Saturday, January 17, 2009

Carrefour, Target, Metro, Tesco and others are right on the heels of Walmart, threatening its dominance as the number one retailer in the world


Circa 1988: Walton gave up his post of CEO of Walmart but remained on the board as Chairman until his death (1992). Walton created a great business out of the idea that came from a barber, Herb Gibson, “Buy it low, stack it high, and sell it cheap.”

Cut to the present: Walmart is still the number one retailer in the world and has recently undergone a brand makeover. It’s new logo has the ‘hy phen’ missing and Walmart is one word! But is this something new? Not if we tell you that Walmart has done this several times before! What is however unique here is the idea of remodelling the existent Walmart stores. During the year, the company has promised that it would remodel 350 stores in US. And if this excites you, Eduardo Castro-Wright, President & CEO of the U.S. stores division has some better news for you. “The number of remodelled stores could double to about 700 each of the following two years,” he claims. Indeed, Walmart had banked on the low-cost factor for a truly long time, and had ignored the essence of marketing and in-store experience and appeal to its consumers. Agrees Susan Rider, President, Rider & Associates, “Sam Walton was an example of a businessman that cared to provide a low cost product so that people could afford a better way to live. I believe that is still the mantra for Wal-mart but when you have thousands of managers and executives, the concept may get lost...”

However, senior officials at Walmart continue believing in the low-cost model, so much so that they have even extended their private label portfolio to combat shrinking margins. But somehow, Walmart’s image (after all the legal suits) is getting tarnished by the day, even when it comes to the quality of the cheap products it sells. “Most of this ‘cheap’ inventory comes from overseas and has tarnished Walmart’s reputation of providing quality items,” affirms Doron Levy, President, Captus Business Consulting who further recommends the importance of ‘minimum’ quality focus for Walmart’s brand longevity.

As Sam Walton notes in his autobiography Made in America, “Walmart wouldn’t be what it is today without a host of fine competition, most especially Harry Cunningham of Kmart, who really designed the first discount store, and who in my opinion, should be remembered as one of the leading retailers of all time.” But Lee Scott, current CEO of Walmart wouldn’t want to use such positively expressive words for his competitors... Why you ask? During the past few years, Target, Metro, Carrefour and Tesco have emerged as the ‘new-age’ retail giants globally. To talk about US alone, Target is the one giving nightmares to Walmart as a recent Global Markets Survey by Citigroup on the latest shopping trends illustrates that Target’s prices are only 3% higher than that of Walmart’s on an average. The report further went on to warn that the reported in-store experience of Target was far better than that of Walmart’s. As Nikki Baird, Managing Partner, RSR Research remarks, “It took competing retailers longer than it should have to realise they couldn’t compete with Walmart on price. Customer-centric strategies have emerged very much as a response to Walmart. Today the retailers say that: if I can’t beat Walmart on price, then I’m going to change the basis of competition.” Really, Walmart has to move beyond the myopia of keeping its faith tucked in the blanket of just low prices!

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Source : IIPM Editorial, 2008

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

Wednesday, January 07, 2009

Ramalinga Raju has grown satyam into a billion dollar enterprise by betting on encouraging entrepreneurs within his firm...or so he says!


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When 4Ps B&M caught up with Rama Raju, CEO, Satyam Computer Services Ltd. and asked him about how Satyam plans to be among the Big 3 rather than the Big 4, he strongly asserted that investments in leadership will be a key differentiator for Satyam. Indeed, leadership in itself can be a very important barometer of the company. The trends with regard to CEO succession for the top IT giants in India do make for quite an interesting comparison. The Tatas seem to have an immensely unshakeable faith in S. Ramodarai, who has been CEO for over the past 12 years. The Infosys CEO baton, in contrast, has passed from Narayana Murthy to Nandan Nilekani in 2002 and then to Kris Gopalakrishnan in 2007; which has been hailed as an outcome of outstanding succession planning. As far as Wipro is concerned, the less said the better about CEOS. Azim Premji had famously quoted in 2005, “Wipro doesn’t need a CEO!” Nevertheless, the company is now following a unique joint CEO structure, with Girish S. Paranjpe and Suresh Vaswani at the helm since early 2008.

Which brings us back to Satyam, and also back to Rama Raju, who, besides being the brother of the iconic Chairman Ramalinga Raju, has been the MD of the company since 1996 and CEO since 2005 (there was no CEO designation at Satyam before that, as company officials tell us). If we go by first impression, also considering how Ramalinga Raju is the most visible face since inception; it appears that Satyam is a case where ownership and management are one.

Do note, however, that we used the word ‘appears’. On the contrary, within Satyam, a powerful entourage of leaders is being created as we speak, who, the company claims, will enable it to make the next big leap soon. Rama Raju tells us that distributed leadership and minimal bureaucracy are the key aspects that Satyam is focussing on. He says the company has “some 2000 value creating entities and 800-900 projects for a few hundred customer relationships.” Furthermore, he says that even as far as succession planning goes, he has people in mind, though he did not wish to name them, who could take up his position when he retires in another 10 years. If we look at the senior management, there are a number of knights in Raju’s army who, though they are not so well talked about, are actually quite ‘mission critical’ to Satyam’s hitherto elusive ‘Big three goal’.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, January 02, 2009

With elections ‘09 looming, India’s politicians are also gearing up for the kill.


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Back home, you only have to flashback to December 2007 to see how the political marketing fever has seized India’s once dogmatic and rhetoric-oriented netas. The Gujarat election campaigning was at its peak that time, and political supporters of firebrand BJP leader Narendra Modi thronged election rallies wearing slickly designed Modi masks, which added the hysteria value to the overall brand Modi. Reminiscent of the successive Reagan, Carter, Clinton, Bush and now Obama masks that have defined US election campaigns for decades, the made-in-China Modi masks were conceived by Modi’s campaign managers.

40-year old fine-arts professional, Manish Bardia, who designed the Modi mask still remains in awe of the CM’s understanding of media. “The masks were a small part of the Modi campaign, which started at least a year before elections. Whatever the government did - however small - was communicated via media,” says Bardia. Incidentally, 20-days prior to the election, Bardia was asked by Modi’s team to design the website - Gujarat Gaurav Fan Club, on lines of Clinton and Obama’s websites. “It was to tap the NRI Gujarati base and youngsters in the state,” explains Bardia. The website was a hit with target audiences, registering almost 15 lakh hits in 20 days and visible across Facebook and Orkut.

Strangely though, while Modi’s over-the-top image makeover, backed by a pro-communication & technology strategy was lapped up by Gujarati voters recently; BJP’s similar national strategy did not cut much ice with the electorate when the nation went to polls in 2004. BJPs $20 million India Shining campaign hogged TV spots and print media at the time. Conceived by ad agency Grey Worldwide, the advertising zing was combined with top-of-the-line online presence, bulk e-mail, blogs, posters and India Shining rhetoric during election rallies. Political watchers were convinced that the slogan and its accompanying promise would win the day for BJP. But when election results came in, the saffron party crumbled. Some grudgingly even admitted that what works for the US does not necessarily work in India.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
Now IIPM's World-Class Education... for everybody!!
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...