up with the cutting age of the technology, consolidation and expansion of evolving technologies across the length and the breadth of the country will follow with a lag. Future vision of telecom is a vision of IT. Telecom will be the springboard of future expansion of IT heralding in an information society. ICT will spread among the masses and will spur innovation, entrepreneurship and growth. An expanding domestic market will deepen the synergy between the domestic and the export market and strengthen India's presence in the highvalue segment of the global trade and investment. ICT benefits will spread among all, the rich and the poor, the young and the old, the men and the women, the organized and the unorganized and the government and the governed. Conclusion Indian Government's decision to raise the foreign investment limit to 74% is expected to spur fresh round of mergers and takeovers in India. The sector has slimmed from more than 20 carriers to 5-6 major players in 2006 and telecom pundits believe that a final round of consolidation to churn the number of players is in the offing. The possibility of realignment of shareholding structure in existing licences and entry of new investors also cannot be ruled out. The sector thus represents humongous opportunity waiting to be tapped by Indian and foreign conglomerates. Critics claim telecom mergers reduce competition and promote monopoly. In reality, these mergers are part of a healthy competitive process and would foster innovation and bring benefits to consumers. Finally, the success of a merger hinges on how well the post-merged entity positions itself to achieve cost and profit efficiencies. As Robert C Higgins of University of Washington points out “careful valuation and disciplined negotiation are vital to successful acquisition, but in business as in life, it is sometimes more important to be lucky than smart.” There is a strong sign that 2010 could be a watershed year for telecom with lasting and permanent changes in the market structure and competitive landscape. This, in turn, can affect service delivery, coverage, pace of rollout, and ultimately tariffs. While 2009 was an excellent year in terms of addition of new subscribers and lower tariffs, new competition was cruel on the financial health of telecom companies. The India Telecom 2009 saw the participation of over 300 companies from more than sixty countries. The theme for this edition of the event was 'Telecom for inclusive growth'. Indian telcos are joining communication majors such as Vodafone, AT&T and France Telecom in a bid to capitalize on the National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 55 global boom in the mobile applications space. On Tuesday, mobile operator Aircel, along with software major Infosys, will unveil the country's first mobile application store. 3. Greer, C. R. 2002, Strategic Human Resource Management: n d A General Managerial Approach, 2 edition, Pearson Education, Singapore. If past trend were any guide, it would be reasonable to hope that by 2020 India would complete transition into digital switching and transmission, VoIP, broadband and 3G. Though there would be always a small niche market in India, which would catch up with the cutting age of the technology, consolidation and expansion of evolving technologies across the length and the breadth of the country will follow with a lag. 4. Lengnick-Hall, M.L. and C.A. Lengnick-Hall 2003, Human Resource management In the Knowledge Economy: New Challenges, New Roles, New Capabilities, Berrett-Koehler Publishers, Inc., San Francisco, pp. 36-43. 5. Roehling, M.V., M.A. Cavanaugh, L.M. Moynihan, and W.R. Boswell 2000, "The Nature of the New Employment Relationship: A Content Analysis of the Practitioner and Academic Literatures", Human Resource Management, Vol. 39, no. 4, pp. 305-20. 6. Ruta, C.D.2005, "The Application of Change Management Theory to HR Portal Implementation in Subsidiaries of Multinational Corporation", H uman Resource Management, vol. 44, no. 1, pp. 35-53. 7. Shah, K., "The Dream Nightmare", The Economic Times, New Delhi, 10 June 2006, p.7. 8. Tsui, A.S. and J.B. Wu 2005, "The New Employment Relationship versus the Mutual Investment Approach: Implications for Human Resource Management", Human Resource Management, vol. 44, no. 2, pp. 115-21. 9. Wilhelm, W.R. 1990, "Revitalizing the Human Resource Management Function in a Mature, Large Corporation", Human Resource Management, vol. 29, no. 2, pp. 129-44. Future vision of telecom is a vision of IT. Telecom will be the springboard of future expansion of IT heralding in an information society. ICT will spread among the masses and will spur innovation, entrepreneurship and growth. An expanding domestic market will deepen the synergy between the domestic and the export market and strengthen India's presence in the highvalue segment of the global trade and investment. ICT benefits will spread among all, the rich and the poor, the young and the old, the men and the women, the organized and the unorganized and the government and the governed References:1. 2. Biswas, S., "Knowledge Services Sector to Generate $ 200b Economy by '20", The Economic Times, New Delhi, 12 April 2005, p. 16. Chaudhuri, A.R., and K. Muthukumar, "The World's Ageing, and it's an Old hand at Work All around You", The Economic Times, New Delhi, 15 June 2004, p. 9. 56 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Strategic Cost Management Dr. Kalyani Srinivas C. Modern College of Engineering, MBA Department, Pune The Strategic Importance of Cost Management Strategic Cost Management - Cost Drivers Business exists to create and render value to its stakeholders. Hence, the main activities for a business organization are value creating activities. Corporate managers are responsible for acquiring physical and financial resources from the firm's environment and using them to create value for the firm's investors. Value is created when the firm earns a return on its investment in excess of the cost of capital (Palepu, Bernard, & Healy, 1996). Value for the firm's investors can be achieved only by rendering value to the customers. The two forms of cost reduction related to Shank and Govindarajan's contention that cost drivers are of two types are: structural cost drivers that are determined by organizational structure and by investment decisions that define the operating leverage of the firm, and executional cost drivers that are determined by the efficacy and efficiency with which the strategy is executed. Strategic cost management - concerns and objectives "In today's environment, nothing is constant or predictable - not market growth, customer demand, product life cycles, the rate of technological change, or the nature of competition". Organizations engage in value creating activities face a dynamic environment, where they have to be on the lookout for avenues to sustain their competitive advantage. An organization's strategic plan allocates scarce resources to an organization's best opportunities. For many years, Porter's significant work has defined how strategy has shaped the way that firms evaluate competitive conditions and develop strategy. Competitive advantage is gained by differentiation or cost leadership. Considering the transient nature of differentiation, companies should focus on cost leadership for long-term competitiveness. One of the ways in which organizations can sustain and improve their competitive advantage, in the current environment, is to reduce cost and thereby maximize value rendered to their customers. Costs are caused by many interrelated factors. Some factors are implicit in the firm's choices about its underlying economic structure (structural cost drivers). They include strategic choices concerning: scale (size of investment to be made in manufacturing, R&D, marketing areas), scope (degree of vertical integration), experience (number of times the firm has already done what it is doing again), technology (type of process technologies used at each step of the firm's value chain) and complexity (product or service line breadth). Structural cost components can be managed (up or down), but only by changing the fundamental economic elements of how the business competes. Such changes are far from easy to implement. This makes optimization very tricky. Costs are also driven by the firm's ability to execute successfully within its given structure (executional drivers). In particular, executional cost drivers include work force involvement (commitment to improvement), total quality management (Kaizen and zero defects), capacity utilization, plant layout, product configuration, and linkages with customers and suppliers. Lower costs can be achieved either through redesigning the firm's value chain, reassessing the coherence of current activities compared with the customers' business requirements, reconfiguring the structural business model, or better executing within that model. For example, the amount of stationery used by employees is more easily modified than structural cost drivers such as size of the factory used in production. Strategic Cost Management - Key Concepts Strategic cost management, a tool for competitive advantage and value creation, does not focus on traditional cost reduction- it entails unnecessary costs elimination. It is a deliberate decisionmaking aimed at aligning the firm's cost structure with its strategy and optimizing the achievement of the strategy. Alignment and optimization must cover the full value chain and all stakeholders to ensure long run sustainable profits for the firm. Thus strategic cost management demands that the firm spend as little as possible to achieve the desired results, but spend National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario as much as needed to keep all key stakeholders satisfied. What does it mean to say an organization understands its costs? It means that the organization's managers can predict, with some clarity, how costs will responds to management actions. In other words, it means managers can predict how cost will change, if at all, when they direct the organization to do something differently than it is being done today. Strategic cost management takes two forms: structural cost management, which employs tools of organizational design, product design and process design to build a cost structure that is coherent with strategy; and executional cost management, which employs various measurement and analysis tools (e.g., variance analysis, analysis of cost drivers) to evaluate cost performance. Strategic cost management is probably better understood in the production portion value chain than in any other segment. Strategic decisions are aimed at maintaining an organization's alignment with its environment, while also managing internal interdependencies. This idea of creating a link between activities, costs, and strategic objectives can be applied to any situation in different industries and contexts that requires a strategic perspective of costs. Strategic cost reduction requires a comprehensive and disciplined approach and must produce significant result in the short term while establishing mechanisms that ensure the result can be sustained. Costing is not limited within the boundaries of cost reduction and cost rationalization; rather it includes strategic issues including capacity planning and utilization, and investment decisions in specific geographies or technologies. Establishing a strong foundation is essential to sustainable cost savings. Defining operating cost drivers through a bottom-up analysis and linking financial plans to operating plans will provide transparency, improve accountability, and enable measurement of cost reduction activities. The most powerful strategic cost reduction emerges from a strategic planning process that indicates why cost reduction is essential to the organization's future. Then embedding cost reduction efforts into the strategic planning process implies that the organization has been adopting cost culture. Cost culture echoes the extent of the permeation of cost consciousness across the organization. Using cost management and control processes, successful companies often strategically position themselves during downturns to emerge stronger after the economy recovers. For example, Cisco expanded its presence in Asia during the region's financial crisis as other Western companies fled, and Apple launched the iPod during the 2001 recession. 57 considering buying a fleet of new trolleys. Under conventional cost management, this may mean reducing the number of trolleys ordered from 5,000 to 2,000 and ordering from a cheaper supplier for a lower price. Strategic cost management takes into account the fact that customers may become disgruntled with the lack of trolleys available and the poor quality of a trolley's deviating wheel. These customers may then decide to shop elsewhere, making the savings counterproductive. Is the manager of a company using refilled toner cartridge (for use in inkjet printers) of Rs 250 each instead of new cartridge (Rs 1,100) saving cost? No! A refilled cartridge gives such a poor impression requiring re-printing of documents again and again (or requiring to use bold types, consuming more ink) so much so that at least one refilling is required every month, while a new cartridge lasts six months. So, refilling costs Rs 1,500 every six months instead of Rs 1,100. Adding up the cost difference for hundreds of printers in use in a big company - it means a substantial saving if a new cartridge is used instead of refilling. To cite another example, a company producing lightweight suitcases used to send them by road transport. One full truckload consisted of 500 big-sized suitcases or 750 medium-sized ones or, 1,500 small-sized ones. So, 500 suitcases of three sizes each required two truckloads (because 500 medium-sized suitcases needed two-thirds of one truckload and 500 small ones needed one-third of one truckload). Weary of reducing transport costs (as at that time the Railway strike was continuing and so transport by rail, though cheaper, could not be availed of) the company came up with a novel way of loading suitcases. One small-sized suitcase was put inside a medium-sized one and the medium-sized suitcase was placed inside one big-sized suitcase. Thus, one truckload was needed to transport 1,500 suitcases (that is, 500 of each variety). Instead of doubling, the transport cost was just cut to half, and that turned out to be even cheaper than the railway transport! About 90 per cent of cost-reduction programmes fail to achieve their intended goals and do not deliver long-term results. In view of this, organizations start looking at long-term strategies that can provide a sustained benefit. Cost Optimization, which focuses on customer value rather than just on cost reduction is a viable alternative. Focusing on creating a leaner and efficient organization with processes that are business-focused and costoptimized is the way forward for organizations to meet the challenging demands of the economy. Characteristics of a strategic approach to cost reduction Common innovations can save huge costs and improve productivity and profitability to a very large extent. The other aspect is that random cost cutting measures may result in losses in the long run. More efficient firms are rewarded by the market, but the key to maximizing shareholder value is increasing the efficiency of operations. Rather than a goal that is ultimately achieved, continually improving operating efficiency has to become a way of doing business. A strategic cost reduction program will produce greater short term savings as well as longer-term gains in efficiency. To reap benefits, firms need to approach strategic cost reduction with the following five characteristics : For example, a supermarket looking to reduce costs might be 1. Linked to Strategic Goals -The first step is to reexamine a Applying Strategic Cost Management 58 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario firm's business strategy to ensure that it remains relevant to changing market conditions. A strategic approach then carefully aligns cost reduction initiatives with the reconfirmed strategy, rather than relying on across-the-board reductions that could undermine business objectives. 2. Comprehensive- Instead of focusing only on staff reductions, strategic cost reduction analyzes the entire organization for costcutting opportunities and establishing a cost base. 3. Sustainable Cost Savings- A strategic approach increases efficiency by rethinking both what the firm does and how it does it and setting realistic targets. CATEGORY 4. Phased Implementation- Initiatives include both quick wins and longer-term measures that are more difficult to implement but offer greater cost savings. The firm not only needs to identify these initiatives, it also needs to prioritize them increasingly being used by companies as a strategic weapon. The building blocks or essential elements of a cost reduction and cost management and control framework include financial management and control, procurement and supply chain, business process execution, and performance management. The following table summarizes some of the initiatives that can be taken and the potential for savings in them: CATEGORYSAMPLE INITIATIVES POTENTIALCOST REDUCTION* SAMPLE INITIATIVES POTENTIAL COST REDUCTION* HR _ Link compensation more closely to performanc e 5---10% Occupancy Costs _ Renegotiate leases _ Seek government incentives 5---20% Travel & Entertainment _ Revise policies and procedures _ Improve monitoring and enforcement of compliance 5---10% 5. Senior Management Commitment - An essential component is the full commitment of senior management, which can best be demonstrated by appointing a prominent senior executive to lead the effort. Advertising & Marketing _ Revise policies and procedures _ Improve monitoring of return on spend 5---10% Tax _Tax-efficient structuring of financing, leasing, research & development, and corporate restructuring NA Outsourcing _ Outsourcing aspects of major business processes _ Strategic partnerships with vendors. Up to 10% To gain long-term competitive advantage and increase shareholder value, firms need to make ongoing improvements to operating efficiency a permanent way of doing business throughout the business cycle while being aligned with a firm's business strategy. Strategic Sourcing _ Create global procurement _ Create uniform standards _ Reduce number of suppliers _ Improve monitoring of contract compliance. 15---25% Functional Consolidation _ Shared-service centers to achieve economies of scale 10---20% Automation _ Straight through processing _ Billing and collection _ Procurement 15---20% Elimination of bottlenecks, redundancies 25---30% Cost Management Methods Reengineering Cost management methods must help with the production of new products that meet customer demands at the lowest cost, as well as with cost reduction of existing products by eliminating waste. Strategic cost reduction means strategically improving efficiency. In a business environment of increased global competition, new markets, increasing regulation and changing demographics, successful companies are changing their approach to cost structuring and control. The concern for financial viability and value creation has assumed great importance in today's business environment. Therefore, the businesses have to think new and innovative ways to manage their costs to remain ahead of the competition. To meet this objective, the companies are using latest cost management tools such as activity based management, life cycle costing, value chain analysis, cost of quality, target costing, capacity management, complexity management, experience effects, overhead management, fixed cost management, benchmarking etc that help to influence cost behavior, cost structure and then cost level of the company to remain competitive and create more value. As a result of these developments, the components of an integrated cost planning and management approach are becoming visible. Rather than an internally focused and tactical control system, effectively understanding and managing costs is *Sustainable cost reduction that can be achieved by typical firms consistent with long-term growth. Depending on their specific circumstances, individual firms may achieve either higher or lower cost savings than these estimates. Note: These cost reduction estimates are not cumulative. DESIGNING A PORTFOLIO OF COST REDUCTION INITIATIVES National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Three common reasons why cost reduction measures fail are: 1. Senior management focuses on transformational opportunities to reduce costs without paying attention to the behaviors and decision making processes that drive costs in the first place. 59 of cost consciousness, in both bad times and good. Often, when business picks up and expenses rise once again, and firms must bear the cost of rehiring and retraining staff. For a viable future, companies must think strategy, not just bottom line. 2. Departments are directed to reduce spending by a set target. The target is often arbitrary and reactive to market conditions. Strategic cost management holds that cost should not be reduced at the expense of business strategy and that costs must be managed for economic value, not in isolation to each other, but always with regards to the value generated from the costs spent. 3. Departments become personally invested in their own budgets and rarely find waste. References: Changing Business Environment & Strategic Cost Management Companies have always been under pressure to look for efficiencies and reduce costs, but never more so since the US slid into recession at the end of 2007. Increasing efficiency should be a cornerstone of corporate strategy whether the economy is expanding or contracting, yet most firms have only focused on cost reduction in response to the economic slowdown that began in many countries in 2001. Firms in sectors with declining business activity and revenues announce deep cuts in personnel and other expense items to reflect reduced business volumes. While needed, these volumerelated reductions don't build sustainable competitive advantage by increasing productivity. This approach to cost management can also lead to a loss of customers and market share, unsustainable turnover of experienced staff, and inefficiencies in the long term. For cost reduction measures to work, companies must clarify the cost drivers of the business and use that knowledge to create a culture ! Ibrahim Abd El Mageed Ali El Kelety, Towards a conceptual framework for strategic cost management- The concept, objectives, and instruments ! Lorenzoni, Shank, Silvi, Networked Organizations: A Strategic Cost Management Perspective ! SUDANA I PUTU, ORGANIZATIONAL CULTURE AND STRATEGIC COST REDUCTION [Journal]. ! Business Daily , THE HINDU, Thursday, Dec 04, 2008 ! Business Daily , THE HINDU, Thursday, Sep 24, 2009 ! Building competitive advantage through strategic cost reduction, DELOITTE RESEARCH ! Jeff Thomson & Jim Gurowka, STRATEGIC FINANCE, August 2005 ! Building competitive advantage through strategic cost reduction, DELOITTE RESEARCH ! Peggy Tee, Strategic Cost Management in a Recession 60 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Strategic Compensation Management Dr. Puja Bhardwaj, Asst. Prof., PCMRD, Pune Prof Anagha Kalay, Lecturer, PCMRD, Pune Jatin Joshi, MBA II Year, Student, PCMRD, Pune Abstract The recent slow down has put pressures on the profit margins of companies. The companies were forced to rework their cost structures. As compensation paid to the employees is the major cost component, recession warranted companies to reduce the labour cost considerably. Companies tried to sustain either through reducing the compensation or by retrenching the workforce altogether. Five lakh people were rendered jobless between October to December 2008 due to the recession, according to the latest government study (by Labour Bureau of ministry of Labour and Employment sample size of 2,581 units covering 20 centres across 11 states, and 8 sectors). The situation in IT indisutry is particularly bad as they have high operating overheads (high power budgets, 24*7 redundant network connectivity) which puts extra burden on labour component. Compensation structures designed in the booming market were not able to power growth during the recession. This pointed the way towards a redesign of the compensation packages in the industry; the need of the hour is a flexible package that can act as a motivation for growth and at the same time not act as an unduly high cost in times of bad business. Introduction Organizations achieve their objectives through their employees. Thus, Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result achieved and hence it is important for every organization to manage and motivate their employees by providing best remuneration and compensation as per industry standards. A lucrative compensation serves the mission of attracting and retaining the best talent in industry. Compensation is the sum total of all forms of payments and rewards provided to employees for performing tasks to achieve organizational objectives. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. From the employer's perspective pay and rewards are important since these affect its profitability. Compensation constitutes the major cost of doing business, since it determines the employee cost. Organizations also view compensation and rewards as a means to reinforce desirable employee behavior. It is one of the means to communicate to the employee his or her worth to the organization which in turn aligns employee efforts with achievement of the organizational objectives. Compensation and rewards offered by an organization is an important determinant of an individual's performance, his decision to join a company, motivation to improve performance, desire to undergo training, and desire to continue to work for the organization. And to put it very basically, from the employee's perspective it is a means of satisfying the needs in terms of her or her expected standards of living. Thus, the compensation an employee receives determines one's standard of living and purchasing power. Employees seek to maximize their rewards to meet their aspirations. They also expect to be compensated fairly and rewarded for the effort, skills, knowledge etc that they contribute towards the achievement of organizational goals. Performance Flexible Competence Variable Incentive Leadership Vision Creativity Support Retention & Long Term Securit y - Post Retirement Benefits Composite Performance Index Inflation Dearness Pay Basic Allowances Basic Wage Cost of Living National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Compensation Management As mentioned earlier, compensation is the sum total of all forms of payments and rewards made to employees against achievement of organizational objectives. Compensation management is a process of determining Compensation direct and indirect - which is known as salary levels or structures. Objectives of Compensation Management : · Compete better when attracting new talent. · Measure to retain human resources. · Moderate the labor cost by trading off some components. · Reduce attrition. · Enhance performance by introducing types of Performance based incentives to motivate for future initiatives. · Sets standard for evaluating individual past performance and current effectiveness. The Equity Function : Equity is the perception of an employee that he/she is being treated and compensated fairly for what he/she does. A major determinant of an employee's productivity satisfaction, motivation, commitment, and performance on the job is the degree of fairness (equity) and unfairness (inequity) that an employee perceives at work in comparison to others. Thus, while designing compensation and reward system, it is important to understand how perception of equity and inequity are formed. An equitable compensation and reward system must incorporate three types of equity : A) Internal Equity : Employees are paid according to relative value of their jobs. B) External Equity : Employees are paid comparable to employees performing similar jobs in other organizations. C) Individual Equity : Compensation based on performance appraisal and perceived as fair when compared with what others in similar jobs in the organization are earning. A few pointers to be considered while administering Compensation and salary include : 1. Pay levels (Fixed and Variable). 2. Internal pay structure / capabilities. 3. Individual pay system. 4. Payment by time. 5. Compensation structures for sales staff, managers & professionals. 6. Fringe benefits & pay supplements. 7. Control of Compensations and salaries i.e. Market parity. 8. Equitable Compensation Strategic Compensation Management Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. 61 Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today's competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems. Why Strategic Compensation Management? Developing human resources. Retaining high potential human resources. Align with the market / competition Replacing human resources is a continuous process. Broad banding merit pay increases do not address the growing inequity in compensation levels of top performers when they were paid below their worth at the time of hiring. With years, the gap will still remain and may even get wider. The solution here could be to adjust such employees in wider pay bands alongwith the effort to reduce the gap in a couple of years. High rates of income tax, varied family backgrounds, different locational advantages and disadvantages and different personal aspirations make the Compensation structuring exercise very complex. A common Compensation policy may not satisfy all. Hence strategic designing of certain portions of the total Compensation package has to be carried out. · · · · · Key Issues - Economic Volatility · Market economy brings unexpected changes in the value chain of an enterprise. The changes may make some of the employees outdated (or unemployable) and they must therefore be retrenched or redeployed with re-equipping. Flexibility in a Compensation package plays a vital role here. · Boom time Compensations and Compensations during recession are very sensitive issues to be tackled. It is a common experience that volume based incentives become a serious problem during recession, as employees expect this kind of Compensation irrespective of the volume they produce. In other words, the journey from boom to recession and from recession to boom always creates problems in handling variable Compensations. · In times of recession, the compensation package should address the needs at the lower levels of Maslow's pyramid; employees can willingly take a pay cut if their basic needs can still be met with the reduced package; the company must assure it's employees that their loyalty will be rewarded when the economy recovers. · Further, with fluctuations in the Rupee value vis-à-vis Dollar also has an impact on the profit earnings of the employer. With rupee becoming stronger, service based companies who earn from their clients in Dollars loose on the income. The pay out to the employee does not affect largely as his/her income is fixed in Rupee value. Here, the sustainable power of the organization will help it survive in such fluctuating National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 62 times. However, small or medium-sized organizations may get affected in such situations. An indirect impact of this situation could be retrenchment of people who are on bench. One solution could be to finalize the contract on project value rather than hourly value for resources on the project. Also, some clause on a percentage consideration of such fluctuations can be included in the contract. Strategic Compensation Structure - ValueAddition Value addition concept relates the salary structures and composition to value contributed by each employee and the levels of initiatives taken. Higher the value addition more flexible the salary structure should be. Here the focus is on managing high value employees. The employees who are high value drivers need to be handled like equal stakeholders or partners. They drive the organization and support the owners in achieving the desired rate of wealth appreciation. Creative, flexible, long term and adequate structuring of Compensations differentiate between different individuals whose performance levels may vary. Thus, a drawback is of failure of recognizing better performers and motivate them to retain their high performance standards. Historically, pay systems of many organizations were based on the relative worth of the job. The compensation was based on comparing the jobs to one another and assigning internal equitable pay rates for each job. Thus, the pay rate principally depended on the job itself rather than who is doing it. This approach is alright where individuals have stable duties with no frequent changes. Jobs are well defined and the individual is expected to perform only as per the guidelines. There is no need for “thinking” but only for “action”. Thus, the incentives and compensation system focuses on the job and not on action. For Example: In a manufacturing set up, the shopfloor workforce especially unskilled employees, compensation is based on number of units produced at the end of the period defined. This for such employees becomes essential. The chairman of the group can use such employees (with utmost empowerment) to build up his empire. essentially means working only as per the “Standard Operating Procedures” and no “Out of Box Thinking” is required/allowed. (A) System Based Employees More than organization loyalty, today employees expect to be rewarded in ways that improves their marketability. Companies are now required to offer their workforces time bound reward schemes. The talk is all around “Pay for the person” more than the job and the compensation systems must revolve around this. This approach focuses on the job or the grade or designation, but not based on the employee who performs the job. The compensation systems are traditional and are used over the years based on the concept of “pay for the job”. Such systems do not (B) Knowledge Based Employees National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Some strategies that could be suggested here : · Identify key positions and competencies that are most critical to achieve the organization's objectives. This helps in setting a standard and communicating the expectations which form a base to compensate employees. Competency based compensation might involve expanding position, salary bands, merit-based pay, spot bonuses, short-term bonuses, stock options etc., in place of hierarchical advancement. · Instead of moving employees into bigger roles, the organization can focus on development by providing experiences within the current jobs such as, special projects, task forces or other temporary assignments that promote important skills, knowledge and behaviors. Competencies required for futures roles are clearly communicated to hi potentials and opportunities for development are provided. Opportunities include temporary assignments, being a mentor / coach to new hires, part time assignments that enlarge current responsibilities. Apart from development of skills and abilities, this approach helps employees align career expectations with business needs and can change individual's perceptions of their opportunities for growth within the organization. · Organizations can identify benefits typically associated with senior positions and incorporate them into lower-level positions. This is called “proxy” for promotion. Knowledge-based employees have a great scope here for professional development in terms of increasing responsibility, authority and visibility in the organization. Some opportunities could be a chance to meet important customers, participate in strategic planning sessions, make presentations to senior management, represent the company at professional gatherings or work on high impact projects. · Another aspect in profit linked variable pay system is conflicting situation wherein an executive gets bonus even if return to the shareholders' funds is not adequate. Accounting profit is a very vague parameter for determining managerial performance. While determining accounting profit, only cost of borrowed capital is deducted. Cost of shareholders' funds managed is never taken into account nor did the managers count cost of free reserve. EVA Based bonus or rewards is suggested. Organizations emphasize in particular the need to base variable compensation on performance measured “on the long run.” To summarize, it is a given today that to reinforce value-added contributions from each individual through their contributions, knowledge, competencies, capabilities an innovative compensation plan needs to be devised. While specific compensation plan designs will vary according to company and industry, and be based on culture, management style and overall objectives, the basic outcome should remain the same- increased retention of valuable employees, and increased satisfaction of all stakeholders. 63 For Example : Unlike the unskilled workforce in a manufacturing set up (referred in system-based employees section above), the focus is on skilled employees. These skilled employees are not only supposed to produce “x” no. of units at the end of the period, but also to contribute to the bottomline of the organization (directly or indirectly) in terms of value addition viz., applying world-class manufacturing techniques like Kaizen, 5 S et all which may eliminate wastes or ensure an optimum capacity utilization, contribution to Quality, Health, Safety or Environment. (C)Entrepreneurial Employees Employees who are directly involved in entrepreneurial activitiesbuilding an organization, proposing new ideas, exploring how our existing technologies and services can be applied to new customers and/or leading proposal efforts to bring in new business. Characteristics of Entrepreneurial Employees: 1. Pro-Active: employees who can forecast the uncertainty and risks and take corrective actions before the actual problem sets in. They have the capacity to deal with risk and uncertainties. 2. Initiative: taking lead in case of any issue is a trade mark of an entrepreneurial employee. They help the organization come out of the problem with sound decision making skills. 3. Innovative: such employees have capacity to come out with new ideas and concepts and help organizations in implementing such ideas. 4. High Value Drivers: they high value drivers for the company in terms of both business and growth of the company. 5. Behavior: on behavior front they have willingness as well as capacity to contribute towards organizational goals. 6. Leadership: they have the ability to lead the team by motivating and rewarding them as and when desired. 7. Continuous Improvement: they have the guts to challenge the setup if required and suggest the remedies. Entrepreneurial Compensation: The compensation of high-value drivers in India has touched global levels and there has been much innovation in structuring their compensations. Since kind of compensations fall in the high tax bracket, the structuring of the package is more important than base pay per se. · Employee Stock Options (ESOPs) : In addition to new opportunities, entrepreneurial employees want to be rewarded for their effortsthey want ownership in what they are building. Those who contribute to the company should own it, and ownership should be commensurate with employee contribution and performance as much as feasible. Fixed part is normally at the lower side, maximum proportion is variable to the value contributed to the company's profit and growth. Variable salary can be linked either to the direct profits earned by the company or they can be given the ownership rights through stock options. Stock options can be given as the reward (bonus). It can also be National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 64 given as incentive for achieving targets or company's objectives and goals. The goal can be bringing in a certain level of new business, completing a contract on time and under budget, or preparing a winning proposal for a contract. Employees understand what is expected of them and what goals are critical to the company. It is a powerful incentive tool. The rationale for offering an ESOP is an assumption that the manager will work towards ensuring that the price of the stock rises. The senior executives generally negotiate for ESOPs during the hiring stage. · A retention bonus (4.5 L to 9 L) paid in advance and is for a 2-3 year period. If such employees leave before that time, he/she has to return the allowance. · A free residence (if the employee stays on, the organization gifts to the employee the house that he/she is living in). change its business plan mid-way. Conclusion : In order to sustain in highly dynamic economies, organizations need to work on increasing levels of motivation and retention of high potential employees. To achieve this, organizations need to have strategic compensation management structures which essentially have to revolve around a “pay for performance culture” which is prevalent for knowledge based and entrepreneurial employees. The same can be structured for system-based employees as it would ensure equity and increase in productivity thereby improving bottomlines of the organization. Some steps to manage a pay for performance culture could be: · For determining pay differentials for individuals, it is critical to have a good & correct performance assessment. And for doing correct performance assessment, managers should be aware of employee's competencies, performance and potential. · Post implementation of a target base pay, the senior management should closely monitor the overall effectiveness of the compensation strategy and conduct a broad banding exercise for doing salary adjustments based on annual gap analyses and budget constraints. · Pay special attention to newer hires as their learning curve and contribution to the organization is highest in the initial years of employment compared to an experienced veteran in th the 10 year of his/her employment. During leaner times, in case this young employee is paid a minimal or given zero percent salary increase, he/she will lag the market in pay. Also if he/she is a top performer then the company's such a practice will lead to losing of a talented employee. · · Benefits e.g. health insurance, vacations etc. But packaged differently from other employees. For e.g. executive health plans may allow the executive to charge all medical bills with no limit specified, to the company. They may also have complete freedom in choice of hospital or doctors. Use solid compensation tools to determine the target pay for each employee based on their competency, performance and potential as assessed. This will help in determining the gap between the current salary and target pay. · · Perquisites some special benefits for executives come in the form of non-cash perquisites. They serve to retain the executive by enhancing his/her status by means of visible symbols. Differentiate between top performers and non-performers and also mediocre. Reward only top performance as it sets a culture of “Pay for performance” and may motivate the mediocres. · Check the market whether the compensation system is competitive. With increasing risks, both the organization and the employees are building in safeguards for themselves. E.g. an organization introduced a penalty clause in the employment contract that required the candidate to pay Rs. 1 million if he / she did not join after having committed. · Consider the “employee worth” and the “relative job worth” while designing the compensation system. References: · Asign-on bonus, to ensure commitment. · A joining bonus or a “golden hello” (to compensate the loss of the existing job) · Severance pay (if one party decides to cancel the contract, it will pay a certain amount to the other) · Apre-joining holiday · They are being offered a “market premium bonus”. Such a bonus is a small percentage of revenue paid to such employees if the company is listed in the top 25% of the stock market. · Short-term incentives are designed to motivate the shortterm performance of managers and are tied to company profitability. E.g. annual bonus · Long-term incentives are designed to motivate executives to stay with the organization for a longer period. These allow executives to accumulate capital that can be encashed only after a few years, thus resulting in retention. They demand that a “golden parachute” clause be included in the contract when they believe that the project is too risky, or involves serious regulatory issues beyond the control of management, or when there is a risk that the company may ! Strategic Financial Management by J. P. Jhakotiya, Vikas Publishing House Pvt. Ltd., New Delhi, 2008. ! Strategic Human Resource Management by Tanuja Agarwala, Oxford University Press, New Delhi. ! Strategic Compensation: A Human Resource Management Approach, by Joseph J. Martocchio, Pearson Education, third National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario edition, 2006. 65 0Resource%20and%20Organization%20Behavior/HROB1 12.htm Seven Characteristics of Highly Effective Entrepreneurial Employees by Joseph G Hadzima Jr., Boston Business Journal. ! http://www.citehr.com/532-compensation-strategiesimprove-employee-morale.html ! www.entrepreneurship.org ! ! http://payroll.naukrihub.com/compensation/ http://www.strategic-human-resource.com/compensationstrategy.html ! http://www.indianmba.com/Faculty_Column/FC436/fc436. html ! ! http://www.indianmba.com/Articles_on_Management/AO M31/aom31.html http://www.iitk.ac.in/infocell/announce/convention/papers/ Context%20and%20Human%20Resource-07Manjunath%20V%20S,%20C%20N%20B%20Rajesh%20 Final.pdf http://www.icmrindia.org/casestudies/catalogue/Human%2 ! ! h t t p : / / w w w. C a s e - St u d i e s - i n - B u s i n e s s Ethics/9780132424325.page ! FEEDBACK FEEDBACK P CMRD has set a great benchmark for others to follow by organising the National Seminar of such high standard. The National Seminar gave us as insight of the various challenges faced by the Industry and what the experts are doing to tackle them. It was indeed great to hear people of such high reputation share their Knowledge and Experience under one roof and I must congratulate the institution for taking efforts in this direction. The \entire experience was a fabulous one and I wish them all the best for their future endeavours. - Dr.Liaqat Ali Faculty Accounting and Finance Area School of Management Studies Punjabi University, Patiala 66 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Managing the Top Executives to Face the Challenges of the Upturn Ms. Sakshi Satkar, Ms. Shinu Varghese, Ms. Leena Gaidhani Students, Institute of Business Management and Administration (IBMA), Ahmednagar , Prof. Vinod Malkar Placement Officer, Pravara Institute of Research and Education in Natural and Social sciences (PIRENS), The year gone by was completely taken over by recession the world over. The industry had witnessed a lot of lay-off and other measures only to retain the potential employees so that the organization could sail properly out of the problems it is facing currently. constantly need to push in the fresh energy into the business for which there is now a trend to change the CEO's every three-tofive years. This will ensure the business to survive even in the extreme conditions since the young CEO's will put in their creativity and freshness into the business. But now the period of recovery has come, however India just faced mild shock of recession. Upturn is actually upward shift in an economic-cycle such as from recession to steady-state or expansion. A stock market is in upturn when it changes from a bear market to a bull market. Two-thirds (65%) of HR professionals anticipate an upturn in business over the next twelve months and nearly three-fifths (57%) expect business results to be on or above targeted levels for 2010, according to research from the Hay Group. Despite this pay and bonuses have improved with nearly four-fifths (79%) of organizations intending to increase salaries over the next 12 months, compared to 57% that increased salaries in 2009. Payouts will vary markedly according to industry sector- the majority of FMCG and retail organizations plan to pay full bonuses in 2010, while worst hit sectors, such as financial services and manufacturing, are anticipating below target bonuses. What is happening now is that many companies simply don't look like they did even a few months ago: they have been merged, acquired, reinvented, and reborn. Redundancies have been made, staff shuffled and reconfigured, management structures reorganize. And in many companies where this hasn't yet happened all this is about to happen, or Will happen within next six months. The dark days seem to be finally over with signs of optimism in the overall economic scenario. Across industries, companies are gearing up for the upturn and will focus strongly towards innovation and investment in the best people practices All of this restructuring may be spot on for survival purposes, but can wreak havoc on Productivity, Morale and growth. Many companies emerging from all this turmoil expect everyone to just get on with things, buckle down and carry on within the new frame work. Today, there are many business commentators talking about the economic turmoil faced by developed countries, emerging economies and the rest of the world. Bankruptcy and bail out plans for many multi-national and transnational businesses are a common order of the day. Lay-offs, cutting and slimming unwanted fat or 'right sizing' of many companies are common in many parts of the world. This pessimism has infected many companies, dynamic business executives and corporate lobbyists alike. They are already working towards facing up to these conditions of doom and gloom. Under such portents of calamity and economic turmoil, can one possibly suggest to anyone to prepare for an economic “up turn”? Managing the top executives has become a top priority since the business situations are highly complex and require a dynamic personality to manage the business with expertise. Thus they While the majority of sectors are cautiously optimistic about 2010 the manufacturing and public sectors continue to face challenging times. Public and not-for-profit organizations are even more pessimistic, with nearly three quarters (71%) not expecting to benefit from the upturn for more than 18 months. Median public sector salary increases are forecast to be just 1% in 2010, In sharp contrast, 90% of retailers and 75% of fast moving consumer goods (FMCG) companies firms expect business performance to reach or surpass target levels this year. Almost all FMCG companies (95%) and a majority of retailers (92%) will provide a salary increase. Nearly three fifths (57%) of FMCG firms that implemented pay freezes in 2009 expect to lift them within the next six months. Short-term incentives have and will continue to be a hot topic for the financial services sector. Rather unsurprisingly, these are forecast to be below target by nearly two thirds (63%) of respondents. Very few (6%) respondents expect above target incentives, as opposed to 13% of organizations across all sectors. Priorities and challenges of the top CEO's during the upturn are employee retention, succession planning and supporting and sustaining their business' leadership. Succession planning has assumed a greater importance these days since it would contribute greatly to the long term growth and stability. A National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario successful business is the one that not only has a great management and an excellent business model buy also a great culture to hold the two together. For e.g. back in the 1970's,American car giant Chrysler was losing money and was bankrupt and had the Government to provide a bailout of $1.5 million, it was its leader Lee Iacocca who not only took the company to the No.1 position but also repaid the loan of the Government early. Whilst succession planning could represent the basis for a firm having the talent assuring its future growth, strategic succession planning could couple this aim, with retention and development of organization's best talents. Best talents need to be engaged and motivated before they even consider to leave. So here comes the concept of retention and talent management. For instance the recession had greatly affected the aviation sector. Like the Kingfisher airlines which resorted to cost-cutting of various measures like the lay-offs, retention policies like highlighting the career-development opportunities to the employees, encouraging the employees to take up the future education, encouraging and implementing the cross-utilization helped the organization to sail through properly thereby becoming the market leader in the Indian sector. 67 headcount. During these times, it becomes important for companies to invest in employees through training and development and other initiatives to motivate them. Thus the IT industry like all other sectors, was affected by the global slowdown, however the measures taken by the companies will try them to effectively gear for the upturn. The upturn path after having been hit in the global recessionary storm, with companies showing optimism on hiring and salary increases. With companies starting to prepare for the upturn by hiring, HR leaders may have to look at various creative retention measures to retain their top talent, as a company always requires a skillful workforce. Service Sector There's no doubt it's going to be another tough year for HR. Hudson has looked into the priorities for its clients going forward here are the key HR issues on their minds. Management is the art of getting extraordinary results from ordinary people Human Resources Management is also a management function concerned with hiring, motivating, and maintaining people in an organization. It focuses on people in the organization the main factor in the Service Sector. The Employee Empowerment is the key word in the service industry, the strategies followed in Small and Medium Enterprises (SME) the SME Top Executives recruits by selecting people with passion and quality, because only then will the employees stay longer with the company.the positive gains of this practices are a low attrition rate of about 12% no industrial dispute has been reported yet. As a CSR initiative they are running a driving school in a no loss no profit strategy. Talent development Upturn brings different perspective to the fore. Improving staff retention There are top challenges to be confronted in the face of upturn. While the global financial crisis helped to retain staff in 2009, employees will be less cautious and more inclined to change jobs during the recovery. Likewise, competitors will once again able to afford to hire and poach. In particular, employees who were more closely scrutinising remuneration and benefits, job security and career advancement prospects in other companies will gladly make the move as hiring freezes are lifted. Proactive HR strategies must be implemented now to retain employees. Priorities to be seen Organizational development Workforce engagement Compensation and benefits Companies have to focus on doing the right things with business being the centrifugal force. Now, the HR trends are to ensure all the business needs / priorities are met not by doing run of the mill stuff, but by getting creative and innovative in the overall approach and sustaining the intensity and momentum. Talking about the global scenario, corporate India is on the upturn path after having been hit in the global recessionary storm, with companies showing optimism on hiring and salary increases. With companies starting to prepare for the upturn by hiring, CEO may have to look at various creative retention measures to retain their top talent, as a company always requires a skillful workforce. HR will have to manage challenges of hiring and managing attrition. Getting A-level skills is not a problem during times of recession. But with the upturn, there is going to be a great demand for Alevel talent. This naturally leads to the other challenge, which is attrition. With every company stretching to pull in top quality talent, organizations will be put to test when it comes to retaining their staff. The improved hiring outlook is also as a result of companies reducing their dependence on the U.S by expanding in newer geographies and within India, thus increasing overall According to the Hudson report, 22% of respondents expect that talent development will take precedence as HR's first priority moving into 2010. Improvement of talent development strategies and delivery will be key to leveraging the available talent as effectively as possible, especially for success-critical positions. Mercer adds that developing high-potential talents for the future should also be high on HR's agenda. Being one of the top executive talent challenges faced by companies in Asia, leadership development initiatives must be stepped up in order to avoid talent shortages at the most crucial levels. Employers should ensure future leaders are given access to future development and learning opportunities to accelerate their skills development. They must also gain a better understanding of the skills, competencies and behaviours that will be required of leaders in their organisational culture, and assess the gap between these needs and existing talents. 68 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Compensation and benefits are emerging, particularly in areas of work-life balance. The economic downturn has changed the way HR approaches compensation and benefits. According to Hudson, 2010 will be a year of realigning total rewards programmes to meet corporate objectives. Research from Talent2 suggests adjusting salary and rewards packages will be half the battle for HR professionals in the upcoming year. Finding creative and cost-effective ways of combining tangible and non-tangible rewards will also be a major challenge. If resignations become more frequent, HR must structure its exit interview process to find out why people are leaving, and what it can to do retain current and future employees. Feedback should not just address HR's initiatives - leaders should also be assessed on their roles in motivating employees. Employers will benefit from paying particular attention to using compensation as a retention and motivational tool, or leveraging non-financial rewards to keep employees better engaged. Hudson says HR departments will be exploring more effective ways of communicating benefit plans that offer individual flexibility and build appreciation, trust and commitment. Not only will HR have to be more innovative in this key area in 2010; they will also have to take a more individualised approach to rewards and recognition schemes. Incentive programmes should target all employees rather than just sales personnel who have traditionally been the focus of such initiatives. Out-of-thebox thinking will be crucial in 2010 as companies strive to choose rewards which are relevant and motivational. Organisations which make it a priority to build customised compensation and benefits programmes are in good company. According to Mercer's 2009 Employee Benefits Choice survey, near-100 percent of Singapore companies believe providing employees with a choice in the benefits that they receive is crucial for responding to diverse workforce needs and values. Employers also acknowledged the importance of implementing employee choice programmes in order to remain competitive in the marketplace. Employee Engagement If there is a lesson to be learned from past recessions, it's the erosion of employee commitment in organizations. Cost-cutting measures and other effects from the economic downturn have impacted levels of trust and loyalty in employees. Many are feeling stressed and nervous. The upturn will see some of an organization's best and brightest workers leaving to join competitors if their employers don't take immediate steps to motivate and retain them. Hudson says 14 % of respondents to one of its recent surveys expect employee engagement and re-engagement to be linked closely with staff retention next year. The HR challenges lie in reconnecting with the mood of the workforce, rebuilding trust and collaboration, and driving continuous and transparent communication. A great emphasis should be placed on measuring employee engagement levels within organisations. Employee surveys, for example, will be very useful in highlighting where HR is succeeding and which areas can be improved. HR should know its key talent segments and find out what they value. Mercer consultants say employers might be surprised at new trends that Besides feedback, HR can be proactive with its retention efforts. Change management programmes must adequately address employee needs. Paying special attention to career development opportunities will send a message to employees that their growth in the organization is encouraged and valued. Leaders must be deployed and equipped at all levels to inspire employees to work towards a common goal in order to minimise distractions and increase productivity. Cost control Cost control will be a corporate-wide priority in 2010, but there will be added pressure on HR to manage budgets through process and policy standardisation. HR must consider cost-efficient solutions in areas such as compensation and benefits and training programmes. But if forecasts show an upturn is on the way, why will cost control still be a challenge? Talent reminds employers that recovery in 2010 will not be so drastic that employers no longer have the challenge of dealing with budget constraints. Organizations will not restore budgets and head counts to anything near pre-crisis levels as they want to maintain continuous efforts to be as distanced from the effects of the economic downturn as possible. In multinationals particularly, the mantra “do more with less” has trickled from headquarter offices in the US and Europe to Asia, despite this region faring relatively better in the crisis. But economic uncertainty is not an excuse to ignore the backbone of any business: the people. According to the ECA International 2009 Assignment Benefits Survey, HR is under significant pressure to reduce costs for international assignments. Two-thirds of participants reported that they intend to review various facets of their benefits policy in the upcoming year. However, employers are also struggling to find a balance between cost management and finding the right talent to post overseas. These conflicting requirements will be a major HR consideration in 2010. Mercer consultants suggest looking for measures to contain costs. Organisations can leverage economies of scale from regional frameworks on executive pay, employee health and benefit programmes, and training and development. Meanwhile Hudson consultants predict that some HR departments will go through restructuring themsleves. They may opt to outsource more non-essential activities, they told HRM. Perceptions of HR Experts found it difficult to rank something so subjective and multilayered, but most agreed that this is an issue HR must National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario address. HR has been one of the most vilified departments in many organisations this year, and its efforts to limit attrition were largely underestimated. Not only does HR have to improve its image in the eyes of employees, it has to strengthen ties with other business departments. Research from Talent2 shows HR is still seen as a back-office, transactional and operational function in Singapore and much of Asia. Buy-in from senior management is often hard to come by as well. Yet, high expectations await HR. In a recent Hudson Report, 12% of survey respondents said a dominating priority would be ensuring HR strategy is the cornerstone of the overall corporate strategy. HR departments must examine their effectiveness and the way they deliver services to ensure it becomes a high-performing function moving into 2010. Suggestions for improvement vary according to consultants. Some suggest HR outsourcing as an important solution. It enables HR to decrease its administrative burdens and practice a more direct approach to business needs. Others believe leaders should work to give a stronger definition to HR roles in the organization so they are more aligned with business requirements. Employers and employees agree that 2009 was a year of inequity 69 whether in terms of salary cuts compared to rising costs of living, or overtime hours versus leisure time. Achieving Work-Life Balance shifted from the check-list to the wish-list in 2009, but it is likely to be solidly back on the agenda in 2010. The fact that experts are moving it to 2010's HR challenges list is both good and bad news. It is heartening that work-life balance will become a priority, and that HR may be better equipped to give employees that much-needed break. However, like each of the top five challenges facing HR professionals in 2010, it indicates HR will certainly have its work cut out for it. Actions to be taken now Watson Wyatt says next year is going to be just as challenging as the last; but HR can ease the burden by putting some strategies into play immediately. ! Refine and communicate your employee value proposition ! Strengthen communication at all levels of the organization ! Be clear with employees about what is expected of them and how they are doing ! Get performance-based reviews right ! Focus on retaining high-performers ! Tune-up the HR function to deliver ! Take advantage of “engageable moments” 70 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario Managerial Challenges under Globalized Industrial Economy Prof. Kalpana Lodha-Chordiya Lecturer, PCMRD, Pune During the post-New Economic Policy (NEP) period, our country has undergone an ocean changes in the process of industrialization and economic development. This phenomenal industrial growth has brought India to a prominent position amongst the industrially advanced countries in the world. During this period the most important phenomenon has been a speedy diminution of public sector enterprises in industrial and commercial fields. Though the growth of private sector had been equally impressive, on the eve of the new millennium, the basic policies of industrial development were formulated through the various Industry Policy Resolutions, which envisaged that public sector enterprises will achieve the commanding heights of the economy only to some extent; and private sector will continue to develop in number of areas. Both sectors will function as to complement each other. As per the New Economic Policy, the major thrust is on privatization and disinvestment by the government. In order to have effective industrial development the resources consisting of land, labour, capital and entrepreneurship skills with the government protection in cohesive cultural is the need of a globalize economy. Truly speaking, an extreme example the Taliban is not fit for the industrial development as compared to India. , since it India has ample chances of growth due to comfortable peaceful cultural heritages besides amply available resources. However, the mere availability of the physical resources is not sufficient panacea to get the boost in the industrial activities. There is a need for skilled technicians and managerial personnel who can harness the available factors of production for the development of the industrial enterprises by using the cultural advantages. Indians in the new economic wave partially disturbed by the recessionary epidemic are eager to fight and prepare to conquer the global challenges with the help of host of duly trained technicians consisting of managerial, engineering and supportive skills. Indian experience provides a suspension bridge between highly developed countries and developing countries in the world and between primary production and marketing of advanced goods and services, keeping in view its high sophistication. Simultaneously, the technological advancement in the country during the post New Economic Policy period has been equally phenomenal, particularly in the areas of oil refining, petrochemicals, drugs, pharmaceuticals, basic chemicals, fertilizers, engineering, heavy machine building, heavy power generating equipment etc. In the same way, in the post NEP period, the professional managerial growth and development has been spectacular. A number of management institutes have been set up in the country. There is today undoubtedly a need for professionalization in every activity of management. Professional managers are now running a vast number of enterprises in the private sector. The silent but effective revolution in favor of professional management is being witnessed and this is likely to catch further momentum in the next decade and thereafter. The success of industrialization is considerably dependent on managerial performance. In the words of Prof. Peter Drucker1, “Resources are developed by managers and are allocated by managers, and managers are responsible for their productivity. It is above all, productivity, which is the first mission of management and its first responsibility. The management task today focuses increasingly the management task of tomorrow and is significantly centered on the productivity of resources”. It is the management's task:i. To make human resources productive by proper and adequate training; ii. To make effective use of capital resources for productive purposes, and iii. To obtain beneficial results for society allocating resources where they are most needed. The first responsibility of industrial entrepreneurs is to manage their business enterprises efficiently and profitably. Success in this role is necessary, but is not the end of their ultimate objective. They have a tremendous responsibility towards the society and the people of this country, in the form of providing better employment opportunities by establishing new units and expansion of the existing ones; by providing quality products and services which are most cost and effective & ultimately will help the weaker section of our community to improve their standard of living. The surpluses generated by the industries needs to be utilized for the ultimate benefit of the people of this country. It is against this background that we need to review the management perspective in 2009-10 and thereafter to assess to what extent the future management will be able to fulfill its wider objectives. It is recognized that this is not an easy task but at the same time it is within the reach of the industrial managers in the next decade and thereafter. Some of the important aspects, which deserve consideration at this juncture, are mentioned ahead: · Hike in Petroleum Products by Gulf Countries Consequent to a steep rise in oil prices during the period 2000 onward, there was a period of widespread economic turbulence National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario and a rift was created between the oil producing countries and the oil consuming countries. Our economy also received an economic setback because the increased oil prices caused a severe strain on our foreign exchange resources and it became a Herculean task to increase the exports commensurate with the increased burden of imports of crude oil and petroleum products. But for the remittances received from the Indian nationals working abroad, our foreign exchange position would have been too critical. The continuous increase in oil prices since 1973-74 has caused a major impact on our future economic and industrial development. This trend of increase in oil prices is persisting and it is difficult to comprehend its impact on our industry in the next decade.(2009-19) Foreign Exchange For Importing Crude Oil Oil not only continues to be a major source of energy, but an essential item of our day-to-day life. In our country, large quantities of kerosene is required by millions of people for cooking and lighting; diesel is used for road and rail movement and naphtha and furnace oil as industrial feedstock. The consumption of oil is increasing and its availability is becoming more and more difficult. Finding a suitable substitute is perhaps the biggest challenge to the industrial planners all over the world in the next decade. The problem is too acute for our economy because of power cuts and slow rail consumption, knowing fully well that diesel availability is restrictive. The new (2009) Government, under the leadership of Dr. Manmohan Singh (?) Or any other (?) may make recommendations as to how to resolve this difficult situation. The Government may also like to consider the feasibility of increasing the exports to match the increased demands of foreign exchange for importing crude oil and petroleum products. Advancement in Technology The entrepreneurs during the new millennium will be required to develop new technology in the production of items of mass consumption at low costs so that we are able to provide the basic needs of life to a fairly large number of our people. Presently, our efforts in the development of new technology have been encouraging and we are less reliant on imported technology. If we do not make high-speed progress in the same, we will be frustrating the hope and confidence of millions of people of this country. Population: Another important phenomenon particularly relevant to our country is the increase in population. Broadly, the annual increase in the population is about 2 crores people, which is more or less equal to the population of Australia. If this growth is not checked well in time it would not be a surprise, if in the next 20 years the population of our country may touch the mark of 140 crore people. During the post-independence period efforts were being made to provide housing, better health services, education and basic amenities of life to our people, but the population explosion continues to make our task much more difficult. At present, the number of unemployed or under-employed is 71 estimated at about 37% in the population. It is not going to be an easy task to provide jobs in the next one or two decades, commensurate with the increase in population. Unemployment The truth is that we are increasing in numbers far more rapidly than our capacity to generate new jobs. No matter what efforts we undertake to combat unemployment, the dilemma will continue to be with us in the next decade and beyond and in a large, more pronounced way than at present. The pressure on industrial and commercial organizations to provide employment for more and more people will continue. The pressures and agitations for higher wages from the organized sector which represents less than 10 percent of the population of the country are mounting and when the management succumbs to such demands, its impact is all the more severe on the rest of the population as well as on the national economy. i. So far as the future economic and industrial development of our country is concerned, the next decade will mark an increased growth of our industries in the private sector and it will continue to be in a position of commanding heights of the economy. Private enterprises will increase due to a variety of reasons, primary being the large requirements of the capital, which cannot be invested by the government involved in war preparation against Pakistan or in drought/flood or in political instabilities.. ii. With respect to the development of the private industries, the continued assistance by the public financial institutions will gradually increase public ownership. It is not necessary for this research paper to go into the impact of the convertibility clause in regard to the loans advanced by public financial institutions but it would suffice to say that in the next decade and thereafter, not only the dominance of institutional finance will continue to increase in the industrial field, but public participation in management will also continue to increase. The public participation will be in various forms such as public financial institutions appointing Directors on the Board etc. A number of other measures have already been initiated by the State in this direction. The impact of all these will be greater reliance on professional management and thereby a larger responsibility on the managers in industry to keep the industrial apparatus in perfect condition so as to make available increased production by the optimum utilization of the resources available. More and more opportunities for the development of professional managers and use of modern techniques of management will have to be created in the next decade and thereafter, to meet this challenge. Great consciousness has to be developed by providing more and more opportunities for training of workers, operators and management staff, so as to ensure optimum utilization of the available resources for the ultimate benefit of our people. iii. The advent of instant communications (MIS) (Radio, telephone, telex, and computers) has made a major impact on the management practices in industry and will continue to make that impact in the next decade. The 72 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario management cannot manage its industry in isolation, but will have to be guided by the development of technology and managerial practices in the world around. It is even recognized that social, political and economic developments of other countries in the world are likely to have a considerable influence on the formulation of our economic and industrial policies. As a result of the instant communications, the world is witnessing a change in the habits of the people, their mode of living etc., which has a major impact on the future industrial development of a country. We have witnessed this change in a big way in our country the change in the social life and habits of our people. For example, every man living in a rural area now aspires to have a pakka house, a radio, transistor, dresses made of synthetic fibers, electricity and essential electric appliances such as a fan, stove, refrigerator etc. These changes have a major impact on the demands for the products and on future industrialization. Entrepreneurs will have to keep these aspects very much in view while formulating their new investment proposals whether in the small, medium or large sector. iv. It is now worthwhile to refer to another area of importance and that is the “Management Authority” in the next decade. From the available data one has a reason to conclude that it is gradually increasing by the government action (disinvestment policies, industrial de-licensing, elastic regulation of prices and wages or Company Law provisions, etc.). Government intervention in our country is on decrease and there are no signs of its reversal in the next decade. Lately, the power of our trade unions has decreased by their disassociation with political parties etc., and they have verified their power that they are not in a position to prevent production, prevent implementation of new plans and schemes if their demands are not met. In this background, the task of the managers in industry in the next decade is indeed very challenging. carefully for the good future of the company Talent management is a professional term that gained popularity in the late 1990s. Companies that are engaged in talent management (human capital management) are strategic and deliberate in how they source, attract, select, train, develop, promote, and move employees through the organization “TALENT MANAGEMENT” refers to “Keeping People Who Keep You in Business” Talent, however, cannot be taught. As someone said, “you can teach a turkey to climb a tree, but it is easier to hire a squirrel”. According to Branham, 75 % of the senior executives admit that employee retention is a major concern today, the obvious reason being the 'increasing rate of turnover'. Achieving 0% percent turnover is neither realistic nor desirable. One major reason why people leave their organization is because of the organization's failure to bring about a correlation between pay and performance. The organization no longer wants to just hire to hire, in fact they are striving to find the right people, bring them into the organization and retain their services. Talent Management v/s Traditional HRApproach Traditional HR systems approach people development from the perspective of developing competencies in the organization. This can actually be a risk-prone approach, especially for companies operating in fast evolving industries, since competencies become redundant with time and new competencies need to be developed. Thus, over time, the entire approach to development of people might be rendered obsolete calling for rethinking the entire development initiative. Talent management on the other hand focuses on enhancing the potential of people by developing capacities. Capacities are the basic DNA of an organization and also of individual potential. In fact, the following appropriately describes the role of talent management: Above are some fundamental challenges for India but at the same time India and the rest world is going through the economic cycle phase of recession. In that, India including the world faced D different types challenges .It was the testing period of employers as well as for the employees. There are different observations based on that during Point of Departure the downturn period and when India is Translating organizational coming out of it. The way HR manger vision into goals and mapping behaved (on behalf of the Organization) the required level of and competencies during the recession, his attitude and capacities to achieve goals strategies he applied were different and now he has to change his strategies. One of the important strategies he has to apply to get back all the cream layer from the Assessment of talent to market (in the earlier period he remove). profile the level of capacities The different strategies related to the talent management he has to apply which is the master key for him. In recession he was the king but now…….? For that he has to apply all the talent management very skillfully and and set of competencies possessed within the organization Gap analysis and identification of development path N A Navigation Point of Arrival Aligning individual values and vision with organizationa Clear understanding of the varied roles within the organization and appreciation of the value-addition from self and others leading to building a culture of trust, sharing and team orientation l values and vision Enhancing capacities to learn, think relate and act through development initiatives Individual growth to meet and accept varied, incremental and transformational roles in an overall scenario of acknowledged need for change Helping individuals realize their full potential through learning and development Developed individuals enabling breakthrough performance 73 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario The talent management is developing the following intrinsic (Basic) human Capacities: 1. Capacity to learn (measured as learning quotient LQ) 2. Capacity to think (measured as conceptual quotient CQ) 3. Capacity to relate (measured as relationship quotient RQ) 4. Capacity to act (measured as action quotient AQ) The individual's values help in discriminating amongst alternatives and act as the bedrock for decisions. They act as multipliers in enhancing the individual's capacities, a sigma of which reflects the individual's true talent Thus: (LQ + CQ + RQ +AQ) X Values = Talent Organizations provide individuals the opportunity and space for physically manifesting their talent into performance for achieving individual and organizational vision. Talent manifests into performance as follows: Talent + Vision/Mission/Strategy + Skills & Competencies + Role & structure + Opportunity + Encouragement & Recognition + Training & Development + Coaching + Action Plan & Goals + Resources Performance Management System Performance Thus the domain of talent management focuses not only on development of Individual's intrinsic capacities, but also on culture building and change management to provide the other elements listed above for manifestation of talent into performance right person to the right job is an acknowledged need in organizations. But one of the toughest challenges in selection often overlooked is matching the right candidate to his immediate boss. What makes that goal particularly tough is when the boss does not have a clue? What kind of candidate would work well with him? Working with various tools, we can design and customize assessment exercises and materials. 3. Retaining Talent: Reducing Turnover and Aligning Talent with Organization Goals 4. Developing Talent: Challenging Your People with Executive Coaching and Leadership Development Programs. 5. Career Development / Career Management 6. Leadership Development 7. Transitioning Talent: Creating Goodwill through Career Transition Programs Organizations need to have a vision and a well defined strategy on hiring for the future. India has become the outsourcing capital of the world and this has created its own set of HR challenges. India's biggest problem is that, qualified graduates are becoming scarce. Despite the large population, the supply of engineers cannot keep up with the sharply increased demand as India has started coming out of the Downturn .In such a condition following are the objectives we have to focus in connection to the above fundamental challenges faced by India . OBJECTIVES · To identify various upcoming challenges of talent management · To establish upcoming trends in talent management. · To identify the ways to retain the best talent while on the verge of downturn Upcoming Challenges: With help of some Global Recruitment Market Report: 2009 we can analyze key trends and market forecast. Year Countries Employment JAN 2009 US (22.7%) 76000 declined in jobs JAN 2009 Canada (7.2%) 129000 UK(1.3%) France Indian Service Sector Contributed 56% To The GDP in 2008-09 Talent Management as a Strategic Approach: talent management as a strategic approach to managing human capital throughout the career cycle:. In an organization, Talent Management “A conscious, deliberate approach undertaken to attract, develop and retain people with the aptitude and abilities to meet current and future organizational need” The economic downturn: Coping strategies 1. Attracting Talent: Creating Assessment and Selection Strategies and Processes The current economic situation 2. Matching the Right Candidate to the Boss: Matching the ! Demand plummeted; ! Markets became unstable, ! Credit dried up. ! The future looked murky and unpredictable Consumer debts in some countries like the US and UK remains too high Unemployment still rising, and consumers won't National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 74 spend until they feel safe in their jobs in 1982. The current economic outlook By the last quarter of 2009 and 2010, growth returns to most of the world. Asia, Africa and parts of Latin America will begin to grow quite briskly In the advanced economies, unemployment may increase until mid-2010 and may not reach pre-crisis levels until 2013; financing will be difficult but inflation should stay low. India, China leading Asia out of global downturn (GDP Rates) Decline - 4. The global economic calamity and recession, worst hit has been for the outsourcing industry Offshore Outsourcing Challenges In 2009 The year 2008-09 has not been very good for businesses. With the global economic calamity and recession, worst hit has been for the outsourcing industry. But the trouble doesn't end here. In fact, the offshore outsourcing industry has many other challenges staring at face. Here are some of them. Other Current challenges Company Scandals - Satyam Happened and question the ethics of debacle(Disaster) Indian outsourcing companies. Obama and American Policies Anti-outsourcing views; proposed the Countries GDP rate US 4% companies that outsource their work Japan 8% The Indian outsourcing industry is A Asia excluding China, India n a and Indonesia, 7% removal of tax benefits for to offshore continents. faced with the huge challenge to overcome on this regards. Indian Politics and Uncertainty Till the period of uncertainty is there, there will only be a skeptical attitude towards the outsourcing industry. Advanced economies are projected to expand sluggishly through much of 2010, with unemployment continuing to rise until later in the year, with annual growth in 2010 projected to be about 1.25%, following a contraction of 3.5% in 2009. In emerging economies, with rebound driven by China, India, and a number of other emerging Asian economies, real GDP growth is forecast to reach almost 5 % in 2010, up from 1.75% in 2009 Other Outsourcing Hubs Also pressure of increasing competition like is other emerging outsourcing centers like Philippines, China etc…. Though Philippines is poor and lacks political stability, it is heavily banking on outsourcing to bring in revenue. Some Indian M&A The Great Recession of 2007-09 JK Tyres acquires Mexican firm Tornel The global economy is now in the process of gradually recovering from the most severe financial shock and the worst economic downturn since the Great Depression of the 1930s.Since the 1960s this has been the first year in which global real GDP has actually declined Biocon to buy US firm for $400 mn: Report Asia has been less impacted; more specifically growth in China and India has remained impressive although down slightly from the very rapid levels of a few years ago. The growth in these economies is especially important from an humanitarian point of view since they are so large with over a third of the world's population and since they contain over a half of the world's poor. Tata makes offer to acquire Brazilian ore miner AVG GMR to acquire 50% of SA coal firm for Rs 620 cr SIRO buys out German clinical R&D firm M&M set to buy Belgian gear-maker for $475 mn Tatas to buy stake in Italian auto designer Pininfarina Dr. Reddy's Acquires BASF's Pharmaceutical Contract Manufacturing Business and Related Facility at Shreveport in the US · poverty has increased by 90 million Essar acquires US based mobile payment company, · unemployment by 50 million Obopay Inc In the last 60 years the global economy has only experienced four significant recessions, these were in; 1975, 1982, 1991 and 2009. Of these four global recessions, 2009 has been the worst in terms of the UAEs Etisalat eyes Stake in Spice Telecom 1. Decline in GDP, Bharti Airtel eyes South African MTN 2. Industrial production, 3. And investment the current recession has been about twice as great as that of the second worst, which occurred http://economictimes.indiatimes.com/...ow/2996913.cms 3i Infotech buys US co Regulus for $80 mn http://economictimes.indiatimes.com/...ow/2996904.cms In case of such a different types of problems HR department should always be keen because HR still has to prove every time that they are an integral part of the organization that they are National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario working as a shield for the organization. HR has to handle very delicate issues to sustain itself in the market. Every time they have to be careful while applying different strategies. And this is a testing period for the HR department that how they handle the situations when they are coming out of downturn (but not completely and); how they handle the talent management. Again it's not easy to cope up when there is a M&A. A lot of issues regarding nurturing of employees is a challenge. (issues related to managerial ,financial as well as very important issue of personnel ) A model would be the Mahnidra group when it took over Satyam. STRATEGIES FOR MANAGING HUMAN RESOURCE IN M&A: As a Part of Talent Management I. Communication During mergers and acquisitions, employees are often kept in the dark about the sale of the corporation. This can lead to a distorted or misrepresented picture of the acquisition's ramifications and to counterproductive activities by employees, who may be anxious about possible job losses. By involving people at all levels of the organization, the merging companies are encouraging widespread acceptance of the merger process and reducing feelings of insecurity. II. Retaining Key People Pay and reward strategies can also play an important role in management's retention strategy but they need to be addressed early on in the merger process and should not only focus on senior executive pay, but also on the remuneration of employees at all levels of the organization III. Try to Establish a Common Culture Create a win-win situation for both organizations, since it will result in a corporate culture with which both sides can identify 75 HDFC Bank; vCustomer corporation are concerned about organizational culture .Average 92 hours of Training on behavioral and skill enhancement training every quarter they gives. Provide Individual Counseling Individual counseling on personal adjustment and stress coping strategies can assist the employees to 'solve the problems associated with merger stress; recommend, demonstrate and initiate coping with merger stress strategies; or improve the employee's mastery' Most of all the strategies are followed by Mahindra & Mahindra in the form of-that from the very beginning like the day new employees joins, he picked from his house in Mahindra Scorpio and welcomed with a rose.1st impression comprises of a feedback from every employee on the 7th 30th 90th &180 day from the date of his joining. The company is driven by the core purpose of Indians are second to none in the world' From the above overall scenario we can say following are the current challenges for the HR from that he has find out the way. Concluding it can be said Today's Top 10 TalentManagement Challenges are 1. Attracting and retaining enough employees at all levels to meet the needs of organic and inorganic growth 2. Creating a value proposition that appeals to multiple generations: most companies are struggling to create an employee experience that appeals to individuals with diverse needs, preferences and assumptions The stores have a high percentage of Gen Y employees, while corporate roles and leadership ranks are primarily made up of Gen X'ers and Boomers. 3. Developing a robust leadership pipeline Conducting a cultural audit is a useful way of obtaining useful information about the two companies' 4. Rounding out the capabilities of hires who lack the breadth of necessary for global leadership This is handled in a very good manner by Sataym & manhindra. 5. Transferring key knowledge and relationships For Employee Branding Mahindra also got the award in 2009 6. Stemming the exodus of Gen X'ers from corporate life IV. Training and Development 7. Redesigning talent management practices to attract and retain Gen Y's Training and development should be provided to senior and middle management and should focus on all aspects of the merger process. 8. Creating a workplace that is open to Boomers in their "second careers Training should focus on the implications of the merger for the company, its effects on employees at all levels of the organization 9. Overcoming a "norm" of short tenure and frequent movement. Tata's are expert in this field, McDonald's places emphasis on the training and development of its employees. They aim to provide career opportunities for people to achieve their potential , Indian Oil Corporation belives that there should be T& D form the starting point when employee enter into the organsiation. 10. Enlisting executives who don't appreciate the challenge V. Try to Eliminate the Them-Us Syndrome Try to eradicate any arrogance on the part of their personnel to ensure that acquired employees do not feel inferior and 'conquered.' Business and HR strategies to be integrated well, it is apparent that the top management, business heads and HR professionals need to work closely with each other. There are five ways in which HR professionals can enhance their ability to contribute to this integration process. 1. HR professionals must spend more time and effort understanding the business environment and the key National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 76 strategic issues faced by the company: To be mentally prepared for all possibilities, to be able to give a clear picture of changes to fellow employees, and to look ahead and foresee changes on the horizon that could involve changes in HR policies and practices, understanding the business environment ; the key strategic issues faced by the company on a continuing basis is essential. 2. 3. HR professionals must move towards taking an integrated look at the people in the organisation, bridging the gap between HR and IR (Industrial Relations) by employee branding which done in a very good manner by different companies like…Wipro, Infoysis. 5. It is tried by vCustomer Corporation in the form of “it provides outlet for creative writers; monthly magazines gives a whole new meaning to free speech, when employees express their opinion on various topics. There are groups like vRiders, the bikers and vlive …etc every quarter through which they can display their talent at various cultural vents which make it more open to know different potential talents hidden in them. HR professionals must get more involved in the nittygritty's of the business, i.e., in operational details and issues: Better understanding of operational concerns will also help HR professionals play a more useful role in training and development, transcending behavioral training programmes and “leadership”. This is particularly important in an era when domain knowledge and technical expertise are becoming more important. Specially this care is taken by Tata Group well, also by P&G 4. 6. Diversity of Talents and Personalities & Deep Immersion: HR professionals must see themselves as knowledge workers and facilitators of knowledge flows within the organisation: . 7. Horizontal Growth Paths: Productive growth path is horizontal and ,progressive organizations have created lateral paths that allow people to broaden their skills and knowledge within their disciplines and jobs. Companies like IBM, Intel have instituted technical mastery programs to allow individual contributors and specialists to develop their knowledge and learning and to be paid and recognized for it. From the above we can say if HR manger change his polices on behalf of the organization considering the future ( to nurture and minimize the attrition rate of good knowledge capital ) i.e considering that the recession will over by the end of 2013 throughout the world and apply the following 8 (Eight) Principles for success definitely make the path of human capital as well of the Organization will be smoother. i. Accurate diagnosis is the first step in effective development Documentation and sharing of such knowledge helps organizations do this effectively. Performance appraisal processes and incentive systems need to reflect the importance of this activity. ii. Ensure development is tied to where our business is going now and in the future. HR professionals need to change from a support paradigm to a value creation paradigm iv. Prioritize potential SEVEN TALENT MANAGEMENT PRACTICES: With lot of determination and skillful execution of seven key practices, any organization can create motivating workplace. iii. Development talent needs to represent a balance between fixing weaknesses and leveraging strengths. v. Effective development requires a blend of activities including mentoring, classroom learning, coaching, job assignments, action learning etc.. vi. Don't underestimate the role of management support 1. Job Stretch and Mobility: Talented people need to be constantly challenged and stretched whatever may be job defined narrowly. Allow them to take risks, try new things though they fail or …etc. This strategy is followed by the Reliance Group.The employees are expected to show their talent vii. Creating learning tension will maximize your return 2. Mentoring Not Just Managing: Only transferring of knowledge mechanically is not important but it is also important to guide at each step by one to one quality conversation which now a days done by the different software companies “He looks forward to the next decade. He shall be managing under more difficult conditions than ever before and more will be expected from him. That is a challenge he should welcome, since he has chosen to be managers not caretakers. He alone can meet the expectations of ordinary people in the next decade, by providing them with the goods and services they want, by enabling them to find the satisfaction at work they are looking for and by helping them to tackle community problems. What he will require above all in the years ahead is the confidence to meet that challenge to the full”. 3. Freedom and Motivation: SAP Labs India ltd provides flexi time. Compassion leave is available to employees in case of bereavement .500 employees are member of SAPPORT CSR initiative 5. Teaching and Coaching viii. Developing others becomes a measurable management performance objective. The role of Industrial entrepreneurs in globalization may be summarizing in the following words: National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 77 Positive Organizational Outcomes With Strategic HRM Prof. Kalpana Lodha- Chordiya, Lecturer, PCMRD, Pune Prof. M. Swati, Soft Skill Trainer, PCMRD, Pune The Global Picture Today's leaders must assume the responsibility for creating new models of management systems because many of the assumptions on which management practices were based are now becoming obsolete. The global picture when it comes to business is that the world is indeed becoming a smaller place. More and more companies are operating across geographic and cultural boundaries. While most have adapted to the global reality in their operations, many are lagging behind in developing the human resource policies, structures, and services that support globalization. The human resource function faced many challenges during the globalization process, including creating a global mind-set within the HR group, creating practices that will be consistently applied in different locations/offices while also maintaining the various local cultures and practices, and communicating a consistent corporate culture across the entire organization. To meet these challenges, organizations need to consider the HR function not as just an administrative service but as a strategic business partner. The changes in the present industrial scenario have necessitated changes in the structure and functioning of an organization. Organizations have been focusing on radical changes in the structure resulting in the flatter and leaner organization. These changes with the increased emphasis on the knowledge management have resulted in the significant shifts in the working environment and HR policies pursued by the organization. The primary focus of the human resource management is to match the job profile with the skill set off the people, in order to achieve the organization goal. The business environment is dynamic, and the cause of yesterday's success may be the cause of tomorrow's failure. Foreign competition and the need to trade more effectively overseas have forced most corporations and government to become increasingly culturally sensitive and globally minded. Rapid technological changes have transformed the time dimension of competition. Speed and quality in addressing the needs of worldwide customers greatly influences who the next winning businesses are going to be. The flow of technological know-how around the world is also much quicker than in any other previous era. New powerful global competitors are emerging in countries previously on the periphery of global economic activities. The human resources department should develop and implement both business and people strategies. This type of partnership is necessary if an organization wants to change potentially inaccurate perceptions of HR and reiterate the HR function's purpose and importance throughout its global environment. Organizations will also discover that HR can be priceless in facilitating the development of a unifying corporate culture and finding and cultivating much needed leadership talent around the world. The process of globalizing resources, both human and otherwise, is challenging for any company. Organizations should realize that their global HR function can help them utilize their existing human talent from across multiple geographic and cultural boundaries. International organizations need to assist and incorporate their HR function to meet the challenges they face if they want to create a truly global workforce. Functions such as operations, sales, and marketing have generally made great progress in adapting to the global reality. However, the HR function has typically lagged behind in developing policies and structures that support globalization. The top challenges HR faces in the globalization process include: NEW TRENDS IN HRM HRM places great emphasis on a number of responsibilities and functions such as relocation, orientation and translation services to help employees adapt to a new and different environment outside their own country. Selection of employees: Requires careful evaluation of the personal characteristics of the candidate . At the same time HR manager has to remember that this is the base on which some percentage of the attrition or turnover rate depends. We are now coming out of a slowdown & it's like a rejuvenating phase of the industry. In this the HR manager has to be very careful as the other part of the world still has to come out of the recession. As per the data this recovery will continue in different parts of the world till 2013.The HR manager will play a crucial role in selecting people who will be easy to nurture and are more productive. Changed Employee Expectations: Again there is a difference in the thought process of different generations (Gen.X: Gen.Y….etc.) that he has to keep in mind. Employees demand empowerment and expect equality with the management. Previous notions on managerial authority are giving way to employee influence & involvement along with mechanisms for upward communication and due process. 78 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario If we look at the workers' unions of Otis, Hindustan Lever, ICI, TOMCO, Blue Star, Webel Electro, and Central Bank. They have rewritten their agenda to include quality and better customer service. So every time there is a need to redraw the profile of the worker and discover new methods of training, hiring, remunerating and motivating employees. Outsourcing HR Activities: The trends towards outsourcing have been caused by several strategic and operational motives. HR departments are divesting themselves from mundane activities to focus more on strategic role. Outsourcing has also been used to help reduce bureaucracy and to encourage a more responsive culture by introducing external market forces into the firm through the biding process. It is a big challenge before the HR manager to prove that his/her department is as important as any other functions in the organization. their number of management grades, elimination of layers, & redrawing reporting lines within their organization. ITC, HLL, Godrej & Boyce, RPG Enterprises, Raymond Woollen Mills, Shaw Wallace, Ballarpur Industries, Compton & Greaves are some of the companies that are doing so. Changes are required particularly during the time of Acquisitions and Mergers also during the bad weather of the firm. This is a paramount need to keep people working effectively and efficiently. Here there are main issues like financial, managerial as well as two different organizational cultures etc .These are done according to the changing character of competition, as major companies operate through complex web of strategic alliances of varying degrees of permanence. Changing Workforce Dynamics: Frequent, physical relocation is required. The increasing number of dual-career professionals limits individual flexibility in accepting such assignments and may hinder number of dual-career professionals limits individual flexibility in accepting such assignments and may hinder organizational flexibility in acquiring and developing talent. Some demographic changes in the workforce having their own implications to the HR managers are: Managing Diversity: This is getting to be a very important issue because of: Increase in the number of young workers in the workforce, increase in the number of women joining the work-force, increase in the proportion of ethnic minorities in the total workforce, increase in mobility of work-force, international careers & expatriates are becoming common, international experience as a pre-requisite for career progression to many top-level managerial positions. Organizations that can manage diversity better tend to be more flexible because they have broadened their policies are more open-minded, have less standardized operating methods and have developed skills in dealing with resistance to change. (i) Increasing number of working mothers, CHALLENGES OF HRM IN INDIAN IT INDUSTRY: (ii)Asteady decline of blue-collar employees who are giving way to white-collar employees, and The Indian IT industry poses a unsolved challenge to HR professionals-from recruitment to detainment, compensation to career planning and from technological obsolescence . (iii) Increasing awareness & education among workers. Eg. Wipro cares about dual career couple. They give more preference to working women. Balancing Work-life: Balancing work & life assumes relevance when both husband and wife are employed. Challenges of a of a working housewife / mother are more than a working husband, thus balancing it is becoming a major challenge for the HR manager. So a program that aims at balancing work-life is required and is supposed to include: Childcare at or near the workplace, Job Sharing, Care for sick children and employees, On-site summer camp. Training supervisors to respond to work and family needs of employees, Flexible work scheduling, Sick leave policies, Variety of errands from dry cleaning, dropping children at schools, and many more like these. Making HR activities ethical: Hiring ethically strong employees is only the beginning. The need to ensure ethical conduct of employees is increased a lot with the passage of time. The Hr manager needs to carefully screen applications for jobs, weed out those who are prone to indulge in misdemeanors and hire those who can build a value driven organization. Organizational Restructuring: Peter Drucker prophesies in his book(The New Realities) that many big companies are reducing Labour turnover. This problem can be tackled with the use of HR planning which in itself is a challenging task in IT industry. As the maximum turnover rate in the IT industry is approximately 59%. Determining the strength required for the near future is a very complex problem in an IT company. The deciding factor is the company's perceived ability to bag projects both locally and internationally. The problem here is that until the companies have sufficient right staff-mix, it cannot clinch a project. But unless there is a project, it cannot attract and retain people. With the advent of MNC's it may be noted that job prospects are gearing up. The multinationals are offering fantastic pay packets and working environments to their employees Eg: TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Mode, recognized as the benchmark of excellence in software development. TCS has over 120,000 of the world's best trained IT consultants in 42 countries, with an annual sale of $5.7 billion (fiscal year ending 31 March, 2008) TCS has also won many awards in different fields as ! TCS tops the Data Quest DQTop20 list of IT Services providers in India for 2008 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario ! TCS ranked among Top 25 in Business Week's 2007 Information Technology 100 ! TCS awarded top position in 2007 "Global Services" 100 'Top 10 Best Performing IT Services TCS is the world's first organization to achieve an enterprisewide Maturity Level 5 on CMMI® and P-CMM® based on SCAMPISM, the most rigorous assessment methodology. TCS Integrated Quality Management System (iQMS™) integrates processes, people, and technology maturity through various established frameworks and practices, including IEEE, ISO 9001: 2000, CMMi, SW-CMM, P-CMM, and Six-Sigma. This shows that it is lays much emphasis on quality control. CHALLENGES IN TCS 1) TO MAINTAIN WORKFORCE DIVERSITY The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced of workplace diversity can be turned into a strategic organizational advantage. In Modern Human Resource Management if an organization is able to capitalize on this melting pot of diverse talents. With the mixture of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond to business opportunities more rapidly and creatively, especially in the global arena (Cox, 1993), which must be one of the most important organizational goals to be attained. More importantly, if the organizational environment does not support diversity broadly, one risks losing talent to competitors Since TCS has offices in more than 40 countries, the challenge for HRM is to maintain the proper ratio between foreign and Indian origin employees. 2) THE MANAGEMENT OFWORKPLACE DIVERSITY In order to effectively manage workplace diversity, Cox (1993) suggests that a HR Manager needs to change from an ethnocentric view ("our way is the best way") to a culturally relative perspective ("let's take the best of a variety of ways"). This shift in philosophy has to be ingrained in the managerial framework of the HR Manager in his/her planning, organizing, leading and controlling of organizational resources. TCS deals with this challenge by conducting mentoring programs. 3) LARGE WORKFORCE There is a big challenge of maintaining large work force consisting of 1.3 Lac employees in for TCS. 4) MANAGING EIS As information is the basis of decision-making in an organization, there lies a great need for effective managerial control. A good control system would ensure the communication of the right information at the right time and relayed to the right people to take prompt actions. 79 When managing an Executive Information System, a HR manager must first find out exactly what information decisionmakers would like to have available in the field of human resource management, and then to include it in the EIS. This is because having people simply use an EIS that lacks critical information is of no value-add to the organization. In addition, the manager must ensure that the use of information technology has to be brought into alignment with strategic business goals. 5) CONTROLAND MEASURE RESULTS A HR Manager must conduct regular organizational assessments on issues like pay, benefits, work environment, management and promotional opportunities to assess the progress over the long term. There is also a need to develop appropriate measuring tools to measure the impact of diversity initiatives at the organization through organization wide feedback surveys and other methods. Without proper control and evaluation, some of these diversity initiatives may just fizzle. 6) LEADINGTHE TALK A HR Manager needs to advocate a diverse workforce by making diversity evident at all organizational levels. Otherwise, some employees will quickly conclude that there is no future for them in the company. As the HR Manager, it is pertinent to show respect for diversity issues and promote clear and positive responses to them. He/She must also show a high level of commitment and be able to resolve issues of workplace diversity in an ethical and responsible manner. 7) HOW TO KEEP THE SAME LEVEL OF RECRUITEMENT EVEN IN RECESSION The biggest challenge for HR is to maintain the company reputation, which it gained over a period by recruiting a large number of new employees every year. 8) HOW TOABSORBALLRECRUITEES Though there are recruitments on a large scale, they do not have enough projects to absorb all the new recruited employees. In order to tackle this situation, they are calling the new recruited employees in small batches rather than 2-3 large groups. 9) HOW TO MAKE MORE PROFIT WITH SAME REVENUE As per Economic times, TCS is planning to decrease the variable pay of executives by 10-15% and keeping the gross same for middle management and developers. 10) HOW TO MOTIVATE EMPLOYEE The development of an appropriate organizational reward system is probably one of the strongest motivational factors. This can influence both job satisfaction and employee motivation. The reward system affects job satisfaction by making the employee more comfortable and contented. Motivational factors in an organizational context include working environment, job as a result of the rewards received. The reward system influences 80 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario motivation primarily through the perceived value of the rewards and their contingency on performance (Hickins, 1998). The challenge which HR is facing is that how to motivate employee without any significant salary hike or promotion. BIRLASOFTAND THEIR HRM PROBLEMS Birlasoft is a leading provider of information technology services in both onshore and offshore models to Fortune 1000 as well as mid-sized organizations in banking, financial services, insurance, retail, healthcare, manufacturing and independent software vendors sectors. Birlasoft services include application development, support & maintenance, enterprise application implementation, integration, infrastructure management and quality Birlasoft's robust delivery processes embrace digitized project management methodologies, embedded within proven practices of Six Sigma, SEI CMMi Level 5 on a continuous Representation and secure services framework with BS7799. The Noida centers of the company have been recently assessed at PCMM Level 3 for its HR practices. Headquartered at Noida, India, Birlasoft has 4,000+ employees across US, UK, Germany, Netherlands, Czech Republic, Malaysia,Australia, Singapore and India. Birlasoft is part of the global $1.4 billion CK Birla Group which traces its roots back to over 150 years and has diversified interests ranging from automobiles, cement, paper, software etc. to hospitals, schools and colleges as part of its philanthropic work. The company is a joint venture of CK Birla Group of India and Computer Horizons Corporation (CHC) of USA. It is leading Information Technology Company with offices world-wide. It offers high class solutions and offshore services to its clients that include companies like AT & T, P&O Containers, Merrill Lynch, ICL, Oracle Corporation, Ford, IBM, Network Managers, Shawn Ice, SaudiAramco, DDA, NEI, BMBHRC, ET &T, CDAC. In the year 1999 it was rated as the third fastest growing software companies of India by the magazine named Dataquest of India. CHALLENGES IN BIRLASOFT 1. Communication Focusing on establishing effective communication throughout the organization and to ensure that Birlasoftians have the skills and avenues to share information and coordinate activities effectively. 2. Performance Management Driving the organization's and its members' progress by establishing objectives related to committed work against which performance can be measured, ascertain capability development assistance required to continuously enhance performance. 3. Competency Development This starts with identification of requisite competencies at the organization level which are ultimately dependent on competencies that are needed to be identified, built or enhanced in the individual Birla softian. Also constantly enhancing the capability of Birlasoftians to perform assigned tasks. This responsibility in turn uplinks to the organizations capability building. 4. Training and Development To ensure that the identified competency requirements are built through a systematic and focused approach. 5. Compensation To provide all individuals with remuneration and benefits based on theircontribution and value to the organization in a fair and transparent manner. Competitiveness of the compensation offered in comparison with the prevailing 6. Career Development To ensure that individuals are provided opportunities to develop their competencies that enable them to achieve professional and personal career objectives within the organization's goals. 7. Participatory Culture A myopic outlook of utilizing talents of people only in the delivery of assigned duties has two broad undesirable effects: It prevents people from developing as well rounded professionals; and it denies the organization the readily available multitalented internal resource pool that could potentially contribute to most of the challenges and opportunities facing the organization. Building a participatory culture enables availability of avenues to harness/give exposure to employees' full capability by involvement in making decisions and solving problems that affect the performance of business activities CHALLENGES OF HRM IN INDIAN TOBACCO INDUSTRY: Large companies can afford to keep surplus staff and keep them engaged in internal projects or training programs. However, employees deeply resent transfers from one project to another as it adversely affects their career planning and prospects. Unexpected employee turnover and overseas deputation may aid further strain on the HR department. Notwithstanding the complexity of the problem, it has to be tackled to enable the HR department to plan its recruitment campaign, at least 3 months in advance. The marketing department has to play a vital role here. It must forecast the technologies in demand . INDIAN TOBACCO COMPANY (ITC) AND THEIR HRM PROBLEMS Company Profile ITC is one of India's foremost private sector companies with a market capitalization of over US $ 13 billion and a turnover of US $ 3.5 billion. Rated among the World's Best Big Companies by Forbes magazine and among India's Most Respected Companies by BusinessWorld, ITC ranks third in pre-tax profit among India's private sector corporations. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 81 Confectionery,Information Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. CHALLENGES FACEDAT ITC BYTHE HR MANAGER History Attrition is the gradual reduction of a workforce by employees' leaving and not being replaced rather than by their being laid. Reducing attrition rate has been a challenge for HR Managers since many years. Tobacco industry was not much affected by the problem of attrition, but due to stringency in government policies this problem became a prominent challenge for HR Managers of this industry. ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses ITC's Packaging & Printing Business Division, was set up in 1925 as a strategic backward integration for ITC's Cigarettes business In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. Products CIGARETTES Wills, Insignia, India Kings, Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristol, Flake. FOODS Ready to eat foods, staples, confectionery and snacks. LIFESTYLE RETAILING Wills Classic work wear, Wills Clublife evening wear, Wills sports wear. GREETING, GIFTINGAND STATIONARY Expressions greeting cards, autograph books, slam books, party invitations, pop up & mini books, Expressions Regalia (collection of premium greeting cards & social cause cards and desk calendars) Market Share ITC has captured a market share of 8%. In confectionery, ITC has built up a 17% share of mint candies and 24% of hard-boiled candiesReady-to-eat Sunfeast Pasta Treat has clocked 6% of the branded noodles. Challenges in Modern Human Resource Management Indian tobacco act's amendment 2003. CigarettesAct is passed with first statutory health warning, 1975 States like Delhi, Goa and a few more had created their own tobacco control laws . Kerala High Court and Supreme Court give momentous decisions in favor of tobacco control policies. Prevention and Control of Pollution Act included smoking in the definition of air pollution, Motor Vehicles Act of 1988 made it illegal to smoke in a public vehicle and Cables Television Network Amendment Act of 2000 prohibited the transmission of tobacco commercials on cable TV across the country. The Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA), a comprehensive tobacco control legislation, comes into force on 1st May 2004. India ratified FCTC on 5th February 2004. 1. ATTRITION The same is the case with HR Manager of ITC, due to stringency in government policies the sales went down and the profits declined. In order to maintain the profit levels employees were pressurized and thereby adding to the attrition rate. Now, HR Managers are working hard to reduce this increasing attrition rate. 2. RECRUITMENTAND TRAINING As the employees are leaving the organization due to increased work pressures, it has become mandatory for the HR Manager to recruit new employees. And in this liquidity crunch they are spending on the recruitment and training of the new recruits. 3. RETENTION Retention is a process of continued possession. Retaining an employee without giving any fringe benefits is more difficult in the current scenario when each and every organization is suffering from liquidity crunch. It is very difficult for an organization to give tangible or intangible benefits. The HR Manager of ITC also is moving in the same boat. He is also facing difficulties in retaining the old employees, as he is not able to motivate them and with the increased pressure the attrition is increasing. The Challenges of Workplace Diversity Workplace Diversity According to Thomas (1992), dimensions of workplace diversity include, but are not limited to: age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background, geographic location, income, marital status, military experience, religious beliefs, parental status, and work experience. The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced by workplace diversity can be turned into a strategic organizational asset if an organization is able to capitalize on this melting pot of diverse talents. With the mixture of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond to business opportunities more rapidly and creatively, especially in the global arena (Cox, 1993), which must be one of the important organizational goals to be attained. More importantly, if the organizational environment does not support diversity broadly, one risks losing talent to competitors. 82 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario This is especially true for multinational companies (MNCs) who have operations on a global scale and employ people of different countries, ethical and cultural backgrounds. Thus, a HR manager needs to be mindful and may employ a 'Think Global, Act Local' approach in most circumstances. The challenge of workplace diversity is also prevalent amongst Singapore's Small and Medium Enterprises (SMEs). With a population of only four million people and the nation's strive towards high technology and knowledge-based economy; foreign talents are lured to share their expertise in these areas. employ diverse talents to understand the various niches of the market. For example, when China was opening up its markets and exporting their products globally in the late 1980s, the Chinese companies (such as China's electronic giants Haier) were seeking the marketing expertise of Singaporeans. This is because Singapore's marketing talents were able to understand the local China markets relatively well (almost 75% of Singaporeans are of Chinese descent) and as well as being attuned to the markets in the West due to Singapore's open economic policies and English language abilities. (Toh, R, 1993) Thus, many local HR managers have to undergo cultural-based Human Resource Management training to further their abilities to motivate a group of professional that are highly qualified but culturally diverse. Furthermore, the HR professional must assure the local professionals that these foreign talents are not a threat to their career advancement (Toh, 1993). In many ways, the effectiveness of workplace diversity management is dependent on the skilful balancing act of the HR manager. With this trend in place, a HR Manager must be able to organize the pool of diverse talents strategically for the organization. He /She must consider how a diverse workforce can enable the company to attain new markets and other organizational goals in order to harness the full potential of workplace diversity. One of the main reasons for ineffective workplace diversity management is the Predisposition to pigeonhole employees, placing them in a different silo based on their diversity profile (Thomas, 1992). In the real world, diversity cannot be easily categorized and those organizations that respond to human complexity by leveraging the talents of a broad workforce will be the most effective in growing their businesses and their customer base. As suggested by Thomas (1992) and Cox (1993), there are several best practices that a HR manager can adopt in ensuring effective management of workplace diversity in order to attain organizational goals. They are: Planning a Mentoring Program: One of the best ways to handle workplace diversity issues is through initiating a Diversity Mentoring Program. This could necessitate involving different departmental managers in a mentoring program to coach and provide feedback to employees who are different from them. In order for the program to run successfully, it is wise to provide practical training for these managers or seek help from consultants and experts in this field. Usually, such a program will encourage organization's members to air their opinions and learn how to resolve conflicts due to their diversity. More importantly, the purpose of a Diversity Mentoring Program seeks to encourage members to move beyond their own cultural frame of reference to recognize and take full advantage of the productivity potential inherent in a diverse population. Organizing Talents Strategically: Many companies are now realizing the advantages of a diverse workplace. As more and more companies are going global in their market expansions either physically or virtually (for example, E-commerce-related companies), there is a necessity to An organization that sees the existence of a diverse workforce as an organizational asset rather than a liability would indirectly help the organization to positively take in its stride some of the less positive aspects of workforce diversity. Control and Measure Results: A HR Manager must conduct regular organizational assessments on issues like pay, benefits, work environment, management and promotional opportunities to assess the progress over the long term. There is also a need to develop appropriate measuring tools to measure the impact of diversity initiatives at the organization through organization-wide feedback surveys and other methods. Without proper control and evaluation, some of these diversity initiatives may just fizzle out, without resolving any real problems that may surface due to workplace diversity. MotivationalApproaches Workplace motivation can be defined as the influence that makes us do things to achieve organizational goals: this is a result of our individual needs being satisfied (or met) so that we are motivated to complete organizational tasks effectively. As these needs vary from person to person, an organization must be able to utilize different motivational tools to encourage their employees to put in the required effort and increase productivity for the company. Why do we need motivated employees? The answer is survival (Smith, 1994). In our changing workplace and competitive market environments, motivated employees and their contributions are the necessary currency for an organization's survival and success. Motivational factors in an organizational context include working environment, job characteristics, and appropriate organizational reward system. The development of an appropriate organizational reward system is probably one of the strongest motivational factors. This can influence both job satisfaction and employee motivation. The reward system affects job satisfaction by making the employee more comfortable and contented as a result of the rewards received. The reward system influences motivation primarily through the perceived value of the rewards and their contingency on performance (Hickins, 1998). National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario To be effective, an organizational reward system should be based on sound understanding of the motivation of people at work. Some popular methods of reward systems are : Gain-sharing: Gain-sharing programs generally refer to incentive plans that involve employees in a common effort to improve organizational performance, and are based on the concept that the resulting incremental economic gains are shared among employees and the company. Managing Gain-sharing In order for a gain-sharing program that meets the minimum requirements for success to be in place, Paulsen (1991) and Boyett (1988) have suggested a few pointers in the effective management of a gain-sharing program. They are as follows: A HR manager must ensure that the people who will be participating in the plan are influencing the performance measured by the gain-sharing formula in a significant way by bringing in changes in their day-to-day behavior. The main idea of the gain sharing is to motivate members to increase productivity through their behavioral changes and working attitudes. If the increase in the performance measurement was due to external factors, then it would have defeated the purpose of having a gain-sharing program. An effective manager must ensure that the gain-sharing targets are challenging but legitimate and attainable. In addition, the targets should be specific and challenging but reasonable and justifiable given the historical performance, the business strategy and the competitive environment. If the gain-sharing participants perceive the target as impossibility and are not motivated at all, the whole program will be a disaster. A manager must provide useful feedback as guidance to the gainsharing participants concerning how they need to change their behavior(s) to realize gain-sharing payouts the feedback should be regular, objective and clearly based on the members' performance in relation to the gain-sharing target. 83 A manager must have an effective mechanism in place to allow gain-sharing participants to initiate changes in work procedures and methods and/or requesting new or additional resources such as new technology to improve performance and realize gains. Though a manager must have a tight control of company's resources, reasonable and justifiable requests for additional resources and/or changes in work methods from gain-sharing participants should be considered. Managing EIS As information is the basis of decision-making in an organization, there is a great need for effective managerial control. A good control system would ensure the communication of the right information at the right time and relayed to the right people to take prompt actions. When managing an Executive Information System, a HR manager must first find out exactly what information decisionmakers would like to have available in the field of human resource management, and then to include it in the EIS. This is because having people simply use an EIS that lacks critical information is of no value-add to the organization. In addition, the manager must ensure that the use of information technology has to be brought into alignment with strategic business goals (Laudon, K and Laudon, J, 2003). Conclusion The role of the HR manager must parallel the needs of the changing organization. Successful organizations are becoming more adaptable, resilient, quick to change directions, and customer-centered. Within this environment, the HR professional must learn how to manage effectively through planning, organizing, leading and controlling the human resource and be knowledgeable of emerging trends in training and employee development. Finally a very well thought of strategy needs to be applied to emerge a winner out of the meltdown and not become embroiled and wedged in regressive trends. National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 84 Talent Acquisition: An Unstoppable Global Trend Prof. Vikas S. Gaundare Prof. Gaurav R. Khandelwal Lecturers, Department of Management Studies, SSVPS BSD College of Engineering, Dhule- Maharashtra ABSTRACT: Today the whole world can be called as a World of Youth and this is the main advantage for organizations to pour fresh blood in the veins of their management. But another side of this coin which commands attention toward the fact that major workforce at present is expected to retire due to age factor. It is found that over the next 10 years, the demand for talented people will far exceed the availability of skilled workers - at all levels, and in all industries. So the companies are in race to gain talent from the labor market as it also has its roots in explosive business growth and widespread hijacking of talent from other industries. Today each organization has its Eagle eye over the scarce available talent; it results in 'The war for Talent' to which we know as 'Talent Acquisition'. With the magnificent edges of global economy Talent Acquisition concept not just includes traditional efforts to recruit, develop and retain high performers but also it needs new strategies to acquire new talent with specialized knowledge and integrated career planning programs within and beyond the organization. It seems to favor gentle push which requires mentality and opportunity to manifest. This paper has its focus on the matters like Origin of Talent Acquisition, Scarcity of Talented Youth, Recruitment & Talent Acquisition and a Strategic view behind the this concept of TalentAcquisition. Key Words: Talent War, Recruitment, Talent Retention and Talent Poaching etc. INTRODUCTION: In today's era of global edge each and every entrepreneur want better resources than his competitors so that he can grow more than them. And fact is that they are ready to acquire those resources from their competitor also. Though the population of the world is exploding every organization is facing the problem of getting new talented people who can pour fresh blood in their veins. So due to scarcity of such adequate talent in the market there is start of “War of Talent” and every employer want to win it by making the world as “Employment Seller's Market”. When we think about the effects, we should never ignore further conditions which caused them: · It is estimated that at least 1/3 of business failures are due to poor hiring decisions and inability to attract and retain the right talent. · The average cost of replacing a manager or professional is 1.5 to 3 times salary. · The cost of working around an under-performer can run as high as six figures · The cost of consistently failing to attract and retain good talent including declining productivity, morale, culture and reputation - is inestimable. · Each vacant position costs your organization Rs. 60,000 on average. For some management positions, it can easily run into six figures. From this we can said that the Talent is very essential for the survival of organizations in competitive edge of current market. Most corporate officers say that the biggest constraint to pursuing growth opportunities is 'Talent'. Every one has an eagle eye over the available scare talent in the market and trying to acquire it before the others. So the question can be arisen, what is mean the term TalentAcquisition? M I N D S E T S O F P E O P L E A B O U T TA L E N T ACQUISITION: Let's see, what is the mindset of people about "Talent Acquisition"? Old Mindset about People: A. Avague notion that "People are our Most ImportantAsset" B. HR is responsible for people Management C. We have a two-day Success Planning Exercise Once a year D. I work with the people I inherit. New Talent Mindset A. A deep conviction that Talent Leads to Better Corporate Performance B. All Managers Are Accountable for strengthening their talent Pool C. Talent Managers is a central Part of How we run the company D. I take bold actions to build the talent pool I need ORIGIN OFTHE CONCEPT: First and foremost, 'Talent Acquisition' forms a part of a much broader strategic approach in the corporate quest to gain and sustain a competitive advantage in today's marketplace. Other aspects include talent development, retention and transition, these are primarily inward facing, whilst the former is outward looking. The core concept of talent acquisition is to get away from the 'fill in the box' thinking to one that is more pro-active and much closer to building the skill sets required to achieve National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 85 business success. Traditionally, a recruitment need occurs when an individual either leaves or is promoted to another function. This makes it easy to predict that specific openings will occur at a pre-determined period in time. That's when panic can set in, especially if no suitable internal solution is found, a situation that is becoming known as - "under the bus syndrome". Strong relationship building or networking skills are important here. The key to success in talent acquisition is the unique way that you are able to tap into the 'top performers' who are not really looking for another job. They never read the traditional job ads or go to the job boards on the Internet. Encouraging your own 'star' players to identify other outside top performers is an extremely powerful tool that is being used more and more. Corporations are offering a wide range of rewards in order to get these names and then act on them. In the most enlightened cases of Strategic Talent Acquisition, clients will recruit today for positions that do not even exist today but are expected to become available in the future. “Talent Acquisition is a powerful tool for managing all the subprocesses involved in finding, attracting, and eventually hiring highly talented individuals who will integrate smoothly and productively into your company”. There are various aspects require for Talent Acquisition. Money is of course essential in the talent acquisition quest, but it's not the only element. Many corporations are using traditional job classification and job grading systems in order to remain competitive in the 'cash compensation' side. Being able to mould an opportunity and make it exciting will also attract top performers. Benefits and perks are at the fore here with long-term incentives such as stock options, being widely used. The work/life concept will also have an impact, a lot of corporations talk about this element but not many have fully embraced it. Others look at it from an investment banker perspective and view potential 'top performers' as they would any targeted acquisition, some people are even thinking of attributing P/E ratio values to top talent. Just think for one moment at that analogy, the talent marketplace becomes the equivalent of the NASDAQ or Dow Jones and the attractiveness of top talent will vary according to their performance relative to peers and the value added they can bring. Perhaps in the future you will see talent 'indexes' being used. That will prove to be more and more essential in giving corporations a leading edge and competitive advantage over others. If you have it you will be one of the survivors, if not then a 'market correction' may be soon be coming your way. Then a question can arise in one's mind that Are Recruitment and Acquisition of Talent same? "RECRUITMENT" Vs "TALENTACQUISITION": The easy part of the answer is to define "Recruiting". It is nothing more than filling open positions. It is an entirely tactical event. The more complex part of the answer is the definition of Strategic Talent Acquisition. “Strategic Talent Acquisition takes a longterm view of not only filling positions today, but also using the candidates that come out of a recruiting campaign as a means to fill similar positions in the future.” These future positions may be identifiable today by looking at the succession management plan, or by analyzing the history of attrition for certain positions. Taking the long term strategic approach to talent acquisition has a huge impact on how an approach is made to a candidate. If the approach is purely tactical in nature, all we ask of the prospective candidate is "are you qualified and interested?" However, if the approach is more strategic in nature, the intent of the call is to go much further, and the conversation becomes more relationship building. The candidate has an opportunity to explain his/her future career aspirations, and the recruiter gathers enough information to determine if there is a potential fit in the client organization. If during a strategic recruiting call the candidate declares that they are both qualified and interested, then the tactical nature of the call has been automatically fulfilled. If, however, the candidate lacks sufficient experience, or the timing for a career move is not propitious, then they become candidates for the future, and all the recruiter has to do is keep in touch until either they become available, or a position with the client organization opens up. Most of the money spent on Strategic Talent Acquisition would have been spent in a tactical recruiting mandate anyway. The only additional cost is in collecting data on high-potential candidates and then keeping in touch with them until hire is made. The additional cost becomes insignificant compared to the value of hiring top competitive talent over time. Strategic Talent Acquisition allows us access to a pool of competitive talent that would otherwise have been missed or even worse, ignored. Clearly the business case for acquiring talent strategically is far more compelling than simply paying to fill positions today. What we are doing is adding a small incremental effort, in exchange for a huge potential reward. Also some people have killer's view behind this is that they think if they acquire talent in market though they don't need it today but the competitor should not get it before them. IMPORTANCE OF TALENT RETENTION FOR ORGANIZATIONS: Today is the question is that do all academic institutions are able to provide those talented and fully equipped candidates from them which companies require? The answer is now days all academic institutions are trying to give all those require knowledge and practical exposure for their students so that they can contribute their talent to the growth of the organizations in which they will get acquire. Many institutions are giving emphasis on soft skills along with practical and theoretical knowledge. Academic/professional qualifications though are certainly important, but what differentiates and is more relevant for the individual's success and also probably what organizations look for are candidates with higher degree of soft skills. Though the academic orientation is changing for the better, the 86 National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario industry still faces a shortage of the right talent. In fact, we can say that more than 40 per cent of the management's time is allotted directly or indirectly to talent acquisition, harnessing and retention. This issue is not limited to any specific industry or country but probably is across the industry and global. So, while this situation has lead to an ardent task of retention of the right talent for organizations, needless to mention, the right talent would also command a premium. It is also a fact that remuneration is not the only factor for retention, and that one could use other tools too. Retention elements are the ones who are accepted and appreciated by their customers, whether internal or external. Employees having the right values and service culture would be always scoring over others, because job skills can be acquired and imparted but as mentioned earlier soft skills are more relevant and differentiate people. caliber of talent you will have on your team and take deliberate action to strengthen that group. Develop a discerning "nose" for talent, and make clear-eyed, insightful assessments of the performance and potential of each person. Are they capable of taking this particular job where it needs to go? What are their greatest strengths and what holds them back from being more effective? There are various analytical as well as database working tools available today. A well designed and implemented performance appraisal system, potential vs. performance analysis, mentoring systems, succession planning, challenging projects and performance based reward system, etc are few of the most effective and successfully employed tools by various organizations. Generally, it has been observed that the high value talent/performers are very sensitive towards a performance based reward system in the organization. They look forward to be differentiated and treated differently from the rest of the employees and rightly so. Companies need to work on these systems, to be able to retain such talent. And it is not just retention, but also the spread of these high performers across the organization that companies need to look at. HPHPs (High Potential High Performers), as one would call them, should ideally be spread throughout the organization at all levels. · Face up to the difficult task of dealing with low performers. Tell them unambiguously that their performance is not good enough, and tell them exactly what they need to do to improve. Encourage and help them to improve. One thing organizations should never forget is that everything changes, and so will the talent list of your organization, hence the talent review activity has to be done regularly to ensure that no one lives on past laurels and that consistent performance is the most important factor for organizational and individual success ASTRATEGIC VIEW BEHIND TALENTACQUISITION: Historically organizations have not treated the recruitment process as one of strategic importance, but latterly many are now waking up to the reality that the world has changed dramatically. No more can the organization pick and choose between several great candidates for one position. Several changes in our connected world have tipped the scales in favor of the highly talented individual looking for a new opportunity. Also with the new wireless technologies like internet, it is very easy to apply and get better job opportunities for HPHPs. So if we want to acquire such HPHPs in your organization then we have to make a prior strategy for it and this view behind the Talent Acquisition given a StrategicAspect to it. Here the tentative Strategies are suggested by us for Talent Acquisition: Strengthen Your Own Direct Reports: Becoming a great talent manager starts in your own back yard. Set high standards for the · Tell your people, in a straightforward way, how they are performing and what you perceive as their greatest strengths and weaknesses. · Give the strong performers new challenges, greater responsibilities and the tasks they are most passionate about. Accelerate their development and do everything you can to keep them delighted and energized. · While developing the people you already have, hunt for new talent to bring into your group. Look for high-potential people deep within your organization to promote. Do everything you can to make your unit a magnet for highly talented people. Give people exciting challenges and lots of room to spread their wings. Help them grow their skills and body of experience. Be a demanding boss who sets high aspirations, but also one who engenders trust and helps others shine. Establish a talent Standard: If you are a leader of a large organization, you also have to extend your influence to the talent pool. Start by setting the gold standard for talent for your organization. Identify and articulate the characteristics and caliber of leaders that the organization should have. You model this every day through the quality of the people you hire, the quality of people you chose to keep in the company and standards you judge people against. But you should also explicitly communicate the type and caliber of managers you want to have in your organization. Weave development into your organization: Emphasis must be on the development of your people. Everyone in your organization - even if he/she cannot be a superstar - can push the limits of what they can. Mentoring is a powerful tool to help you weaving development in your organization. A mentor should offer encouragement and believe in the ability of the individual to achieve great things. Influence People Decisions Far Down your Organization: Defining the standard for leadership talent isn't enough, though. Leaders who manage talent well get directly involved in the hiring, promotion and firing decisions for many people as they p o s s i b l y c a n . This doesn't mean that you necessarily make all the decisions on people two or three levels below you. But you should influence them by making sure that the talent standard is being used objectively and by contributing your judgment in a meaningful National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario way. When a vacancy is being filled, add or remove candidates from the slate, interview the finalists, voice your opinion and then in most cases, let the immediate boss make the decision. Hold Managers Accountable for the strength of their Talent Pools: Each unit- be it Account Dept., Product Division, Customer Service Division, Sales Force- Should set three to six Specific talent strengthening objectives for the coming year. These objectives should be negotiated between the unit manager and the next-higher executive. Assessing how well a manager delivers against those objectives will require judgment and ongoing discussions about how effectively the talent pool is being built. Unfortunately, these conversations are not nor taking place in any systematic, comprehensive, probing way in most companies today. Talent Poaching: Poaching is not wrong and it is not unethical as well. It only shows some loop holes in the retention strategies of the company whose employees are being poached. If I identify a talent of my requirement in your company and if I can afford that talent in terms of Compensation and growth then I have every right to poach the same. Poaching talent is the practice of proactively targeting and hiring top talent away from a competitor or top firm, with the specific intention of: Damaging your competitors' ability to achieve their strategic objectives. The approach is not new and has been deployed around the world for ages, particularly in sports and now used in business. Software Tools for Talent Acquisition: Today with new technological changes all things get easy to carry out. As same it is beneficial for the term Talent Acquisition. Now to save the time of organizations over the hunt for new talent in market the software for Talent Acquisition is becoming popular. Talent acquisition software helps you streamline the entire recruiting process and dramatically reduce your overall recruiting costs. In a single online location, managers and recruiters can create and post requisitions, search the talent acquisition pool, screen applicants, perform background checks, and select the best candidates for the job at hand. Among the many options provided by talent acquisition software, your recruiting team can now: Create and edit job requisitions online. Track and manage open requisitions from their desktops. 87 Schedule interviews and enter interview results online. Consolidate billing and track recruitment costs. Rapidly scan all references pertaining to a given candidate. Talent acquisition software enables unsolicited candidates who want to change jobs to advertise their intentions within minutes of making their decision and receive inquiries about their talents within hours. Talent acquisition solves a true business problem: ready availability of work capability or in other terms, the labor force, and most important, quality of the new labor force. CONCLUSION: In this paper we have seen that if organizations want to survive in today's Competitive Edge of markets then they have to get Talented People. And as available talent in the market is scarce the issue of 'The war for Talent' i.e. Talent Acquisition has been raised. This concept is different from the concept of mere Recruitment and it has its own views. At last from this paper we can conclude that to meet the new emerging challenges before business every organization not only must have to adopt some strategies to retain their own talented and high performers but also acquire new talent from others. Also as being unstoppable global trend the concept of Talent Acquisition will retain its need in labor market only the aspects and strategies may differ. REFERENCES: 1. Discussion with managers of different organizations. 2. Hiring the Best: A Manager's Guide to Effective Interviewing by Martin Yate 3. Recruiting Excellence:An Insider's Guide to Sourcing Top Talent; by Jeff Grout, Sarah Perrin 4. http://www.bpoindia.org/research/talent-acquisition-bigchallenge.shtml 5. http://www.taleo.com/research/g-talent-acquisition22.php 6. http://www.csscorp.com/microsites/singapore/ services/talent-acquisition.php 7. h t t p : / / w w w. m b a m a t c h . c o m / K n o w l e d g e _ B a s e / Talent_Mgt/ta.htm National Seminar - Challenges & Strategies for the Indian Industry in the Emerging Global Economic Scenario 88 The Brains Behind… Editor in Chief : Student Editor : Event Coordinator : Dr.Puja Bharadwaj Abhishek Bandodkar Prof Minal Wagh Video Committee: Escort Committee Hospitality Committee Pankaj Dhakare Sameer Kamthankar Ajay Pawar Aditya Joshi Amarjit Borawake Jayesh Kalantri Sneha Katari Renu Swapnil Bhutkar Ankit Shond Monika Magarde Mithun Kothari Neha Rao Lavanya Gunnu Ankit Shond Faculty Coordinator: Prof Madhav Pathak and Prof Puja Student Coordinator: Jatin Joshi Renu Sneha Kataria Aarti naidu Abdullah Desai Kapil Dyanesh Radhika Stage Arrangement Certificate Incharge Registration Committee Faculty Coordinator: Prof. Anagha and Prof. Kalpana Student Coordinator: Ashutosh Kumar Radhika Sneha Kataria Darshan W Ajay Powar Geetanjali Jayesh Kalantari Jayesh Rajan Vivek Patil Faculty Coordinator: Prof Divya Lakhani Student Coordinator: Natasha Kale Ashwini Kadam. 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