Global (Economic) Meltdown 2008

The global economic downturn made 2008 a forgettable year. It had its usual share of ups and downs for India Inc. Here’s a look at some of the events that shaped the year:
10 Jan: Sensex hits its all time high of 21,206.77 points. ‘Nano´ is born. The world’s cheapest car costing Rs100,000 unveiled at 9th Auto Expo in Delhi by Ratan Tata.
15 Jan: India’s largest IPO by Reliance Power to raise Rs11,000 crore opens. The issue closed on 18 January but was hammered in the market on debut. The company issued bonus shares to retain investor confidence.
21 Jan : The Sensex saw its highest ever loss of 1,408 points at the end of the session.
26 Mar: Tata Motors announces agreement with Ford Motor to acquire Jaguar Land Rover for $2.3 billion.
11 June: Japanese drug firm Daiichi Sankyo acquires control of Ranbaxy for over Rs22,000 crore - essays biggest Indian pharma industry deal.
25 June: Idea Cellular acquires 40.8% stake in a smaller rival Spice Communications for about Rs2700 crore.
8 Aug: South Korean steel giant Posco gets approval from Supreme Court to go ahead with its Rs51,000 crore steel project in Orissa after getting environmental clearance.
11 Aug: Low-cost airline Spicejet secures $100 million investment from Goldman Sachs and WL Ross.
16 Sep: US Foods and Drug Administration bans 30 drugs manufactured by Ranbaxy Laboratories at its two facilities in Dewas and Poanta Sahib.
26 Sep: HCL Technologies makes a cash offer of 650 pence a share for acquiring UK-based SAP consulting firm Axon Group.
3 Oct: Tata Motors pulls out of Singur, where it planned to set up the mother plant for Nano at an investment of Rs1,500 crore.
7 Oct: Tata Motors announces new Nano plant will come up at Sanand in Gujarat at an investment of Rs2000 crore.
Oct 8: TCS acquires 96.3% stake in Citigroup Global Services Ltd, the BPO outfit of the American bank, for $505 million.
13 Oct: Jet Airways and Kingfisher Airlines form operational alliance to cut costs.
15 Oct: Jet Airways lays off 1900 of its employees in various work profiles. Two days later, company Chairman Naresh Goyal orders reinstatement of all the sacked employees.
21 Nov: Dabur India acquires 72.15% stake in women’s skin-care company Fem Care Pharma (FCPL) for Rs203.7 crore.
16 Dec: India’s fourth largest IT firm Satyam Computer announces acquisition of Maytas Properties and Mytas Infra for $1.6 billion dollars.
17 Dec: Satyam calls off acquisition after angry shareholders response. Since then, four of the company’s independent directors have quit.
23 Dec: Country’s third-largest software services provider Wipro agrees to buy Citi Technology Services Ltd from Citigroup for about $127 million.
25 Dec: World Bank says Satyam barred from doing business with it for eight years; Reliance Petroleum commissions its 580,000 barrels per day refinery ar Jamnagar.
31 Dec: Stock market benchmark Sensex closes trading for the year down 69 points at 9,647.31. It had peaked to 21,206.77 points in January.
IT sector:
· The sector, which has been charting a growth of over 30%, had to settle for a growth rate of 20%, as the global slowdown plunged the industry into unpredictable times.
· The Indian firms and employees continue to struggle with the ‘pink slip’ showing more every day.Satyam recently announced they will be laying off 400 people (Satyam fires 400 people), Wipro let go of under 2000 people for non performance (Wipro to remove staff for non-performance), other IT vendors including Patni (Patni hands pink slips to non performers), Convergys (Convergsys shuts down Mumbai facility) have been laying off people under the non performance umbrella.
· In the year filled with economic disasters, the failed attempt of country’s fourth largest software exporter Satyam to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
· HCL pipped rival country’s second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million.
Currency Values:
Dollar was broadly higher while oil fell below $39 a barrel, a 60% loss for the year. · The euro has fallen by around 3.4% against the dollar over the year. However, it recovered towards the end of the year, jumping by over 10% during December.
U.S:
Job unemployment rates are highest ever in the US. Here are some harsh facts for the US markets:
• 84,000 jobs lost in August 2008
• Unemployment rate a five-year peak of 6.1%
• 2.2 million Americans lost their jobs in the past 12 months
• Firms laid of 605, 000 workers in 2008 with an average of 76,000 a month
Global Meltdown:
· Scientists have long agreed that climate change could have a profound impact on the planet; from melting ice sheets and withering rainforests, to flash floods and droughts.
· The most likely rise, of 4C by the end of the century, would cause droughts across Africa, and a fall in harvests of 15% to 35%. Globally, crop yields would fall 10%.
· Sea levels would rise by up to 59cm, with Bangladesh and Vietnam among the worst hit, along with coastal cities such as New York, London, Tokyo, Kolkata and Karachi.

Ten Deadly Sins of marketing

Philip Kotler:
1. The company is not sufficiently market focused and customer driven.
2. The company does not fully understand its target customers.
3. The company needs to better define and monitor its competitors.
4. The company has not properly managed its relationships with its stakeholders.
5. The company is not good at finding new opportunities.
6. The company’s marketing plans and planning process are deficient.
7. The company’s product and service policies need tightening.
8. The company’s brand building and communications skill are weak.
9. The company is not well organized to carry on effective and efficient marketing.
10. The company has not made maximum use of technology.

MT-01, A Bike from Yamaha

FZ16- Lord of the Streets, The Yamaha Creation

If you've seen the Hindi film "Rab ne bana di jodi" you would have probably noticed Shah Rukh Khan riding a bike that is not entirely familiar on Indian roads. As usual one would have come to a conclusion that the bike is probably an imported vehicle. I personally loved the refreshing new look Yamaha has brought into India. This new release from Yamaha is called “FZ16 – Lord of the Streets”.
The bike was launched on September 14th,2008 and was displayed at the Auto Expo 2008. Why has it chosen a movie as its advertisement platform? Will its apperance in the movie “Rab ne Bana di Jodi” make it popular?Movie happens to be a popular and economical medium to advertise. Movies as a means, facilitates mass communication in a very effective manner . It helps in launching trendy items, products related to fashion and style etc.. It creates awareness and has an impact on most audience.

BAJAJ PLATINA INTO DTS-I FAMILY

Bajaj platina is the lowcost motorcycle from bajaj, which crossed sales of 500,000 units within eight months of its launch in April 2006. Bajaj platina sales reduced by 16% in 2007, which is followed by further reduction of 11% in 2008. Bajaj is the first company to intoduce DTS-I technology in India in 2003. DTS-I (Digital Twin Spark-ignition) became a special attraction to the customers .
With the slow growth in the 100cc motorcycle market, bajaj introduced a 125cc engine model in september 2007 with a new technology DTS-SI (Digital Twin Spark-Swirl induction), named as Bajaj XCD 125 DTS-SI. DTSI is the parent technology to the DTS-SI. Bajaj has a dominant market share of almost 50 per cent in the 125 cc + segment. Bajaj XCD 125 alone contributes 13 per cent of the 125 cc + segment, a feat not achieved by other 125cc products after years of existence.

To capture the growth in the 125cc sector, bajaj has to introduce another model in 125cc. If bajaj goes for a new brand creation, it has to spend more in creating a brand. So, bajaj went for brandline extension of Bajaj Platina from 100cc to 125cc using the new DTS-Si technology.

Risks Involved in Brand Endorsement

Do you think the Brand Ambassadors will be paid more after the new Companies Bill 2008. The new law says that “Celebrities will be subjected to legal action, if they use misleading claims to induce consumers to buy a product and the companies shall be charged a penalty”. The law makes Brand Ambassadors to be careful, cautious and ensure the authenticity of the claims while they endorse a brand.
Is there anything in the law about the post endorsement actions?, i.e. A celebrity endorses for a brand and after few months if the claims about the product prove to be wrong, is there any action taken against the Celebrity? Don’t you think the law is biased towards celebrities. Is this the risk taken by the celebrities? Will this make the celebrities demand more remuneration because of the risk involved?

Advertisements in Recession

Do you think expenditure on advertisements has to be reduced during Recession? Such a period is plagued by lay-offs, non availability of funds and so on. But yes, companies should not stop promoting their brands just because of recession.

Research on marketing during a recession showed that cutting TV spending is damaging. The argument is irrefutable, but the reasons that some advertisers still reduce spending are often based on short termism and shareholder ignorance of how marketing works. Sometimes this is induced by the City, because cutting the marketing budget is an obvious way to reduce over-heads, but it costs a fortune to recover afterwards.

Smart businesses recognize that this is no way to manage a brand. Maintaining advertising expenditure gives huge benefit during a down-turn, and pays off when in an upturn. If you have to cut any marketing budget, choose anything but TV, as TV is the best medium for building brands.

When the other brands are opting for reducing their marketing expenditures, smart companies can take advantage of this by taking steps to increase brand visibility through keeping with their expenditure with respect to marketing the brand. This would be true only if companies are sure to survive the recession period.