Moving beyond the Indian Diaspora

Shah Rukh Khan and his best pal Karan Johar aka KJ have just entered a joint venture with Fox tra Studios to finance and distribute one of their biggest projects so far – ‘My name is Khan’. While Fox Star Studios will distribute the movie in Asia, its subsidiaries, Fox Searchlight Pictures and Twentieth Century Fox, will dole it out in the US and the rest of the world. And if the grapevine is to be believed, the deal, which is pegged to be one of the biggest for an Indian film, is worth about Rs.100-120 crore. This certainly sounds extraordinary, but then, the question is – Is there really a market for an Indian film beyond desi diaspora? And when we say Indian, we mean a film about India, made by an Indian, featuring Indian stars. “After meeting with Karan and Shah Rukh, and hearing their vision for this film, I was deeply affected by this story and I feel that it will touch moviegoers around the world. With Shah Rukh’s global popularity coupled with Karan’s commercial sensibilities, ‘My Name is Khan’ will sure be a global hit,” avers Jim Gianopulos, Chairman, Fox Filmed Entertainment. No doubt, in the last couple of years, brand ‘India’ has become a global phenomena, particularly in the media & entertainment space, be it TV or movies. But then, this is the first time that an Indian movie will be launched globally at such a massive scale and that too beyond the Indian diaspora. So, is King Khan ready for the real test? “Of course he is,” his fans voice together!

Pallavi Srivastava

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Source : IIPM Editorial, 2010.

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

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600 down! More to go?

Starbucks’ expansion has presumably backfired; so the coffee king has put in place a new plan of action. But why will this work better than before?

It’s a classic problem of plenty. If you had limited money and if you had to invest in either expanding retail outlets or maintaining/improving quality in current outlets (with each choice being mutually exclusive of the other), which one would you have chosen in the current times of economic slowdown? One line of thought would say that people don’t stop drinking coffee even when there is slowdown, so it’s better to expand. Another line of thought would say that people would surely stop drinking coffee during economic slowdown ‘if’ the coffee was a premium (relatively) high priced brand; and therefore the focus should then be on consolidating current customers, improving and maintaining quality rather than on expansion.

The $10 billion turnover Seattle based Starbucks, the world’s largest coffee chain, went in for the former; that is, expanded. But more interestingly, in their expansion drive, they adopted a mixed positioning strategy (that is, they positioned Starbucks as a coffee for masses, yet tried to hold on to their premium positioning). The result? It was forced to shut down 600 stores across the globe – a hefty number considering that Starbucks has 16,000 plus stores globally. While the share price was at a high of close to $17 a year back on Nasdaq, it fell rapidly to the $7-8 range by the first quarter of this year.

Starbucks, because of a focus on expansion rather than delivering a quality coffee product, ended up in a situation where the brand was definitely available to a wider consumer group; but because of the premium price, it was still not affordable to everyone,” explains Elizabeth Higgins, Consumer Foodservice Industry Manager, Euromonitor International. But all was not lost; as Starbucks perchance realised the mistake and immediately started correcting the positioning back to a premium one. To that effect, the coffee king has taken in many measures. For example, Starbucks is planning to roll out coffee in small quantities and also is adding items such as wine and beer to its menu for evening visitors. Apart from this, it also plans to offer live entertainment to its customers by way of movie screenings, live music, dance, community theatre, et al. “Their recent [changed] focus on the product should help them win back consumers that were turned off previously by the quality or service,” adds Higgins.

However, the challenge that lies ahead of it is that if Starbucks wishes each one of its stores to be on the same pattern, it may have to shut down some more stores, especially those in areas where consumer segments are not interested in spending more for coffee. What has been the current result? Net revenues for the quarter gone by (Apr-Jun 09) fell 6.6% to $2.40 billion from $2.57 billion in the same quarter previous year, more because of outlets being closed down. What about profit? For the quarter in question, Starbucks got in $151.5 million as net profit. This is considerable, as last year same quarter they had a huge loss of $6.7 million. So are things looking up? Well, the share price has already crossed 52 week high barrier of $17 in Jul-Aug 2009...

Savreen Gadhoke

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Source : IIPM Editorial, 2010.

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

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All roads lead to... !

Government’s new found love for private enterprises seems to be finally taking shape in the form of PPPs. No doubt, they are the only way forward for the Indian economy towards growth at present, but then, there are areas which need immediate attention, if the government doesn’t want to hit a road block, feels Niharika Patra

What can be more surprising to a person, who is visiting India after a long time, than a host of long and shimmering roads, swanky buildings and above all, a sudden increase in the quality of basic amenities provided by the government. After all, it’s a never-seen-before India for him!

All thanks to the government’s new found love for private business houses, an impressive combination of public projects and private money is finally making India a place to be. Though, one cannot disagree that the results have been few and far, but the good thing is that the whole concept of mixed economy is finally coming up with the combination, which is certainly making the idea click.

In fact, public-private partnership (PPP) is that one thing which can make India rub its shoulders with the dragon nation, when it comes to world-class infrastructure coupled with the much needed push for the Indian economy. Agrees M. Y. Reddy, Committee Head, Infrastructure, FICCI, “Applying PPP model to the infrastructure is what can give the sector the necessary boost that it wants as of now.”

Though the idea is not new for the Indian policy makers, PPPs have been utilised to a greater extent only during the last decade or so (and that have been mostly limited to roads, airports, ports, bridges, et al). However, the recent announcements made by Finance Minister, Pranab Mukherjee, to provide infrastructure sector the much needed push, through clearing of pending PPP projects, would surely open new doors, not only for the private sector, but will also make projects like that under National Highways Authority of India (NHAI, which requires 60 highways to be built across India with an upward investment of Rs.70,000 crore) get going once again.

Even steel, ports and the Railways have been waiting for long for some big programme implementations under PPP. In fact, a latest report by BNP Paribas shows that the Railways alone provides for an investment opportunity close to a whopping Rs.2.7 lakh crore in the next eight years. Of the whole corpus, an investment of Rs.68,000 crore is alone needed by the Dedicated Freight Corridor, which covers 2,800 kms of rail corridor across seven states of India.

But then, that’s not all. Poverty eradication and social reforms too are reaching ground levels and this is where the PPP model is eying for a big opportunity. In fact, Food Security Bill, which talks about providing grains to the poor at Rs.3, can do wonders coupled with a proper distribution system. For instance, the use of Smart Cards (for the distribution of food grains), the latest innovative step that allows the holder to check the status of their application and stock while facilitating easier and more transparent distribution of stocks, provides huge business opportunity to Smart Card producers, who have been eagerly waiting to tap the huge potential in the public sector. The initiative (which has already tasted success in National Health Insurance Scheme) can be seen as a win-win solution for both the government as well as private players. Avers S. Kumarswamy, Chairman, Agrochemicals Promotion Group, “Public distribution has been a problem not only for the BPL families, but also for the ingredient suppliers of fertilisers and seeds because of the rampant corruption.” Certainly, Smart Cards would to a great extent also help in removing that devastating loophole.

Education too, has seen PPPs mushrooming up. The latest plans of Education Minister Kapil Sibal to make vocational training more accessible indicate a bright future for PPP based ventures in up-gradation of ITIs. Till now 171 ITIs have already been identified by the government for upgradation under PPP basis. If implemented in a proper manner it has the potential to transform the education system in the country.

But then, PPPs don’t come without hiccups. While PPPs are proving to be a good means of turning out quality projects, there are long-term troubles attached to the model. The first and foremost is the time. While the tenders are given with a time-frame attached to them, the projects, most of the times, don’t end up on time. Raison d’être: the regulatory loopholes. Price too contributes heavily at times to such conflicts.

For instance, even with PPPs in line, power is one sector that has seen conflicts between the parties, both at the cost and price front. In fact, coming to a fair price agreement is the biggest hurdle in effective use of PPP model. “For augmenting investment, it is critically important to move from fixed rates to market determined rates,” agrees T. N. Thakur, Chairman, Power Trading Corporation.

Moreover, the number of PPPs on the social infrastructure front is also too small at present. In fact, it’s the current policy environment in the country that is discouraging private players from lending in their hands to the government for such projects. Further, wherever a PPP model exists, it’s mostly an Indian company doing the Tango with the government. The contribution from foreign players’ is almost missing.

“Decentralisation of power and quick decision making is what will make the PPP model click in India. Further, it’s important that empowered monitoring mechanisms are put in place so that all such projects are implemented in a time bound and phased manner,” Satish Bagrodia, President, PHDCCI tries to suggest a solution to the problem.

No doubt, in order to make the elephant dance, both private and public players have to dance together too. After all, it takes two to tango, they say! But then, the harmony somehow seems missing as of now and that is certainly not a good sign. If you don’t believe us, ask a dance instructor!

Niharika Patra

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

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

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How the hand Rocked the Lotus, Elephant, Bicycle, Lantern...

Management guru Arindam Chaudhuri’s latest blockbuster book, Discover The Diamond In You

The revamp of the 124-year-old party and brand continues. Says Santosh Desai, CEO of Future Brands, “Congress as a party has understood that Indian elections are the largest marketing exercise in the world and that inclusive growth can be the best USP of the Congress brand.” But, inclusive growth does not mean literally going back to the villages embracing the old dogmas of socialism. The appointment of Nandan Nilekani as the head of the Unique Identification Authority with the rank of a Cabinet Minister sends out another powerful message about the new brand Congress – talent is welcome, even if it is from the private sector. If and when Nandan Nilekani succeeds in his mission, the Congress would have used a private sector entrepreneur to execute one of the most critical ‘public’ tasks. Tamper proof I cards can ensure the poor actually get the benefits from social welfare schemes. And if money meant for the poor actually manages to reach the poor, brand Congress would have nurtured a massive base of loyal consumers (Voters). There are twin benefits of this ‘private-public strategy, according to Congress insiders. Having Nandan Nilekani lead this mammoth task will be a big hit with the Gen Next that idolises successful and ‘ethical’ entrepreneurs like Nilekani and looks up to them as role models. Then again, Nilekani’s success means more than 400 million rural consumers will have a solid reason to choose Congress over other brands.

This unabashed and unapologetic ‘coupling’ of Brand Congress with the aam aadmi can be seen even in the Budget presented by Finance Minister Pranab Mukherjee. He has simply junked the old – and insidious – habit of finance ministers of doling out largesse to corporate titans and Dalal Street while paying lip service to the poor. This Pranab budget is all about rural India, about farmers and about poor Indians everywhere. And more importantly, the Budget has not taken any step to take the Indian economy back to the bad old days of crony ‘socialism’. This aam aadmi socialism yes; but of a kind where entrepreneurs and wealth creators will have a key role to play. Senior Congressmen understand the potential power of this strategy. Says Congress spokesperson Manish Tiwari, “ The Budget is a judicious mix of short term stimulus, medium term fiscal prudence and long term institutional reform.” When asked about how the market is perceiving the Budget as a marketing exercise, the politician Tiwari is quick to retort, “I don’t think the Budget can be really seen as an image building exercise or a kind of a political platform. A Budget can be evaluated in the context of circumstances.” Tiwari may be coy, but the marketing and advertising world knows that the budget is actually a huge boost for the new brand identity of Congress.

And lest you think that brand Congress is now all about doling out sops to the poor without a future vision, please re-examine what the Minister for Human resources Kapil Sibal has been saying for a while. Sibal has loudly and persistently made it clear that the private sector must play a key role in revamping India’s messy education system. Sibal and his team understand clearly that India can never reap the demographic dividend with the current education system where rent seeking and corruption is rife and rampant. Sibal is laying down a vision where the young – both rich and poor – will have more choices when it comes to education and careers. Once implemented, this strategy will create one whole generation of loyal consumers who have not yet reached the legal age of voting!

And of course, no matter what you and I say or the aam aadmi says, Brand Congress will also be closely identified and linked with Brand Gandhi. Like it or not, it is Sonia Gandhi who first gave a new lease of life to the dying Congress in 2004. In 2009, the CEO to be Rahul Gandhi is getting ready to take over from his mother, with sister Priyanka always around as a strategic advisor. Says Ad guru Prahlad Kakkar, “While Sonia resonates to dignity and simplicity, Rahul implies to modernity.”

That, as rivals of Brand Congress have realised painfully, is an unbeatable identity for a brand to have!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

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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