(News collection for Management studies)

Volume: 02           Issue: 113          27-November, 2009 – Friday   Pages: 9

Focus :  Social Network Sites
B-schools talk the talk on social network sites
 

“Summer PlacementNotification: Process starts November 4. Media entry to campus restricted. Info to be sourced only through external relations (ER) secretaries...”

Reads like a notice board? Actually, this is a blog by IIM Calcutta (IIM-C) on its Twitter account and it's just one of India’s top management schools to have started using social networking and micro-blogging sites to keep students and aspirants abreast of placements and other institute-related information.

IIM-C is busy using Twitter.com to share the latest updates on its summer placements for its first-year students that will start on November 4. The process will run till the entire batch of 408 students is placed.

Paul Savio, one of the students behind this initiative, says: “We plan to keep sending out updates as often as possible, to intimate the public as to what is happening during the summer placement process. Twitter is our informal way of communicating with all those who are interested in the campus -- current studetns, alumni, faculty, press, associated universities and so on.”

IIM-C started using Twitter informally last December. “We are even connected to many other universities, both in India, like with the other IIMs, MDI, etc, and abroad, like with the University of Melbourne, among others,” Savio adds.

IIM Bangalore (IIM-B), on its part, started a Twitter account this October to provide updates on campus-related news and information on campus activities to the world. Vernon Fernandez, a student behind this initiative, says: “Twitter is a means of instantly broadcasting small titbits of news to a large audience. By updating activities on the twitter account, a large cross section of web-users, like the alumni, present students, future aspirants and interested press, can find out information on IIM Bangalore. We might even use the Twitter account to answer frequently asked questions about IIM Bangalore.”

IIM Ahmedabad (IIM-A), too has taken to Twitter.com, with its Twitter channel followed by almost 1,000 users and the blog read more than 10,000 times.

Rohan Desai, secretary of IIM Ahmedabad's media cell, said, “We may tweet once in a while about summer placements. Besides, the media cell at IIM-A maintains a blog at insideiima.wordpress.com. We also use YouTube and Facebook to connect with everyone from aspirants who dream of studying at the institute to alumni who love to stay connected.”

Meanwhile, IIM Lucknow (IIM-L) has created a presence on popular social networks like Yahoo Groups, LinkedIn and Facebook. These are managed by student and alumni committees. IIM-L is also present on Wiki through a detailed profile of the institute and its active committees. “We are working towards hosting a blog to serve as a communication medium to the outside world at large,” said Nitin Jacob, spokesperson for IIM Lucknow.

“For all major events on campus, like the recently concluded sports and cultural meet Varchasva, we have an active online presence. Again, the recently concluded leaders' conclave Samvit ’09 was actively followed on Facebook,” says Jacob. IIM-L’s twitter account has about 366 followers who occasionally re-tweet messages. The Varchasva fan page had regular traffic during the event and has about 380 fans.

At IIM Kozhikode (IIM-K) the placement season statistics covering final, lateral and summer placements, are released at the end of the process on social networking sites like Twitter. The target is to reach the intended audience covering maximum students and corporate entities.

Most B-schools feel social networking sites are expected to serve as a new strategic communication medium in the near future, not least because it offers a low-cost and virtual communication platform.

“Social networking sites like Twitter and LinkedIn allow us to maintain industry and alumni contacts. The alumni community prefers to keep in touch with their alma mater through Yahoo or Google groups. Facebook and Orkut are also widely used for related discussions and event updates. In addition to this, several managerial and social initiatives are publicized on social networking sites to generate public opinion and encourage community participation. The mentorship programme to offer assistance to CAT aspirants is operated online,” said Tess Zacharias, a student behind this initiative at IIM-K.

A good example of how social networking has been useful was when IIM-A used it to inform people about the “Joy of Giving Week” at IIM-A. Students offered a guided tour of the campus and visitors were charged a nominal fee of Rs 25 which went towards a social intitiative by IIM-A students called “Prayaas”. More than a 1,000 visitors made use of the opportunity and Rs 25,000 was donated to Prayaas.

XLRI Jamshedpur uses social networking sites to disseminate details about activities by the current batch, which in turn are expected to help the alumni and recruiters get a good idea about things inside the campus leading to the placement season.

A spokesperson for XLRI says: “The two major social networking sites XLRI is looking forward to are Twitter and Facebook. One of the major support social networking sites provide is the opportunity to interact with the aspirants and help future XLIers with all the information they need. So far this was being done through one or two MBA help sites that were still serving the purpose but it was more of a one-to-one conversation that could not help the masses. With blogs, Facebook and Twitter, both the purposes are taken care of. While Twitter and blogs help to disseminate the information in micro and macro forms, Facebookise the bridge between the two paradigms where both the group and individuals can converge.”

Small is sensible

The balloons, streamers, stars and flowers are all over. Workers ready cars for delivery — there are number plates to screw in, wheels to polish and accessories to fit. Visitors glide in and out of cars. Located off the busy road that connects Faridabad with Delhi, the Hyundai showroom hopes to sell at least 600 cars in October. The period is auspicious for Hindus, with Diwali smack in the middle of the month. The Central government has handed out another lot of pay arrears that resulted from the award of the Sixth Pay Commission. Companies have given bonuses to employees. And people are keen to put their money to good use.

In his office above the showroom, Hyundai Motor India Managing Director & CEO Heung Soo Lheem looks satisfied with the state of affairs. “We are running full three shifts at our two plants (in Tamil Nadu). We hope the momentum will continue after Diwali as well.” Lheem has worked 37 years in Hyundai, last close to four in India.

Car makers reckon sales will grow at least ten per cent in 2009. For Hyundai, it is important that sales grow at a fast clip. Its production (600,000 cars per annum or 50,000 per month) is at present split equally between local sales and exports. Several countries in the West had announced “scrappage” incentives for buyers of fuel-efficient cars. This gave a huge momentum to exporters like Hyundai. But now the incentives have begun to run out. Lheem admits getting new export orders has become tough. Hyundai Motor India Senior Vice-president (marketing & sales) Arvind Saxena says exports in 2009 may fall about 10,000 short of local sales, and the gap may double in 2010. It is therefore crucial for Hyundai to do well in India.

Hyundai sits on 23 per cent of the Indian car market. But the market place is turning crowded by the day. Leader Maruti Suzuki (market share: 52 per cent) has strengthened its small car portfolio with launches like the A-Star, Ritz and new Zen Estillo. Fiat has begun its new innings with the Linea and Punto. Ford has announced a new small car for India called the Figo. Nissan has set its sights on a 5 per cent market share. General Motors wants a 10 per cent slice of the pie.

Portfolio makeover 
Small cars account for over 75 per cent of the Indian market. The economic slowdown of the last one year has reinforced consumers’ preference for fuel-efficient and inexpensive small cars. According to Saxena, almost a quarter of Hyundai’s repeat customers now own two small cars. In the past, the second purchase was invariably a mid-sized sedan.

And Hyundai knows this is where the future lies. The Korean chaebol has made India its hub for small cars in the world. Models like the Santro, i10 and i20 are not made anywhere else in the world. This ensures, Lheem claims, that the cars sold in India are of global standards. But it cuts the other way too. Often cars for the overseas market need to be fitted with expensive components and material; this drives up the price in India.

To consolidate its position, Hyundai launched the i10 in October 2007 and the i20 in December 2008. In September, it gave a facelift to its old warhorse, the Santro. The company has sold 11,000 to 12,000 i10s, about 7,000 Santros and between 4,200 and 5,000 i20s every month this year. The surprise here was the i20. “We expected to sell not more than 700 every month,” says Lheem. The car’s export volumes have been cut, says Saxena, to feed the domestic market.

The Getz will be taken off the road soon. In the works is a new 800-cc, 3-cylinder car somewhere in a Hyundai laboratory in South Korea. The brief to the engineers, says Lheem, is to keep the price below $6,000 (approximately Rs 300,000). “It will be smaller than the Santro in price as well as size,” adds Saxena. The car, which is yet to get a name, could take another two or three years before it launches.

The focus on small cars has had an unexpected fallout. Sector experts say that Hyundai faces a problem similar to Maruti Suzuki — consumers feel that it is good only with small cars. “Globally, Hyundai is strong in middle- and large-sized cars. But that imagery is somehow missing in India,” says Synovate Motoresearch Associate Director Sumit Arora.

Lheem says his mix of small and big cars mirrors that of the industry — 75:25 — but admits that people perhaps are more familiar with the brand Santro than Hyundai.

Privately, car makers admit that real money is in middle- and large-sized cars. The profit margins in small cars are just a fraction. To be fair, Hyundai does have more than one brand in this segment: the Verna, Accent, Sonata and Tuscon. It has withdrawn the Elantra and wants to plug that gap between the Accent and Sonata with a new brand. The SUV portfolio will see the Santa Fe in addition to the Tuscon.

Still, Lheem says he has to fight an unfair battle against the likes of Honda and Toyota in this segment as they import parts free of duty from Thailand. (India and Thailand have a free-trade agreement.) The answer, he says, is to buy more and more components from within India. Lheem admits that not all his cars sell at a profit, in India as well as abroad. He doesn’t name them but says some exports of “developing country” models are being done at a loss.

Some experts believe there is enough headroom in the small car market for all to grow. “More car buyers are getting into the market,” says Ernst & Young Partner Kapil Arora. “Customers were always price-sensitive; they have now become value conscious — they want small cars with more features.” This might be true. Saxena says Hyundai gets almost 45 per cent of its volumes from first-time buyers, up from 33 per cent a few years ago.

To cater to price-sensitive customers, several car makers have extracted the last ounce of profit from their vendors. Component manufacturers have complained for long that business is tough. Car makers have used the threat of sourcing from China to beat down prices. More and more of them also want full control over sales in the lucrative retail market. Lheem says he has offered all vendors who get a majority of their business from Hyundai financial compensation in case they begin to lose money. “Thankfully, nobody has come to me so far,” says he.

Diesel for growth
India has for long subsidised diesel more heavily than petrol. As a result, a growing number of consumers want to buy cars that run on diesel engines. This was about 20 per cent of the market three years ago. Now, it stands at 27 per cent. The projections are that the figure will hit 35 per cent in the next three years.

Maruti Suzuki got a strong foothold in this market after it set up a plant at Manesar near Delhi to make 100,000 diesel engines per annum. Hyundai has a limited play in the diesel market. Its only presence is the diesel i20 fitted with an imported diesel engine. But the company knows that if it wants to increase its market share, it needs to do much more. At the moment, the company is studying the feasibility of a factory to make 120,000 to 150,000 small diesel engines every year. The investment, according to Saxena, could be as much as Rs 1,200 crore. A decision is expected by the end of the year. “The industry has to move towards diesel,” says Arora of Synovate. Hyundai needs to move fast with its plans.

Dealer upgrade 
Recent research by Synovate shows that when markets turn bad, as they did in the country till a few months back, buyers prefer to go for brands that have a wider presence. It reassures them that the company will not go out of business. And for that a large dealer network for sales as well as repairs and service is essential. At present, Hyundai has 272 dealers across 190 cities and towns. The company plans to raise the network to 300 across 230 cities and towns by the end of the year, though Lheem feels 295 would be a more reasonable number.

Saxena feels this more or less covers the entire country. “The top ten cities sell 60 per cent of the cars in the country, and the top 20 sell 75 per cent. Beyond what we plan is not profitable,” says he.

Dealers are clearly an important cog in the Hyundai game plan. The key therefore is to boost the profitability of the dealers. What Lheem has done is that he has channeled all sales of spare parts through the dealers. Even the 700-odd authorised service stations have no option but to buy components from dealers. The logic is simple: While the profit margins on car sales are low (the industry average is below eight per cent), those on spares can be as high as 60 per cent. Hyundai has been around for ten years in the country now and there are 1.5 million Santros on the road. The service volume is not negligible.

Meanwhile, the company has also worked with dealers to improve their showrooms and service infrastructure. Hyundai every year rates its dealers collectively on a scale of 1,000. Last year, the score was 800. Lheem had set a target of 950 by the end of 2009. By mid-October, it has hit 905. “We have seen at least 15 per cent improvement in most of our dealers,” says Lheem. He also plans to convert 100 of them into elite dealers.

Finance matters 
A large dealer network may be fine, but for footfalls to convert into purchases, credit is the key. In the last one year, private banks as well as non-bank finance companies, which had fuelled the last boom in car sales, have turned conservative. Earlier, they had financed up to 90 per cent of the cars sold — only around 10 per cent customers bought cash down. The number shot up to 40 per cent in December 2008, thanks to the financial meltdown, it has since dropped to 33 per cent.

Saxena is of the view that unless it falls to 15 per cent to 20 per cent, car sales are unlikely to boom like in 2006 and 2007. Hyundai has thus quietly tied up with about a dozen state-owned banks which have been “gently persuaded” by the government to lend freely. (This is a part of its stimulus to revive the fortunes of the economy.) These banks lend freely to Hyundai’s customers. In return, Hyundai dealers have given business to these banks. They source, for instance, all their working capital from them. So far, the trick seems to have worked. State-owned banks accounted for about 15 per cent of Hyundai’s sales a year ago; today, they contribute as much as 29 per cent.

It is every chief executive’s job, Lheem waxes philosophical, to aim for market leadership. Though he refuses to disclose his targets, these initiatives he hopes will help bridge the gap with Maruti Suzuki.

DAY FOCUS:  Focused by J.Deepthi, 1-Sem MBA (09D61E0011)

Macro Economy -RBI studying Dubai World default impact: Subbarao

The Reserve Bank of India on Friday said it is examining the impact of the Dubai Government’s decision to suspend debt payments by Dubai World, which led global stock markets to tumble amid fears of widespread default. The RBI Governor, Mr D. Subbarao, said he has asked his officials to study the impact and “if necessary make recommendations.”

“We shouldn’t react to instant news like this. One lesson that we learnt from the (global financial) crisis is that we must study the developments and measure the extent of the problem and hence study the impact on India,’’ said Mr Subbarao, who attended an interactive session with the students of Indian School of Business at Hyderabad.

Meanwhile, Mr N. Chandrasekharan, CEO and MD, Tata Consultancy Services, said it did not have much exposure to Dubai markets and so impact if any is negligible.

Macro Economy -Dubai crisis will not hit remittances: Finance Secretary

The Finance Ministry on Friday said the financial crisis in Dubai, triggered by a slump in real estate, may not impact remittances sent by Indian expatriates in the Gulf.

“Remittances from expats didn’t suffer during the period when the larger crisis was on. So whether this should have an impact in terms of employment, in terms of salaries and therefore in terms of remittances is somewhat unlikely,” the Finance Secretary, Mr Ashok Chawla told . India gets nearly a quarter of its total remittances from the United Arab Emirates.

The former RBI Governor, Dr Y.V. Reddy, said: “On the basis of past evidence, the recent development in West Asia should not have any serious impact on the Indian remittances.”

Mr Chawla, however, said it will take some time for the Finance Ministry to examine the exact impact of the crisis on the Indian economy. “We have seen the press reports. We will have to study what the issue is, what the problem is and what will be the possible implications, if any for the Indian economy, on the people, on the corporates. It will take some time for us to examine this,” he said.

Just a year after the global downturn derailed Dubai’s explosive growth, the city is now swamped in debt.There are fears that Dubai’s conglomerate, Dubai World , may default on its around $59-billion debt and is seeking postponement of the debt until at least May because of the crisis triggered by real estate slump.

Dubai, which borrowed hugely, in a real estate boom, suffered due to slump in real estate following the global recession.

Macro Economy -Oct infrastructure output up 3.5%

India’s key infrastructure industries rose by 3.5 per cent in October on better performance by petroleum refinery products, electricity and finished steel. The six infrastructure industries, which account for a quarter of the nation’s industrial production, registered 2 per cent growth in October 2008.

Petroleum refinery products grew by 7.2 per cent in October compared to 5 per cent in the same month last year, as per the data released by the government here on Friday. In case of electricity and finished steel (carbon), the growth was 4.7 per cent and 1.1 per cent, respectively. The index for the six key industries rose to 254.8 in October from 246.3 a year earlier, the data said.

During April—October this year, the six infrastructure sectors rose by 4.7 per cent better than 3.3 per cent in the year ago period. Except for crude oil which posted negative growth of 2.2 per cent, all other key industries posted positive growth. Cement grew by 5.3 per cent against 6.2 per cent in the same period last year. Among other components of the six key industries, coal outp ut stood at 5 per cent in the reviewed period.

However, on sequential basis since August, when the core industries grew by 7.8 per cent, it has been on a decline. For the September month, the index rose by 4.1 per cent and in October growth was 3.5 per cent. 

Core sector investment target may not be achieved

The Government may not achieve the Eleventh Five-Year Plan’s investment target of $500 billion in infrastructure due to the global economic downturn, a senior Government official said.

“It is very difficult to achieve the target as many projects kicked-off very late...even many projects’ bidding process started late. The projects were delayed due to the global (economic) downturn,” the Planning Commission Advisor (Infrastructure), Mr G ajendra Haldea, told reporters on the sidelines of a conference at Mumbai today.

Mr Haldea said resource generation would not be a constraint for the Government and it is committed to building a world-class infrastructure for Indian industries. “Efforts are going on to complete all mega projects by 2012,” he said.

About 46,000 km of national highways at an investment of Rs 2,36,000 crore would be completed by 2012, he said, adding investments for 21,036 km have been approved through Public Private Partnership (PPP) programmes. To achieve the target, Mr Haldea said: “the Government has decided to involve state governments to accelerate the national highway projects.” 

Panel opposes model schools in PPP mode

The Government’s move to set up 2,500 model schools in public-private-partnership (PPP) mode has been opposed by a Parliamentary Panel which wants such institutions under public sector. The Parliament’s Standing Committee on HRD has said it does not agree with the proposal for setting up of model schools in PPP mode.

“The Committee does not agree with the proposal to set up model schools particularly through the PPP mode. The Committee is in favour of setting up these schools under the government support and control,” the committee said in its report.

The Government has decided to set up 6,000 model schools under the 11th Plan period. Of these, about 3,500 would come up under government sector, and 2,500 in PPP mode. The process of evolving suitable a PPP model for starting these schools is already underway. The government has conveyed to the Parliamentary committee that the rationale behind setting up of some of the model schools in PPP mode was to supplement the efforts of the government sector. The PPP mode will enable philanthropic bodies or trusts to meaningfully contribute to the government’s efforts to provide quality schooling to rural children, the Committee was informed. 

Info-Tech -TCS offers doctorate funding programme

Tata Consultancy Services has announced a new doctorate funding programme to drive quality academic research and increase the available faculty talent pool in India.

Announcing the TCS Research Scholar Programme on the sidelines of Sangam, TCS’ annual academic conclave, Mr N. Chandrasekaran, CEO and Managing Director, said: “At a time, when the introduction of new technologies is changing business models rapidly, the re is an urgent need for more focused research to stay ahead of the learning curve. The TCS Research Scholar Programme will help enlarge the R&D agenda and encourage exploration of new ideas by funding candidates in doctorate programmes.’’ 

Info-Tech -‘Poor economy not an excuse for layoffs’

Poor economy should not be an excuse for laying off people especially in recession when it becomes inevitable for the corporate world, Infosys mentor Mr N R Narayana Murthy said at Mumbai on Friday.

“In today’s economic downturn, the challenge lies in having the courage to set an example that responsible profitability is a realistic achievement, and by using data to demonstrate that it is possible to preserve jobs in economic downturn while innovati ng to increase profits, productivity and efficiency,” Mr Murthy said here.

It is simply too risky to pour money into projects or assets that may or may not yield desired results. Therefore, from the perspective of resource management, there is a case to be made for creative thinking and innovation to create new productivity and efficiency solutions from existing resources, Mr Murthy said. “The other imperative of Indian companies is to improve the lives of the largest number of Indians because that is how you can make this a better society,” he said. 

ONGC eyes 20-25% stake in Iranian gas field

ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), will discuss participation in the development of Phase-12 of the gigantic South Pars gas field in the Persian Gulf, when top officials of Iranian national oil firm visit the country next week, sources said.

Hinduja Group, too, is interested in the $7.5-billion South Pars Phase-12 (SP-12) project but OVL’s pursuit is independent of it. OVL has not approached Petropars, the unit of National Iranian Oil Co (NIOC) which holds the rights for the field, for picking a stake through a joint venture with the Hindujas.

Both OVL and the Hindujas had in the past signed separate MoUs with Petropars for SP-12 and are independently talking to NIOC, they said, adding if the Hindujas are able to convince Iran to give them a stake in the field, the state-run company will welcome them in the consortium formed by Petropars.

In its talk with NIOC next week, OVL would also take up the issue of granting development rights for the offshore Farsi gas fields for which it, along with IndianOil and Oil India, has submitted a $5-billion development plan.Sources said OVL would negotiate getting liquefied natural gas in return for its efforts in both the projects.

MANAGEMENT TIPS: BOOSTING PRODUCTIVITY

Getting the most out of your day can be difficult with a busy schedule, but you can use these tips to help you maximize your time in order to be better available to employees.

Get the most out of meetings. Be organized and prepared for meetings to increase effectiveness and time savings.

Focus your energy on things that matter. Don't let trivial tasks take time away from things that are really important.

Identify your time-stealers. Everyone has little things that detract their attention and make them lose focus. Figure out what these are and work to eliminate them, if only for a few hours a day.

Be punctual. Being on time is a big deal. Never keep people waiting for appointments or meetings if you can help it.

Respond to your correspondence within a reasonable amount of time. You don't have to be chained to your inbox, but make sure you respond to emails within a few hours whenever possible.

Do only what is necessary. There are times when going above and beyond works, but doing so on a daily basis can derail your progress on more important issues. Get the key things done first, then see if you have time for additional things.

Stick to schedules and routines. While they may not be the most exciting things, schedules and routines can help streamline and improve your productivity.

Organize and manage your schedule. Use any tools and utilities you have at your disposal to prioritize your day and keep track of what you need to get done.

Plan more than you think you can do. While this may sound stressful, it can actually be a great motivator. If you manage to get everything done, you'll enjoy a great sense of achievement.

Get to work early on occasion. Sometimes an uninterrupted half hour in an unoccupied office can help you get key things done or allow you to plan your day before there are any distractions to slow you down.

Know that sometimes stress is good. While too much of anything, especially stress, can be bad, sometimes a little stress can be the motivation to get you moving, allowing you to get more done.

Do your least favorite tasks first. Get your most tedious and least desirable tasks out of the way earlier in the day. After that, everything else will be a breeze

Focus – Day Tip The unity of thought, word and deed is true humanness.