3 ghosts of the future?!

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US giants need a bailout package of $75 billion. Now!

The newly elected US President Barack Obama recently met the current president George Bush and spoke about a series of issues, including bailout packages for the US auto majors. The situation of the US auto sector is even worse than that of India, as the auto majors are begging for bailouts, with all urgency! The accused in this case are the three Detroit giants – Ford, GM and Chrysler, whose financials are getting worse, every passing month! The three automakers have asked for a $50 billion package from the US government, which will help them combat the current crisis. Interestingly, this figure doesn’t include the additional $25 billion which the government has agreed to grant to the automakers to produce energy efficient vehicles.

Well, in a situation where almost five million jobs rely on the auto sector, falling apart of the sector surely means a state of urgency! It is a situation where the stock prices of these auto giants is tumbling by the trading hour and their operating cost shows no signs of falling. Surely, for now, it’s about breathing hard, underwater for the giants. Strange though, it was the same trio that once ruled the world of automakers. Today, they have been reduced to brands that might just becomes ghosts for the American future. Obama, you there? Bailout is the word!

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Source : IIPM Editorial, 2009

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

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SOME UNUSUAL BUSINESS

The last year had not been easy for Hindustan Unilever (HUL). But India’s largest FMCG behemoth fought the blues and posted a net profit of Rs.24.96 billion for the 15-month ending March 2009.

HARISH MANWANI, CHAIRMAN, HUL

How did HUL do it? Well, in Chairman Harish Manwani’s words it was via a paradoxical strategy of “business as usual on growth and business unusual on costs.” At first, struggling with increasing prices of critical raw materials, HUL tried every known trick in the trade to balance its cost, price and profit equation. They raised prices of their shampoos, detergents and tea brands and even reduced grammage of some products. While these measures helped HUL in achieving decent sales growth, increased prices led to a simultaneous decline in volumes. But when inflation reared its ugly head, HUL was again forced to cut prices of its key brands to stay competitive.

It was then that Manwani took the decision to convert the impending crisis into an opportunity. Realising that those conventional strategies would be unable to bail HUL out of its predicament, Manwani implemented three crucial strategies to balance the company’s toplines and bottomlines. He first declared a ‘war on waste,’ wherein the company reduced its fixed cost component. Primarily, HUL began buying its raw materials (commodities) on a monthly basis instead of the previous annual cycle to take advantage of the fluctuations in the commodity market. Says Dibyajyoti Bora, FMCG Analyst, CII, “In the long term, the move will help HUL take advantage of futures contracts and save costs.” The company followed this up by ‘straddling the pyramid’ to capture uptrading opportunities. Actually with an increase in prices, HUL had started losing market share to cheaper rivals.

To counter this, they rationalised their stock keeping units (SKUs) and spread out their vast product portfolio at new price points. Tweaking their go-to-market strategy to cut flab at the front end added more push. For FY10, HUL has decided to revamp its entire product portfolio and relaunch several brands like Rexona, Breeze, Kissan Fruit Jam, et al. The bid is to enhance ad budgets for brands like Hamam and Liril. Business unusual? Naah!

Savreen Gadhoke

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Source : IIPM Editorial, 2009

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

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Grandiose as the Taj

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Their hospitality matches the grand name. There’s nothing left to say when its employees don’t leave their guests even during a terror attack...

When Jamshed Ji Tata created history way back in 1903 with the opening of India’s first luxury hotel, little did he know that Taj will be hitting the headlines of global media after a century. But it did, although for all the wrong reasons - a terror attack. Nevertheless, the tragic incident displayed the heroics of the employees of this prestigious hotel. Ratan Tata, Chairman, Tata Group, gets emotional when he talks of the incident. “The heros of that evening were members of staff, many of whom lost their lives. But people used their head and saved people, and sheltered so many of the guests who were there either for dinner or otherwise, and got them out.” The incident showcased the commitment of Taj employees towards their service who refused to escape even in that situation of extreme terror. Small wonder that the Taj emerged with an even more glowing reputation after 26/11. The daily routine of a Taj employee is nothing similar to the incidents of that fateful day, but the dedication to serve its guests is almost similar.

We spoke to a 30-year-old chef at Taj on conditions of anonymity (as it’s against the company policy to allow its mid-level staff to interact with the media) to get a hang of his activities through the day. He told us that his day starts early and begins with planning the day - staff duty planning, updating staff about kebab & curry, stabilising hygienic standards of the kitchen, looking after the staff’s personal hygiene, receiving various supplies (which come on daily basis like butchery, dairy et al), co-ordatinating with managers in charges of banquet functions, setting the menus for the day... phew! And the fellow is not even complaining! In fact, he says, each of his colleagues have a similar level of commitment to serving guests at the hotel.

No wonder that the foreign tourist arrival in the Taj increased by a whopping 6% and summed up to 5.37 million tourist’s inflow in 2008 despite fears of recession looming around. Even the RevPar along with ARRs increased at a good rate. Taj has an edge over others as it has changed itself with time. They were among the first in the country to introduce 42 inch plasma TVs in all rooms along with ergonomic imported chairs worth $500 each, L-shaped work stations, steam baths in place of traditional bath tubs and more. Hospitality analyst Amol Rao avers, “What makes Taj best among the lot is its constant drive to provide customised services to its customers.” Truly, a day at one of the icon brands of India has to be as great as the name itself.

Neha Saraiya

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Source : IIPM Editorial, 2009

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

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If music be the food of ads, Rahman rocks!

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Brand: World Space Radio
Agency: O&M

It was a music everyday-everywhere overdrive with maestro A. R. Rahman himself. And while the satellite radio is not doing too well now, within 45 days of the campaign’s launch, WorldSpace had 2,00,000 queries & awareness shot up from 40% to almost 80%.

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

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