Management Informatika-Learn and Share- A www.blogomania.in initiative

Contents of a Business Plan

2008-08-08T12:23:00.000-07:00

Executive Summary
Vision, mission, objectives
Current state of business
Products and services
Strategy and sources of sustainable competitive advantage
Customer acceptance
Summary financial forecasts
Money required, timing and deal on offer

Basic business information
Title
Contents
Contact Information
Document control
Proffesional advisers
Definitions
Legal structure and corporate data

Current Business situation
Definition of current business and its markets
Corporate history, major events and past financial performance
Current business and market position
Core competencies
Current business organisation and outline business infrastructure

Strategic analysis
Political, economic, social and technical anlysis and impacts
Key differentiators and unique selling points
VRIO analysis
Core competencies
Confirguration of resources
Value add analysis
Value chain analysis
Value system
Resource audit
Operations resources
Human Resources
Organisational resources
Financial resources
Industry life cycle
Industry structure
Competitor analysis
SWOT analysis

Strategic Plan
Vision, mission and objectives
Sources of sustainable competitive advantage
Competitive position
Marketing positioning
Brand Strategy
Portfolio strategy
Business design

Marketing Plan
Market segments, size and growth
Description of customers and customers needs
Target market segments
Product positioning and value proposition
Marketing mix
Description of products and services
Pricing and discounting
Advertising and promotional plans
Channel and distribution strategy
Guarantees and warranties
After sales service and customer care
Comparison with competition
Performance and economics
Marketing forecasts

Operations/Production
Physical location
Make or buy considerations
The production process
Facilities, equipment and machinery
Scalability of operations
Engineering and design support
Quality control plans
Staffing recruitments
Sources of supply of key materials

Research and Development
Objectives
Organisation
Plans
Resources

Management and Organisation
Organisation chart
Top Management
Management's ability to deliver the plan
Corporate governance and shareholder control
Staffing
Recruitment
Training
Labour Relations
Office space and amenities
Employee and related costs

Forecasts and financial Data
Summary of performance ratio
Sales forecast
Assumptions underpinning financial forecasts
Profit and loss account
Balance sheet
Cash flow statement
Evaluation criteria and valuation
Discounted cash flow
Payback
Break even
Benchmarks
Sensitivity analysis

Financing
Summary of operations prior to financing
Current shareholders loans oustanding
Funds required and timing
Use of proceeds
The deal on offer
Anticipated scenarios and strategic responses
Specific risks and risk reduction strategies

Business Controls
Information Technology
Financial
Sales and marketing
Operations
Other controls

Appendices
Glossary of terms
Details of market research
Consultants' reports
Product specifications
Marketing collateral
Orders in hand
Organisation charts
Curricula vitae
Detailed financial forecasts

How to find the impact of Advertisement?

2008-08-08T12:02:00.000-07:00

Hello friends

Recently, I was reading Marketing Management by Philip Kotler. One topic struck my mind. How to measure the impact of the advertisement?

Just think. With billions in budget, the marketing and advertisement guys do their best to have powerful and memorable ads. But the point, is does it give any results? If yes, then how much?

I am sure, this is the question that bugs every marketing and advertising professional.

So, I asked the following question on one forum.

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Question

Hello Friends

When we design the marketing campaign, we focus on three factors i.e. Reach, Frequency and Impact. Now reach, can be obtained through the media agencies like the readership of the newspapers, and the categories of the readership. Frequency, can also be calculated via various quantitative techniques, like you can tail the target customer, and find out the frequency of exposure, he gets to the particular type of media. But, I am unable to understand, how to find the impact Can anybody help me to understand this?

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Responses

Dear Prabal, I would like to talk about what I understand of the issues that you've raised. When we design a marketing campaign, we do not focus on reach, frequency and impact alone. A marketing campaign adheres to the marketing plan (sample attached). Hence these three factors are only a part of the whole (marketing) plan. Reach, frequency and impact come under the domain of ADVERTISING and/or MEDIA CAMPAIGN. Although roles overlap, reach and frequency are taken care of by media planning agencies. Impact is measured by the media planners, ad agency and even the client. To measure the impact, the media vehicle details (like reach, frequency) are collated from media agencies (say TAM) by the ad agency and the company. The ad agency may or may not do a "Communication Research" in which they do a market survey to "test" and analyze the response of the target audience. The ad agency may do primary research to gauge the public opinion and a secondary research to gauge the response of the critics. Then they arrive at the "impact" of the ad campaign on the brand - whether the ads have succeeded to position the brand in the mind of the customers as intended. The company may or may not do a litmus test on its brand equity to measure the "impact" of the ad campaign on its brand. But as many marketers, and definitely the sales managers, will say - The "real impact" is measured by the ACTUAL SALES as all this effort is directed at only one goal - making the balance sheet look good!
Links:
http://www.csu.edu.au/division/marketing/downloads/Marketing_Plan_template1...

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If it moves people to do something (hopefully purchase something in most cases or at least be remembered correctly in terms of brand and message) it has had an impact. If it doesn't, it hasn't. Simple eh? Many things are unless people are getting paid to unnecessarily complicate them.
Messages from Peter Palmer (1):

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Agree to Peters views. Impact will be positive as well negative, neutral one will not be considered good from placement as well campaign point of view. To me impact can be as simple as getting numbers/data for Has campaign succedded in reaching potential audience/targets/buyers with appropriate message, with acceptable cost. Has potential audience/targets/buyers started finding more about product/service Has potential audience/targets/buyers started enquiring about product/service at sell points Have they started buying it finally, how much, how frequently, hows feedback so far? Are they buying it again and again and helping brand building through loyalty as well value add to customer. With above data one can check how much your service/product is eating into competition business etc.. Hope this helps. regds- Vijay
Messages from Vijay Kurhade (1):

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Impact is the ability to create sales - so measure sales. Or if the advertising is not directly focused on sales, then its increase in something like brand strength or consideration - this can be obtained from market research. Other possibilities for estimates of impact include enquiries, returned coupons, visits to a website.
Messages from Saul Dobney (1):

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Impact have to call out the shock in the customer and to encourage him to the purchase product( I say that purchase without the reflection so example the small child ask for next ice cream) not so much the frequency because this can bore but to calculate the cost of attainment to the customer - for the best on the 1000 persons. Effective reach of advertisement good tools for this for example GRP(Gross Rating Points) or TRP( Target Rating Points). I like better to use GRP. I think that impact is the pressure on the customer something in the kind of buy this if you are not you be wrongful - you will fall down about 1 level in social hierarchy, everyone of use wants to boast this stay in our nature. Nobody does want to be beyond of the sociable cream
Messages from Lukasz Urbaniak (3):

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You can do some research to measure the effect of your campaign - some metrics such as brand awareness, image, etc. With media you should get a post-buy analysis The best proof is your sales though ;)
Messages from Mirek mirpo POLYNIAK (1):

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Prabal, This a very good question. However, what you are describing is not a marketing campaign, but an advertising/ media campaign which is a part of a marketing campaign. A marketing campaign can have two prime targets: - creating brand awareness By which we use mostly mass media (that what you where describing). - creating sales By which we use mostly direct marketing to reach our goals The campaign itself can be focussed on one or the other or both targets. I will leave direct marketing for another discussion and will focus on the term ‘brand awareness’. Within ‘brand awareness’ you again have different possibilities of setting targets, for example: - creating top of mind awareness - creating a certain Public Image - etc. Know we come to your question: “How the measure the impact of advertisement? “ To measure the impact of advertisement directly is very difficult. Their always creative ways to measure a certain part of your advertisement campaign off course, but most often the results are not reliable. A better way is to link the ‘impact’ to the target you have set for the campaign, think of creating top of mind awareness. Before you start your campaign you have data regarding the current situation; simple example is that from a 1000 persons 200 think of your name first during a survey. Know you can measure the impact by holding the exact same survey again after your campaign and compare the results with the previous survey. The impact of your advertising campaign is measured on the comparing of the two survey’s and their results.
Messages from Sebastiaan van Aard (3):

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Hi Prabal, I think conversion/ sales would be tangible impact. You could also measure brand awareness, advertisement recal etc pre and post advertisement for impact evaluation.
Messages from Yogesh Bisht (2):

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Prabal, When you say 'impact' I'm not sure whether you are referring to sales impact or communication impact. But, reach and frequency are surrogate measures for what a marketer really cares about, sales. If a communication metric is necessary you should look towards awareness because you can make better correlations to sales this way.
Messages from David Adelman (1):

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Prabal, It is quite an interesting question, however, the answers are pretty basic. Reach and Frequency are measurements of the depth of your advertisement reaching your target audience, frequency is the number of times your target is exposed to the ad. Impact is the results which moves the consumer to take action. This is measured by sales, visits to the web, tracking, pre and post focus groups, etc. However, remember, that if we all knew the answers all of the time regarding this question, we probably would not be discussing it now :). Fran

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Sales of course is a the most direct metric, however that can be constrained by factors like distrbution and pricing. To understand the AD IMPACT ie whether the ad motivated the consumer to consider purchasing the brand the following simple metrics would give you a good idea. - ad awareness - how many people recall seeing the ad - message recall- what do they remember from the ad - Impact on purchase intent and brand image- difference in purchase /trial intent and brand image ratings amongst those aware of ad vs those not aware These metrics can be obtained via primary research.
Messages from Asit Gupta (1):

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Prabal- Impact can be defined from a media point-of-view, such as R/F. Media impact is more or less measured by setting some level of effective communications level... e.g. reach at the 3+ frequency level and effective GRP's (a/k/a ERP's). However, a more salient measurement is whether your ad resonates with your audience and does the messaging communicates to them. This can be determined via focus groups, copy testing, etc. Hopefully, this will translate to increased sales and/or increased awareness of your product or service.
Messages from Stan Weinstein (1):

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When we traverse Marketing through to Sales and are looking at the success of any campaign - 'impact' is best measured by looking at your order book....It's simple from that perspective Ensure you define specific milestones at various stages along the campaign timeline as this will allow you to trend the success or failure of the campaign. The metrics you create will vary according to the nature and reach of the campaign.
Messages from Sam Thiara (1):

Book Section: Joker in the Pack

2008-08-08T11:32:00.000-07:00

By Ritesh Sharma & Neeraj Pahlajani

This is the book, I saw in my friends hand few months back, during the placement season of my college.I came to know that it’s the story about IIM life, and wanted to read immediately. But, as time was scarce couldn’t pick it.

Few weeks ago, I was out shopping, and saw it in one of the windows of the book shop, and immediately bought it.

The story is indeed about the life in B-Schools in general and IIM’s in specific. While reading it was remniscent of my life in general and my B-School life in specific. The dilemma, whether to do MBA or not? Which B School to choose? How to convert the interview call?

Then it further walked me down the lane of ragging, summers, Business Plan Competitions, Co-curricular activities, Placement fight, and of course academics.

To make the story spicy, it had a estranged love story, lot of funny incidents. And the best part was the insertion of ‘hindi’ dialogues.

I would recommend it to any B-School aspirant, student and alumunus.

Easy Cabs: Business Model

2008-08-01T08:21:00.000-07:00

www.easycabs.com
Recently I got a chance to come in one prepaid air conditioned taxi ( courtesy my new job ) from airport to my home. The drive was of about an hour.

The moment I entered it, the driver asked me, which newspaper I would like to read. I was surprised, and chose one business paper. Then he asked me, whether I would like to have mineral water, I was even more surprised, and accepted one bottle. Then he asked me, which music I would like to listen, I chose pop music. Then, he asked me if I smoke, and which brand, I courtly gave him my brand, and he offered me cigeratte. Then he told me that, if I need to charge my mobile phone, I told him, he wont be having its charger, to which he replied, that he has five type of chargers. I was simply amazed at this treatment.

( Some of this was cooked up to make the story spicy, but my astonishment was not )

By this time, I was intrigued by the five star treatment. So, I started inquiring him about the business model of the taxi system.

The major highlights :

The taxi was owned by the company, but will be transferred to the driver after 4 years.
There was a call center throughout the National Capital Region ( Delhi and around), with a single no.
The customer calls the call center
The call center, flashes the message to all the taxis in 10 km range of the customer location.
The driver who bids first, gets the order.
The taxi has to reach the customer in 15 mins.
All this is done via GPS (Global Positioning System) installed in each taxi.
The driver is a qualified driver, from a reputed driving institute.
The driver is supposed to pay the company, Rs 750 a day
Rest all the expenses including fuel is born by the driver
Apart from Rs. 750 a day, all the earnings go to the driver
But for this, drivers need to pay Rs 25000/- as deposit, and two guaranters.

What does the company gets?

Presently this company is having around 500-1000 taxis. Just imagine that the company is earning Rs 750x 750 ( average of 500- 1000 taxis)= Rs 562500 a day just for operating a call center. This amounts to be Rs 205312500 ( 205 millions) an year.

What does the driver gets?

Apart from getting the taxi after four years, each driver earns Rs 1500 a day after deducting expenses. In other words Rs 45000 per month. This is rare for even qualified professionals in India.

What does customer gets?

Five star service at reasonable rate.

Isn’t it the cool business model??

Food business

2008-03-17T23:52:00.001-07:00

Speaking of eating joints, when we were at this place, I actually felt that this was a good business. Any ways margins are way high in the restaurant business, add some novelty like a Rajwadu style village setting or a maachan and people will pay the premium.
My friend pointed out that it wasn't a very easy business to do however. His reasoning was, that you need to be present all the time else you wouldn't know where your ingredients disappeared. Cooking isn't exactly an activity where you measure with a weighing scale how much atta you used in a paratha (though I know of pizza places which do that, weight the dough, weigh the cheese etc, atleast Dominos does). How do you track a few Kgs of atta going here and there, vegetables disappearing. Unless you source the food items yourself, you might get hit on the prices (assuming you have people who are not exactly honest working for you) Or how do you track spoilage ?
Today I was sitting at this food joint waiting for my order, when I overheard the conversation that the manager of the joint was having with his employee. The place had apparently made a loss of some 35-40k and he was trying to check the accounts. Finally it came down to staff eating food for free. The employee showed the register where the staff makes entry when they eat. The manager scans it and says, "this itself will account for more than half of your loss" (actually said in Hindi, but will post translated versions here)
Then he starts looking at individual items and names of the staff and suddenly exclaims "where is my name in this, even I had eaten, why is my name not here"
The employee showed him his name saying "Ya it is there, see here" to which the manager replies "Double omlett against my name, I don't even eat eggs, get me a pen let me scratch this out, I am a pundit, eggs against my name doesn't look good" simultaneously scratching out his name. Then he goes on to scan the rest of the ledger
"Omlett so many times ? I don't remember having eaten here so many times, what is the date here, 24th and 29th, that time I had still not started eating eggs, I am a pundit" scratch- scratch
And he goes on... Finally exasperated he says "Listen, I am your manager, you don't put my name here, I will make life tough for you" while laughing.
Saying this he says, "see this is the reason for the loss, from tomorrow onwards staff won't eat at this outlet, if they eat they will have to pay. I will talk to the boss and get this system in place" and then tossing aside the register, he asks the guy whats there in the kitchen, "get me dinner, I have to eat here else who will do your accounts for you. Understand else I will stop coming here and you can show your accounts to the big boss himself. Now is there paratha? rice? get me some dal along with it" And off he ate happily.
Its true, with motivated employees like these, it is definitely a difficult business to do :)

Money Money everywhere

2008-03-17T23:51:00.000-07:00

Ever since I took the LEM course with professor Handa, I am always on a look out for some business / venture which might interest me. The more I observe the more convinced I am there there is money to be made everywhere. You don't necessarily need a splendid idea that no one had thought of before. Find what people want and give it to them and they will pay. Let me give you a few examples

1. The chai and maska bun seller at gujarat university road.

One evening while on a stroll we went to this fellow. He sells just 2 things. Tea and maska bun. ( Ok he sells coffee as well, but thats besides the point) Now lets do a simple estimation based on what we observed in the 15 mins we were there. The charges are Rs 10 for a maska bun. A plain bun costs Rs 2.50, even assuming he justs puts 10 buns from a 100gm butter pack which costs Rs 15, butter costs Rs 1.50 thus total raw material cost = Rs 4. So assuming he is an entrepreneur and so he doesn't charge himself for his labour. Thus he gets a contribution of Rs 6 for each maska bun he sells. In the 15 mins we were there he sold atleast 25-30 buns ( yeah he is famous ) So lets assume he sells say a meger of 150 buns in a day ( though I think he sells much more, lets be conservative) So he makes Rs 900 a day. He has two helpers. Now labour who does work for civil and construction is paid between Rs 40-Rs 60 a day. Lets assume he pays these helpers Rs 100 a day. Even then he makes Rs 700 a day and in a month he makes
Rs 21,000 and all of it tax-free !!! Surprised ???
Where are all the software engineers ?? We think we make money :P

2. Visa-counselling service

When we were to go to Germany on student exchange, we were going to stay for 4 months and hence we couldn't go on a schangen visa, we had to apply for a long term student visa / residence permit. Now we had guidance from our seniors who told us to apply for a 90 day student visa and then convert it to a residence permit after reaching Germany. Thats what we did. Now some other friends of ours from another management institute decided it was probably better to go to a visa agency. The agency asked them their duration of stay and based on that asked them to directly apply for a residence permit. Nothing wrong so far, however the problem is that the consulate asked them to show as financial proof, a DD drawn on a German bank to the effect of EUR 7000 ( our total 3 month expense was less than EUR 3000) and so none of them ended up going on exchange. EUR 7000 is a lot of money to show even if you will not use all of it. All this when they paid the visa agency probably a 1000 bucks.
This got me thinking. This is actually a good business. All you need to do is, go to the websites of all the consulates and download forms, requirements for the different visa types etc. Now-a-days almost all consulate websites are self sufficient. Once you have this dossier ready, you are in business. Any time someone comes, find the safest option, photocopy the relevant info from the dossier, hand it to them and take you fees. NO visa agency will give guarantee and no one will expect them to either.

There are so many other seemingly "unglamorous" businesses which nevertheless make money !!

Reflections on the past two years at IIMA

2008-03-17T23:50:00.000-07:00

Sometime back, a freind had asked me how we (IIMA people) solve a case. What is it that we do differently when we solve a case and when I thought about it, my honest answer was nothing different. We still do the same things, we look at the data, we analyse it, and give our recommendations.
So what is different about an MBA from IIMA?
Now that I have spent 2 years here and am on the verge of graduation, I was stumped by this question and spent some time reflecting on the two years here and how it has changed me. Well in my opinion, the biggest value add that I received from the two years here was more personal than academic. (yes all the assignments and cases and discussions did help me think in a more structured manner)
The rigorous first year is the key I'ed say. When I came here, I had no idea that I was capable of working so hard. Sleep at 2 am and be ready for class at 9am day after day. Nightouts, read 100-200 pages daily. Be prepared with the basics and the class starts assuming you know the basics. Plus couple this with being part of campus activities. When I look back, though the second year has made me a bit lazy, but if it really came to it, I can do it again and it won't scare me.
The two years here have really seen me stretch myself to the limits, and I am much more confident of my abilities than I was before I came here. Learning to manage your time well, so that you can also make time for some other things you like and not get caught up finishing your academic work, increased stress resistance and even higher failure tolerance. Outside of IIMA each one of us was probably amongst the top in our respective colleges, once you come here, you realise that there are others far better than you. First there is denial, then you taste failure, then you decide that its time to work harder and you improve on your past performance. It its things like these that have been the most value add to me, not the thousands of cases we did, yes they did matter, they did help in broadening our outlook, but in my opinion I value the personal growth more.

Command and Control, Why Not?

2008-03-07T03:32:00.000-08:00

“Command and Control,” Why Not!

There is a school of thought that suggests that we should continue with the authoritarian, Command and Control model of leadership for no reason other than there is no alternative.

How can we control an organisations production or service if we are not allowed to specify the parameters within which it works?
After all, we have to tell people what to do or they would never do anything, would they?

We are aware of the flaws inherent in this system of management, strikes, low moral, destructive behaviour, but in the absence of any other way to manage we persevere, flogging this same old dead horse.

But there is a model for non authoritarian leadership, and although the model predates the book it is thoroughly explained in Douglas McGregors work "The Human Side of Enterprise."
Written in 1962.In this book Douglas defines the authoritarian Command and Control model as Theory X management and the non authoritarian model as Theory Y.

In the Theory X model management assume that the workforce are lazy and ignorant, the job of the Theory X manager is therefore to make it so difficult for the workforce not to work that they are forced to do what the manager wants.
The Theory Y manager on the other hand believes that his workforce is intelligent, articulate and imaginative, and above all that they want to do a good job.
The job of the Theory Y manager, instead of telling his workforce what to do, is to create the environment in which they can do their best.

The only way that this can be achieved is by knowing what the workforce actually need in order to do their best, and the only way a manager can do that is to listen to what they want.

Ooops, that is going to be a problem, how can we really listen to what our employees want when we have hundreds or possibly thousands of workers who all need to be heard.

But that is the clue, listening is not a "need" (As defined in Maslows Hierarchy of needs) for the manager.

The manager cannot see any benefit to him or herself that would come from listening to the workforce.
“They have not been to college, I have, why should I listen to them?”
So managers never make much of an effort to listen because they do not feel the need to.

Being heard however is a "need" for the workforce. Being heard gives the workforce the respect that they "need".
It allows them to become engaged and take pride in what they do.
If listening is not a "need" for managers then we have to look for another way for the workforce to be heard, something mechanistic that will not fail because management don't need to do it and therefore will not support it.
Such a system is built and is maintained by the workforce.
It is simple and repeatable; it satisfies their need to be heard without having to rely on management who don’t see why they should listen.It produces practical process improvements whose value can be measured and it makes the workforce feel good about what they do.
Over time management see the measured performance improvements that result from the workforce being heard and then even they start to support the system by asking how they can help.

That last sentence is very important.

In the Nineteen Fifties, Nye Bevan suggested that management for the fledgling National Health Service in the UK should have an “Inverted Pyramid” structure.
He suggested that instead of management being at the top, supported by the rest of the pyramid, the Pyramid should be inverted with management at the bottom supporting the rest of the workforce in their delivery of care to their patients.
This was such a powerful image that few disagreed and the “Inverted Pyramid” model of management became one of the staples of the MBA syllabus.Unfortunately few have ever been able to bring the academic model to life and our management structure remains solidly pyramidal, (Managers at the top and everyone else underneath), despite the consensus with Bevan that it should be the other way up.
Using the workforce maintained system to allow their voices to be heard initially appears to exclude management, this is deliberate and avoids the damage that can be caused by management who lack the “need” to listen and therefore do not.
When the workforce however are being heard and the consequent performance improvement is evident, managers return to the workforce operated system and ask how they can help to support it because they too want to be a part of the improvement.
From being top down driven traditional “Command and Control” managers they have become, in a very short time, Inverted Pyramid Managers who instead of telling the workforce what to do, are asking what they can do to help.

They have developed a “need” to listen to their workforce.

That is a big deal.

Peter A Hunter
Author “Breaking the Mould”
www.breakingthemould.co.uk

WakeUpVibes Blog: Mornings, Music, Coffee & Waking Up » Blog Archive » 19 Waking Quotes About Coffee

2008-02-28T20:31:00.000-08:00

Lovely quotes about coffee!!!!!

A site right after my heart.. :)

WakeUpVibes Blog: Mornings, Music, Coffee & Waking Up » Blog Archive » 19 Waking Quotes About Coffee: "S*"

Tourism Development in India

2008-01-31T03:57:00.001-08:00

Introduction

“Tourism is one of the fastest growing sectors of economic activity” (WTO, 2005). The number of international arrivals shows increasing trend from mere 25 million in 1950 to an estimated 846 million in 2006, corresponding to an average annual growth of 5.4 % (WTO, 2005).

“India is a fascinating country for tourists, with a variegated and rich cultural heritage, religious centres, natural spots, adventure sports, captivating fairs and festivals” (Batra and Kaur, 1996). The major aim of the paper is to highlight the development problems country is facing and would suggest a few strategic recommendations to avoid these hindrances in near future.

Historical, Political and Economic Background

India achieved freedom on 15th August 1947 from British rule. Politically speaking, India is the biggest complete democracy in the world and runs similar system of the parliament having Lok Sabha and Rajya Sabha. Main political parties include Congress party, Bhartiya Janta party and Communist Party of India-Marxist (U.S. Department of State, 2007). The centre politics is run by the ‘Prime Minister’ who is the head of the ruling party. Economically speaking, India is considered to be one of the fastest growing economies after China in the world with the biggest consumer market (Srinivasan, 2006). India is also known as one of the largest manufacturer of the software products and exporting goods. Agriculture has always played a pivotal role in the economic development.

Problem Identification

Although, India is growing politically and economically at a fast pace but there are lots of problems which affect tourism development such as:

1) Terrorism: According to Sahni A, 2001 Lashkar-e-toiba, Jaish-e-mohammad and Hiz-bul-mujahiddeen are three major Islamic terrorist groups, headquartered in Pakistan but have intruded in India.
2) Lack of education and medical treatment (the situation is more sever in rural areas).
3) Increasing environmental problems (pollutants emitted by vehicles and industrial waste).
4) Poverty and hunger (see appendix 1).
5) Unequal distribution of income within the earning society.

People who have responsibilities in Indian tourism industry believe that the major problems faced by them are specifically discussed as:
1) Lack of infrastructure (which includes inadequate air capacity and poor transportation which makes accessibility to tourist destinations difficult).
2) Unavailability of cheaper land.
3) Insufficient trained people in catering (lack of training institutes where expertise is born)
4) Touting and harassment incidents leading to poor visitor experiences (see appendix 2)
5) Un-hygienic conditions and poor maintenance of historical monuments and tourists’ destinations.
6) Natural disasters and changing weather conditions across the globe (see appendix 3).

Despite of these problems, tourism has been playing an important role in the economic and overall development of India. India has an average annual growth of 2.7 % in international arrivals and 5.8 % increase in international tourism receipts.

Tourism Policies

Since India achieves independence, the Five Years Plans (see appendix 4) are catering for India’s growth in different sectors including Tourism. During the 2nd and 3rd five-year-plans, Indian Tourism Development Corporation (ITDC) and Tourism Finance Corporation established by the government of India add another feather to tourism industry in 1966. Upon realizing the importance in the 6th plan (1980), the Central government of India formulated the “National Policy on Tourism” in 1982. Six years later, “National Committee on Tourism” was established to comprehensively develop a steady but fast pace growth in tourism. Altogether 21 National Council for Hotel Management (NCHM) and 14 Food and Craft Institutes (FCI) came up to provide special training in hotel and catering seekers (Sinha, 2000).

The success of tourism objectives and policies can be judged by increasing facts and figures of Indian tourism industry. Foreign exchange earning has gone up by 81% within 5 years since 2000. According to Sinha (2000), domestic tourism has gone up from $64 million in 1990 to $167 million in 1998. Domestic tourism is on the rise with 390 million showing 13% growth in number of trips in 2005.

Recommendations

The recommendations part would highlight responsibilities shared by Indian government and private owners of hotels and tourists spots to promote Indian tourism industry. Some important concerns in the coming future are discussed as follows:
1) Providing better infrastructure in air seating capacity, cheaper accommodation and proper transportation.
2) Promoting heritage tourism by highlighting heritage hotels and historical monuments, developing beaches, water and ice sports, wild life sanctuaries, etc. to promote adventure tourism.
3) Medical tourism is concerned with attracting tourists from those countries where medical treatment is very expensive or of poor quality. India’s attempt to attract foreign tourists with medical needs started in late 2002, for the treatment in India is cheaper and of good quality compared to other developing and developed countries. (Goswami and Chinai, 2007).

Tourism department of India has started taking actions on the above mentioned areas but there is still a need to promote specific areas.

1) Education Tourism attracts students from other countries. Although, there has been a positive response from the neighbouring countries (Pakistan, China, Nepal and Malaysia) but a lot can be done to fascinate students from developed countries (Europe, UK, USA) within certain specified courses where India has edge over them.
2) Social Tourism can be defined as “the relationships and phenomena in the field of tourism resulting from participation in travel by economically weak or otherwise disadvantaged elements of society” (Hall, 2005). In India, it is basically concerned with socialists from other developed countries visiting and helping poor people to have a better standard of living and more meaningful fun-filled life.

Hence, the tourism board needs to bring the above mentioned agendas under there consideration while formulating tourism policies.

Conclusion

Indian tourism has been facing the problem of not getting the effective number of foreign tourists despite extensive marketing efforts. The term ‘India’ is not sending the correct signals to travel enthusiasts across the globe. In spite of upward trend in tourist’s arrivals following the ‘Incredible India’ campaign (Ministry of Tourism, 2006) still India is not preferred as destination image by large number of tourists all over the world. As per the tourism plans discussed above, India is trying to change their general socio-economic tourism to macro-economic levels. Firstly, India few decades ago had a general idea about tourism, which was established further with formation of specialised organizations and later financial institutes supporting tourism. The tourism management is becoming more systematic now. The government needs to make policies comprising of medical, education social tourism and merge with private companies to work towards the common endeavor of achieving tourism development in India.

References

Ayers, R (2000) Tourism as part to development in small states: reflections on Cyprus, International Journal of Social Economic, Vol. 27, No. 2, pp.114-133.

Batra, G.S. and Kaur, N. (1996) New vistas in reducing the conflicts between tourism and the environment: an environmental audit approach, Managerial Auditing Journal, Vol. 11, No. 4, pp. 3-10.

Chinai, R and Goswami, R (2007) Medical visas mark growth of Indian medical tourism, URL: http://www.scielosp.org/scielo.php?pid=S0042-96862007000300004 and script=sci_arttext. [Accessed on 20th October, 2007]

Euromonitor International, (2007) URL: http://www.euromonitor.com/travel-and-tourism-in-india [Accessed on 12th October, 2007]

Hall, C.M. (2005). Governance and state intervention, Tourism: rethinking the social science of mobility, Pearson Education, pp. 152.

Ministry of Tourism (2006) Incredible India Campaign, URL: http://www.incredibleindia.org [Accessed on 23rd October, 2007].

Sahni, A (2001) Major terrorist groups operating in India, URL: http://www.satp.org/satporgtp/ajaisahni/Pink161101.htm [Accessed on 20th October, 2007]

Sinha, A. (2000) Tourism development in India, URL: http://www.pib.nic.in/feature/feyr2000/fmay2000/f080520001.html [Accessed on 12th October, 2007]

Srinivasan, T. N. (2006) China, India and World Economy, Stanford Centre for International Development, Stanford University, Working paper No. 286

U.S. Department of State (2007) Background Note: India, Bureau of South and Central Asian Affairs, URL: http://www.state.gov/r/pa/ei/bgn/3454.htm [Accessed on 21st October, 2007]

Appendices:

1) India has got indexes of 25.73% in 1997 and 25.73% in 2003, which is ranked 96, and is currently ranked 94th, according to the global hunger index 2007.

2) On 12th July 2007, a British couple was mobbed by three youths of Kolkata and was annoyed by the non serious attitude of the police officials. They registered the complaint only after being threatened of going to the higher authorities (Headlines india.com, 2007).

3) Natural disasters: Firstly, when Gujarat was affected by earthquake in January 2001, 13,800 people were killed and 167,000 were injured. Thousands of houses, schools, markets and administrative buildings crumbled (World Bank, 2007). Secondly, all the countries located around the Bay of Bengal were hit by tsunami waves on 26th December 2004 and the states which were severely affected by tsunami in India were Tamil Nadu, Kerala, Andhra Pradesh, Pondicherry and Andaman and Nicober islands. The total population affected due to tsunami was 3,415,000 (Mohanty, 2004).

4) The process of planned economic development started with the launch of first Five year plan in April 1951.The main aims of planning in India are growth, mordernisation, self-reliance and social justice (Surry, 2006). Since 1951, India has completed tenth five year plan (2002-2007) and eleventh five year plan is underway.

Shahrukh Khan and Cricket-The Branding Perspective

2008-01-14T07:55:00.000-08:00

Shahrukh Khan and Cricket-The Branding Perspective

Two brands in the market that carry a personality that is dominating, enlightening and controversial. Let us see what is different between the two. The former lives a reel life and the latter lives a real life. We must remember that there are no retakes on the cricket field. They have to face real people and play their part.

The commonality between two is the hype. A testimony of the same is the huge number of products endorsed by them. Now what is interesting is the relationship between the two. Where do we see them together? And who is it benefiting the most form the brand image.

Platforms

We see them together on television advertisements, TV shows. The most recent show we saw was on Star TV called Chak De Yaara! Where Shahrukh was there entertaining the cricketers and here we saw the cricketers having a great time with the filmstar.

Who benefits the most?

I would say it is the media and advertising agencies.These brands prevail in the market making their presence felt all the time and creating resonating relationships with the customers.

The Impact

A Shahrukh Khan in Chak De India makes hockey a popular sport which had become extinct and a cricketer in an advertisement makes the product popular. But it is important to realize both can have serious and negative influences on the public. Both need to be responsible in any of heir activities as people idolize them.

Please post in your comments on the same topic….

Executive Search Consultants

2008-01-13T12:06:00.000-08:00

Ever wondered why the CEO of this channel is now a part of another one! Ever thought gosh! This chap was Director marketing in this firm till yesterday and today he is promoting another firm.But who routes these people form one company to another.What is the channel they use? Who are the people they consult? This is where the role of an executive search consultant comes.These are niche HR consultancies which hire people for senior management level posts only.The lowest profile people they place are Director,Marketing,etc.But the job is highly confidential keeping the database of candidates extremely secure.

How do these function?

Most of these are family setups running branches across the country with each branch having approximately 20-25 people.What? That is it?Well yes that is true.But then where is the challenge.

High Profile People!

Here is a chance to interact with the top notch people of various companies and getting to learn a lot from them

Getting Across

The people are high profile and getting through them is not an easy task.Making an entry into his office is a challenge in itself

Cracking the deal

Convincing the person to switch his job to another company is a task in itself.That person is happy with his job and you have ot provide him with geat incentives to let him leave his current job and join another company

Research

A lot of research goes into the industry and the company and the candidate's profile.Then a suitable job match is found

How does it all happen?

A client of yours say Pepsi approached you taht they are looking for a Director,HR.The consultancy will start with doing a research on the industry and company and the candidate's profile and then approach the suitable candidate with an offer.Various people will be shortlisted for the same and finally the most appropriate candidate is appointed by the client.

Nation Branding

2008-01-13T11:44:00.000-08:00

Nike!Coca Cola!Google!Apple! Brands prevail in the market making their presence felt all the time and creating resonating relationships with customers.Brands can be products,places,services,etc.Nation branding is a niche subset of place branding.Globalization has led nations to become more integrated and competing with each other for tourists,business,foreign investments or merely for the attention of the media.100% pure New Zealand,Malaysia-Truly Asia,etc are remarkable examples of nations atempting to brand themeselves.However some nations need not explicitly brand themselves due to their popularity like America for power and money,Japan for technology,etc.

Why would a nation brand itself?

1. A nation could brand itself if it has been targeting the wrong audiences.For example targeting a segment with low spending power for tourism.

2. A nation could brand itself if wants to correct a wrongly built image.For instance.India is still known to the world as a land of culture but nothing beyond.It is important to make the people aware of the technological breakthroughs the country has gone through and also that India is the land of spirituality,youth and corporate leaders.

3. A nation could also want to correct a negatively developed image due to wars,etc

Simon Anholt describes the nation brand as the sum of the perceptions of a country and its
people across six dimensions of national assets, characteristics and competence.
Apart from the above mentioned factors some researchers have also identified agriculture as an important parameter to be use din the promotion of the nation.

Elevator Pitch

2008-01-10T02:33:00.000-08:00

Imagine bumping into the CEO or a VC who will fund your next project in an elevator. It takes 30 secs from the elevator to go from the floor you get in to the floor on which you get out. So are you prepared? Do you have your pitch pat down, so that you can if not convince but get the attention of the VC / CEO to your idea? During the managerial communication class we had a tutorial where each student had to make an elevator pitch on a particular situation which was revealed to you just 45 secs before you are due to present and this reminded me of a very smart thing. When I was returning from Amsterdam to Cologne a few months back, in the train, I met this “desi” guy who just came up to us and started talking about how he was a research student at univ X and as a part time he provided other services like courier, arrange for events etc for other desis That’s one interesting thing I observed while in Europe. In India you wouldn’t bother talking to a stranger but there, every brown skinned person is a desi (whether from sri lanka or India or Pakistan ) and you will smile at / greet other desis.. ok I digress…
So this person gives me his card, and on the back side of the card he has a list of the services he provides. This is smart I say. After a month if I were to look at his card, I might not remember where I met him, and who the heck does this card belong to but when I turn it around immediately the context is clear. I don’t remember where I read this or who told me but this was suggested as a very good method for entrepreuners looking for funding. Take your business card and on the back write a short description of your product, main features etc. So the next time you bump into a VC or someone important who can help you in your venture, you give them your card and later they have a way to remember you and your idea later. It didn’t strike me in the train but later when I was planning for my elevator pitch, the application of the idea was blaringly apparent. Nice idea I’ed say, though you would have to be prepared for the chance encounters… but that’s what entrepreneurship is all about isn’t it?

Private Telephone Exchange?? Huh?

2008-01-10T02:14:00.000-08:00

Ya that’s my first reaction when I heard about it. I was just talking with my gym instructor about whether he goes to other gyms as well to teach, how much he is paid and how does he manage with the salary etc. It so happens that the job as a gym instructor is just a hobby that gets him some extra cash. He owns a printing business and a PRIVATE TELEPHONE EXCHANGE.
I don’t know about you guys, but my only memory of a telephone exchange is that of a dilapidated building, with pan chewing babus who think they are doing a big favor even if they let you stand in front of them and listen to you. But those were the days of the monopoly of state owned telephone companies. With the liberalization in the telecom industry and entry of private players this has changed. “So what exactly is this private telephone exchange? How does it work?” I asked him. So here is the model. I will apply for 7 or 8 telephone lines from a private telecom company, Relaince or Tata Indicom for example. Then I will install a “box” which will let me create 150-200 lines. Something like a PBX we have in offices, or some kind of a multiplexing device I guess. Then you give these lines to customers in a local area of say 1-2 km radius. You charge them rental and on a per call basis.
“Is it legal? Do the companies know about it? How do you make money?” I ask.
Well for starters the companies know about it. Each of the 150-200 users gets a proper and unique telephone number from the telecom company itself. Its cheaper for the users because the private exchange guy will charge them lesser rental and lesser call rates than charged by the teleco. “So whats in it for the telecom companies?” One it reduces their investment in terms of infrastructure and marketing since these are borne by the pvt. exchange fellow. It helps them quickly increase the subscriber base. They get a share of the revenue from the pvt exchange. Here is how it works, the teleco will charge rental and call charges to this guy for the 7-8 lines he uses. The teleco will give this guy a better rate say 90p per call as against 1.30p charged to a retail user. This guy will give a rate of Re 1.00 or 1.10 to the user, and half the rental of a normal telephone connection. Even so, contrast full rental of 8 lines vs half rental of 150 lines. The numbers are evident. Since he charges 10p or 20p less than the teleco, users wouldn’t mind going to him. He breaks even and then pays some percentage of profits over and above the breakeven to the teleco.
Sounds like a win-win for all right? So where’s the catch you ask. I did too. “What about the quality of the line?” He assures me that there is no drop in quality, and I would agree with him, cos at the end of the day, the box is just a router, which connects your line to one of the 7 lines. So you might face a problem of delay / line being busy when you call someone or when someone calls you. “Nobody uses the phone all the time, so we have an idea of how many lines we can branch out from a single line without effecting availability or quality” he tells me. Don’t know much about the details of the technology, nor can you be sure that there is no drop in quality, but in the Indian context, I’m sure that people would be willing to sacrifice a bit on the quality if the cost is low enough. Besides in voice communication, a minor loss of quality might not be easily perceptible compared to data where your page loads slower. Doesn’t this model remind you of when broadband first came, and cable modems cost in 5 digits. Your local cable operator would buy a cable modem between 5-10 users and you would get shared broadband.
Interesting isin’t it? The teleco gains cos it gets a higher customer base, quick penetration, share of revenue, lower infrastructure costs. The customer benefits because he pays less with almost the same quality, the exchange fellow benefits because he is able to utilize his infrastructure at high utilization rates, have his own business and earn a decent return on his investment. Sounds too good to be true, the zero sum mentality in me doesn’t let me leave it at a “win-win for all” so looking forward to your suggestion / comments on flaws, problems in this model.

BENCHMARKING

2007-12-30T05:59:00.000-08:00

Courtesy: Professor Satish Ailawadi
( can be contacted at ailawadi24@yahoo.com)

Definitions of benchmarking

(1)“A continuous systematic process for evaluating the products, services and work of organizations that are recognized as representing best practices for the purpose of organizational improvement.”

(2)“ A continuous search for, and application of , significantly better practices that lead to superior competitive performance.”

(3)“A disciplined process that begins with a thorough search to identify best-practice-organizations, continues with the careful study of one’s own practices and performance, progresses through systematic site visits and interviews, and concludes with an analysis of results, development of recommendations and implementation”.

(4) “Benchmarking is an external focus on internal activities, functions, or operations in order to achieve continuous improvement.”

(5) “Benchmarking is systematic and continuous measurement process – a process of continuously measuring and comparing an organizations business processes against process leaders anywhere in the world to gain information which will help the organizations to take action to improve performance.”

Why Benchmarking ?

•Successful companies in every industry engage in a variety of practices, which lead to achievement of high level of performance.

•Benchmarking has become one of the most important tools of business management in corporate that attempts to gain and maintain competitive advantage.

•The central essence of benchmarking is about learning how to improve business activity, processes, and management.

The Benchmarking Process

•Benchmarking involves looking outside a particular business, organization, industry, region or country to examine how others achieve their performance levels and to understand the processes they use.

•Thus, benchmarking helps explain the processes behind excellent performance.When lessons learnt from benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organization or in key areas of the business environment

Types of Benchmarking

Supply Chain in Diwali - Ops funda!

2007-12-12T10:39:00.000-08:00

Oye, to all.... here's my take on Diwali :) yenjoy.... learn Ops fundas aswell !!!

Give and Take - Inventory Management Mom Style!!!

Operations Managament is the essence of life. It's all encompassing as well as it permeates everything! Take for instance this mail. The inputs are my weird thoughts, the output is the mail and the process of typing it, the value add ---------- yeah right :)!!!!

Diwali - the festival of light, is also the season where Mom's all across the globe face up to the big challenge of Inventory control. It's the time for the deluge, the give and take and the smooth maneuvering of gifts from one hand to the other.

Take my home for example. In Diwali, my Kitchen plays the role of a warehouse and MOM the part of the Inventory controller. Her job is not only to procure - gifts for people; but also find the right suitors for the parcels that are received from other people! Its not as simple as it sounds.

The thing about Gifts (mostly sweets and things to eat) is that , you need to do an ABC analysis of the inventory at all times and match the inflow value with the outflow value. If the outgoing value to the source is not atleast approximately equal to the incoming one from that source, it leads to supplier dissatisfaction. Whereas, if the outgoing value is greater than the incoming one, it leads to dissatisfaction of the inventory manager - my MOM .

The second challenge lies in the fact that at all times, the average space utilization of the gifts kept in the kitchen remains the same. So no matter how much MOM tries, the replenishment is always ready. Whenever she is absolutely ecstatic that the final gift was delivered, fresh stock arrives uninvited, with the additional burden of replenishing stock of equal value in order to send a return gift.

The third challenge is how to minimize the spend on gifts, by tactfully directing gift from A to Z and B to H and J to R and so on. At all times, the value of the interaction i.e. A to Home and Home to A should remain approximately equal. And its no easy task, mind it! MOM's through years of experience - recieve, evaluate, procure, inspect, handle, store and deliver gifts with such precision that each and every relationship becomes stronger and not one person is dissatified. It becomes almost second nature, involuntary to them. The challenge also lies in inspecting the gift, without spoiling the wrapper , in order to ensure that the gift has not been customised and codified to our name!

Also, the biggest challenge lies in the security of this inventory from a certain "ME" who has his eyes on the stock at all times. Pilferage - being a threat, stock counting is done twice a day and as it is inevitable, fresh order is placed in order to reach the minumum stock level, to prevent loss of dignity!!! The quantity ordered is instinctively calculated at "Economical" Order Quantities!!!

Finally, having a huge closing stock also creates health hazards for "ME" - because I generally recycle everything by eating it !! I generally END PRODUCT, i.e. I generally make "Finished product" a reality - I finish it alright !!! So the challenge is to have minimal to zero inventory at end of season. At this time, the tit-for-tat theory goes for a toss, and generosity comes to the fore. Even though obsolescence of stock is impossible (thanks to ME) , the stock is handed out in charity to the underprivileged. Not that I am complaining, but one person that is not satisfied is me :) Insatiable is my Nick name anyways.

If you come to think of it, JIT, lean supply chain -minimizing waste are fundas that are so astutely used during Diwali, the festival of light. Salute to MOM's and at some places Dads who manage this festival of give and take with such aplomb. As for my Mom, as I said, she has an addtional task at hand during this season, because for me personally - Diwali isn't the festival of " LIGHT ", my funda is Diwali - the festival of getting "HEAVY " :) hehehehehehehehe. So, a salute to her :)

Fundamentor...

Why I like the IIMA style of learning

2007-12-03T05:40:00.001-08:00

Here at the Univ of Koeln, as a part of my course I am doing what is called a Business Project with a leading German company (to avoid any issues later let me call it Company C). It is a live consulting assignment where C wants to evaluate the strategy it adopts for process P and evaluate whether the money spent on department D (which is a profit center) is worth it. Now the structure of the team is such that there is an academician (lets call him Mr X), who on the behalf of the prof has to act like a guide and there is a representative from C who liaisons with us on behalf of C. As is evident, the grades we get will be governed by what the TA thinks of our work and whether C is happy or not depends on the results we give them. Now the nature of the problem is that, the German system is a bit skewed in the sense that when you submit a report or use something you have to support it with adequate literature. The attitude is “I am not a researcher; some researcher has done work and shown that this works so I will use his/her work”. The work we do for C is consulting and hence there are so many things which work in the principle of prototyping. You collect data from the company, study it, make a hypothesis, and decide whether the results support your data. Now for work like this the probability that someone else has done exactly the same thing is very less because each company is different. And here is the fun part. Company C is happy with us because we are on the right track and am giving them useful insights, but Mr X is not because we don’t have literature to support what we are doing. Cost-benefit analysis is a tool that has been used since ages, asking me to find some thesis paper or literature where cost-benefit analysis has been used is like asking me to give supporting literature to show that 2 + 2 = 4. If some company is spending money on A and wants to see whether the benefits B it gets are commensurate logically implies that some kind of cost benefit analysis needs to be done. And Mr X simply wouldn’t understand. It’s so frustrating. Let’s hope that this person is an exception and not a representative sample.

Now contrast this with the way we study at IIMA. Whenever we use someone else’s work we have to reference it. Even if it is just a few words and there is a strict checking of whether what we write is copied from somewhere. You can borrow ideas, give credit to the person and use it to suit your needs. There is credit given to application of the theory and commonsense logic above all ! Infact, this strictness has somehow ingrained in most of us a quality where none of us would even inadvertently use work directly from the net. We research, we read, we google, we search, then we understand, we digest it, we apply it and then produce the output. So no matter what we do, whether its some case we are solving, some assignment or some project report, unless there is something we put of our own, we don’t feel we have done something worthwhile. Contrast this with the pedantic approach of Mr X. This is not the only example. There are few more cases. Profs insisting that you learn definitions by rote, if a model has x components that you should name the x components in the order in which the original author of the model has mentioned it, in your thesis paper you have to have a bibliography with atleast 15-20 references to well known journals…. Well what do I say, the freedom that the system gives, which I mentioned in my previous post, is more or less nullified by such approach to learning. But as they say, you gain some, you loose some.

DEPRECIATING VALUE OF THE DOLLAR AND THE GATES THAT IT IS OPENING

2007-11-29T08:46:00.000-08:00

This article has been written by Sudeep Bhargava of Globaladroit (www.globaladroit.com)

The depreciating value of dollar in comparison to the major currencies across the globe is a matter of great discussion. Indian software industries and the exporters are feeling the pressure because of the depreciating value.

The value of dollar which was as high as 49.5 rupees per dollar a few years ago, has now come down to around 39.5 rupees per dollar. This marks over 18% degradation in the value.

Is this some way a boon for the Indian business system? I feel YES. I firmly believe that this is an opportunity which has been bestowed to the Indian business to INNOVATE. This is time to rethink about the current business models that are being followed.

This gives an opportunity to look into your business models and shell off the “non value adding” steps which are unnecessarily eating into your operational costs. In other worlds, this could be the time to go “lean”. Applying simple lean principles can give the Indian industry the competitive edge that they badly want to be competitive in the world market.

Improving the “way you work” and not only the quality of the final product or service would see the Indian business develop the competitive advantage. Probably there is no better time than this to apply the principles of Six Sigma and Lean which have given excellent results to the Fortune 500 companies.

One key question to ask is how to develop other sources of competitive advantage, such as building high-level capabilities which cannot easily be replicated by competitors, or how to change the mix of activities carried out in India versus other countries.

In order to do this, we will have to change their mindset: We will have to stop thinking of themselves as Indian companies and think more like global companies of Indian origin.
Indian companies will need to analyze their portfolio of costs and move production to where it makes the best economic sense. Already, the Indian IT firms are trying to address rising wage costs by moving production within India to lower cost regions like Kolkata or Bhubaneswar and to Tier-II and Tier-III towns.

The challenge that the Indian economy faces is not that of an economic bubble burst but of moving on to the next growth trajectory and economic development. Going by the model proposed by Porter, India has to embark on a journey that needs sowing the seeds for catapulting India into an innovation driven economy unique value.

India will have to definitely accelerate its reform processes and start working to become an innovation driven economy, as that would determine whether the country would become a developed nation by the year 2020. The focus should be on building processes that would be driven by innovation; this would make the economy resistant to external shocks and vagaries of economic cycles and currency fluctuations.

The bottom line is, our policies should concentrate on enhancing our capability in manufacturing, promote entrepreneurship, and provide incentives for innovation.

A comparison: German vs. Indian way of education.

2007-11-12T17:23:00.001-08:00

Before I get into any details; a disclaimer: This post is based solely on my observations while at the University of Köln on exchange and has by no means any scientific basis. So please treat it accordingly. So here goes.

Well the system here is on the other end of the system compared to what we have back at IIMA. Here first of all the Bachelor, Master system and hence have no strict conditions about time limits for finishing the degree, unlike us where there is the usual 4 yrs and 2 yrs. (Though they are now converting to the bachelor and master system to ensure universal acceptability of the degrees) The advantage of their old system was that you could take longer than required and interspaced your terms with as many internships as you wished. I know of people who have 4 or 5 internships before they graduate. This not only helps you to fund your own education, but also get a first hand feel of what you are learning. This coupled with the very open system of courses makes it a potent combination for exploring your career and likes. There is no restriction on the courses you take. A person registered for economics can also take courses in the political science stream or philosophy without anyone questioning him/her. And along the same lines, the responsibility of completing the required courses and credits lies solely with the students themselves. Contrast this with the very fixed and structured system we have back home where everything has been pre-decided based on the stream you choose. If you want to become a electronics engineer, you take courses A, B, C, D and if you want to become a CA you take courses X, Y, Z; but what if I don’t know whether I want to be a CA or an engineer? Well I guess this has something to do with our societal structure and income levels as well where there is not enough time or money with everyone to experiment with their life to see what it is that suits them. Not that either way is better but they are two very distinct ways one more exploratory the other more structured and well planned, pre-decided based on the basic skills essential for one to work as a particular profession.

So on one end you have a prescribed guide book. Learn this much and you will be an engineer, the other is more research oriented. Look at the way the courses are structured. Here though there is classroom teaching and the number of contact hours in class are very less compared to India but the amount of time you spend on your own independent study are comparatively higher. Most courses require you to write a thesis / seminar paper where the more research you do , the more thinking you put in the better grades you get. This system is designed to cater to innovation and creativity. Contrast this with a system where you have a lot of classroom teaching with an even larger number of practice assignments. This may not be the case but in my opinion this system is more designed to produce mass engineers who can do what they are taught to do, well mechanically within the predefined frameworks they have learnt and mastered. Though there will always be some who are really good. Recently there was a lot of talk about outsourcing etc where the developed nations spoke about how the developing countries like India and China are poor at innovation and that the best they can do is take away jobs that the mechanical and thus free up the people there to work on innovation and new products etc. Well, it might not be completely wrong either. Look at the professors here. At least at the Univ of Köln, the only time you are called a professor is when you get “a chair” i.e. when someone sponsors you at the University for “Life”. Thus you have guarantee of tenure, lot of freedom to pursue your own research, structure and decide how many and what courses you want to offer etc. At the same time, the fact that you need to have a PhD, need to have published X number of papers in international journals etc makes it very difficult for any lecturer to get a chair. Once you are a full tenured professor, you have your own library, lots of research assistants who are doing their research under you, who help you with not just the administrative work of your courses. So in effect each professor is more like an independent school in himself in a manner of speaking and students go and check the professor’s website for what courses he is offering and register for them etc. They you also inform the univ that you will be taking the exam for the particular course. Also there are very few courses that have “restrictions” on the number of people who can take the course. Their logic is, if someone is interested why stop someone from taking it. (in contrast to back home where people have to bid for courses) I have seen classrooms that are as huge as an auditorium used for lectures and are full. And in a way, since the education system is more geared towards research and less of classroom teaching the student professor ratio though important is not a limiting factor.

I am not saying that one system is better than the other. One is well suited to developing the required skill sets to pursue a decided profession in the shortest possible time and the other is more suited to exploring what you want to do but at the expense of time. Both have their pros and cons but that is for another post :P

Applying Newton’s Laws to NPD - II

2007-10-31T06:43:00.000-07:00

In the November issue article we saw how the Newton’s laws of motion can be applied to new product development Ref November issue “Applying Newton’s Laws to New Product Development (NPD)”. This article will deal with the detailed analysis of each component and will provide the mathematical correlation between the two conjectures.

In Newtonian mechanics you have to be in one reference plane so that all the activities like motion, acceleration etc can be defined with respect to it. Similarly, while doing the analysis of NPD we will use two reference planes i.e. Company’s reference plane and Customer’s reference plane. By the reference plane I mean the way things are professed and the way it is conceptualized. As the reference plane changes from the customer point of view to company point of view, there is tremendous change in perception and hence aligning the reference planes becomes a gargantuan task. Even though it’s a difficult task, if done successfully it would prove to be immensely beneficial to the company and the customer.

In the first law we saw that “The customer will remain at rest or in other words not buy your product or will buy the bare minimum of products from you unless he is applied by the intangible force of Value addition”.

To move a football at rest, someone must kick it and to throw a stone upwards, one has to give it an upward thrust. Clearly, some external agent is needed to provide force to move a body from rest. Hence to increase the consumption of the product the companies also have to apply intangible force in terms of value addition.

Let us see what the value from the customer point of view is. Value to the customer is the worth in terms of technical, economic, service and social benefits a customer receives in exchange for the price he pays for an offering. Hence
Value = f (technical, economic, service, social benefits) …….. (1)
i.e. the value is the function of these four major components and is directly proportional to each components. Value is considered as the vector quantity as it has both magnitude and direction as the perception of value for customer is different and that of company is different, with respect to the reference planes discussed. Hence the first law states that if the Value addition is done through the change in any four components of equation (1) the customer will increase the consumption of that product. Value can be considered as the Force in that of Newtonian mechanics:
Force = Value
F = V…………………………..………………..... (2)

In the second law we saw that “The frequency of purchase of your product is directly proportional to the number of problems that the product solves for the customer.”
In Newtonian mechanics
Force = mass * acceleration
F = m * a………………………………………… (3)
Mass and acceleration are the factors, which define how fast the body will move and are directly proportional to the force applied on it. If same force were applied to a heavier body and the lighter body, then the lighter body tends to accelerates faster than that of heavier body.

The Mass can be correlated to the “Mindset Rigidity” of the customer. Changing the perception of a customer is a very difficult task. Due to this impenetrability it becomes all the more essential to look at techniques like change management, newer promotion strategies, influential brand ambassadors etc. But this discussion is beyond the scope of this paper we consider, but Mass in Newtonian mechanics can be regard as equal to Mindset rigidity of the customer. Hence,
Mass = Mindset Rigidity
m = MR……………………………………….… (4)

Higher the mass, higher force is required to move the body. Similarly grueling the rigidity of the mind of the customer, higher force is required in terms of perceived value addition to influence his buying decisions.

Acceleration of the equation (3) can be correlated to the frequency of purchase of the product.
Hence,
Acceleration = Frequency of Purchase
a = FP…………………………………………… (5)
or, Value = Mindset Rigidity * Frequency of Purchase ……………….from (1,2,3,4,5)
V = MR * FP
FP = V/MR
i.e. Frequency of Purchase = f (technical, economic, service, social benefits) / Mindset rigidity
The above equation shows that Frequency of purchase is directly proportional to the value and inversely proportional to the Mindset rigidity.
i.e FP α V
and FP α 1/ MR
Above equations implies that there are two ways to increase the consumption of the product offered by company. The company can provide more value to the customers in terms of the technical, economic, service and social benefits or they can influence the purchasing decision of the customer by changing their mindset rigidity.

In the third law we saw that “For every action of a company on the product front it has an equal and opposite reaction from its consumers”
This can be understood by considering the following fig.

The Value provided by the company is in terms of usage benefits to the customer, his need accomplishment etc and is like force (Va) acting on the product. The product is similar to an object under the Newtonian mechanics. The Value forgone by the customer is the money what he is paying to buy that product and this is also a force (Vc), which is acting on the product but is in opposite direction of (Va). The customer is bound to think, whether he should buy this product or can do without it? If the Va is greater than the Vc then the customer buys the product i.e. the product moves from company’s hand to the customers hand, else the product lies with the company only.

Assessing and truly understanding value in business markets is the stepping-stone to increasing profitability. Hence gauging and communicating what your products and services are worth to customers are very essential for a company’s success. Finally the customers when deciding to buy the product for use, compares the differential gain i.e. the difference between the value and price. The customer would buy the product when the perceived value is greater than the price. For attaining and retaining loyal customers every company should provide a differential gain greater than that given by the competitors.

i.e. (Value – Price)Company > (Value – Price)Competitors for customers to buy your product.
This can be done by providing same value to customer at lower price or providing more value at same price. Rarely does the price and value change at the same time.

When company looks at coming out with tons of new products, it has to check whether the value it is providing is more than the price. But many a times companies make a mistake in judging the perceived value, as company and customer are in different planes. Hence company should carry out pilot surveys and price the new product according to the perceived value. Once this is done, an intangible force works on the customer and the company makes headway in bending the rigidity of the customer. But this is not a one-time fix, the company should constantly gauge the competition and the changing perceptions of the customer and come up with newer deals – i.e. provide higher value at same price or same value at lower price.

Newton had the feeling of “Eureka”, when the apple fell on his head; it was an external stimuli. Similarly a company should keep throwing apples i.e. value at the customer, so that they also get a feeling of “Eureka” and keep buying the product.