Saturday, August 09, 2008

Hulked out!

Whoever let him loose?

‘Hulk’ing oil prices have gripped the world, and the problem isn’t rising consumption. karan mehrishi of 4PsB&M takes a closer look

What goes up must come down? How one wishes this was as true for oil prices, which, besides defying gravity, have upset the budgetary calculations of millions of households across the world; not to mention bringing entire governments to their knees. When oil prices breached the $110 mark, analysts were of the opinion that prices would stabilise themselves as consumers would abstain from consumption as soon as they feel the pinch. Those analysts have been caught on the wrong barrel... er... foot, since oil prices are now touching $130, and a super spike to 200 is now considered possibile.

Even though some factions believed that a super spike, prices exceeding $200 per barrel, will be an eventuality, some analysts have a separate opinion. “I don’t think prices of crude will cross $200 per barrel simply because it’s too high. We are at the $120-130 range and consumers and governments have already started to contribute significantly,” says renowned oil expert Sebastian Mallaby, Fellow, Counsel on Foreign Relations (CFR), to 4Ps B&M.

However, there is still no respite from the reality of the impending oil shock and stakes are indeed high. According to Petro India’s Shantanu Saikia, “There is a fair amount of volatility, it all depends on what rice the demand-supply equilibrium is settled at. However, this is not a violent shock; prices can stabilise in 5-6 years, but it should be understood that this is an era of high oil prices.”

As a result, there is great insecurity among end consumers, who have found their money incomes depleted with respect to purchasing power. As per a survey by National Association of Convenience Stores, 45% of American consumers reported a decline in spending power due to rising petrol prices. While 19% wanted to buy more fuel efficient cars, an astonishing 13% had already reduced their driving on the back of $3/ gallon gasoline prices! As a result of earlier oil shocks, consumers have increasingly adapted an ‘aftermath attitude’ and eventual demands for automobiles have sagged significantly through out the world. A total of 38,214 hybrids were sold in the American market alone in March 2008, proof that these cars are now being perceived as a value proposition that’s beyond ‘fashion’.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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Friday, August 08, 2008

Oh! What a Fortune!

The Fortune 500, 2008 list is ‘out’, albeit with a generous dose of bad news. And ‘going global’ remains the ultimate ‘winning’ strategy

Even if we consider the credit crisis that hit one and (almost) all in corporate America during 2007, even if we consider the consumer spending control measures adopted by consumers in America during 2007, even if we consider the correction of financial markets the world over, even if… Well, we could go on and on with the anguishes of woebegone America Inc. but one thing holds – holding onto the Fortune top spot for 6 years (out of the past 7) isn’t easy. “Easy” would rather be a weak expression when we refer to the top 500 US corporations (in terms of revenues), supposedly masters in the money-making business.

The Fortune 500 list for 2008 is out and it’s Wal-Mart again, which rules with $378.80 billion in revenues. It however wasn’t the most profitable (no.8 with $12.73 billion in net profits); the pole position in this regard being held by Exxon Mobil, which scored a scintillating $40.61 billion in profits – the highest ever by a corporation in the history of mankind!

The bottom line is hitting rock bottom, though. Despite witnessing an annual rise of 7.1% in revenues to touch $10.6 trillion during 2007, the gang of 500 could not create the best of real bucks with total net profits falling by an alarming 17.8% to $645.22 billion. There is also a misfortune list of 31 corporations displaced from the hallowed list for the current year; low topline growth being blamed for the unfortunate outcome. Of course, this being said, there was also the usual list of those who returned a greater bang for the buck and a few surprises like 422nd-ranked Mosaic Co. (in which Cargill has a 35% stake), which returned an eye-popping 341.7% returns to shareholder equity during 2007, on revenues of $5.77 billion – the highest ever by any company in a matter of a year; the figure being over double of the second best return!

For Complete
IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
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India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs

Wednesday, August 06, 2008

Offshoot of globalisation

A notable feature of all high revenue earners this year was the amount of revenues earned as an offshoot of globalisation. Yes, of the 32 companies that earned more than $50 billion in revenues, a swashbuckling 65.63% earned more than 20% revenues from outside America. In this regard, too, the leader was Exxon Mobil, which earned a gargantuan 72.2% of its revenues from non-US customers. Others in this list include HP (66.6%), Dow Chemical (65.9%), Chevron (65.7%) and IBM (63%).

Of those who lost money in 2007, GM, with net losses of $38.73 billion ensured that auto companies retained the ‘tainted’ title (Ford was the odd one with losses of $12.61 billion in 2006), followed by Sprint Nextel with losses of $28.58 billion and Merrill Lynch ($7.78 billion). In all, 57 companies recorded losses of $116.7 billion, a dejecting rise in net aggregate loss of 141.12%. Another 183 companies reporting lower profits for 2007 – a rise of 17.51% in count over last year.

As per Fortune’s Geoff Colvin, “The IMF has lowered its estimates of world growth for 2008, and the higher cost of capital is hurting businesses that need to borrow – which means everyone...” This is followed by the prediction of the US economy weakening further and unemployment rising to an alarming 5.6% as per National Association for Business Economics. With over 56% economists predicting a recession in US as per the report, surely time, profits and even revenues for America Inc. will get harder in 2008. Year 2008 will perhaps even see topline tumbling with US economic growth predicted to grow by just 1.4% in 2008 (from 2.2% in 2007) as Lynn Reaser, chief economist at Bank of America’s Investment Strategies Group confirms, “The economy is still going to be weak in the very near term…’’ Even Ellen Hughes-Cromwick, President, NABE & Chief Economist, Ford Motors professes, “Although housing and credit markets will gradually loosen their grip, US economic growth is expected to ‘only slowly’ return to health.’’ ‘Slowly’, mind you!

Watch out for the 2008 Global 500 list… the count of losers sadly will increase further and winners will remain the same with the glorious top five top-line & bottom-line champions remaining unchanged. And yes, only those with well diversified global operations will score better over last year!

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs

Monday, August 04, 2008

Generics business

Further, with growing competition from Asian peers, the Indian players are learning how tough the generics business can be, the hard way. Generics is one space that has seen killing price wars (particularly in the US). This is despite the fact that China, the undisputed master of the pricing game, doesn’t account for much in the global pharma sweepstakes. “In generics space, the competition from Chinese counterparts is currently limited to the API space. Hence currently the pricing pressure is limited only to the API space, while the formulation space is still dominated by the Indian companies. However, Chinese players can increase the level of competition in the formulation space anytime soon,” prophesies Sarabjit. And even though they are enjoying their day in the sun, these firms still lack the financial and R&D muscle of the global Big Pharma – indeed their final destination. Thus, in this scenario, consolidation happens to be real churner for them. “ R&D is a high risk activity requiring large scale funding & a strong talent pool to bring a drug to market. All these factors are likely to prompt a consolidation in the industry. And as the industry matures, it is bound to happen,” Sujay Shetty, Associate Director, Financial Advisory Services Pharma & LifeSciences, PwC shares with 4Ps B&M.


However, this is not the only reason. “Mid size companies with small promoter’s stake are anytime vulnerable to predators. No doubt, the domestic consolidation is long due in the Indian pharmaceuticals industry and it just needs a trigger to shoot up,” Shetty adds on. Further, with concerns related to economic slowdown and a history of failed overseas acquisitions, Indian companies now seem to have realised that though it’s exciting to buy big companies abroad, the real synergies are hard to achieve and in this scenario the next best option is to look for something in your own courtyard.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Friday, August 01, 2008

Yatra.com

Yatra.com registered top line revenues of $120 million in 2007 & is looking forward to become a $210 million entity by end 2008. Nikhil Rungta, Head of Marketing, Yatra.com opines, “Yatra.com being one of the largest players in online travel space is growing at a faster growth rate than the market (in 2008 we are looking at growing by more than 75% over 2007). Our constant endeavor is to provide better service to our customers.”

Well, the plans & dreams looks picturesque. However there is a price to be paid for it as there are a lot of hardships which need to be addressed tactfully. Challenge one: More and more players are planning an entry into the world of online travel booking, with existing giants like Kuoni India & Thomas Cook rolling out travel portals soon. Challenge two: The dependence of industry on air-services needs to be reduced as budget airlines time & again threaten to reduce commissions which in-turn affect their bottom-lines.


To achieve these targets and remain competitive, the online players are following the hybridised model. They are aggressively entering non-air businesses like hotels and car rentals. More importantly, offering a complete platter of services via means of holiday packages is certainly a top priority for these companies as Deep explains, “We recognise that ‘hotels and holiday’ category will be the next big drivers of growth. Our relative success in the category is driven by a sharp focus on the quality of offerings (like building a portfolio of relevant partners, not just a huge number), and continued investment in product, technology and channel innovation.” In the last fiscal, MMT generated 10% of the total revenue from hotel bookings and in the current fiscal they believe that the domain will grow by a stupendous rate of 200%.

Moreover, as the traditional players enter into their territory, MMT and Yatra are strategically balancing their operations by setting up shops across the length and breath of the nation as Nikhil explains, “We recently opened Holiday Lounges in Delhi, NCR, Chandigarh, Ahmedabad, Bangalore, Chennai & Mumbai. We plan to open 50 such outlets by 2008. These lounges focus on making customer buying process of a five star level.” Not far behind, MMT too is busy in broadbasing its delivery channels and is investing heavily in setting up offline touch-points – with regional offices in Ahmedabad, Bangalore, Kolkata, Pune, Chennai, Nasik et al. They currently have regional offices in 20 locations and plan to increase their presence rapidly. A focus area for MMT is also to aggressively promote its B2B solutions to agents and other intermediaries.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative