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  1. 1. January-March 2010 Volume I Issue II e-GlobuzZ International Business Society @ SIMSRCover StoryHow “SOUR” is the SWEET Industry?S I MSRK J Somaiya Institute of Management Studies & Research
  2. 2. ForewordDear Readers,It gives me immense pleasure to bring to you the second issue of e-Globuzz, Jan-Mar 10. We hope you liked our first issue, Nov-Dec 09.The International BusinessSociety (IBS@SIMSR) organized during the last four months some importantevents like an interactive session with international experts on WTO for studentsand faculty.We interacted with a delegation of Management faculty and studentsfrom Deakin University, Australia. We had the privilege of hosting an interactivesession with Mr. O K Kaul, Executive Director,TATA International Limited, for ourstudents and faculty. In fact, this issue includes highlights of Mr. O K Kaulsinterview taken by our students of International Business this week. We also hadan interactive session with Mr. Walter Stechel, the Consul General for FederalRepublic of Germany (FRG) in India. As a part of the International Businesscelebration at Samavesh 09, we had the privilege of having with us eminentspeakers from ECGC and TATA International Limited, who gave us meaningfulinsights on country risk evaluation and international transfer pricing.These sessions hosted by IBS@SIMSR attended by a large cross section of SIMSRstudents and faculty went a long way in complementing the classroom learning atSIMSR with the expertise of industry leaders, international professionals,students and faculty from universities abroad.Continuing with the format of the inaugural issue of e-Globuzz, which was highlyappreciated, we have covered in this issue, Mr. O K Kauls interview and articlescontributed by SIMSR students, Corporate Executives and Industry Experts onvarious aspects of international trade, international marketing, internationalfinance, international logistics and world affairs, complete with a popularcrossword.Our next issue is planned in July 10, which we trust gives you enough time to sendus your articles for the third issue of e-Globuzz. We also look forward to yourfeedback and continued support.Till then we will miss you. Prof C P Joshi Faculty Mentor
  3. 3. 601 Cover Story The Confectionery Sector How “SOUR” is the SWEET Industry? Business Leader in Focus: Aiko Toyoda02 Company in Focus: Wal-Mart03 Country in Focus: Germany04 International Logistics: Green Supply Chain05 USA Health Reforms06 Cover Story: How “Sour” is the Sweet Industry? The Confectionery Sector09 International Marketing: Marketing of Avatar10 Interview with Mr. O.K. Kaul, ED, TATA International12 Debate – Copenhagen: Success or Failure for India?14 Book Review: The New Age of Innovation15 International Business News16 Did you know these terms?17 Crossword # 02
  4. 4. TOYOTA Business Leader in Focus Aiko Toyoda - President, Toyota MotorsHe likes to race cars and just completed a 24-hour endurance competition accelerator problems were generated under the control of his twowith three other team members in a Toyota supercar at Germanys famed predecessors. Mr Toyoda very nearly predicted a crisis of some sort whenNürburgring, a Grand Prix-style race. When the 52 year old Toyoda he said last June that the company had grown too fast. When heNicknamed as "Prince" by Japanese media took over the post from Toyota reiterated there was a faint glint behind the apology; it may never work,President, Katsuaki Watanabe, in June 2009, the company expected but he may have it in mind to trim the behemoth his forebears created.Toyoda to inject an international approach to correct the miserableperformance of the companys overseas operations which led to the firstmajor losses in 70 years and he may not have expected the kind of He vows to rein in overcapacity,situation he is facing. reorganize operations to strengthen control, and get theWhile getting his law degree from Tokyos prestigious Keio University, he company back to basics. Hedreamt of playing Olympic field hockey. Instead, he went on to get his especially wants to reinstillmasters degree in business administration at Babson College inWellesley, Mass. He set out on a career away from autos by joining an dedication to one of the pillarsinvestment bank and working as a management consultant, living on of Toyotas production system:Manhattans Upper East Side, then moving to London. At Toyota his genchi genbutsu, meaningmusings about a possible career were met with a lukewarm response “go and see for yourself."from his father, Shoichiro Toyoda, who told his son: "No one wants to be The toughest task ahead of Mr. Toyoda is to regain and maintain the faithyour boss." But he believed he could make a unique contribution because in brand. In case of Toyota the quality of its product, the honesty of itshe was a young president by Japanese standards. claims and continuous improvement are at its core, and the recent recallsBut, seven months into his job and one month into the worst crisis in his have shaken the foundation of the brand. The company has alreadycompanys history, the grandson of the companys founder is facing strong started taking essential steps by the recall of vehicles worldwide,questions from all corners of the world for manufacturing of defective maintaining communication through democratic channels (e.g. Twitter)vehicles. The company is under scanner over the companys handling of to maintain a dialogue with its customer base reinforces its intent to makecustomer safety concerns and its series of recalls over potentially faulty good. He vows to rein in overcapacity, reorganize operations toaccelerators and braking systems. Mr Toyoda is facing harsh criticism for strengthen control, and get the company back to basics. He especiallyshattering the Japanese manufacturers management. Mr Toyoda, a wants to re-instill dedication to one of the pillars of Toyotas productioncorporate implant of mighty Japan, groomed from birth for leadership, system: genchi genbutsu, meaning "go and see for yourself." These strongeducated abroad has followed steady ascent through the ranks of the moves show a commitment to its brand positioning values and reflecting a man with a decent grasp of the business, a hands-onapproach to management and a relatively high level of internationalsophistication. byIf Toyoda is fazed by the challenges awaiting him, he never betrays it. The Anirudha Kandharkar,all criticism does not mean, he will fall and resign. The much talked PGDM IB 2009-11e-Globuzz, Volume I, Issue II Jan-March 2010 Page 1
  5. 5. Company in FocusCompany Overview: Servicio, Chile.In February 2007, the Company announced theIf you feel that your purchases have become convenient and cost purchase of a 35% interest in BCL. BCL operates 101 hypermarketseffective, then here is the company to know about. Wal-Mart in 34 cities in China under the Trust-Mart banner. In August 2007,Stores, Inc. was established in 1962 and only to change the way the Company announced an agreement between Wal-Mart andretail industry operates all over the globe. Its unique strategic Bharti Enterprises, to establish a joint venture called Bharti Wal-position is the outcome of hard work of the founder Mr. Sam Mart Private Limited to conduct wholesale cash-and-carry andWalton David, and subsequent President and Chief Executive back-end supply chain management operations in India, inOfficers, Mr. David Glass, Mr. Lee Scott and recently appointed Mr. compliance with Government of India guidelines. In addition,Michael T. Duke. “My Dad created Wal-Mart to help people save Bharti Retail entered into a franchise agreement with an Indianmoney so they can have a better life. This mission remains as subsidiary of Wal-Mart to provide technical support to Bhartirelevant now as it was in 1962”, says Rob Walton, Chairman of the Retails retail business.Board for Wal-Mart. In sync with it the company focuses entirelyon EDLC-EDLP, that is, Everyday Low Cost- Everyday Low Prices.Walton opened his first Wal-Mart in Rogers, Arkansas. Thecompany went public in 1970 and added more stores every year. In1990, Wal-Mart surpassed key rival Kmart in size. Two years later, itsurpassed Sears. The store formats include the Discount Stores,Super Centers and the Neighborhood Markets. Their way tosuccess was by balancing the deliverance of value, variety andquality to satisfy customers and build long term relationships withsuppliers, and its employees whom they refer as-associates. Wal-Mart efficiently deployed technology for operational efficiency inits logistical and marketing processes. Wal-Mart has sustainedfirmly on its business model. Wal-Marts cost leadership position isderived from firstly, the economies of scale. Thus thinner margin iscompensated by volume. Secondly, economies of scope, whereinemphasis is laid on categories in which the Wal-Marts brand hasauthority and can offer a full line of products. Third is the stability Wal-Mart, Partners and Society:and consistency of the management. Wal-Mart created more than 63,000 jobs worldwide in 2009. Its “Sustainability 360” is the Companywide effort to takeFinancial Performance: sustainability beyond their direct footprint to encompass Wal- Of the total business 63.7% is contributed by Wal-Marts Marts associates, suppliers, communities and customers. As theoperations in the USA where Texas and Florida have highest purchasing agent for the customers, Wal-Marts goal is toconcentration of stores, 24.6% sales come from International encourage improvements in sustainability and ethical practicesoperations where Mexico(1197), Central America(502) and among suppliers. The Wal-Mart Foundation is dedicated toUK(358) have maximum number of stores, and remaining 11.7% supporting programs that help people live better, primarily bycomes from the Sams Club. expanding access to education, health care, and job opportunities, as well as by promoting responsible sourcing. Wal-Mart is anGlobal Presence: economic force, a cultural phenomenon and a lightning rod forWith a clear intention to focus on price leadership in every market controversies. Be its unprecedented power to shape laborto drive global leadership, it has set up 3615 international stores, markets globally or changing the way entire industry operates, andin total of 7873 stores. It entered various markets recently by way pressurize the suppliers to sell at cheaper prices. Wal-Mart hasof joint- ventures, and acquisitions. Some of its recent moves explored new sectors of retail, used technology favorably andinclude opening a Hong Kong regional office to facilitate long-term adopted a frugal corporate culture to clearly be the leader in retailopportunities in Asia with focus on Japan, India and China. In and make its Frugality, the global in thing.October 2007, the Company acquired the majority of the commonshares and all minority preferred shares in its own Japanese bysubsidiary, The Seiyu Ltd. In January 2009, the Company acquired Anchal Sachanapproximately 58.2% of the outstanding D&S shares Distribución y PGDM IB 2009-11e-Globuzz, Volume I, Issue II Jan-March 2010 Page 2
  6. 6. Country in Focus GERMANYLocated in the heart of Western Europe, Germany is the continents Protection of Property Rightsmost industrialized and populous country. It is a federal Intellectual property is well protected in Germany. Germany is aparliamentary republic of sixteen states (Länder), and is a major member of the World Intellectual Property Organization and a partypower with the worlds fourth largest economy by nominal GDP and to most of the major international intellectual property protectionthe fifth largest in purchasing power parity. Germany is recognized a scientific and technological leader in several fields. CultureBrief History Germany, in general, is a very conservative country and this featureThe Great Depression, which began in 1929, led to a polarization of is also reflected in their way of business. They have very distinct,German politics and to an upsurge in support for the Communist somewhat formal, ways of working. Prescribed rules, distinctand Nazi parties. In 1933, the Nazis under Adolf Hitler gained power. etiquettes are what they adhere to. Besides their conservatism,The Nazis imposed a totalitarian regime and followed an their innovation, productivity and excellence are distinctexpansionist foreign policy that led to World War II. After Nazi characteristics of German business. The Germans emphasize onGermanys defeat, the country was divided into democratic West individualism, masculinity, and uncertainty avoidance. PowerGermany and communist East Germany. In 1990, East Germany was distance and long-term orientation are both ranked considerablyreunited with West Germany. lower than the others. This illustrates Germanys belief in equalityGovernment and Legal System and opportunity for each citizen, as well as its ability to change andGermany is a federal, parliamentary, representative, democratic adapt rapidly.republic, with rights guaranteed by the Basic Law, or constitution.The Chancellor is the head of government and exercises executive Foreign Relationspower, where as The President is the head of state, invested Germany has played a leading role in the European Union since itsprimarily with representative responsibilities and powers. inception. It is also a partner of NATO and is fully protected by NATOThe Judiciary of Germany is independent of the executive and the agreements. As one of the worlds leading industrial nations,legislative branches. Germany has a civil or statute law system that Germany has partnerships and special agreements with countriesis based on Roman law with some references to Germanic law. all around the globe. That makes it a safe place to do business in. InEconomy the area of development aid, Germany is one of the largest netGermany is the largest national economy in Europe. In 2008 contributors of the UN and has several development agenciesGermanys GDP was about US$2.9 trillion on a purchasing power working in Africa and the Middle East.parity (PPP) basis and nearly US$3.65 trillion at current exchange Conclusionrates. Germany is the worlds second largest exporter with $1.170 From manufacturers of complex nanotechnology solutions totrillion exported in 2009. Most of the countrys products are in energy efficiency consultancies, Germany has become a pacesetterengineering, especially in automobiles, machinery, metals, and for modern products and services on highly competitivechemical goods. Germany is the leading producer of wind turbines international markets. It has the capability to become Europesand solar power technology in the world. most successful economy. Already today, Germany has attractedInvestment Climate the highest concentration of American investment in EuropeGermany has a modern financial market sector and transparent and totalling more than 130 billion euros and directly creating moreeffective laws and policies to promote competition. It has strict than 800,000 jobs. In the year 2020 no international company willdomestic anti-corruption and anti-bribery laws and is considered be able to ignore Germany as a business location. As the continentsone of the least corruption-plagued countries of the industrialized entrepreneurial hub, the country is the best address for everyworld. Foreign and domestic entities have the right to establish investor in Europe.and own business enterprises, engage in all forms of remunerative byactivity, and to acquire and dispose of interests in business Lubna Akhtarenterprises. PGDM IB 2009-11 e-Globuzz, Volume I, Issue II Jan-March 2010 Page 3
  7. 7. International Logistics - Green Supply Chain Anil Kumar, Sr. Consultant, IBM Global Business Services SAP PracticeWhat is the one of the questions that is one of the top priority of all In US, Wal Mart has redesigned its stores to reduce energy andexecutives across the globe apart from the economic scenario? water consumption. It has started harvesting sunlight to reduceAccording to a recent Top of the Mind study by The Consumer the usage of electricity in its stores. This has not only made theGoods Forum, sustainability and corporate social responsibility stores Greener but also has helped Wal Mart in reducing thefeature amongst the top three priorities of the consumer goods overall cost of its operations.industry. A similar finding is resonated in the IBM Institute forBusiness Value study. IT companies have also joined the bandwagon and are coming up with innovative products which have reduced energy usage. IBMMany of us would be thinking why companies and businesses are through its smarter planet initiative is working with organizationsthinking about Green Initiatives, when they should be focusing both public and private to help them turn smarter and moretheir energies on growth and other strategic issues. Energy and efficient.water efficiency not only helps the planet, but also saves on bills.The technology employed to optimize logistics not only reducesfuel usage and toxic emissions, but makes for a leaner, moreefficient and cheaper supply chain. Aligning an organizations“green strategy” with its overall business strategy is paramount.This begins with a clear understanding of the overall corporateobjectives and priorities, followed by carefully defined programs,goals and tasks that address environmental and stakeholderviews. It creates a positive perception about the company andcompanies are better prepared to meet the regulations as andwhen they come. Sustainability makes perfect business sense.By driving operational efficiencies and adopting Lean and GreenSupply Chain Management practices, companies are trying toreduce their carbon foot print. Below are the key areas wherecompanies are channeling their efforts to turn their supply chainsgreener: Sustainability and CSR can also help companies in creating a brandProduct Design and Redesign – Companies are redesigning presence. Consider the example of the Save our Tigers campaignproducts to reduce energy consumption in the production and by Aircel. By associating itself with the noble cause of saving thedistribution. Innovations in product design are leading to tigers, Aircel has created a unique brand presence in the minds ofreduction of some of the processes leading to Greener products. the consumers. So when we think of saving the tigers, Aircels name is always there in the back of our minds.Green Manufacturing – Reduced energy usage throughstreamlined production and greener supplier networks are In Bihars rice belt, a group of individuals have founded a company,helping companies become manufacturing Greener products. Husk Power Systems, which caters to the energy needs to the villages. The company uses rice husk to produce sustainable andRoute Planning and Shipment Consolidation – By consolidating renewable energy and is electrifying the remotest villages in Bihar.logistics and shipment dispatch companies are reducing theircarbon foot print. Route planning has made the supply chain Sustainability and Clean Technology have become the focus of thegreener. governments and enterprises worldwide. From energy efficiency and renewable energy to efficient and lean manufacturing andWell, how does all this translate into business and what have been supply chains, clean technologies have opened huge market forthe results so far. Let us examine a few examples on how innovation. The entire Clean Technology industry is estimated tocompanies have used Sustainability, Green initiatives and CSR to be worth more than trillions of dollars. Organizations andachieve spectacular business results. countries which are prepared to take on this new opportunity will emerge as leaders in the coming decades. So, start thinking howMany times sustainability helps you beyond the usual cost saving. you can contribute and catch up on the business opportunity thatWhen a company champions of a cause, customers associate it is good for the world.with something good and are willing to pay premium price fortheir products. Consider the case of US clothing and adventuregear maker, Patagonia. Patagonia turned its fortunes by adoptingan eco friendly product range by switching to organic cotton andchanging the packaging to reduce impact on environment and alot of other such initiatives. Patagonias products not only becamea big hit with the consumers but also allowed the company tocharge a premium price. This strategic change turned Patagoniafrom near bankruptcy in 1996 to a company with thirty nine storesin seven countries and $ 270 million in revenue in 2006.e-Globuzz, Volume I, Issue II Jan-March 2010 Page 4
  8. 8. USA Health Reforms Puneet Kumar, Business Analyst, Accenture USAUS Health Reform remaining 43% is financed from general revenues. Because of rising health care costs, general revenues would have to pay forUnited Statess health care reform plan is one of the most 62% of Medicare costs by 2030.important bill which will have a major impact on US health caresystem, private health care insurers and on US economy in near Impact on Private Insurers:future. US badly needs to revive its poor health care system filled The Insurance business is dominated by a small group of largewith insurance frauds, skyrocketing premiums, uninsured companies that has been gobbling up their rivals. In recent years,families, unaffordable medical bills and personal bankruptcy. On for-profit companies have bought up not-for-profit insurersFebruary 22, 2010, President Barack Obama launched a new around the country. There have been over 400 health carehealth care reform plan that is mainly modeled after the Senate mergers in the last 10 years and just two companies dominate aHealth Care Reform Bill. It will regulate the health insurance full third of the national market.These changes were supposed to make the industry more efficient, but instead premiums haveindustry under a seven-member Health Insurance Rate Authority skyrocketed.This bill if gets passed will hurt the firms bottom linethat could deny or limit substantial premium increases. This has and lead to much more competitive market. Health insurance intraditionally been a state responsibility. Like the Senate Bill, it will itself is not a quiet profitable line of business as critics seems tocreate an exchange that allowed families and small businesses to think. For every dollar paid as premium, 83 cents goes out inshop for insurance plans. It will restrict on federal funding for medical costs – doctors, hospitals, and drugs. However considerabortion, but cuts back taxes on the high end health plans. WellPoint, the biggest private health insurer on Wall Street, which paid out 83.6% of revenues in expenses but the net profit after tax deduction came out to be princely 4.1%. Returns onPlan: assets are also key measure in profitability and are typically · Insurance will be more affordable pretty modest. The health-care reform was dominated by the · Sets up new competitive health insurance market issue of the so-called "public option" - whether the government should offer an insurance plan that competes with those offered · Greater accountability to health care by keeping by private insurers. But that is out of picture now as per the new premiums down and prevent insurance industry plan. If public option of health insurance would have come into abuses and denial of care picture then this 4.1% profit would have made quiet a significant · End of discrimination for patients with pre existing difference between government and private sector. conditions · Stability in economy by reducing the deficit by more NAIC Response: State regulators are working closely with congressional drafters than $100 billion over next ten years and about $1 to make certain that the legislation preserves the critical role of trillion over second decade state regulators and continues the use of objective standards in rate review process. State regulators are pleased that PresidentsReasons for Reform: Health insurance premiums have doubled in proposal emphasizes state-based reforms but are concerned forlast 8 years, rising 3.7 times faster than wages, and increasing co- about the inadequacy of the individual mandate which could leadpays and deductibles threaten access to care.This forces families to a dysfunctional market place and higher rates for sit around kitchen table and decide whether to pay rent or The members of the NAIC are strongly opposed to any bill inhealth premium. Many insurance plans cover only a limited which the federal government allows insurance carriers to sellnumber of doctors visits or hospital days, exposing families to their products in our states using the regulatory rules of anotherunlimited financial liability. Unaffordable medical bills are state. This misguided proposal would increase premiums forresponsible for more than 50% of all personal bankruptcies today. those who need insurance the most and eliminate importantLack of affordable health care is compounded by serious flaws in consumer protections. It would also fragment the insurancehealth care delivery system. One-quarter of all medical spending market and expose consumers to increased fraud and abuse.Thisgoes to administrative and overhead costs, and reliance on concept must be rejected and the decision whether to allow, andantiquated paper-based record and information systems under what conditions to allow, interstate sales of insuranceneedlessly increases these costs. should be left up to the individual states.Impact onUSA Economy:The rising health care cost will devastate the federal budget infuture. The US health care system contributes $2.5 trillion ornearly 18% to GDP, the highest percentage in the developedworld. Health care reform is needed to stem the economic costsof frauds. Between 3-10% ($60-$200 billion) is lost to fraud. Ifthose same percentages are applied to the proposed $436 billionMedicare program, the cost of Medicare fraud is $14-30 billion.Without health care reform, government spending on Medicareand Medicaid is unsustainable. These costs will rise from 6%(current) to 15% of GDP by 2040.Thats because Medicare payrolltaxes and premiums cover only 57% of current benefits. Thee-Globuzz, Volume I, Issue II Jan-March 2010 Page 5
  9. 9. Cover Story - Sector in Focus Confectionery Sector How “Sour” is the Sweet Industry? “Sour”Market Overview: Confectionery is undeniably a part of expected CAGR of 2.2% during the same period.Out of theeverybodys everyday life.All of us reach for chocolates and broad categories in the confectionery industry, chocolatecandies at virtually every meal and many times during the confectionery is the largest sector, accounting for almostday. Almost two-thirds of all confectionery consumption is 60% of total sales in value terms. By volume, however,driven by "emotional" as opposed to functional "need sugar confectionery accounts for the majority of sales, withstates"--presenting endless consumption opportunities to a share of 51% and gum holds only a 14% stake but is thethe buyers and myriad branding opportunities to fastest-growing segment. The per capita consumption ofmanufacturers. Not surprisingly, the global confectionery confectionery in most of the developed countries averagesmarket is expected to reach $152.37 billion by the end of almost 11 kilograms. Also, per capita consumption of2010. chocolate confectionery tends to be higher in northernMuch of this recent growth has come from developing European countries, while the Scandinavian marketsregions and countries, aided by the spread of multinational command high per capita rates for sugar confectionery.companies and their brands, as well as a growing base of The per capita consumption of chocolate is highest inincreasingly affluent consumers in places such as Russia, countries like Switzerland, Germany, Austria, UnitedChina and India. In the developed world, much of the Kingdom and recent growth can be attributed to niche sectors,such as low-fat, low-sugar, organic and fair trade products.Mergers and acquisitions in this sector have alsocontributed immensely to growth and penetration in thedeveloping markets. In 2012, the confectionery market inthe BRIC (Brazil, Russia, India, China) nations is forecastedto have a value of $25.6 Billion.The confectionery sector is highly dependent on twoprimary ingredients; Sugar and Cocoa. Unfortunately, Major Players: The global confectionery market remainsthese commodities are subject to high price volatility relatively fragmented, with big names like Hershey, Kraft-which, in turn, puts an upward price pressure on production Cadbury, Mars, Nestle, Ferrero, Lindt, Lotte Confectionery,costs and consumer prices. This seriously affects the Perfetti Van Melle, Meiji Seika Kaisha etc.accounting forindustrys sales volumes and profit margins. less than half (45%) of value sales. Some of the brands under established names are M&M by Mars, CadburysMarket size and growth: The confectionery industry is Dairy Milk and Trident, Wrigleys Orbit, Marss Snickers,categorized as follows: Hersheys Kisses, Krafts Tobolerone, Meiji Seika Kaishas · Chocolate confectionery: molded bars, boxed Meiji etc. chocolate, chocolate countlines, novelties and In recent years, this sector has seen many mergers and chocolate straightlines. acquisitions. Companies have been buying high growth · Sugar confectionery: caramels and toffees, hard segments and utilizing their existing distribution channels boiled sweets, gums and jellies, medicated not only for market penetration but also increasing their confectionery, regular mints, and power mints. geographical spread. A special mention of the two recent big deals sealed cannot be missed in this segment. The · Gum: sugar free gum, regular chewing gum, Kraft-Cadbury deal has put Kraft on the top position in the functional chewing gum and bubblegum chocolate and confectionery segment. The group will have · Cereal bars: sports and energy bars and other bars. 40 confectionery brands, each having an annual sale ofThe market for confectionery is valued according to retail $100 million. This deal will help Kraft reach leadingselling price (RSP) and it includes applicable taxes. By the positions in developing markets, including BRIC nationsend 2012, the global confectionery market is expected to be and Mexico. Another deal between Mars and Wrigley inworth USD 161.39 billion in terms of value, with an 2008 boosted Mars position in the global market throughexpected CAGR of 3% between 2007 and 2012, while the its acquisition of The Wrigley Company, the leader in themarket, by volume, will total 16.18 billion kg, with an chewing and bubble gum subsector.e-Globuzz, Volume I, Issue II Jan-March 2010 Page 6
  10. 10. Cover Story - Sector in Focus Global Confectionery Value Region-wise Forecast, 2010-2012 (USD billion, nominal prices) Region 2010 2011 2012 Western Europe 53.75 54.50 56.12 Eastern Europe 17.80 18.83 19.84 North America 38.21 39.19 40.15 Asia Pacific 26.45 27.25 28.07 Latin America 10.98 11.32 11.67 Middle East and Africa 5.18 5.36 5.54 OVERALL 152.37 156.86 161.39 Source: DatamonitorGrowth Drivers and MarketTrends: local manufacture, transportation and shelf- 1. Consumers purchasing power: Demand for stability of sugar products. premium varieties is not only increasing in 5. Kids Confectionery: Primarily, kids remain the developed nations, but is also witnessing a growth main target group for confectionery items. To in developing countries owing to stable economic create a buzz among target consumers is a very growth, rising middle class incomes and increasing tedious and capital intensive activity. A kid these spending power. days is very selective and has approximately 14 2. Innovation: New Product Development taking brands in his/her preference set (lack of product or local factor into consideration in the form of flavour brand loyalty), luring him/her towards products is extensions, innovative packaging and variety of extremely difficult. Companies come out with many new combinations are being developed by “firsts” in sales promotions (freebies such as tazos, manufacturers to cater to the taste buds of the giga cards, temporary tattoos, magic candles) to masses. expand and sustain market shares. 3. Healthy lifestyles: Consumer concerns over 6. Imported confectionery items: Consumers are portion sizes and emerging natural and wellness choosing chocolate according to region and the trends is forcing companies to come up with level of cocoa solids, an approach similar to that in offerings providing functional health benefits such wine and cheese tasting. Single-origin chocolate as oral health care, skin care, low sugar, low fat, low will experience high growth over the next five years. calorie and low carbohydrate kind of products. All the big global players in confectionery sector Companies in certain countries have introduced export in large quantities as confectionery is nutritional labeling for their brands displaying becoming a part of developing nations growing calorie content on pack fronts and guideline daily appetite forWestern food products. amounts (GDA) on the reverse. 7. Seasonality: Sale of confectionery items is 4. Sugar confectionery remains an important induced by festivities or other social occasions. category: Sugar confectionery is still the most Hence, special packaging for promotional activities dominating and important confectionery category including “one-off” promotions — is increasingly in due to its lower unit price than chocolate and gum. demand. Companies engage in special limited In addition, consumer awareness of the dangers of editions products and packaging to promote their sugar-based confectionery on oral health is still products and build brand strength thereby grabbing relatively poor among consumers in these not only the share of consumers wallet but also countries. They have a strong holding in developing their minds. regions for cultural reasons, in addition to ease of 8. Increase in supermarkets /hypermarkets: Withe-Globuzz, Volume I, Issue II Jan-March 2010 Page 7
  11. 11. Cover Story - Sector in Focus the booming retail sector, confectionery products The Road Ahead: Chocolates will remain the more have managed to get an increased presence on promising area of opportunity for confectionery giants shelves and also in inducing impulsive buying, thus because it lends itself better to the increasingly accessible gaining much greater visibility, enhanced sales and (high-end, high income) markets. Sugar confectionery will increased penetration. be next, with the best opportunities being captured by 9. Prices of factor inputs: Heavy fluctuation in the unique novelty/specialty candies. Gum is the challenging price of cocoa is adversely impacting the profit category going forward, as price points are low, volumes are margins of companies operating in this sector, as small, distribution costs are high, and competition is fierce. chocolate based confectionery generates higher Sugar-free confectionery demand is expected to grow sales revenues compared to other two components of this sector. The recent hike in sugar price has rapidly as there is a considerable increase in health become another area of concern for the companies, conscious population. In future, the main trend in thereby bringing tremendous pressure on these confectionery will be of experimenting with flavours and players. variety, specifically a growing demand for health benefits 10. Horizontal Integration: All most all the global and better for you ingredients, boosting the `natural players have been integrating horizontally by credentials of brands through the removal of artificial acquiring or merging with other food giants in sub colours and preservatives and replacing them with sectors like Kraft bought Danone biscuits, Nestle ingredients such as fruit juices etc. Eco-friendly bought Krafts Pizza business, thus expanding their manufacturing efforts, like recyclable packaging, will product portfolio and increasing reach by using influence product development and consumer purchasing. existing distribution networks. Another factor that companies need to look into is their communication strategies. Since in many countries, Promotional Strategies: Confectionery brands rely on objections have been raised regarding advertising to kids, soadvertising for brand building. In fact, TV advertising spend future growth can be dependent on creating sweets that areis second highest for the confectionery segment. To enhance as popular with adults as children.visibility, companies engage in ATL activities and focus onBTL as well in order to complement the overall marketingprogramme. Confectionery sales are primarily retail salesthus laying emphasis on point of purchase promotions likeposters, danglers, jars, 3-tier,5-tier stands, as confectionerypurchases are generally driven by impulse. Innovations,limited editions and brand extensions including flavour andtexture developments such as Snickers Cruncher (fromMars) or KitKat Orange (from Nestlé) are being launched tosustain consumer interest.Distribution Strategies: There is lot of pressure oncompanies to ensure retailers stock their products all thetime to bring about deeper market penetration and thusenabling more products to reach more consumers. There isheavy reliance on convenience stores and other formats oforganised trade. In developing nations however small retailoutlets and other unorganized formats like small grocerystores, tobacconists result in the bulk of the sales. Supplyingto fragmented retail channels in developing nations is quitecostly, so it becomes absolute necessary for companies todevelop a comprehensive distribution network.Issues/ challenges 1. Highly competitive market due to fragmentation by 2. Plethora of spurious products available 3. Huge investments in innovation and new product Astha Pasricha development Sukhmani Grewal: PGDM IB 2009-11e-Globuzz, Volume I, Issue II Jan-March 2010 Page 8
  12. 12. International Marketing Marketing of ‘AVATAR’The movie Avatar directed by famous James square boxes that showcase many of theCameron who made a comeback after 12 yrs digital initiatives that make this movie standwas a smashing hit at the box office. out. Fans had access to the story, characterAccording to the Los Angeles Times, the cost bios, the music, and wallpaper downloads;of making and marketing this magnum opus and they also had opportunities to contributefrom the “Titanic director James Cameron content and showcase their interest in thewas $430 million, though some have film -- including Pandorapedia, a wiki for allsuggested $500 million. This state-of-the-art things "Avatar," and the previously discussedblockbuster which is about an evil 22nd- blogging community. Moreover the self crashcentury corporation raping a pure-utopian of the site by the viewers trying to bookplanet, brought healthy profit to its makers, advance tickets in August added fuel to thewith more to come in line with DVDs, action fire and in way was related to the concept offigures, books, video games, and sequels the movie, that is, Humans trying to destroyThis movie has revolutionized the 3D industry. home tree.In India, Reliance Big TV bagged the deal and Avatar also exploited Social network sites asentered into strategic alliance with Fox Star they are popular marketing tool nowadays forStudios. As by its very nature movies have a launch of any new product in the market andshort life time as they need to make an impact they also have the potential of roping in ain the first week of their release or they are large number of viewers. It built successfulswiped from the minds of consumers. With connections and conversations with theworld entering into digital era, it opens the visitors on Facebook (close to 1.3 million fans),opportunity for the marketers to a wide MySpace (close to 800,000 friends) andpopulation but this needs to be carefully fine Twitter (over 25,000 followers). Due to itstuned to its last detail. wide reach, these sites were able to createA lot has been talked about the success of the enthusiasm among the viewers and the AVATAR builtmovie. But the strategy and the effort that marketing team of Avatar fuelled it by addingwent into the making of a trendsetter is worth “Tweet to Listen" promo that required fans to successfulrevealing. Marketing of the movie was done send a message onTwitter in order to listen toat International level with attention paid to music from the film. Avatar social media connectionsevery miniscule detail. strategy also extended toYouTube with close andThe comeback of a great director James to 11 million viewers, Flikr with 1 millionCameron itself created curiosity among the viewers and TypePad blogging community conversationsviewers. The audience was waiting eagerly to (close to 4,000 members).see the brainchild of James on which he has Avatar also had interactive trailers added to with thespent so much of time. This in itself drew a lot the success of the movie. It had 11 points ofof attention and created a buzz. August 21, interaction and provided viewers with one visitors on2009 was celebrated as Avatars day with 100IMAX 3-D theaters worldwide showcased 16 click access to each character. Mattel created "Avatar" toys that buyers could activate and Facebook (closeminutes of footage for the movie. The same "bring to life" through webcams and special to 1.3 millionday Ubisoft made a debut with a trailer for a product tags, while Coke Zero producedvideogame based on the film and Mattel custom cans that opened up the world of fans), MySpaceunveiled action figures inspired by the films Pandora A day earlier, the teaser for the The end result is that "Avatar" is now the (close tovery same film broke a record on Apple.comafter bong streamed more than four million biggest box office movie of all time. The movie has eclipsed $2 billion in total ticket 800,000times on its first day. sales, driven largely by 3-D revenues and friends) andThe website of the movie was itself creative international interest.that it had all the elements of pull strategy. Twitter (overVisitors had access to more than the standard byfare of trailers, images and background Shilpi Tayal 25,000materials. The website offered side-scrolling PGDM IB 2009-11 followers)e-Globuzz, Volume I, Issue II Jan-March 2010 Page 9
  13. 13. Q&AMr. OK Kaul joined the leather business of TataInternational in 1975.He was promoted to vice Excerpts of talk of Mr O K Kaul, Executive Director, TATA International with Shashi Shekhar and Manish Raj of PGDM IB 2008-10 & Sukhmani and Vikash of PGDM IB 2009-11, SIMSR segment to begin with and then diversify into leather accessories and garments. The move to enter retailpresident of the Leather & Leather Products division in space is triggered by the simple fact that the sheer1993 where Tata became the first leather company in consumption drives promising growth rate to IndianAsia to be certified with ISO 9000 and ISO 14000. O K retail industry. As of now we are limiting it to IndianKaul was later appointed as President of the Leather & markets, however we will expand our operations to fewLeather Products Business. In April 2009, he was neighbouring countries, but not in the immediateappointed executive director of Tata International Ltd future.Worldwide encompassing leather & leather products,engineering and new business opportunities. Students should dirty theirSIMSR STUDENT: Tata Group has several companies in hands in the industry ratherdiversified businesses under its umbrella. How you doyou manage to tap group synergies for growth in than just focusing onInternational Business? Have you ever felt that thepresence of so many companies has proved to be powerpoint presentationsdisadvantageous to the prospects of Tata from day one. They should getInternational?Mr. O.K. Kaul involved in the entire viciousTata International has many businesses ranging fromaluminium, steel, auto components, solar circle of to trading and modular housing. Itsprimarily a trading organization. We do “Opportunity Management education addsTrading” – Somebody somewhere wants something, value when you have priorTata International fulfils it. Since Tata Internationalhas a strong foothold and sound infrastructure in the work experience. InternshipAfrican continent; we act as distributor for TataMotors and not its competitor. After all we all fall should focus on deliverablesunder one umbrella-Tata Group. Our role is topromote small companies and is involved in total rather than just getting asupply chain. Tata International works with a trading certificate. And to achievemindset adding value at each stage of the value chain.Tata International runs on a model where it deliverables, two months isempowers all its employees to operate asentrepreneurs. We run Strategy workshops and too short a time.sessions wherein each vertical proposes its BusinessPlan for the next five years, this is then discussed with SIMSR STUDENT: How do you view the marketingthe whole team. Feedback is taken from other alliance in Tata International entered with Tataverticals, the technical team and the senior Strategic Management Group?management on the feasibility aspects of the business Mr. O.K. Kaul: TSMG is Tata Groups consulting arm.plan and only then is it taken forward. This may be Tata International provides its local domainconfusing for an outsider but this enables in quick knowledge to TSMG in the countries where TIL isdecision making and allows for flexibility. present. Tata International Ltd scans the country and explores market opportunities and risks. The allianceSIMSR STUDENT: Will we see Tata International between TSMG and Tata International enhances theentering into retail and FMCG sector in the near reach of TSMG in these international markets.future? If so, is it going to be India specific or abroad as Additionally, Tata International provides businesswell? development and infrastructure support to TSMG forMr O.K. Kaul: We entered the retail space last year in project execution, local business knowledge andthe bicycles segment in the north east India. We are identifying opportunities in these geographies.also considering into entering the leather shoese-Globuzz, Volume I, Issue II Jan-March 2010 Page 10
  14. 14. SIMSR STUDENT: How do you view Agriculture as a since average and bound tariffs for leather still remainpotential lucrative sector and how can Tata high for developed countries, while for other categoriesInternational leverage its competencies to tap this it has fallen with the advent of WTO.sector at a global scale for International markets? Mr. O.K. Kaul: This is specifically a problem with leatherMr. O.K. Kaul:. With the population increasing manifold industry since there have been oppositions by the PETAand the demand for food soaring, the agriculture sector and other similar organizations. Leather industry isdemands a lot of attention from both the government fragmented and issues such as child labour andbodies and corporate sector. Tata International wants to degradation of environment have been raised severalcreate a business model whereby it can partner with times. There is a need now for organised players touniversities to conduct R&D programs to enhance come together and be vociferous about their practices.productivity in this sector. This project is still in the Tata has never been media shy and has been proactivenascent stage and it purely depends on the availability to communicate its practices and norms to the people.of land and productivity potential. So if there is land But we need to be more aggressive to showcase ouravailable for R&D in Latin America or Africa, we would norms and practices. To sum up, Corporate initiative isgo there and conduct soil-crop fit testing and other the key in this regard and role of WTO can only berelevant tests. We could collaborate with either foreign leveraged if the organization takes the first step.universities or Indian universities and other IT firms tohelp us carry out this project. These projects are long SIMSR STUDENT: What in your opinion could be the keydrawn and require time and effort to be brought to changes you would like to see in the currentmaturity to meet its objective. management education in India? Mr. O.K. Kaul: Keep yourself updated. READ. StudentsSIMSR STUDENT: Tata International is an end to end should dirty their hands in the industry rather than justSCM Solution provider in India through its Joint venture focussing on PPT presentation from day 1.They shouldDIESL. Will we see the value chain expanding to tap the get involved in the entire circle of activities in the totalglobal logistics market of 3.5 trillion USD? value chain. Management education adds value whenMr. O.K. Kaul: Yes, expansion is certainly on the cards. you have prior work experience. Internship should focusOur next step is to make our global presence felt. Drive on deliverables rather than just getting a certificate. Andas we call it and DIESL as you call, is growing very fast to achieve deliverables, two months is too short a time.and so is the logistics sector. It has few organised players Neither the intern nor the company employee has theand the unorganised ones are integrating with motivation to give the best or take the best. Americanorganised players to increase value. Moreover, the Universities have mastered these very effectively andlogistics sector is directly related to the growth in the result is clearly evident all over the world. We have toretail, hospitality and services sector. Thus with the take a cue and emulate the same here.strengthening of these sectors, Logistics and our role toprovide value addition to these sectors has immensescope. Solution # 01SIMSR STUDENT: What do you think have been theeffects of the Copenhagen summit on internationalbusiness environment?Mr. O.K. Kaul: The greatest achievement of this summithas been that it has been able to create awarenessamong people, governments and the corporate sector.It has helped people to have a GO GREEN mindset.Companies have started thinking in this direction andgauging opportunities to benefit from it too. Issuesrelated to global warming, carbon emissions andrelated aspects such as carbon credits are being talkedabout. Tata as a group has worked diligently on theseareas and has given its best to make the world a betterand greener place to live in. For instance, in the Africancontinent people prefer to deploy solar panels in thenew residential and office buildings. We have boardedthe wagon long back to address this.SIMSR STUDENT: What is your view on TechnicalBarriers to Trade (TBT) as non-tariff barriers to restrictleather exports from developing countries like India, e-Globuzz, Volume I, Issue II Jan-March 2010 Page 11
  15. 15. Debate: COPENHAGEN - Success or Failure for India? Success for India by Abhay K Agrawal, Technologist, GE Energy thBefore going to the 15 Conference of Parties (COP) at the Danish capital i.e. Copenhagen Summit, India had threekey objectives. They were: No legally binding emission cuts;No peaking year; No international review of domesticfunded mitigation actions.Also Indian govt said that the outcome of the talk must be within UN frameworkconvention on climate change (UNFCCC), countries especially developed polluting countries who are put inAnnex-Iof Kyoto Protocol (KP) should stick to it even after its expiry in 2012 and also should abide by the Bali action plan onlong-term cooperative action.Looking at the outcome of the conference which sets global warming target ofbelow 20 temp rise than that of 1990 and $100B annual financing byAnnex-I countries to the developing & poor countries tofight the climate change, one can observe that it doesnot meet the expectations of the world. TheCopenhagenAccord does not put any legally bindingemission cuts on any country, does not provide anymechanism on how to achieve the temperaturetarget and how to raise & finance the fund todeveloping & poor nations. Thus, it failed to stick orstrengthen the KP.Also the accord was madebetween few (26) countries including India inside closedroom and was not accepted by all the193 participating parties.Coming to the positives from this summit, One of the most valuableoutcome has been the guarantee of the continuity of UNFCCC negotiations,which will now continue atleast for a year despite the accord. Another success fordeveloping countries like India was that theyensured that primary agenda of developed countriesto dilute the KP principle of “ c o m m on b u tdifferentiated responsibilities and respectivecapabilities” were pushed back.Their attempts to dump the KP and alter significantly the terms ofUNFCCC were notsucceeded at the formal level. The developing countries position that their voluntary mitigation actions, which arenot financially assisted, will be reported only through periodic national communication and will be reviewed onlydomestically has been partially preserved.By looking at the objectives of India & the outcome of the summit, I can easily say that India was able to meet its keyprinciples and was partially successful in others. Now after 3 months of the summit, the Copenhagen accord hasbeen endorsed by more than 100 nations, which provides a small boost to the accord.Thus, the summit was not thelast hope but it is “an important beginning” as termed byUNSecretaryGeneral Ban Ki-moon.e-Globuzz, Volume I, Issue II Jan-March 2010 Page 12
  16. 16. Debate: COPENHAGEN - Success or Failure for India? Failure for India by Pratik Jha, Territory Manager, Hindalco Industries Ltd.As Kyoto protocol is about to expire in 2012, a strong conclusion was needed from Copenhagen, to address the globalclimate change. The Final document that emerged from the summit has no firm commitments in it at all. Instead theagreement simply stuck to the normal diplomatic nonsense about the necessity of tackling the problem, reflects theglobal failure.India had set two distinct goals for itself when deciding its strategy for Copenhagen negotiations. First, it wanted toleave no room for the western media and politicians to paint India as obstructionist. Second, being firmly of the viewthat in the long run India will suffer disproportionately more from catastrophes resulting from global warming, itwanted to cut a deal that would lead to major reductions in carbon emissions worldwide.Mr. Manmohan Singh went so far as to state in his maiden speech inCopenhagen that India will deliver on its promise of bringing downits 2005 emission intensity by 20 percent by 2020 even if anagreement were not reached in Copenhagen. Thissomehow initially managed to achieve its first goal. But itcan cost dearly to India. On one hand, it will not haveachieved the goal of avoiding environmentalcatastrophes and on the other; it would have ended upcompromising growth and poverty alleviation.Prime Minister Singh will need to carefully weigh thiscost of Indias own mitigation commitments against thebenefits to be reaped from improved commitmentoffers from industrial countries in the negotiations for a finalclimate accord. He must remember that given just 4 percent share inglobal emissions, mitigation by India by itself has virtually no impact onfuture global warming. His commitments will acquire value only if major emitterscountries sign on to an ambitious mitigation agreement. Under existingtechnologies, cuts in emissions or their growth are almost sure to translate intocuts in energy consumption or its growth, which would in turn adversely impactIndias GDP growth and poverty alleviation.With Indias initial stand, that given the countrys lowper-capita emissions, India should not be subjectedto any mitigation commitments Singh went on step-by-step to raise the level of his countrys voluntarycommitments. After bringing down emission by 20 %, he proceeded to commit to the goal of holding the averagetemperature increases around the globe to 2°C. This was followed by the announcement of eight national missionsaimed at mitigation.As a part of as yet non-binding Copenhagen Accord, Singh also accepted the U.S. demand for submission of mitigationplans & progress report on mitigation to the UNFCCC. In principle, this provision can be seen as a first step towards theconversion of what are currently “voluntary” steps towards mitigation into internationally mandated commitmentthat Singh has promised not to accept under any circumstances.These progressively rising levels of concessions have not led to any improvement in the offer by the United States,which currently stands at cutting its countrys 1990 emissions by merely 3 percent by 2020. This meager U.S.response testifies to Singhs failure to achieve his second objective.e-Globuzz, Volume I, Issue II Jan-March 2010 Page 13
  17. 17. Book Review THE NEW AGE OF INNOVATION THE KEY TO CREATING VALUE & THE FUTURE GROWTHThe book co-authored by C K Prahalad and M K distinct tension between the two and it is often notKrishnan is about co-creation of value by companies resolvable. The chapter also discusses problemsand customers together. moving from the old way to the new way. The final chapter, An Agenda for Managers, promises that theThe fabric of the book is woven from two threads, authors model is the one that will be the basis forexpressed as formulas. N = 1 means focussing on “one innovation and value creation. There are some goodconsumer experience at a time"; R = G means that advice like "learn by doing, take small steps" and "A"resources from multiple vendors and often from long-term focus with short-term actions is thearound the globe". N=1, is different from mass essence of organizational transformation."customisation offered by companies. Moreover, therange of skills needed for N=1 approach, can only be They include examples of failures and mistakes. Inachieved by building collaborative networks by one powerful example, the authors discuss about acompanies. Also, there are certain capacities, "major auto supplier" in the U.S shifting the sourcingcapabilities and flexibilities that one needs to build in of various parts toChina. Unexpectedly, what seemedones business systems, in ones human capital and like a clear-cut business decision had a negativeones geographical reach. Prahalad and Krishnan impact on many levels: The logistics of air-freightingwrite that all firms will access resources from a wide parts from China wiped out any cost benefits, whilevariety of other big and small firms—a global the resulting lack of flexibility and longer lead timesecosystem. Companys internal focus should be on meant that the companys internal design processgaining access to resources, not necessarily owning also had to be entirely rethought. The examplethem. provides a salient reminder of the importance of stepping back and thinking about the big picture, toFurther in the book, the authors emphasize the need consider the existence of less codified processes andof information and communication technology (ICT) systems, and to identify and pre-empt the potentialarchitecture that can connect business processes and consequences of any to data and application. In a rapidlychanging environment business process cannot be Although, the concept has been beautifully packagedstatic. There is a need for continuous innovation. and presented, it is tough to fully agree with theContinuous Analysis is required for insights for next universality of this concept. At times the book gives ainnovations in the organizations. They also feeling of being written for IT companies, especiallyemphasize how legacy systems need to be replaced those having their primary base in India. It would haveto make the organization more flexible to been better if there were as many cases or examplesaccommodate the N=1, R=G model. They present a from old traditional companies who havecase of lot of Indian companies who have adapted this transformed or remodeled themselves to adapt tomodel and have built flexibilities in their systems. the model proposed in the book.They make a case for the strategic importance of ITand how organizations cannot afford to write it off as SometimesThe New Age of Innovation veers into thea commodity. academic speak and formulaic structures so beloved of college professors, and theres a fair amount ofFurther they explain the mindset changes that the management jargon that can be grating at times. But,managers need to go through to accept and be the in the main, this is a fairly breezy and informal readchange that would enable the organization for this that provides a timely snapshot of a rapidlynew model. They talk about the new requirements in transforming business landscape. As the authorstalent management which again needs to be both make clear, this transformation is neither optional norflexible and mobile.Authors also talk about the role of reversible. This book provides a valuable primer forleadership in bringing in these changes in the those wishing to stay on for the ride.organization. byThe chapter on Efficiency and Flexibility highlights a Parul Shrivastavachallenge that every company that has ever tried to Mitul Shahbe both nimble and efficient has faced. There is a PGDM IB 2009-11e-Globuzz, Volume I, Issue II Jan-March 2010 Page 14
  18. 18. International Business News India-EU FTA to be Kraft takeover Cadbury completed by Oct 2010India and the European as one of the first ten Cadbury, a leading sweets they might have to faceUnion will be entering a nations. "Once the FTA is and chocolate challenges from Hershey.Free Trade Agreement finalized, business manufacturing company It has been reported that(FTA) by the end of this between the two will go up of the world has lost its Krafts next aim would beyear which could open up several folds." Trade independence after they to persuade the majornew export opportunities between India and the EU accepted the deal with stakeholders of Cadbury,worth USD 9 billion for currently stands at 78 Kraft, one of the food as the time for counterIndia. Daniele Smadja, billion euro (USD 107 giants of the United offer will remain open tillAmbassador, Head of EC billion), but is still less than States. As per the reports, January 25. They will haveDelegation to India, said one-fifth the value of the the board members of to act cautiously asthe exact date for signing EUs trade with China. In Cadbury has decided to Hershey might use thisthe pact would be decided recent years trade sell the brand to Kraft opportunity and try to winafter the final round of between India and EU after they modified the the ownership of thetalks in March. Indian countries had been deal and increased the company. The takeoverPrime Minister growing at 16% a year amount of money. The creates fresh worries forManmohan Singh and EU compared to EUs overall takeover battle between Cadbury workers in thisCommission President growth rate of trade of ten Kraft and Cadbury was c o u n t r y, w i t h K r a f tJose Manuel Barroso per cent on account of the going on for several promising hundreds ofwould be finalizing the growth performance of months and the final millions of dollars inagreement soon the Indian economy. decision ultimately came annual savings from theTerming India for its fast in favour of the Kraft deal, which analysts sayemergence as a major Company. means some of Cadburyspower in the region, Though the US food 45,000 workers aroundSmadja said the country company, Kraft has been the world will lose theirfigured in the EUs list of successful in acquiring the jobs.significant trading partners ownership of Cadbury, Toyotas ongoing troubles…Its not stopping...Toyotas recall of almost 8 acceleration”. Toyota has himself. models. The charge sheetmillion cars across the put the cost of the recalls Other carmakers, notably against the companyworld and the subsequent at $2 billion in the first Ford and the ambitious lengthens daily too.suspension of sales and quarter alone. Toyotas Volkswagen Group, have Toyota probably faces anp ro d u c t i o n o f e i g h t sales in America last closed the quality gap and avalanche of class-actionmodels with potential month plunged by 16% are offering more lawsuits in America whichfaulty accelerator pedals compared with a year interesting cars. It is the will prolong the adversehas sent shock waves earlier, while those of worlds best selling hybrid publicity. What is clear forthrough the industry. General Motors rose by car and Japans most To y o t a a n d o t h e rToyota announced on 15% and Fords by 24%, popular new car of all. companies that may findFebruary 1st that it had allowing it to reclaim the Around half of the cars themselves in a similarcome up with a cure for number-two slot in the affected by this recall are position is that swift andthe sticking pedals which, market it lost to Toyota in Priuses in Japan. This will decisive action may bealong with badly fitting 2 0 0 7 . M r To y o d a undoubtedly do no good painful but less agonisingfloor mats have been p ro m i s e d a v i s i t t o for a company that is than letting a problem boilblamed for at least 19 America, the car attempting to maintain its over and then attemptingdeaths and more than companys largest market, lead in hybrid cars as to clear up afterwards.2,000 incidents of to see the damage to competitors line up to“ u n i n t e n d e d Toyotas reputation for launch competing greene-Globuzz, Volume I, Issue II Jan-March 2010 Page 15
  19. 19. HARMONIZED SYSTEMSA provision that establishes international uniformity for product classifications.HUSBANDINGTerm used by steamship lines, agents, or port captains who are appointed to handle all matters inassisting the master of the vessel while in port to obtain bunkering, fresh water, food and supplies,payroll for the crew, doctors appointments, ship repair, etc.BUNKER ADJUSTMENT FACTORA Fuel Surcharge expressed as a percentage added or subtracted from the freight amount, reflectingthe movement in the market place price for bunkers.FORCE MAJEUREThe title of a standard clause in marine contracts, exempting the parties for non-fulfillment of theirobligations, as a result of conditions beyond their control, such as earthquakes, floods, or war.LAYCANStands for "laydays commencing / laydays cancelling" and is a spread of dates which provides for theearliest date for the ship to arrive and for laytime to commenceDUNNAGEMaterials of various types, often timber or matting, placed among the cargo for separation, and henceprotection from damage, for ventilationMALA FIDESA sellers representation that goods are usable for a particular purpose, when in fact the seller knowsthat the goods are not.JETSAMArticles from a ship or ships cargo that were thrown overboard ALL RISKS CLAUSE An insurance provision, which provides additional coverage to an Open Cargo Did Policy, usually for an additional premium. you SNAKE LOADING Loading products into a container in the sequence with which the goods will be know unloaded and stored in at destination. PRO FORMA INVOICE these Draft invoice sent to an importer by the exporter prior to order confirmation and terms? shipment to assist in obtaining import licences or foreign exchange allocations. FOUL BILL OF LADING A receipt for goods issued by a carrier bearing a notation that the outward containers or goods have been damaged.e-Globuzz, Volume I, Issue II Jan-March 2010 Page 16
  20. 20. CROSSWORD #02 DOWN 9. A government grant that gives 5. A form of corporate acquisition in 1. The process by which a country inventors exclusive right of making, which one firm absorbs another and becomes a member of an using, or selling the invention. (6) the assets and liabilities of the two international agreement, such as the 10. A document issued by a bank at the firms are combined. (6) WTO or the European Community. buyers request in favor of the seller, 6. Collaborative groups of vertically and (9) promising to pay an agreed amount horizontally integrated firms with 2. Official discussion with another of money upon receipt by the bank of extensive share cross-holdings and government carried out on conforming documents with a with a major Japanese bank or instructions. (8) specified time. (3) corporation at the center. (8) 3. A document that establishes the 11. An agreement among, or an 7. A community made up of Bolivia, terms and conditions of a contract organization of, suppliers of a Colombia, Ecuador, Peru and between a shipper and a shipping product to limit production in order Venezuela. (6) company under which freight is to be to minimize competition and 8. An arrangement which establishes moved between specified points for maximize market power. (6) unimpeded exchange and flow of a specified charge. (3) ACROSS goods and services between trading 4. The means companies select to 1. The treaty, formally known as the partners regardless of national achieve their objectives. (8) Treaty on European Union, signed in borders. (3) 5. An intermediary storage facility 1992 that led to the unification of 9. A simultaneous spot and forward where goods are kept temporarily for many European countries. (10) foreign exchange transaction. (4) distribution within a country or for re 2. Korean business groups that are 10. A treaty between two countries to export. (8) similar to keiretsu and also contain a ensure that investments between the 6. The Japanese process of continuous trading company as part of the two countries receive the same improvement, the cornerstone of group. (7) treatment as domestic or other TQM. (6) 3. The act of seizing commercial international investments. (3) 7. The practice of charging or paying exchange with a particular country. 11. A domestic tax assessed on the exorbitant interest on a loan or other Such act is common during wartime. manufacture, sale, or use of a transaction. (5) (8) commodity within a country. Usually 8. Taxes on imported goods and 4. In an acquisition or merger, when the refundable if the product is exported. services, levied by governments to value of the combination is greater (6) raise revenues and create barriers to than the sum of the individual parts. trade. (6) (7)e-Globuzz, Volume I, Issue II Jan-March 2010 Page 17