IIPM Press Release

Tuesday, August 17, 2010

WHEN SMALL IS BEAUTIFUL

First Rajshri Productions, then Shah Rukh’s Red Chillies Entertainment and now Yash Raj Films. What is it that’s bringing these movie mavericks to the idiot box? 4Ps B&M does a checkout with some eminent industry insiders...

Are you intrigued by the gigantic budgets that Indian filmmakers keep throwing around? Or by the collections these movies allegedly make? And does that make you think that television is a poor cousin of film? Think again! It’s no more the situation actually. In fact, it just might be the younger and wealthier sister.

Chew this: In 2008, while the Indian film industry was worth Rs.109.3 billion, TV was pegged at a whopping Rs.240.5 billion. For 2009 too, while the estimated figure for films is Rs.109.2 billion, for TV it’s pegged at Rs.262.7 billion. And if the ‘FICCI-KPMG Media & Entertainment Report 2009’ is to be believed, then this trend will continue in the near future. As per the report, in 2013 the film industry is estimated to reap in Rs.168.6 billion while TV is estimated to make a mind-boggling Rs.472.6 billion. “Not to forget that the phenomenal projected growth for TV (14.5%) is much higher than films (9.1%) and the overall entertainment industry average (12.5%) during 2009-2013,” says Shubhoshekhar Bhattacharjee, CEO, Planman Motion Pictures.

The most buzzing TV debut (among film makers) in the recent past is Yash Raj Films Television (YRF TV) on Sony. And it’s not just YRF! Shah Rukh’s Red Chillies Entertainment is already exploring the space with successful shows like Tere Mere Beach Main (hosted by Farah Khan). Rajshri, which had its first television stint in the Doordarshan era with a show named ‘Paying Guest’, too started its second innings on TV five years ago with Wo Rehne Wali Mehlon Ki on Sahara One. Currently, it has a show on-air on Zee TV titled ‘Yahan Main Ghar Ghar Kheli’. Further, there are several individual filmmakers, including names like Vikram Bhatt and Anubhav Sinha.

Rauf Ahmed, Ex-Editor Filmfare says, “It’s the huge financial potential offered by TV that is luring filmmakers towards the small screen. Moreover, films are becoming a riskier business by the day.” Zee TV’s Fiction content Head, Sukesh Motwani agrees with Rauf. He feels that in terms of returns, TV is more stable compared to films which are comparatively vulnerable. Further, it’s also about offering a complete entertainment bouquet. As Rafiq Gangjee, VP, Marketing & Communications, YRF points out, “Getting into TV content seemed like a natural progression in our (YRF) growth.”

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!

IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎

Monday, August 16, 2010

The lesson we never did learn!

To bring together people who could teach and those who wanted to learn, ToI launched the Teach India campaign and made ‘Let’s learn to teach’ the clarion call

THE TIMES OF INDIA

CAMPAIGN: Teach India

AGENCY: JWT

MEDIA SPENDS: Rs.2.5-5 crore

OBJECTIVE: To achieve 5,000 volunteers who could be trained to teach. The contact points included individuals (who could teach and were willing to donate their time), NGOs (working with illiterate children), schools (to provide space) and companies (to sponsor the initiative).

STRATEGIC CHALLENGE: The key challenge was the unenthusiastic response from consumers. The uphill task was to communicate the hard-hitting realistic future of brand India – a future which was trapped in the vicious cycle of poverty including 75 million children. While most problems faced by the education sector (like under-equipped schools, high rate of dropouts, caste & gender bias, politicisation, et al) needed massive infrastructural investment, ToI took the onus of catering to the problem of shortage of qualified and equipped teachers. The strategic challenge remaining convincing Indians to commit themselves.

BIG IDEA: Despite being home to a large mass of highly educated Indians, only a few educated volunteer to teach. Why? Past qualitative research revealed that though the educated class wanted to contribute, they didn’t have a platform to do so. ToI trained volunteers, provided eager students waiting for teachers, matched their locational requirements with NGOs, and made ‘Let’s learn to teach’ their clarion call. Volunteers were asked to spare two hours per week for this cause. Aamir Khan too volunteered for the programme.

COMMUNICATION TOUCH POINTS: Principals, CEOs, housewives, collegians, professionals, et al, were contacted. 28 direct response ads in print, 3 TVCs with multiple edits, 10 outdoor creatives, bookmarks, car stickers, elevator stickers were created. Digital media, hoardings, events, et al, were also used.

EFFECTIVENESS: The first 10 days of the campaign saw over 10,000 volunteers sign up, close to 60 NGOs recruit students, 32 schools donate space to conduct classes, 31 companies support the initiative (both in terms of sponsorship and volunteers), 550,000 visits to the website & 6000+ video downloads (Source: Client Data). While Aamir continues to teach for two hours every week, 2 million children (at the last count) have benefited from the Teach India cause.

Friday, August 13, 2010

Hayward’s wayward BP ways?

B&E’s Steven Philip Warner talks to various global oil & climate experts from the likes of Goldman Sachs, Credit Suisse, Standard & Poor’s, Argus Research, JBC Energy & Varda Group to find out what awaits BP’s fate? Will BP, which as recently as two months back was the second most valued oil major in the world, disappear?

The Niger Delta, which has 606 oil rigs, today caters to 40% of the crude oil imported by US – perhaps a reason for the US Congress to ignore the wrongdoings in Nigeria. On May 1, 2010 (ten days after the BP spill), US giant ExxonMobil spilled about 1.1 million gallons into the delta for a week before the leak was stopped. It was ignored. The locals are demanding $1 billion in compensation. That will be ignored too. Beats us why the US Congress has not questioned Exxon. As per the Nigerian govt. figures, more than 7,000 spills occurred in the region between 1970 and 2000, with Shell accounting for more than 1,000 of the cases. In 2009 alone, Shell was responsible for a leakage of more than 14,000 tonnes of oil in the region. Was it even questioned?

6.1 million gallons is Hayward’s crime to date. If Exxon could have been let go off with just $507 million in charges after the 10.8 million gallons spilled in 1989 (following which, “Exxon tried to limit its liability by undertaking destructive technologies in attempts to show it was trying to ‘clean-up’ such as hot water washing and fought through the courts challenging the compensation claims from those impacted by the spill,” as Kelly Rigg, Exec. Director of Varda Group tells B&E), why ask BP to create a $20 billion “slush fund”? But BP won’t mind. And neither will Hayward. He knows, once a substantial amount of restoration to BP’s public image has been done, he’ll be replaced.

[As we go to print, Hayward has already started handing over his daily operational work to Bob Dudley (MD of BP), and will hereon look after its UK operations.]

Thursday, August 12, 2010

Rich poverty

Orissa’s development confounds

The general notion is that economic prosperity and improvement in living standards of people go hand in hand – but the Indian state of Orissa seems to be a contrast to this. The state, enriched with a bounty of natural resources, remains a backward state when it comes to all the possible measures of standards of living.

Despite recession, investment plans of India Inc. in Indian states increased exponentially from Rs.13,80,099 crores in 2008 to Rs.15,94,203 crores in 2009. India’s leading states that attract the highest amount of investments are Gujarat, Orissa and Andhra Pradesh with their individual share being 15.4%, 12.6 and 8.1% of total investments attracted by Indian states, respectively. Orissa is a rare example of attracting investments exceeding Rs.6 lakh crores in mineral-based industries. Orissa also is host to 33% of India’s total iron reserves, 50% bauxite reserves, 95% nickel reserves, 98% chromite reserves and 24% coal reserves.

There were 49 MoUs that have been signed up with various steel promoters for setting up of plants in 2009, with total investments worth about Rs.2,00,846 crore. The estimated production capacity is about 74.66 million tonnes per annum of steel, according to the government sources. Reliance Energy announced setting up a 12,000 MW power plant with Rs.60,000 crores investment. Bhushan Steel and Strips also announced their plans of increasing their capacity of producing steel from 3 million tonnes to 9 million tonnes with an additional investment of Rs.15,000 crores, apart from Posco, Tata Steel, Jindal Steel and Power, Sterlite Iron and Steel Company, and Essar signing MoUs.

At the same time, while 85% in Orissa live in rural areas, 47% of them live below the poverty line. Overall, 42% people live below the poverty line. In absolute numbers, in 1992, there were 141 lakhs living below poverty line in Orissa; in 2005, this figure had reached 152 lakhs. The annual per capita income of state citizens was Rs.14.795 compared to the national average of Rs.37,490 in 2009. One would have expected citizens of Orissa to be amongst the richest in India. They’re the third most poorest in India.

Akram Hoque

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!

IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎

Wednesday, August 11, 2010

Satisfied with the performance of UPA Chairperson Sonia Gandhi?

The lady from Italy has proved to be the BJP's ultimate nemesis. By maintaining a dignified distance from running the government and by astute handling of allies and party members, the UPA supremo has approval ratings double than that of L.K. Advani. Never in the forefront, she has been ably assisted by Prime Minister Manmohan Singh and Union finance minister Pranab Mukherjee among others.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!

IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎

Tuesday, August 10, 2010

Friends forever

“I’ll be there for you…” ran the title track of the hit sitcom Friends, and six years after its last season, two of the protagonists are still very much there for each other. Jennifer Aniston and Courteney Cox Arquette (Rachel and Monica respectively in the show) have been best friends for years, and when Courteney recently won an award for excellence in television at the Women in Film Awards, Jennifer was there for her, cheering and clapping enthusiastically!

Monday, August 09, 2010

The curious case of gourmet food

While many international restaurant brands are already in India, a host of others are lining up to commence operations. But almost every CEO B&E met for this story lamented the over-policing by the government... We take a quantitative stock analysis! by Vareen Gadhoke Ray & Swati Sharma

Variety, they say, is the spice of life – a fact that Lee Iacocca (former CEO, Chrysler) vouched for in his autobiography. He mentions that when his parents immigrated from Italy to the US, his father Nicola started a hot dog restaurant, Yocco's Hot Dogs, (apart from two other businesses). And then the infamous 1929 Wall Street Crash happened, wiping out the savings of millions of Americans in one shot. Iacocca writes that while most other businesses in America collapsed, the restaurant business kept thriving – because people wanted to forget their worries. So customers kept streaming into Yocco's Hot Dogs, and business never seemed to go down. His family saw those times through relatively easily because of that. Iacocca was five years old then, but the lessons remained with him throughout his life. Almost everybody knows Iacocca worked in Ford, and then headed Chrysler till his retirement in 1992. Not many know that in 1998, Iacocca became the Chairman of the LA based restaurant chain, Koo Koo Roo Inc.

The anecdotes are placed simply to prove a point – the restaurant industry is interestingly one of the Indian economy’s best kept secrets. Fast food chains, QSRs, fine/casual dining, cafes, bars & lounges, food courts, take away kiosks, et al, from across the world have set up shop here. With a slew of customised product, offerings and pricing strategies coupled with an armoury of aggressive expansion plans, the restaurant sector (which is growing at 5-6% per annum) is now worth a huge Rs.430 billion! But strangely, there's generally never any kind of a brouhaha over this sector within India – no particularly data-heavy media reports, no statistics, no intrinsic analysis... So B&E decided to go one-up and bring a collation of the latest status of this industry, and the challenges that stand within.

The Economics of Food

Notwithstanding its increased prominence in recent years, the restaurant industry has a history of being fragmented & unorganised, and often suffers the consequence of being compared to the small sweet shops & roadside snack outlets spread across the country. In a market dominated by the unorganised players, the organised segment is estimated to be Rs.70-85 billion [as per "Indian Restaurant Industry 2010", a White Paper prepared by National Restaurant Association of India (NRAI) in association with Technopak Mindscape]. The organised segment of the restaurant industry forms 16-20% of the total restaurant market of Rs.430 billion.

In spite of the slowdown, the restaurant industry in India is still expected to be one of the fastest growing, with a growth of 5% plus until 2011. The organised segment is in fact expected to grow faster than the overall restaurant industry, at 20-25% per annum. And given the faster growth of the organised segment, its share of the pie is expected to increase to 45% (to a size of Rs.280 billion). The reasons for this growth are two fold. First, the growth of current and new organised players, and second some of the unorganised operators becoming organised.

As per a Technopak report, by 2015, the restaurant industry will become Rs.625 billion plus. While this is a fast paced growth, had the Indian restaurant industry occupied a similar share of GDP as the restaurant industry of the US occupies of the US GDP, its value would be Rs.1,800 billion, so the untapped potential is immense. Among the various formats, QSRs & cafes have had the maximum growth over the last few years. While most other countries in the Asia region witnessed single-digit growth, QSRs are expected to grow at 15-20% over the next five years.

Saturday, August 07, 2010

‘V’iciously ‘A’bnormal ‘T’ax!

Inter-State VAT variations are proving to be the chronic ulcer for trade and commerce in the country. And the problems are visible. Will the yet to be implemented GST prove a breather? by Savreen Gadhoke

During the bygone month and a half, Kapil Soni, a resident of Gulmohar Park in New Delhi, has never visited a gas station in the capital city to refill his hatchback’s diesel tank. Not that his hatchback has a mileage that guarantees an on-road time that lasts six weeks, but he prefers to avail of the service rendered by a remote gas station in Ghaziabad (Uttar Pradesh) which falls on his way to office. Reason: The Value Added Tax (VAT) levied on diesel in Delhi was raised from 12.5% to 20%, effective April 1, 2010, which made diesel dearer by Rs.4/litre in Delhi. For Soni, a 33 year-old who belongs to the salaried class, that implies savings in excess of Rs.1,200 a month; talk about precious dimes!

This outflux of diesel buyers from Delhi has cost the petrol pumps in the capital city about Rs.350 million in net earnings within just the first month (April 2010) of the increase in VAT. As industry sources confirm, revenues of diesel sellers have dipped by 40% in Delhi and is expected to fall further by around 80%. Understandably, the worst affected are the oil shops that lie in the border areas of the capital. A field enquiry suggests that those in areas like Ghazipur, Anand Vihar (East Delhi) and Dilshad Garden (North-East Delhi) have seen their monthly revenues fall by as much as 70%.

There is another negative spillover. The month of February 2010 saw the minimum wage levels of unskilled labour being increased by 33.5%. At a time when revenues have fallen, it becomes hard to imagine how the gas station owners can adhere to the rule of wage increase.

So do they have an answer to this bonehead play? The gas station parties believe they do – retaliate. Adopting a demonstrative method, the Petrol Dealer’s Association (PDA) of Delhi and NCR has announced that petrol pumps in Delhi will go on a 24-hour strike every Monday, starting May 14, 2010, so long as the VAT increase is not annulled. As of date, there have been three such day-long shut downs at the pumps – on April 9, May 14 & May 24, 2010. The Association has also threatened to go on an indefinite strike from June 14, 2010, if its demands are not met.

The predicament of the gas station owners in Delhi is just one of such instances, where variable Inter-State VAT is bringing about great inconvenience to trade and commerce. While these variations have negatively impacted businesses in certain states, they have also given rise to smuggling and black marketing. This defeats the intention of introducing the very system of VAT in 2005. It was conceived with a view to make accounting more transparent, to cut trade barriers, curb tax evasion and boost tax revenues. Items were classified into various categories such as essential, nonessential, luxury items with taxes ranging from 1% to 20%. VAT rates for each State is decided by the individual State Governments, and this has led to non-consistency in the taxes levied on similar product categories.

Poultry is one example of how variation in VAT has affected the trade between Kerala and Tamil Nadu. Kerala has depended on Tamil Nadu for poultry supply, for decades. There was no State tax applicable on poultry till Kerala agreed to the VAT regime. Thereafter, consumers buying poultry had to pay 12.5% more on the purchase of poultry in Kerala, while the commodity was kept free of VAT in Tamil Nadu! The effect – during 2004, around 2 million live birds were transported from Tamil Nadu to Kerala, post-VAT, the trade almost came to a halt. This gave rise to smuggling of live birds from Tamil Nadu into Kerala to bypass VAT and earn that 12.5% on bottomlines by the traders. The act has become so severe and organised now that even after the strengthening of check posts on borders by the Kerala government, smuggling continues through parallel roads and country routes.

Friday, August 06, 2010

Touch me not!

From healing touch to heeling touch… Women have an incredibly wider spectrum of influence than one could have ever anticipated!!

Have you men ever walked into a shop and felt incapacitated as a negotiator, and had to deal with the brunt of a raw deal that may have burnt a hole in your pocket? Isn’t it true that our female counterparts have an edge when it comes to negotiations and bargaining? Not only that; it has been observed that men accompanied by women folk may also feel much more confident and far more secure while closing deals or simply venturing out. A recent study in New York shows that the reassurance of a woman’s touch can influence decisions made by men. It finally stands to logic why women always get their way and it won’t be a surprise if another study showed that women are in fact always aware of the fact that men feel empowered when they are around! Now, the million dollar question that remains is why are they still given the tag of the ‘weaker sex’?

Women sure have accomplished almost everything that was earlier considered a man’s forte. And in some cases they have achieved even greater feats. Be it personal chores or strategising in a corporate forum, women are omnipresent. Although, some chauvinists and uninitiated introverts donning the garb of shyness, moving further into their cocoons (read wimps) might beg to differ and still vouch for male bosses and colleagues, just so the equations remains ‘simple’. It is a known fact that men would score way lesser than women as far as emotional quotient is concerned. This largely fuels the debate that claims women are better managers, because women colleagues and bosses have greater people management skills, and empathy tops the charts on their priority lists. One might have noticed that while being served in any of the airlines where air hostesses as well as flight stewards are on duty, a passenger might get agitated if a male steward falters, but a reassuring smile from the hostess pacifies even the most irate guest.

It is natural to drop one’s guard while in conversation with the opposite sex; let alone the female touch in question. It is a fact that opposites attract, and it is not a matter of self deprecation if such a scenario comes to the fore because “Complex interplay of hormones and pheromones released during an inter-sex conversation is postulated to hinder abstract thinking, instant decision taking abilities, rationalisation and may influence intuitive abilities,” says Dr. Vinant Bhargava, Physician, Sir Gangaram Hospital.

From legendary epics of ‘Mahabharata’ and ‘Ramayan’ (not to forget Kekai’s tantrums in Ramayan which led to the exile of Lord Ram) to the present day ‘home frontiers’ and ‘cut-throat corporate arenas’, women have succeeded in turning the tables everywhere. It’s not the women who are at fault here. It’s human tendency to take advantage of a situation where undue leeway is being provided for one to behave as desired. Female touch is probably not the only driving force providing reassurance to an individual or the confidence to go ahead and bear risk. Point to be pondered here is that is there a possibility that it could be the ‘human touch’ which is the stimulant? A group of friends or a confidant is not subject to any caste, creed or sex. Hence how one deals, invests or operates around or without one’s support system is an individual’s call. The only disclaimer is ‘offer documents may be subject to market risks… please read the offer documents carefully before investing!’

Ravi Inder Singh

Thursday, August 05, 2010

So what do we do about burning cars?

As car manufacturers double up efforts to ensure cars don’t catch fire, it is important for customers also to understand how they might be ‘the’ problem in such incidents. by Pawan Chabra

Many similar Ajays and Pramods in the Indian market have literally put their lives at stake and eventually ended up spending lakhs just for saving a few thousands. According to data provided by Indraprastha Gas Ltd., there are around 170 certified CNG kit suppliers in Delhi alone, but consumers still visit local suppliers and get the uncertified kits fitted. Further, the technology is still crude. Cases of leakages in the CNG pipe or problems in the valve of a vehicle are a daily affair at several CNG stations. “The technology has been just lifted from western countries. It needs some refinement so that it can adapt the Indian climate,” says Ramesh Kumar Gautam, an employee at one of the CNG stations in Delhi.

The story is no different with the LPG-kit fitted car owners. In fact, some car owners use gas cylinders that are meant for household use. “We refrain from selling our alternative fuel empowered cars in regions where the alternative fuel is not available as it encourages unsafe practices,” reasons Mayank Pareek, Managing Executive, Sales & Marketing, Maruti Suzuki. He adds that though Maruti is working on developing CNG and LPG variants of its models, it will only happen once the network for these fuels fully develops in India.

Undoubtedly, car manufacturers are doing their bit to control such incidents, but then no one has a control on unsafe practices undertaken by individual consumers. For instance, in western countries, the after-sales market is equally divided between authorised service stations and multi-brand car workshops. But in India, customers prefer to go to the neighbourhood garages rather than visiting an authorised service centre to get their car serviced. Moreover the concept of multi-brand car service shops has still not picked up. “The trend and magnitude of neighbourhood garage shops is almost exclusive to India. Having said that, the trend is changing and consumers prefer authorised showrooms over the neighbourhood garage shops,” Jagdish Khattar, former Maruti head honcho and current MD, Carnation Auto tells B&E.

All this clearly indicates that just as car manufacturers need to be put under the scanner for service defects, there is a need to reinforce safety measures and the government should persuade consumers to follow the same either by incentives or by increasing the cost of non-compliance.

With inputs from Danish Reyaz

Pawan Chabra

Wednesday, August 04, 2010

Finally, a wrong move?

You can look at it as an advantage or as a drawback, but when Apple makes any kind of play, it is bound to invite numerous discussions, debates and scrutiny. The same is true for its latest acquisition of Intrinsity. Is Steve Job’s new penchant for semi-conductors the ‘wrong move’ that experts had been waiting for so long? by Amir Moin

Another aspect of this whole episode is how this will change the dynamics of the industry. Apple chips are based on a design that competes with Intel’s for the fast-growing market of small to mid-size consumer devices, ranging from smart phones to tablet computers. So if Apple prompts other tablet manufacturers to use a similar chip in their products, Intel could see red. Intel also supplies microprocessor’s for Apple’s computing devices and would rue losing such a high profile client.

Custom made chips, if successful and pathbreaking, will come with unique hardware features that are hard to copy and will set Apple apart from vendors who manufacture their products using off the shelf components already available in the market. However, manufacturing chips from scratch is also an extremely risky proposition because such chips are so complex and expensive to make.

In mobile computing, the right kind of chip design can provide a tremendous, differentiated competitive advantage. Apple is even abandoning the traditionally open software-development model. The iPhone, iPod Touch and iPad are all but closed to third-party developers who don’t use Apple’s software-development kit (SDK) and the Apple-filtered App Store. With all this, Apple is tightening its hold over mobile platforms and the huge revenue potential of a fully closed system may encourage Apple to further accelerate this development. All these developments may have huge implications for Apple but given the drive of Apple to be different; this acquisition is poised to bring paradigm shifts in the industry only if Apple convinces other vendors to use its custom made chips instead of what are already available off the shelf.

Apple’s stock price fell significantly post the acquisition announcement (m-cap collapsed from $245 billion on April 26, 2010 to $233 billion on May 7, 2010, though recovering to $238 billion on May 12), showing the lack of faith even extremely loyal investors have in Steve’s latest move. This was also because of news of Google’s Android phones beating Apple’s iPhones in US Q1 (Jan-Mar 2010) sales. With all this in the background and performance issues creeping up fast in iPad customer feedback (Jobs has still not launched iPad in Asia, Australia and Europe), Steve the Goliath needs the latest gambit to give returns too fast to get the heat of his back. But hey, since when has he started caring about what others think of his strategic moves?

Amir Moin

Tuesday, August 03, 2010

Fiends on the prowl

A TSI sting operation finds how paedophilia has turned into a thriving business in Delhi, NCR and Mumbai. Taking advantage of kids’ poverty and craze for brands and gadgets, middlemen get rich by supplying minor boys and girls to satiate the desire of sick, rich men, many of them NRIs and foreigners. By Abhishek Kumar and Neeraj Rajput

TSI – What’s your age?
Rupesh – 16 years.
Rupesh – You are also gay, right?

TSI – No, I’m not gay but I like small kids.
Rupesh – But the boys of 10-12 years are not mature enough to do anything with you.
Rupesh – I do have young boys but they don’t know anything.. I mean if you tell them to …they will not do and you will have to do it.

TSI – Yes, I am saying the same thing.
Rupesh – Oh. I did not know about this. Had I known, I would have got your job done. I have children of 10-12 years. I will instruct them and they will do likewise.

TSI – I hope there won’t be any problem?
Rupesh –Not at all. They are my students and I am their teacher.

Maria insisted we tried out Rupesh once but we used his higher age as the right excuse. When we went to meet Rupesh, we got the shock of our lives. Rupesh had told us the children would be 10-12 years but one kid was not even 8 years old. We wondered if he could answer us but found that he was extremely vocal and well-trained.
TSI – Son, do you learn to dance?
Kids – Yes.

TSI - Which all style have you learnt?
Kids - Hip-hop.

TSI - How many more students are there?
Kids – There are 4-5 more.

TSI - Which class are you in?
Kids – Eighth standard.

In the flesh trade, if a middleman is aware that you are loaded, they will do anything that you ask for. We were on the right track. With the help of Maria, we found Rupesh, the real culprit who supplied small children to paedophiles. Rupesh told us that it was going to be the first time for the kids. It was a ploy to make more money as the rates are higher for a ‘fresh’ sex worker.

Rupesh told us that he had already instructed the kids about what they had to do. We asked Rupesh what if the kids went home and told their parents. Rupesh allayed such fears and agreed to be present while we ‘had sex’ with the kids. He further advised us to avoid taking the kids to hotels or guest houses as the risk of being caught was high. He told us that a private place like some friend’s house was preferable.

Then popped the money question. Rupesh asked for an astounding Rs. 25,000. Now that we were done with our work, we had to get out of the deal citing some excuse. So we said we did not have access to a private place and that we were scared of being caught in the act. This infuriated Rupesh who started shouting at us, “These kids know everything. They do have girlfriends and have done everything with them. I am in this business for a very long time. If you are not interested, I will take them to some other client.” He blurted out that his clients came from as far as Singapore, Pakistan, Dubai, Australia and Canada.

Monday, August 02, 2010

Time to revisit the basket & egg theory

After a long lull, one can finally see some action at Walmart’s India headquarter. But that action seems pretty lackadaisical by Walmart’s standards... Is everything alright? by Savreen Gadhoke

Walmart had entered Germany in 1997 through two acquisitions – Wertkauf Stores (which had 21 stores) and Spar (a chain of 74 hypermarkets). The acquisition of Spar was considered to be a nastily hasty decision as it was one of the weakest German players targeted at low-income groups. Walmart had a self-inflicted hard time providing ‘everyday low prices’ and failed miserably while competing with cost leaders Aldi and Lidl that gave superior price cuts and discounts as compared to Walmart. And we haven’t even come to the retailer’s inability to understand cultural nuances. This coupled with the lack of a strong leadership, and Walmart Germany became a case study for what not to do when you enter a new market. As a result, in four years of their operations, Walmart Germany changed its CEOs four times. Walmart had to eventually pull out of the country in 2006 after selling off its 85 stores to Metro at a massive loss of $1 billion.

Raj Jain, the President & CEO, Walmart India knows these details too well. A closer look at Walmart’s India operations and the caution being displayed by the giant comes out too clear. After having committed $100 million for the expansion of C&C stores across India, Walmart (or rather, Bharti-Walmart) launched only their second store in Zirakpur (near Chandigarh) on April 14, 2010. The launch of the second store comes almost a year after the start of its first such store (branded as ‘Best Price Modern Wholesale’) in Amritsar in May 2009. Two years for two stores? Is this the Walmart we know? Yes, they do confirm they’re planning to launch seven more by this year end. But the mantra behind the success of Walmart in any part of the world has been in achieving economies of scale, i.e. cost advantages achieved by expansion. And with seven stores, it’s anybody’s guess how Bharti Walmart believes it can really achieve economies of scale in India?

More critical is the fact that logistics in a country like India, where different regions specialise in producing different specific commodities, can be a cost efficient exercise only when the expansion plan takes into account the major cash and carry (C&C) purchase belts of India. Till now, it seems Bharti Walmart is satisfied to restrict its operations to just North India and remain a regional player. Even if our prognosis turns out to be wrong in the future – given the promised seven new outlets – the government’s latest decision to cap sales by C&C players to their group front-end companies at 25% of overall sales would put paid to any overly enthusiastic growth strategies the company might have been nurturing.

As per KPMG, this government move can force these wholesalers (like Bharti Walmart) to reduce investment plans by around Rs.8 billion in the immediate term. At the same time, experts like Ashish Sehgal, Executive Director, Infoline, feel that Bharti Walmart need not expand fast as it’s based on a long-term sustainability model. As per Ashish, economies of scale are not achieved solely by expansion but by other factors too like demand, huge customer base, cost control, et al, which are conducive for doing business.