Opportunities Galore

It sometimes rocks your mind on seeing opportunities lying around us everywhere. Right from selling shoes to selling food to selling clothes to selling cycles, we have enough and ample opportunities. The good thing is we don’t even have to stock or produce any material, mere by being a intermediary one can rake in huge profits. It just has to be a viable business idea to rake in market cap. Who knew that a 10 year old company can command a market cap of $100bn just because it caused a revolution i.e. google. Era of communication and internet has totally revolutionized these things. Internet marketing has huge potential and almost every 5 young enterprising guys can really rake in money rather than working for big MNC’s. Yatra.com, Cleatrip.com etc have totally revolutionized the way we shop and transact. Best part is we are not talking of setting up huge plants and getting in construction hazards, but we are only intermediaries helping people transact ensuring a win win for vendor, customer as well as these companies. One more excellent example is flipkart.com and seeing the excellent service and response they are getting, no wonder 5 years down the line people would love to order soap and hair oil over internet. Guess what is the investment these Yatra’s , Flipkart, Makemytrip would be making, that would be very less to the tunes of few crores. They don’t have to manufacture goods, stock goods, not to bother about pilferage or wastage as they directly negotiate from manufacturers, not to invest in R&D, the only significant cost they would have is invest in IT & expenses in advertisement. Definitely, the business model allows them to break-even very soon and have enough liquidity in their cash flows as most of the expenses are operational rather than any significant asset base. This business model also makes way for excellent customer service as word of mouth has done wonders for flipkart. It happened personally with me when while paying through net banking for flipkart, my transaction (bad gateway) failed after getting processed from my bank. The same thing happens regularly with irctc and you have to wait for 4-5 days for the money to be refunded in your account. But guess what, Flipkart got to know of the failed transaction and processed my order without any fuss. Within seconds I saw the message on my cell and delivery guy gave me the Kit the very next day.

Opportunities are galore and we only need to be gutsier in choosing what we aspire for. And that’s easier said than done and applies for me too

Marketing You

We live among brands day in and day out, play with them, sleep with them but do we think of branding ourselves ever seriously..

Especially in a corporate jungle, it’s far more imperative to brand one & to send a message continuously. We are too engrossed in branding commodities, products, but the most important thing which can take someone to places is branding oneself and that we don’t do or we do but are not consistent and intelligent enough to maintain.

To be terse, by branding I would say how you maintain your personality day in and day out. What people think of you in a home, what your spouse thinks of you, what your reportees think of you, what your boss thinks of you and above all what your organization thinks of you.

Especially in this era of twitter/FB we are continuously communicating with outside world thus making an impression on people. LinkedIn also has converged the office space to our private world. You may be a very tough & no nonsense boss in the office, but are pouring your family outbursts on FaceBook every day, so what your reportees may think of you?? May be I would think, that this guy is a loser venting his anger out on reportees. We are continuously communicating via mail, SMS, in parties, get together & networking sites etc. It may not be a formal communication, but body language itself may be a way how people recognize us and then treat us accordingly. The way how you start answering a call to the way how you stand in a queue to take you food to the way how you greet your seniors in cafeteria to the way how you dress up for a Friday everything says something of you..

This genre where people live their private life in public space and boast of 600 friends in FB, it’s a tough task, but I won’t be recommending do’s and don’ts for one considering it depends on the individual, but the less a person tries to fake who he/she is , the more successful and happy he/she becomes.. We are more concerned of what others think, but the day we actually start showing what we are in either walks of life, we won’t need to market ourselves:

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Lets Bounce

It’s high time I stop being lazy and pen down my thoughts on what’s happening in the world outside. Probably the mere reason for my laziness is because of my current role in sales & that‘s continuously in loggerheads with my blog objective. As I don’t have anything much focused now, let’s bounce around on a macro level.

First things first: there has been a gradual shift in marketing communications over a period of time. World of communications was quite different in a MBA class and its very different in the reality now. The way companies, brands, people communicate has undergone a sea change. These day brands, companies have become more focused in their approach. A recent study by a leading marketing firm says that share of traditional marketing has gone down by more than 20%. Recent trends of marketing like online etc. give a more focused and better approach. We can see the difference by watching how actors are actually promoting their movies. Either going to malls or sharing their pics in twitter or going to reality shows, they know that these acts would give them a better publicity & visibility. They know that either the movie better be too good or be too pompous to rake in your money in 3-4 days

In fact it’s a good learning for all of us in knowing how to actually promote your product/service be it soap or a movie. What’s all is working these days is a 360 deg approach which definitely gives a better roi. The approach may not be very aggressive, but will be very focused considering the tg in mind. Gone are those days when 90% of the budget would be spent on traditional advertising, rather it’s the time for out of box advertising, the exception always being rajnikanth.

There are some brands that I would like to compare that I picked up during the starting days of my masters. One is Nano and other Micromax. I always thought that Nano would be an iconic brand and indeed would be a sell away, refer my earlier blog post: The reverse was the feeling for Micromax. But the same after 3-4 years has undergone a shift. Nano is a perfect example of how even a conglomerate as big as Tata can go wrong in all the fronts, while a new comer like PVK of micromax can give biggies like Nokia a run for their money. Nano has to be discussed separately, but one must really go through the success story of micromax and admire the vision and guts of the promoters. It’s all a lesson for us that opportunities always exist, we would need to be courageous and take it head on. We would be sitting in our homes with some fantastic business plans, but don’t have the courage to venture out and be happy with our 9 to 6 job. Probably penning down is the easiest thing and that’s what I am doing, but let’s hope that someday we would rise to what we actually believe in and be a micromax or at least fail 14 times and try be a Kishore BiyaniJ

All About M&A's

Mergers & Acquisitions

Especially, when times are torrid, people go back to the table & ponder over their decisions taken earlier. That’s why sometimes even economists say that slowdowns are a good measure to check the irrational exuberance exhibited by honchos when everything is hunky- dory. Was wondering about fate of M&A’s while idling in the silence of the train, especially when times are choppy, it gives me a perfect alibi to defend my selves. Except a few of them, I couldn’t come across any major successful M&A over a period of time. Be it an Indian acquisition or a global firm, the path taken to inorganic growth has more or less always drained the left hand side of the balance sheet. I will start with the most amusing of takeovers; especially it appears to me now, based on hindsight.

A whooping $183 billion hostile takeover of Germany’s Mannesman AG by none other than our ZoZo creator Vodafone. Combined once, they had a market cap of $365 billion, but guess what, today they have their stands stripped down to a pathetic $65 billion. I won’t go into the details of why did the soup go sour? There may be lot of reasons like, not a strategic fit, differing business models, cultural barriers, wrong rational etc. How can we forget the acquisition which formed the largest media & entertainment company in the world? Ya, you guessed it right. The marriage of AOL & Time Warner, but guess what, even their market cap today has witnessed an appalling fall of 90%. One research estimates the cumulated losses to be a staggering $132.6 billion.

The irony is that these valuation blunders have not even left financial majors unscathed. When everything was falling apart in October 2008, one consortium of financial major thought that to be an ideal shopping time. Result was $99bn purchase of ABN Amro. Their can’t be another bigger wrong price deal done at the wrong time. Coming to the desi acquisitions, the very first terrible acquisition that strikes to my mind is the takeover of two dead dodos from Ford, i.e. JLR by Tatas. I have never doubted the ambitiousness of Tata Gr, but what happens to their calculations when they think of acquiring companies. If ambition is not combined with prudence & clear understanding of the competitive landscape, you can land yourselves with terrible consequences. $2.3 bn acquisition of JLR, when the market cap of GM is not even $3bn is a hopeless buy. (Market Cap of GM in October, it has further plummeted now). Even the Corus buy has landed them in huge debt. Further, these decisions were taken when the markets were peaking, thus leading to wrong estimation of valuations. Overall, I believe that the big ticket acquisitions are more of driven by the egos rather than valuations. But, yes when the fish becomes big only one has to survive. Market share becomes an issue. Either the merger of Arcelormittal or Corus or the recent oracle & sun marriage, big ticket acquisitions have more or less failed to deliver. The nature & cause of M&As is different in case of small & different for big companies. Companies should identify which part of the learning curve they belong to & then accordingly strategize for M&As. That’s why we don’t see Infosys, Wipro or HCL vying for big companies despite having billions in their kitty. They very well know their constraints. That’s why Wipro-Infocrossing or HCL-Axon acquisitions are giving good results compared to the brave M&As by Tatas. Yes, I agree big ticket acquisitions take longer time to yield fruits, but do you have that much cash to afford that. Take Tata Motors for instance. Onus is on the company’s management to believe in small takeovers which make strategic sense or be brave and be a Tata Motors.

Renaissance

I have learned my lesson the hard way. Yes, probably reason might be that we are completing our post graduation & venturing in to so call corporate life. Amazing, but it’s true. I am not so ecstatic, as I should be. I don’t know why. Hey, the reason might be that you wouldn’t have got a job in this year, the so called worst year to graduate in this decade. But, that’s not the problem. After 6 years of my extensive education, suddenly I don’t feel like going in to this corporate life. This past month has been the most enlightening for me especially as a student. In fact, very few months back I cribbed every hour I spent in the endless case discussions. I was wondering when the hell, I would get rid of these endless intellectual lectures by faculties. But, ironically in our last month, I attended each & every lecture with lot of attention. Wonder why? Probably I know the answer. As a student we are used to damn our system every time, but our heart still resides there. Probably I realized this very thing & as the sun appeared setting very soon, my love for my college or perhaps as a student was well realized. Perhaps I knew, the fun in those classes, those gestures by our faculties, endless chit-chats in canteen, just in time slide preparations, late night gossip, exam time tensions are all going to end, and we all friends will soon be engrossed in the money minting exercise. Rightly, said by many people the real fun lies in the college life.

I believe that more than the education & knowledge you receive in the college, it’s the exposure that makes you more informed & mature. You come across diverse set of people, whom you make friends & then share your feelings. The care & love shown by them sometimes, goes beyond reason. I was really lucky to come across some great teachers. Though I may not have learnt what they taught probably because I was half asleep, yet my learning from them came more as a person rather as a teacher. The humility that they showed, in spite of being so learned, sometimes put me to shame. Probably, I have rightly guessed the reason behind their success. “Money is not everything” is what everyone listens now & then. I used to scoff at this sometimes back. But not, now. Probably it has been taught well to me by my teachers & friends.

Brand Equity Shifting to Customer Equity

Yes, the renaissance of modern marketing led by kotler & porters has evolved brand as the single most powerful tool. Rightly, brand managers toil day & night to enhance their brand equity. But, over a period of time, brand managers are so obsessed, that they forget the main purpose of building the equity. Why is that some very powerful brands having excellent promotions & recall have to be shelved one day? One very confusing question these days is who is more valuable, your customers or your brands. The choice represents a strategic issue. If you answered brands, then you'll no doubt devote attention to increasing the value of your brands. You'll pay homage to such concepts as "brand equity," "brand image" and other buzzwords. You may even pay consultants who promise to refurbish your "brand architecture," defined by brand guru David Aaker as "that which organizes and structures a brand portfolio by specifying brand roles and the nature of relationships between them and their markets."

Unfortunately, that answer is wrong.

It could only be customers. We are so engrossed in porter’s 5 forces network model that we forget that it is the customers who give us profitability. Without customers, there can be no profitability, and without profitability, there is no business. By contrast, brands can have little relationship to the success or profitability of companies. Take for e.g. brands like Dabur, Amul which have exceptional brand recall, but how many times have you bought a Dabur product? or you wanted a Amul ice cream rather than Walls. One of the brands having very good recall is Wills lifestyle, but one day I struggled to find a single person wearing WLS among 300 people.

Not only Indian brands, but brands across the globe have suffered from the same problem. Consider "Sock Puppet," Commodore, Skytrain and other brands or brand images that have died, not for lack of great branding, but for the lack of customers. GM recently announced that Buick and Pontiac may follow Oldsmobile to the brand graveyard. So the question remains is all the brand babble skewed? Yes to a certain extent. That’s why increasing number of companies these days are emphasizing on giving due importance to customer- centricity & initiatives like CRM. This concept is not very new. HBR sept 2004 issue featured a path breaking article by Rust, Roland on “Customer-Centered Brand Management”. Economist issue April 02, 2005, entitled "Power at Last," illustrated how consumers now buy based on research and personal value, not on companies seek to "position" their products. That’s why I am not surprised these days on the famous quote by Larry Light, McDonald’s chief global marketing officer i.e. "Positioning" is dead. No doubt, this approach is only responsible for the turnaround of McDonald.

Why Satyam is a bad take?

Eyes are on Satyam these days, when it goes under the hammer. These troubled times when economy is going through a correction, Satyam scandal could be the worst timing for Indian IT industry. Lot of MNC’s from India and abroad is vying for this so called 4th largest software exporter of India, at least Raju says it. Yes, when the valuations are so attractive, why won’t you acquire it? Considering the revenue of Satyam of $2.5bn yearly, even a wild guess would indicate at a valuation of not less than $5bn, had everything been right. But, things are different now. Shares are trading low, and considering the deal is wrapped at Rs 50/share, the valuations won’t exceed $700-800 million. But, wait there is a catch. If it’s so, then why isn’t big Indian 3 i.e. TCS, Infy, Wipro vying for this so called value proposition despite having billions of cash in their kitty.
Let’s talk about who can turn around this company, if it acquires it. Signs are not good for Satyam. Majority of the firms that have applied to acquire it, are partnered by PE firms. Going to the basics, the sole motive of a PE firm is profit booking. They don’t stay invested for long. Barring few exceptions like Blackstone, I don’t believe that any PE firm can turn around this beleaguered giant. Phaneesh Murthy pulled out few days back citing fears of increasing law suits in US, which could go up to $840 million from an estimate. Rightly done by igate, as igate itself is not in a very good position these days.
Spice also pulled out citing lack of transparency in the process. I am still thinking for a reason why they tried to acquire it. Forget, about turning around a sinking ship, do they have any proper IT management experience? Rightly they realized and exited the proposition.
Why do I believe that it’s difficult to turn around Satyam? Satyam has an operating margin of 3%, when Cognizant reported an operating margin of 20%. Industry Bench strength of IT employees is around 15%, while sources say Satyam has at least 15000 extra employees. So, a company taking over Satyam first of all has to answer all these questions. How can they increase the operating margin, remember it’s a long drawn process and may require taking extreme steps.
Lack of big ticket clients, is another reason not favoring Satyam. Satyam doesn’t have clients who can give it around $100 million annually. Majority of its clients are around $40-70 mn, which makes it tough to guarantee a continuous source of income.
So, here is the take. Who can change Satyam and bring in a renaissance? Considering all the options, I believe that the best that could happen to Satyam is IBM. IBM’s track record of IT competence, coupled with vast management expertise is all that Satyam wants now. Satyam doesn’t need a novice, who will experiment with it, and then leave it in a lurch. It needs a mature player, who knows to take hard decisions and also has the capability to handle it.
Whoever takes it, the brunt has to be faced by Satyam employees only. One thing is certain, Satyam is gonna witness a larger layoff very soon. Things can be even tougher with IBM, which is known for its aggressive firing policy. Let Satyam stand for what it stood once. Satyamev Jayate.