The Great Indian Middle Class. A Comprehensive Report By NCAER,India.

It's the great Indian Middle Class who are pushing the Indian Economy. It's her in built domestic demand which is pushing the Indian Economy. 

Only 2% of India's population is investing in the Stock Market.

These middle class are also entering in to the stock market not directly but via Mutual Funds and Unit Linked Insurance.

They are the target audience fr Organised Retails, Small Cars,Housing Loans, Educational Loans and FMCG  firms.

It's the Middle Class buying population which gives a direction to India's Economic growth.It's the Middle Class Indian who are consider to be the backbone of our strong economy.
The Indian economy should give opportunity to its poor section to get in to the Middle class bracket.

Here is an interesting report by National Council Of Applied Economic Research.
Please click:

http://www.ncaer.org/downloads/PPT/TheGreatIndianMarket.pdf

Tata's Gift To Cornell

Ratan Naval Tata , one of Cornell's most eminent alumni, is chairman of Tata Sons, the holding company of the Tata Group. Tata was named one of the 30 most respected CEOs in the world by Barron's magazine last year, and the Tata Group was awarded the Carnegie Medal of Philanthropy in 2007.Tata has given $50 million to Cornell University for educational development.
The endowment consists of $25 million to establish the Tata-Cornell Initiative in Agriculture and Nutrition, which will contribute to advances in nutrition and agriculture for India; and $25 million for the Tata Scholarship Fund for Students from India, to help attract more of the best and brightest students to Cornell from India.
Tata’s are known for corporate governance and running business with values and ethics, they are the pioneers in the Iron and Steel ,Automobile in India.Their recent project is on people’s car Nano which will cost around Rs 120000( US $ 2,400) which will be getting launched on 28th December 2008 on RNT’s birthday,

Azim Premji's Management Advice To All The Wiproite

Mr Ajim Pemji  Chairman of Wipro India ,has recently issued one letter to 95,000 employees working in the Global Indian Conglomerate, Wipro.

Premji has advised seven points which can be used to reap the benefits even in the economic down turn.

His most important advice to all his colleagues "to align people to business opportunity.Re-skill and right-skill to make things happen."

His management mantra remains the same it's "customer centricity". 

Renee Mauborgne came to India to attend the SAS Premier Business Leadership Series.

She categorically stated that Indian Premier League bought the BCCI unquestionable success in the T-20 cricket, drawing as many as 18 million viewers.

 She said in an interview with Indian Management”Tata Motors’s Nano is probably the Blue Ocean that is getting the most global press and curiosity. I know the car is not out yet and with the rising input cost whether it can hit its price target is some thing we have to watch for.  But I think this is very exciting experiment to create a car for people who could never have cars and at such a challenging price.”

 As in the case of Blue Ocean Strategy demand is created rather than fought over. There are ample opportunity for growth that is both profitable and rapid. Here competition is irrelevant because the rules of the game are waiting to be set. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.

 The Blue Ocean Strategy is basically a four step strategy. At the core centre is the four-step strategy visualization process any organization can approach and apply.

The first step is the Visual Awakening. At this particular stage the business executives are asked to draw their 'As Is' strategy map - a visual representation of their company's strategy vis-à-vis the competition. This brings home the need for change. It serves as a forceful wake-up call for companies to challenge their existing strategies.

The second step is called the Visual Exploration. Here in this step the managers go into the market field to explore the new market space creation. Here managers observe the distinct differences of alternative products and services and takes decisions which factors should be eliminated, created or changed in the offerings to the customers which will give value addition to the customers.

The third step is the Visual Strategy Fair. Here executives begin to draw their 'To Be' Strategy map based on insights from the market exploration observations and test these ideas with customers, non-customers, and lost customers.

The fourth and final step is 'To Be' strategy canvas; the last step is to communicate it in a way that can be easily understood by any employee of the organization.

 

HR Management dilemma in India's Jet Airways.

The sacking of 1900 employees by Jet Airway’s management , and bringing back them on board within forty eight hours after sacking has been most talked about management topic the global corporate HR management strategy.

Jet's management has over reacted to the economic meltdown, a traditional India   have got a very conservative culture, though we are trying adopting the westernized management system, but this is very difficult to practice in India in taking tough decisions particularly with HR related issues.

The typical hire fire  management system is not applicable in Indian corporate culture, if we look back to late Mr. G.D.Birla, Late Mr. J.R.D.Tata they were very conservative in their HR management policy, they believed in a mix of corporate management and as well as family management that was made on the principal of Gandhi's Collective bargaining and mutual trusteeship model.

It may be due to our own ancient Indian Hindu-Buddhist traditional culture, very much like the Japanese management and work culture of life time employment.

Mr. Goel got very emotional and said that it's his family and the family members will sacrifice (Pay cut) and both management and employees will help to bring back the loss making Jet to profit.

Unlike West  we don't have the safety net and stubborn social security; it's basically a rapid transformation from a traditional primary economy to industrial economy to tertiary economy.

Over the last decade in India the tertiary economy (service sectors like BFSI, BPO, KPO, Retails, and Air Taxi Business etc) has grown by leaps and bound, the Indian Gen Y has been absorbed in these sectors.

The transformation and dependence on the tertiary sector has been very rapid and the whole education and training sector in India has focused on these above sectors and are churning out thousands of manpower focusing on this sector. The macro economic management transformation has been too fast.

The real economic tsunami will hit India, if the multi billion US$ outsourcing industry order flow vanishes overnight which is very much possible. One third of revenues of Infosys, TCS, Satyam, Wipro’s  comes from U.S. market over night this business can vanish.

One good thing happens India management can take lessons during the downturns, Indian corporate, policy makers in government, and educational professionals like you, can sit back and introspect what exactly going wrong, with India.

As India is a young country 55% of her population is below 25 years of age, we really have to think back about our education management systems and human capital management and development process.

One more thing lastly the silver lining, which can really bail out India from this turmoil is the domestic demand management.

If the domestic demand can be properly managed the immediate crisis can be neutralized too some extent. 

 

 

 

 

China's Role In the Global Economy.

In the last two decades globalisation has taken it's proper shape. Interestingly China's role has made the whole management world to rethink about the success that China has made in the manufacturing sectors. The cost effectiveness has prompted the Western conglomerates to shift manufacturing bases to China, in order to remain competitive in the global market.China's role in the BRIC economic block is significant and working as growth engine in the world economy.

There are many questions which comes to my mind regarding the super economic success and sustainable model of China's success.It's the china's central govt policies and its manpower planning and development has helped the economy to grow faster, but the main question still lies how it has motivated it's labor at such cheap price to remain competitive.

1. How can China turn around so fast into a world class manufacturing hub from a closed and command economy?

2. How can be the cost is so competitive by Global standard?

3. How can China motivates its workforce in SEZ, at such low cost, is it by stick or by carrot.

4. The basic principal of Economics is “Capital formation can only be possible through cheap work force"; it has become the manufacturing base of the western conglomerate because of international labor arbitrage market. How long it will be possible to maintain this phenomenon.?

5. Talk about Cisco which is outsourcing its routers from china , but many Chinese manufactured brands in the router segments like Huwai, Maipu ,are coming up very fast and doing brand positioning in the Global market. Which can be threat to many global MNC brands that are getting the contract manufacturing from them? Replicating a business success is not big issues. IBM checked out from PC business and Lenevo (Previously contract manufacturer for IBM) and has positioned its brand in the global market. Don’t you think Western MNCs will be in deep trouble, contract manufacturing, outsourcing can back fire? South Korea Brands like Samsung, LG, etc are giving tremendous fight to U.S and EEU brands.

6. The China is not only in manufacturing hub of the world, they are learning English and by 2012; many of the BPO and KPO jobs can shift from India to China. Soon it will be the service hub of the world and a stiff competitor for its neighboring India. Will it be really possible to be another cheap service hub of the world, next to India?

7. How meticulously they have reaped the demographic dividend, the quality and disciplined human capital has given them the huge dividend, transforming ordinary human capital to a productive and knowledge based human capital within a very short period of time. How this has been possible?

8. How China is maintaining and developing the SEZ, its land acquiring , developments in the infrastructures like roads, telecoms , housing of SEZ. Making SEZ and providing all the infrastructures for investors or contract manufacturing is also important and the central government must have worked proactively and have helped to make these SEZs, viable and productive.

Turnaround Management Experts Will Be In Great Demand To Bail Out Sinking Corporates.

Contemporary management requires Turnaround Management expects, who are seasoned captains to steer ships in stormy high sea conditions.

After this great economic melt down , the next phase requires CORPORATES TURNAROUND experts.

Turnaround management professionals will be in great demand. Again the Transformation leadership will play the most important role to generate confidence in the mind of the stake holders.

In such corporate crisis, the leadership elements of the business captain are to be displayed with high degree of business acumen and managing skill sets.

With poor balance sheet and negative net worth, strong and prudent leadership will be the only panacea for these organization. Strategic vision in terms of utilizing very scares factors of productions and properly allocating these inputs will be the real acid test for the turnaround business leader.

These under performing corporations has to be revitalized , rejuvenated and it requires a well thought after balanced turnaround management process.

According to Shamsud D. Chowdhury und occurs when ”a firm perseveres through an existence threatening performance decline; end the threat with combination of strategies, systems ,skills and capabilities; and achieves sustainable performance recovery. The obverse of performance recovery is failure and death.”

The above definition of Corporate Turnaround has the very in depth meaning and self explanatory.

According to Chowdhury there are four stages which requires to be monitored very carefully. And the stages are as follows.

1st Stage: Decline, 2nd Stage: Response Initiations,3rd Stage: Transition and the 4th Stage: Outcome.

At the 1st Stage the firm’s performance reaches its nadir the stock market and the balance sheet reflects it.

Then the 2nd stage ,swiftness of the change management comes in , the sense of urgency and corrective actions has to be initiated.

3rd Stage : the turnaround management mechanism, the transition process and the most complex and difficult stage. This is the stage when the turnaround experts experiments with different strategies, structures, cultures and technology. Sometimes ruthless smart sizing and downsizing happens in this stage .

The 4th stage is the outcome stage, outcome of all the management activities undertaken during the 3rd stage is realized. The outcome can be a success or failure.

Turnaround experts help to get in to break even as quickly as possible reduce the gestation time to profitability from a loss situation.

Governments should come forward with all fiscal measure to bail out these loss making organizations. Internal corporate governance will play an important role.

Turnaround management is a subset of Change management rather at an accelerated space. It's easier said than done , in past IBM, Chrysler,Nissan,GM all these corporations has been bailed out from deeper crisis, so nothing to worry about, again a big challenge for the management professionals.

The Original article is below for your ready reference.

FindArticles - Turnarounds: A stage theory perspective
Canadian Journal of Administrative Sciences, Sep 2002, by Shamsud D Chowdhurry

The Basic Indepth Concept Of The Red Ocean and The Blue Ocean Strategy.Part-II

RED OCEAN STRATEGY	BLUE OCEAN STRATEGY
Compete in existing market space	Create uncontested market space
Beat the competition	Make the competition irrelevant
Focus on existing customers	Focus on non-customers
Exploit existing demand	Create and capture new demand
Make the value-cost trade off (create greater value to customers at a higher cost or  create reasonable value at a lower cost)	Break the value-cost trade off (Seek greater value to customers and low cost simultaneously)
Align the whole system of firm’s activities with its strategic choice of differentiation or low cost	Align the whole system of a firm’s activities in pursuit of differentiation and low cost.

This time I will be discussing about the in depth of the Blue Ocean strategy which was formulated by the Insead Business School Professors Kim and Mauborgne clearly explains that tomorrow’s leading companies success will not by fighting competitors, but by creating “blue oceans” of uncontested market space which will enhance in terms of market share and profitability and market capitalisation growth. 

There should be a complete paradigm shift which the smart management requires as pioneered in the Blue Ocean strategy as –  “value innovation” leveraging value for both the firm and creating the new customers, outsmarting competitors and unleashing latent demands.

Insead original text where the concepts of Blue Ocean has been given:http://www.insead.edu/blueoceanstrategyinstitute/BOS/index.cfm

The real challenge  lies with the service companies to be in the blue ocean, they should constantly try to come up with innovative ideas and create tangible vales for the product or services to the customers and un served customers.

If not properly managed it can slip down from The Blue Ocean to  The Red Ocean and starts bleeding.Yes it is an intelligent and a very tight walking for the top management guys to keep the firm in The Blue Ocean.

Courtesy: Insead ,France.

The Blue Ocean Strategy :The New Business Mantra For Business Survival

Renee A. Mauborgne, W. Chan Kim pioneered the concepts of The Blue Ocean Strategy is firms innovative thinking specially identify product or services some what different that it is doing at present and creating new rules for value additions through an innovative business re modeling.

The Blue Ocean is a new market place an absolutely new space for firms to cater to the un served customers.

The Red Ocean is a highly competitive market with lot many players operating in that market place and firms margins are under pressure

All new innovative technology are Blue Ocean , say Youtube of Google Inc, Iphone , iPod of Apple Computers Inc to name a few is absolutely Blue Ocean a new market place a virgin global market territory .

Firms has to have a practical market and customer analysis and in-depth understanding of the market dynamics and system in business process thinking must introspect the present conditions the new opportunities lying ahead

Of course it is an enhancement strategy piggy bagging on strategic drifts, SWOT analysis, Michael Porter's generic competitive strategies, Porter's five forces, Porters Differentiation Strategy, BCG Matrix,and other systems adopted in strategic planning and process of change management.

If we track back to Late Dr Michael Hammer’s basic 3C’s( Customer, Competition, Change) while analyzing Business Process Re engineering for a firm, Blue Ocean is indebted to the 3C’s and BPR.

Now in the world of globalization, competition is the name of the game, and to win the game firms must innovate or perish.

It is not only to innovate the product and services but also to innovate a new market segments the product and services can be catered.

An Example: Global Automakers are looking a segment of sub US$3000 car market using alternative source of energy, existing auto makers are getting in to Blue Ocean with sub US$3000 cars focusing for the emerging markets in Asia, Africa and Latin America. Of course not shifting focus from existing market place like EU and North America which are slowly becoming red ocean both product wise and market segment wise.

Yes ,Blue Ocean can become Red Ocean ,back to the basics of Free Market Economics( Free Entry and Free Exit , no firm can operate in a super normal profits or abnormal profits but only can operate in normal profits in long run), new entrant can replicate the firms practicing Blue Ocean and can make the Blue Ocean a Red Ocean.

Markets over which the competition is fierce have turned red. In the bloody red ocean, even the organizations which manage to stay afloat, and command a sizable market share might often face the mind baffling problem of diminishing profit margins for every increase in the pie of the business market share. Markets( bundle of un served customers) still not explored or non existent markets to be precise, are blue (they are yet to turn bloody where firm can operate in super normal profits) and firm’s management smartness should in fact go about identifying and creating such new markets.

Blue oceans are created when there is a perceptible change, an improvement, in value addition. There needs to be value innovation.

When Blue Ocean strategy happens, it makes competition irrelevant as it has created an uncontested market space

Please Click to read the article in HBR.

http://www.courtenayhr.com/images/Blue%20Ocean%20Strategy.pdf

The major concept made in the Blue Ocean Strategy is that firms compete in red oceans( crowded market, large number of competitors a typically monopolistic market tending towards hyper competition ) which are markets that are blood red due to wars( price, market share, human capital shortage, etc) amongst the existing players.

The Blue Ocean Strategy is all about encouraging leaders to develop pristine blue markets, which have not yet been tapped.

Strategy Canvas: Strategy Canvas which is the very core and primary tool used to define a new high level business plan and approach. Strategy Canvas meticulously identify the factors that are the building blocks of the overall strategy of each company competing in that industry. This provides a clear visual representation and enables one to construct a strategy which breaks away from the pack by addressing a different market using a different business model.

Mauborgne, and Kim have taken a many real life examples such success as South West Airlines, CNN, McDonald's, primarily is the service industry.Sustaining and consistency both are important in Blue Ocean strategy.

I Am Coming Back Soon

I was not posting for last four months , I will be coming back soon with lot of posting on Change and Contemporary management thoughts taking place in the current business world.

The topics that I want to write will be on 

1) Blue Ocean Strategy.

2)HR Score Card.

3)Inorganic Growth Culture through Merger and Acquisitions.

4)India in 2025.

5) How to keep the core competence Intact.

 There has been lot of turmoil in the global economy in the last two to three months , high inflation , fall of Lehman Brothers, AIG, slowing down of the global economy coupled with political instability and terrorism. Bailing out the U.S. economy with a package of US$700Bn which will give a breather to the U.S. economy along with the global economy where change management will play the most important role.

Specially the BRIC economy is not insulated to the U.S. economic melt down,still there is a silver lining behind the dark clouds. 

I will discuss all these in my posting shortly.