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Quarterly periodical of International Business Society @ SIMSR

Quarterly periodical of International Business Society @ SIMSR

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    E globuz z-vol1_issue_iii E globuz z-vol1_issue_iii Document Transcript

    • ForewordDear Readers,It gives me immense pleasure to bring to you the third issue of e-Globuzz, Jul-Sep10. We hope you likedour previous issue of Jan-Mar10.There are those who envision, and then there are those who work to make the vision a reality. We areproud to say that we have a team which does both. We would like to thank all those who were involved intaking this issue to the completion stage.Our next issue is planned in Oct 10, which we trust will be even more insightful as we try and evolvewith every issue of ours. In future we plan to evolve by bringing in greater participation from thecorporate executives, industry experts, alumni & faculty. We look forward to hearing from our readers.Please do send us your feedback at simsr.ibs@gmail.com.We have dedicated this issue to late Prof. C. K. Prahalad whose books & articles have been a guidinglight for us and hence some of these articles and books have been referred to in this issue.For everyone in the SIMSR family, Late Prof. C. K. Prahalad was a great source of inspiration; a rolemodel and an outstanding academician for whom we always had and will continue to have profoundrespect and admiration. We were shocked at the news of his untimely passing away in April 2010. Wewere looking forward to reading many more of his books and articles in respected international journals.Some of us at SIMSR, the students and the faculty had the privilege to listen to his insightful speech inJanuary 2010 when he addressed a packed auditorium at the seventh Nani A Palkhivala MemorialLecture in Mumbai. Little did we realize that for us it would be his last lecture, and we would not get theprivilege to hear him again But late Prof. C. K. Prahalad lives on in our minds and in our hearts. We willfondly continue to read again his various articles and books, which will continue to inspire us and guideus in our quest for achieving academic & professional excellence.Another great quality of Late Prof. C. K. Prahalad which we greatly admire is his humility which he hadinspite of his truly exceptional professional achievements as a leading & globally respected author andconsultant to several leading multinational enterprises. His humility is evident in the Preface of his book -authored with Prof. Gary Hamel of London Business School.ranging from Kenneth Andrews, Igor Ansoff, Peter Drucker & Henry Mintzberg to Michael Porter &Kenichi Ohmae- all of whose works on strategy are eagerly read by SIMSR students, alumni & faculty.The International Business Society (IBS@SIMSR) pays its humble tribute to late Prof. C. K. Prahalad,Paul and Ruth McCracken Distinguished University Professor, Ross School of Business, University ofMichigan, USA. Prof. C. P. Joshi Faculty Mentor-IBS@SIMSR Course Coordinator- PGDM-IB
    • COVER STORY:6 Team BOTTOM OF THE PYRAMID How Sustainable is your e Globuzz Business?01 Company In Focus: APPLE Faculty Mentor04 Sector in Focus: Global Automobile Industry Prof. C P Joshi06 Cover Story: BOTTOM OF THE PYRAMID How Sustainable is Your Business? Editors08 Country in Focus: SOUTH AFRICA Vikash Kumar Singh10 Academic fraud in China Anchal Sachan11 Report on Economic Freedom Network Asia Conference 2009 Designers13 International Marketing: COCA COLA scores a winner Parul Shrivastava Rachit Goel15 International Finance: Global Banking Scenario17 Interview with Mr ROHIT PANDYA, Dy. General Manager, Buyer and Country Underwriting, ECGC, Circulation Mumbai. Astha Pasricha19 Debate: - Will the European Union Sustain? Celia Madona Vincent21 Did you know these terms?22 Book Review: COMPETING FOR THE FUTURE All the views expressed in24 Crossword #03 the magazine reflect the personal opinions and views of the authors and do not reflect the .
    • APPLe COMPANY IN FOCUS INTRODUCTION Apple Inc. (previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The companys best-known hardware products include the Macintosh computers, the iPod, the iPhone and the iPad. Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was previously named Apple Computer, Inc. for its first 30 years, but removed the word "Computer" on January 9, 2007, to reflect the companys on-going expansion into the consumer electronics market in addition to its traditional focus on personal computers. Focused Differentiation Strategy Earlier Apple followed a Focused Differentiation Strategy because It was catering to a narrow market niche with unique needs It adopted a premium pricing strategy to target high-end consumers and business market Broad Differentiation Strategy Now Apple has now moved towards Broad Differentiation Strategy after the introduction of i-phones and i-pods It now offers a broad range of products to a larger number of consumers Gives value to customers by differentiation STRATEGIES FOR INNOVATION following steps explain the techniques it uses for innovation.e - GlobuzZ, Volume I, Issue III July September2010 Page | 1
    • Think Different Apple maintains an introspective, self-contained operating style that is capable of confounding competitors and shaking up entire industries. For example, Nokia, once considered the undisputed leader in mobile phones, never anticipated that a single product from a computer maker might throw its ascendancy into question. think differently about itself that keeps Apple at the head of the pack. Build your fortress - Create the infrastructure needed for innovation Size and sprawl are formidable challenges that most companies manage, either by splintering into disorganized, undisciplined communities or by locking employees into tight, stifling bureaucracies. Apple tends toward the latter, but it does so in a unique way ion with secrecy is a double-edged sword, however: It gives Apple a vital element of surprise in the marketplace Cultivate your elite - Empower your most valuable employees to do amazing work , new products are often seen in their complete form by only a small group of top executives. This, too, works as a strength for Apple: Instead of a sprawling bureaucracy that new products have to be pushed through, knit group that has a hand in almost every important decision the company makes. Short-term, cyclical, or competitive pressures do not overwhelm an effective strategy at Apple. It cancels, releases, and updates products at its own speed, seemingly irrespective of market conditions or competitive pressure. The iPod and iPhone, iconic products both, each began as rumors that Apple seemed determined to quash. Clone your own Steve jobs - If you put a tyrannical perfectionist in charge, institutionalize his thinking k, for example, worked well as acting CEO during the first half of 2009, when Jobs was on sick leave. The most iconic Apple laptop, the original PowerBook, was released in 1991, after Jobs had been absent for six years. As per the financial statements of Apple for 2009, 70% of its revenue is contributed by hand-held equipments. Hence further analysis of the company is based on the smart phones industry. STRATEGIC GROUP smart phones have been positioned as premium products with narrow product lines. KEY SUCCESS FACTORS As per experts smartphones seems to be a part of a difficult industry as part of it is fashion & part of it is technology. Based on this observation Apple has pursued following factors relentlessly to gain the numerouno position in its respective strategic group Technology Internet driven force It has immensely helped Apple drive its sales to target leisure time on internet (2009 NASSCOM survey). Hence it becomes imperative for Apple to have a good internet driven sales force.e - GlobuzZ, Volume I, Issue III July September2010 Page | 2
    • Replacing communication technology Smartphones have changed the way people communicate & manage their daily offer a lot more value to customers rather than just being a communication device Next Generation experience - Although 3G is newest kid on the technology block but the talks of 4G are already on. Hence its all about embracing new technology & innovating with evolving technology & consumer needs. Marketing Brand name Apple is a well- known& respected brand in the market. It has trust of its loyal customer base which has been built over years. Market segmentation Apple marketing philosophy takes its roots from proper market segmentation. It is based on this market segmentation only that they have a very narrow product line positioned in premium category. Skill & Capability Value Addition test ability is to add value to customer in a faster, more convenient & less expensive ways then the available options. Design & Innovation Expertise This capability of Apple lets them innovate at a regular basis and present & design those innovations in a package which adds value to customer at an affordable price. Distribution Strong Network Apple has a vast network of wholesalers, distributors & dealers. They have deep reach in the market which enables them to make their innovations available to markets in a short span of time. Fast introduction & application of services The vast distribution network, working with internet as its backbone, helps apple to even put its services faster in the market than the competitors. STRATEGIC RECOMMENDATIONS To encounter certain threats like entry of corporate giants like Google, increasing competition and bargaining power of buyers, following are some strategic recommendations for Apple. Diversification: To explore new markets and focus more on developing markets like India and China. Innovation: Apple should focus on innovation of national products; products adapted to the needs of developing nations. Expansion: Apple should look at opportunities for mergers and acquisitions across the globe to enhance their distribution and manufacturing capabilities. Hitesh Gandhi Priyanka Singhal PGDM IB (09-11)e - GlobuzZ, Volume I, Issue III July September2010 Page | 3
    • Global AUTOMOBILE INDUSTRY Sector in Focus Current Global Scenario dŽLJŽƚĂ ĂƐ ƚŚĞ :ĂƉĂŶĞƐĞ ŐŝĂŶƚ ƌĞĞůƐ ĨƌŽŵ Ă ƐƚƌŝŶŐ ŽĨ ƌĞĐĞŶƚ ŐĂƐ ƉĞĚĂů ƌĞĐĂůůƐ ĂƐ ǁĞůů ĂƐ ŝƚƐ ůĂƚĞƐƚ ďƌĂŬĞ ƌĞĐĂůů ŽŶ WƌŝƵƐ ŚLJďƌŝĚƐ͘ dŚĞ ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ŝŶĚƵƐƚƌLJ ŚĂƐ ďĞĞŶ ĚĞĞƉůLJ ŝŵƉĂĐƚĞĚ ďLJ ƚŚĞ sŽůŬƐǁĂŐĞŶ ;stͿ ŝƐ ŚŽƉŝŶŐ ƚŚĂƚ dŽLJŽƚĂ͛Ɛ ƌĞĐĞŶƚ ŶĞŐĂƚŝǀĞ ĞĐŽŶŽŵŝĐ ƐůŽǁĚŽǁŶ ǁŝƚŚ ƉƌŽďůĞŵƐ ƐƵĐŚ ĂƐ ƉƌŽĚƵĐƚŝŽŶ ƉƵďůŝĐŝƚLJ ǁŝůů ŐŝǀĞ ŝƚƐ ƐĂůĞƐ Ă ƉƵƐŚ͘ ŽǀĞƌĐĂƉĂĐŝƚLJ͕ ŚŝŐŚ ŝŶǀĞŶƚŽƌLJ ĂŶĚ ůŽǁ ƉƌŽĨŝƚĂďŝůŝƚLJ͘ ^ŚƌŝŶŬŝŶŐ ĐŽŶƐƵŵƉƚŝŽŶ ĂŶĚ ůŽǁ ĐƌĞĚŝƚ ĂǀĂŝůĂďŝůŝƚLJ ĂƌĞ ƉƵƐŚŝŶŐ ĚŽǁŶ ŐůŽďĂů /ŶƚĞƌŶĂƚŝŽŶĂů Ăƌ ƐĂůĞƐ KƵƚůŽŽŬ ĂƵƚŽŵŽƚŝǀĞ ƐĂůĞƐ͕ ǁŚŝĐŚ ĂƌĞ ĞdžƉĞĐƚĞĚ ƚŽ ĐŽŶƚƌĂĐƚ Ăƚ Ă ĐŽŵƉŽƵŶĚ ůŽďĂů ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ĂŶŶƵĂů ŐƌŽǁƚŚ ƌĂƚĞ ; ZͿ ŽĨ ĂƌŽƵŶĚ ŵŝŶƵƐ ϱ ƉĞƌ ĐĞŶƚ ďĞƚǁĞĞŶ ^ĂůĞƐ;ŝŶ ;ĨͿ ŵŝůůŝŽŶƐͿ ϮϬϬϳ ĂŶĚ ϮϬϭϬ͘ ,ŽǁĞǀĞƌ͕ ŝƚ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ũƵŵƉ ďĂĐŬ ƚŽ ƐĂůĞƐ ĂŶĂĚĂ ϭ͘ϲϰ ϭ͘ϰϲ ϭ͘ϱϯ ŐƌŽǁƚŚ ǁŝƚŚ ƌŝƐŝŶŐ ŐůŽďĂů ĞĐŽŶŽŵŝĐ ƌĞĐŽǀĞƌLJ͕ ƌĞƐƚŽƌĞĚ ĐŽŶƐƵŵĞƌ hŶŝƚĞĚ ^ƚĂƚĞƐ ϭϯ͘ϭϵ ϭϬ͘ϰ ϭϭ͘ϱ ĐŽŶĨŝĚĞŶĐĞ ĂŶĚ ŝŶĐƌĞĂƐŝŶŐ ĚĞŵĂŶĚ ĨŽƌ ƐŵĂůůĞƌ ĂŶĚ ĨƵĞůͲĞĨĨŝĐŝĞŶƚ DĞdžŝĐŽ ϭ͘ϬϮ Ϭ͘ϴϮ Ϭ͘ϴϱ ĐĂƌƐ͕ ĞƐƉĞĐŝĂůůLJ ŝŶ ĞŵĞƌŐŝŶŐ ŵĂƌŬĞƚƐ͘ EŽƌƚŚ ŵĞƌŝĐĂ ϭϱ͘ϴϱ ϭϮ͘ϲϴ ϭϯ͘ϴϴ /ŵƉƌŽǀĞŵĞŶƚ ŝŶ ĐƌĞĚŝƚ ĂǀĂŝůĂďŝůŝƚLJ ĂŶĚ ŝŶĐƌĞĂƐĞ ŝŶ ĐŽŶƐƵŵĞƌ ^ŽƵƚŚ ŵĞƌŝĐĂ ϯ͘ϳ ϯ͘ϵϮ ϰ͘Ϯϴ ĐŽŶĨŝĚĞŶĐĞ͕ ĐĂƚĂůLJnjĞĚ ďLJ ŐŽǀĞƌŶŵĞŶƚ ƐƚŝŵƵůƵƐ ƉĂĐŬĂŐĞƐ ĂƌŽƵŶĚ ƚŚĞ ǁŽƌůĚ ĂŶĚ ŐƌŽǁŝŶŐ ĚĞŵĂŶĚ ŝŶ ƌĂnjŝů͕ ZƵƐƐŝĂ͕ /ŶĚŝĂ ĂŶĚ ŚŝŶĂ tĞƐƚĞƌŶ ƵƌŽƉĞ ϭϯ͘ϱϰ ϭϯ͘ϲϮ ϭϮ͘Ϯϲ ;Z/Ϳ ĂŶĚ ĞŵĞƌŐŝŶŐ ĞĐŽŶŽŵŝĞƐ ǁŝůů ŚĞůƉ ĂŝĚ ƚŚĞ ƌĞĐŽǀĞƌLJ ŽĨ ƚŚĞ ĂƐƚĞƌŶ ƵƌŽƉĞ ϰ͘Ϭϭ ϯ͘Ϭϭ ϯ͘ϭϲ ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ŵĂƌŬĞƚ͕Ζ ŶŽƚĞƐ ƚŚĞ ĂŶĂůLJƐƚ ŽĨ ƚŚŝƐ ƌĞƐĞĂƌĐŚ͘ ^ŵĂůů͕ ĂĨĨŽƌĚĂďůĞ ĂŶĚ ĐůĞĂŶ ĐĂƌƐ ĂƌĞ ŐŽŝŶŐ ƚŽ ďĞ ŵĞŐĂ ƚƌĞŶĚƐ ŝŶ ŚŝŶĂ ϱ͘Ϭϰ ϳ͘ϯϭ ϴ͘ϳϳ ƚŚĞ ĂƵƚŽ ŝŶĚƵƐƚƌLJ ŝŶ ƚŚĞ ŶĞdžƚ ĨŝǀĞ LJĞĂƌƐ͕ ĐŽŵƉƌŝƐŝŶŐ ŵŽƌĞ ƚŚĂŶ Ϯϱ /ŶĚŝĂ ϭ͘Ϯ ϭ͘ϰϲ ϭ͘ϳϮ ƉĞƌ ĐĞŶƚ ŽĨ ŐůŽďĂů ǀĞŚŝĐůĞ ƐĂůĞƐ͕ ŽŶ ƚŚĞ ďĂĐŬ ŽĨ Ă ƉƌĞƐƐŝŶŐ ŶĞĞĚ ƚŽ ƐŝĂ ϭϱ͘Ϭϳ ϭϳ͘ϲϴ ϮϬ͘ϯϵ ŝŶĐƌĞĂƐĞ ĨƵĞů ĞĨĨŝĐŝĞŶĐLJ ĂŶĚ ĚĞĐƌĞĂƐĞ ĞŵŝƐƐŝŽŶƐ͘ /ƚ ĂŶŶŽƵŶĐĞĚ ƚŚĂƚ ďLJ ϮϬϭϴ ŝƚ ŚŽƉĞƐ ƚŽ ƉƌŽĚƵĐĞ ϭϬ ŵŝůůŝŽŶ ŶĞǁ ǀĞŚŝĐůĞƐ ĂŶĚ ĂĐŚŝĞǀĞ Ă ƌĞƚƵƌŶ ŽĨ ŵŽƌĞ ƚŚĂŶ ϭϲ ƉĞƌĐĞŶƚ ŽĨ ŝƚƐ India has emerged as an outsourcing hub ŝŶǀĞƐƚŵĞŶƚ͘ dŚĞ ĐŽŵƉĂŶLJ ŝƐ ƉƵƐŚŝŶŐ ĨŽƌ Ă ϱ ƉĞƌĐĞŶƚ ƉƌŽĨŝƚ ŵĂƌŐŝŶ ƚŚŝƐ LJĞĂƌ͕ ǁŚŝĐŚ ĚŽĞƐ ŶŽƚ LJĞƚ ŝŶĐůƵĚĞ ƚŚĞ WŽƌƐĐŚĞ ƉƌŽĚƵĐƚŝŽŶ͕ ĂƐ for auto parts for international ŝƚ ǁŝůů ŶŽƚ ďĞ ŝŶƚĞŐƌĂƚĞĚ ǁŝƚŚŝŶ st ƵŶƚŝů ϮϬϭϭ͘ ͞tŝƚŚ ƚŚĞ companies such as Ford, General Motors, ŝŵƉůĞŵĞŶƚĂƚŝŽŶ ŽĨ ͚^ƚƌĂƚĞŐLJ ϮϬϭϴ͕͛ ƚŚĞ sŽůŬƐǁĂŐĞŶ ƌŽƵƉ ŝƐ ƐĞĞŬŝŶŐ ŐůŽďĂů ĞĐŽŶŽŵŝĐ ĂŶĚ ĞŶǀŝƌŽŶŵĞŶƚĂů ůĞĂĚĞƌƐŚŝƉ ŝŶ ƚŚĞ Daimler Chrysler, Fiat, Volkswagen and ĂƵƚŽŵŽƚŝǀĞ ŝŶĚƵƐƚƌLJ ďLJ ϮϬϭϴ͕͟ st ƐĂŝĚ ŝŶ Ă ƉƵďůŝƐŚĞĚ &ĞďƌƵĂƌLJ Toyota ƐƚĂƚĞŵĞŶƚ ƚŽ ŝŶǀĞƐƚŽƌƐ͘ dŽLJŽƚĂ ĞƐƚŝŵĂƚĞĚ ƚŚĂƚ ƚŚĞ ĐŽƐƚ ŽĨ ƚŚĞ ƌĞĐĂůů ǁŽƵůĚ ƐŚĂǀĞ ŽĨĨ ůŽďĂů DĂƌŬĞƚ ƌŽǁƚŚ ƌŽƵŐŚůLJ Ψϭ͘ϭ ďŝůůŝŽŶ ŽĨ ŝƚƐ ŝŶĐŽŵĞ ƚŚŝƐ LJĞĂƌ͘ dŚĞ ƌĞĐĂůů ĂĨĨĞĐƚĞĚ ƐĂůĞƐ͕ ǁŝƚŚ Ă ϭϲ ƉĞƌĐĞŶƚ ĚĞĐůŝŶĞ ŽĨ ƐĂůĞƐ ďLJ ƚŚĞ ĞŶĚ ŽĨ :ĂŶƵĂƌLJ͕ dŚĞ ŵĂƌŬĞƚ ŝƐ ƐŚŽǁŝŶŐ ƌĞĐŽǀĞƌŝŶŐ ƐŝŐŶƐ ĂŶĚ ŐůŽďĂů ƐĂůĞƐ ĂƌĞ ŐŽŝŶŐ ǁŚŝůĞ D͛Ɛ ƐĂůĞƐ ŝŶĐƌĞĂƐĞĚ ďLJ ϭϱ ƉĞƌĐĞŶƚ ĚƵƌŝŶŐ ƚŚĞ ƐĂŵĞ ƉĞƌŝŽĚ͘ ƚŽ ŝŶĐƌĞĂƐĞ ŝŶ ŶĞĂƌ ĨƵƚƵƌĞ͘ /ŶĚŝĂ ŝƐ ƐĞĞŶ ĂƐ Ă ƌŝƐŝŶŐ ƐƚĂƌ ŝŶ ƐŝĂ WƌĞĚŝĐƚŝŽŶƐ ĂƌĞ ƚŚĂƚ ŐůŽďĂů ƐĂůĞƐ ǁŝůů ŶŽƚ ƐƚĂŐŶĂƚĞ ĂŶLJ ĨƵƌƚŚĞƌ ĂŶĚ ǁŝƚŚ ƌĞƐƉĞĐƚ ƚŽ ĂƵƚŽ ƐĂůĞƐ͕ ŵĂŝŶůLJ ĚƵĞ ƚŽ ĚŽŵĞƐƚŝĐ ĚĞŵĂŶĚ͕ ĂŶĚ ϮϬϭϬ ǁŝůů ďĞ Ă ŵŽĚĞƐƚůLJ ďĞƚƚĞƌ LJĞĂƌ͘ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ŝŶĐƌĞĂƐĞ ŽƵƚƉƵƚ ĂŶĚ ƐĂůĞƐ ďLJ ƌŽƵŐŚůLJ ϴ ƉĞƌĐĞŶƚ͘ sĞŚŝĐůĞ ƐĂůĞƐ ŝŶ ^ŽƵƚŚ <ŽƌĞĂ͕ ŚĂǀŝŶŐ ƚĂŬĞŶ Ă ŶŽƐĞĚŝǀĞ ŽĨ Ϯϰ ůŽďĂů DĂƌŬĞƚ WŽƚĞŶƚŝĂů ƉĞƌĐĞŶƚ ůĂƐƚ LJĞĂƌ ĚĞƐƉŝƚĞ ƚĂdž ďƌĞĂŬƐ ŝŶ ƚŚĞ ůŽĐĂů ŵĂƌŬĞƚ͕ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ƐŚŽǁ Ă ŵĂƌŐŝŶĂů ŝŶĐƌĞĂƐĞ ŽĨ ϱ ƉĞƌĐĞŶƚ͘ ůŽďĂůůLJ͕ /Ŷ Ă ƌĞĐĞŶƚ ƐƵƌǀĞLJ ĐŽŶĚƵĐƚĞĚ ďLJ <WD /ŶƚĞƌŶĂƚŝŽŶĂů ŝŶ ĂƵƚŽŵĂŬĞƌƐ ĂƌĞ ĂƚƚĞŵƉƚŝŶŐ ƚŽ ǁƌĞƐƚůĞ ŵĂƌŬĞƚ ƐŚĂƌĞ ĂǁĂLJ ĨƌŽŵ ^ĞƉƚĞŵďĞƌ ϮϬϬϵ͗ ϮϬϬ ƌĞƐƉŽŶĚĞŶƚƐ ĨƌŽŵ Ϯϰ ĐŽƵŶƚƌŝĞƐ ŝŶĐůƵĚŝŶŐĞͲ ůŽďƵnj sŽůƵŵĞ /͕ /ƐƐƵĞ /// :ƵůLJ ^ĞƉƚĞŵďĞƌϮϬϭϬ WĂŐĞ ͮ ϰ
    • ŵĞƌŝĐĂ͕ ƐŝĂ WĂĐŝĨŝĐ͕ ƵƌŽƉĞ͕ ĨƌŝĐĂ ĂŶĚ DŝĚĚůĞ Ă ƚŽŽŬ ƉĂƌƚ ŝŶ ĂƐƚ dŚĞ /ŶĚŝĂŶ ĂƵƚŽŵŽďŝůĞ ŝŶĚƵƐƚƌLJ ŵĂŶƵĨĂĐƚƵƌĞƐ ŽǀĞƌ ϭϭ ŵŝůůŝŽŶ ƚŚĞ ƐƵƌǀĞLJ͘ dŚĞ ƌĞƐƉŽŶĚĞŶƚƐ ŝŶĐůƵĚĞĚ K͕ WƌĞƐŝĚĞŶƚ ŚĂŝƌŵĂŶ͕ WƌĞƐŝĚĞŶƚ͕ ǀĞŚŝĐůĞƐ Ă LJĞĂƌ͕ ĞŵƉůŽLJŝŶŐ ŵŽƌĞ ƚŚĂŶ ƚŚƌĞĞ ŵŝůůŝŽŶ ƉĞŽƉůĞ͘ dŚĞ ŽƵŶƚƌLJ ʹůĞǀĞů džĞĐƵƚŝǀĞ͕ ƵƐŝŶĞƐƐ hŶŝƚ ,ĞĂĚ͕ &ƵŶĐƚŝŽŶĂů ŚĞĂ ŽĨ ŚĞĂĚ ŝŶĚƵƐƚƌLJ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ŐƌŽǁ ƚŽ h^Ψ ϰϬ ŝůůŝŽŶ ďLJ ϮϬϭϱ͘ LJ ƚŚĞ Ϯ ĚŝĨĨĞƌĞŶƚ ĂƵƚŽ ĐŽŵƉĂŶŝĞƐ ĂƐ ǁĞůů ĂƐ dŝĞƌͲϭ ĂŶĚ dŝĞƌͲϮ ƐƵƉƉůŝĞƌƐ͘ LJĞĂƌ ϮϬϭϲ ƚŚĞ ŝŶĚƵƐƚƌLJ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ĐŽŶƚƌŝďƵƚĞ ϭϬй ŽĨ ƚŚĞ ϭϬ dŚĞŝƌ ƌĞƐƉŽŶƐĞ ĨŽƌ ƚŚĞ ĐŽƵŶƚƌLJ ĂƚƚƌĂĐƚŝǀĞŶĞƐƐ ŝŶ ĂƵ ŝŶĚƵƐƚƌLJ ĂƵƚŽ ŶĂƚŝŽŶ͛Ɛ W͘ dŚĞ ƐƵĐĐĞƐƐĨƵů ůĂƵŶĐŚ ŽĨ dĂƚĂ EĂŶŽ͕ ƚŚĞ ĐŚĞĂƉĞƐƚ ĐŚĞĂƉĞƐ ŝŶĚŝĐĂƚĞĚ ƐŝĂ WĂĐŝĨŝĐ ƌĞŐŝŽŶ ƚŽ ďĞ ƚŚĞ ŵŽƐƚ ĂƚƚƌĂĐƚŝǀĞ ŽĨ Ăůů͘ ĐĂƌ ŝŶ ƚŚĞ ǁŽƌůĚ͕ ŚĂƐ ŐŽƚ ŝŶƐƚĂŶƚ ƌĞĐŽŐŶŝƚŝŽŶ ŝŶ ƚŚĞ ĂƵƚŽŵŽďŝůĞ ƚŚ ŝŶĚƵƐƚƌLJ ĂĐƌŽƐƐ ƚŚĞ ŐůŽďĞ͘ /ƚ ŚĞƌĂůĚĞĚ ƚŚĞ ĐŽŵŝŶŐ ƚŽ ĂŐĞ ŽĨ ƚŚĞ ƚ /ŶĚŝĂŶ ƵƚŽŵŽďŝůĞ /ŶĚƵƐƚƌLJ Ăƚ ƚŚĞ ůŽďĂů ůĞǀĞů͘ ^ƵũĂLJ ^ĂdžĞŶĂ DŝƚƵů ͘ ^ŚĂŚ WD / ;ϬϵͲϭϭͿ ƵƌŽƉĞĂŶ ĐŽŶŽŵLJ DĂƉƉŝŶŐ ƚŚĞ hΖƐ Ğďƚ͕ :ŽďƐ ĂŶĚ ƌŽǁƚŚ tŽƌƌŝĞƐ dŚĞƌĞ ĂƌĞ ĨĞĂƌƐ ƚŚĂƚ ƌĞĞĐĞΖƐ ĚĞďƚ ĐƌŝƐŝƐ ǁŝůů ŚĂǀĞ ƐŝŵŝůĂƌ ĞƉŝƐŽĚĞƐ ĞůƐĞǁŚĞƌĞ ĞůƐ ŝŶ ƚŚĞ ĞƵƌŽ njŽŶĞ Ͳ ŶŽƚĂďůLJ ŝŶ WŽƌƚƵŐĂů ĂŶĚ ^ƉĂŝŶ͘ dŚĞƐĞ ĐŽƵŶƚƌŝĞƐ ŚĂǀĞ ƐĞŶƚ ƐŽǀĞƌĞŝŐŶͲďŽŶĚ LJŝĞůĚƐ ĨŽƌ ƐĞǀĞƌĂů ƐŽƵƚŚĞƌŶ ƵƌŽƉĞĂŶ ĐŽƵŶƚƌŝĞƐ ĚƌŝĨƚŝŶŐ ŚŝŐŚĞƌ͕ ĂŶĚ ŚĂǀĞ ĨƵĞůůĞĚ ĨĞĂƌƐ ĂďŽƵƚ ƚŚĞ ĞdžƉŽƐƵƌĞ ŽĨ ƵƌŽƉĞΖƐ ďĂŶŬƐ ƚŽ ŝŶĚĞďƚĞĚ ƵƌŽƉĞ ŐŽǀĞƌŶŵĞŶƚƐ͘ ƚƚĞŵƉƚƐ ƚŽ ƌĞŝŶ ŝŶ ƚŚĞ ƉƵďůŝĐ ĨŝŶĂŶĐĞƐ ŵĂLJ ĐĂůŵ ďŽŶĚ ŵĂƌŬĞƚƐ ĨŝŶĂŶĐĞ ďƵƚ ƚŚĞLJ ĂůƐŽ ƌŝƐŬ ǁĞĂŬĞŶŝŶŐ ŐƌŽǁƚŚ͕ ǁŚŝĐŚ ŵĂŬĞƐ ůŝĨĞ ŵŽƌĞ ĚŝĨĨŝĐƵůƚ ĨŽƌ ůŝ ϭ͘ ŽŵƉĂŶŝĞƐ ŝŶ ŵĞƌŝĐĂ ĂƌĞ ŽƉƚŝŵŝƐƚŝĐ ŽŶ ĞĐŽŶŽŵŝĐ ĞdžƉŽƌƚĞƌƐ ŝŶ ƉůĂĐĞƐ ůŝŬĞ ŚŝŶĂ ĂŶĚ ŵĞƌŝĐĂ͕ ĂŶĚ ƐƉĞůůƐ ƚƌŽƵďůĞ ŽĨ Ă ĚŝĨĨĞƌĞŶƚ ƐƉĞ ĞĐŽŶŽŵLJ ŐƌŽǁƚŚ ŬŝŶĚ ĨŽƌ ƚŚĞ ďĂŶŬƐ͘ /Ŷ ϮϬϬϵ ŽŶůLJ WŽůĂŶĚ ŽĨ ƚŚĞ Ϯϳ ĐŽƵŶƚƌŝĞƐ ŝŶ ƚŚĞ ƵƌŽƉĞĂŶ ƵƌŽƉĞĂ Ϯ͘ :ĂƉĂŶ ŝƐ ƌĂƚĞĚ ůŽǁĞƐƚ ŐƌŽǁƚŚ ŵĂƌŬĞƚ ďLJ D ĐŽƵŶƚƌŝĞƐ ϯ͘ ƌŽĂĚ ƌĞŐŝŽŶĂů ĐŽŶƐĞŶƐƵƐ ŚŝŐŚ ĂƐƚĞƌŶ ƵƌŽƉĞ ĂŶĚ Ɛ ƐŝĂŶ hŶŝŽŶ ŵĂŶĂŐĞĚ ƚŽ ƌĞĐŽƌĚ ƉŽƐŝƚŝǀĞ ŐƌŽǁƚŚ͘ ůƚŚŽƵŐŚ ŵĂŶLJ ĐŽƵŶƚƌŝĞƐ ŚĂǀĞ ŶŽǁ ŵ ŐƌŽǁƚŚ ƌĞƚƵƌŶĞĚ ƚŽ ŐƌŽǁƚŚ͕ ŝƚ ŝƐ ŐĞŶĞƌĂůůLJ ĂŶĂĞŵŝĐ͘ /Ŷ ŵĂŶLJ ĐŽƵŶƚƌŝĞƐ ƵŶĞŵƉůŽLJŵĞŶƚ ŵĂŶ ƌĂƚĞƐ ŚĂǀĞ ŶŽƚ ƌŝƐĞŶ ĂƐ ŵƵĐŚ ĂƐ ŽŶĞ ŵŝŐŚƚ ĞdžƉĞĐƚ ŐŝǀĞŶ ƚŚĞ ĚĞƉƚŚ ŽĨ ƚŚĞ /E/ ʹ dŚĞ ZŽĂĚ ŚĞĂĚ ĐƌŝƐŝƐͶƚŚĞƌĞ ĂƌĞ ƚŝŵĞƐ ǁŚĞŶ ŵĂŬŝŶŐ ŝƚ ŚĂƌĚ ƚŽ ĨŝƌĞ ƉĞŽƉůĞ ŚĂƐ ƐŽŵĞ ĂĚǀĂŶƚĂŐĞƐ͘ Ƶƚ ƚŚĞ ĨůŝƉƐŝĚĞ ŽĨ ůĂďŽƵƌͲŵĂƌŬĞƚ ƌŝŐŝĚŝƚLJ ŝƐ ƚŚĂƚ ƚŚĞ /ŶĚŝĂ ŝƐ ĞŵĞƌŐŝŶŐ ĂƐ ŽŶĞ ŽĨ ƚŚĞ ŬĞLJ ŵĂƌŬĞƚ ĨŽƌ ĂƵƚŽ ĂƵƚŽŵŽďŝůĞƐ ĂŶĚ ƵŶĞŵƉůŽLJŵĞŶƚ ƌĂƚĞ ŵĂLJ ďĞ ΗƐƚŝĐŬLJΗ͕ ďĞĐĂƵƐĞ ĨŝƌŵƐ ŚĂǀĞ ůĞƐƐ ŶĞĞĚ ƚŽ ŚŝƌĞ ĂƐ ŚĂ ĂƵƚŽ ĐŽŵƉŽŶĞŶƚƐ ĐĞŶƚĞƌ ĂŶĚ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ƉůĂLJ Ă ƐŝƐŝŐŶŝĨŝĐĂŶƚ ƌŽůĞ ƌĞĐŽǀĞƌLJ ƚĂŬĞƐ ŚŽůĚ͘ dŚĂƚ ǁŝůů ŬĞĞƉ ĚĞŵĂŶĚ ŐƌŽǁƚŚ ƐƵďĚƵĞĚ͘ ŝŶ ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ƐƵƉƉůLJ ĐŚĂŝŶ ŝŶ ƚŚĞ ŶĞĂƌ ĨƵƚƵƌĞ͘ /ŶĚŝĂ ŚĂƐ ĞŵĞƌŐĞĚ ĂƐ ĂŶ ŽƵƚƐŽƵƌĐŝŶŐ ŚƵď ĨŽƌ ĂƵƚŽ ƉĂƌƚƐ ĨŽƌ ŝŶ ŝŶƚĞƌŶĂƚŝŽŶĂů DĞĚŝŽĐƌĞ ŐƌŽǁƚŚ ƌĂƚĞƐ ĂƌĞ ŵŽƌĞ ŽĨ Ă ƉƌŽďůĞŵ ĨŽƌ ƐŽŵĞ ĐŽƵŶƚƌŝĞƐ ƚŚĂŶ ŽƚŚĞƌƐ͘ ƐŽŵ ĐŽŵƉĂŶŝĞƐ ƐƵĐŚ ĂƐ &ŽƌĚ͕ ĞŶĞƌĂů DŽƚŽƌƐ͕ ĂŝŵůĞƌ Śƌ ŚƌLJƐůĞƌ͕ &ŝĂƚ͕ dŚĞLJ ƐƉĞůů ƉĂƌƚŝĐƵůĂƌ ƚƌŽƵďůĞ ĨŽƌ ƚŚŽƐĞ ƚŚĂƚ ŚĂǀĞ ŚŝŐŚ ůĞǀĞůƐ ŽĨ ĚĞďƚ ĂŶĚ ƚŚĂƚ ĚŽ Ś sŽůŬƐǁĂŐĞŶ ĂŶĚ dŽLJŽƚĂ͘ ƵƌŝŶŐ ƚŚĞ LJĞĂƌ ϮϬϬϴͲϬϵ͕ ƚŚĞ ƚƵƌŶŽǀĞƌ ĂŶĚ ĞdžƉŽƌƚ ĨŽƌ ĂƵƚŽ ĐŽŵƉŽŶĞŶƚ ŝŶĚƵƐƚƌLJ ǁĂƐ ƌĞĐŽƌĚĞĚ Ăƚ h^Ψ ŶŽƚ ŚĂǀĞ ƚŚĞ ŽƉƚŝŽŶ ƚŽ ĚĞǀĂůƵĞ ƚŚĞŝƌ ĐƵƌƌĞŶĐŝĞƐ͘ dŚĂƚ ĞdžƉůĂŝŶƐ ǁŚLJ ƌĞĞĐĞ ǁĂƐ dŚ ϭϱ͘ϴϱ ŝůůŝŽŶ ĂŶĚ h^Ψ ϯ͘ϭϭ ŝůůŝŽŶ ƌĞƐƉĞĐƚŝǀĞůLJ͘ ĨŝƌƐƚ ƚŽ ůŽƐĞ ƚŚĞ ĐŽŶĨŝĚĞŶĐĞ ŽĨ ƚŚĞ ŵĂƌŬĞƚƐ͗ ǁŝƚŚ Ă ƉƵďůŝĐͲĚĞďƚͲƚŽͲW ƌĂƚŝŽ ŽĨ ϭϭϱй ĂŶĚ Ă ďƵĚŐĞƚ ĚĞĨŝĐŝƚ ŽĨ ϭϯ͘ϲй ŝŶ ϮϬϬϵ͕ ŝƚ ǁĂƐ ƚŚĞ ĞƵƌŽ njŽŶĞΖƐ ŽƵƚůŝĞƌ dŚĞ /ŶĚŝĂŶ ĂƵƚŽ ŝŶĚƵƐƚƌLJ ŝƐ ůŝŬĞůLJ ƚŽ ƐĞĞ Ă ŐƌŽǁƚŚ ŽĨ ϭϬͲϭϮ ƉĞƌĐĞŶƚ ĐŽƵŶƚƌLJ͘ KƚŚĞƌ ĐŽƵŶƚƌŝĞƐ ĂƌĞ ŶŽǁ ƐĐƌĂŵďůŝŶŐ ƚŽ ĂǀŽŝĚ ƌĞĞĐĞΖƐ ĨĂƚĞ͘ /ƌĞůĂŶĚ͕ ĂǀŽŝ ŝŶ ƐĂůĞƐ ŝŶ ϮϬϭϬ͕ ĂĐĐŽƌĚŝŶŐ ƚŽ Ă ƌĞƉŽƌƚ ďLJ ŐůŽďĂů ƌĂƚŝŶŐ Ĩŝƌŵ͕ &ŝƚĐŚ͘ ĂŶŽƚŚĞƌ ŚĞĂǀŝůLJ ŝŶĚĞďƚĞĚ ĞƵƌŽͲnjŽŶĞ ŵĞŵďĞƌ͕ ĞŵďĂƌŬĞĚ ŽŶ ĂƵƐƚĞƌŝƚLJ ĞĂƌůLJ͖ ^ŽŵĞ ŽĨ ƚŚĞ ŬĞLJ ŐƌŽǁƚŚ ĚƌŝǀĞƌƐ ŽĨ ƚŚĞ ŝŶĚƵƐƚƌLJ ĂƌĞ͗ WŽƌƚƵŐĂů ĂŶĚ ^ƉĂŝŶ͕ ǁŚŽƐĞ ƉƌŽďůĞŵƐ ƐƚĞŵ ĂƐ ŵƵĐŚ ĨƌŽŵ ůĞǀĞůƐ ŽĨ ĞdžƚĞƌŶĂů ĂŶĚ ĨƌŽ ƉƌŝǀĂƚĞ ĚĞďƚ ĂƐ ĨƌŽŵ ŐŽǀĞƌŶŵĞŶƚ ďŽƌƌŽǁŝŶŐ͕ ŚĂǀĞ ŚĂĚ ƚŚĞŝƌ ŚĂŶĚƐ ĨŽƌĐĞĚ͘ ^ƚŝůů • ZŝƐŝŶŐ ŝŶĚƵƐƚƌŝĂů ŽƵƚƉƵƚ ŽƚŚĞƌƐ ĂƌĞ ƉƌƵŶŝŶŐ ďĞĨŽƌĞ ƚŚĞ ŵĂƌŬĞƚƐ ĞdžĞƌƚ ƌĞĂů ƉƌĞƐƐƵƌĞ͗ ƌŝƚĂŝŶΖƐ ĚĞďƚ ŚĂƐ • ZŝƐŝŶŐ ƉĞƌ ĐĂƉŝƚĂ ŝŶĐŽŵĞ ƚŚĞ ůŽŶŐĞƐƚ ŵĂƚƵƌŝƚLJ ŽĨ ĂŶLJ h ŵĞŵďĞƌ ďƵƚ ŝƚ ŝƐ Ɛƚŝůů ĂŝŵŝŶŐ ƚŽ ŐĞƚ ŝƚƐ ĨŝŶĂŶĐĞƐ Ɛƚŝ • ZŝƐŝŶŐ ŵŝĚĚůĞ ĐůĂƐƐ ŝŶ ŽƌĚĞƌ ǁŝƚŚŝŶ ĨŽƵƌ ƐĂǀĂŐĞ LJĞĂƌƐ͘ • hƌďĂŶŝnjĂƚŝŽŶ ďŚŝƐŚĞŬ DŽĚĂŬ • ZŝƐŝŶŐ ŝƐƉŽƐĂďůĞ ŝŶĐŽŵĞ WD / ;ϬϵͲϭϭͿ • ĂƐLJ ĨŝŶĂŶĐĞ ƐĐŚĞŵĞƐ • ZŽďƵƐƚ ĂŶĚ ǁŽƌůĚ ĐůĂƐƐ ƉƌŽĚƵĐƚŝŽŶĞͲ ůŽďƵnj sŽůƵŵĞ /͕ /ƐƐƵĞ /// :ƵůLJ ^ĞƉƚĞŵďĞƌϮϬϭϬ ϮϬϭϬ WĂŐĞ ͮ ϱ
    • COVER STORY A tribute to Late Prof. C. K. Prahalad Bottom of the Pyramid How Sustainable is your Business? Did we know that a company could make a bigger profit by focusing on the market segment consisting poor. of people who earn less than $2 per day? Financially sustainable and integrated BOP business lines are the pinnacle of growing market is at the bottom and not the top of the fortune pyramid? truly sustainable and strategic Corporate Social Responsibility Were we aware that nine countries including China, India, Brazil, Mexico, Russia, Indonesia, Turkey, The real fortune being sought is the simultaneous South Africa, and Thailand collectively have a GDP accomplishment of a trifecta of goals corporate of $12.5 trillion, larger than the GDP of Japan, profit, relevant and sustainable social impact and Germany, France, Italy, and the UK combined? local poverty alleviation. The impending questions are: C.K. I. Securing Internal Support: How can companies Prahalad gather data affordably in order to make a compelling business case and develop accurate projections? know-how, and investment capacity, we are unable II. Testing on a Budget: How can we run pilot to make even a minor contribution to the problem of programs at an affordable cost with low-margin business models? This profound question stares at you only to leave you answerless. In 2002, The Fortune at the Bottom III. Patience: How can we balance corporate of the Pyramid ushered in a new level of pressures for profitability with commitments for consciousness in international business strategy. impact in the community? Although the idea of doing good and doing well was already well established, the anecdotal case by C.K. IV. The challenge of growth: How can we scale while Prahalad and Stuart Hart that the four billion people adapting the product composition and its delivery each living on less than US$2 a day (the bottom of mechanisms to the needs of each local community? held the potential for immense profit captured popular The assumption that the poor need to seen as a imagination. Multi-national companies (MNEs) market, but one different from the conventional around the world launched initiatives to adapt and perception ofa market, has some immediatee - GlobuzZ, Volume I, Issue III July September 2010 Page | 6
    • COVER STORY A tribute to Late Prof. C. K. Prahalad consequences all of the traditional business concepts are applicable but each and every one of those concepts needs to be applied from a distinct perspective. What results is a practical example of the applicationof innovative thinking and innovation to an intractable problem How to cater to the more than 4-billion humans who do not form part of the target market of the organizations that are driven by conventional assumptions about products, services, value and needs. Professor Prahalad demonstrated that the process of poor can provide substantial returns to create real partnerships and innovations for established participatory, bottom-up initiative companies. To a great extent, financially sustainable and Thus Top of the Pyramid Approach may just lead to integrated BOP business lines are the pinnacle of Sustainability BUT Bottom of the Pyramid leads to truly sustainable and strategic Corporate Social Sustainable Development Responsibility. Answering the questions at the bottom of the pyramid may be the key to ushering in What is required is to undertake an analysis of the a new era of capitalism which generates profit, current BOP paradigm to support the development offers wealth-creation opportunities for the poor, of a sustainable, participatory multi-stakeholder spreads products to reduce sickness and spreads approach. education around the world welcoming billions of -nationals towards SME people to participate in a more inclusive, sustainable global economy. The thousands of little fires lit by corporations, entrepreneurs, academics, governments and non-profits may yet become a blaze that will change the world. development Vikash Singh PGDM IB (09-11) The Wellness Wave: International HRM Dhara Shah (MMS- HR 09-11) Workplace Wellness established its foothold in the West long back. The trend is now finally catching up in India. With the rapid growth of the IT and ITeS sectors, the rest of the industries. A 2009 study conducted by Right Management, a Manpower Company, suggests that wellness is an extremely powerful element that can play a significant role in employee engagement, organizational productivity, talent retention, and creativity and innovation. It is imperative that wellness should be incorporated in the organizational effectiveness framework to realize real business gains. it is important to note that an organization can position Wellness very effectively as an int its influence going well beyond the boundaries of just physical and psychological health will translate into better organizational effectiveness. Wellness needs to be looked at as an umbrella of various initiatives and offerings. Redefining wellness as a concept that offers more than just health to the employees is the way forward for all the organizations.e - GlobuzZ, Volume I, Issue III July September 2010 Page | 7
    • COUNTRY IN FOCUS SOUTH AFRICA The Republic of South Africa is a country located at the country with its products. southern tip of Africa, with a 2,798 kilometers coastlineon the Atlantic and Indian Ocean. The official currency is Rand. Political System The country is divided into nine provinces with the four main regions of commerce being in the Western Cape (Cape Town), African National Congress, with Mr. Nelson Mandela as Eastern Cape (Port Elizabeth and East London), KwaZulu-Natal president, was elected with an overwhelming majority. The (Durban) and Gauteng (Johannesburg). South African government comprises as the national, Industries provincial and local spheres of government which are distinctive, inter-dependent and inter-related. The legislative South Africa is rich in mineral resources, has a well-developed authorities, executive authorities and judicial authorities are all separate from one another. minerals. It has a broad-based industrial manufacturing centre, making it the largest and most industrially developed economy Social Issues in The education system and teaching methodology are not yet modern. The number of graduates is quite less. There is a trading nations. Agriculture is an important component of the critical shortage of low cost housing. Crime rates are high economy and the country is a net exporter of food. though the government has implemented National Crime Investing Climate Prevention Strategy. HIV/AIDS is one of the greatest challenges for both the Government and the businesses. The South African economy is predominantly based on free market principles, with some areas of state control. There is a IPR long history of foreign investment in South Africa, with heavy South Africa has tight Intellectual Property laws though the involvement by British, German and American interests. As the enforcement is not stringent. The review of South Africas IPR leading economy in Africa, with a well-developed regime reveals a rather mixed picture of the state of IPR infrastructure and established trade links with the rest of the protection in South Africa. The approval of South African continent, South Africa is a suitable base for generating Reserve Bank is necessary for the export of any investment and trade with the rest of Africa, particularly in the technology/intellectual property. In South Africa, the sub-Saharan region. Except in the banking, insurance and intellectual property division of CIPRO, the Companies and broadcasting industries, there are no restrictions on foreign Intellectual Property Registration Office, is responsible for the ownership of local companies and businesses. registration of patents, trademarks, designs and copyright. There are initiatives in place for the empowerment of black persons (i.e. Black, Colored and Indian persons). These include increasing ownership of companies by black persons and other With a well-developed forms of empowerment through employment equity and infrastructure and established preferential procurement. trade links with the rest of the Economy continent, South Africa is a The country has an excellent physical infrastructure in terms of suitable base for generating roadways, railways, power distribution etc. South African industry is able to produce most of the requirements of investment and trade with the Southern Africa. The market is, however, small in comparison rest of Africa, particularly in the to European and US standards and in many instances a single enterprise is capable of satisfying the entire needs of the sub-Saharan region.e - GlobuzZ, Volume I, Issue III July September 2010 Page | 8
    • Foreign relationships The government has made it clear that foreign investment is welcome in South Africa, and investor-friendly policies support One of the leading voices in the African continent, South Africa the public pronouncements. SouthAfrica has a world- has been involved in a series of initiatives at both political and class,progressive legal framework. Other factors like economic level to promote and advance African interests and unemployment, weak health care sector etc. notwithstanding, peace in Africa. South Africa is a founder member of the New South Africa appears to offer a lot to potential investors and Par a business ventures. member of several international organizations such as United Nations, the Commonwealth and the Non-Aligned Movement and has established diplomatic relations with over 150 nations. In recent years, South Africa has also developed strong relations with markets in the rest of Africa, Asia and Latin America. South Africa is also part of IBSA, a trilateral developmental initiative between India, Brazil and South Africa, to promote South-South cooperation and exchange. Culture South Africa is a mix of different cultures representing every level of an extremely stratified community. Apart from the Afrikaners, most of the white South Africans are of British descent. But most of the traits of a heterogeneous culture were ignored, destroyed or trivialized during the years of the apartheid. In a society where a person could be imprisoned for just owning a politically incorrect piece of art like a painting, all the serious works of art were forced underground and the MAP : South Africa galleries and theaters were filled with bland works of art. South Africans have been referred to as the rainbow nation, a title which epitomizes the countrys cultural diversity. The population of South Africa is one of the most complex and diverse in the world. Of the 45 million South Africans, nearly 31 million are black, 5 million white, 3 million colored and one million Indian. The population density is 32.9 people per km. Parvathi Ramanandan Conclusion Aditi Gupta PGDM IB (09-11) As an investment destination, South Africa has enormous potential due to the unique mix of highly developed first class economic infrastructure with a vibrant emerging market economy. It is also one of the most advanced and productive economies in Africa. After adopting democracy in 1994, South Africa has been undergoing rapid structural transformation with the implementation of macro-economic policies aimed at promoting domestic competitiveness, growth and employment and increasing the economys outward orientation. Not only is South Africa in itself an important emerging market, it is also a key for accessing other sub- Saharan markets. Key economic reforms have given rise to a high level of macro-economic stability.e - GlobuzZ, Volume I, Issue III July September 2010 Page | 9
    • Academic Fraud in China Thus reward can come without academic rigour and senior the need to foster innovation. He makes a strong case: scientists, who are rarely punished for fraud, set a wrong sustaining economic growth and competitiveness requires example for juniors. China to go beyond mere labour-driven manufacturing and into the knowledge-based business of discoveries, inventions The implications of widespread academic misconduct could and other advances. be great. Denis Fred Simon of Penn State University argues overall credibility of the entire scientific enterprise in China- well-earned reputation for pervasive academic and scientific and unfortunately feeds negatively into the related concerns misconduct. Scholars, both Chinese and western, say that about the safety of Chinese products and the integrity of fraud remains rampant and misconduct ranges from falsified data to fibs about degrees, cheating on tests and extensive plagiarism. In practical terms foreign scientists may be deterred from China, as they worry about getting caught up in scandals. The most notable recent case centres on Tang Jun, a Early this year, after it was found that 70 papers on crystal celebrity executive, a self-made man and author of a popular structures submitted to an international journal by Chinese book, My Success Can Be Replicated . He was recently scientists had been fabricated, the Lancet medical journal accused of falsely claiming that he had a doctorate from the prestigious California Institute of Technology. He responded that his publisher had erred and in fact his degree is from suggested, had failed to get to the root of why some Chinese another, much less swanky, California school. scientists lie. Other cases involve accusations of plagiarism against well- Another direct cost may be felt by Chinese students looking known Chinese scholars which have provoked the for college places abroad. Admissions officials are suspicious authorities to talk of investigating. A western scholar of near-perfect scores on standardised tests and glowing recounts how a social-science project was jeopardized recommendations from professors, which are common to recently when data collection was contracted out to a many applications from China. The risk is that genuinely Chinese company whose researchers simply filled out the qualified students are turned away because of general survey forms themselves. integration with the outside world may help. As more Such lapses of integrity are not unique to China, but poor academicians earn degrees abroad and go back to posts in peer-review mechanisms, misguided incentives and a lack of China, informal networks are created that help outsiders checks on academic behaviour all allow fraud to be more check on the quality of applicants. That is a small innovation, common. China may be susceptible, suggests Dr Cong Cao, a but perhaps one that will benefit China. specialist of Chinese Sociology at the State University of New York, because academics expect to advance according to the Abhishek Modak number, not the quality, of their published works. PGDM IB (09-11)e - GlobuzZ, Volume I, Issue III July September 2010 Page | 10
    • Report on Economic Freedom Network Asia Conference 2009 Siam Reap, Cambodia In 2009, I bagged an opportunity to present a view from SEN, Deputy Prime Minister and Minister of Economy and India in the historical city of Siam Reap in Cambodia to a Finance (representing H.E Somdech Akka Moha Sena padei distinguished and diverse gathering. The conference Techo HUN SEN,Prime Minister of the Kingdom of Cambodia). discussed the ongoing financial and economic crisis and ways to tackle it. The theme unearthed many more sub-themes H.E. Chhon stated in his opening address that "In a broad and when considered through the pris global term, the Rule of Law is threatened worldwide from conference, economists, corporate professionals, four directions: (i) by the lumpen proletariat for their policymakers, lawyers, newsmakers, grassroots-workers, philosophers, thinkers, educationists reflected and expressed ignorance, despair and poverty, (ii) by the lumpen aristocracy their views on the latest global debacle. The congregation of for their arrogance and their insatiable greed as revealed by 130 academicians and practitioners from 18 countries the cataclysmic crisis of international finance, (iii) by the enriched the conversations on the broad theme. deadly terrorism fuelled by ideological extremism and (iv) by Cambodia as a Setting for the Conference: the organized crimes. Cambodia was aptly chosen as the host The Rule of Law relates to the economy country representing the case of a conflict- through its power to protect property ravaged nation trying to get on the way to rights, enforce contracts, ensure fair economic recovery amidst the backdrop of competition, and mobilize and disburse the economic shake-out in the western, financial capital." develope Key Points of Discussion: economy grew at an average of 11.1 percent during 2004-2007, after its transparent system) is preferred as accession to WTO in 2004) opposed which is Conference took place in the once- glorious city of the Angkor arbitrary, opaque and mainly for political ends). Wat (the famous temple complex built by King Suryavarman II th in 12 century, which still is magnificent as a ruin). part and parcel of progress especially in a capitalist economies. Therefore instead of lamenting the Overall Experience of the Conference: The two-day recessionary phase, the focal points should be on conference featured keynote addresses from internationally finding ways of cushioning the impact of the renowned experts, as well as a series of themed panel recession. streams, presentations and exhibitions. The conference Free Market Economy may not be the perfect market structure but is the best alternative up with their own agenda thanks to the Open Space An inward-looking response to the economic crisis Technology. will delay recovery and can deepen recession. Proceedings in Brief Thanks to globalization, the recovery signs have The Conference was officially opened by H.E. Keat Chhon, appeared quickly, as compared to earlier crisese - GlobuzZ, Volume I, Issue III July September2010 Page | 11
    • Ad-hoc bailouts crisis?" Undervaluation of currencies in Asia Causes of the Financial and Economic Crisis: Though the sub- Proposed Solutions: prime crisis initiated the domino effect, there were other 1) Immediate Measures: factors that contributed to the spread of the crisis. As Curtail deficit spending discussed in the conference a few of them are enumerated Reduce the role of politics in policy formation below: 2) Medium Term Measures: Central bank interventions International understanding/cooperation towards Too much regulation or too much freedom? reducing barriers Nature of rules and regulations: Community Define the Lender of Last Resort function of the central Reinvestment Act, Basel II bank Misleading statistics and ineffective risk assessment Risk-based Pricing of Deposit Insurance Premium tools 3) Long- Term Measure: Irresponsible credit rating agencies Moving towards Decentralization of Money and Free Savvy Financial marketers who created fancy financial Banking System products Yavnika Khanna Poor corporate governance PGDM Marketing (09-11) CROSS WORD SOLUTION # 02e - GlobuzZ, Volume I, Issue III July September2010 Page | 12
    • Coca Cola Scores a Winner C o a C o a S c re a W i nn r c l o s e INTERNATIONAL MARKETINGdifferent sports. Sports act as a common platform to bring together people from different walks of life.Marketers wait impatiently for opportunitiesevents. Such strategies or sports events for promotion of brands have been used since time immemorial.Recently the Football World Cup was held at South Africa. Hoards of brands promoted their product and someeven launched products during FIFA. Coca Cola has a formal association with FIFA since 1974 and an officialsponsorship of FIFA World Cup that began in 1978. Coca-Cola has had stadium advertising at every FIFAWorld Cup since 1950. Five additional sponsors for FIFA 2010 were Budweiser, Castrol, MTN, McDonalds andContinental. Each of these deals have cost them more than $ 100 million only for the event. Mahindra Satyamwas designed the official IT partner at FIFA. From September 2009 to greatest prize was embarked on its biggest ever global tour in 86 countries including every nation in Africa as part of the FIFA World CupBut Coca Cola went a step ahead and came up with several promotional activities tailor made for FIFA. It hasformal association with FIFA since 1974 and an official sponsorship of FIFA World Cup that began in 1978.The FIFA World Cup Trophy Tour by Coca-Cola had embarked on its biggest ever global tourto 86 countries including every nation in Africa as part of the FIFA World Cup Trophy Tour by Coca-Cola. Freetickets to the Trophy Tour were made available to consumers via Coca-Cola promotions in countries on theroute.At events in each city, fans had souvenir photos taken of them with the trophy, viewed a 3-D movie showcasingmoments of the FIFA World Cup, participated in interactive displays and enjoyed other entertainment. This toursave fans around the globe a chance to experience the excitement and pageantry of football no matter wherethey lived. So this made the consumer feel that Coca Cola brings happiness to their doorstep, against all odds.Coca Cola recorded the Coca Cola 2010 FIFA World C Flag Coca-with Somalian hip- . This track was the music element throughout the FIFA World cupcampaign. It was featured in all TV commercials, played during promotedonline and more.
    • Coca-Cola Celebration Award Coca Cola interactive marketing strategies included the recognizing of goal. This grabbed attention of the fans as for the first time ever they got a chance to vote for the eventual winner online. Coca Cola also came up with a CSR activity. For every goal scored and celebrated with a dance it made an additional donation to th Water for School effort that helps provides schools access to safe drinking water.AdvertisingCoca-Cola created three commercials as part of the campaign thestory of how Roger Milla inspired footballers to celebrate goals in an African- an way around the globe. - Coca-Cola produced a 60-minute documentary which unfolds catches up with 2010 FIFA World Cup players as they plan their Africa inspired celebrations for the tournament.Commemorative PackagingCoca Cola also came up with special packaging that celebrated the 2010 FIFA World Cup with dynamicgraphics and football imagery.Coca-Cola Football Camp250 teenagers from around the world gathered at a special football camp hosted by Coca-Cola in Pretoria, SouthAfrica during the FIFA World Cup tournament. The camp encouraged young people to remain active throughsports and also included training, skills demonstrations, celebrity coaches and a tournament.Coca-Cola Flag bearersCoca-Cola also gave young football fans around the world the once-in-a-lifetime opportunity to be official flagbearers and lead the teams out on to the pitch before 2010 FIFA World Cup games.ConclusionCoca-cola, by showing the world how to celebrate the World Cup, has also showed the management gurus andother companies how to market a brand by riding on the glory of a much loved event. It made a mark and wasthe defining brand of this World Cup, even though other brands like Pepsi tried to ambush its position. Themulti frontal, multi platform and multimedia based approach of Coca-C marketing campaign ensured thatthe audiences around the world over were left with the memory of celebrating the world cup with little drops ofjoy. Shilpi Tayal Celia Madona Vincent PGDM IB (09-11)
    • Global Banking Scenario INTERNATIONAL FINANCE Introduction The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and their branches A bank is a financial intermediary that accepts deposits and (82,000). As of Nov 2009, Chinas top 4 banks have in excess of channels those deposits into lending activities, either directly or 67,000 branches (ICBC: 18000+, BOC: 12000+, CCB: through capital markets. A bank connects customers with 13000+, ABC: 24000+) with an additional 140 smaller banks capital deficits to customers with capital surpluses. Banking is with an undetermined number of branches. Japan had 129 generally a highly regulated industry, and government banks and 12,000 branches. In 2004, Germany, France, and Italy restrictions on financial activities by banks have varied over each had more than 30,000 branches more than double of the time and location. The current set of global bank capital 15,000 branches in the UK. standards is called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial What is Banking today? corporations while in other countries such as the United The current banking scenario is greatly different from the past. States banks are prohibited from owning non-financial Only 15 to 20 years ago, most Western banks generated 90% of companies. In Japan, banks are usually the nexus of a cross- revenue from interest income. Now this percentage has fallen share holding entity known as The Keiretsu. The oldest bank to 60%, sometimes as low as 40%. The concept of banking is still in existence is Monte dei Paschi di Siena, headquartered being modified and the traditional barriers among financial in Siena, Italy, which has been operating continuously since service sub industries (retail banking, private banking, 1472. investment banking, asset management, insurance, etc.) are Size of Global Banking Industry vanished. Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while Global Banking profits declined by 85% to $115bn. Growth in assets in adverse The common trends resulted in pace of dramatic change for market conditions was largely a result of recapitalization. EU banking are: banks held the largest share of the total, 56% in 2008/2009, The focus of banking is shifting from transaction down from 61% in the previous year. Asian banks share management towards sales of financial products. increased from 12% to 14% during the year, while the share of Barriers to entry for the retail banking segment are US banks increased from 11% to 13%. Fee revenue generated being lowered. by global investment banking totaled $66.3bn in 2009, up 12% The growing variety of delivery channels for banking on the previous year. enables new entrants to thrive. Factors affecting Global Banking Scenario The technological breakthrough caused by the Despite the improvement eruption of e-banking and e-finance. to banks balance sheets, Worldwide consolidation and consequent several factors raise restructuring. doubts about the Increasing competition in terms of both markets and sustainability of banks products.e - GlobuzZ, Volume I, Issue III July September 2010 Page | 15
    • INTERNATIONAL FINANCE The Bank of England has cut interest rates to a record A slowing population growth and increasing average low of 1% -the lowest level in its 315-year history life expectancy and per capita income. The US Congress passed a stimulus package worth $ The growing importance of a clear strategic intent in 838 billion, aimed at creating millions the banking industry. of new jobs and steering the economy out of the New competitors are entering the financial service recession. business. China announced a huge economic stimulus package of Consolidation : Consolidations take place for the an estimated $586 billion. following reasons: Japan announced $100bn to curb recession. o To take advantage of economies of scale. Germany announced $63bn e.g.:-the merger between the Swiss banks UBS Conclusion and SBC creating one of the largest banks in "Despite the improvement to banks balance sheets, several the factors raise doubts about the sustainability of bank profits," o To have access to distribution channels. the BIS (The Bank for International Settlements) said. Banks like o To widen the range of products that the bank UBS (UBSN.VX), Morgan Stanley (MS.N) and Goldman Sachs can offer both actual and potential clients. (GS.N) posted strong earnings in the first three months of this e.g.:-between Citibank and Travelers, has year thanks to trading income. A number of countries had to originated Citigroup bail out banks at the height of the crisis to prevent the financial Highlights of Global Crisis system from collapsing. In October 2007 major failures start to appear in the Also not all crisis-related losses may be exposed yet as less bank has announced losses $3.4bn from investments stringent and less timely reporting requirements for banks in linked to sub-prime. Europe had made it more difficult to gauge future write downs. Following, American banking giant Citigroup posted a More write downs could be expected due to falling commercial sub-prime loss of $40bn. property prices, it said. US investment bank Merrill Lynch revealed a $7.9bn "Losses on European bank balance sheets are expected to disclosure to bad debt. mount over the next few years," the BIS said. "Anecdotal After failing to search for a potential buyer, Lehman evidence suggests that some banks have taken to rolling over Brothers becoming the first major US investment bank existing loans rather than inducing foreclosures, thus delaying to collapse since beginning of the credit crisis. loss recognition." The BIS also said that many banks in Europe and elsewhere were overly reliant on US dollar swaps. Aftermath of Global Crisis European and other banks had an estimated $7 trillion in IMF warns that world economy development could dollar-denominated assets on their books, much of them with decline to its lowest point ever since World War II to long-dated maturities. just 0.5% this year. So, the worlds banks are still not out of the woods despite In USA the interest rate has been cut hugely by the recent multi-billion profits as write downs on loans loom and Federal Reserve from the 5.25% to 0.25%. funding pressures remain high. In UK pound was at a 23-year low against the dollar. Shalu Goyal PGDM IB (09-11)e - GlobuzZ, Volume I, Issue III July September 2010 Page | 16
    • Excerpts of talk of Mr. RohitPandya- Dy. General Manager- Q&A Mr. Rohit Pandya joined ECGC in 1982 in the Risk Buyer & Country Underwriting,ECGC, Mumbai with Sukhmani and Vikash of PGDM IB (09-11) medium/long term projects has happened In India a similar Management Division and then moved to the role of deputy prospect is visualised as the economy matures. General Manager - Buyer & Country Underwriting and is continuing in the position since then. He has over 28 years of Q. How do you evaluate the risk for Credit Insurance Products experience in the field and has been involved in numerous provided by ECGC? International assignments. A. We, at ECGC, follows a system of risk assessment wherein 3 dimensions or perspectives are analysed: Q. Tell us something about your background and the career path a. Indian Exporters- over these years. IECD Code, membership of promotion Council, holding bank account, pan card and assessment of capability of exporter to A. As far as my academic background is concerned, I did my execute the order or sustain himself in the International arena. Hons. in Economics and then a Post-Graduation in Sociology. I also completed my Masters in Business Management from b. Overseas Buyers- in terms of financial & Non-Financial Bombay University and then went on to complete my diploma in factors. Reports from 13 agencies to get credit information on Foreign Trade from IIFT. the buyers are accessed. In addition ECGC Experience with the buy My professional career started when I joined ECGC in 1982 in account. the Risk Management Division as well performed other functions in the Corporation and then I moved recently to the c. Country - in terms of Objective Score Methodology with 7 fold role of Deputy General Manager Buyer & Country classification as A1, A2, B1, B2, C, D countries the political risks Underwriting and am continuing in this division since then. associated with a country is assessed. Q. You have been associated with ECGC for past 28 years. What Q. What competitive advantage does ECGC have over its changes have you seen in the International Trade environment competitors viz a viz private insurance players in the market? over your tenure? A. ECGC has a unique competitive advantage of being a A. There has been significant change in the International trade Government supported ECA which expands its role and scope. It environment especially in the last few years. Earlier there was has a record of over three lakh buyers to depend upon while precious demand for Credit insurance and very little awareness underwriting the buyer risks. The area of Indemnifying bank, about the same. The trend has changed in terms of increased which comprises of 2/3rd awareness and demand for credit insurance because of transition Support are the areas which have been introduced by ECGC and of Indian exports from traditional markets to non-traditional not by any other global or Indian player and similar models are markets and traditional commodities giving way to new now being replicated abroad. It has a strong hold in the credit commodities .Also there has been an addition of a large number insurance business which affirms its position as the major body of new buyers. On the country level perspective, in the last few in Export insurance sector. years the the Q. In case of European countries like Portugal, Italy, Greece large and well-known companies going bust in developed and Spain that are on the brink of sovereign defaults, some markets. Underwriting process has also undergone a change in private sector general insurers like ICICI Lombard General this view. About six years ago a more liberalized approach was Insurance Company Ltd and Bajaj Allianz General Insurance introduced, because the Corporation was showing operating Company Ltd. have begun tightening risk premiums to these surplus in its schemes. The premiums rates were last revised in 2003 but the classification have been constantly revised and have taken a totally new dimension post meltdown era. A. Instead we deal with such cases by putting a restriction on the In the Global credit insurance market in advanced countries the buyers in such countries. For example, in UAE we have Short Term businesses are now on a decline and movement to discontinued Single Buyer covers and only offer Umbrella Covere - GlobuzZ, Volume I, Issue III July September 2010 Page | 17
    • SCJFHDKJFDFDF Q&A products to have a good spread of the risk. Also if the situation so A. There is vast potential in such tools which are a result of the warrants we re-classify a country which directly or indirectly has collaborative effort between the two institutions. There has been an impact on the premium rates. increasing role of ECGC in the International Trade environment and that has led to great synchronization with other Q. ECGC has reclassified the credit-worthiness of 237 countries organizations like EXIM bank particularly in areas of Line of in April 2010 by reviewing all the countries using its CRRM model which includes forecasting as a parameter. Could you please give some insight on the measures? Q. ECGC Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of A. ECGC has a regular process of reviewing its rating equity or loan. Are there any specific sectors which are covered methodology. For example, Cuba lately has been revised for its under this scheme? ranking and is now upgraded in the ratings after initiatives from Indian government to develop trade relations with Cuba were A. ECGC Overseas Investment Insurance provides cover to all declared. ECGC has high level exposures, monitoring and the sectors and has an equal focus on all of them. The major risk reviewing systems in place and is constantly keeping pace with covers include Expropriation Risk & War Risk, Transfer Delay the changing environment. risk etc. Similarly, ECGC is quite bullish on Iran but as of now has Q. What major challenges has ECGC been facing in the restricted exposures to Iraq. International trade environment lately? A. Some of the challenges have been related to the high claim insurance in the last couple of years; heavy loss in markets like US, UK, UAE, Italy & Germany; losses in commodities like Strategy is the key to Gems & Jewellery etc. The global meltdown and the consequences of squeeze in credit lines and pile up in inventories integrate all the has affected the credit insurance requests sought which has increased both in size and frequency. There is a noticeable techniques you learn in increase apart from delinquencies, requests for rescheduling and elongated terms of payment. management. A Three- Q. What leverage, in your opinion, does a course specializing in International Business provide & what competencies should a fold dimension of Focus, student of International business develop to be Industry ready in the International Business environment? Knowledge base and A. I would term a management course in international Business as an MBA PLUS. Strategy is the key to integrate all the Skills development is techniques you learn in management. Implementation is achieved through a thorough understanding of the International required for competitive strategy that should be put in place for the company to succeed in the global market. As for the competencies, having a three- advantage to be gained fold dimension is required: a Global Focus on the International Scenari through MBA in IB. the borders of the country, Skill adaptability & flexibility are the most sought after competency areas. These should be well coupled with having an international outlook, developing the ability to assimilate different cultures, developing negotiation skills & lingua franca will ensure that the student is well equipped to add value to the becoming a major player in Q. EXIM Bank in association with ECGC has planned new International business. credit tools (partially structured buyers credit where exporters will bear the subsidy) where government or multilateral lines of credit are not available and ECGC will grant the political risk in such cases. How much of market value do you see in such tools?e - GlobuzZ, Volume I, Issue III July September 2010 Page | 18
    • DEBATE: WILL EUROPEAN UNION SUSTAIN? The Euro zone has a choice to make, which is, to either integrate or disintegrate. Greater integration has been chosen as more financially disciplined nations of the European Union bailed out the PIIGS (Portugal, Ireland, Italy, Greece and Spain) whose excessive spending and serious indebtedness have threatened the stability of the worlds number two reserve currency; the Euro. The decision to make EU effectively a monitory union, tying its member countries into a joint currency and interest rate decisions, while allowing them to retain control over national budgets and taxes, has left the fractured grouping at a crossroads where in the members can either come together and stand by each other to tackle the problems or choose to fall apart driven by self-interests of the country. So the major question arises whether the EU will sustain as a union or disintegrate. from any of those countries failed the tests. POINT 2nd largest reserve currency. Failure of EU would mean Inspite of the dark cloud surrounding the European Union and the world over; inspite of so many articles being fall of Euro which will also endanger the other major written about European Union and predictions of torrid stakeholders around the world who maintain their part times ahead; there is still lot of hope about its reserve in Euro. These include countries like Russia and sustainability in the future. china. Hence there would be a huge pressure from around the world for EU to remain integrated. Even if the need The Greek and the economic crisis have done no good to arises IMF would step in to rescue. it. Nearly $1 trillion bailout package was declared from dragging under other weak economies Portugal, Spain, Ireland and Italy that are all vulnerable. It comes in the form of loans, debt guarantees, and additional cash to the money markets. The risk of contagion has already been mitigated through this bailout package. There are some reason Firstly, EU banks have survived the stress test. The tests have found that 91 banks in 20 European countries could deteriorating economic and financial environment. But only 7 banks flunked the tests, coming up short a Market reactions are muted, likely indicating that neither the worst fears nor greatest hopes were realized. The euro seesawed in New York trading, eventually gaining ground against the dollar. The Dow Jones Industrial Average What we are talking about here is one fifth of the World dropped shortly after test results were announced around be ignored by rest of the world. Disintegration just on the basis of some financial noon Eastern Daylight Time, but ended the day up 102 jitters is unlikely. Austerity measures employed across EU points, to 10424.62. U.S.-listed shares of some big would bring down the debt level. European Union was European banks followed the same trajectory. thought to be strict about its clauses of treaty, but it has already softened on the no bail out clause. And even the Bank supervisors throughout Europe hailed the test results deadline of 2012 would most probably extend. All in all as affirming the stability of the continents banking Disintegration of EU is a very unlikely scenario. system. Market confidence in Europes banks has since improved somewhat, partly due to optimism that a round Swastik Dasgupta of stress testing, which last year helped ease the U.S. banking crisis, would work similar wonders in Europe. PGDM IB (09-11) Despite worries about the health of the French, Irish, Italian and Portuguese economies and banks, no banke - GlobuzZ, Volume I, Issue III July September 2010 Page | 19
    • COUNTERPOINT Several leaders in the bloc are doing all they can to avoid representing half a billion people, 7 percent of world nations to have budget deficit ceilings of 3% of GDP & consumers and a fifth of world trade. external debt ceilings of 60% of GDP by 2012. The chart shows standings as of 2009. of exiting from the crisis. With the Euro that is some Symbiotic association is slowly turning out to be a parasitic association. Can the stability of the whole union be bought at the expense of few well off economies? Being in Union would mean more threat to countries like Germany, Netherlands and others who would have to carry the burden of the limping nations. And all this is just to ensure that the caused by contagion effect. Countries in EU were left with what is famously known as and economic stability, or instability. And clearly countries have chosen to take-up social pain. Several austerity measures are been implemented all across the EU to bring down the Debt levels. year and another 2.6 per cent in 2011. And similar would be the condition of other PIIGS countries. Both Greece and Portugal have already been hit by serious protests as a result of budget cuts. The question stands, would all the nations be able to push through the necessary reforms, because without much-needed reform, the gap between the strong and weak members of the euro zone threatens Is it right to use tax payer s hard earned money for to get even wider. would imply a direct impact on all the 27 member nations 5 of 16 Euro zone states have public finances in shambles, even if something goes wrong with one. Even if one enough to make the entire Continent uneasy. Investors country fumbles and decides to withdraw from the Union, fear that stable countries like Germany, Finland or the it will send out shock across the whole world and may Netherlands could ultimately be affected; that they may even lead to immediate disintegration. With so much be forced to pay for the financial errors of other EU happening around the world and in Europe, the stability of members in order to maintain the stability. EU is questionable. put together Akhilsingh Patil said Stephen Lewis, senior economist at London-based PGDM IB (09-11)e - GlobuzZ, Volume I, Issue III July September 2010 Page | 20
    • Empty Repo The movement of empty containers GDSM Abbreviation for "General Department Store Merchandise."A classification of commodities that includes goods generally shipped by mass-merchandise companies. This commodity structure occurs only in service contracts. Astern Behind a vessel. Move in a reverse direction. Beam The width of a ship. Jacobs Ladder A rope ladder suspended from the side of a vessel and used for boarding. Longshoreman Individual employed in a port to load and unload ships. Bunkers A Maritime term referring to Fuel used aboard the ship. Coal stowage areas aboard a vessel in the past were in bins or bunkers. DID YOU Bull Rings Cargo-securing devices mounted in the floor of KNOW containers; allow lashing and securing of cargo. Car Pooling THESE Use of individual carrier/rail equipment through a central agency for the benefit of carriers and shippers TERMS ??? Sonam Doshi PGDM IB (09-11)e- GlobuzZ, Volume I, Issue III July - September 2010 Page | 21
    • BOOK REVIEW COMPETING FOR THE FUTURE BY GARY HAMEL & C.K PRAHALAD Competing for the future by C. K. Prahalad and Gary Hamel is an excellent book on strategy guiding the managers of companies to think innovatively. It is a masterful blueprint for what a company should be doing today if it is to occupy the competitive high ground of tomorrow. Although this masterpiece was written about two decades ago, it is very relevant today in the rapidly changing business environment. The book talks about three phases of competing for the future viz. intellectual leadership, management of migration paths and Prof. C.K. Prahalad competition for the market share. There are two aspects occupying attention. Restructuring and re-engineering. Neither is an alternate for imagining and creating the future. Competing for the future requires not only a redefinition of strategy, To create the future a company must change in some fundamental way the rules of engagement in a long standing industry, redraw the boundaries between industries and create entirely new industries. Creating the future is more Prof. GARY HAMEL challenging than trying to Creating the future is more challenging than trying to catch it. The catch it. The goal is not to goal is not to benchmark a imitate them, but to develop independent point of view about how to create and exploit them. To get to the future, a company products and services or must be willing to jettison its past, at least in part. What prevents imitate them, but to companies from creating the future is installed base of thinking develop independent point the unquestioned conventions, myopic view of opportunities and threats, and the unchallenged precedents that comprise the of view about how to create existing managerial frame. To beat competition, the best way is to and exploit them. be the first to start alternative value delivery systems, the first toe- GlobuzZ Volume I, Issue III July - September 2010 Page | 22
    • BOOK REVIEW the future. Competing for the future must be a corporate A strategic architecture may point out the way to the future, responsibility. The competencies needed to access the new opportunity arena may well be spread across a number of provides the emotional and intellectual energy for the journey. business units, and it is up to the corporation to bring these Strategic architecture is the brain; strategic intent is the heart. competencies together at the appropriate point within the A company should work to shape the future according to its company. own standards. Getting to the future first may enable a The book explains that firms should compete for industry company to be the first to establish a virtual monopoly in a foresight. The goal of competition for industry foresight is, at one particular new product category and may also enable a level, simple: to build the best possible assumption base about company to establish the rules by which other companies have the future and thereby develop the prescience needed to to compete. It also explains the vital importance of core proactively shape industry evolution. competencies, they being the gateway to the future. A company that fails to understand the core competence basis for competition in its industry may be surprised by new A strategic entrants who rely on competencies developed in other end architecture may point markets. In the evolving global competition, growth and diversification will increasingly be a function of core out the way to the competencies and core products rather than an extension of existing products. Towards the end the book details out ways of securing the future and thinking differently. ambitious and By showing that the key to future industry leadership is to compelling strategic develop an independent point of view about tomorrows opportunities and build capabilities that exploit them, the intent that provides authors reveal an entirely new perspective on what it means to the emotional and be strategic--and successful. The book is a must read for both the corporate executives and the business school faculty and intellectual energy for corporate managers. Hamel and the journey. Prahalad argue persuasively that traditional approaches to strategic planning are unlikely to prepare a firm for sustainable industry leadership in the future. Crafting strategic architecture is another important aspect to Soniya Sahita compete. It identifies the major capabilities to be built, but Iti Purohit PGDM IB (09-11)e- GlobuzZ Volume I, Issue III July - September 2010 Page | 23
    • CROSSWORD # 03 ACROSS 9. System of organization replete with overlap, 15. Third month of English calendar.(5) multiplicity, mixed ascendancy, and/or divergent-but-coexistent patterns of relation. 16. Association of two or more individuals, 1. A Japanese term describing a loose ..(10) companies, organizations or governments (or any conglomeration of companies organized around a combination of these entities) with the objective single bank for their mutual benefit.(8) 10. kind of tax, often associated with customs, a of participating in a common activity or pooling 2. Political system where the state, usually under payment due to the revenue of a state, levied their resources for achieving a common goal.(10) the control of a single political person, faction, or by force of law.(4) 17. Individual whose ideas and behavior serve as class. (12) 11. South Korean form of business a model to others.(13) 3. Bond which is issued in several countries at the conglomerate.(7) 18. Term used to describe a policy regime which same time.(10) 12. Protectionist trade restriction that sets a encourages exports, discourages imports, 4. usage-based payments made by one party to physical limit on the quantity of a good that can controls capital movement and centralizes another for ongoing use of an asset, sometimes be imported into a country in a given period of currency decisions in the hands of a central an intellectual property (IP) right.(9) time.(5) government.(15) 5. Rise in the general level of prices of goods and DOWN Sonam Doshi services in an economy over a period of time.(9) PGDM IB (09-11) 1. Japanese process of continuous 6. Efforts by FACB and IASC to move toward a improvement (6) common global set of accounting standards.(11) 13. Situation in which cooperating company 7. Process of returning a person back to ones takes an equity position in the company with place of origin or citizenship.(12) which it has collaborative arrangement.(13) 8. Using the earth or earthly life as the only basis of 14. Standardized and simplified conceptions of evaluation. (10) groups based on some prior assumptions. (10)e - GlobuzZ, Volume I, Issue III July September 2010 Page | 24