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Prognosis on Consumer Spending
Corporate Governance

Prognosis on Consumer Spending

We are spooking ourselves into a slowdown that is even slower than is warranted by the reality of how much our consumers’ disposable income and their mood has actually been hit. Gloom and doom feeds on itself, and then it makes companies even more pessimistic in their marketing conduct as they shift from coaxing consumers to buy (as they usually do in the normal course of their business) to conserving their own cash and not taking chances on sales growth generating expenditure. The last several quarters saw unprecedented rise in input costs, but companies decided to absorb much of it and opt for margin pressure rather than pass it on to the consumer and risk decreasing consumer demand. Their bet was on a steady future increase in consumer income and desire to consume, hence top line growth would more than offset the margin drop, and profits growth would be safe. […]

October 27, 2008 0 Comments
Made in India
India My Land

Made in India

A few weeks ago, the Centre for Innovation, Incubation and Entrepreneurship (CIIE) at IIM Ahmedabad organized a conference where alumni entrepreneurs were invited to share their experiences with the centre and with students interested in becoming entrepreneurs. Most of us would assume that very few people showed up on either side, since the popular perception of IIMA is that it is the bastion of straight-and-narrow corporate executives, and not the breeding ground for off-the-beaten-track entrepreneurs who march to the beat of his own drummer. Factually, the audience comprised about 150 alumni entrepreneurs and over 250 eager beaver students who came to learn whatever they could and to ask questions like “Is 5-6 years of work experience in a company a good thing before striking out on your own” and “how do you know when you are ready to take the plunge”. At the conference the CIIE also released a book […]

August 1, 2008 0 Comments
The Prognosis for Consumer Demand
Demand Drivers

The Prognosis for Consumer Demand

After the last edition of this column about the human face of the economy, and its implications for economic policy, someone asked why a consumer markets person was writing about the economy now. That is exactly the point that was attempted to be made in my last column and re iterated again here – that The Economy is not just about invisible macro forces or numbers like exchange rates and indices of industrial or agricultural production; but that it is also about how different people or groups of people actually get affected, how they think about their situation, and the spending / saving / investment choices they make as a result of that. When conference rooms debate whether there is an economic slowdown, if they are B2C companies, they are speculating about the spending and saving / investment choices and compulsions of rich and poor individual people; and if they […]

July 28, 2008 0 Comments
Should Ranbaxy Have Sold Out?
Business Strategy

Should Ranbaxy Have Sold Out?

Rama Bijapurkar, Independent Director and Market Strategy Consultant If we want opportunity for Indian companies to grow abroad, we have to open up our backyard Should Ranbaxy have sold out? To begin with, please let us use the phrase “sold”, and not “sold out”. The dictionary meaning of ‘sell out’ is betrayal. That sort of prejudges the case! No, I do not believe that the Ranbaxy sale is a setback to the rise of Indian MNCs. Let’s define what we mean by the emotionally loaded phrase “a setback to the rise of Indian MNCs”. It means that the phenomenon we all desire, of seeing more and more Indian companies expand their business operations to different countries around the world, will not pick up steam and grow exponentially. Worse still, it could slow down, or, even worse, could come to a grinding halt. So the question is, will the act of Ranbaxy promoters […]

June 17, 2008 0 Comments
Let a thousand Indias bloom
India My Land

Let a thousand Indias bloom

Lots of debate is happening around how to build “Brand India”. There are two commonly voiced dilemmas. One, that some of the harsh realities of India are so harsh (poor infrastructure, poor human development index, poor responsiveness from Government to potential investors, corruption etc.), that they will always appear as ugly black warts, marring the credibility of any ‘beautiful India’ or ‘powerful India’ branding that we do. The other dilemma is that there is no single India, and that it is impossible to reflect, under a single brand, the ancient heritage and the modern accomplishments, tourism’s “incredible India” and ITES’s 24×7 “industrious India”, manufacturing’s “innovative India” and the magic of handcrafted artisan India, the budhist stupas and Nehru’s temples of modern India, yoga, medicine and the IITs. The answer to the first is simple – yes, we need to work on our warts, but even as we do so, we […]

April 13, 2008 0 Comments
Governance Models for IIMs & IITs
Corporate Governance

Governance Models for IIMs & IITs

The HRD minister must be congratulated – and thanked – for wholeheartedly accepting the propositions that educational institutions should be governed by their governing boards; and that there is nothing wrong with a plan that delivers self-sufficiency with social justice. We look forward to this being the direction in which he will encourage all educational “navaratnas” to move. The purpose of this article is to provide facts and perspectives in order to frame the debate on governance of IIMs and IITs and the role of MHRD. It would be a waste of this space to further stir up the already muddied waters of the fee increase issue. Suffice it to say that social justice is not served by subsidising people who have an average starting salary of around Rs 17 lakh and access to pre-approved loans with banks who deem them creditworthy based on where they are going, and irrespective […]

April 7, 2008 0 Comments
It’s the ‘Who’ that Counts
Consumer Trends

It’s the ‘Who’ that Counts

Consumer demand is now no longer about undesirable habits of rich folk but about driving GDP growth. Being morally purified, it now attracts a great deal of discussion and analysis, especially as we run up to another budget, a key theme of which is about stimulating consumption. Yet most of the discussion and analyses are totally supply sided and product-centric and obsessed with WHAT is being spent on, rather than on WHO is spending and how they decide to. Consumer demand is about how much people choose to spend, on what their consumption ability, aspiration and priorities are, in turn determined by their world view and life stage and socio cultural group. It is therefore simplistic to think about stimulating consumption in terms of spread sheet projections of past sales trends, suggesting how much excise duty to cut on what product categories or about cutting income tax (given that most […]

February 15, 2008 0 Comments
Testing Times Ahead for the Consumer Goods Sector
Business Strategy

Testing Times Ahead for the Consumer Goods Sector

Consumer goods companies seem to have their work cut out for them in the near future. While consumer demand is on the rise, sustaining margins is becoming increasingly challenging. Having healthy margins to keep the stock market happy but missing out on the investment needed to grab the enormous opportunity offered by India’s economics and demographics is a pyrrhic victory – as is having a healthy and high margin market share today at the cost of investing in brands. We are regrettably seeing more and more high market share, but jaded and eroded brands are unable to stand up to strong or reckless competitive pressure. Per capita incomes will continue to rise across the board and all socio economic strata are well infected with the consumption bug. However, the fight for a share of the consumer’s wallet is more intense now than ever before. EMIs, pension plans, health insurance, entertainment, […]

February 6, 2008 0 Comments
Understanding Our Social Transition
Business Strategy

Understanding Our Social Transition

Over the past five years, ever since the India story started getting more credible, one has been asking annoyingly often by foreign business audiences about the caste system and whether rising inequality would cause severe social tension and breakdown of law and order and constitute a major country risk. One did not believe that this was the correct interpretation of events, and wrote earlier in this column that the anatomy of social tension in India was not street wars and bloody violence, but institutions at loggerheads with each other, through every institutional and constitutional means available. But after reading about the growth of the Maoist belt, one thought that maybe there were things one wasn’t seeing, and started to examine this issue from the other side of the table – the poor people themselves (the politically correct term nowadays, is not poor or have-not, but people at the bottom of […]

November 26, 2007 0 Comments
Winning in the Indian Market
Business Strategy

Winning in the Indian Market

If the ET awards has a category for the non-Indian multinational that built a businesses in India of the scale, scope and profitability of either ICICI, Bharti or Infosys, it is a reasonable guess that the jury would not have had the problem of plenty to choose from. While it could be argued that the same holds true for Indian companies too, the fact is that the golden greats from overseas have far larger war chests, far deeper competencies and all the benefits of an already global business. Why then has Indian market not been over run by MNCs from outside? Why are there not many, many more Nokias, LGs, Samsungs? At a pinch, we can count Honda in that list, although it is the Hero Honda JV that has changed the landscape of personal transportation in urban and rural India. Maybe Hindustan Unilever can also be counted in this […]

October 19, 2007 0 Comments
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