Business Insights

For managing multiple channels for room-distribution to maintaining rate parity across all channels

2010-05-01T06:43:00.000-07:00

RateGain, one of the most awarded travel technology companies, offers a channel and inventory management solution for Hoteliers worldwide.

ChannelGain, a Channel & Inventory Management solution for Hoteliers
From managing multiple channels for room-distribution to maintaining rate parity across all channels, ChannelGain helps more than 2000 hoteliers perform tedious tasks easily and efficiently. This product is a web-based platform with the capability of managing multiple extranets. Rates, inventory and restrictions can be managed across multiple merchant and retail distribution sites from the efficiency of a single interface.

Features: -
• A web-based platform to manage your online distribution from any location globally

• Manage unlimited channels and truly exploit the long tail of online distribution

• Ensure rate parity across all channels and manage multiple channels from a common pool of inventory

• With Linked Rooms, the most popular time-saving feature, use one single master room to apply price updates for several room types on different channels

• RMS integrations allow you to view the rate recommendations from systems inside of ChannelGain and accept, modify or reject them before pushing to the channels

• 90-day updates feature allows you to update the whole year ahead in just four updates

• Ability to manage channels and partners that do not have an extranet and generally send updates via email

• 24 x 7 x 365 support with pre-defined turnaround times (SLA) irrespective of time zone you are in

• Fetch reservation information from channels via BookingFetch functionality

To know more about this channel & inventory management solution and for a product demo, please visit http://www.rategain.com or contact me.

Coca-Cola 'Expedition 206'

2009-10-23T04:42:00.000-07:00

In 2010, Coca-Cola is sending a team of Happiness Ambassadors around the world to visit 206 countries in 365 days.

Their mission: Find out what makes people happy.

According to Coca-Cola:

In January 2010, a team of three travelers will begin an unprecedented journey. A mission. An expedition. A quest to visit in 365 days 206 countries where Coca-Cola is sold. These three travelers are more than mere explorers–they are Happiness Ambassadors, and they will seek and share the optimism and happiness of Coca-Cola from Aruba to Zimbabwe and everywhere in between. They will participate in some amazing events including the Winter Olympics in Vancouver, the FIFA World Cup in South Africa and the World Expo in Shanghai.

Throughout the year-long journey, these Happiness Ambassadors will be sharing their blog posts, tweets, videos, interviews and pictures so you can follow their adventures in every country along the way.

But first we need your help. We need you to help us select the lucky travelers who will undertake this exciting and record-breaking journey. Which Ambassador team will uncover happiness in every corner of the world? It’s up to you. Check out the team profiles, vote for your favorite and let the journey begin.

The campaign is called 'Expedition 206' and will run throughout 2010.

There is an online voting being done to choose which teams should be preferred to undertake the journey, from a shortlist of nine finalists. The winners will begin their journey on 1 January in Madrid and end it in Atlanta on 31 December, at the World of Coca-Cola museum.

Mash-up Social Media Strategy – USP

It will be documented via the official Expedition 206 website as well as on Facebook, YouTube, Twitter and Flickr.

The public can engage with the campaign by acting as virtual tour guides, making suggestions as to where the ambassadors should go and what they should do when they are there.

"This mash-up of social media — online photo galleries, video clips, blogs, microblogs, social networking — combined with an amazing journey, enthusiastic travellers and a theme of happiness is a great way for us to connect with people around the world.” – Adam Brown, director of digital communications and social media at Coca-Cola

America's Best Young Entrepreneurs 2009 - BusinessWeek

2009-10-13T23:20:00.000-07:00

BusinessWeek readers nominated a record number of young entrepreneurs.

Here is the list
1. Ascension Aircraft
What It Does: Aircraft sales and leasing
Founder: Jamail Larkins, 25
Web Site: www.ascensionaircraft.com
Based: Augusta, Ga.

2. Box.net
What It Does: Online collaboration tool
Founders: Aaron Levie, 24, and Dylan Smith, 24
Web Site: box.net
Based: Palo Alto, Calif.

3. Click To Client
What It Does: Online marketing agency
Founder: Shama Kabani, 24
Web Site: www.clicktoclient.com
Based: Dallas

4. Emergent
What It Does: Renewable energy consulting
Founders: Jesse Gossett, 23 (left); Jayson Uppal, 23 (center); and Chris Jacobs, 21 (right)
Web Site: www.emergentgroup.com
Based: Boston

5. I Bec Creative
What It Does: Web development and graphic design
Founder: Becky Stockbridge, 25
Web Site: www.ibeccreative.com
Based: Portland, Me.

6. Intern Queen
What It Does: Internship placement consultancy
Founder: Lauren Berger, 25
Web Site: www.internqueen.com
Based: Los Angeles

7. ModCloth
What It Does: Online marketplace for indie designer fashion and decor
Founders: Eric Koger, 25, and Susan Koger, 24
Web Site: www.modcloth.com
Based: Pittsburgh

8. NoteHall
What It Does: Online marketplace for class notes
Founders: Sean Conway, 25 (right); Justin Miller, 21(far right); B.J. Stephan, 24 (left); Fadi Chalfoon, 23 (second from left)
Web Site: www.notehall.com
Based: Tucson, Ariz.

9. Trunk Club
What It Does: Online clothes shopping service for men
Founder: Joanna Van Vleck, 26
Web Site: www.trunkclub.com
Based: Bend, Ore.

10. Tumblr
What It Does: Microblogging platform
Founder: David Karp, 23
Web Site: www.tumblr.com
Based: New York

See the full slide show of 25 U.S. Entrepreneurs Ages 25 and Under

Yahoo's "It's Y!ou" Campaign didnt click - YouGov

2009-10-13T21:14:00.000-07:00

There's evidence that Yahoo's $100 million "It's Y!ou" ad campaign might actually be hurting the company's brand. A company called YouGov interviews 5,000 people a day and asks them about brands. For Yahoo, they asked "If you've heard anything about the brand in the last two weeks, was it positive or negative?"

YouGov then gives the company a score between -100 and 100, compiled by subtracting negative feedback from positive.

Here's the bad news for Yahoo (YHOO). Since the launch of "It's Y!ou" campaign on September 28th, Yahoo's buzz score dropped from a 35.4 to a score of 25.5 as of yesterday, Monday, October 12th.

Source: Business Insider, Silicon Alley Insider

Evolution of Social Media: The next phase

2009-10-09T04:12:00.000-07:00

A powerful tool to understand customers and increase ROI. Next phase of Social Media will not monitor but merge business intelligence to analyze & take effective measures

Over the past few years social media has emerged as a powerful platform not only for connecting likeminded people online but also to understand specific preferences of different niche groups. There are a number of such examples. Not just the big brands but even the small and medium sized businesses are making their presence felt through this platform and are also introducing innovative marketing campaigns to leverage this highly lucrative platform. Few companies have been able to garner impressive ROI, one such example is of Dell, the company made more than 3 million USD using Twitter as a medium to reach out to its existing and potential customers. There are many other examples.

It seems that the life cycle evolution of social media is waiting for the next giant leap. One can classify the evolution of social media so far into three phases;

• First Phase: began with one or two sites and then graduated to networking sites like Facebook, Orkut, Twitter, Wikis, Blogs, Video and Picture sharing.

• Second Phase: Techies coined the term Web 2.0 to make their presence felt and interesting applications were introduced.

• Third Phase: The current phase, where digital marketing evolved from the web marketing era and became synonymous with an integrated digital marketing concept that imbibed web 2.0 and mobile marketing. Companies realized the potential and power of this combined Digital Marketing Concept and came up with innovative marketing campaigns. Thanks to the creative and digital agencies for these path-breaking concepts.

One common trait in all the innovative marketing campaigns is that despite huge engagements & participation by the target audiences that resulted in sales, companies used social media platforms to reach out to their customers and engage them with interesting tools instigating them to buy. Dell is a unique example where they approached the customers with the core objective of listening to their opinion and getting their feedback. An interesting fact is that the company used this information to align its marketing and sales approach to digital platforms.

It is clear that just Listening to the social media consumer is no longer enough. It is time for companies to think out of the box and not just use social media platforms to make their presence felt. They should get involved in different ways, such as product/services conceptualization and development, positioning, communication, offers/discounts etc. Basically, use social media to understand what people are talking about, understand their viewpoint and preferences, gather insights, identify their problems and opportunities, and reach out to them with much more efficient marketing strategy. Brands also need to be more flexible in how they approach social media, avoiding “One size fits all” approach to marketing.

Another important aspect is to merge the marketing concept with localized touch i.e. one should not forget that the basic definition of social media is community based networking. Although the platform is globally available; it is advisable to transform the global campaign with a localized digital marketing strategy e.g. in Asia and Europe, where every country has different and unique culture, socio-economic divides.

From a technology perspective, to complement this approach, Google has taken a path-breaking approach once again with SideWikis.

What’s in the Future?
The fourth phase: which is yet to begin can take forward the concept of SideWikis leading to the emergence of technologies based on human intelligence and will track and analyze all the opinions voiced by users on social media platforms. These tools will not only track comments but also act like a typical sales or BD executive who categorizes similar opinions and approach them with a right proposition.

Popular social media platforms like blogs, facebook, twitter, discussion boards etc. can be integrated with technologies that can carry out the following processes:
• Track user comments and opinions
• Understand requirements and talk like human minds
• Categorize the opinions and comments
• Create graphs and charts using business intelligence
• Provide a user interface for the BD and Sales executives to access list of potential targets with their exact requirements and approach them with the right sales or brand awareness or image enhancement proposition

One major example in this context is Crimson Hexagon's VoxTrot listening platform. Crimson Hexagon's VoxTrot listening platform provides companies with actionable insight into consumer opinion of their brand, product, or market. VoxTrot technology can identify opinion from large quantities of text, whether it's an in-house content repository or the vast blogosphere. Crimson Hexagon's VoxTrot Opinion Monitor has its roots in a statistical algorithm created by Gary King, a professor at Harvard University. Proven in research and commercial settings, the technology is patent-pending and already in use with global brands.

This technology analyzes the vast social internet (blog posts, forum messages, Tweets, etc.) by identifying statistical patterns in the words used to express opinions on different topics. It uses these patterns to calculate the percentage of opinion for reach opinion category, as defined by you, the business user. Competitive technologies, by contrast, simply count the number of mentions of different keywords or infer generic positive/negative sentiment. You can read about the technology in detail at following links:
- How a listening platform provides actionable insight
- Measuring brand equity in the age of big data

I would love to hear from you on this article, be it in response to what I have outlined here or your own thoughts on the subject. In case you have an opinion or viewpoint, let’s connect and discuss innovative options for the transformation of Social Media & Web 2.0 to the next level.

Intel-powered ‘Blogathon’ 2009

2009-09-28T23:11:00.001-07:00

In July 2009, Intel launched a new range of ultra-low-voltage processors that enable PC brands to build ultra-thin notebooks offering long battery life and sophisticated processing capabilities in an easily portable form.

Objective: Intel wanted to demonstrate these lifestyle benefits more than ever…

Strategy: Intel tapped Singapore’s most influential tech and fashion bloggers to generate a profile for a visually uninspiring, but technologically exciting, product. Top 10 famous tech bloggers from Singapore were prepared to embark on a live 24-hour, non-stop, Intel-powered ‘Blogathon’.

Vision
1) Create maximum visibility for the slimline notebooks fitted with Intel’s range of ultra-low-voltage processors;
2) Bring the chip to life for consumers by making it relevant to their lifestyles;
3) Educate consumers on the performance of the Intel Core 2 Solo chip.

Execution plan (17 July - 18 July)

Hardware provider (Laptops): Lenovo

Sponsor (design and appearence): Singaporean fashion brand TANGS

Selection process of bloggers: An intensive audit was conducted to identify relevant, influential bloggers to participate in the event. An equal percentage of both ‘tech geeks’ and ‘fashionistas’ were engaged with a view to expanding brand equity between both groups.

Media channels & platforms

Youtube.com: A reality-TV-style video was aired on YouTube four days before the launch. It also served as material for the participants to include in their blogs. The video revealed the bloggers’ initial thoughts about the challenge alongside a sneak preview of their makeover experience at TANGS.

Microsite: A Flash-based microsite with blog aggregator was created to inspire the bloggers to create content over the 24-hour period.

Analytics: A tracking system was integrated on the microsite to ensure precise measurements usually unattainable in a blogger engagement programme (such as measuring the time spent per visitor on average per blog post).

BTL/On-ground support: To maintain a high level of interest during the event, attract on-ground traffic, and maintain a constant level of dialogue, real-time Twitter conversations were aired on LCD TV screens placed in each window display; a product demonstration booth allowed shoppers to try out the Lenovo laptops used by the bloggers; and trained product specialists from Lenovo provided on-site education on the laptops and the capabilities of Intel’s Core 2 Solo processor.

Digital agency: Ogilvy 360º Digital Influence, Ogilvy Public Relations Worldwide, responsible for the live integration of the visual capabilities of Flash

Blog platform: Wordpress, content management system

After the event, a video summarising the highlights was posted on YouTube.

Results

Total hits on the micro-site: 3,705 people from 34 markets visited the microsite in five days; 88 per cent were from Singapore. The site helped build an organic database, with 353 votes cast on-site.

Total visitors / Blog participation: 3,958 unique visitors. A total of 140 blog posts were generated in 24 hours, averaging 5.8 blog posts per hour; 817 comments were posted in 24 hours, averaging 34 per hour. It was covered across eight news platforms, 51 external blogs, and a leading design portal, notcot.org.
With no prizes or activities created on the site to incentivise visitors, bloggers were challenged to create more engaging content than their rivals and to read and comment on posts. This resulted in 42,372 page-views in five days, averaging about 11.44 page-views per person; each visitor spent on average 12:04 minutes on the site, the equivalent of 24 30-second TV commercials watched consecutively in the same time period; the bounce rate was low at 32.42 per cent. Only three out of 10 visitors dropped out in under a minute, while around 10 per cent of visitors (300) viewed 20 pages or more.

Reference: Haymarket Media

In-game Advertising - Next Big Thing in Digital Marketing

2009-09-16T03:36:00.000-07:00

Video gaming is expanding in popularity across Asia Pacific and so is the practice of in-game advertising, as its offering available to marketers expands. In-game advertising (IGA) refers to the use of computer and video games as a medium in which to deliver advertising.

Companies like Google and Microsoft have already joined the bandwagon and are offering interesting propositions of in-game advertising. Microsoft, which bought Massive in May 2006, is a leader in placing dynamic advertising in games. The market is filled with many smaller players, such as a company called Double Fusion. But it's also attracting other big technology names, including Google, which bought AdScape Media for $23 million in 2007. The new ad format is provided by Massive Inc., a wholly owned subsidiary of Microsoft. In-game advertising is available through Microsoft Advertising across the region and campaigns are currently running in Korea, Australia, New Zealand, Singapore and Hong Kong.

Microsoft showed off its Massive advertising platform in Sep 2007. Flashing high above 43rd Street were clips from a series of games that showed avatars stopping to view a movie trailer for the Hollywood blockbuster 300. A Toyota advertisement also lined the outfield wall in a baseball game that's played on Microsoft's Xbox game console.

"The idea is to have advertisements appear and fit in naturally to the games just as they would in real life. But these advertisements are also dynamic. So the ads can be updated or changed by the advertiser at any time." -- Jay Sampson, VP, North American and Asia Pacific sales for Massive, Microsoft's in-game advertising marketplace.

"In-game advertising provider Massive Inc., acquired by Microsoft in 2006, has signed up or renewed contracts with several publishers, notably EA, Blizzard Entertainment, THQ, and Activision. Eagerly anticipated games like Need for Speed: Shift will feature the technology that continuously collects 'anonymous' information about users, sends them to the Massive database for analysis, and downloads advertisements to be shown in the game.

"The games industry sees in-game advertising as a promising new revenue stream. Video Games with revenue expected to break the $10 billion mark this year and garner over $300 million in advertising investment, the gaming industry represents a strong marketing opportunity.

Video gaming offers the opportunity to connect with traditionally difficult-to-reach consumers-- young affluent males. It attains the fourth-highest reach (after TV, internet and radio) against teens and heavy gamers. Not only can in-game advertising efficiently reach key consumers, it can also reach them while they are actively engaged with the medium.

In order to maximize the value of in-game communication, several studies have examined the role of brands within video games and players' attitudes towards gaming and in-game communication. The goal has been to learn how best to use games to create meaningful relationships between brands and consumers.

The results are a set of insights and guidelines that will help deliver more effective in-game communication.” -- Fran Kennish, Senior Partner, Director of Strategic Planning at MEC MediaLab

Industry figures suggest that such advertisement could increase profits for publishers by an extra $1 to $2 per game unit sold - a significant increase over the current $5 to $6 profit per unit.

Publishers see this revenue stream as a way to offset growing game development costs, which are estimated to rise up to $20 million per title for a 7th generation console. Some developers believe that the extra revenue will reduce the risk involved in a game development project, allowing them to experiment with more innovative game-play and new ideas.

In-game advertising has even replaced purchase price as a revenue model for some mobile phone games. In 2005, spending on in-game advertising was US $56 million, and this figure is estimated to grow to $1.8 billion by 2010 according to Massive Incorporated, although Yankee Group gives a lower estimate at $732 million.

Yankee Group revealed that the global in-game advertising market, which generated $77.7 million globally in 2006, continues to develop at an exponential rate. By 2011, worldwide in-game advertising expenditures (fixed product placement/static ads and dynamic ads) will grow to $971.3 million.

"As ubiquitous connectivity continues to reshape the media and entertainment landscape, media fragmentation and clutter are a result, making traditional advertising channels less effective. Advertisers are increasingly finding in-game advertising to be a greater investment value because of the variety of opportunities that exist in and around games. Video games represent an 'above the line' opportunity, which means that video games should be used to build brands and not as a call to action that distracts from the game play." - Michael Goodman, Director, Digital Entertainment, Yankee Group's Consumer Research Group

In-game advertising is seen by some in the games industry as offering a new revenue stream, allowing developers to offset growing development costs and to take more risks in game play. Advertisers see in-game advertising as a prime way to target the male 18-34 demographic, who are increasingly neglecting television in favor of computer and video games.

However, some gamers see these moves as greedy and invasive, dubbing in-game advertising software as spyware. This view was demonstrated by the backlash against Electronic Arts' Battlefield 2142 which contained in-game advertisements from IGA Worldwide. This has not, however, stopped traditional firms such as Nielsen Media Research branching out into the in-game advertising space, by announcing a new video games ratings service (similar to Nielsen ratings) called GamePlay Metrics to serve in-game advertisers.

According to a recent news in Media Asia, McDonald's becomes Microsoft's first in-game advertiser in Hong Kong -- McDonald's is to set to unveil its first in-game advertising campaign for the Hong Kong market in conjunction with Microsoft Advertising. The initiative will feature a series of virtual 'McDelivery' billboards in five leading video games on the PC and Xbox 360 platforms. The games include PES 2009, The Need for Speed, Undercover, Rainbow Six: Las Vegas 2, NBA Live 2009 and Burnout: Paradise.

“There is a growing opportunity for in-game advertising because it is the only platform where people are completely immersed in one activity. When gamers play a game, they tend to only play the game. We don’t see trends that indicate they do much multi-tasking which would split their attention away from the game.” -- Richard Dunmall, Managing Director, Microsoft Advertising Asia Pacific

“Computer and online games are where young man and women often hang out with their friends these days. The in-game advertsing platform is suitable for advertisers like fast-food chains, sports and fashion brands alike who are looking to target the demographic using gaming. The in-game advertising is imbedded in the game environment, and should be an extension of advertisers’ existing marketing campaigns, as part of the media channels across multiple platforms". -- Kenneth Andrew, Marketing Director, Greater Asia Pacific, Microsoft Advertising

Digital Storytelling - An interesting tool to leverage social media platforms

2009-09-16T02:58:00.000-07:00

An interesting and interactive technique to engage visitors on popular social media platforms is Digital Storytelling. According to Wikipedia "Digital Storytelling" is an emerging term, one that arises from a grassroots movement that uses new digital tools to help ordinary people tell their own 'true stories' in a compelling and emotionally engaging form. These stories usually take the form of a relatively short story (less than 8 minutes) and can involve interactivity. The term can also be a broader journalistic reference to the variety of emergent new forms of digital narratives (web-based stories, interactive stories, hypertexts, and narrative computer games). As an emerging area of creative work, the definition of digital storytelling is still the subject of much debate.”

Digital storytelling is the best weapon for media creatives. There are three ways in which digital storytelling was different from analogue storytelling. It creates a brand story, and doesn't just provide product information. Also, it allows marketers to pull in people, rather than pushing merely consumers. Thirdly, it creates significant word of mouth.
- Thomas Kin, Creative Director, Global Creative Team, Cheil Worldwide

Digital storytelling aims to make its audience spread the stories spontaneously by word of mouth and create a buzz over the internet. Lately various forms of commercial messages, including advertising on portal sites, microsites and games sites, have become more prevalent.

Some of the interesting campaigns in the recent times that leveraged digital storytelling are Samsung's 'Haptic Mission', Nike’s 'Be the Legend', “Hang in There Jack”, Zack 16 etc.

An interesting proposition would be using digital storytelling of a product in a campaign using social media platform to engage customers.

More interesting case studies on campaigns involving digital storytelling to follow soon….

Why Twitter isn't making money

2009-08-25T01:44:00.000-07:00

Twitter – an innovative micro-blogging service - has become the new darling among social media marketers and internet geeks. According to comScore, over the last year, Twitter's traffic has exploded 15X to 44.5 million worldwide unique visitors in June, according to comScore. But Twitter's growth story isn't just limited to the U.S. and North America, where only about half its traffic comes from, according to comScore. In June 09, Twitter attracted 11 million visitors from Europe, 7 million from Asia Pacific, and 4 million from Latin America -- a total 22 million unique visitors from those three regions, up from about 2 million the year before.

Everyday there are more than 100+ stories circulated across various news and blog platforms highlighting how companies are leveraging Twitter either to increase sales or to raise awareness or just to be visible. Unlike its other counter parts like Facebook or LinkedIn, every now and then people raise questions like…

“Do they make money…how do they survive?”

“There aren’t any ads or subscription fees, how these guys manage their salaries?

“Is it a charity…Google is the most generous of all but still it knows how to make money”

So…the big question is Why Twitter doesn’t make money if it is an industry synonym for Web 2.0 or Social Media????

According to Daniel Riveong, an Internet Marketer working at e-Storm International in San Francisco, California, twitter has to start making money else…
“Maybe Twitter won’t be around to see 2010, yet many major brands have moved in to communicate with consumers and the world via Twitter. He categorized some of these companies under three types of twittering brands:
# 1 Conversational Twitters: H&R Block, Zappos, 10 Downing Street
# 2 News Item Twitters: Amazon.com, New York Times
# 3 Reputation Monitoring Twitters: Radian6 & GeekSquad”

There are many well wishers of Twitter on the web who suggest various way through which twitter can make money. On such supporter is Mashable blogger Adam Ostrow, who feels that Twitter could “couple e-commerce with advice from other shoppers, an element that most search engines do not offer.”

Steven Verbruggen feels that if they want to make some money quick, premium services like Google Analytics could generate quite some cash flow. He further suggests that Twitter can make money by:
1. Acquiring a company that is interested in data and relations and leverage Twitter as a research platform.
2. Advertising route
3. Turning it into a commercial service, let users pay for the use, or let them pay if they want to go over a certain threshold like following xx people or posting xx tweets per month.
4. Introducing commercial features
5. And last but not the least, by introducing Twitter Analytics.

Sarah Milstien, program founder for Just Food, a local-food-and-farms non-profit, and co-founder of Two Tomatoes Records, feels that
“Twitter could make money in a number of ways, from selling data to selling services (it recently posted an ad for a Business Product Manager, calling the role "Twitter's first product manager focused on revenue generation" and then describing a product that sounds like competition for Yammer and Present.ly). Indeed, Blog posts and articles speculate constantly, and comments around the Web range from curious to seemingly angry that Twitter is not yet generating serious cash.”

OR
Is too late for Twitter to monetize from its business model which has already been copied aped and experimented by different companies.

Few companies are already experimenting with business models, creating a situation where these sites have monetized before Twitter itself (Mashable, for instance, launched the Twitter Brand Sponsors ad format recently). The ad network Federated Media is taking a shot at making money from Twitter; FM has launched ExecTweets. A site created by Federated Media, in partnership with Microsoft, ExecTweets is a platform that aggregates the tweets of top business execs and empowers the community to surface the most insightful, business-related tweets.

Even more interesting: Twitter will officially endorse ExecTweets today and encourage brands to create portals like this.

There are several such sites floating around leveraging on the Twitter mania. In an interesting development, Twitter’s legal team sent a cease and desist order to New Yorker Dean Collins telling him that his mytwitterbutler service has to go because it has the T word in its URL and the domain must be handed over before August 24 or else.

So...what’s stopping Twitter to start making money???

I would like to draw an analogy on Google’s growth in the recent times. Be it Google’s business model, industry buy-ins, favorable developments and later on the migration of its services from a free-for-all to a money making machine. Google started off as an innovative concept and introduced its marvelous search engine, on similar lines Twitter introduced an innovative service that gave the birth of the new buzzword Web 2.0. Google had an instant hit in its kitty with its search engine and suddenly VCs, companies and investors were knocking on Google’s door. Twitter’s story is very similar as well. Twitter has already received funding of $20 million (initially) and $250 million (recently). Like Google, Twitter recently turned down a half-billion dollars from Facebook.

After this phase, Google instead of adopting the traditional money making business models waited patiently and used initial funding to ensure that salaries and sustainability are not serious concerns. They used this grace period intelligently to conceptualize and design state-of-the-art innovative technologies. The company knew that it has struck gold with its most innovative web technology of the decade, so they have to live up to their expectation.

Mantra was to go slow and step by step. Leverage on what they know best and introduce offsprings of the mother – The Search Engine. They invested most of their time on conceptualizing innovative technologies and they took their good long time to introduce them. Today when people talk about innovation, Google, 3M and Apple are always mentioned.

Twitter started off on a similar note. They just can’t follow something that has already been introduced, leveraged and exploited. What would be new (read Twitter) about it? I strongly feel that Twitter is not in a rush as of now and would be using this honeymoon time to do its home work properly and thinking about new innovative web 2.0 technologies and platform.

Twitter will definitely start making money but only with its own innovative tools and applications. To my mind, it will introduce something else to make money only if it can take the legacy of Twitter to the next level of innovation – something that is quite synonymous with its brand name.

I am not an expert in web technologies but I strongly feel that Twitter core mantra is sharing information and all its future endeavors would be around this core concept only (after all Web 2.0 is about it as well). Going forward, I feel Twitter could be thinking of something on these lines: -

1. Authentication – Today anyone can create a login and start using Twitter. Twitter can think of introducing the authentication or verification angle to it so that the analytics chalked out using Twitter would become more reliable.

2. Subscription based tweets – Tweets are the main weapon in its arsenal. All successful case studies on leveraging Twitter had one thing in common i.e. Tweets. Twitter may club it with its Authentication service and start offering specific and customized user tweets for specific reasons. It could be either surveys, analytics, customer service, sales etc.

3. Search Engine – Twitter can integrate a powerful search engine that gives the functionality to filter tweets and get only the most relevant ones as per the specific search criterion. This could become a powerful tool for the enterprise users of Twitter that can be made fee based gradually.

4. Twitpic – An interesting service to move beyond the 140 limit on Twitter and add some personalization to a dull Twitter user home page. Taking it to the next level, Twitter could think of introducing a platform for not only integrating pictures but also videos and files.

5. Another out of the box concept could be “Breaking News” service – Most of active Twitter users will validate this statement that Twitter has become an internet channel which gives them the news faster than any other news channel or resource. In real world we have plethora of TV channels and print media resources but as we are moving to the new internet world with Web 2.0, news about people who aren’t known to many, news that the whole world may not be interested in but you would, news about your friends, families, peer-group…will make the difference and who else can do this better or is equipped to do better than TWITTER.

Will surely love your thoughts and ideas on my thoughts. In case you have something interesting, not done before and goes well for Twitter, lets connect and suggest some good and innovative ways through which our dear friend Twitter can take its legacy to a new height – “Google of Web 2.0”

Now Air New Zealand is leveraging facebook to promote its Hong Kong London route targeting young professionals

2009-08-24T22:30:00.000-07:00

Companies from different industry verticals are coming up with innovative ideas to leverage Web 2.0 wave. Joining Lufthansa and Emirates Airways, Air New Zealand has launched an application and a fan page to promote its Hong Kong London route targeting young professionals.

“This is the first time the company has rolled out a Facebook focused campaign and wants to use this channel as a test platform. Facebook can reach her target audience, comprising frequent independent travelers between 25 to 34 years old that makes up the bulk of Facebook users here” - Prudence Lau, marketing manager in Hong Kong & Southern China for Air New Zealand

BIG Idea - "Explore the other side of London"

The theme of this Facebook campaign is called "Explore the other side of London" that will run until the end of next month. The campaign is supported by PR activation to invite key media influencers and bloggers to participate.

The application encourages its customers to come up with an idea to travel in London besides the typical tourist spots. It allows consumers to pick a travel companion and create a dream trip where the most unique and wacky trip will stand a chance to win free air tickets and accommodation to London.

Measurement metrics
Lau is also excited about setting up a fan page for Air New Zealand Hong Kong, which she said would be more than just updates on the latest fares but include the latest happenings and trends in New Zealand and England. She would use the number of fans recruited on the Facebook fan page as one of the KPIs on the effectiveness of this campaign.

Rudi Leung, communication planning director for Agenda Hong Kong, said Air New Zealand will benchmark results of this campaign with its previous consumer engagement activities in traditional media, which will help to decide how they would allocate more budgets for social media in the future.

According to Check Facebook, there are almost 2.2 million people using Facebook in Hong Kong.

Ref: Marketing-Interactive.Com

New profile additions in the C-suite – Chief Growth Officer (CGO)

2009-08-18T00:06:00.000-07:00

In recent months, organic growth has risen to the top of the corporate agenda. A Marakon survey in April 2004 found that organic growth is the key issue for 59 percent of the senior executives running US, European and Asian companies. For 57 percent, the priority has increased over the past year. Other studies highlight similar sentiments. For instance, a recent IBM survey of CEOs worldwide found revenue growth is the top agenda item for four of five.

Most if not all of a company's resources are spent moving through its corporate lifecycle, and that movement is typically fixed along a predetermined path. What happens when that company experiences rapid sales growth and an immediate change is required?

What happens when a rapid shift must occur due to unexpected competitor activity or due to a recent exodus of staff in light of the current labor shortage?

The challenge today is that with companies running lean and efficiently they cannot typically afford the time, money, and people required to deal with these issues effectively. They usually cannot afford the expensive trial-and-error associated with both learning and implementing new best practices, either. This is as true for Fortune 500 companies trying to reinvent themselves as it is for startups just entering the marketplace and experiencing fast growth.

Growth has become so important that an increasing number of companies--H.J. Heinz, Interpublic Group and Hain Celestial, among them--have carved out a new executive position: "Chief Growth Officer."

Popularly termed as Mr. Idea, this profile is basically to have one person in charge of all-around growth helps you to look at business processes holistically. Typical role entails creating new products, finding new ways to repackage old products, or just enhancing relationships.

A CGO is like having 5 key positions in one:-
1. Chief Growth Officer/Organization Development Director
2. Chief Information & Technology Officer
3. Chief Learning Officer (Top HR Executive)
4. Chief Operating Officer
5. Strategic Advisor

Generic job responsibilities:
- Evaluates the corporate structure and ensures that the structure is aligned with the company's objectives.
- Analyses effects of proposed changes to structure and its effect on the motivation and work/life balance of employees.
- Works with managers to develop effective line of communication and chains of responsibility.
- Requires a bachelor's degree with at least 10 years of experience in the field.
- Familiar with a variety of the field's concepts, practices, and procedures.
- Relies on extensive experience and judgment to plan and accomplish goals.
- Performs a variety of tasks.
- Leads and directs the work of others.
- A wide degree of creativity and latitude is expected.

Fig: Org Structure

Companies like Colgate Palmolive, Dentsu Media, Thomas Group, Zurich Financial Services, Hershey Company, TradeKing, H.J. Heinz, Interpublic Group and Hain Celestial etc. have already hired renowned professionals for this profile.

According to a recent job post for this profile, following are the expected qualities of this profile: -
# Identify root causes for missing opportunities and create conditions for growth
# Focus on new business models that leverage enabling trends, solve customer problems in larger potential markets and rapidly assemble internal and external capabilities required to build the platforms
# Validate ideas and achieve milestones in the development and execution of new business opportunities
# Promote new product development
# Design and build an organization to screen, select, fund and deliver the company Enterprise Growth
# Agenda and support Group Growth Agendas; define the mission of the organization and establish budget and investment requirements
# Support the CEO and Group VPs in shaping their enterprise and group growth agendas and related plans and priorities
# Understand future trends and targeted domains/markets and related dynamics
# Identify domains in which the company should seek opportunities to build a leadership position; explore big potential opportunities, (which customers could the company work with to prototype/build out the opportunities? what core capabilities can be leveraged in this new and emerging opportunity space?)
# Identify the systemic and interrelated challenges that drive towards and away from growth; align key elements of infrastructure and culture/behavior to the growth goals and agendas
# Mobilize business building leaders and teams to build out new targeted businesses/growth platforms

Requirements: Critical Traits for the CGO Role:
# Abstract reasoning, flexibility and idea orientation (able to 'connect the dots')
# Assertiveness and aggressiveness (can state opinions forcefully and deal with resistance or confrontation effectively)
# Self-discipline and urgency (sense of time pressure and motivation to complete activities)
# Risk taking (willing to try new things and explore new domains)
# Natural curiosity with bias for action exploring possibilities
# Ego drive and ego strength
# An undergraduate degree is required

Critical Experiences:
# Experience in strategy development with a history of innovation and passion for growth
# Track record indicating focused time to the external environment, customers, and external networking

Singapore’s FairPrice leveraging Facebook – An impressive Social Media Marketing Strategy

2009-08-17T23:20:00.000-07:00

Supermarket chain NTUC FairPrice has entered social media with a Facebook profile 'That's My FairPrice', already supported by a huge fans base. According to press statement the supermarket chain acquired about 1,000 fans just three hours after its launch. As on 18th August, it had 7,595 fans on facebook.

Presently, it is running an online contest, “That’s my Family” Contest, where it is inviting its fans to post their & their family’s photo on the wall and add a short caption.

Once the photo is uploaded, users are then asked to share their post with their friends and tag at least 20 friends to get them to “Like” your post. If any particular user has the most “Liked” entry at the end of the contest, that user will win the Grand Prize - S$1,000 NTUC FairPrice Gift Vouchers! Also, if any user is among the Top 3 “Liked” entries of the week, he/she stands to win S$100 NTUC FairPrice Gift Vouchers!

Initially, to promote the Facebook profile, NTUC FairPrice also launched an advertising campaign featuring a TVC. The campaign was developed in partnership with iHub Media and FairPrice's media agency MPG. The new Homepage Reach Block Video Fan ad unit, claims to ensure two million impressions and up to a maximum of five impressions per user.

“This debut into social media is yet another channel for us to enhance our relationship with customers, so as to understand and better serve their needs. We will continue to explore new channels to engage our customers, fulfilling our brand promise in delivering excellent customer service.” -- Jeremy Khoo, deputy director of marketing communications at NTUC FairPrice

In Singapore, Facebook reaches more than 1.4 million internet users, or 50 per cent of the web population (comScore Media Metrix, May 2009), with an almost even representation in each age group. On average, more than 366,000 Singapore users log in to Facebook every day.

Last year NTUC Fairprice appointed Euro RSCG and MPG as its creative and media agencies following a six-way review. The retailer also appointed local interactive shop Manic for a website revamp.

References: Brand Asia and Marketing-interactive.com

Indian tax law set to come of age

2009-08-12T21:23:00.000-07:00

The government has proposed a dramatic makeover of the country’s 48-year tax law, bringing it on a par with the new economy and also with what prevails in the rest of the world.

The draft of a new direct tax code introduced by the finance ministry on Wednesday has suggested significant cuts in tax rates for individuals and companies, pruned exemptions, choked loopholes for foreign companies and radically changed definitions, all of which are likely to have a mixed impact on companies and individuals. Together with greater surveillance, it would ensure greater compliance and thereby reduce the risk of any loss in tax revenues due to a cut in rates.

“The underlying philosophy of the code is the philosophy of the government. (It is) wedded to a well-regulated free market system,” P. Chidambaram, current home minister who was involved in preparing the draft code earlier, said at a press conference called by finance minister Pranab Mukherjee to release the draft code. Mukherjee said he would strive to introduce the draft legislation in the winter session of Parliament.

Source: Livemint

Cisco Unveils Vision of Future Cities at Incheon Global Fair & Festival

2009-08-11T21:45:00.000-07:00

SEOUL, Korea - August 6, 2009 - Cisco will demonstrate its Smart+Connected Communities vision for cities of the future at the Incheon Global Fair and Festival.

The Cisco® Smart+Connected Communities initiative aims to help cities and communities around the world use the network as the platform to transform how citizens use utilities, safety and security measures, connected real estate, transportation, health care, learning, sports venues and government services. Smart+Connected Communities solutions address the demand of increasingly urbanised populations by providing a network-enabled blueprint for successful 'smart' cities of the future that run on networked information.

Cisco will present its Smart+Connected Communities vision at the Cisco 'Global Cities of the Future' pavilion at the Global Fair & Festival, which opens Aug. 7 and runs for 80 days.

Wim Elfrink, chief globalisation officer and executive vice president of Cisco Services, said, "We believe the network can truly be the platform for transforming cities, communities and countries. Cisco's presence at the Incheon Global Fair and Festival is further evidence of our commitment to collaborate with the Incheon Free Economic Zone and cities around the world to help them use technology for increased environmental, social and economic sustainability."

The Cisco pavilion showcases six solutions: Cisco Virtual Information Desk, Cisco TelePresenceTM, Cisco community and connection services, security operations, building control, and green energy.

# Cisco Virtual Information Desk provides remote management functions that allow a receptionist to effectively welcome visiting customers from multiple locations.

# Virtual Information Desk is an environmentally friendly solution that helps reduce commuting and labor costs as well as energy consumption.

# Cisco TelePresence is a cutting-edge video conferencing solution with full high-definition video and high-quality audio combined with interactive conferencing functions that maximize the feeling of in-person interactions.

# Cisco community and connection services allow citizens to get remote health care and public services at home through Cisco Customer TelePresence by directly connecting to hospitals and public organizations.

# Cisco security operations are shown in building management and monitoring systems based on an Internet Protocol (IP) network. A closed-circuit television gives an operator in a control room the experience of real-time security and precautions. The comprehensive Inno-Watch solution can control CCTV images and external signals.

# The building control center allows visitors to experience IP-based intelligent building systems that address a number of integration, security and centralized monitoring issues. The building control center integrates IP operations and management to reduce operating costs and increase the asset value of buildings. Users can also access services such as meeting room reservations from their IP phone, digital media systems or PDA.

# The green energy exhibit showcases the Cisco EnergyWise solution, which deals with energy savings and environmental issues in office buildings and homes. Based on Cisco's router, switch and data center platform technologies, Cisco EnergyWise helps monitor energy consumption thus prevents unnecessary energy consumption.

In line with its pavilion, Cisco will provide a comprehensive Customer Briefing Center program for enterprise customers. Cisco is also scheduled to hold the Sustainable Cities of the Future Conference in Incheon on Sept. 18, which will bring together thought leaders from government and developers.

As part of the Cisco 'Global Cities of the Future' pavilion opening event, Cisco will provide free entry tickets to 50 people for the Incheon Global Fair and Festival and an opportunity to use Cisco TelePresence to meet with friends and relatives abroad.

About Incheon Global Fair and Festival
With the theme of 'Lightening Tomorrow', Global Fair & Festival 2009 Incheon will take place from Aug. 7 to Oct. 25, 2009. Hosted by Incheon Metropolitan City and organized by 2009 Incheon Global Fair & Festival Organizing Committee, the Incheon Global Fair and Festival will be held in Songdo International City.

Source: Official Press Release, Cisco

Web 2.0 Marketing Strategies

2009-08-11T00:00:00.001-07:00

Web 2.0 Marketing Strategies For The Rest Of Us

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Integrating Social Media Into Your Marketing Plan

2009-08-10T23:56:00.001-07:00

Integrating Social Media Into Your Marketing Plan

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Web-based Business Marketing

2009-08-10T23:53:00.000-07:00

Web-based Business Marketing

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Social Media & Word of Mouth Marketing for Startups

2009-08-10T23:50:00.000-07:00

Social Media & Word of Mouth Marketing for Startups (Muhammad Saleem, Startonomics SF 2008)

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Layar, worlds first mobile Augmented Reality browser

2009-08-10T23:44:00.001-07:00

Trend towards crowd sourcing

2009-08-10T01:09:00.001-07:00

Publicis Groupe's acquisition of Razorfish: the Asian angle

2009-08-09T23:36:00.000-07:00

Following the news that Microsoft will sell digital agency Razorfish to Publicis Groupe for US$530 million, sources expect it to be "business as usual" for the agency under its new ownership, including in Japan, where Razorfish is engaged in a joint venture with Dentsu.

According to the global agreement, Razorfish will become part of Publicis’ VivaKi, joining Digitas, Starcom MediaVest Group and ZenithOptimedia in the region, and is expected to keep its current leadership worldwide.

In Asia-Pacific, Razorfish’s agencies are Hong Kong-based e-Crusade, which handles Nike among other clients, Amnesia Razorfish in Australia and a joint venture with Dentsu in Japan.

Publicis is slated to take full control of the agency, which was sold to Microsoft in 2007 as part of the $6 billion acquisition of online advertising group aQuantive, in the fourth quarter of this year.

According to Razorfish’s regional president Lee Sherman, the leadership in the agency’s regional office will stay the same, and “the agency is very excited about the agreement” because it will be able to expand its capabilities by using the VivaKi network, “as it makes sense for our clients”.

Amnesia Razorfish’s founder Iain McDonald added that the partnership is advantageous because it perpetuates a relationship with Microsoft – from which Publicis has agreed to buy search and display advertising – and “will help accelerate our plans for growth in the region”.

Meanwhile, a spokesman for Razorfish noted it will be “business as usual for Dentsu Razorfish”, and anticipates that Publicis will continues the joint venture’s management with rival holding company Dentsu, which had also bid to buy Razorfish from Microsoft.

The spokesman added that the specifics of the deal are still up in the air. “It’s too early to speculate on possible working arrangements for our various brands around the world with the deal just having been signed,” he said.

A regional representative for Publicis said he expects Publicis and Dentsu to work together on the venture, pointing out that Dentsu holds a minority stake in Publicis Groupe and the two holding companies work together globally on public relations and sports marketing initiatives. “We are used to working together,” he added.

However, agency sources within the region also say the deal gives Publicis little leverage in Asia-Pacific’s digital arena outside a few key markets.

According to Barney Loehnis, Asian network director of Aegis Group’s Isobar Global, outside of a bolstered presence in Australia, Hong Kong and Japan, “I don’t think this deal gives Publicis a firm dunk in Asia”. “My personal observation is that $530 million is not cheap and Publicis is paying the price of its lack of vision from a few years back,” Loehnis said of the deal. “More than anything, this deal is interesting from a media-strategy perspective as it will still be working with Microsoft. But, this absolutely does not increase Publicis’ ability to go to market with a strong digital case.”

Source: Brand Republic

Collection of Interesting Case Studies on Social Media Marketing

2009-08-09T23:05:00.000-07:00

List of interesting case studies on Social Media Marketing

Crispin Porter’s viral Subservient Chicken garnered about 14 million unique visitors and 396 million hits to date, through Adweek here (March 7, 2005). http://www.adweek.com/aw/national/article_display.jsp?vnu_content_id=1000828049

Up Your Budget Treasure Hunt for Budget Car Rental in 2005, the first ever blog-based viral marketing campaign, promoted entirely through bloggers and blog advertising - with no traditional marketing whatsoever. The results: one million unique visits to the site, 2,000 registered treasure hunters, and over 10 million page views in only four weeks. The clue videos were downloaded a total 43,000 times. There were 19.9 million blog advertising impressions at an average cost of 33 cents. Created by BL Ochman.
http://www.whatsnextblog.com/archives/2006/10/case_study_up_your_budget_i_2005_created_by_bl_ochman.asp

Click TV - Blogger Relations for Click TV (April 17, 2006): An outline of a blogger relations campaign for a Web 2.0 company, Shel Holtz, results here http://blog.holtz.com/index.php/blogger_relations_for_clicktv/

Fiskateers for Fiskars, who make crafting tools. Branded mentions of Fiskars products are up more than 400% on a per-week basis since the program began, from Brains on Fire (2007) http://brainsonfire.com/blog/

Coca Cola’s Community Approach to Second Life (April 17, 2007): Coca-Cola’s new social media strategy in Second Life featured an approach other than buying real estate and creating a store, Shel Holtz & Crayon http://blog.holtz.com/index.php/coca_colas_community_approach_to_second_life/

SeaWorld San Antonio: Journey to Atlantis (May 3, 2007): The launch and results of an “event” site to support the opening of a new ride, My PR Pro http://overtonecomm.blogspot.com/2007/05/anatomy-of-social-media-campaign.html

Splashcast’s Social Media for Marketing: (May 16, 2007): Splashcast used social media for marketing purposes, and succeeded by directly engaging the community, Marshall Kirkpatrick http://marshallk.com/social-media-for-marketing-what-weve-done-at-splashcast-so-far

GeoCommons Social Media News Release (May 29, 2007): An outline of the pitfalls and successes of releasing news via SMNR, Livingston Communications http://www.livingstonbuzz.com/blog/2007/05/29/geocommons-social-media-release-a-case-study/

New Adventures of Old Christine (June 14, 2007): The show was about to get a new day and time, and she thought outreach to parent bloggers was a perfect fit, CBS via Marketing Roadmaps http://getgood.typepad.com/getgood_strategic_marketi/2007/06/defining_social_1.html

Sci Fi Channel Digital Press Tour (July 12, 2007): Sci Fi channel begins blogger relations program by providing access to filming setsSci Fi, Channel via Marketing Roadmaps http://getgood.typepad.com/getgood_strategic_marketi/2007/07/sci-fi-channel-.html

Goodwill’s Social Media Strategy (August 29, 2007): How Goodwill used social media to rebrand its vintage clothing, Livingston Communications http://www.livingstonbuzz.com/blog/2007/08/29/case-study-goodwills-social-media-strategy/

Five Lessons from the SIGGART Online Word of Mouth Campaign (August 30, 2007): Thiseco-friendly aluminum water bottles company chalked up tons of quantifiable results, including 8000 unique visitors who visited for an average of 17 minutes, Gold Group http://goldgroup.blog.com/2045504/

Hugh Macleod at gapingvoid has done a spectacular job of marketing Stormhoek wine entirely through blogs and social networking, vis a vis BL Ochman (Sept. 17, 2007) http://www.whatsnextblog.com/archives/2007/09/with_as_many_as_1200.asp

Gates Foundation ED in ‘08 (Sept. 25, 2008): This very successful case study shows social media tools from video to Facebook, and calls to action like ordering endorsement kits, Mindshare Interactive http://www.livingstonbuzz.com/blog/2007/09/25/era-of-conversation-case-study-gates-foundations-ed-in-08-campaign/

Social Media Case Study: CMP’s TechMash (September 27, 2007) Social media forms used to garner attendance at CMP event, Horn Group http://www.engageinpr.com/?p=348

A Social Media News Release from Eurekstar (October 2, 2007): Shift Partner and Father of the SMNR breaks down form and function in this one, SHIFT Communications. http://www.pr-squared.com/2007/10/a_social_media_release_work.html

Marketing Pro Lewis Green discusses how his BizSolutionsPlus blog yielded four clients in one year (October 15, 2007). http://lgbusinesssolutions.typepad.com/solutions_to_grow_your_bu/2007/10/a-case-stufy-bl.html

Squidoo is profitable, and without venture capital, Viget Labs and Seth Godin (December 18, 2007)
http://blog.viget.com/squidoo-profitable-and-lasting-without-vc/

The White House uses social media to get the word out on drug policies (December 18, 2007)
http://www.livingstonbuzz.com/blog/2007/12/18/case-study-white-house-pushes-back/

ITToolbox, who’ve grown their social network for IT professionals into multi-million business with more than $8 million in ad sales, and 1.7 million pages of user generated content as of Jan. 1, 2008.
http://www.ittoolbox.com/

Sony drives approximately 11,000,000 million visits to 30 Days Night moviecontests page using Facebook widget (reported by Jeremiah, January 29, 2008) http://www.web-strategist.com/blog/2008/01/29/case-study-how-sony-leveraged-a-popular-vampire-facebook-widget-to-reach-its-community/

Nokia’s Mosh creates more than 200,000 rabid friends, almost 30 million downloads through crowd-sourcing initiative (reported by the Buzz Bin, March 3, 2008) http://www.livingstonbuzz.com/blog/2008/03/03/nokia-mosh/

The Human Capital Institute uses its liveblog to engage its membership, determine if they are social media savvy, Livingston Communications (March 18, 2008) http://www.livingstonbuzz.com/blog/2008/03/18/case-study-national-human-capital-institute-liveblog/

H&R Block Friends Stressed Out Taxed Americans on Twitter (reported by Social Media Explorer, March 21, 2008) http://www.socialmediaexplorer.com/2008/03/21/case-study-how-to-blatantly-advertise-through-social-media-%E2%80%A6-and-get-away-with-it/

Disney’s continued MySpace Step Up 2 the Streets success yields a surprise box-office hit; it also managed to expand the movie’s already sizeable and enthusiastic group of fans. The movie’s MySpace profile has more than 156,000 friends (March 24, 2008, AdAge via Social media Optimization).
http://social-media-optimization.com/2008/03/a-successful-myspace-social-media-campaign/

Neat Receipts Becomes a Hit with Mommy Bloggers (SHIFT Communications, April 2, 2008).
http://www.pr-squared.com/2008/04/blogger_relations_case_study_m.html

The U.S. Department of Health and Human Services’ Pandemic Flu Leadership Blog: HHS engaged national leaders and the online pandemic flu community through its 5-week blog summit (June 2007 by OgilvyPR). http://blog.pandemicflu.gov/

Joffrey’s Coffee & Tea Company drove traffic to their site, increased buzz and branded in social media and the blogosphere using a beta test. More than 1500 blogs participated (Pierson Grant Public Relations, June 3, 2008). http://thefuturebuzz.com/2008/06/03/a-case-study-in-building-buzz-in-the-blogosphere-joffrey%E2%80%99s-coffee-tea-company/

Scripps Networks - HGTV’s Rate My Space. Online community creates prime advertising real estate, generating ROI within weeks and creating continuous stream of advertising revenues. Success leads to companion television series - social media successfully serves to bridge gap between online and on-air (NY Times, June 19, 2008). http://tvdecoder.blogs.nytimes.com/2008/06/19/a-home-improvement-web-site-begets-a-tv-series/

Adidas leverages mobile social media to increase retail revenues 20x around NBA All Star game in Vegas (Event Marketer, June 24, 2008). http://www.eventmarketer.com/viewmedia.asp?prmMID=2107

Network Solutions is using a monitoring program to turn around a negative blog post ratio in the 58 percentile range (Livingston Communications, August 8, 2008). http://www.livingstonbuzz.com/2008/08/07/network-solutions-changes-perceptions-with-new-actions/

The Nature Conservancy leverages Facebook and Digg for cause marketing: How TNC raised nearly $75,000 through Facebook Causes and a partnership with Lil Green Patch, a popular Facebook application. The group has also built significant brand awareness through the social news site Digg! (As reported by Jonathon Colman of TNC, September 29, 2008). http://www.slideshare.net/jcolman/fundraising-on-facebook-a-new-model-for-fundraising-on-facebook-using-an-old-skool-tool-causerelated-marketing-presentation

JetBlue Twitter – Case Study: When JetBlue joined Twitter in the spring of 2007, it was one of the first major brands to do so. Today, the company has nearly a million of followers, and its account is often cited as an example of smart corporate twittering. But the company started out on Twitter with modest goals. It wanted to help customers. http://business.twitter.com/twitter101/case_jetblue

Teusner Wines Twitter – Case Study: Teusner Wines, a boutique winery in Australia’s Barossa Valley, has three employees. Dave Brookes is the sales and marketing department. A cycling fan, Brookes was watching the Tour Down Under in January 2009 when he noticed that Lance Armstrong was on Twitter. “I followed him,” says Brookes, “and I starting thinking Twitter would a good tool to tell people about the winery.” http://business.twitter.com/twitter101/case_teusner

Current Media Twitter – Case Study: For the 2008 presidential elections, Current knew it had to do something different. The media company, headquartered in San Francisco, would receive the same live feed of the debates as every other broadcaster. Unless Current distinguished its coverage, viewers would have no particular reason to tune in. http://business.twitter.com/twitter101/case_current

Tasti D-lite Twitter – Case Study: The popular dessert franchise Tasti D-lite offers customers over 100 flavors of guilt-free frozen treats. Tasti has been beloved by customers in the greater New York area for over 20 years, growing to 50+ locations and continuing to open new locations while expanding its geographic reach. http://business.twitter.com/twitter101/case_tastidlite

CoffeeGroundz Twitter – Case Study: CoffeeGroundz is a popular, albeit modest, Houston, TX based independent coffee shop that sells a variety of locally roasted coffee, tea, pastries, sandwiches, and alcoholic beverages. There are a couple of booths, 16 tables and another ten on the patio. If you come to CoffeeGroundz, J.R. Cohen, its general manager, strives to make sure “you feel at home.” http://business.twitter.com/twitter101/case_coffeegroundz

Etsy Twitter – Case Study: Etsy is an online marketplace for buying & selling all things handmade. Since launching in 2005, the Brooklyn, NY company has grown to over 65 employees. More importantly, over 250,000 sellers have opened up shop on Etsy to sell their handmade goods.
http://business.twitter.com/twitter101/case_etsy

NAKEDPizza Twitter – Case Study: Founded in late 2006 as one small store in New Orleans in an area that flooded during hurricane Katrina, NAKEDPizza (originally named World's Healthiest Pizza) was launched as an ambitious business model that seeks to change the nutritional profile of fast food in America.
http://business.twitter.com/twitter101/case_nakedpizza

American Apparel Twitter – Case Study: The Los Angeles company and leading basics brand provides hip clothing for people of all ages. Vertically-integrated American Apparel is the largest clothing manufacturer in the United States. http://business.twitter.com/twitter101/case_americanapparel

Pepsi Twitter – Case Study: Pepsi may be a classic brand, but it’s using 21st century tools to collaborate and build relationships with customers.
http://business.twitter.com/twitter101/case_pepsi

Social Media Assessment Case Study Citrix Webex

Social Media Assessment Case Study Citrix Webex

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Fundraising on Facebook: A Case-Study on Cause-Related Marketing

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Case Study: The Barack Obama Strategy

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More to follow...

Dell Twitter Case Study

2009-08-09T22:39:00.000-07:00

First adopters of social media networks like Twitter, Facebook, Linkedin, and blogging understand that their success can be measured and based on audience engagement, recognition, and involvement. Yet, Social Media’s Achilles heel, in the eyes of corporate decision makers who still utilize Web 1.0 analytics and measurement for their marketing, sales, and promotion efforts, is the lack of compelling ROI case studies: until now.

The fundamental recommendations from Twitter can be summarised in four simple steps
- Listen to what people are saying about your brand on Twitter
- Set up your own presence and be honest about who you are
- Follow people that are relevant to you
- Respond to discussions about your brand and business

Dell leveraged Twitter perfectly to generate sales. In December 2008, InternetNews reported that Dell has produced $1 million in revenue over the past year and a half through sale alerts via Twitter. People who sign up to follow Dell on Twitter receive messages when discounted products are available the company’s Home Outlet Store. They can click over to purchase the product or forward the information to others.

Background
Dell Outlet faces a common but vexing challenge. A division of the giant made-to-order computer business, Dell Outlet carries refurbished equipment and other inventory that it needs to sell quickly. Because the division has to get the word out fast, it doesn’t have the luxury of hiring an agency and developing an ad campaign. Instead, the outlet relies primarily on email marketing, paid search results, search-engine optimization and affiliate links to raise awareness and drive sales. It’s always looking for new, cost-effective ways to reach people.

Dell's worst problem had been that customers were having too many of the wrong conversations with too many service technicians in too many countries. "It was a real mess," confesses Dick Hunter, former head of manufacturing and now head of customer service. Dell's DNA of cost-cutting "got in the way," Hunter says. "In order to become very efficient, I think we became ineffective."

Hunter has increased service spending 35%, cut outsourcing partners from 14 to 6 (and is headed to 3), and retrained staff to take on more problems and responsibility (higher-end techs can scrap their phone scripts; techs in other countries learn empathy). Crucially, Hunter also stopped counting the "handle time" per call that rushed representatives and motivated them to transfer customers so they would be someone else's problem. At Dell's worst, more than 7,000 of the 400,000 customers calling each week suffered transfers more than seven times.

Today, the transfer rate has fallen from 45% to 18%. Now Hunter tracks the minutes per resolution of a problem, which runs in the 40s. His favorite acronym mantra (among many) is RI1: resolve in one call. (Apple (AAPL) claims it resolves 90% of problems in one call.) He is also experimenting with outreach e-mails and chatty phone calls to 5,000 selected New Yorkers before problems strike, trying to replace the brother-in-law as their trusted adviser.

Strategy
What did Dell do to make it happen, while others are still playing the wait and watch game.

- Fast to adopt:
While its competitors watched how the new entrant to the social media scenario would perform Dell set up its strategy and used Twitter as a channel of distribution to sell their products, taking the leadership stance and approach.

- Segmentated users:
Dell had a very clear strategy and focus to leverage Twitter, its stretegy revolved around studing the model and its users. Dell segmented twitter users demographically by setting up different twitter accounts ( ie. They started Dell Twitter for NZ users , Dell Twitter for UK users, Dell Twitter for Canada users ) Each of these twitter accounts spoke to users in a different country with localised product offerings.

- Created special offering for each of its segments :
With the segmentation strategy was adopted for different markets, it backed it up with special offers for each of these segments. Thus adapting the ‘Think Global, Act Local’ approach for their overall Twitter marketing strategy.

- Created a following and build a trust factor :
Companies that have built communities have always been succcessful in selling their products. Dell leveraged its online brand identity and trust factor to create and build a large community on Twitter. They built a strong and loyal following of more than 2000 users.

- Targeted Sales messages to the community :
Once they had a following they strategically leveraged their offers and promotions in form of Tweets or messages on Twitter to their following.

Tactics
Holding Conversations: When company employees discovered Twitter at the South by Southwest conference in 2007, they thought they’d hit on a good channel for pushing out information.

“We thought, ‘Great—this has a really short lead time, and it will let us communicate our message effectively,’” says Stefanie Nelson, manager of demand generation at Dell Outlet. “We started using it for one-way communication.” The company was surprised when people responded. “They wanted to ask questions. They wanted to share their experiences, good and bad,” says Nelson, who’s based in Austin, TX. “We realized that people were really interested in talking with us.”

Raising awareness: So instead of using Twitter just to let people know about deals, the company has come to think of it as a good place to interact with customers—and to raise awareness about the brand. “When we respond to people on Twitter, they get really excited, and we gain advocates.”

That doesn’t mean Dell Outlet has abandoned the deals. In fact, the company often posts offers that are exclusive to Twitter. They twitter only a few times a week so as not to spam their followers, and they use tracking URLs to gauge what followers find most appealing.

Increasing sales: Do the coupons work? Big time. Not only do they get retweeted and picked up by coupon sites—both of which spread the brand name—they also drive sales. Dell Outlet has booked more than $3 million in revenue attributable to its Twitter posts. In addition, the division has done research showing that awareness of the outlet has grown, too.

“The uplift has been more than we dreamed,” says Nelson.

Connecting with customers: Dell now has more than 80 Dell-branded Twitter accounts (including @dellhomeoffers for new system deals) offering everything from videos of new technologies to promotions for Asia-Pacific customers. It also encourages employees to twitter, and has well over 100 employee accounts. Dell uses many of those accounts (with names like @StefanieAtDell), primarily for customer service exchanges that require direct messages (Twitter’s private channel) and to reach out to people who are twittering about Dell (which they find via Twitter search).

@DellOutlet now has over 15,000 followers who are receiving these marketing messages from Dell. So while Twitter is trying to figure out how to make money from its service, it is interesting to see that Dell recognizes that Twitter is a marketing channel, and more importantly, it is a channel that can increase revenues.

Results
- At start of program, 49% of blog posts were negative. Today, overall tonality is 22%negative.
- Direct2Dell currently ranked about 700 on Technorati, among the highest corporate blogs.
- Direct2Dell gets more than 5 million unique views per month
- Over 7000 ideas have been submitted via IdeaStorm
- Studio Dell is gets more than 200,000 views per month

Dell has over 650,000 followers on Twitter. Although they are only following 23, they are known as a value provider:

Coupons: Dell distributes valuable discount coupons through Twitter
Customer Service: Dell answers questions and solves problems by engaging with their audience
Crowdsourcing: like their efforts at Ideastorm, they crowdsource their Twitter network for ideas on products, services, processes, and anything related to making their consumers satisfied
Network: Dell brilliantly and seamlessly integrate their Twitter network of followers with their Facebook fans for their Facebook company page. They convert many Twitter followers to Facebook fans and vice-versa

Nelson has learned when starting a new account on Twitter, it’s smart to reach out to your current customer base. They’re already interested in chatting with you, and they’ll tell other people about you. But no matter who’s following you on Twitter, she says, “offering relevant information that people are interested in is key.”

Dell & Twitter

View more presentations from Dell Inc.

Interesting Social Media Trends - A Study

2009-08-09T21:34:00.000-07:00

Social media trends indicate that online marketing is set to undergo a dramatic makeover. Businesses are increasingly integrating social networking websites into their marketing strategy. A recent study conducted by the Association of National Advertisers (a representative body of American marketers) revealed that 26% of marketers found trends in social media taking it towards further growth.

Recession has called for accountability and efforts are being made towards innovating measurement techniques. This would help in calculating the ROI from marketing through social media. The Online Measurement and Strategy Report 2009 (conducted by Econsultancy in combination with Lynchpin) recorded that the proportion of firms looking at social media metrics has doubled during the course of a year from 21% to 40%.

The popularity of tools monitoring the buzz continues to rise. Be it staying alert with Google or inhaling the web on Addictomatic, such tools have become essential to internet marketing. Influence has emerged as a main indicator of success. The authority an account exercises over its followers and the networking activity as a whole are becoming the measurement tools.

# Social Media Engagement Trends
Over 60% of young consumers use social networking sites at least weekly, and about 40% check their networks every day. These young creators grew up in the age of personal computers, graphical user interfaces, and digital social annotations. The social computing boom of the past few years has created an online identity and digital hub, altered as frequently as one's clothes.

Adults are also researching news and creating content online. 22% of adults read blogs at least monthly, and 19% of adults surveyed are members of a social media site. Customer ratings and reviews was the most popular online activity, with about 40% of survey participants utilizing sites such as Amazon to read the thoughts and opinions of peers before making a purchase.

Forrester analysts identified six levels of social media participation in ascending levels of sophistication: inactives, spectators, joiners, collectors, critics, and creators. The categories are not mutually exclusive, as a blog author (a creator) will likely read other blogs (as a spectator), occasionally comment (a critic), and perhaps use web feeds or annotation tools (a collector).

These varied levels of social media participation highlight the need to better engage your audience across the board, easing them into the social media experience. Many social media sites focus on the joiners and creators, setting high barriers of entry and participation. A casual reader might mark a story or video as a personal favorite, or share a collection with friends. A collector might engage more audience members, creating a more focused community for a niche audience. Businesses and websites can engage multiple market segments and open up their community to wider participation.

# Comparative Analysis of Top Social Media Networks

# The Rise of New Business Models?

Frankly, predicting new business models within the media industry is difficult with its complex web of content distribution relationships spanning theaters, international distribution, cable and satellite distribution. However, with the success of industry ratified models like Hulu and the sense of inevitability that content is destined towards freedom, 2009’s recession will force new media models into play because the old models aren’t working any more.

Business Week’s Steven Wildstrom notes that consumers can’t find many great old movies on DVD or online in this era of the long tail retailing.

The battle is between an industry that wants to tightly control who gets to see what when and customers who want to watch what they want wherever and whenever. This clash is slowly being resolved in favor of consumers. Movies are becoming available for download and on DVD more quickly after theatrical release. Director Steven Soderbergh has a deal with Mark Cuban’s Landmark Theatres and HDNet that allows some of his movies to be released on disk and online the same day they show up in theaters. I expect more movies to be launched this way.

The day you can choose to see a new movie in a theater, on your TV, on your laptop, or on your iPhone is still some time off, but it is coming.

# The 2009 Recession will Elevate Social Media Marketing as a Corporate Cost Control Measure

Brand advertising has generally employed one-way messaging to consumers who typically respond to brand commercials as agenda-laden, or even spam. That’s why Tivo fast forwarding of ads is a value proposition. Brand advertising developed in the 1950’s with Madison Avenue’s recognition of the power of the new visual media to branding. It worked because broadcast TV was, at the time, the most optimal means to distribute the message.

Brand advertising is expensive because it employs the vertical professional services of advertising agencies – creative, research and production – to develop “campaigns”, and ad budgets for mass market placement. Social media in part threatens to disintermediate advertising professionals by leveraging “crowdsourcing” to test marketing and advertising concepts more quickly and cheaply.

# Entertainment Bubble
“Content creators are layering a multitude of media into entertainment for simultaneous consumption and engagement. For example, “LittleBigPlanet” users are gamers, social networkers and content creators, “The Hills” ‘Backchannel’ social networking site is where fans can gather to talk about the show as its happening on TV, and author StephenieMeyer has a playlist that readers can listen to while they’re reading the Twilight series. People are almost in an entertainment bubble of sorts”. -- Ann Mack, Director of Trendspotting, JWT (Source: sctimes.com)

# On Mobile
Social networks are going mobile. With devices such as the iPhone closely integrating the Web and cell phones, social networks like MySpace are working towards establishing their mobile presence.
“..Next year your media friend might start collecting dust when a mighty mini version takes hold, with the iPhone, the Bold and the Google phone, we’re beginning to truly be able to take our shows on the road. For example, the iPhonecan be a baby monitor and a Google phone, such as the T-Mobile G1, has a bar code scanner which allows you scan any bar code at the store and then immediately compare prices online. People are cutting their Internet service to save money and relying on their phones. After all, an iPhoneis much easier to fit into your pocket than an iBook”.
Mobilize Me -- Jane Buckingham, President, The Intelligence Group
Source: sctimes.com

Companies will continue to place a high priority on mobility initiatives primarily for productivity increases, with mobility activities heating up in emerging markets. In addition, we will see growth in the mobile "wannabe" user segment as employees bring their personal devices, such as the iPhone, into work and expect organizations to develop ways to support these new devices —even with the slowdown expected in consumer mobile device purchases. -- Forrester

# On Engagements
“The recession will put consumers in a more powerful position. Feedback 1.0 was the lone customer posting a review or complaint and companies ignoring him. Feedback 2.0 was when millions posted, with companies largely ignoring them.

Feedback 3.0 finds companies listening and replying. For example, Starbucks lovers can already “help shape the future of Starbucks,” by sharing their ideas online, and hotel managers can respond to complaints and praises posted on TripAdvisor”. -- ReinierEvers, Founder, TrendWatching.com

# “How Social Media is helping businesses?”
Facebook Connect, and its social network cousins Google Friend Connect, and the still obscure MySpace ID will facilitate the portability of social networks, or the “social graph”. This will be one of the most powerful applications towards creating a social media business model in 2009, but is hard to explain to social media newbies. What does it mean?

Through Facebook Connect, consumers log into other sites using their Facebook login details. Once inside the site, users can discuss or post their activities in real time to their Facebook network. The effect is to bring in their network of friends into the hosting site. For example, a teenage girl may visit a Facebook Connect – enabled retail fashion site like Forever 21, buy an awesome sweater at a deep discount sale price, and broadcast this fact to her large Facebook network. A few of her Facebook friends do the same thing, and by extension, you can imagine the instant viral marketing power of each new succeeding Facebook network put “into play” for a good sweater deal.

# Crowd sourcing will be a huge social media trend for 2009.

Crowd souring has the potential to take off pretty big, although i don’t see the online movement in that direction. The launch of Predictify suggest such a conclusion. Also, Idea Blob has been fairly successful. There are a number of crowd sourcing creative (graphic design and video) that are bubbling to the surface beyond the e-lance model. This will only continue to increase as the need for outsourcing and budget cutting continues in 2009. The trend known as crowd funding may also see an upward and exciting trajectory.

# Rise of video driven communities
Video driven communities that drive conversation will take off in social media. Winelibrary TV, Epic FU, and The Politico Playbook (aka Kotecki TV) have shown what video can do. Momversation, sponsored by Target, is driving conversation and community around the issues of moms. The video serves as a fantastic differentiator, creates emotional connection, and is potentially truly remarkable content.

Twitter under microscope - An HP Research Study

2009-08-09T20:47:00.000-07:00

A study of social interactions within Twitter (via Snake Coffee), conducted by B. A. Huberman, D.M. Romero, and F. Wu (HP Labs) reveals that the driver of usage is a sparse and hidden network of connections underlying the “declared” set of friends and followers.

In a paper named Social networks that matter: Twitter under the microscope (PDF) the researchers investigated how relevant a list of “friends” is to members of the network. Practically, they were interested in finding out how many people each user communicates directly with through Twitter. They have defined user’s friend as a person whom the user directed at least two posts. By that the researchers were able to compare number of friends to number of followers.

Research Findings:

1. Saturation of delivered content:
The researchers expected that users who receive attention from many people (hold many followers) will post more often than users who receive little attention. Indeed, the total number of posts increases with both the number of followers and friends. However, as Figure shows, the number of total posts eventually saturates as a function of the number of followers. This implies that users with a large number of followers are not necessarily those with very large number of total posts.

On the other hand, the number of total posts does not saturate as a function of number of friends, as seen on Figure below.

The researchers concluded that in order to predict how active a Twitter user is, the number of friends is a more accurate signal than the number of his followers.

2. Social saturation:
The research shows (see Figure) that even though the number of
friends initially increases as the number of followees increases, after a while the number of friends saturates. This trend can be explained by the fact that the cost of “declaring” a new followee is very low compared to the cost of maintaining friends. Hence, the number of people a user actually communicates with eventually stops increasing while the number of followees can continue to grow indefinitely.

3. Reciprocity:
The research presents evidence to reciprocated attention. On average, 90 percent of a user’s friends reciprocate attention by being friends of the user as well (see figure).

Research Conclusions:
1. Twitter users have a very small number of friends compared to the number of followers and followees they declare. This implies the existence of two different networks: a very dense one made up of followers and followees, and a sparser and simpler network of actual friends. The latter proves to be a more influential network in driving Twitter usage since users with many actual friends tend to post more updates than users with few actual friends. On the other hand, users with many followers or followees post updates more infrequently than those with few followers or followees.

2. A link between any two people does not necessarily imply an interaction between them. In the case of Twitter, most of the links declared within Twitter were meaningless from an interaction point of view.

Sources: HP Twitter Study

About the authors
Bernardo A. Huberman is a Senior HP Fellow and Director of the Social Computing Lab at Hewlett–Packard Laboratories, Palo Alto, Calif.
Web: http://www.hpl.hp.com/research/idl/people/huberman/
E–mail: bernardo [dot] huberman [at] hp [dot] com
Daniel M. Romero is a graduate student at the Center for Applied Mathematics of Cornell University (Ithaca, N.Y.) and also a researcher in the Social Computing Lab of HP Laboratories.
E–mail: dmr239 [at] cornell [dot] edu

Measurement Metrics of Social Media

2009-08-07T04:08:00.000-07:00

According to Wetpaint and the Altimeter Group, deep engagement with consumers through social media channels correlates to better financial performance. The ENGAGEMENTdb study (www.engagementdb.com) showed significant positive financial results for the companies who measured as having the greatest breadth and depth of social media engagement. These "Social Media Mavens" on average grew company revenues by 18 percent over the last 12 months, while the least engaged companies saw revenues sink 6 percent on average over the same time period.

The ENGAGEMENTdb study reviewed more than 10 discrete social media channels, including blogs, Facebook, Twitter, wikis, and discussion forums for each of the 100 most valuable brands as identified by the 2008 BusinessWeek/Interbrand Best Global Brands ranking. Activity in each channel was ranked for depth of interaction on measures that corresponded to that specific channel. Scores for overall brand engagement ranged from a high of 127 to a low of 1.

The top 10 ENGAGEMENTdb brands with their scores are:
1. Starbucks (127)
2. Dell (123)
3. eBay (115)
4. Google (105)
5. Microsoft (103)
6. Thomson Reuters (101)
7. Nike (100)
8. Amazon (88)
9. SAP (86)
10. Tie - Yahoo!/Intel (85)

Qualities of Success Companies that scored well in the study generally have dedicated teams, however small, active in the social media channels they utilize. The study found that the most successful teams evangelize social media across the entire organization to pull in a broad range of stakeholders. These companies view social media as an indispensable tool to help them achieve results, and their approach is conversational. This mode of operation differs from the approach of traditional communications and early corporate blog experimentation, which emphasizes messaging and talking points.

"This is the first study of this depth on the top global brands and we think the results provide a good guide for corporations and brand marketers in every industry," said Charlene Li, Founder, Altimeter Group. "The success stories we have uncovered provide a blueprint for companies making decisions about how to best apply their marketing and consumer relations resources." "The ENGAGEMENTdb study goes a long way towards validating the importance of social media for business," said Ben Elowitz, CEO of Wetpaint.

"The closer any company is to its customers, the better, and it's hard to argue with the ability for social media to create such proximity. In this day and age, companies should feel much more comfortable investing in social media -- the correlation to results is so clear." Four Quadrants of Engagement While each company in the study received a quantitative score, the ENGAGEMENTdb study revealed that companies fell into four specific categories in terms of their breadth and depth of investment in social media channels -- Mavens, Butterflies, Selectives, and Wallflowers.

Mavens -- brands that have made social media a core part of their go-to-market strategies and are very active in many channels; usually driven by dedicated teams assisted by company-wide awareness and participation.

Butterflies -- brands that recognize the need to be in many channels but have only met with real success in a subset of their activities; these companies are usually spread a bit too thin.

Selectives -- brands that focus on just a few channels and excel in those; these efforts are usually initiated by an internal evangelist.

Wallflowers -- brands present in only a few channels and very lightly in those; these brands are sitting on the sidelines and are wary of the risks. They are still trying to figure out the best next steps and investments in social media.

Source: www.wetpaint.com

Top Twenty Five Social Networking Sites – May 2009

2009-08-07T04:00:00.000-07:00

According to comScore, Facebook totaled 70,278,000 unique visitors, up 97% from May 2008 to May 2009. MySpace audience shrank 5% over the same timeframe, falling to 70,255,000 unique visitors.

In April, MySpace visitors viewed 31.8 million ads, accounting for almost 47% of the total social network advertising space. Facebook was second, serving nearly 25 million ads and making up about 37% of the sector. In third place surprisingly was Tagged, which served 2.4 million ads, or 3.6% of publisher views.

eMarketer expects that the revenue gap will likely close in 2009-2010. MySpace entered into an advertising agreement with Google in 2006 that would pay the social network roughly $300 million a year, ending in June 2010. But TechCrunch reported that a new deal between Google and MySpace would be worth only $50 million to $75 million yearly, punching a big hole in the social network’s revenues.

Word of mouth (WOM) is the most trusted form of advertising in India

2009-08-02T21:45:00.000-07:00

According to the Nielsen Global Online Consumer Survey, conducted by Nielsen Consumer Research company that provides insights on the preferences of internet consumers across the world, word of mouth is the most trusted form of advertising in India with 93% votes, followed by editorial content such as articles in newspaper with 87% votes and Brand websites with 78% votes. This comes at a time when internet advertising is booming, with newer brands associating themselves with internet and testing new waters.

“The main problem is that there are too many online users and just very few websites, this results in just the same ads on every website or a great clutter. So the ads don’t attract the audiences at all, hence not serving the purpose they should,” says Rammohan Sundaram, Founder of Networkplay.

Alok Kejariwal, CEO, games2win.com, feels that internet is at its nascent stage, so it will take some time for internet advertising to catch. “Any medium takes at least 20-30 years to develop. Further more, internet advertising intrudes personal space. It strikes when you are reading your personal mail or browsing through the net; it gets very irritating.”

According to Sundaram, there are many ads which are placed just to have an online presence. The advertisers don’t get into a deep research as to which site will suit the product, the placement of the ad.

But does this mean that online advertising is not on the right track? “There’s no major flaw in online advertising or its approach, it’s just that people find word of mouth more credible since it’s an unbiased and unpaid review. There’s no hidden motive behind it, which makes people trust it blindly. This difference between the trust on word of mouth and any form of advertising will remain forever,” says Mudit Khosla, Founding General Manager, Strategic Relations Group, Yatra.com
“The only way one can improve the trust is by involving the audiences. In my website we invite our audiences to write comments of services they have used.
This not only gives these audiences a platform to speak up but the others also get a chance to read unbiased opinions on the same website, “asserts Khosla.

Harish Bahl, MD, Quasar Media has a positive outlook, “According to me, the search results are very contradictory. A major portion of online advertising are the social websites, where audiences write blogs, connect and exchange information, or in other words, spread word of mouth. The Nielsen report saying that word of mouth is more trustworthy than online advertising proves that it’s a win-win situation for online advertising.”

“Internet is definitely growing fast and so will internet advertising, it just that products should be sold in a better way to gain the consumers’ trust,” believes Khosla.

Indian entertainment and media industry to reach Rs. 929.5 billion in the next 5 years

2009-08-02T21:44:00.000-07:00

The Indian E&M industry is estimated to grow from Rs. 563.9 billion in 2008, at a CAGR of 10.5% for the next five years to reach Rs. 929.5 billion in 2013, says the PricewaterhouseCoopers’s Indian entertainment and media outlook 2009.

Over the next five years, television industry is projected to continue to be the major contributor to the overall industry revenue pie and is estimated to grow at a stable rate of 11.4% cumulatively, from an estimated Rs. 244.7 billion in 2008.

The overall television industry is projected to reach Rs. 420 billion by 2013. In the Television pie, distribution is projected to garner a share of 60% in 2013. On the other hand, television advertising industry is projected to command a share of 41.0% in 2013, having increased from a present share of 39.0% in the total ad industry pie. The relative share of the television content industry is expected to remain constant at 4%.

The Indian film industry is projected to grow at a CAGR of 11.6% over the next five years, reaching to Rs. 185 billion in 2013 from Rs. 107 billion in 2008. The relative shares of the film industry are expected to shift marginally from the traditional revenues to the new emerging revenues.

The Indian film print media industry is projected to grow by 5.6% over 2009-13, reaching to Rs. 213 billion in 2013 from Rs. 162 billion in 2008. The relative shares of newspaper publishing and magazine publishing are not expected to remain the same at around 87%, in favour of newspaper publishing. Magazine publishing is expected to grow at a higher rate of 6.5% as compared with newspaper publishing which is expected to grow at 5.6% for the next five years.

The radio advertising industry is projected to grow at a CAGR of 18% over 2009-13, reaching Rs. 19 billion in 2013 from Rs. 8.3 billion in 2008; more than double its present size. In terms of share of ad pie, it is projected that the radio advertising industry will be able to increase its share from 3.8% to 5.2% in the next five years.

The animation, gaming and VFX industry will continue to maintain its growth pace and is projected to grow at a CAGR of 22% to Rs. 42.5 billion in 2013 from Rs 15.6 billion. In the animation space, domestic demand will create the fillip in its growth, as well as contribution from international co-productions, in the film and television space.

The Indian gaming industry is projected to grow from an estimated size of Rs. 3.9 billion in 2008 to an estimated Rs. 16.3 billion by 2013; translating into a cumulative growth of 32.7% over the next five years . Mobile gaming will dominate the segment with 74% share , driven by the growth in the high end segment of the mobile users, new content by mobile operators and the availability of 3G spectrum that enables easy of play.

Online gaming will be the next highest contributor followed by console gaming. This will be fuelled by the growth of internet users and especially the growth of the target segment of users aged between 15-34 years. The growth in solo gaming will also be aided by falling cost of console prices and availability of local games.
Given the trends of increased internet usage, internet advertising is projected to grow by 32% over the next five years and reach an estimated Rs. 20 billion in 2013 from Rs. 5 billion, currently. The share of the online advertising too is projected to grow from 2.3% in 2008 to 5.5% in 2013 of the overall advertising pie.

The estimated size of the OOH industry is Rs. 15 billion, which is projected to become almost twice its current size in 2013 to 25 billion. Its share in the total ad pie is expected to go down marginally to 6.8% in 2013 from 6.9% in 2008.

The key growth driver for the music industry over the next five years will be digital music, and its share is expected to move from 16% in 2008 to 60% in 2013. Within digital music, mobile music will continue to increase its share and maintain its dominance.

Source: http://www.audiencematters.com/newsdetails.aspx?tbl_type=news&n_detail=2551&news_type=Media

Online advertising market to grow 27% by 2013: Study

2009-08-02T21:42:00.000-07:00

Netscribes (India) Pvt. Ltd., a knowledge consulting solutions company, has launched the Online Advertising Market – India Report.

According to the report, the industry has grown at 74% per annum from 2004-08, driven by increasing awareness among advertisers and increase in internet penetration. Online ad networks have started gaining acceptance in the Indian market in the past 2-3 years.

Online advertising in India, largely dominated by search engines and portal, is fast gaining acceptance and offers an ever increasing user base. Increasing awareness among advertisers, low input costs for advertisers, and increase in Internet penetration are driving growth of the online medium and its horizontals.

The market is expected to witness only a 27% p.a. growth from 2008-2013. primarily due the massive advertising budget cuts in the industry.

The developing online advertising market in India is already witnessing stiff competition among domestic as well as international players. Niche and emerging nature coupled with low barriers to entry in this industry could lead to rise in competition. BFSI, Online publishers and IT/Telecom are the major revenue contributors for the online advertising industry in India. Acquisitions and investments by foreign players as well as private equity firms are providing a boost to this industry in the nascent stage.

Indian Commodities Trading Market

2008-11-13T22:07:00.000-08:00

Turmoil in financial markets, slower growth in high-income countries, and rising inflation have all adversely affected growth prospects for developing countries over the near term. Most countries have shown impressive resilience in this turbulent environment, and growth for developing countries as a group is expected to moderate from 7.8% in 2007 to a still strong 6.5% in 2008. However, vulnerable countries that depend on foreign capital flows are likely to experience a sharper slowdown. Moreover, despite strong production growth at the aggregate level, higher food and energy prices have caused real incomes to decline, significantly increasing the hardships faced by the very poor, particularly in urban centers.

A recent article in the Wall Street Journal noted that if one were to examine the historical performance of the S&P 500, one would find that the stock market is trading at the same level at which it was doing so nine years ago. Commodities markets, on the other hand, have been in a bull trend. Some of the major drivers that have contributed in this stupendous growth of commodity markets globally are
- Increasing influence of Asian demand, particularly from rapidly industrializing China and India
- Increase in commodities prices in international markets as a result of demand growth, reinforced by tight supply capacities, tense geopolitical conditions (especially with respect to the oil market) and intense speculative activity
- With the rise in prices of crude oil, metals and minerals, commodity prices reached record historical levels in nominal terms in 2006, which increased by more than 30% between 2005 and 2006 (and by 80% from 2000 to 2006).
- Numerous developing countries rely on commodities for export revenues, and commodity production and trade provide employment for more than 2.5 billion people worldwide.
- The considerable rise in prices has had an impact on incomes of developing countries. It is estimated that extra revenues resulting from commodity exports were around 6.7 percentage points of GDP for oil-exporting countries and about 3 percentage points for countries exporting mining products.
- Increases in demand from developing countries stimulated by a particularly vigorous commodity consumption per unit of GDP compared to that of developed countries, faster economic growth, and increasing population
- "Globalization" of securities and commodities markets
- Baby boomers are in the middle of their peak savings years and have been one of the major causes of huge inflows of money into the stock market and into mutual funds.
- The increased use of food crops for production of bio-fuels is an important factor that led to large increases in the prices of vegetable oils and grains in 2007, which in turn contributed to an overall 15 percent increase in the index of agricultural prices and a 20 percent rise in food prices.
- The prices of metals have increased more than other commodity prices over the last four years, largely because of an especially strong demand in China.
- Shortages of equipment and skilled workers have significantly increased development costs, and ore grades are deteriorating.

The report on “Indian Commodities Trading Market” offers an in-depth analysis of the Global Commodities Trading Market vis-à-vis the Indian Commodities Trading Market. It discusses the overall structure of the Global Commodities Market as well as Indian Commodities Market from an insider perspective and provides a comprehensive study on macro and micro factors driving the growth of this market.

The report furnishes up-to-date facts and figures following meticulous observation with an aim to provide you with real insights into the commodity trading market as it stands today; the knowledge one needs to stand out and make informed decisions. The expanse of such insights into the past and present scenario percolates down to every known commodity currently traded. A conscious effort has been made to provide an overview of all there is to know and know of in the volatile market whilst a detailed product-wise and segment-wise is used in conjunction to expand. Taking into account that Price and Risk being the key drivers of the market, the report presents an exclusive section which maps price growth trend behaviour, factors triggering such behaviour, tracking relative performance of commodities , effects on the market players directly or indirectly using composite indexes from leading sources, the use of various hedging tools such as forwards and options and the relative performance in comparison, the implication and significance of the various regulatory bodies, commissions and statutory acts to highlight a few.

Table of Contents

Section I: Commodities Trading – An Overview

1. How Commodities Market Evolved – Historical Perspective

2. How Commodities Trading Market Works
2.1 Involved Parties
2.2 Types of Contracts
2.3 Participants in derivative contracts
2.4 Trading Techniques in Commodities Market
2.4.1 Ready Delivery Market
2.4.2 Specific Delivery Market
2.4.3 Futures Market
2.4.4 Auction Market
2.5 Requirement & Benefits of Commodity Derivatives

Section II: Commodities Market – An Analysis

1. Global Commodities Market – An Overview
1.1 Commodities Trading vis-à-vis Role of Investment Banks
1.1.1 Barclays Capital Commodities - Profile
1.1.2 BNP Paribas Commodity Futures – Profile
1.1.3 Citi Global Commodities – Profile
1.1.4 DB Commodity Services LLC - Profile
1.1.5 Goldman Sachs Commodities – Profile
1.1.6 J.P. Morgan’s Global Commodities Group – Profile
1.1.7 Merrill Lynch Global Commodities (MLCI) - Profile
1.1.8 UBS's Commodities Group
1.2 Energy Trading vis-à-vis Energy Trading In-house Divisions
1.2.1 RBS Sempra Commodities
1.2.2 Chevron’s Supply & Trading
1.2.3 LITASCO (LUKOIL International Trading and Supply Company)
1.2.4 Koch Supply & Trading
1.2.5 AEP Energy Services (Subsidiary of American Electric Power Company, Inc.)
1.2.6 Duke Energy Trading and Marketing (DETM)
1.2.7 Shell Trading (US) Company
1.2.8 Reliant Energy Securities & Commodities Trading Center
1.3 Commodity ETFs and ETNs
1.4 Commodity Trading vis-à-vis Sovereign Wealth Funds (SWFs)
1.4.1 History of SWFs
1.4.2 Driving Factors, Issues, Trends & Opportunities
1.4.3 Sources of Capital
1.4.4 How & where the money is invested – Market Size & Projections
1.4.5 Fund Rankings: Largest Funds by Assets under Management

2. Global Commodities Market Analysis
2.1 Global Commodities Market Size & Forecast
2.2 Commodity Market Profiles – Quick Points (Profile, Producers, Consumers, Largest Markets, Price Performance & Top Companies)
2.2.1 Aluminium Market
2.2.2 Cocoa Market
2.2.3 Coffee Market
2.2.4 Copper Market
2.2.5 Cotton Market
2.2.6 Gold Market
2.2.7 Nickel Market
2.3 Global Commodities Indexes – Performance Analysis
2.3.1 Dow Jones - AIG Commodity Indices
2.3.2 Merrill Lynch Commodity index eXtra (MLCX)
2.3.3 S&P GSCI™ Composite Index
2.3.4 Reuters/Jefferies-CRB® Indices

3. Issues, Trends & Opportunities
3.1 Impact of higher commodity prices
3.2 Movement of oil prices
3.3 Performance of agriculture commodities
3.4 Companies turn to top derivatives dealers for help in hedging
3.5 Carbon to be the biggest global commodity market by 2012
3.6 Renewed interest from investors
3.7 More sophisticated tools & platforms
3.8 Investment banks are major players
3.9 ETFs, changing the equation of Commodities Investment
3.10 China – Major Demand Driver of Global Commodities
3.11 Macro-Economic Driving Factors
3.12 Factors affecting pricing of base metals
3.12.1 Lead (75% y-o-y growth)
3.12.2 Tin (66% y-o-y growth)
3.12.3 Zinc (40% y-o-y decline)
3.12.4 Nickel (4% y-o-y decline)

Section III: Indian Commodities Trading Market

1. Indian Commodities Market – An Overview

2. Indian Commodities Market Size – An Analysis
2.1 MCX vs. SENSEX – A Comparative Analysis

3. Indian Commodities Market – Performance Analysis
3.1 Aluminium Market – Future Contract Value (Jan 07 – Jul 08)
3.2 Coffee Market – Robusta Futures Contract Value (Jan 07 – Aug 08)
3.3 Copper Market – Copper Futures Contract Value (Jan 07 – Jul 08)
3.5 Crude Oil Market – Crude Oil Futures Contract Value (Jan 07 - Aug 08)
3.6 Gold Market – Futures Contract Value (Jan 07 – Aug 08)
3.7 Chana (Chickpea) Market – Futures Contract Value (Jan 07 – May 08)
3.8 Nickel Market – Futures Contract Value (Jan 07 – Jul 08)
3.9 Zinc Market – Futures Contract Value (Jan 07 – Jul 08)
3.10 Lead Market – Price Performance (Jan 07 – Aug 08)
3.11 Cardamom Market – Futures Contract Value (Jan 07 – Jul 08)
3.12 Jeera (Cumin Seed) Market – Futures Contract Value (Jan 07 – Jul 08)
3.13 Lead Market – Futures Contract Value (Jan 07 – Jul 08)
3.14 Mentha Oil Market – Futures Contract Value (Jan 07 – Jul 08)
3.15 Natural Gas Market – Futures Contract Value (Jan 07 – Jul 08)

4. Government Regulations, Initiatives and Reforms
4.1 Setting up a Committee on Role of Futures Trading in 1993
4.2 Setting up of Forward Market Commission in 1953
4.3 Forward Contracts (Regulation) Act, 1952
4.4 Forward Contracts (Regulation) Amendment Bill, 2006
4.5 Forward Contracts (Regulation) Amendment Ordinance, 2008
4.6 Commodities Trading Tax
4.7 Import duty cut & export duty hike in Metals industry

5. Issues, Trends & Opportunities
5.1 Commodity Trends: Hurt by economic slowdown
5.2 Multi Commodity Exchange (MCX) launched currency futures trading
5.2 Hedging ban a slow political process to kill futures market
5.3 Commodity investment goes retail
5.4 Unresolved Issues and Future Prospects
5.5 Scrap now being considered a waste commodity
5.6 Commodity and Equity Markets have been moving in tandem
5.7 Indian Bt Cotton to hit market soon
5.8 Warehousing to take giant leap in India

List of Charts

Chart 1: Mode of Financing in Commodities Trading
Chart 2: Business Operations Model of a Trading Process in a Commodity Exchange
Chart 3: SWFs Market Projections (2007-2012)
Chart 4: Comparison of AUM of SWFs and Asset Managers, Private Equity and Hedge Funds ($ billions)
Chart 5: Sovereign Wealth Fund Deal Volume (1997-2007)
Chart 6: Sector-wise growth: Exchange trade of commodity derivatives by volume (03-06)
Chart 7: World’s leading Commodity Exchanges in developing countries – 2006 Contracts ($millions)
Chart 8: Major base metal commodity exchanges & emerging markets
Chart 9: Base Metal Price Trend – 2006 vs. Present Price
Chart 10: Cocoa Monthly Averages of Daily Prices (Oct 07- Oct 08)
Chart 11: ICO Indicator Prices - Annual & Monthly Averages (1998 to 2008)
Chart 12: Global Cotton Average Price Trend ("A" Index (cents/pound)) – 1988 -2008
Chart 13: Merrill Lynch Commodity index eXtra (MLCX) - Commodity Weightings
Chart 14: MLCX Weights as of January 2008
Chart 15: MLCXTR outperformance vs. SPGCCITR & DJAIGTR
Chart 16: Reuters/Jefferies CRB® Total Return Index: Jan 82 – Sep 08 (monthly close)
Chart 17: Forecast of China's Share of the Growth in Demand for Global Commodities- 2009
Chart 18: Types of Commodities Traded in India
Chart 19: MCX vs. SENSEX – Comparative Analysis (Jan 06-Sep 08)
Chart 20: India's Aluminium Futures Contract in Value (Rs. Crore) (Jan 07 – Jul 08)
Chart 21: India's Coffee Robusta Futures Contract in Value (Rs. Lakhs) (Jan 07 – Aug 08)
Chart 22: India's Copper Futures Contract in Value (Rs. Crore)
Chart 23: India's Crude Oil Futures Contract in Value (Rs. Crore)
Chart 24: India's Gold (1Kg) Futures Contract in Value (Rs. Crore)
Chart 25: India's Gold (100g) Futures contract in Value (Rs. Crore)
Chart 26: India's Chana (Chickpea) Futures Contract in Value (Rs. Crore)
Chart 27: India's Nickel Futures Contract in Value (Rs. Crore)
Chart 28: India's Zinc Futures Contract in Value (Rs. Crore)
Chart 29: India's Lead Futures Contract in Value (Rs. Crore)
Chart 30: India's Cardamom Futures Contract in Value (Rs. Crore)
Chart 31: India's Jeera (Cumin Seed) Futures Contract in Value (Rs. Lakhs)
Chart 32: India's Lead Futures Contract in Value (Rs. Crore)
Chart 33: India's Mentha Oil Futures Contract in Value (Rs. Crore)
Chart 34: India's Natural Gas Futures Contract in Value (Rs. Crore)

List of Tables

Table 1: The Global Economic Outlook (2006-2010)
Table 2: Major Global Commodity Exchanges
Table 3: Major Asian Commodity Exchanges
Table 4: Major European Commodity Exchanges
Table 5: Commodity Traders – List of top banks, Financial Institutions & other top companies
Table 6: Fund Rankings: Largest Funds by Assets under Management
Table 7: Global Commodity Prices – Monthly & Yearly Averages (Jan 06 - Sep 08)
Table 8: Commodity Forecast Nominal Prices (2007-2020)
Table 9: World Cocoa Market Estimates (in million metric tons) – 2002-2008
Table 10: ICO Indicator Prices - Annual & Monthly Averages (1998 to 2008)
Table 11: Global Cotton Average Price Trend ("A" Index (cents/pound)) – 1988 -2008
Table 12: Comparison of Commodity Indexes
Table 13: Dow Jones AIG Total Return Performance %
Table 14: Dow Jones AIG Excess Return Performance %
Table 15: Dow Jones AIG Yearly Returns (1990-2008)
Table 16: DJGI AIG Commodity Index - Commodity Weightings
Table 17: Merrill Lynch Commodity index eXtra (MLCX) - Commodity Weightings
Table 18: S&P GSCI™ Components and Dollar Weights (%)
Table 19: S&P GSCI™ Index Values
Table 20: Commodity Exchanges in India
Table 21: Trend of Commodities in National Commodity & Derivatives Exchange (Oct 08)
Table 22: Trend of Commodities in Multi Commodity Exchange of India (Oct 08)
Table 23: Trend of Metals in Multi Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX) (Oct 08)
Table 24: Trend of Oil Commodities traded in NYMEX (Oct 08)
Table 25: Trend of Metal commodities traded in NYMEX (Oct 08)

Pages: 186

N-deal spins off 100,000 new jobs

2008-07-29T05:53:00.000-07:00

One of the spin offs of the India-U.S. civil nuclear deal coming through will be the creation of 100,000 new jobs for the 30-odd reactors that India hopes to set up to meet its nuclear power deadline of 20,000 MW by 2020, experts say. Congress MP Rahul Gandhi highlighted the fillip the deal is expected to give to employment generation and the energy sector. Interacting with students of Ravindra Bharati in Hyderabad on Saturday, Gandhi said: "The nuclear deal means millions and millions of jobs, and lights in the houses of the poor in this country."

Union Minister of State for Commerce and Power Jairam Ramesh, visiting the Department of Atomic Energy (DAE)'s Kalpakkam campus in Tamil Nadu, said: "Nearly 10,000 MW of nuclear power would be generated from indigenous reactors, 8,000 MW from light water reactors and 2,000 MW from Fast Breeder Reactors (FBR)."

Thousands of engineers, technicians and scientists would be needed to run these establishments, he underlined. "India's 17 nuclear reactors have the capacity to generate 4,120 MW, but in 2007 they could produce only 1,800 MW due to lack of fuel," Ramesh said. By 2020, India is likely to import six light water reactors while six nuclear plants are under construction to beef up generation capacity, said Nuclear Power Corporation of India Ltd Technical Director S.A. Bhardwaj. The total expansion is valued at nearly $300 billion.

"India's Department of Atomic Energy employs about 70,000 experts today," M.R. Srinivasan, former chairperson of the Atomic Energy Commission, told the media at a function in Kalpakkam. The new nuclear power plants on the cards are expected to create at least a 100,000 new jobs in India, experts say. Not just in India, the nuclear deal is expected to give a fillip to the industry in the US also.

In 2007, Ron Somers, president of the US-India Business Council, supporting the Indo-US Nuclear Cooperation Agreement, said: "The deal would create 27,000 high-quality jobs a year for the next 10 years in the US nuclear industry." To strengthen research at universities, the DAE is providing grants for projects through the Board of Research in Nuclear Sciences. The DAE Graduate Fellowship Scheme for the Indian Institutes of Technology (IITs) has been in place since 2002 to promote collaborative research through postgraduate students.

IIT-Kanpur offers a course in nuclear engineering and technology, now IIT-Madras has also decided to offer a similar course from the 2009 academic session. The country's premier institute for nuclear studies and research - The Homi Bhabha National Institute - will provide the necessary guides and teaching staff. India has two hubs for advanced studies in nuclear technology - Mumbai and Kalpakkam. The Mumbai-based Bhabha Institute unifies 10 institutions, four premier centres and six autonomous institutes, each with a research-driven framework.

Bhabha Institute also includes DAE's top research institute, The Bhabha Atomic Research Centre where old horses of the '80s, the Cirus and Dhruva reactors, are still kept going. DAE's other research institute is the Indira Gandhi Centre for Atomic Research (IGCAR), which was set up in 1971.

"The IGCAR has an open door policy for any student keen on science," says institute director Baldev Raj."The IGCAR has tried to strike a balance between networking with institutions with expertise and collaborating with academia for harvesting fresh thoughts," he added. According to the Nuclear Energy Institute, 30 countries worldwide are operating 439 reactors for electricity generation and 34 new nuclear plants were under construction in 14 countries.

Sources: IANS and Silicon India

Strategic Initiatives of Credit Suisse in Eastern Europe

2008-07-24T23:44:00.000-07:00

Traditionally Credit Suisse had seen the highest growth coming in the East, in countries like Russia and Kazakhstan and in some of the other Central Asian countries. Central Europe has grown a little bit more slowly and they are expecting that looking forward in 2007 and 2008 as well.

Area of focus for CSFB
The largest driver of growth within Central Europe is likely to be Poland where Credit Suisse is looking at a growth rate of up to 5.5 percent, or 6 percent. Poland is the area Credit Suisse is focused on in Central Europe. It’s a very deep and exciting equity market with a very diverse sector representation.

Which countries will underperform?
From a growth perspective, Credit Suisse is hoping Hungary will lag a bit behind this year on a growth perspective. That is mainly because CSFB sees the government making significant cuts in fiscal spending in order to achieve the Maastricht criteria target of less than 3 percent GDP budget deficit. It is likely that they will see less government spending in Hungary over the coming years. That is likely to have some impact on the growth rate in the country overall.

Difference in development between the two new EU members and the rest of the region
Rumania and Bulgaria are the newest EU members. They joined in January of 2007. They think these are very interesting countries for investment. Unfortunately, Credit Suisse had seen a pretty shallow equity market historically in these two countries. CSFB is anticipating some new IPOs over the coming year that will allow them to invest in both Rumania and Bulgaria in a more significant way going forward.

On Russia’s economic growth?
On the commodity side, Credit Suisse is quite bullish on commodity prices. They are expecting commodity prices to maintain the high levels that we’ve seen over the past few years. One of the most positive aspects of Russia is that Credit Suisse is really starting to see diversification in the economy. One of the biggest drivers across the region, and for Russia in particular, will be growth in consumption and growth in investment. The government is looking to spend a lot of money on infrastructure build over the coming years. Credit Suisse do see the growth of the Russian consumption being hugely important for the economy overall.

The oil, gas industry certainly is the major industrial sector within the Russian market. Credit Suisse is starting to see some new industries grow. They are hoping to see more IPOs in these areas, so they can participate in those growth areas of the market. An example would be the IT sector. Credit Suisse do see a fairly large IPO going on in the IT sector today. We could see some growth in that industry over time, so we are looking to tap into some of these opportunities.

Trends
The fragmentation of the $50 billion European fixed-income market illustrates the diversity of the competitive landscape. Today, 11 major global players have a share of just under 50% of the market, nine major regional players have 27 percent, and around 40 national players have just under a quarter. Each category includes highly profitable players. Profits come from the more value added products such as derivatives and hybrid securities and from regions such as Eastern Europe and the Middle East. As a result of intense competition, the core investment-grade bond business and other plain-vanilla product categories have wafer thin margins.

Another consequence of that competitive intensity has been the death of the sole adviser. Clients have many mouths to feed at payback time, after months or years of diligent coverage by the major firms. Consequently, big IPO and M&A deals typically involve a number of advisers. Inevitably, this arrangement puts even more pressure on the economics of banking.

The industry's radical transformation is likely to continue as major banks in Europe, as well as global banks that do business there, seek to build winning corporate- and investment- banking franchises. The bad news is that competition will intensify. The good news is that it will likely drive further innovation, spurring primary demand as more of Europe's financial-intermediation activity moves to the capital markets.

CSFB thinks most interesting sectors in the equity market today are the retail and consumption driven sectors. Retail stocks would be a place that is very interesting as well as infrastructure stocks. The main way Credit Suisse is looking at that theme is through the steel sector which is of course providing beams for some of the major road construction, some of the rail construction and a lot of the home buildings going on in the country.

According to CSFB, there are very few internal macroeconomic risks that could disrupt the long-term outlook for the markets. However, they do remain concerned about commodities. The equity markets are sensitive to commodities. So, any prolonged downside in the commodity prices certainly would be a negative for this region of the world. However, Credit Suisse expects that commodity prices will remain in relatively strong bands looking into the future.

Management reshuffle
Credit Suisse has reshuffled top-line management within parts of its European fixed-income capital markets business, following the decision of the bank's head of structuring to step down. The move announced in Jan 2007, spans three separate business areas and comes in direct response to Jeremy Bennett's decision to to take a sabbatical. As well as being the bank's head of structuring, Bennet is also co-head of European fixed-income capital markets and the emerging markets group.

As part of the reshuffle, Sudip Thakor takes over as head of the global structuring group in addition to his existing responsibilities as head of the fixed income derivatives product group in New York and co-head of the global credit trading business, which includes investment grade and emerging market credits.

Thakor is co-head of the global credit trading and sales business alongside Jonathan McHardy, who also runs the commodities business globally.
McHardy is now also solely responsible for managing the bank’s insurance and tax business, with Pedro Beroy and Larry Fletcher reporting to him directly. Credit Suisse’s European fixed income business was co-led by Bennett, but his departure now hands Gael de Boissard full control and responsibility for the London-based division.

Furthermore, the emerging markets group – one of the most lucrative revenue earning businesses within Credit Suisse’s fixed income division - is now being jointly run by Ram Nayak and Darren Walker. Nayak, who remains European head of commodities and co-head of fixed income for Eastern Europe , Middle East and Africa, reports directly to Thakor and McHardy.Nayak joins the bank’s fixed income operating committee with Walker, who holds on to his existing responsibilities for the EEMEA trading group that includes credit trading, credit derivatives and local currency trading.

Walker also reports directly to Thakor and McHardy. Bennett, who joined Credit Suisse First Boston as it was then known in 1997, has been one of the most important figureheads in carving out a new direction for Credit Suisse’s fixed income capital markets operations over the last three years.

Sources: Industry articles

US Institutional Fixed Income Asset Management Industry

2008-07-24T23:30:00.000-07:00

Market Size

# The U.S. fixed income market is one of the largest securities markets in the world with more than $29.2 trillion in outstanding debt according to SIFMA as of September 31, 2007.
# The average daily dollar value traded rose from $274.0 billion in 1996 to $508.9 billion in 2001 and $889.8 billion in 2006.

Market Segmentation

# The retail fixed income market accounts for approximately 70 percent of the total fixed income transactions and is expected to expand as 75+ million baby boomers enter retirement and begin shifting investment assets from growth to preservation strategies. Institutional fixed income market accounts for the remaining 30% of the total market share. (Source: Knight Capital Group, Inc.)

Institutional asset management industry has become an important feature of modern financial markets, with the scale of this business’s importance readily apparent from the size of assets under management by different types of institutional asset managers. The growth of the professional asset management industry has been a key feature of the structural changes in the international financial system, a development with implications for many different aspects of the financial landscape - market turnover, securities issuance, international capital flows, market stability, industrial organization and corporate governance. A wide variety of institutional investors, with professional asset managers, has emerged - pension funds, insurance companies (life and non-life), and investment companies (of all kinds).

Market Trends

The sources of profitability & growth in the industry are shifting rapidly as evidenced by the following major trends:

=> With asset management involving a delegation process, shaping appropriate incentive structures is essential for aligning the incentives of owners of funds with those of the institutional managers of these funds.

=> As the industry is still regarded as an evolving business, its strong recent growth is expected to continue well into the foreseeable future. As a result, structural changes in the industry, to the extent that they affect asset managers’ incentives, are likely to have their effect on their decision-making and, possibly, market outcomes. Ongoing industry trends have therefore an obvious potential to change institutional investor behaviour in ways that can be important for global financial markets.

=> Traditional products are now trapped in a vise-like squeeze, with higher alpha and "cheap beta" products again capturing almost all asset growth;

=> The most successful traditional firms dramatically grew both their revenues and profits from alternatives, with these products now accounting for more than one-third of institutional revenues – up from almost nothing only five years ago;

=> As a result of both these trends, retail and institutional net prices have now almost fully converged, with major implications for client segment attractiveness;

=> The defined benefit market is far from dead, but flows are undergoing a radical shift, with higher-alpha, fixed income and cheap beta products the main sources of growth.

Consequences

While the industry overall remains highly profitable, firms that are unable to adapt to these changes will have a hard time maintaining future growth and profitability. Indeed, a direct consequence of the shifting sands of growth and profitability is that most firms continue to struggle to gain real operating leverage.

=> Even in this rapidly moving environment, the effective use of scale remains the dominant characteristic of the most successful asset management firms. Players pursuing any one of three "winning" business models – at-scale, multi boutique and focused-asset players – remain almost twice as profitable as those that do not. Moreover, firms following these models appear better positioned than their peers to adapt to the shifting sources of industry growth and profitability.

=> These rapid industry shifts pose a real challenge for firms' middle and back offices. Indeed, operations and technology have taken on a new strategic imperative, in particular around innovation, customer service, and efficiency; with leading asset managers already recognizing that the payoff for aggressively managing O&T has never been more compelling than it is today.

=> Broadening array of asset classes: The rise in professionally managed assets, both in absolute terms and as a share of overall financial wealth, was complemented by rising interest in non-core markets and, recently, some growth in funds placed with unregulated asset managers.

Sources: McKinsey and CGFS

Commodity market to reach $1.73 trillion by 2010: Assocham

2008-07-06T23:33:00.000-07:00

The Indian commodity market is expected to grow by 30 percent and will reach Rs.74,156 billion ($1.73 trillion) in volume by 2010, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham). Assocham found that the Indian commodity market expanded 50 times in a span of five years from Rs.665.3 billion in 2002 to Rs.33,753 billion in 2007 as people's participation in such trade continued to grow. "The growth in commodities derivatives trading would now grow by about 30 percent to reach a projected level of Rs.74,156 billion in the next two years," said Assocham president Sajjan Jindal.

The turnover in proportion to GDP of commodity trade increased from 4.7 percent in 2004 to 20 percent in 2007 and is expected to go up many-fold since commodity markets would remain friendly to subscribers. "The daily average volume of trade in commodities exchanges by December 2007 was over Rs.120 billion," said Jindal.

"Gold, silver and crude recorded the highest turnover in Multi Commodity Exchange (MCX) while in National Commodity & Derivatives Exchange Ltd (NCDEX), soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend is likely to continue," he added. The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains.

It also noted that Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. "Some of the major problems associated with commodity markets in India include infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges and integration of spot and futures markets," the study said.

To attract active traders to commodity futures, the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers, imposing capital adequacy norms and defining qualification criteria, it noted.

For a vibrant futures market, it is imperative that commodity pricing be left to market forces, without monopolistic government control. However, in India, scores of commodities in which futures trading is permitted are still protected under the Essential Commodity Act, 1955. The integration of the spot and futures market is another critical factor for the expansion of the commodity futures market in India. The state governments largely control the spot market in commodities, the study said. The institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the Forward Markets Commission in order to take necessary measures to pave the way for a significant expansion and further development of the commodity futures markets, Assocham stressed.

Sources: ASSOCHAM, Silicon India and PTI

Indian Telecom Market

2008-07-02T21:47:00.000-07:00

Market Penetration
Every one in four Indians has a phone now, thanks to the scorching pace at which the burgeoning telecom services sector grew in the last fiscal, says an annual survey. With the total wireless subscriber base crossing 261 million as on March 31, wireless connectivity forms 22 percent of the total tele-density at 25 percent across the country, the survey adds. The annual survey by Voice and Data of CyberMedia group revealed that the Indian telecom subscriber base zoomed by 66 percent year-on-year (YoY) in the fiscal under review over the previous year.

"A booming economy, easing of entry barriers and lowering of tariffs fuelled the growth in FY 2008, with 104 million new subscribers getting connected and making India the second fastest growing telecom market in the world," CyberMedia publisher Prasanto K. Roy said Tuesday, citing the survey findings. The trigger for rapid telecom service growth was the revolutionary telecom policies of the present United Progressive Alliance (UPA) and the previous National Democratic Alliance (NDA) governments, resulting in affordable connectivity to a common man.

""With India's telecom tariffs still the lowest in the world, there's enormous and sustained growth beyond the metros. So telcos see huge opportunity in the three-fourths of Indians still untouched by the mobile phone revolution," Roy noted. Thriving in the growing market, the Indian telecom services industry generated Rs.1,306 billion ($31 billion) in 2007-08, registering 21.3 percent growth. Mobile, fixed line, national long distance (NLD), ILD, broadband, VSAT (very small aperture terminal) and radio-trunking constitute the telecom services industry. Growing at 36.4 percent YoY, revenue from mobile service increased to Rs. 766 billion from Rs. 562 billion in the previous fiscal (FY 2007).

Majority of new mobile subscribers is from towns and villages with less than 200,000 population. The mobile network covers about 50 percent of the 600,000 towns and villages across the country. The top five service providers vie for a larger share of the growing telecom pie. State-run BSNL (Bharat Sanchar Nigam Ltd) leads the pack with Rs.353 billion despite 12 percent decline from the previous fiscal," Roy pointed out.

BSNL is followed by Bharti Airtel, with Rs.264 billion, Reliance Communications Rs.186 billion and Vodafone Rs.155 billion, respectively. The top five operators based on cellular subscriber base are Bharti (62 million), Reliance (46 million), Vodafone (44 million), BSNL (41 million) and Idea cellular (24 million).

Prospects (Source: Gartner)
Total cellular services revenue in India is projected to grow at a compound annual growth rate (CAGR) of 18 percent from 2008-2012 to exceed US$37 billion, according to Gartner, Inc. The India mobile subscriber base is set to exceed 737 million connections by 2012 growing at a CAGR of 21 percent in the same period. This growth is poised to continue through the forecast period, and India is expected to remain the world’s second largest wireless market after China in terms of mobile connections.

“The growth in the mobile subscriber base is on the back of a rapidly proliferating rural market, lower handset costs, and low tariff rates in the Indian market,” said Madhusudan Gupta, senior research analyst at Gartner. “Rural telephony will continue to trigger growth and is expected to grow fourfold during the forecast period. Call rates have further dropped to about 1.5 cents per minute narrowing the gap with fixed-line rates. These factors along with an increasing competitive landscape will fuel market growth and encourage the adoption of wireless services in the rural and semi urban provinces of India.”

Cellular market penetration is projected to increase from 19.8 percent in 2007 to 60.7 percent in 2012. Gartner analysts said this growth could be primarily attributed to the increasing focus on the rural market, local consumer durable and electronic companies entering the domestic mobile handset segment, and lower handset prices. Vendors will continue to focus on sub-25$ handsets to capture market share.

The Indian mobile connection market continues to be dominated by prepaid subscribers. Prepaid connections accounted for more than 89 percent of all mobile connections in 2007 and are expected to grow to more than 92 percent of the connection base by 2012. The total services revenue for prepaid connections is expected to grow at 18.9 percent CAGR for the period 2008 - 2012 and the total services revenue for postpaid connections is expected to grow at 15 percent CAGR during the same forecast period. By 2012, the prepaid subscriber base will cross 683 million and postpaid subscriber base will exceed 53 million subscribers. The churn rate in India is 41.0 percent (2008), and despite a maturing market the ratio is expected to go up to 49 percent in 2012.

Revenues – Data revenues driving growth
The revenues from data services will significantly contribute to the growth of overall cellular services revenue in India, with a CAGR of 26.3 percent in the forecast period.

Prepaid subscribers are expected to adopt data services faster than the post-paid segment. Data revenues for the prepaid segment are projected to grow at 29 percent CAGR during the forecast period as compared to 22 percent CAGR for the post paid subscribers during the same period.

The bulk of the revenues will continue to come from voice revenues. However, with the increased growth in data services, the percentage of revenues coming from voice will reduce from 89 percent in 2007 to 85 percent in 2012.

Expected changes in the Indian Telecom landscape
According to Gartner, the industry will witness several changes in the coming year that could revolutionize the face of the telecom industry with the introduction of new technologies such as WiMAX, 3G and Mobile Number Portability (MNP). India will move to its next phase of evolution with the commercial launch of WiMAX by 1Q09 and 3G by 2Q09. With the introduction of MNP in 2008, churn rates are not expected to rise significantly, as India continues to be a prepaid dominated market.

“The Indian wireless market is a vibrant, price-sensitive and high-growth market,” Mr. Gupta said. “With 14 telecom service operators already present and another two set to join, the Indian telecom industry is expected to see some level of M&A activity in 2009. Given the high level of competition and anticipated consolidation, different business models will emerge that could push tariffs further down, with Indian mobile service consumers set to emerge as the biggest beneficiaries.”

Rural India will wrest 40 percent of new telecom market
India's rural telecom connectivity is poised for explosive growth in the next five to 10 years, grabbing a 40 percent share of the new market, a study released in July 08 said. "Of the estimated new 250 million Indian wireless users, in next 5-10 years approximately 100 million will be from rural areas," said the study by the Federation of Indian Chambers of Commerce and Industry (Ficci) and Ernst and Young.

The paper said operators have demonstrated they can achieve profitability by reducing fixed costs, controlling variable costs and carefully tailoring services to the requirements of their customers. A similar model with minor customization could be emulated in the rural areas, it said. The government will likely phase out the Access Deficit Charge (ADC) - a levy imposed on private players in rural areas - and roll out new incentives for mobile networks in rural India, the report said. Passive infrastructure sharing and spectrum hoarding cess on defaulter operators who fail to meet their roll-out obligations are illustrations of proactive government initiative, it observed.

"Erecting wireless telecom towers in India's tough rural terrain is still expensive and logistically challenging, reinforcing the desirability of sharing," the paper said. The paper also noted that the ultra-low cost handset of approximately Rs.840 ($20) to the market with built-in subsidies, lifetime validity and minimal maintenance costs have promoted mobile usage in remote areas. Moreover, operators could learn from business models that have been experimented across the developing world for expanding rural connectivity.

Source: Moneycontrol.com, Silicon India and IANS

China - The Insurance Giant in Asia-Pac

2008-07-02T00:15:00.000-07:00

Authors: Nishith Srivastava & Akash Rakyan

China has been the fastest-growing nation for the past quarter of a century with an average annual GDP growth rate above 10%. Chinese economy is the 4th largest in the world after the US, Japan and Germany, with a nominal GDP of US$3.42 trillion (2007) when measured in exchange-rate terms.

China is the world’s largest untapped insurance market. With GDP growth of over 10% per annum, rapid economic development and a burgeoning consumer class, China has the potential to become one of the world’s most significant insurance markets. Driven by a variety of demographic, economic and regulatory factors, this growth should continue at a solid pace for the foreseeable future. As of late 2004, China was fully compliant with its WTO insurance-related accession provisions, giving foreign firms greater market access. While domestic players dominate the market, foreign insurers are gradually attaining greater market share. Challenges remain, however, and include an overall lack of management talent, unsophisticated consumers, poor distribution channels and non-transparent regulatory approval processes.

Several factors are responsible for this astounding level of growth. Some of the most noticeable ones are China’s aging population; high savings rate and poor social security systems as well as an increasing number of wealthy consumers segment that is spurring growth in the property and casualty, auto and health insurance sectors. Compared to its regional peers, the Chinese market is still substantially smaller than Japan and marginally smaller than South Korea. It is, however, the fastest-growing market in both absolute and relative terms, growing by $61.17 billion and 169.63% between 2002 and 2007. This rapid development of the Chinese insurance market is driven by economic growth, but premium growth has outstripped economic growth consistently over the past five years.

In 1996, total premium .i.e. life insurance and non-life insurance combined was $12.84 billion and in 2007, it was estimated to be $97.23 billion. Between 1996 and 2007, Chinese Insurance sector experienced a CAGR of approximately 20.21%. Between 1996 and 2000, life segment had an increase of $13.11 billion from $7.14 billion to $18.56 billion and between 2002 and 2007, an increase of $37.47 billion from $24.26 billion in 2002 to $61.73 billion. We forecast that life insurance premiums in 2011 will be $108.12 billion. In non-life segment, between 1996 and 2007, a growth of $29.80 billion was seen from $5.70 billion in 1996 and $35.50 billion in 2007. It is expected that non-life premiums in 2011 will be $64.37 billion.

Major Driving Factors
=> Variety of demographic, economic and regulatory factors
=> Demand from Commercial Property Segment
=> Increased risk awareness and demand for sophisticated products
=> Improved expertise of local insurers
=> Guarantee rate reform and many other....

Major Trends & Issues
=> Foreign entrants facing ownership restrictions with respect to joint ventures
=> Regulatory obstacles for foreign companies
=> Use of bank channels by insurance companies to reach out to consumers in non-urban areas.
=> Customer loyalty in China’s insurance market is very thin, and customers are easily poached.
=> The State Council having recently cleared the way for banks to invest in established insurance companies on a pilot basis
=> Focus from price competition has shifted to developing new products and expanding the overall size of the insurance market
=> Low penetration as a result of low customer awareness
=> Need of further capacity and expertise in specialist areas such as MAT, energy, liability insurance
=> And many other....

Emerging Areas
=> Longer-term foreign exchange life insurance policies
=> Cross-sector investment (e.g., investment in banks), and an expansion of investment classifications (asset-backed securities, property, industry funds, offshore markets, etc.) for insurers.
=> Development of a Stock Broker Market
=> Growth of domestic reinsurance capacity
=> And many other....

As per China Insurance Regulatory Commission (CIRC) as of June 30, 2006, there were around 100 insurance companies in China. Out of these 100 companies, there were 56 domestic insurance companies and 44 foreign insurance companies. Domestic insurance companies had a market share of approximately 93.3% and the remaining 6.7% was controlled by the foreign insurance companies. The entire market is quite fragmented and most of these 56 domestic insurance companies are region-centric and are strong in their respective markets. The largest foreign companies are AIU (a subsidiary of AIG), Tokio Marine, and Mitsui Somitomo. As new players have entered the market, competition has intensified significantly, as the existing players fight to maintain their market share.

Topics covered in the report
=> Trend analysis of Chinese economy & macroeconomic factors contributing to the growth of the sector
=> China’s position in the context of emerging countries
=> Historical growth trends & growth drivers of Insurance & its sub-sectors in China and outlook till 2011.
=> Market size of insurance sector (total, life & non-life) since 2000 till 2007
=> Market forecast of insurance sector (total, life & non-life) between 2007 and 2011
=> Government policies, initiatives, regulations and problems faced by foreign insurers
=> Key issues & challenges, major trends & opportunities
=> Role of stock brokers, banks, domestic reinsurance and bancassurance segments
=> Industry and markets with best prospects for insurance products
=> Government’s initiatives to promote & regulate the insurance market
=> Competitive landscape and market share of top players
=> And many more...

Table of Contents

METHODOLOGY & RESEARCH APPROACH

EXECUTIVE SUMMARY

1. CHINA
1.1. CHINESE ECONOMY
1.1.1. Macroeconomic trends
1.2. GOVERNMENT POLICIES
1.2.1. Three-Step Regional Development Strategy
1.2.2. The 11th Five-Year Program (2006-2010)
1.2.3. Development of Energy-Efficient Society

2. CHINESE INSURANCE SECTOR
2.1. MARKET OVERVIEW
2.1.1. Insurance Sector vs. Macro-Economic Factors
2.1.2. Market Constituents
2.2. MARKET PERFORMANCE & FORECAST (1996-2011)
2.2.1. Chinese Insurance Market
2.2.1.1. Chinese Life Insurance Market
2.2.1.2. Chinese Non-Life Insurance Market
2.3. TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.3.1. Demand from Commercial Property Segment
2.3.2. Increasing Population and Prospective Buyers
2.3.3. Middle-men or Broker Market
2.3.4. Entry of Banks
2.3.5. Increasing risk awareness & demand for innovative products
2.3.6. Guarantee rate reform
2.3.7. Development of domestic reinsurance markets
2.3.8. Regulatory obstacles
2.3.9. Other major issues & trends
2.4. GOVERNMENT REGULATIONS
2.5. COMPETITIVE LANDSCAPE
2.5.1. Market Segmentation
2.5.1.1. Competition in Life Insurance Sector
2.5.1.2. Competition in Non-Life Insurance Sector
2.5.2. Driving Factors
2.5.3. Company Profiles
2.5.3.1. China Life Insurance Company Limited
2.5.3.2. China Pacific
2.5.3.3. Ping An
2.5.3.4. New China Life

Pages: 82; Format: PDF

List of Charts
Chart 1: China’s GDP Growth (1952-2005)
Chart 2: Macroeconomic Data & Factors
Chart 3: Total Premium Growth vs. GDP Growth (%) – 1996-2007e
Chart 4: Growth (%): Life vs. Non-Life vs. Total Premium vs. GDP (%) – 1996-2008f
Chart 5: Chinese Insurance Market: Segment Share
Chart 6: China Insurance Market Value ($billion): 2000-2007e
Chart 7: China Insurance Market Value Forecast ($ billion): 2008-2011f
Chart 8: Growth Trend of Life Insurance and Non-Life Insurance ($billion): 1996-2007e
Chart 9: GDP Growth vs. Total Premium Growth vs. Life Insurance Growth (%) – 1996-2007e
Chart 10: Life Insurance Market in China: 1996-2007e ($ billions)
Chart 11: Life Insurance Market in China: Forecast 2007-2011f ($billions)
Chart 12: GDP Growth vs. Total Premium Growth vs. Non-life Insurance Growth (%) – 1996-2008f
Chart 13: Sub-sector share of Non-life Insurance Market in China
Chart 14: Non-life Insurance Market in China: 1996-2007e ($ billions)
Chart 15: Non-life Insurance Market in China: Forecast 2007-2011f ($billions)
Chart 16: Market Share of Top 3 Domestic Life Insurance Companies
Chart 17: Market Share of Non-life Insurance Companies in China
Chart 18: Market Share of Reinsurers in China (2006)

List of Tables
Table 1: Macroeconomic Data & Factors
Table 2: Chinese GDP vs. US Dollar exchange vs. Inflation Index
Table 3: Total Premium Growth & GDP Growth (%) – 1996-2007e
Table 4: Growth (%): Life vs. Non-Life vs. Total Premium vs. GDP (%) – 1996-2008f
Table 5: China Insurance Market Value & Forecast ($ billion): 1996-2011f
Table 6: Growth Trend of Life Insurance and Non-Life Insurance ($billion): 1996-2007e
Table 7: GDP Growth vs. Total Premium Growth vs. Life Insurance Growth (%) – 1996-2007e
Table 8: Life Insurance Market in China: 1996-2007 ($ billions)
Table 9: Life Insurance Market in China: Forecast 2007-2011 ($billions)
Table 10: GDP Growth vs. Total Premium Growth vs. Non-life Insurance Growth (%) – 1996-2008f
Table 11: Non-life Insurance Market in China: 1996-2007e ($ billions)
Table 12: Non-life Insurance Market in China: Forecast 2007-2011f ($billions)
Table 13: Top Domestic and Foreign-Invested Life Insurance Firms in China
Table 14: Top Domestic and Foreign-Invested Non-Life Insurance Firms in China

Vietnam Insurance Sector: Untapped Potential

2008-07-02T00:12:00.000-07:00

Authors: Akash Rakyan & Nishith Srivastava

In recent years, there has been a significant economic growth in Vietnam of approximately 7.5% per annum. This growth is attributable to the recently adopted strategic and long-term initiatives by the Vietnamese government. These steps have streamlined and improved the economic infrastructure of the country by offering more incentives for foreign investors and implementing a 10 year socio-economic development plan etc. The country has gradually migrated from a planned economy to a market based economy by shifting its focus from agricultural production to industries and services. With all these developments, Vietnam has become one of the fastest-growing economies in the world, averaging around 8% annual gross domestic product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2007, GDP grew over 8% annually. Vietnam is now able to compete and get counted with regional as well as global economic countries. There has been a significant increase in inflows of foreign direct and private investment.

In the last few years, Vietnamese insurance sector has seen a noticeable growth. Today, despite being very young, Vietnamese life insurance market has already overtaken Indonesia and Philippines in terms of market penetration. This is because Insurance premium forms a larger percentage of the country’s GDP. With opening up of its insurance market since 1996, more and more foreign insurers are getting access to the highly lucrative insurance market in Vietnam. Foreign companies can now easily operate in the country and are forming joint ventures with local companies in order to enter Vietnam and diversify their clientele. In addition, a range of foreign life insurers, including some large Asian-based life insurers (principally from Singapore, Taiwan, China and South Korea), have set up representative offices in Vietnam and are working toward gaining operating licenses. Investors from regions like Asia, US and Europe are also actively lobbying the Vietnamese government for access to the local insurance market. Upon the country's accession to the World Trade Organization, foreign insurers expect to be allowed to establish more wholly owned units and to benefit from progressively declining limitations on their scope of business.

Market Performance & Forecast
In 2000, Insurance sector was valued to be $177.12 million. Within the next 7 years, the total market size of insurance sector in Vietnam was estimated to be $1141.98 million in 2007; a CAGR growth of 26.23% and an average growth rate of 33.25% during this tenure. Going forward, we are expecting a CAGR growth of around 12.30% in the Vietnamese Insurance Sector between 2007 and 2011. During this time period, the market from $1141.98 million will grow at an average rate of 16.25% and reach $2039.95 million by the end of 2011.

Between 2000 and 2007, Vietnamese life insurance sector increased from $51.12 million to $586.24 million, CAGR growth of 35.65% during this period. We forecast that the life insurance market in Vietnam would grow at a CAGR of 10.71% and an annual average growth rate of 13.21% between 2007 and 2011. From $596.24 million in 2007, the market will increase by approximately $388 million and reach $975.21 million by the end of 2011.

Non-life premiums in Vietnam were estimated to be $555.74 million in 2007, a growth of $429.74 million from the market size of $126.00 million in year 2000. Between 2007 and 2011, we project a CAGR of 13.89% .i.e. from $555.74 million in 2007; the non-life insurance sector in Vietnam will reach $1064.75 million.

According to the Vietnam Insurance Association, there are 120,000 insurance agents and 10,000 employees in the country. There are currently 16 non-life insurers, eight life insurers and seven insurance brokers. Vietnam's life insurers offer about 100 products and generated premium income. Fifteen foreign insurers have established operations and 30 others have representative offices. Foreign-owned insurers dominate the life insurance market. Domestic insurers are more dominant in the non-life insurance market and foreign insurers hold only a 7 percent market share. Some of the top insurance companies in Vietnam are ACE Life Insurance Co., Ltd., AIG General Insurance (Vietnam) Company Limited, Bao Viet Holdings, Bao Minh, Groupama/GAN, Nipponkoa Insurance Co., Ltd., Prudential Vietnam Assurance, Petrolimex Joint Stock Insurance Company (PJICO), Petrovietnam Insurance Company (PVIC), and QBE Insurance (Vietnam) Company Limited etc.

Major Driving Factors
=> Economic growth above 8 percent
=> Entry to the World Trade Organization (WTO)
=> Opening up of insurance market for foreign investments
=> US-Vietnam bilateral trade agreement in 2001
=> Emerging middle class & increasing literacy rate
=> Increasing foreign direct investments
=> And many more…

Major Issues & Trends
=> Foreign investors targeting Vietnamese Insurance Sector
=> Foreign companies trying to capture Vietnamese Market
=> Insurance still in a nascent stage due to traditional mindset
=> Lack of infrastructure and support
=> Setting up of a national export-credit insurance organisation
=> Demand for risk prevention increasing
=> Staffing concerns in insurance companies
=> Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
=> Recent developments at Bao Viet
=> And many more…

Topics covered in the report
=> Economic performance of Vietnam
=> Recent economic policies of the Communist Party
=> Macroeconomic trends and drivers
=> Focus on increasing Foreign Direct Investments and opening up of insurance market
=> Past and present scenario of Vietnamese Insurance Market & Future Outlook
=> Past and present scenario of Vietnamese Life Insurance Market & Future Outlook
=> Past and present scenario of Vietnamese Non-Life Insurance Market & Future Outlook
=> Driving factors for Vietnamese Insurance Market
=> Entry in WTO
=> Setting up of a national export-credit insurance organisation
=> Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
=> Government strategic initiatives to strengthen Insurance Market
=> Competitive Landscape & Market Share of foreign and domestic players
=> Recent developments in Bao Viet
=> Company profiles of top players
=> And many more…

Table of Contents

1. VIETNAM
1.1 VIETNAMESE ECONOMY
1.2 GOVERNMENT POLICIES

2. INSURANCE SECTOR
2.1 MARKET OVERVIEW
2.2 MARKET SEGMENTATION & PERFORMANCE
2.2.1 Vietnamese Insurance Market
2.2.1.1 Life Insurance Sector
2.2.1.2 Non-Life Insurance Sector
2.3 DRIVING FACTORS
2.3.1 Recent catalysts
2.3.2 Young and vibrant population
2.3.3 Emerging middles class
2.3.4 Literacy rate
2.3.5 War of talent
2.3.6 Increasing foreign direct investment (FDI)
2.4 TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.4.1 Foreign investors targeting Vietnamese Insurance Sector
2.4.2 Entry in WTO
2.4.3 Foreign companies trying to capture Vietnamese Market
2.4.4 Traditional mindset of the people – Insurance still in a nascent stage
2.4.5 Inadequate basic infrastructure and support
2.4.6 Underselling to capture market
2.4.7 Setting up of a national export-credit insurance organisation
2.4.8 Underlying opportunity for life insurance policies – need for risk prevention
2.4.9 Entry of foreign players & staffing concerns
2.4.10 Historical economic growth trends
2.4.11 Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
2.4.12 Factors driving investment decisions
2.4.13 Transformation at Bao Viet
2.4.14 HSBC enters strategic relationship with top Vietnam insurer, Bao Viet
2.5 GOVERNMENT REGULATIONS
2.6 COMPETITIVE LANDSCAPE & MARKET SHARE
2.6.1 Company Profiles
2.6.1.1 ACE Life Insurance Co., Ltd.
2.6.1.2 AIG General Insurance (Vietnam) Company Limited
2.6.1.3 Bao Viet Holdings
2.6.1.4 Bao Minh
2.6.1.5 Groupama/GAN
2.6.1.6 Nipponkoa Insurance Co., Ltd.
2.6.1.7 Prudential Vietnam Assurance
2.6.1.8 Petrolimex Joint Stock Insurance Company (PJICO)
2.6.1.9 Petrovietnam Insurance Company (PVIC)
2.6.1.10 QBE Insurance (Vietnam) Company Limited

Pages: 107; Format: PDF

List of Charts
Chart 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions): 2002-2011
Chart 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP Growth (%): 2002-2011
Chart 3: Vietnam Insurance Market ($million): 2000-2007e
Chart 4: Vietnam Insurance Market Forecast ($million): 2007e-2011f
Chart 5: Vietnam Life Insurance Market Value ($million): 2000-2007e
Chart 6: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011f
Chart 7: Vietnam Non-Life Insurance Market Value ($million): 2000-2007e
Chart 8: Vietnam Non-Life Insurance Market Value Forecast ($million): 2007e-2011f
Chart 9: Market Share of Life Insurance Companies in Vietnam
Chart 10: Market Share of Non-Life Insurance Companies in Vietnam

List of Tables
Table 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions): 2002-2011
Table 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP Growth (%): 2002-2011
Table 3: Vietnam Insurance Market ($million): 2000-2007e
Table 4: Vietnam Insurance Market Forecast ($million): 2007e-2011f
Table 5: Vietnam Life Insurance Market Value ($million): 2000-2007e
Table 6: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011f
Table 7: Vietnam Non-Life Insurance Market Value ($million): 2000-2007e
Table 8: Vietnam Life Insurance Market Value Forecast ($million): 2007e-2011

Thailand Insurance Sector

2008-07-02T00:10:00.000-07:00

Authors: Nishith Srivastava & Akash Rakyan

Thailand is the 2nd largest economy in Southeast Asia, after Indonesia. It ranks midway in the wealth spread in South East Asia and is the 4th richest nation per capita, after Singapore, Brunei, and Malaysia. The Thai economy in 2008 is forecasted to grow at 5.6% (in the forecasted range of 5.0-6.0%). This figure is an improvement on 4.8% growth in the previous year according to Fiscal Policy Office (FPO), Ministry of Finance. In 2008 accelerated public sector spending led to recovery in domestic demand which is expected to be far more balanced economic expansion. Government policy would then be forced to stimulate the domestic economy. This happens when external demand is likely to be softened from possible global economic slowdown. External stability in 2008 will remain strong with current account surplus estimated to be 0.5% of GDP (in the range of 0.3-0.8% of GDP). In contrast, internal stability in 2008 may have some risk with increasing headline inflation at 4.5% (in a range of 4.3-4.8%). This is mainly due to rising energy and food prices in the world markets.

According to ‘The Economist’, real GDP growth will slow down by 1.15% p.a over the next 4 years (2008-12), as compared to 5.3% p.a in past 3 years since 2007. This sluggishness of GDP can be attributed to various negative factors, such as political uncertainty, instability of foreign exchange rates, and continuous high petroleum prices in 2006.

The Thai insurance industry, along with the wider Thai economy, has now however recovered from the depths of the Asian financial crisis and is experiencing noteworthy growth. The trend is expected to continue as public awareness of the need for insurance increases.

Market Performance and Forecast
Within a span of 7 years (2000-2007), Thai Insurance Sector has experienced a growth of 191% currently valuated at $9,434.72 million. The Knowledge Centre predicts, the overall market size will increase by 72.5% further and is expected to touch the highs of $13,012.75 million by 2011.

The life insurance market in Thailand between 2000 and 2007 increased at a CAGR of 16.57%. The Knowledge Centre envisages that this trend would continue and the market will see CAGR of 5.75% in 5 years and reach $8,306.21 million in 2011.

The non-life insurance market in Thailand between 2000 and 2007 increased at a CAGR of 10.73%. The Knowledge Centre also forecasts that the growth will continue and the market will see CAGR of 8.34% in the next 5 years with the premiums reaching $4,706 million by 2011.

Competitive Landscape
Some of the top foreign insurance companies in Thailand are ACE, AIG, Allianz, AXA, Generali, ING, Millea Holdings, Manulife, New York Life and Prudential (UK). The market is dominated by AIA, the local name of AIG that accounted for approx. 29% of all of gross premiums in 2007. Thai Life (TLI) is considered to be the second largest player overall with a market share of approx. 14%. The next largest group is considered to be a joint venture between non-life insurer Ayudhya, local conglomerate Charoen Pokphand and Allianz (AACP) with a market share of approx. 14%. Other major players in this market are Ocean Life, Finansa, local associates of AXA (Krungthai) and ING.

Non-life insurance sector in Thailand is further sub-categorized under Fire, Marine & Transportation, Hull, Cargo, Automobile, Compulsory, Voluntary, Miscellaneous, Industrial All Risks, Public Liability, Engineering Insurance, Aviation Insurance, Personal Accident, Health Insurance, Crop Insurance and Other Insurance. Some of the top companies in this sector are Bangkok Insurance, Dhipaya Insurance, Phatra Insurance, New Hampshire Insurance, Ayudhya Insurance, Mitsui Sumitomo Insurance, MSIG Insurance, Sri Muang Insurance, Siam Commercial Samaggi, South East Insurance, Viriyah Insurance, Synmunkong Insurance, Krungthai Panich etc.

Driving factors
 Balanced economic expansion and supporting role of the government
 Recent reforms and government’s regulatory initiatives
 Re-defined financial practices and strengthening of corporate governance
 Relaxation of restrictions on directors and senior executives of insurance companies
 Amendment of clauses governing the evaluation of assets & debts of a life insurance company
 Merger or consolidation of the large number of local insurers
 Middle income industrial developing nation
 Growing interest in Bancassurance
 Adoption of THBFix and Bibor
 Establishment of Insurance Commission

Major trends, issues and opportunities
 Mergers and acquisitions in Thailand's insurance industry are likely to drop off
 Thailand's economy is slowing as the effects of high oil prices, rising interest rates and long-running political uncertainty take their toll.
 Political uncertainty and instability of foreign exchange rates
 Bullish trend in fixed deposit rates
 Government regulations laying a strong foundation for future growth
 Increase in foreign ownership limits
 Move towards a knowledge economy through skills development
 Issues in Health Insurance Systems

Topics covered in the report
 Thai economy, its performance, future outlook for 2008-09
 Government’s economic policies, macroeconomic factors, trends and analysis
 Economic and Insurance environment in Thailand
 Market performance and forecast for Thai Insurance Sector between 2000, 2007 and 2011
 Market performance and forecast for Thai Life Insurance Sector between 2000, 2007 & 2011
 Market performance and forecast for Thai Non-Life Insurance Sector between 2000, 2007 & 2011
 Recent reorganization of financial institutions and setting up of Insurance Commission
 Corporate Finance Legislation and other major regulatory developments
 Role of Bancassurance
 Specific regulations and norms by the Thai Government for insurance sector.
 Sub-categorization of life and non-life insurance sector
 Competitive landscape & market share of companies in life and non-life insurance sector
 Company profiles of top players in life and non-life insurance sector

Table of Contents

1. THAILAND
1.1. THAI ECONOMY
1.2. GOVERNMENT POLICIES

2. THAI INSURANCE SECTOR

2.1. MARKET OVERVIEW

2.2. MARKET PERFORMANCE & FORECAST
2.2.1. Thailand Insurance Market
2.2.1.1. Thailand – Life Insurance Market
2.2.1.2. Thailand – Non-Life Market

2.3. DRIVING FACTORS
2.3.1. Recent Reforms
2.3.2. M&A or transfer of the business of an Insurance Company
2.3.3. Thai Corporate Finance Legislation
2.3.4. Role of Bancassurance
2.3.5. Recent Regulatory Developments
2.3.6. Insurance Commission replaced Department of Insurance

2.4. TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.4.1. Insurance M&A likely to drop
2.4.2. Pending Legislations
2.4.3. Implications for Foreign Insurers
2.4.4. Skills development remains a key
2.4.5. Issues in Health Insurance Systems in Thailand

2.5. GOVERNMENT REGULATIONS

2.6. COMPETITIVE LANDSCAPE
2.6.1. Life Insurance
2.6.1.1. Life Insurance Renewal Market
2.6.1.2. Single Premium Market
2.6.2. Non-Life Insurance Market
2.6.2.1. Fire Insurance Market
2.6.2.2. Marine and Transportation Market
2.6.2.3. Cargo & Hull Market
2.6.2.4. Automobile Sector
2.6.2.5. Miscellaneous Insurance
2.6.2.6. Industrial All Risks Insurance
2.6.2.7. Public Liability Insurance
2.6.2.8. Engineering Insurance
2.6.2.9. Aviation Insurance
2.6.2.10. Health Insurance
2.6.2.11. Personal Accident Insurance
2.6.2.12. Other Insurance
2.6.3. Company Profiles
2.6.3.1. American International Assurance company (AIA), Thailand
2.6.3.2. ACE INA Overseas Insurance Company Limited
2.6.3.3. Ayudhya Insurance Public Company Limited
2.6.3.4. Ayudhya Allianz C.P. Life Public Company Limited
2.6.3.5. Bangkok Insurance Public Company Limited
2.6.3.6. Bangkok Union Insurance
2.6.3.7. Charan Insurance
2.6.3.8. Deves Insurance
2.6.3.9. ING Life Limited
2.6.3.10. Indara Insurance
2.6.3.11. Manulife Insurance (Thailand) Public Company Limited
2.6.3.12. MSIG Insurance
2.6.3.13. QBE Insurance (Thailand) Company Limited
2.6.3.14. Sri Muang Insurance
2.6.3.15. The Viriyah Insurance Co., Ltd.

List of Tables
Table 1: Macroeconomic Trends: Population (mil.) vs. Nominal GDP ($ bil.) – 2002-2011f
Table 2: Macroeconomic Trends: GDP per capital ($ bil.) vs. Real GDP Growth (%) – 2003-2011f
Table 3: Growth Trends: Inflation (2002-2008f)
Table 4: Key Economic Indicators Forecast – 2007-2012f
Table 5: Growth Trend Comparison: GDP Growth vs. Insurance Growth (%) – 2000-2011
Table 6: Thailand Insurance Market Value ($million): 2000-2007
Table 7: Thailand Insurance Market Value Forecast ($million): 2007-2011f
Table 8 : Insurance Density: Premiums Per Capita in USD
Table 9: Insurance Premium in % of GDP (2001-2011f)
Table 10: Growth Trend of Life Insurance and Non-Life Insurance ($Million): 2000-2011f
Table 11: Thailand Life Insurance Market Value ($million): 2000-2007
Table 12: Thailand Life Insurance Market Value Forecast ($million): 2007-2011f
Table 13: Thailand Non-Life Insurance Market Value ($million): 2000-2007
Table 14: Thailand Non-Life Insurance Market Value Forecast ($million): 2007-2011f
Table 15: Thailand Insurance Sector: Projections of Macroeconomic Drivers (2006-2010f)
Table 16: Market Share of Top Players in Life Insurance Sector: Comparison between 2006 & 2007 (Million Baht) and their Growth (%)
Table 17: Life Insurance Total Premium Growth Year on Year by Company 2006-2007 (%)
Table 18: Life Insurance Market Growth by First Year Premium of Top Companies: Comparison between 2006 & 2007 (mn Baht)
Table 19: Life Insurance Market Growth by First Year Premium of Top Companies: Comparison between 2006 & 2007 (%)
Table 20: Life Insurance Premium Renewal (million Baht) and Growth (%) Year on Year for Top Companies (2006-2007)
Table 21: Life Insurance Renewal Market Share of Top Companies in 2007 (mn Baht)
Table 22: Life Insurance Single Premium Market Share of Top Companies in 2007 (mn Baht & % growth)
Table 23: Loss Ratio of Non - Life Insurance Business (2007)
Table 24: Marine and Transportation Companies: Markey Share by Direct Premium (Unit: 1,000 Baht)
Table 25: Automobile Insurance Top companies by Direct Premium (2007)
Table 26: Top Miscellaneous Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Table 27: Top Industrial All Risk Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 28: Top Public Liability Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 29: Top Engineering Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Table 30: Top Aviation Non-Life Insurance Companies: Market Share by Direct Premium – 2007
Table 31: Top Health Insurance Companies: Market Share by Direct Premium – 2007
Table 32: Top Personal Accident Insurance Companies: Market Share by Direct Premium – 2007
Table 33: Top Other Non-Life Insurance Companies: Market Share by Direct Premium – 2007

List of Charts
Chart 1: Macroeconomic Trends: Population (mil.) vs. Nominal GDP ($ bil.) – 2002-2011f
Chart 2: Macroeconomic Trends: GDP per capital ($ bil.) vs. Real GDP Growth (%) – 2003-2011f
Chart 3: Growth Trends: Inflation (2002-2008f)
Chart 4: Key Economic Indicators Forecast (2007-2012f)
Chart 5: Growth Trend Comparison: GDP Growth vs. Insurance Growth (%) – 2000-2011f
Chart 6: Thailand Insurance Market Value ($billion): 2000-2007
Chart 7: Thailand Insurance Market Value Forecast ($million): 2007-2011f
Chart 8: Insurance Density: Premiums Per Capita in USD
Chart 9: Insurance Premium in % of GDP (2001-2011f)
Chart 10: Thailand Insurance Market: Segment Share 2007
Chart 11: Growth Trend of Life Insurance and Non-Life Insurance ($Million): 2000-2011f
Chart 12: Thailand Life Insurance Market Value ($million): 2000-2007
Chart 13: Thailand Life Insurance Market Value Forecast ($million): 2007-2011f
Chart 14: Thailand Non-Life Insurance Market Value ($million): 2000-2007
Chart 15: Thailand Non-Life Insurance Market Value Forecast ($million): 2007-2011f
Chart 16: Market Segmentation of Non-Life Insurance (%): 2007
Chart 17: Market Segmentation of Non-Life Companies by Ownership 2007 (%)
Chart 18: Comparison of Direct Premiums of Non - Life Insurance Business (2007 & 2006)
Chart 19: Direct Premium per Insurance Policy for 2007-2006 (Baht)
Chart 20: Comparison of Sum Insured Per Premium of Non - Life Insurance Business Segments (2007 & 2006)
Chart 21: Loss Ratio of Non - Life Insurance Business (2007)
Chart 22: Market Share of Top Life Insurance Companies by Total Premium in 2007 (%)
Chart 23: Life Insurance First Year Premium Market Segment in 2007 by Top Companies (%)
Chart 24: Life Insurance Premium Renewal (million Baht) and Growth (%) Year on Year for Top Companies (2006-2007)
Chart 25: Life Insurance Renewal Market Share of Top Companies in 2007 (%)
Chart 26: Single Insurance Premium Company Segmentation 2007
Chart 27: Fire Insurance Companies – Market Share (%): 2007
Chart 28: Marine & Transport Insurance Segment Share (%): 2007
Chart 29: Cargo and Hull Market: Direct Premium Share (%) in 2006-2007
Chart 30: Marine and Transportation Companies: Markey Share by Direct Premium (Unit: 1,000 Baht)
Chart 31: Market Share of Automobile Insurance Sub Sector 2007
Chart 32: Automobile Insurance Top Companies – Market Share by Direct Premium (%) – 2007
Chart 33: Market Share of Miscellaneous Non-Life Sector (%) – 2007
Chart 34: Top Miscellaneous Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 35: Top Industrial All Risk Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 36: Top Public Liability Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 37: Top Engineering Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 38: Top Aviation Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 39: Top Health Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 40: Top Personal Accident Insurance Companies: Market Share by Direct Premium (%) – 2007
Chart 41: Top Other Non-Life Insurance Companies: Market Share by Direct Premium (%) – 2007

Pages: 163

Indian Insurance Market

2008-07-02T00:07:00.000-07:00

Authors: Nishith Srivastava & Akash Rakyan

Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is on the fulcrum of an ever increasing growth curve.

Insurance is one major sector which has been on a continuous growth curve since the revival of Indian economy. Taking into account the huge population and growing per capita income besides several other driving factors, a huge opportunity is in store for the insurance companies in India. According to the latest research findings, nearly 80% of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subjected to weak social security and pension systems with hardly any old age income security. As per our findings, insurance in India is primarily used as a means to improve personal finances and for income tax planning; Indians have a tendency to invest in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small--4-5%. This in itself is an indicator that growth potential for the insurance sector is immense. It’s a business growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion.

India is a vast market for life insurance that is directly proportional to the growth in premiums and an increase in life density. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant. Competition in this market is increasing with companies continues effort to lure the customers with new product offerings. However, the market share of private insurance companies remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints.

In 2000, Indian insurance market size was $21.71 billion. Between 2000 and 2007, it had an increase of 120% and reached $47.89 billion. Between 2000 and 2007, total premiums maintained an average growth rate of 11.96% and the CAGR growth during this time frame has been 11.96%. It was one of the most consistent growth patterns we have noticed in any other emerging economies in Asian as well as Global markets.

Major Driving Factors
=> Growing demand from semi-urban population
=> Entry of private players following the deregulation
=> Rising demand for retirement provision in the ageing population
=> The opening of the pension sector and the establishment of the new pension regulator
=> Rising per capita incomes among the strong middle class, and spreading affluence
=> Growing consumer class and increase in spending & saving capacity
=> Public private partnerships infrastructure development
=> Dearth of innovative & buyer-friendly insurance products
=> Success of Auto insurance sector

Emerging Areas
=> Healthcare Insurance & Pension Plans
=> Mutual fund linked insurance products
=> Multiple Distribution Networks .i.e. Bancassurance

The upward growth trend started from 2000 was mainly due to economic policies adopted by the then Indian government. This year saw initiation of an era of economic liberalization and globalization in the Indian economy followed by several reforms and long-term policies that created a perfect roadmap for the success of Indian financial markets. On the basis of several macroeconomic factors like increase in literacy rate & per capita income, decrease in death rate and unemployment, better tax rebates, growing GDP etc., we estimate that the Indian insurance sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a CAGR of 12.44% and a growth of 59.82%.

The Indian life insurance market generated total revenues of $41.36 billion in 2007, this representing a compound annual growth rate (CAGR) of 11.84% for the period spanning 2000-2007. Life insurance market had a growth of $22.46 billion within a period of 7 years with a growth rate of 118.24%. Estimated life premiums rose from INR1,470,800 million ($36.77 billion) in 2006 to INR1,301,540 million ($32.54billion) in 2005. We envisage that life premiums in 2011 will be $65.96 billion, a growth larger than they were in 2007. The performance of the market is forecast to accelerate, with an anticipated CAGR of 9.78% for the four-year period 2007-2011 expected to drive the market to a value of $65.96 billion by the end of 2011. There would be a growth of $24.6 billion i.e. 59.48% in the next 4 years.

Non-life premiums in India were $6.53 billion in 2007. Gross written premium (GWP) in the Indian non-life insurance market reached a value of $5.75 billion in 2006, this representing an annual growth of 13.55% for the period spanning 2006-2007. Estimated non-life premiums rose from INR230 billion ($5.75 billion) in 2006 to INR261 billion ($6.53 billion) in 2007. We anticipate that non-life premiums will grow by a CAGR of 9.40% between 2007-2011. We are looking for non-life premiums to rise by $405 million over the five years to the end of 2011 with a growth rate of 62.02%.

Topics covered in the report
=> Trend analysis of Indian economy and growing macroeconomic factors and
=> India’s position in the context of emerging countries
=> Historical growth trends & growth drivers of Insurance & its sub-sectors in India and outlook till 2011.
=> Market size of insurance sector (total, life & non-life) since 2000 till 2007
=> Market forecast of insurance sector (total, life & non-life) between 2007 and 2011
=> Key issues & challenges, major trends & opportunities
=> Government’s initiatives to promote & regulate the insurance market
=> Competitive landscape and market share of top players
=> And many more...

Table of Contents

METHODOLOGY & RESEARCH APPROACH

EXECUTIVE SUMMARY

1. INDIA
1.1. ECONOMY
1.1.1. Performance in FY2007
1.1.2. Growing Per Capita Income
1.1.3. Macroeconomic trends
1.1.4. Future predictions
1.2. GOVERNMENT POLICIES

2. INDIAN INSURANCE SECTOR
2.1. MARKET OVERVIEW
2.1.1.Insurance Sector vs. Macro-economic factors
2.2. MARKET PERFORMANCE & FORECAST (2000-2011)
2.2.1. Indian Insurance Market
2.2.1.1.Indian Life Insurance Market
2.2.1.2. Indian Non-Life Insurance Market
2.3.DRIVING FACTORS
2.3.1. Opening of Pension sector
2.3.2. Growing Per Capita Income & Changing Demographics
2.3.3. Macro-Economic and Demographic Growth Drivers
2.3.4. Other Major Drivers
2.4. TRENDS, ISSUES AND OPPORTUNITIES – AN ANALYSIS
2.4.1. Major Issues
2.4.2. Emerging sectors for Insurance
2.4.3. Emergence of Multiple Distribution Networks
2.4.4. Consolidation of Distribution Strategy
2.4.5. Targeting niche customer base with customized products
2.4.6. Stagnating premium growth and underlying opportunity
2.4.7. The Deregulation of the Insurance Market in India (w.e.f. Jan 1,07)
2.4.8. Proposed stages of removal of the tariffs
2.4.9. Insurance sector driving Indian CRM market
2.4.10. Product Preferences among Consumers
2.4.11. Success of Auto Insurance Sector
2.4.12. Other major hurdles
2.5. GOVERNMENT REGULATIONS
2.5.1. Insurance Acts
2.5.2. Government backed insurance schemes
2.5.3. Reforms in Insurance Sector
2.6. COMPETITIVE LANDSCAPE
2.6.1. Competition in Life Insurance Sector
2.6.1.1. Market Share & Segmentation
2.6.1.2. Life Insurance - Five Forces Analysis
2.6.2. Competition in Non-Life Insurance Sector
2.6.2.1. Market Share & Segmentation
2.6.2.2. Non-Life Insurance - Five Forces Analysis
2.7. COMPANY PROFILES – TOP PLAYERS
2.7.1. Bajaj Allianz General Insurance Co. Ltd
2.7.2. ICICI Lombard General Insurance Company
2.7.3. IFFCO-TOKIO General Insurance (ITGI)
2.7.4. National Insurance Company Limited
2.7.5. The New India Assurance Co. Ltd.
2.7.6. The Oriental Insurance Company Limited
2.7.7. Reliance General Insurance
2.7.8. Royal Sundaram Alliance Insurance Co. Ltd
2.7.9. Tata AIG General
2.7.10.United India Insurance Company Limited
2.7.11.Bajaj Allianz Life Insurance Company Limited
2.7.12.ICICI Prudential Life Insurance Company

Pages: 127

Format: PDF

List of Charts

Chart 1: GDP growth, per capita income and size of country by GDP in 2014f
Chart 2: Macroeconomic Data & Factors
Chart 3: Government Debt- India (% of GDP)
Chart 4: Annual Inflation Rate (CPI) - India %
Chart 5: Total Premium Growth vs. GDP Growth (%) – 2000-2007e
Chart 6: Life Insurance vs. Non-Life Insurance vs. Total Premium vs. GDP (%) – 2000-2008f
Chart 7: India Insurance Market Value ($ billion): 2000-2007e
Chart 8: India Insurance Market Value Forecast ($ billion): 2008-2011f
Chart 9: India Insurance Market: Segment Share (2007e)
Chart 10: India Life Insurance Market Value ($billion): 2000-2007e
Chart 11: Asia-Pacific Life Insurance Market Segmentation: % share in 2006e
Chart 12: India Life Insurance Market Share: % Share, by Value, 2006-2007e
Chart 13: India Life Insurance Market Value Forecast ($billion): 2008-2011f
Chart 14: India Non-Life Insurance Market Value ($billion): 2000-2007e
Chart 15: India Non-Life Insurance Market Value Forecast ($billion): 2007-2011f
Chart 16: Sub-sector share of Non-life Insurance Market in India (2007e)
Chart 17: India Non-life Insurance Market Share: % Share, by Value, 2006-2007e
Chart 18: Market Share of leading life insurance companies in India (% share) – 2007e
Chart 19: India Life Insurance Market Segmentation (%share & $billion value): 2010-2011f
Chart 20: India Non-Life Insurance Market Segmentation (%share & $billion value): 2006-2007e
Chart 21: India Non-Life Insurance Market Segmentation (%share & $billion value): 2010-2011f

List of Tables

Table 1: GDP Growth (2002-07)
Table 2: Total Premium Growth & GDP Growth (%) – 2000-2007
Table 3: Growth (%): Life Insurance vs. Non-Life Insurance vs. Total Premium vs. GDP (%) – 2000-2008f
Table 4: India Insurance Market Value ($billion): 2000-2007e
Table 5: India Insurance Market Value Forecast ($ billion): 2008-2011f
Table 6: India Life Insurance Market Value ($billion): 2000-2007e
Table 7: Asia-Pacific Life Insurance Market Segmentation: % share in 2006
Table 8: India Life Insurance Market Share: % Share, by Value, 2006-2007e
Table 9: India Life Insurance Market Value Forecast ($billion): 2008-2011f
Table 10: India Non-Life Insurance Market Value ($billion): 2000-2007e
Table 11: India Non-Life Insurance Market Value Forecast ($billion): 2007-2011f
Table 12: India Non- Life Insurance Market Share: % Share, by Value, 2006-2007e
Table 13: India Insurance Market Segmentation (%share & $billion values): 2006-2007e
Table 14: India Insurance Market Segmentation (%share & $billion value): 2010-2011f
Table 15: Market Share of leading life insurance companies in India – 2007e
Table 16: India Life Insurance Market Segmentation (%share & $billion value): 2010-2011f
Table 17: India Non-Life Insurance Market Segmentation (%share & $billion value): 2006-2007e
Table 18: India Non-Life Insurance Market Segmentation (%share & $billion value): 2010-2011f

20 Indian firms among world's top 100 in outsourcing

2008-05-06T04:32:00.000-07:00

According to Silicon India:

Reflecting strong growth of the Indian industry, 20 Indian firms have successfully made it to the list of top 100 outsourcing companies in the world.

The latest '2008 Global Outsourcing 100', compiled by the International Association of Outsourcing Professionals (IAOP) that features 20 Indian firms has five of them - Infosys (ranked 3), TCS (6), Wipro (7), Genpact (9) and Tech Mahindra (10) among the top 10. All five are leading software service providers.

In the list, Accenture is on the top slot and IBM comes second. Companies on the list averaged $1.7 billion in annual sales and engaged 27,000 employees across the world.

Other Indian companies in the list are HCL Technology (11) Mastek (16), WNS Global Services (19), Hexaware (22), ExlService (26), 24/7 Customer (28), Cambridge (36), ITC Infotech (40), KPIT Cummins (42), Patni (46), Zensar (53), MindTree (54), Mphasis (56), Aditya Birla Minacs (62), FirstSource Solutions (73) and VCustomer (84).

According to IAOP, the key strength of Wipro and TCS is their 'employee management' while 'executive leadership' is cited as the strong point of Infosys and Genpact.

On the other hand, 'outsourcing experience' is attributed as the main strength of Tech Mahindra and HCL Technologies. The power balance in the outsourcing industry is shifting. Global competition in outsourcing is intensifying and that was reflected in this years ranking with companies from 19 countries vying for recognition, IAOP's Managing Director, thought leadership and who head the judges panel, Jagdish Dalal said.

In last year's list, there were five Indian firms in the top 10 - Wipro, Infosys, Genpact, Tech Mahindra and Cambridge.

Profile of Tata Companies - An analysis

2008-04-20T22:48:00.000-07:00

Excerpts sourced from Economic Times and TNN

TATA MOTORS

Competencies & Opportunities: Tata Motors has some new offerings on the block. This includes the 200-500 horse power ‘World Truck’ for the global market. It has also taken a huge stride to grow inorganically by acquiring the business of Ford under the brands, Jaguar and Land Rover. New models such as Sumo Grande and the Rs 1-lakh Nano car are likely to give a fillip to the domestic business.

Challenges: Higher interest rate may dampen the demand for cars. Rising cost of key raw materials such as steel and aluminium will put pressure on margins. Turning around of the Jaguar Land Rover business into a higher profitable business is a major challenge. Positioning of the Tata brand over such a wide variety of vehicles segments starting from the cheapest Tata Nano to the luxury brands like Jaguar will not be easy.

TATA STEEL

Competencies & Opportunities: The Corus acquisition will give Tata Steel the access to global markets and higher volumes. The strong outlook for global as well as domestic steel sector will improve sales realisation. Acquisition of iron ore and coking coal mines in different parts of the globe will improve the operating margin of Corus and contribute more towards the bottomline of the combined entity. The new greenfield and brownfield projects in Orissa, Jharkhand and Chhatisgarh will add significantly to the topline.

Challenges: The higher inflation and pressure from the domestic government might force steel producers to reduce domestic steel prices, resulting in lower profit margins. The higher synergy from Corus will come through only if Tata Steel manages to integrate it successfully.

TCS

Competencies & Opportunities: TCS has been focussing on contracts with larger deal size and time span. This helps in increasing client engagement. Broadening of deliverables will also help in improving competence in the global market for IT services. TCS has opened delivery centres in low-cost destinations of Asia and Latin America. Such a multi-shore delivery strategy comes in handy in times of economic slowdown and lower IT spends by the clients. Presence in the domestic market is worthwhile in the scenario of a stronger home economy and depreciating dollar.

Challenges: Exposure to dollar denominated income increases risk of margin erosion given appreciating rupee. Slowdown in the US may impact the IT budgets of the US clients. This may retard the topline growth. Competition from MNCs in India will intensify. TCS has to come up with firm strategies for its domestic business.

TATA POWER

Competencies & Opportunities: Tata Power is India’s largest private sector power utility with installed capacity in excess of 2,300 mw. Over 600 mw new capacity is likely to be added during FY09, with another 8,000 mw capacity to be added over the next five years including a 4,000-mw UMPP at Mundra. TPL has acquired a 30% stake in two major Indonesian coal producers to assure future fuel requirements. It is emerging as an integrated player in India's power sector with investments in power generation, transmission, distribution and fuel supplies (coal mining and transport).

Challenges: Meeting the time and cost deadlines while executing the long gestation projects is a big challenge as the costs of equipment and project implementation services have gone up substantially. Even after the successful completion of its projects, TPL has to manage the regulatory environment well to ensure sufficient return on its investments.

INDIAN HOTELS

Competencies & Opportunities: Indian Hotels runs the largest domestic hotel chain with 71 hotels and an inventory of 10,487 rooms. It enjoys presence across wide range of hotels right from deluxe properties to budget. This puts the company in a bright spot and helps it take advantage of the growing tourism industry in India. Besides, the company has 14 properties overseas and is expanding its global footprint via acquisitions and greenfield ventures. This is likely to result in greater brand recognition abroad. Its recent entry into lucrative segment of business jets will help the company to take advantage of growing opportunities in this space.

Challenges: Its revenue is greatly dependent on India, where average room rates are expected to see a decline beyond FY09 when supply starts coming in. Rising real estate costs have greatly reduced the return on capital on new properties in major cities.

TATA TEA

Competencies & Opportunities: The company has taken initiatives to introduce different variants of tea. It has also forayed into bottled water and other beverages. This is likely to help it transform itself from a tea company to a beverages company. Acquisitions, geographic expansion and new products are the way to go for Tata Tea, which is already the second largest integrated tea company in the world. Its retail foray through ‘Chai Unchai’ beverage stores is likely to open a new route of growth for the company.

Challenges: Tata Tea operates in a labour-intensive tea industry, which has long gestation periods. This can be an imepdiment in improving operational efficiency. The company will have to grapple with the increase in raw material prices. The appreciation in the rupee is likely to drag profitability of the international businesses.

TATA COMMUNICATIONS

Competencies & Opportunities: Utilisation of existing infrastructure to deliver valueadded services is a sound proposition for Tata Communications. The company recently tied up with Telsima to provide WiMAX services in the country. It has also launched its global telepresence network service to offer virtual meeting solutions. These initiatives will fuel future revenue growth. Tata Comm’s strategy to build global tie-ups for high-end technologies will help it keep pace with the fast-changing technology scenario and improve its global presence.

Challenges: Tata Comm needs to increase focus on deploying managed services, given the stiff competition in domestic as well as global enterprise data space from bigger telecom operators. The company has to improve operational processes in order to increase customer base for its broadband and other services rapidly.

TATA CHEMICALS

Competencies & Opportunities: The recent acquisition of US-based General Chemicals has consolidated position of Tata Chemicals (TCL) in the global soda ash market. Post-acquisition, TCL has become the second largest soda ash manufacturer in the world with majority of the production coming from cheaper natural sources. This goes well with its overall global strategy. TCL is already on an expansion spree for its inorganic chemicals and fertilisers plants in India. This will help it to strengthen its domestic presence. TCL is setting up a 30,000-litres-per-day ethanol plant and has ventured into wholesaling of fresh agricultural produce. This diversification would help in mitigating risk from slowdown in the core business.

Challenges: TCL has to see through an effective integration strategy of its soda ash business with the overseas acquisition. Managing overall growth of the company will be a tough task given the diversification into new business domains.

VOLTAS

Competencies & Opportunities: Voltas is a market leader in central air-conditioning and climate control business in India, besides being a major player in booming West Asia. It is also India's leading distributor and re-seller of textile and mining equipment. Recently it went through a corporate restructuring which has transformed it into a leaner and competitive player. The demand for central A/Cs and climate control systems is booming, thanks to rapid growth in retail, real estate and hospitality sectors. It has also got a boost from strong capex in textile, mining and retail sectors where it supplies forklifts.

Challenges: Being a capital goods supplier, it's highly prone to an economic downturn. It faces strong competitors across its product portfolio. The consumer air-conditioner business continues to be a drag on the company's profitability.

TATA TELE (MAHA)

Competencies & Opportunities: The company is aggressively expanding its base in smaller circles. Increasing presence in high-growth telecom circles B and C will help the company grow its subscriber base rapidly from existing five million.

Challenges: Higher competition is likely to put further pressure on the company’s average revenue per user. This necessitates more focus on value-added services. The company currently provides mobile services on CDMA platform. Establishing a GSM footprint would be a challenging task given competition from bigger GSM players. The company needs to expand its operations in the field of managed services to stay competitive. The company lacks brand recognition. It has to establish its brand presence in the highly competitive
markets.

TITAN IND

Competencies & Opportunities: Titan has diversified into a wide consumer-centric product portfolio comprising time pieces, jewellery, eye wear, and precision equipment among others. A good pedigree, reputed brand standing and strong distribution and service network offer good prospects for the company to ride the boom in consumption. Expansion of retail stores, specially in tier II cities, will help the company increase profitability.

Challenges: Record high gold prices can lead to a drop in jewellery demand, restricting the company's growth in the business. International foray may not be very profitable in view of the global economic slowdown. Branded retail segment is fraught with intense competition. Dominance of unorganised players in the lower end of the watch market poses a challenge. Given rising incomes, Titan may have to face competition from international brands in the premium watch category.

TRENT

Competencies & Opportunities: After establishing its foothold in retail space through Westside stores, Trent is taking new initiatives of foraying into the premium segment. Recently, it joined forces with the Benetton Group for the expansion of the Sisley brand in India. It is tying up with designers to mark its presence in a range different from the private labels. This will help the company face stiff competition in the domestic retail space. Trent has reported good growth in the past few years. Revenues have grown consistently (CAGR of 55% from FY04-07). A sustained revenue model is necessary as it facilitates future expansion plans.

Challenges: The roll out of new stores has not been aggressive. The company has added only 19 stores from ’03 till date. Faces competition from aggressive players such as Pantaloon and new entrants including Reliance Retail.

ArcelorMittal to invest $25 bn in India

2008-04-20T22:46:00.000-07:00

ArcelorMittal, the world's largest steel maker, is planning to invest nearly $25 billion in the country, according to a top company official. "India is one of the star performers and we are very bullish about it. We are committed to invest nearly $25 billion," Malay Mukherjee, member of the group management board of the company said.

Other investments by the company in India
Besides investing $10 billion each in Orissa and Jharkhand on 12 million tonnes steel project each, the company proposes to have more customer-oriented projects such as service centres in the country. "We are also working in joint venture in Chennai in stainless steel, for the automotive sector," Mukherjee said. ArcelorMittal is putting up two steel plants of 12 million tonnes capacity each in Orissa and Jharkhand at a total cost of $20 billion.

Brain drain is passe, India a hot destination for CEOs

2008-04-14T08:34:00.000-07:00

Excerpts sourced from Rediff.com

The Indian office of a leading multinational mobile phone company is facing an unusual challenge. It is losing top executives who have declined senior-level assignments abroad because they do not want to miss opportunities in India.

The brain drain, it seems, is passe. India is becoming one of the hottest destinations for expatriates (both those of Indian origin and foreigners) for top jobs. That is because big business houses in India are ready to offer pay packets that are equivalent to and sometimes more than global benchmarks.

This is a key finding of a study of senior recruitment trends by US-based SpencerStuart, a leading executive search firm that specialises in recruiting CEOs, presidents and COOs for companies globally.

SpencerStuart, which has operations in India and recruits CEOs for almost half the Fortune 500 companies, said for key sectors like retail, real estate, power, oil and gas and refining, transportation and logistics, Indian business houses are offering annual salary packages ranging from $750,000 to $1.5 million - excluding stock options.

Nearly half the CEOs and COOs recruited in these sectors are foreigners (including non-resident Indians).

CEO salaries in these sectors are nearly double what companies pay in other sectors, which could range from $350,000 to $750,000.

"Expats are increasingly finding India a more exciting market in which to work than mature markets. And large Indian companies in certain sectors are willing to match if not better global salaries to get talent which is difficult to get in India," said Anjali Bansal, managing director of SpencerStuart.

In fact, she added, multinationals are finding it difficult to woo Indians at the senior level to take up foreign postings abroad.

As a strategy, SpencerStuart has advised clients to shift regional headquarters from, say, Singapore or Hong Kong to India so that senior Indian executives can operate as heads from India. Several companies are considering this option.

SpencerStuart also said certain countries have been identified for CEO recruitment for India. Contrary to common belief the US is not the favoured recruitment ground.

In real estate the happy hunting grounds include Australia, south east Asia and the UK, amongst others. For oil and gas and power they are Kazakhstan, the North Sea area, Canada and West Asia. For retail the hottest recruitment grounds are West Asia, south east Asia (especially Hong Kong) and Europe.

Bansal said that the recruitment ground is essentially from countries that have seen similar development as India.

India a 'fraud haven,' says report

2008-03-19T05:38:00.000-07:00

Terming the country as a 'fraud haven' with about 60 per cent of the firms having detected frauds in past two years, global consultancy major KPMG on Tuesday said that India Inc is still unprepared to handle this menace.

Making the situation even worse, at least 5 per cent companies have had losses exceeding Rs 10 crore (Rs 100 million) and more than double of them have estimated the hit on their bottom lines in the range of Rs 1 crore (Rs 10 million) to Rs 10 crore, KPMG said citing its 'India Fraud Survey Report 2008.'

According to the survey, over 70 per cent of companies believe that fraud in India would further increase in next two years, while over 80 per cent respondents recognised fraud as a problem in the corporate environment in the country.

Indicating about 54 per cent rise in the number of fraud occurrences since the previous survey in 2006, about 60 per cent of respondents confirmed having experienced fraud at their companies, as against just 39 per cent two years ago.

While noting that actual cost of fraud to business was difficult to estimate as not all are discovered, KPMG said that 31 per cent of those surveyed suffered losses of Rs 10 lakh (Rs 1 million) to Rs 1 crore, while 11 per cent put the losses at Rs 1-10 crore and another 5 per cent at more than Rs 10 crore. However, it was less than Rs 10 lakh for about 53 per cent.

The financial services sector has retained its position as the most susceptible to frauds, while real estate and infrastructure surpassed IT and ITeS as the second most risky business in this regard, the survey found.

The report further pointed out that threat of fraud comes mostly from within the organisation. Majority of those surveyed felt that 'employees pose the maximum threat to an organisation and the senior management is more likely to commit fraud as compared to other employees.'

According to other findings of the survey, over 75 per cent of companies believe that fraud remaining undetected is their biggest concern, followed by inadequacy of anti-fraud measures and unethical behaviour of their employees.

KPMG said that the dual impact of two concerns, unethical behaviour of employees and inadequacy of anti-fraud measures, leads to an environment where both inclination and opportunity co-exist. 'This could mean that organisations in India that remain passive in their approach to deal with fraud may be a perfect breeding ground for fraud,' it added.

KPMG said that over 80 per cent of respondents believed that corporate sector pay bribes or make facilitation payments to do business in India. However, 60 per cent did not have adequate knowledge about anti-corruption laws.

Among the respondents, close to 25 per cent were at the level of an executive director, managing director or chief executive officer, while 30 per cent were chief financial officers of companies.

The inherent responsibilities and trust associated with senior positions, ability to over-ride internal controls, internal knowledge and access to confidential information increases the risks, it noted.

After employees, the maximum threat is perceived from suppliers and service providers, KPMG said.

'With the increase in the number of business transactions combined with the lack of effective monitoring, frauds are a real time threat for most corporates in India. It comes as a surprise that even the larger companies operating in India do not have adequate risk management strategies,' KPMG India's Forensic Services head Deepankar Sanwalka said.

Forecasts for the economy & markets in 2008

2007-12-25T10:50:00.000-08:00

Author: Abheek Barua, Chief Economist, HDFC Bank
Source: Rediff

Since this is my last piece this year I thought I would write about the forecasts I have made for the global economy and financial markets for 2008. There is an important caveat, of course. The global macroeconomic and financial environment remains terribly volatile and a number of these predictions could go wrong.
Let me get to the forecasts. The jury appears to be still out on whether the US is headed for a recession next year (going by the textbook, a situation in which GDP growth turns negative for two successive quarters) or whether swift action by the US Federal Reserve is likely to prevent such a situation. US consumption data like retail numbers occasionally surprise positively and US inflation is far from dead. However, despite this bit of fuzziness I remain somewhat sanguine about the following trends.

Whether it qualifies technically as recession or not, the US is likely to see a marked slowdown at least in the first half of 2008, which could last well into the second half of the year. Besides, despite central banks' best efforts, it will take a while for American and European banks to resume lending to each other and to even slightly risky borrowers. Thus, I see the credit squeeze in the US and Europe continuing and perhaps even getting worse in the near term.

The US slowdown is likely to have knock-on effects on the global economy and world GDP growth is likely to moderate. More specifically the result of sharp currency appreciation, harder interest rates and a credit squeeze will begin to take a toll on euro-zone growth. The UK is well into a cyclical downturn.

As I have argued in earlier columns, I think it is impossible for Asian economies to remain immune to a downturn in the developed economies and growth rates will soften in this region as well. I honestly don't know much about Latin America but I think it is sensible to assume that what applies to Asia applies to these economies as well.

Global energy and food prices are likely to remain elevated in the first quarter but are likely to dip subsequently as demand compression on the back of slowing world demand begins to reflect in prices. I am, for example, convinced that concerns about fresh oil supplies and oil peaks notwithstanding, slower global growth is fundamentally incompatible with oil prices at over ninety dollars a barrel.

The same logic might just apply to other assets including stocks. If indeed the signs of global slowdown become more acute, large investors might begin to dump equities and hold on to safer assets like treasury bonds. If there is growing aversion to equities as an asset class, Asian markets (including Indian stock markets) will also take a hit. The slide in stock prices will not be due to risk-aversion alone.

If global growth slows, the slowing down will begin to impact the top line and bottom line growth of companies across economies. That in turn will buttress the negative sentiment towards risky assets. The bottom line: be prepared for a "correction" in the Indian stock market next year.

There is a potential offset. The US Fed is likely to follow a policy of phased quarter percentage point cuts in its target interest rate - I expect the American central bank to cut the Fed funds rate thrice next year. Thus while inflation risks will weigh on the Fed's mind, I expect growth concerns to dominate and spur the Fed to cut rates some more. I expect the European Central Bank to hold interest rates until the second half and then start cutting signal rates.

My bank's research team has forecast two rate cuts next year, possibly in the second half. The Bank of England is likely to be swifter with two quarter percentage point cuts in the first half of 2008. We also expect more direct liquidity both through unilateral cash infusion by central banks and perhaps through more co-ordinated intervention.

The question is: what happens to all this liquidity when central banks turn on their cash spigots? If investors remain terribly risk-averse, a lot of it would go into low-risk government bonds.

US treasury bond prices will continue to move up and yields will decline as this process continues. Besides, if US assets keep getting cheaper and cheaper, investors will sniff a bargain and start buying these assets. In fact, some of the bigger funds have already started picking up chunks of the American financial industry where valuations have hit rock-bottom. Asian sovereign investment funds, for instance, are bailing out cash-strapped American banks, picking up significant equity stakes in the process.

Finally, there is also a chance that some of the money will start finding its way into emerging financial markets where growth rates, at least in relative terms, will remain high in comparison with the rest of the world. What happens then? My prediction is that emerging markets including India are likely to get buffeted by the crosswinds of rising global liquidity and cheaper interest rates, on one side, and concerns about slowing growth, on the other. This means two things.

Our stock markets will remain volatile for a while to come and sharp upswings could be followed by a quick downturn. Ditto for the currency markets. The interplay of these opposing forces also means that these markets will be stuck in a range. Thus I do not see the possibility of prolonged phases of decline, nor do I see the prospect of an untrammelled bull run.

What will take the markets out of the doldrums? Since the problems of the US economy lie at the heart of all the problems, it will take some clarity on the situation there to do this. Any strong signal that the US cycle has bottomed out will lead to a quick re-pricing of risk and realignment of asset prices.

Car Models in India

2007-09-23T23:48:00.001-07:00

BPO Sector Outlook

2007-09-23T23:20:00.000-07:00

According to:

Dick Vleesenbeek
- Talent shortages are driving labour markets to become increasingly more global, competitive, and employee-driven
- BPO predicted to be an $80B industry by 2009/10
- RPO (subset of BPO) estimated to grow into a $20B by 2009/10
- Vendor Management Solutions (Managed Service Provider) Market predicted to grow to be $4.2B by 2009/10
- Clients are searching for true global solutions and partners
- Trend toward complex, comprehensive solutions (workforce management models) to blend the expertise of internal/external partners
- The trend toward solutions providing off-shoring and shared service components continues
- Staffing and consulting firms face an environment of evolving legislation, increasing consolidation, and technological advancements impacting the business

Atul Subbiah
Manager - M&A Strategy at Deloitte Consulting
1. The coming of age of the major Indian suppliers
2. The unbundling of contracts where deal size is getting smaller
3. Contracts are getting shorter and work is being spread across multiple providers
4. Large deals are being split, with an increase in number of multi vendor contracts leveraging the near shore and offshore options
5. Large outsourcing contracts signed in the 1990s are coming up for re-bidding

Sunmeet Jolly
A Dropping Dollar may affect the attractiveness and ROI in Outsourcing Industry. The trend needs to be watched carefully over next 2-3 years. Rising wages in Outsourcing Providing Countries also adds to the marging pressures. But Demand for Outsourced Services will definitely increase as projected by Analyst firms. Its likely to become a high volume game and we can see some consolidation on vendor side.

Deverick McIntyre PMP
Industry Leader on China's IT & outsourcing industry
Packaged ITO+BPO+ Infrastructure Management Outsourcing is a significant new trend. We have seen this type of consolidation especially in the Financial Services industry, where, for example, the IT system supporting the outsourced business process is hosted and administered by the same vendor.

It makes sense for many clients to consolidate the BPO and IT contracts with the one vendor to achieve synergies and manage risks. This is not good news for pure BPO players, however for the large Indian outsourcers such as Infosys, TATA and Wipro, as well as international players IBM, Accenture, Cap Gemini etc, it is a perfect fit with their broad solution sets.

Packaged IT/BPO contracts are much larger than pure BPO deals and this trend has led to the increasing use of sourcing consultants such as TPI, Everest Group or smaller players such as TaidaL for thorough due diligence.

The other equally important new trend is contract pricing based on client business revenue/risk. Mainly seen in ITO contracts, the trend to package ITO with BPO will result in more innovative BPO contracts using client business based pricing. It is an interesting trend which has come about as clients force consulting companies pushing solutions to "put their money where their mouth is" and invest in the outcome. "If this solution is good for my business then partner with us in the upside (and downside) risk"

Hossam Elgamal
General Manager of GNSE Group
the Global Business Process Outsourcing sector and just after the launch of the latest ATKearny report, shows a tough competition between different emerging players and existing well established ones like India.
this competition is certainly in the favor of the business, shaping up the processes, increasing the quality and diversifying the options and resources in such global industry.
the result in the coming 1-3 years would certainly be a more rewarding choice to clients with less risk and a more framed quality of delivery, more important an observation that is taking place currently where giant players (indian ones like Satyam, TATA, WIPRO...) are having competency centers outside India to diversify their offering, minimize the risk, better control the cost and benefit more of the other countries benefits... thus becoming truely global... which in turn would lead those countries of choice to learn from the experience, build the expertise and start becoming important players in that market..

but mostly important is the fact that Clients will benefit further and more clearer from the BPO, which will come to a maturity stage.

a) the emerging significant developments/trends would be the diversifications of the countries for large BPO players, and the globalizations in the true meaning of the services.

b) driving this trend are: 1. the clients experience and need for better risk management, further more options and choices, better quality, managed cost. 2. the Giant BPO players need to maintain competitive advantage, and capitalizing on the globalization opportunity 3. the Awarness of the emerging countries in that industry, their government support, and their industry maturity.

c) as i said, the key players are moving more agressively into a globalized diversified offering, not standing still in one country only. example for that WIPRO and SATYAM moved recently to open competency centers with 1000s of resources in Egypt, as the government is agressively supporting the initiative by providing incentives, and building the capacity of the local resources, while cost is very competitive and mastering arabic as well as different european languages help providing a competitive advantage!!

Source: LinkedIn

Future of IT / ITES / KPOs

2007-09-20T20:48:00.000-07:00

We seem to have come a full-circle actually. Outsourcing started with low end menial data entry jobs that were discrete and modularized tasks, not interwoven into the company’s real-time environment. Then we graduated upwards to application maintenance, then onward to application development and then design and system architecture work. Call center and BPO brought about a mission-critical real-time and process driven mode of outsourcing with SLA and metrics based performance measures. With the rise of KPO, the emphasis is now on skills-based and decision-making type of work that is neither “mission-critical” nor “real-time” – yet it is more intimately tied to the top-line performance of companies than ever before in the past. With KPO, there are no metrics, no SLAs, no cultural or accent issues, no time-zone barriers and a productized consulting model that is driving a new breed of companies. With a combination of data aggregation, research, analytical, modeling and consulting skills KPO is redefining the boundaries of outsourcing.

According to me, some of the major drivers were:

• BPO found a niche customer due to a huge demand in back office customer support. BPO was and is mainly successful due to costs effectiveness and the availability of cheap labor – it found a huge pool of workforce as the unemployment rate among English speaking graduates was very high. It created a perfect sector which could find an effective solution to all its workforce requirements among the huge pool of university English speaking graduates.

Slowly countries like India found that although BPO was exploiting the general mass of graduates yet another potential pool of qualified engineering, medical, legal, financial professionals was untapped. There was a clear synergy between the mid-level staff across various companies in US & European regions and this pool in India. Gradually it was realized that the mid-level staff which is mainly involved in offering knowledge based services can be replaced with the pool of talented professionals in countries like India at a much lower cost.

• We can say that BPO has slowly reached to a stagnant point as the factor of realization of using BPO services in new avenues is decreasing. OR we can quote unquote what most industry insiders feel - With the opening of the world economy, many surprises have taken place in the business scenario. This is true for countries across the globe both from outside and within the countries.

The western world has started realizing the potential and the importance of smaller countries of Asia in providing quality services at much lesser rates and are treating this fact as a revolution. Similarly, within the Asian countries revolutionary trends are taking place in terms of expansion and spread of service providers to small cities. BPO is giving place to a new name i.e. Knowledge Process Outsourcing (KPO).

Now coming to what could be the next stage of transformation: - According to NASSCOM, KPO is expected to reach $17 billion by 2010, of which $12 billion would be outsourced to India. In the future, it is envisaged that KPO has a high potential as it is not restricted only to IT or ITES sectors, and includes other sectors like Intellectual Property related services, Business Research & Analytics, LPOutsourcing, Web Dev. Application, CAD/CAM, Finance & Accounting Management, Clinical Research, Publishing, Market Research etc.

Taking into account the huge potential of intellectual property within India, I strongly feel that next stage of KPO could be a more evolved involvement ie Consulting. As of now, we are only creating the groundwork and consultants abroad use our findings to offer advisory services to their clients. In the next 2-3 years, India could become a One Stop Shop for research, analytics as well as Consulting and Advisory services. Hence future IT/ITES SMEs in India would evolve themselves as Consulting Companies.

Top 3 concerns when outsourcing to Asia - Uncensored

2007-09-18T09:25:00.000-07:00

Excerpts from one of the discussions going on at LinkedIn. Pretty interesting stuff

Here you go

Senior Software Development Engineer, Toshiba America Electronic Components
In my experience culture, distance & communication are big issues when outsourcing.

First of all, we often outsource software dev to realize cost savings. This savings is often eaten up due to logistical and cultural issues which impede the outsourced projects.

1) Communication issues: Especially with China, communication can be difficult because of the lack of qualified English speakers. I interviewed a team that had daily 10 PM phone conferences from the US to China where only 1 guy on the China side could speak English. The Americans would talk for several minutes, then the one English speaker would translate in 15-20 seconds that content to his team members. A lot was 'lost in translation'.
In another example, members of an American software team had great difficulty working with Indian team members over tele-conference because of the accent issue. The company stateside eventually fired several members of their American staff because they would not cooperate fully with the remote Indian team due to language frustration. This damaged morale of the team, and did little to help the ongoing issues.

2) Culture. Sometimes "yes" does not mean "yes". Teams think they are on the same page with their overseas counterparts, when they are not.

3) Distance (physical and metaphorical) - Software development requires a tight interface between the developers and the stakeholders / customers. When separated by distance, time-zones, culture, and language you are adding a significant project risk that the work being done will not mesh with the (often dynamic) requirements for the end product. Not only are problems more likely to occur, but it will take more time to identify them for all of the above-mentioned reasons.

Executive Producer for Video Games
The 3 biggest concerns would be:
- Cultural background: you will experience vast differences in use of color, shapes, facial features, technical detail etc. from country to country. Don't expect Western style unless you guide extremely well.

- Language barrier: definitely an issue in Japan. Not so problematic in India. Mixed in China.

- Reliability. I don't want to say we've been disappointed so far. But we are fully aware that our legal possibilites are very restricted in China and India. This is not really an issue in Japan though.

CEO Bertin Services
1.As you probably know India is the WW Leader in software development, and gatheres probably 80% of CMMI5 companies in the world... but check what is covered by their CMMI certificate to understand the major concern there : It always looks perfect (english culture). Real Life is often not so bright, although they have competencies and want to make it. dig to make a difference between what they say and what they do.
2. I'd rather go in India than in China, because they're under english culture (easier to work with), software oriented, highly educated, and India is the largest democracy in the world. but they're not so cheap...
3. Outsourcing to Asia will require a lot of lawyers' time to make sure you get a fair Deal, and will take very long in India. Let's also be clear about the risks you'll face to have them copy your production and take the business from you, especially in China.

4. Last but not least : I believe that a key of success of operations set up in Asia I was part of is a very strong involvement of Key people of your company, including having a very reliable peron (at least one) staying down there for a year to ensure everything it going to be taken care of.

Software Development Process Reengineering Manager
NINE offshoring advices.
1. Always take care of your local workers.
2. Focus on core competencies.
3. Work with big established companies.
4. Offshore projects that require minimal interfaces.
5. Do not overemphasize process.
6. Focus on communication.
7. Test offshoring team with some pilot project
8. Read some offshoring articles.
9. Conclusion and evaluation using eSCM.

Reference: LinkedIn

KPMG Predicts that Global M&A Market is about to Peak

2007-08-17T08:41:00.000-07:00

By Big4.com Staff Writers, August 2007

Global M&A Predictor of KPMG Corporate Finance suggests that the Global Mergers and Acquisitions market is going to peak, and further predicts a fall in overall deal volumes this year. KPMG believes that in the year 2007 the global deal volumes will be much less than those achieved in the year 2006.

Global 1,000 M&A Predictor of KPMG Corporate Finance also believes that the latest data of Dealogic which illustrates increasing average deal size on lower volumes, signifies a "final hurrah" with less, but bigger deals being completed.

Stephen Barrett, International Chairman, Corporate Finance at KPMG, comments that "Global activity is about to peak, certainly in terms of deal volume, and we foresee a continued fall in deal numbers during the course of 2007."

Global 1,000 analysis of KPMG reveals that in the first five months of the year 2007, there was a major inconsistency between the main trend indicators of deal values and volumes. The study done by KPMG further reveals that in spite of conservative balance sheets, the appetite for M&A transactions seems to be slowing down.

Europe, out of the major global regions, mainly remains positive in terms of potential M&A activity. In terms of valuation, the U.S remains static. In terms of sector regions, M&A prospects seem to exist in Oil and Gas (North America), Basic Materials (North America), Utilities (Europe), Industrial (Europe) and Consumer Service (Europe). The analysis done by KPMG shows that out of all the main global regions, Europe continues shows the strongest M&A picture.

Indian M&A Deals Update (Mar-July 07)

2007-08-13T05:32:00.000-07:00

North America and Asia were the favourite hunting grounds of India Inc on global acquisition chase as the takeovers deals in these region touched $7 billion and $4.2 billion in the first four months of 2007-08, according to Assocham Eco Pulse Study (AEP). India Inc's global acquisition deals have been worth $15.3 billion. Deals with US-based companies worth $5.1 billion were accomplished during the period April-July 2007 as tracked by the AEP in Study on Mergers & Acquisitions during April-July 2007-08. Tata Group was at the forefront with their total deal values worth $2.13 billion in steel, hospitality and automotives sector. Essar Group acquired Minnesota Steel for $1.65 billion in the US. Reliance Communication expanded to US communications market by acquiring Yipes for $300 million while Infosys plans to acquire Phillips Global for $200 million. Another big acquisition was that of Globeleq by D S Construction for $542 million.

"The equation of business relations with the western countries is undergoing a significant change. Indian business leaders are aiming inorganic expansion through the most industrialised country of the world", said Venugopal Dhoot, President, Assocham, commenting on the success of Indian entrepreneurs in acquiring high value companies based in US. Metal companies in Canada were traced by the Indian bluechips with the war chest of $1.7 billion. Whereas Essar Global acquired Algoma Steel for $1.58 billion, Aditya Birla acquired announced take over of Utkal Alumina International for $0.19 billion. Among the Asian countries, Vietnam was the largest receiver of the deal money as Tata Steel entered into a joint venture with Vietnam Steel with 65% stake for $3.5 billion. Indonesia, Israel and Singapore are the other nations.

12 August 2007, Excerpts sourced from Financial Express

Top Automakers driving for efficient logistics

2007-08-03T08:48:00.000-07:00

2006 and 2007 have been eventful years for the automotive sector. It has seen a huge amount of restructuring, not only in its supply chain but also among the vehicle manufacturers themselves. DaimlerChrysler has ceased to exist with the sale of the Chrysler business to a private equity house and VW Group is now effectively controlled by Porsche. And a large proportion of the US component suppliers remain in bankruptcy protection. The implications of these changes for logistics are substantial. In the case of VW, there appear to have been organisational changes directed in part to creating new logistics systems. This is a response to the success of the KOVP logistics system at BMW, a major competitor to VW’s Audi brand.

While the automotive logistics markets is mature in the traditional markets of Japan, Western Europe and North America, it is growing vigorously in the new markets, such as China, central Europe, Russia and Turkey.

Over recent years, logistics has risen up the corporate agenda of almost all vehicle manufacturers. Most now either have programmes in place or are working on projects to develop their logistics systems. It has been realised by most VMs that logistics is fundamental not only to the efficient working of their assembly plants, but is also key to the management of their markets.

In parallel with the greater sophistication of these logistics systems is an increasing need for more sophisticated services from LSPs. This is seen particularly in finished vehicle logistics, where capabilities such as track-and-trace and greater visibility of inventory are now essential.

A large number of logistics providers compete for contracts with the vehicle manufacturers, which, in contrast, are few in number and well informed about the market.

The result is that operating margins among LSPs servicing this market are often poor, with low organic growth. LSPs, however, continue to be attracted by the large volumes offered.

Assembly plants can easily cost t500m and the vehicle manufacturer feels under intense pressure to utilise this investment to the maximum. This can be characterized as "production orientation".

Raw materials and components need to be fed into the assembly plant, coordinated with the production schedule. This has been perceived as the central logistics task in the automotive supply chain and one that in the past was given to production engineers.

The attitude to logistics changed in the 1980s with the emergence of the Toyota Production System. The greater prominence given to logistics-related ideas such as JIT has resulted in increased prominence for logistics managers and more integration between different types of logistics process in the supply chain.

Toyota has the most coherent approach to logistics, closely followed (but in a very different manner) by BMW. It is no coincidence that these two companies are among the most successful vehicle manufacturers.

Most passenger vehicles are made near the market where they will be sold. Even components are manufactured near the assembly plant. Within Europe, for example, it is quite usual for 90% of component suppliers to be located within 100km of the assembly plant. This supply chain geography is so pronounced that the car industry has created specific locations for suppliers next to its assembly plants, known as supplier parks. Components are then fed directly into the assembly plant often using conveyer belts or forklift trucks.

The use of supplier parks also improves communication between component supplier and vehicle manufacturer.

But Tier 1 suppliers are also faced with the contradictory demands of vehicle manufacturers. On the one hand they want suppliers to invest in logistics or assembly facilities near assembly plants, but are unwilling to commit themselves to suppliers for long enough to ensure that the investment is covered. Consequently there is a danger that suppliers will be left with facilities at or near the VM's assembly plant which are redundant or under-used.

Many LSPs view this as an opportunity for outsourcing, with several suppliers sharing facilities owned and run by the LSP. This appears logical, but conflicts with the unwillingness of many T1 suppliers to outsource assembly operations which they regard as core competencies.

Logistics is usually one of the core functions of such near-plant facilities. Their main function is to break-bulk, and feed components into the assembly plant in a sequence dictated by the production schedule. This would suggest that LSPs are well positioned to offer such services within shared-user facilities, certainly the case in many plants. However, many larger T1 suppliers are very aware of the importance of logistics as a core competency and are unwilling to relinquish it to LSPs on a large scale.

As a consequence, the market for such centres may appear more promising for LSPs than in reality.

Reference: International Freighting Weekly

World's top 100 brands worth trillion dollars, more than India's total m-cap

2007-07-30T09:03:00.000-07:00

The top 100 global brands are together valued worth more than $1 trillion but none of them are from India-though almost all are either already present in the country or are seeking a foothold here to tap the world's second-biggest consumer force.

In the latest "World's top 100 brands" list by Interbrand, a leading international brand consultancy, and Business Week magazine, the biggest soft drinks firm Coca-Cola has retained its top position despite a fall in its brand value to $65.32 billion from $67 billion in 2006. Together the 100 brands are worth about $1.15 trillion-more than the combined market value of over 4,000 listed companies in India. The study described brand value as "the dollar value of a brand, calculated as net present value or today's value of the earnings the brand is expected to generate in the future". Internet search engine, Google emerged as the biggest gainer despite its 20th rank with a rise of over $5 billion in its brand value.

Coca-Cola is followed by Microsoft, IBM, GE, Nokia, Intel, Toyota, McDonald's, Disney and Mercedes-Benz in the top ten. Seven of the top ten brands are from the US, except for Nokia of Finland, Japan's Toyota and Mercedes-Benz of Germany.

The US is the biggest home to the top brands with as many as 52 coming from the country. Germany has grabbed the second position with just 10 brands, followed by nine from France, eight from Japan and six from the UK.

There are only four Swiss brands on the list, three from South Korea, two from Italy and one each from Sweden, Spain, Finland and Bermuda. The top four brands each have a brand value of more than $50 billion, while even the last ten have been given a value of more than $3 billion.

Even though none of the Indian brands figure in the list, the country is high on radar on most of the names mentioned in the elite list.

BusinessWeek noted that global banking giant Citigroup, ranked at 11th position, was opening thousands of branches worldwide, but still has been focusing on looking more local. "It's a strategy of selling itself as a neighbourhood bank but one with the resources of the global giant it is," the magazine quoted the bank's global consumer group chairman and CEO Ajay Banga as saying.

Reference: Financial Express

Toyota vs. Its Competititors - A Case Study

2007-07-30T09:00:00.000-07:00

Akio Toyoda sat on stage as Toyota Motor Corp. president Katsuaki Watanabe introduced nine other executives. When Toyoda's turn came, he made a five-second bow to shareholders gathered in Toyota City, Japan, for the June 22 annual meeting. Two hours later, at a private board meeting, he was named head of Japanese sales.

The second event signalled that Akio, 51, had stepped closer to his apparent destiny as patriarch of a carmaking dynasty that his great-grandfather Sakichi funded and his grandfather Kiichiro started in 1937 by copying General Motors Corp.'s Chevrolets.

In seven decades, the Toyodas have driven their company to global dominance. They manufacture vehicles in 27 countries and regions and sell them in more than 170. They employed 299,394 workers and brought in $195.7 billion US in sales in the fiscal year ended on March 31, almost double a decade earlier. Through holdings in 14 Toyota Group suppliers, they oversaw another 126,638 people and $119.2 billion in revenue as of March 31.

In this year's first quarter, Toyota passed GM for the first time to become the world's biggest automaker by unit sales. Toyota sold 2.35 million vehicles -- 88,000 more than GM did. Toyota held on to the lead in the first half, although GM outsold it by 38,000 vehicles in the second quarter.

A dominant Toyota faces unfamiliar challenges. For most of their automaking history, the Toyodas were underdogs struggling against Detroit's juggernaut.

When the Toyodas, who started in business by manufacturing weaving looms, built their first prototype automobile in 1935, Ford Motor Co. had been making cars for three decades.

After the Second World War, demand for vehicles in Japan was so weak the Toyodas opened dry-cleaning stores. To thwart protectionist pressures in the U.S., Toyota joined with GM and began building cars there in 1984.

The next challenge for Toyota -- and the family that runs it -- is managing size.

Quality has been dented by recalls in the U.S. and Japan. Rivals are undercutting Toyota in the U.S. The company is offering an average of $5,083 in rebates, discounted financing and other incentives on its Tundra full-size pickup truck as gasoline prices rise.

GM lost its sales crown of 76 years after it stumbled over quality and cost issues -- and similar woes threaten to bedevil Akio. "What do you do when you pass a rabbit you've been chasing for 70 years?" says John Shook, a University of Michigan management instructor and a former Toyota engineer.

"Akio has a chance to articulate the first truly new vision for Toyota since Kiichiro. If he doesn't, you'd have to expect decline to set in at some point."

For now, Toyota is enjoying undisputed supremacy. It earned 51.2 per cent, or $14.2 billion, of the $27.7 billion US in net income the world's 17 largest carmakers made in the most recent annual reporting period, says Ashvin Chotai, an analyst at Global Insight Inc.

By 2013, Toyota will build 12.4 million vehicles a year compared with GM's 10.2 million, predicts Michael Robinet, a CSM Worldwide Inc. analyst.

"Toyota has staying power," says Wendy Trevisani, who bought 1.3 million Toyota shares in the 18 months ended in June for Thornburg Investment Management.

Toyota's growth engine is straining. Its shares fell 6.2 per cent to $62.98 this year through July 23 compared with a 14 per cent increase to $34.92 at GM as of July 20. Investors worry that Toyota's expansion will boost costs and damage profits, says Christian Takushi, an analyst at Swisscanto Asset Management AG, who disagrees with that assessment.

"Toyota shares are mispriced," says Takushi, whose company held one million of them in March. "They deserve to be trading at a premium."

Akio Toyoda's appointment to head Toyota's Japanese sales unit lands him in a troublesome spot. During the first half of 2007, Japan's industrywide vehicle sales, excluding minicars, fell 10.5 per cent to 1.8 million, their lowest since 1975.

Akio will introduce new models quickly and open megadealerships, predicts Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. That may spark consolidation and weaken Akio's support among dealers left behind, he says.

"Toyota is not the kind of simple company that will change just because Akio becomes president," Matsumoto says. "He needs charisma, and right now, because he's been very low-key, he doesn't have it."

Referenced from Bloomberg

Rest of Asia exporting more Japanese cars

2007-07-26T06:43:00.000-07:00

Japanese automakers are scrambling to increase exports from production bases in other Asian nations to take advantage of improved worker skills and trade deals.

Asia replaced North America as the largest overseas production base for Japanese automakers in 2006, with output reaching 4.13 million vehicles. Though these vehicles were intended to meet local demand, about 400,000 were shipped to other regions. The figure is expected to reach 600,000 in 2008, more than 10% of production.

In one example, Honda Motor Co. is boosting exports from Thailand to Australia and New Zealand by 40%, or 47,000 units.

Nissan Motor Co. this fiscal year is doubling exports of its Tiida subcompact from Thailand to Australia to roughly 10,000.

Last year, Toyota Motor Corp. exported 100,000 IMVs (Innovative International Multi-purpose Vehicles) to more than 90 countries from Thailand. It will step up exports this year and continue doing so in the future.

Suzuki Motor Corp. plans to triple output capacity to 300,000 vehicles a year at its second Indian assembly plant in 2008. Half will be shipped to Europe and the Middle East. Nissan will launch a new plant in India in 2009 and export subcompact cars to Europe from there.

At a joint venture for export models in the Chinese province of Guangdong, Honda doubled output of subcompacts to 50,000 a year this past spring. The cars are bound for 10 countries, including the U.K., Germany and France. Beginning this month, they will be shipped to Poland and the Czech Republic as well.

One reason for all these exports is the improved quality of Asian-made automobiles, thanks to technology transfers and parts suppliers setting up local operations.

Trade deals are another reason. Thailand signed a free-trade agreement with Australia in 2005, shedding a 15% tariff on passenger cars. More may be on the way. The Association of Southeast Asian Nations and India have agreed with the European Union to launch trade negotiations.

In fiscal 2006, Honda earned nearly 10% of its group operating profit in Asia and Suzuki generated about 40% of its group pretax profit in India alone.

Referenced from Nikkei Weekly

Building of Jet Airways by Naresh Goyal - Case Study

2007-07-24T07:25:00.000-07:00

Naresh Goyal started working in the airline industry right after college in his great uncle's marketing agency for Lebanese International Airlines. His salary was so low -- $40 per month -- that he had to sleep on the floor of his office.

But he moved up the ranks quickly, becoming a publicist for the airline and from there, moving on to other international airlines.

After a few years, he started Jet Air, a marketing organization that represented several international airlines in India. His mother sold her own jewelry to give him money to start the business.

In the early '90s, he looked into buying an airline in Scotland since there was no "national" carrier there, but his plan came to nothing. At home, though, things were changing.

From 1953 until 1992, the only airlines allowed to be based in India were owned and operated by the government. They were less than hospitable -- there were no printed schedules, and service was abominable.

But when the government opened the airline industry to private competition, Goyal jumped at the opportunity. Naresh realised that there was a huge market for good value and a high level of service in a marketplace that had never seen that before.

Goyal now runs an airline that flies from India to 50 destinations. Starting in August, Jet Airways will have a European hub in Brussels.

Goyal still remains true to his marketing roots, which were showcased in a lavish press conference recently. He might not be able to bring one of the airline's Boeing 777s into the Grand Ballroom of the Waldorf-Astoria to show off the upgraded cabins of Jet Airlines, but he did the next best thing: He brought life-size replicas of the cabins and showed off the flight attendants' newly designed mustard-colored ensembles.

Goyal markets service and comfort as the keys to his airline. For about $10,000, passengers in first class get a private suite, complete with closing doors; a full bed; a flat-screen television; and a meal that might be served at a top restaurant in any city. Business and coach offer levels of comfort too, with televisions and ergonomically designed chairs.

With globalization and India's economy opening up, Goyal is counting not only on the Indian diaspora looking to travel around the world, but businesspeople who increasingly need to go to the Indian subcontinent for work.

Referenced from Rediff and Forbes.com

Global Auto makers' report card (H1 2007)

2007-07-23T06:54:00.000-07:00

Referenced from The Globe and Mail

General Motors Corp.: GM is now being challenged in its long-standing position as the world's top auto maker by surging Toyota. But the company vows to regain the Number One spot by dramatically reducing its costs, slashing low-profit sales to rental companies and other fleets, and revamping its product lineup as sales of trucks and sport utility vehicles slump. It is closing plants and cutting jobs to try to become competitive with Asian-based car makers, and 2007 is expected to show some improvement on 2006, when it lost $2-billion (U.S.).

Ford Motor Co.: Ford continues to lose market share in North America, as the markets for its sport utility vehicles and pickup trucks weaken. The company lost a whopping $12.7-billion (U.S.) in 2006, and it is in the process of eliminating thousands of jobs, while closing plants in Canada, the United States and Mexico. Its goal is to return to profitability by 2009 by shifting its focus to growing segments such as crossover utility vehicles and passenger cars.

DaimlerChrysler AG: The German-American auto giant signed a deal this spring to sell off about 80 per cent of its Chrysler arm to private equity firm Cerberus Capital Management LP. Chrysler has a deep cost-cutting plan and will eliminate 13,000 jobs by the end of 2009, mostly by offering buyouts to employees. While all the North American car firms are losing ground to the Japanese, Chrysler has not been hit as hard as GM and Ford. To boost sales of its key minivans, Chrysler recently dramatically cut prices of the product line in North America.

Toyota Motor Corp.: Toyota has been reporting record sales and profits, driven by dramatic growth in North American and European markets. Earlier this year, it surpassed General Motors for global sales for the first time, taking the lead in the January-to-March quarter. Toyota has a reputation for high quality, but it has also been an innovator. It is the top player in the gas-electric hybrid market with the Prius, and the company has now sold more than a million hybrids. It is also a leader in using fuel cells, which power cars from electricity generated from hydrogen.

Honda Motor Co.: Like Toyota, Honda has made huge inroads in the North American car market with double-digit sales increases. And it is also active in emerging markets such as China and India. While Honda has done well with its gas/electric hybrids, it has also hit some speed bumps; it decided earlier this year to stop production of its slow-selling hybrid Accord, which was designed for extra power rather than fuel efficiency.

Nissan Motor Co.: The Japanese auto maker saw sales decline in 2006 in its two largest markets, Japan and the United States, although the numbers have picked up sharply in North America in the past few months. Nissan has also put in place a series of cost-saving measures to try to boost profitability. It is behind Toyota and Honda in developing the hybrid market, but is putting on a big push to catch up in green technologies.

Volkswagen AG: The German company is the biggest European car maker, posting strong results in Europe and Asia, but has been less successful in North America where it has lost money for the past several years. Volkswagen has been cutting thousands of jobs to improve its competitive position, but it owns a range of strong international brands including Audi, Bentley and Skoda.

BMW AG: The German-based luxury car maker saw a dip in profits in its most recent quarter, after spending bags of money launching new models. But it predicts a turnaround in the balance of the year, and record profits for 2007. BMW is planning to boost production at its plant in the United States – its biggest market – to insulate it from exchange-rate fluctuations. The company has also turned the Mini brand into a big success by targeting aging boomers, and it also owns Rolls-Royce.

How Toyota develops exceptional people

2007-07-23T06:47:00.000-07:00

Excerpts sourced from Rediff.com

Leading Toyota authorities Jeffrey Liker and David Meier give you the keps to growing top performers from within through a detailed preocess of preparation, traning, and follow-up. Here are Toyota's secrets to building an exceptional workforce . . .

No one seems to be sure of the exact course of events that led to the development of the Toyota Production System (TPD) as it is today, but we are sure that without highly capable people the current system would quickly disintegrate. We know that in the early development of TPD, its chief architect, Taiichi Ohno, wanted to press forward with some of this ideas and discovered that people were not ready.

When he went to work to achieve single-piece flow in a machine shop and he needed multiskilled workers, he encountered resistance and learned that he had to be patient and to think about developing people who would be able to support the methods. He could not simply order people to flow the rules (although he was known as being very forceful when necessary).

He needed people with thinking capability because of the challenges resented by the application of his new ideas. In fact, the real purpose of creating flow was to bring problems to the surface, which would force people to think about solving the problems and to help them to develop their abilities. A select few front-office experts could not possibly deal with all the situations that would surely arise as Ono pressurized the system, thereby forcing failures. He needed capable masses.

The development of capable masses requires a clear plan. It requires time and patience. Above all its takes persistence and the willingness to stick with it and to deal with the individual peculiarities and challenges of each person.

When Taiichi Ohno discovered the importance of highly capable people, he sought a method of teaching that would support his needs. He believed he had found such a tool in the Job Instruction (JI) Method taught by the American occupation forces after World War II.

It has been the primary teaching tool for all of Toyota since 1950s. Today the capabilities of Toyota employees are a hallmark of the company. We often talk to managers of other companies who view the capability of Toyota employees to be some sort of anomaly or option that is open only to Toyota.

The truth is that Toyota does like to start with good people who posses the capability to become exceptional employees. The people whom Toyota selects must have the capacity and desire to learn. Those are the only absolutes. In fact if one were to look closely at Toyota employees, one would find a broad spectrum of humanity similar to that in any other company -- with all the beauty and blemishes found anywhere.

Toyota employees bring to bear issues similar to those of other companies, such as attendance problems, resistance to change, lack of motivation, and even reluctance to accept the philosophy of TPS.

What allows Toyota to be successful in spite of these challenges is the efforts and interest in drawing out the best of the employee's abilities and initiating possible solutions (rather than a shrug and the 'What are you going to do?' attitude we hear from other companies). Perhaps Toyota has recognized the reality of human behavior and limitations, and it has created systems that minimize those limitations or take advantage of human desire.

People are carefully selected to join Toyota based on their potential and a judgment that there is a fit with the job and with Toyota's culture. They must have some general problem-solving capability and be willing to work as part of a team.

People develop specific capabilities after they are hired at Toyota. It is Toyota's expectation that it will mold the individual to fit the needs of the organization as well as support the interests of the individual. It is this mutuality of purpose that leads to more satisfied employees who are able to perform in exceptional ways.

One must not assume that Toyota is completely altruistic in its efforts to develop employees and to provide engaging activities. The objective is to provide benefits for the employees, which in turn also returns benefits to the company.

Toyota often creates situations in which there is an equal balance between reward and punishment in order to encourage the desired behavior. For example, given the critical nature of attendance on the performance of the system, a high emphasis is placed on having great attendance (perfect attendance is preferred).

On the reward side, Toyota Motor Manufacturing Kentucky (TMMK) has an annual award ceremony for all employees who achieved perfect attendance in the previous year (over 60 percent in 2005). The award ceremony includes entertainment from some top acts in the country including jay Leno, Bill Cosby, and Brooks and Dunn. In addition, each person has his or her name placed into a hat, and 14 winners are drawn, each receiving a brand new car (a mix of Camrys and Avalonds). To sweeten the pot, each team member with consecutive years of perfect attendance will have his or her name added to the hat an additional time for each year of consecutive perfect attendance.

In 2006 there were more than 400 employees who had achieved 15 consecutive years of perfect attendance (the length of the program)!

On the punishment side, repeated unexcused absences are one of the easiest ways to lose a job at TMMK. The policy is fairly strict and is weighted heavily on attendance history and also the circumstances. Consideration is given for good reasons, but repeated absences for poor reasons are sure to lead to discipline. A flat tire is not considered a 'good' reason, for example, but the effort a team member makes to reduce the time loss is in his or her favor.

If a team member has a flat tire and misses the entire day, it is not viewed favorably. And apart from the fear of being fired, sitting home while all your team associates are at the big bas hoping to win a car is its own punishment.

Relationship between Tatas and DaimlerChrysler

2007-06-27T08:00:00.000-07:00

DaimlerChrysler India owns a 6.6% stake in Tata Motors and the two companies have a history of forming alliances in India.

In 1994, when DCX began its manufacturing venture for Mercedes-Benz cars in India, the two companies began a 51/49 joint venture (JV), which was then known as Telco. DCX gradually increased its holding and in 2001 it bought out the entire equity held by Tata Motors. This wholly-owned unit, however, still holds the aforementioned stake in Tata Motors.

Recently Tata Motors gave the go-ahead to Mercedes-Benz's plan to manufacture commercial vehicles in India by issuing a ”no objection certificate” for the venture. According to the Economic Times, Indian government regulations required that Tata signed the certificate before Mercedes-Benz was given the go-ahead for its Indian manufacturing plans. Mercedes-Benz's parent group, DaimlerChrysler (DCX), currently imports a relatively small number of Mercedes-Benz trucks. However, this means that the vehicles in question are subject to import tariffs, and Mercedes-Benz wants to begin production at its passenger car production facility at Pune before moving assembly to a purpose-built truck facility at Chakan, near Pune.

Source: Economic Times

CII supporting companies that are going global

2007-06-27T07:57:00.000-07:00

The Indian companies are going global and many of them have achieved multinational status. To facilitate this process, the Confederation of Indian Industry (CII) in partnership with major Indian companies has launched an initiative -India Inc Going Global.

It is an attempt to create a platform for established and emerging Indian companies, banks, management consultants, and law firms to come together and share insights, which can be leveraged while setting up offices overseas and acquiring overseas companies.

Chairman CII Indian MNCs Committee & Chairman GVK Biosciences said "The aim is to create an ecosystem which can accelerate the creation of multinational corporations from India. The initiative aims to provide a forum for learning sharing and addressing common challenges of the globalisation journey in an actionable format."

The initiative is being led by Asian Paints, Bharat Forge, ICICI Bank, Infosys Technologies, Mahindra & Mahindra, McKinsey & Company and Prof. Tarun Khanna, Jorge Paulo Lemann Professor of the Harvard Business School.

The initiative is organised into operational entities termed as `clusters'. These clusters are based on functional areas or common challenges and opportunities. The three operational clusters are Leadership Development & Talent Management, India Advantage and Inorganic Growth.

Deputy Managing Director ICICI Bank Ltd said the global merger and acquisition business is $4 trillion and Indian companies have only tapped one per cent of the market. Therefore the initiative will help reach this market.

Source: Hindu

SCM Case Study - Supply Chain Model of 'Unilever Group'

2007-06-19T07:59:00.000-07:00

The business strategy of Unilever is to achieve the highest profitability, growth, and return-on-assets. It has sold many plants and has had to put in place processes to coordinate with the third parties that own them, complicating its processes to meet its asset goals. Unilever’s operating model has three components: quality, service, and cost. While keeping its global branding, the company’s strategy is to have local supply chain for local demand to minimize complexity.

Non Production Items (NPI) Organizational Model
Unilever has recognised the importance of implementing a global supply management programme focused on reducing Non Production Items (NPI).

The NPI organisation model being implemented in both Europe and North America (which will be extended to the rest of the world) is founded on clear cross-business governance and effective executive buying. Strategic sourcing is being supported by the global rollout of e-procurement and participation in some key Exchanges, particularly in Transora, where an equity stake is held. Regional and a few global NPI cluster teams have been formed which are undertaking a rigorous methodology to deliver the strategic sourcing strategies and implementation plans required to achieve the targeted savings.

Historically the majority of NPI's have been purchased locally, although there has been an increased move towards national and in a few instances, trans-national negotiations. European and to some extent global supply markets are becoming well established enabled in many instances through e-procurement. In such areas as IT hardware and software, travel & accommodation, energy, logistics and fleet management European and in some cases global supply markets and suppliers already exist. European markets are also emerging for office facilities, telecommunications, marketing point-of-sale items and technical supplies.

The supply-chain model's primary function within Unilever is to provide the Group’s business with shared understanding of the scope of the supply-chain and its sub-processes. The model provides the common language for the different Business Groups and thereby enables the identification and implementation of synergies. Some of Unilever's most important supply-chain model applications are assessing supply-chain performance and KPI development and alignment.

Distribution and Selling
# Unilever’s products are generally sold through its sales force and through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions. Products are distributed through distribution centres, satellite warehouses, company operated and public storage facilities, depots and other facilities.
# Home and Personal Care in North America (HPCNA) has also developed distribution centres for third-party manufacturers where products are collected to create heavier more efficient loads to re-supply customer distribution centres.
# Home & Personal Care business in Europe (HPCE) selects hauliers on cost, performance and environmental impact.

E-Procurement
Unilever meets two of the key corporate strategic thrusts: World Class Supply Chain and Simplification by implementing NPI strategic sourcing and e-procurement enablement. These are two of the six thrusts for implementation of world-class supply management:
# Implement executive buying
# Attract, develop and retain world-class buyers
# Professionalise NPI sourcing
# Enable e-procurement globally
# Accelerate and leverage simplification
# Drive information and measurement

Aggregation of demand and access to new suppliers through real time partnership has enabled Unilever to improve efficiencies of the extended supply chain. Workflow automation has helped in simplification of the internal processes, which has created scale for Unilever to leverage. For Unilever e-procurement represents the opportunity for sustaining the benefits gained from strategic sourcing through information, compliance and business process simplification. There are four ways of defining the benefits of e-procurement:
# A structural enabler for re-engineering the NPI procurement process enabling further benefits to be gained through strategic sourcing, business simplification, visibility of total spend and effective integration routes both internally, e.g. ERP, and externally.
# The means for conducting electronic business upstream using lowest cost links, i.e. cXML.
# A business model prompting re-evaluation of the mechanisms for connecting customers, enterprises and suppliers (incl. Exchanges and Marketplaces)
# A single front-end interface both externally to suppliers and internally for ERP and other areas of integration

Strategically e-procurement complements Unilever's overall e-initiatives. Learning from these and the strategic sourcing expertise gained during implementation, has improved business ability for the future e-procurement of both NPI and direct materials. Workflow automation and simplification to global sourcing processes has resulted in increased productivity and reduction of transaction costs. Data made available can then be applied to harmonise items purchased, rationalise needs with suppliers and monitor and reduce usage, thus further increasing Unilever's buying opportunities.

Exports
Unilever sells its products in nearly all countries throughout the world and manufacture in many of them. The company exports a wide range of products to countries where it does not makes them. For example, inside the European Union, Unilever makes many of its products in only a few member countries, for sale in all of them. The chosen manufacturing conﬁguration is generally determined by an optimized regional sourcing strategy, which takes account of requirements for innovation, quality, service, cost and flexibility.

Global Supply Chain Management Solutions Providers
In an effort to streamline its daily operations, Unilever has partnered with several technology and logistics providers on a worldwide basis. Some of the major providers are:

Technology Providers

Some other technology providers are: -
# Manugistics Group Inc.
# SSA Global
# Syncra Systems Inc.
# Vastera Inc.

Logistics Providers

SCM Technologies in Unilever’s Business Model
Unilever's overall technology vision includes a strong push from client-server to thin-client architecture, Web technologies that bring the company closer to its customers, and business analytics to make management information easier to access, according to Rick Ballou, IT business-area director for Unilever Home and Personal Care North America.

With a market capitalization of $28 billion, the consumer-products giant reported that its recent IT achievements include the rollout of business-intelligence software from Hyperion, and "SAP ERP wall-to-wall" as a global standard. Unilever also has seen significant cost savings from its investment in Ariba's sourcing technology, which has resulted in a reduction of the office-supply purchasing budget by millions of dollars, and a consolidation of data centers from 18 to five; eventually, the number will fall to three.

A cross-functional global committee already is working on the shift from desktop client-server to portal technology. On the B2B front, in addition to its RFID efforts, Unilever is participating in an industry-wide effort to standardize data elements throughout the supply chain through UCCNet. Unilever has also expressed their continued interest in CRM.

Unilever collaborates on statistical and market promotion forecasts for key products with a few large customers, using a collaborative system from Waltham, Mass.-based Syncra Systems Inc.

The organization as whole had multiple ERP and CRM systems from several vendors, and 34 custom-built data warehouses. Unilever currently runs 100 separate, complete SAP enterprise resource-planning systems.

Similar on these lines, some of the major SCM technologies and IT solutions implemented in the business model of The Unilever Group are discussed below: -

ISIS Supply Management Information System: ISIS is Unilever’s integrated supply management information system. It helps its local, regional and global supply managers make appropriate sourcing decisions, allowing them to collate and analyse information quickly and easily. The system enables its managers to negotiate with suppliers in a transparent and efficient way, benefiting both parties. For more details on this, please visit https://isis-unilever.com/Sourcing.

E-procurement Solutions from Ariba: Unilever selected the Ariba Buyer software for e-procurement following a rigorous selection process and initial pilot in North America. Although initial success has been achieved Unilever believes that these are still early days and that the return of investment has still to be proven. While e-procurement is an inevitability for future supply chain optimisation the supply market, particularly in Europe, is still suffering from under-development. There is an emerging recognition that e-Procurement can affect total supply chain operation rather than just transactional activity. Until recently few have taken action to implement or sponsor the necessary changes. Encouragingly though, Unilever believes that this position is changing and unquestionably e-Procurement provides a catalyst for positive improvement in supply management profile.

Enterprise-Scale Data Warehouse and Business Intelligence Solutions: In order to gain a clear view of business performance across its 34 companies in 19 countries, Unilever Latin America has embarked upon an enterprise-scale data warehouse and business intelligence project called Sinfonia.

At the heart of Sinfonia, KALIDO® enterprise data warehouse creation and management software (KALIDO) provides a solution that will grow to encompass one of the largest databases in the world by 2007. KALIDO delivers an aggregated view of data across Unilever Latin America at high speed throughout constant business change such as acquisitions and market consolidation. KALIDO is now making it possible for Unilever Latin America (Unilever LA) to build and manage a fully functional, adaptive data warehouse throughout its lifecycle while simultaneously rolling out an underlying regional SAP system in a 4 to 5 year sister project called Harmonia.

The flexibility of KALIDO is enabling Unilever LA to maintain business continuity as the Sinfonia and Harmonia projects continue to roll out. The KALIDO data warehouse will grow both in geographic coverage and in scope, and is expected to reach 12 TB in size. Throughout this period of growth it will deliver consistent business information, taking increasing volumes of data from the ongoing SAP implementation.

Unilever LA is converging processes, systems and information to enable a truly regional approach to business. Using the KALIDO enterprise data warehousing solution, the organization is successfully delivering a large-scale enterprise data warehouse, on time and within budget, while simultaneously rolling out a region-wide SAP system.

The new information architecture Sinfonia, powered by KALIDO, will deliver high-quality data to 4,000 users by 8 am every day across five time zones. The solution will enable better understanding of regional supply chain processes, brands, customers and suppliers, and will allow Unilever to respond rapidly to new opportunities, even against a backdrop of constant internal and external business change.

Finally, KALIDO will facilitate strategic planning and drive improved decision-making, by delivering tailored information at high speed to key business users, enabling Unilever LA to realize substantial cost savings and improved ability to capitalize on business opportunities.

Supply Chain Information Systems: Using a variety of information systems and several other supply chain management technologies, Unilever aims to enhance its supply chain business model. The following diagram describes the company’s supply chain system vision: -

Discussed below are the various types of information systems used within the business model of The Unilever Group with their specific usage: -
# R&D System R&D System (LIMS): Used for formula development
# Specifications Systems: Used for Packaging, Raw Material, Formula, Master BOM, Finished Products and Process Specifications
# Manufacturing Planning Systems: Used for MRP, Production Orders, Purchase Orders, Standard Costs, RM/Pack/WIP Inventory, Financial Transactions, Material Masters and Production Reporting
# Planning Systems: Used for Demand Planning (DP), Demand Req Planning (DRP), Constrained Prod Planning (CPP), VMI and Finite Scheduling
# MFG Execution Systems (Various): Used for Finished Goods Production, Compounding/Batching, Quality/Lab Systems and Plant Maint Systems
# Order to Cash Systems: Used for Order Entry/Management, Terms of Sale, Deduction Tracking, Stock Allocation and Invoicing
# Finished Goods Management Systems: Used for Shipping, FG Warehouse, Transportation, Finished Goods Production (PIN) and Traceability

Supply Chain Strategies of Unilever N.V
Unilever’s logistics operations present perhaps the biggest opportunity to streamline its supply chain and boost the company’s ability to achieve its lofty growth goals. The company is in the process of consolidating its nearly 30 warehouses down to five massive distribution centers capable of shipping customer orders within a day’s time.

Much of that consolidation is a recognition that retailers are adopting zero-inventory policies, which require an optimal use of flow-through and cross docking in the warehouses. To increase asset utilization, lower inventories and improve service, Unilever adopted collaborative planning, forecasting and replenishment (CPFR) relationships with some retail customers. Thanks to those CPFR efforts, Unilever has been able to achieve 10% inventory reduction, 10% forecast accuracy improvement and 5% increase in sales due to better on-the-shelf availability.

According to Fred Berkheimer, vice president of logistics for Unilever Home and Personal Care, since orders are often impacted by factors that cannot be projected, collaboration between manufacturer and retailer is necessary to increase forecast accuracy. “High accuracy in replenishment can only be achieved through order forecast collaboration and extended supply chain visibility,” says Berkheimer. Today, Unilever’s logistics department is experiencing include improved relationships with retailers, better planning, improved on-time performance and more efficiency in handling promotions.

Path to Growth

In 2000, the company launched a five-year Path to Growth initiative to drop the total number of brands down to 400 by the end of 2004, achieve 5%-6% annual sales growth and a 16% increase in operating margins.

Three years ago, the company was running hundreds of manufacturing sites under an umbrella of 300 operating companies. Path to Growth mandates a reduction in sites to 150 locations.

Unilever's supply savings programme is one of the cornerstones within the Path to Growth Strategy towards the implementation of a world-class supply chain. Through Path to Growth, Unilever’s five-year strategic plan announced in February 2000, the company has greatly strengthened its business.

Unilever's Path to Growth Strategy
=> Reconnect with the consumer - to anticipate the future
=> Focus the brand portfolio - reflecting consumer appeal and growth potential
=> Pioneer new channels - to be in the right place at the right time
=> Develop a world-class supply chain - simplifying sourcing, manufacture, and marketing
=> Simplify the business - reducing complexity

Significant progress has been made towards the achievement of its strategic ambitions with a much more focused brand portfolio and faster growth in the leading brands, while the major reductions in costs and streamlining the asset base have resulted in sharply higher margins and improved capital efficiency.

Under the so-called "Path to Growth" strategy, Unilever first reorganized into two units—foods and nonfoods—in each major geographic area. Path to Growth also calls for Unilever, by 2004, to cut its collection of brands to 400, from a high of 1,600 two years ago. That core of 400 strong sellers—which includes SlimFast, Dove, Ben & Jerry's ice cream and Lipton tea—is expected to make up 90% to 95% of Unilever's total sales, up from 84% today. So far, 700 slow-moving brands, plus an incongruous industrial dry cleaning business, have been sold. Five hundred more are still to be divested, including a group of oils and spreads put up for sale last month.

Over the period 2000 – 2003, Unilever has generated over €16 billion of un-geared free cash flow. The company has also successfully integrated Bestfoods, one of the largest acquisitions ever made in the industry. With one more year to go under Path to Growth this creates a strong basis for the next phase of company’s development.

"Chipping of "Goods" Initiative – RFID
Unilever's Supply Chain Innovation team wants to understand how better tracking of products will affect manufacturing plants, distribution centers and stores. Unilever anticipates that manufacturing plants will have to reduce the length of product runs and make other refinements to react more quickly to changes in demand. And retailers will have to provide more timely information to suppliers.

In continuation to this strategy, on July 29, 2002, Unilever launched its third phase of a supply chain-tracking project under Britain's "Chipping of "Goods" initiative. The company planned to put RFID tags on 30,000 six-packs of Lynx deodorant and monitor them as they move from a manufacturing plant to three Safeway stores. As part of the initiative, Unilever's U.K. home and personal care products company, Lever Fabergé, is putting RFID tags on six-packs of Lynx deodorant at its factory in Leeds. After the individual cans of deodorant are made, they are vacuum-sealed and a small white label with an RFID tag in it is affixed to the package.

Sources: Company Reports, Press releases, M-a-p.co.uk, Findarticles.com, Sap.com, Logisticstoday.com, Kalido, “Unilever's NPI initiative”, By Tim Cooper-Jones, Published at M-a-p.co.uk, IEE (www.iee.org/OnComms/PN/controlauto/Unilever.pdf) and Rfidjournal.com

Human Capital Trends in Indian Automotive Sector

2007-06-14T10:29:00.000-07:00

The success of Indian enterprise has encouraged foreign companies to also set up their base in India. Thanks to many Korean, Japanese, European and US auto firms for investing in India and for linking their prosperity to India’s future. All these firms, Indian and foreign, are contributing to making India an automotive and industrial powerhouse, making us a global manufacturing hub.

Amidst this phenomenal growth, there are numerous trends and developments being experienced across the human capital / resources function within the Indian automotive sector. Discussed below are excerpts of some of the available articles and editorials on this topic.

Trend 1: Reverse brain drain for Auto R&D

According to Booz Allen Hamilton, R&D spending in India has grown by 17% in 2006 whereas, comparative figures in US and Europe is only 5.2% and 2.3% respectively. With globalization, Indian corporate segment experience more and more challenges in market competitiveness and product innovation. Indian strategists are focusing on making their R&D investments judicially to get higher research output in lesser costs. Corporate India seems to have realized that product innovation is the key to survival and may serve the best competitive strategy for sustenance.

According to the Society of Indian Automobile Manufacturers, there are already over 250 Indian expatriates who have returned to work on R&D in domestic automobile companies Mahindra & Mahindra, Ashok Leyland, Tata Motors and Hindustan Motors. SIAM predicts that their numbers will double in two years.

With investments of over Rs 100,000 crore lined up in the Indian automobile industry, and European and US car majors making an aggressive push into India, Indian car companies have begun to understand the significance of R&D. Investments are small -- R&D budgets are just 1 to 2 per cent of domestic car makers' turnover -- but are expected to grow rapidly. "The return of expatriates is helping the Indian companies to overcome their human resource challenge in the field of research. The significant development of the automotive industry is now a magnetic proposition for qualified people to return and harness their knowledge," said Dilip Chenoy, director general, SIAM.

SIAM has set up a society in the US known as the Association of Scientists of Indian Origin that taps Indians working in the automobile majors there and provides access to domestic firms to identify and recruit talent in engineering and R&D. There are numerous examples.
# Arvind S Bharatwaj, for instance, took a 50 per cent cut in his salary in General Motors in the US to return to India and now heads the advanced engineering unit of Chennai-based Ashok Leyland. He has been blending the use of electronics and engineering (infotronics) in commercial vehicles to come out with new high-tech products for the company.
# Pawan Goenka, also returned after a 14-year stint with General Motors' global research and development centre in Detroit. He now heads the automotive division in Mahindra and has been the force behind the introduction of Scorpio, the most successful SUV ever launched in India. He has also prepared the blueprint to sell the Indian SUV in the US.
# V Sumantran, who was closely associated with GM's futuristic EV1 electric cars project and then played a key role in Tata Motors' small car before he quit, now advises Ashok Leyland on developing battery-operated hybrid trucks and buses.
# Raja Pant left the design development facility of Ford Motor Company in the US and is now with the body fabrication business of Tata Motors.
# Sudhir Rao, who was with General Motors engine development operations in Detroit, now works with Avtec Engines, a unit of Hindustan Motors, which supplies engines to Mitsubishi Motors and General Motors India.

Source: Business World

MY SAY
=> Although there are only few examples, more and more Indian R&D executives will come back to India.
=> As several Auto biggies have already started setting up their R&D centers in various locations of India, availability of these brains will consolidate & position India as the next R&D hub.
=> Cars in the near future will have a touch of Indian-ness in their designs.
=> After BPOs and KPOs in ITES Sector, manufacturing sector and more specifically its R&D function is going be the next BIG THING in India.

Trend 2: Auto sector in south Indian state to create 500,000 jobs

The automobile industry in Tamil Nadu in south India will be able to generate as many as 500,000 fresh jobs in the next 10 years and emerge as a 20 billion U.S. dollars industry, a study by an Indian industry chamber said Monday. The study by the Confederation of Indian Industry (CII) titled "Mapping of Human Resource Skills in Tamil Nadu - 2015" said by 2015, the auto sector will employ 580,000 people.

The southern Indian state is already home to major auto companies such as Ford, Hyundai, Ashok Leyland and components firms that employ about 80,000 people. Tamil Nadu has 30 percent share of the auto components market and 17-20 percent share of the vehicle industry in India, the CII study says, adding the sector has the potential for a six-to-seven fold increase in output.

It estimates the size of the industry in Tamil Nadu will be 15 billion U.S. dollars to 20 billion U.S. dollars by 2015. The study observes that the recent trends in the auto industry include the adoption of lean manufacturing practices, quality, shift from assemblers to contract manufacturers and techno- commercial purchases. "In product development, the auto industry needs project management and problem solving skills to identify root causes for design issues," the study says.

Source: CII

MY SAY
=> Tamil Nadu would become the Detroit of India
=> Most of the manufacturing and R&D units from Auto sector would be concentrated in this region.
=> Besides, Tamil Nadu, Maharastra is also seeing such investments and could emerge as the next preferred destination for Auto sector.

Trend 3: Stats on Market Size and HR Challenges in Indian Automobile Sector

# Growth Trend
o Auto sector could grow to $145 b by 2016
o The domestic automobile market has been growing at 14.2 per cent CAGR over the past 4 years (2000-01 to 2004-05), While the auto components market has been growing at 19.2 per cent CAGR (2000-01 to 2003-04).
o The automotive sector also offers significant employment opportunities. It employs 0.45 million people directly and around 10 million people indirectly

# HR Challenges
o Insufficient skills in certain areas, including interpersonal communication, computer literacy, and product knowledge
o Insufficient training
o Insufficient numbers of high-performance customer-facing personnel
o Difficulty securing the best talent to sales and management positions
o A low awareness of career opportunities and paths within the industry, and
o A nagging image problem for the industry exacerbating these issues
o Rajeev Dubey, president of HR and corporate services for Mahindra & Mahindra Ltd., one of the 10 largest Indian business conglomerates, says that with the exception of the relatively few managers with multinational experience, India’s homegrown managers are poorly prepared to cope with global challenges arising from mergers and acquisitions, joint ventures, and entering new markets.
o Of 50 companies in the automotive supply sector, Gaurav Lahiri, operations manager at the Hay Group India in Gurgaon, estimates that only three or four are trying out cutting-edge HR practices. “It’s a case of overpromise and no deliver,” he says. “From an intellectual standpoint everyone nods their head and says strategic HR is great. Whether leaders are engaging and motivating people on the ground is a question. We seldom come across a CEO client that loves the HR managers: They’re constantly complaining about how the HR guys are clueless on the business practices.”

MY SAY
=> I strongly feel that there is very low focus on R&D in Indian companies and thats the reason why India still lacks the ability to compete on designs and technology aspects.
=> Although we have proved to the world that we can produce the best brains yet our managers lack the experience to handle global challenges arising from M&As, JVs and globalization. However, due to the increasing investment from global auto companies in India more and more best practices would be siphoned to India that will gradually give the required exposure to Indian executives. Although it would take some time but I strongly feel that in the next 10-15 years we will see some dynamic leaders in the likes of Carlos Ghosn and Katsuaki Watanabe...

Trend 4: India the latest stop for young executives

# India has become more attractive to executives seeking a chance to test their mettle in a growing market. Some 300 new foreign executives are forecast to come to India this year, according to Kris Lakshmikanth of The Head Hunters.

# According to Evalueserve, India will need more than 100,000 expatriates by 2010. In 2002, the government reported that 13,000 expats were working in the country. Yet the need goes beyond language skills to the highest levels of management. "In India, most business is at the start-up stage, so we need managerial talent," says Sudhakar Balakrishnan, director of Adecco Consulting in Bangalore.

# Indians themselves have filled some of this shortfall, as more are staying here rather than venturing abroad - reversing decades of brain-drain. The need for foreigners remains, however, whether it is for foreign companies establishing their presence in India or for Indian companies wanting experienced Western executives.

MY SAY
=> It would eventually lead to more interaction and exposure for Indian executives.
=> Indirectly this will help in the transition of best practices to Indian corporate world.
=> More and more new executives or rather leaders will emerge from India gradually.

Trend 5: Interesting development in Mahindra & Mahindra – Search process for HR

CEOs in India went outside the HR pipeline to find executives with business acumen who could add a strategic HR perspective. For example, when the leadership team at Mahindra & Mahindra wanted strong HR leadership, they hired Yale University-educated Dubey as president of HR and corporate services. In a career path not usually seen in the United States, Dubey previously had been a CEO for two companies in the Tata Group, India’s largest private conglomerate.

“I had never been part of the HR function, but I dealt with a lot of HR issues when I was a CEO,” Dubey says. Now, he leads 150 HR professionals at Mahindra & Mahindra. “We do a lot of work that’s strategic to the success of our businesses: talent management, creating synergy, creating a culture of integration, mapping, succession planning and developing a global mind-set.”

MY SAY
=> I always feel that HRs in India lack the knowledge on actual business of their company. They are always focussed on the functions, operations and designations and totally ignore the actual requirement of competencies. This leads to the hiring of candidates who eventually prove that they were wrong hires in most of the cases.
=> This practice of picking up a candidate who was earlier a CEO is a very logical and intelligent move of M&A.
=> This offers a very logical approach of hiring i.e. depending on the main corporate strategy of the company, people in the HR function should be chosen from relevant background. This will insure that HR executives will have a clear and complete understanding of not only the human capital requirements but also the competencies required to execute corporate vision.

Trend 6: Indian tech drives autoworld

From infra-red vision in headlamps to in-car Bluetooth applications, Big Auto is turning to India for top-of-the-line technology.

Auto MNCs have been wiring back-office functions to India including supply chain management and procurement functions for their global operations. What’s new is the tech edge in the latest round of sourcing. A host of OEMs due for an India debut are looking at both component and IT sourcing as part of their regional strategy. And car makers like General Motors, Nissan, DaimlerChrysler, BMW and Ford already outsource a host of back-office functions for their global requirements.

Wipro Technologies, Satyam Computer Systems, Genpact are some of the vendors involved in auto outsourcing. Says NS Bala, senior vice-president for manufacturing solutions, Wipro Technologies, “Auto companies are focussing on managing their brands. Applications like Bluetooth in car, remote diagnostics services and new systems that seek to improve safety on roads are being outsourced to India.” Wipro Technologies has eight automobile clients and a 1,000-people team developing applications for global car majors.

Genpact’s BPO has around 1,000 people engaged in finance, accounts payable, analytics, supply chain management and procurement tasks for global auto makers.

Source: Economic Times

MY SAY
=> Its too early to pin our hopes and start projecting on this market in India due to the presence of some of the best technology companies worldwide. It would be really a tough competition for all these companies to earn a share in this market.
=> As India has an edge due to cost effectiveness and availibility of talented yet cheap labour. I foresee these companies to handle all those aspects which would be backend tools or can be outsourced.

India Inc. facing an attrition rate of 20%

2007-06-14T06:29:00.000-07:00

Increasing opportunities and employee aspirations induced by robust economic growth have led to an unhealthy attrition rate, exceeding 20 per cent for India Inc, with services sector facing the maximum brunt, an ASSOCHAM study shows.

An ASSOCHAM Business Barometer Survey on 'Attrition Problem in a Growing Economy' has revealed that attrition rate at 40 per cent is alarming in the services sector, while the same in manufacturing was 20 per cent.

Maximum attrition is taking place among employees in the age group of 26-30 years, while those with an experience of 2-4 years are most vulnerable to job-hopping, the survey covering 160 HR heads noted.

Interestingly, women employees were less prone to job changing compared to men.

"For every 10 males jumping the fence there were only two females crossing over. Even if women face the pressure of balancing the management of their families and workplace, they tend to be more stable than their male colleagues," 52 per cent of HR managers surveyed said.

With India joining the globalised world of business, the movement of workforce across national boundaries has also added to the rising level of employee turnover, according to 72 per cent of the ABB respondents.

The immediate gains in salary package was found to be responsible for job change in 61 per cent of the cases, growth potential was also rated quite high as an important reason.

Source: ASSOCHAM

Auction websites changing traditional M&A processes in India & the World

2007-06-14T06:22:00.000-07:00

Investment bankers have found a new rival in executing merger and acquisition deals in the form of the Internet, which allows sale or purchase of a company at the the click of a mouse.

Marking a significant coming-of-age for the e-commerce industry, online auction platforms like eBay are no more just about selling or buying consumer goods. In fact, entire companies are being sold and acquired on these websites in a simpler, faster and cheaper way than the traditional methods involving a plethora of investment bankers and advisors.

The trend is catching up fast in India as well after a number of successful deals in the US and other countries.

A Lucknow-based telecom firm is seeking bids for 25% stake in the company on eBay India website, a retail outlet in Kharagpur is on sale for a minimum of Rs18 lakh, while another electric vehicle manufactruing firm from the country is also soliciting potential buyers on the website.

Besides, an operational job portal Alphacareer.com, based in Bangalore, has also listed itself for sale on the eBay USA website and is seeking buyers from across the world.

Another e-commerce website focussed on sale and purchase of a business, Biz Buy Sell, has a US-based company seeking buyer for its fully-staffed Indian software developement subsidiary in Mumbai at a base price of $500,000.

There are several other such examples on some of these auction sites.

Inference
Market experts believe prospects for such deals in India should improve further, given the growing number of Internet users and increasing awareness about such websites.

According to web traffic tracking firm comScore, India is already one of the ten most populous countries in terms of Internet users and is growing at a sharp rate.

Source: PTI

Capital flows can hurt India competitiveness - RBI

2007-06-14T05:20:00.000-07:00

Large capital inflows could result in overvaluation of India's currency and erode competitiveness of traditional and goods sectors in the long term, deputy governor of the Reserve Bank of India (RBI) said on Thursday.

Rakesh Mohan, in a paper for a Bank of France seminar in Paris posted on the RBI's Web site www.rbi.org.in, said large remittances and a sustained spurt in software exports were complicating exchange rate management. "(These) coupled with capital inflows have the potential for possible overvaluation of the currency and the resultant erosion of long-term competitiveness of other traditional and goods sectors," Mohan said.

India is part of the way through a three-phase, five-year plan towards greater capital account convertibility. Mohan said opening up the capital account meant market participants needed to be better able to absorb greater volatility and shocks.

"In the context of progress towards further capital account convertibility, the market participants are going to be faced with increased risks on multiple accounts: volatility in capital flows, volatility in asset prices, increased contagion and state of ability of legacy institutions in managing risks."

Source: Reuters

Prospects of Semiconductor Production in India

2007-06-14T05:11:00.001-07:00

According to Gartner, semiconductor manufacturing in India is currently limited, and although there are no operational wafer fab plants in the country right now, five fab plants have been proposed, with approved ones targeted to go live between 2009 and 2010.

Philip Koh, Gartner's research vice president of semiconductor for Asia-Pacific acknowledged the "possibility" that electronics manufacturing services providers in Southeast Asia may move some of the manufacturing facilities to India, but noted that OEM (original equipment manufacturer) investments moving out of the region are not significant right now.

In recent years, electronics manufacturing services providers have set up plants in India, and equipment manufacturers such as Samsung and Nokia are also establishing their mobile-phone manufacturing plants in India, he noted.

Ganesh Ramamoorthy, Gartner's principal research analyst based in Mumbai, India, said that rising salaries and disposable income levels are driving up India's consumption of hi-tech products, such as PMPs, DVD players and notebooks. India's current semiconductor consumption is estimated at about $2.7bn (£1.4bn).

To cater to the rapidly growing domestic market, OEMs including Nokia and Motorola are building manufacturing plants in India, Ramamoorthy said.

He added that the initial focus will be to cater to the local market for up to three years, with a strong possibility of ramping up production to cater to export markets in neighbouring countries such as United Arab Emirates, Sri Lanka, Pakistan and Bangladesh by as early as 2008.

Exports to these countries currently account for less than five percent of India's total production, but that is likely to change, according to Gartner.

Ramamoorthy said that by 2011, between 10 percent and 20 percent of mobile-phone production, for example, could be for export. For instance, if 100 million phones are going to be produced in India by then, 20 percent will be for the export market.

India's equipment production in 2006 amounted to about US$14bn (£7bn), and is expected to increase to US$30bn (£15bn) by 2011, said Gartner.

Source: Gartner

India’s airline sector anticipating more consolidation

2007-06-14T04:52:00.000-07:00

India’s booming airline industry will see further consolidation by 2010 amid growing competition, rising costs and over-capacity along key routes, an industry body said on 13 June.

At least fourteen new airlines such as Easy Air, Trans India and Star Air are seeking government approval to launch operations.

From just three private airlines in 2003, the number has jumped to ten, including low-cost carriers such as SpiceJet, Go Air, Paramount Airways and IndiGo. “Carrier rationalisation along key routes is required, as we see over-concentration of seat capacity along main routes,” said Kapil Kaul, chief executive with responsibility for the Indian subcontinent at the Centre for Asia Pacific Aviation (CAPA) on 13 June.

“Greater consolidation is expected to continue... in the form of strategic alliances, market exits and buyouts of smaller airlines,” he said on the last day of a three-day aviation summit in India’s financial capital. India’s low-cost carriers (LCCs) captured 35% of market share in April this year, Kaul said.

These budget carriers are likely to double their market share by 2010 -- one of the highest in the world, the CAPA said in a recent report on the Indian subcontinent. The performance of two new LCCs -- Air India Express and JetLite (formerly Air Sahara) -- in the domestic market is likely to be closely watched.

“The overall picture in India for present is one of growth, but against a backdrop of extreme, and mounting, unprofitability,” the CAPA report said. India’s airline industry lost 500 million dollars in the year ending March 2007, spurring domestic players to buy rivals.

The country’s largest domestic carrier Jet Airways bought competitor Air Sahara for nearly 340 million dollars in April, followed by a deal between Kingfisher and Air Deccan airlines in May.

India’s airlines have expanded aggressively in recent years, with about 480 aircraft on order for delivery through to 2012.

Source: Wall Street Journal