(News collection for Management studies)
Volume: 02 Issue: 122 24-November, 2010 – Wednesday Pages:13
Message from the Head of the Department, Management Studies, |
Hello everyone,
I am immensely happy and satisfied to inform all of you that we have successfully accomplished one year of the RMCE MBA BLOG. This blog is a logical extension of the WALLFOCUS , which is not only very useful to bounce our ideas around but also as an repository of abundant information, that varied in numerous topics and titles under the umbrella of MBA academics.
I am elated at the unique initiative taken, to start a blog of this kind and maintain it with such rigour and discipline. This has helped all of us with a boundary less access to the information, beyond the constraints of a classroom, without much time being spent to search and also to discuss, argue and enhance our thoughts and ideas.
I would encourage everyone to seek more renewed enthusiasm for augmented participation, contribution and to keep this forum much more lively and extensive.
My expression of joy remains incomplete if do not make a special mention of our dear colleague Sri Venugopalarao who conceived and nurtured the idea of wall focus/ blog and relentlessly worked in creating a platform to put forth our thoughts/ideas and also to share the information we have with others. This indeed a rich contribution to the Knowledge Management which ultimately makes our department into a learnining department.
I would like to take this opportunity to congratulate all the students, colleagues and everyone else involved in making this blog such an interesting arena for sharing knowledge and also for their sincere contributions to wall focus
With warm greetings
Prof. B. Sundara Rao
23.11.2010
SPECIAL FOCUS
White collar crimes are wide spread in society ( K. Mounika, 09D61E0030 )
White-collar crime and its consequences are recognized from centuries, which categorize number of crimes. Mostly business and government professionals are involved in series of frauds termed as white-collar crime because these are lucrative, comparatively risk-free, and nearly socially up to standard. Due to high occurrence of these crimes, security officials plan modern technique to fight back through prevention, investigation, and prosecution. When the term white-collar crime is conversed, people are encouraged to think decisively about the nature of crime, law, and criminal justice. In the criminal justice system, the focal point of the investigative efforts on the crimes of the poor. If it is viewed from same legal eye of the state, the crimes of the powerful are hidden. White-collar crime is defined as "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence.
Individuals and organizations commit these acts to obtain money, property, or services; to avoid the payment or loss of money or services; or to secure personal or business advantage. Generally the white-collar criminals commit range of frauds to get personal financial gain. White-collar crimes do not show any vicious activity, but the extent of these crimes are intense and it can bring about great economic loss for companies, investors. Computer fraud is characterized as the crime committed to perform a plan or illegal activity and the targeting of a computer with the intention to modify, damage, or put out of action the data of computer system. There are many examples of crimes, which include offering missing goods to a buyer, stealing someone's funds by hacking into his bank or credit card account. Hackers find passwords and delete information, create programs to steal passwords, or even rummage through company garbage to find secret information. Embezzlement is another type of white-collar crime, termed as the misuse of items with which a person has been assigned. Charges of embezzlement can even be levied if the embezzler intended to return the property later. Employee theft is most common example of embezzlement. Company employees can have access to company property so they can easily misuse the property. Numerous examples can be quoted such as theft of retail items, discounted sale of retail items, and theft from cash registers.
Health care frauds are a stereotypical white-collar crime in which highly qualified medical practitioners and health supervisory abuses their posts and professional skills through misleading nonviolent tactics such as fake bills just for individual financial gain. Environmental crimes are the infringement of laws, which are made to protect the environment and human health. Littering, Improper waste disposal, Oil spills, Destruction of wetlands are some of the Environmental crimes. Perpetrator of Environmental law violation is fined, put on experimentation, sent to jail. Financial crimes are major white-collar crimes. These are any non-violent felony that is committed by or against an individual or corporation and lead to great fiscal loss. These frauds include tax evasion, cheating of company funds, and the sale of fictitious insurance plans.
Another category of serious white-collar crime is government fraud, which is an unlawful act that deliberately rid the government of funds through trickery. When the government gets fiddled, taxpayers pay the price. Procurement and contractor fraud are examples of costliest government fraud. In Identity theft the criminal use the personal information of another in order to commit fraud. Crooks of this type of crime have to face heavy penalties if trapped. Insurance fraud is very common in which offender forged claims to an insurance company, personal injury and property damage claims that are overstated in order to collect extra reimbursements. Mail fraud is committed by using Postal Service or any private or commercial interstate mail carrier, such as Mailboxes, etc. Money laundering is a felony in which lawbreakers hide the resource and objective of illegitimately acquired funds. Public corruption is an act of violating the public official's duty of faith towards his or her society. Anyone who is elected, appointed, hired, or employee of a constituency of citizens commits crime on the state, or local level when an official takes favorable decision in exchange of offered some value. White-collar criminal such as corporations, broker-dealers, analysts, and private investors commits securities fraud when the executor intentionally deceives investors for financial profits. The culprit of tax evasion deliberately and illegally avoids paying mandatory taxes to the government. Telemarketing fraud fall under white collar criminal in which wrongdoer make some plan that uses telephone contact to fraudulently rid its victims of funds or assets. The most regular type of telemarketing frauds is prize offers and sweepstakes, magazine sales, credit card sales.
In today's hi-tech world, white-collar crimes are creating a serious trouble for government. People who commit white-collar crimes are sometimes the same kind of people who are in a position to see to it that their crimes are not defined too detrimental. While the impact of white-collar criminals leave an immense impact on the nation but the cost to each individual is petite. Practically it is observed that no effort from police department goes into skirmishing white-collar crime.
Our social system is corrupted by number of white-collar crime and it is a great challenge for us to discover suitable resolution to the increasing menace of white-collar crime. These crimes are directly affecting the economy of the nation and the public's confidence, therefore corrective action must be taken immediately for preventing, detecting, investigating, and prosecuting economic crimes in order to minimize their outcome. Main blockade to get to the bottom of the white-collar crime hazard is that the public is not aware of its seriousness. It is more important to create wakefulness and businesses, and the nation's lawmakers must be convinced with its significance in identifying that such high-tech and economic crimes have an undesirable effect on society. Mostly people are innocent and they are not aware of the degree to which there lives, financial status, businesses, families, or privacy might be pretentious by electronic crime. A rock-hard inspection or accounting background is obliging to detect white-collar crime because swindlers are very clever and they can manipulate the situation very well.
Deforestation: Major environmental problem (C.SHRUTHI , 09D61E005 )
Deforestation is a main environmental concern in the world. Deforestation includes the cutting down, burning, and destructing of forests. Numerous researches suggests that deforestation may be the first link in a chain of environment degradation that includes erosion, climatic changes, loss of biodiversity and genetic endowment, air pollution, decline in watershed functions, and the apparent loss of hardwood, fuel wood, and aesthetic stocks.
Population explosion is major basis for decline of the rain forests. These forests are being cut down at a petrifying rate to supply man with lumber, pasture land, and farm land. The outcome of such human activities is deforestation; the world's most valuable environment is being ruined. Plants and animals life is gradually diminishing as the natural habitats are bested. Deforestation occurs because people need land for agricultural. Large companies clear vast amounts of land, often for cattle pastures to fill the beef market. They also use the land for large plantations and use pesticides and irrigation systems that are very harmful to the land. The chemicals which are used to destroy pests also kill other animals and cause a lot of damage to surrounding areas. The rain washes the chemicals into the water system killing the aquatic life. The use of Land in such a way affects negatively the surrounding areas. It also can take centuries to re-grow.
There is solid cause of deforestation which is mainly related to a competitive global economy. It forces countries to utilize their only resource for funds. This process takes place at local and national level. Locally, people use land for farming to generate income because of poverty and population growth. Nationally, governments sell logging concessions to cover debts and develop industries. People are using their rainforests only for a short-term solution and could not assess the long term effects of their distractive activities. It is predicted that half the rain in tropical countries comes from evaporation of moisture from the covering of the trees. As trees and plants are destroyed, the moist awning of the tropical rain forest rapidly reduces. Evaporation and Evapotranspiration processes from the trees and plants return large quantities of water to the local atmosphere, promoting the formation of clouds and precipitation. Due to less evaporation, more of the Sun's energy is able to warm the surface and the air above which leads to increase in temperatures and the drying of land. Today, it is novel policies and program of development; rapid industrialization, urbanization and growing consumerism that have resulted in the large scale destruction of the forests. Due to the difficulty of deforestation, a major environmental issue, many clashes have arisen between environmental activist groups and those concerned in deforestation activities. The solutions to crisis of deforestation lie in dealing with the root cause. To resolve the issue, experts have to consider the economic problems that lie at the heart of the situation. Many proposals have been offered such as sustainable wood sources. If deforestation continues at its current rate then in just 100 years, there will be no more rainforests left at all and people will be the most sufferers.
Governments and environmentalists are facing major challenge- what steps must be taken to stop deforestation so that current environmental conditions would not get poorer. Scarcity and over population are main causes which alarms to governments. Policies must be made to overcome such problems so that we can save our forest and animals. Environmentalists and forestry supporters have been telling people and governments to instantly act on the problem regarding continued deforestation practices all around the world. Deforestation could be gradually stopped if people would be more environmentally mindful. That means, to speed up efforts in stopping deforestation. We must start participating in recycling programs. Governments should also implement legislations that would successfully prevent the deforestation process. Government must encourage reforestation which is the sought-after healing process
Everyone must understand that rainforest are splendid, exceptional gift of nature on our valuable Earth. If preventive measures are not taken immediately to stop the effects of deforestation, humans will be under grip of severe crisis. They may lose animals, plants, and there are great possibilities for dreaded diseases that are killing off our own race. All people must join their hands to work out a plan that is appropriate for businesses, governments, and most importantly the environment. Another important threat to human is that deforestation leads not only to species annihilation but also to loss of the genetic diversity that could help certain species adjust to a changing world. People are well familiar with the environmental crisis which can happen due to deforestation. Still they are destroying speedily.
The effects of deforestation can be devastating. It can lose the land of its natural aesthetic. In coming years, dangerous consequences will be visible. Deforestation can damage to the environment, usually stemming from its ability to cause land erosion. When an area is cleared, the soil under the surface is essentially stripped of the roots that provided it structural integrity and support. Without this support, the force of water, gravity, or both can cause the land to move, either as one piece, or more commonly, steadily and incrementally. Soil erosion due to deforestation is the main cause of Costa Rica
Deforestation of is a severe environmental destruction which can not be revived if damaged at current rate. People cut down trees to meet out their own need without considering future outcome. They do not recognize about the damage they are doing. The deforestation affects the plant life. People have general impression that if trees are cuts down, it will grow back in a few years. Plants will ultimately grow back, but the forest will be changed into a secondary forest and may never be the same. -Ragini Sinha
An Indian now owns East India Company (B.Raghavendra, 09D61E0003)With just around a month to go for the re-launch of the East India Company - the world's first multinational whose forces once ruled much of the globe - its new Indian owner says he is overwhelmed by "a huge feeling of redemption".
It's been a long, emotional and personal journey for Sanjiv Mehta, a Mumbai-born entrepreneur who completed the process of buying the East India Company (EIC) in 2005 from the "30 or 40" people who owned it.
Acutely aware that he owned a piece of history - at its height the company generated half of world trade and employed a third of the British workforce - Mehta, now the sole owner, dived into the company's rich and ruthless past in order to give it a new direction for the future.
With a $15-million investment and inputs from a range of experts - from designers and brand researchers to historians - Mehta is today poised to open the first East India Company store in
And then there is the inevitable - and daunting - task of launching in
It's a task that Mehta has not taken lightly, he told reporter in an interview. "Put yourself in my shoes for a moment: On a rational plane, when I bought the company I saw gold at the end of the rainbow.
"But, at an emotional level as an Indian, when you think with your heart as I do, I had this huge feeling of redemption - this indescribable feeling of owning a company that once owned us."
The formal start of the East India Company is usually dated back to 1600 when
With its own Elizabethan coat of arms - now owned by Mehta - the company was made responsible for bringing tea, coffee and luxury goods to the West and trading in spices across the globe.
By 1757 the company had become a powerful arm of British imperial might, with its own army, navy, shipping fleets and currency, and control over key trading posts in India - where it was known variously as Company Bahadur and John Company. In 1874, the British government nationalised the company, opportunistically blaming the 1857 uprising on its excesses. But the East India Company army, brought under the command of the Crown, retained its all-powerful presence in
"When I took over the company, my objective was to understand its history. I took a sabbatical from all other business and this became the single purpose in my life," said Mehta.
He travelled around the world, visiting former EIC trading posts and museums, reading up records and meeting people "who understood the business of that time".
"There was a huge sense of responsibility - I didn't create this brand, but I wanted to be as pioneering as the merchants who created it."
"The Elizabethan coat of arms stands for trust and reassurance, but we are not repeating history. It took me four years to do the brand positioning and put up the milestones."
The 'relaunched' company, with its headquarters on
EIC products in
"
"The East India Company has that ability."
DAY FOCUS: (Focused by B.Raghavendra, 09D61E0003)
Banking & Finance
Housing Scam: Top officials of PSU Banks, FIs arrrested
Housing Scam: Top officials of PSU Banks, FIs arrrested
The CBI on Wednesday arrested CEO of LIC Housing Finance Mr Ramachandran Nair and seven others including three top officials of public sector banks in connection with an alleged housing finance racket.
Apart from Mr Nair, those arrested are Mr Naresh K Chopra, Secretary (Investment), LIC, Mr R N Tayal, General Manager of Bank of India (Delhi India Delhi
Mr Rajesh Sharma, Chairman and Managing Director of Mumbai-based firm Money Matters Ltd and two of its employees – Mr Suresh Gattani and Mr Sanjay Sharma -- were among those arrested, CBI said.
The officials allegedly colluded with the firm to sanction large scale corporate loans, overriding mandatory conditions for such approvals along with other irregularities.
“The CBI has busted a racket wherein a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans,” CBI spokesman Mr R K Gaur said in a statement.
“Officers of top management and middle management of various public sector banks and financial institutions viz. Bank of India, Central Bank of India, Punjab National Bank, LIC and LIC Housing Finance Ltd were receiving illegal gratifications from the pr ivate financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions,” he said.
Korean tension spooks market; Sensex tanks 266 points
Equity market took a battering on Tuesday as the tension between North and South Korea
The benchmark Sensex fell by 266 points (1.33 per cent) and S&P CNX Nifty by 76 points (1.25) to end the day at 19,691.84 and 5934.75 respectively.
The markets moved in line with the news flow. The Sensex opened 100 points lower and continued to fall through the day, shedding more than 600 points intra-day. However, the market picked up in the afternoon session as the situation eased and local investors resorted to value buying.
According to analysts, it was an over-reaction on the part of the investors. “When the global sentiment is bad, any event can act as a trigger and then people over-react. In fact, the South Korean index did not fall as sharply. So, I don't see any reason why the Indian markets should react so strongly,” said Mr Kishor Ostwal, CMD, CNI Research. All major Asian markets, except Japan
“Globally, there is political uncertainty, especially with the EU and IMF bailout offered to Ireland Ireland Europe . If this continues, then the markets could experience further fall in the days to come,” said Mr Nirakar Pradhan, Chief Investment Officer, Future Generali LIC Ltd. “Further, it is the year end so FIIs will start pulling money away and there will be a further down-trend,” he added.
FIIs were net sellers for equities worth Rs 1,493 crore while DIIs were net buyers for Rs 1,502 crore. On the BSE, retail investors were net buyers at Rs 53 crore.
Cars- Mergers & Acquisitions
SsangYong to power M&M's global SUV drive - Korean co will help Mahindras build a base in key regions around the world. -M&M can access SsangYong's retail network for its own SUV offerings.
SsangYong to power M&M's global SUV drive - Korean co will help Mahindras build a base in key regions around the world. -M&M can access SsangYong's retail network for its own SUV offerings.
Three years ago, Mahindra & Mahindra was a serious contender to acquire Jaguar Land Rover from Ford, a deal which Tata Motors eventually bagged. Insiders say M&M dropped out of the race since the cost of the buyout (the Tatas paid $2.5 billion) for these two British brands was way too much.
Today, with SsangYong Motor firmly in its kitty, the stage is set for M&M to go flat out in the global sports utility vehicle market. Even though the company has products in every segment, ranging from two-wheelers and cars to tractors and commercial vehicles, it has reiterated that SUVs will remain its core business.
To that extent, SsangYong will play a big role in consolidating M&M's presence in India
In earlier interactions with Business Line, Dr Pawan Goenka, President (Automotive and Farm Equipment Sectors), had said SsangYong had suffered a bit in the past, for want of investments to create a strong product pipeline.
M&M, he added, would ensure that this issue was addressed on a priority basis while rebuilding the Korean company's brand.
Create synergies - However, the key objective of the acquisition was to create synergies with its new owner.
This would include bringing SsangYong products to India
Sources say it will be interesting to see how the Indian script pans out from the viewpoint of localising the Korean automaker's products at M&M's Chakan plant.
“If priced competitively, the vehicles will do well and establish M&M's leadership in the SUV space,” they add.
Scooters & bikes - As for its other vehicles portfolio, the company is clearly taking one step at a time. Soon after acquiring Kinetic's two-wheeler business for a little over Rs 100 crore, M&M is gradually creating the base for its own brand of scooters and bikes.
Even though there are stronger players in the market, it believes there is room for yet another given the growth in the two-wheeler segment.
Its cargo three-wheelers have been doing well, while the Maximmo and Gio are gearing up for a bigger role in the mini-truck space.
In the heavy commercial vehicle category, Navistar is expected to be a useful ally to take the story forward. “They were also gathering confidential business information from financial institutions,” Mr Gaur said.
Searches were conducted at various locations in Mumbai, Delhi
The British government is closing one of the most popular routes for highly skilled non EU migrants.
The tier 1 general route, used by nearly 14,000 migrants last year will be closed from April 2011, while numbers for a new “exceptional” worker route will be capped at 1,000.
The far less popular investor and entrepreneur routes will not be capped.
Bowing to concerns of business, there will be no cap on the number of intra company transfers, though those staying more than a year will have to be on a salary of at least £40,000 a year.
While no cap has yet been made to the student route, the UK Home Secretary, Ms Teresa May, said changes introducing new stringent limits on this route would be introduced following a consultation and more will be done to ensure those who apply for temporary entry cannot stay on permanently.
The changes were intended to meet the dual aim of “doing what is right for the economy and business and doing what the British public want,” said Ms May.
MANAGEMENT TIPS:
BODY LANGUAGE
CASE STUDY (ET Awards Case study Competition 2008 , ‘Case Study in Excellence’ )
Case: Poised for exponential growth
“But how do I take Arvind to the next level of growth ? !” these were the thoughts that Kunal Mishra (CEO and MD of Arvind bicycles) was mulling on. On his way back home from the management meet he was stuck in a traffic jam, an occurrence which he had seen increasing at an alarming rate over the past few years across Indian cities. It was this phenomenon that he had anticipated and setup Arvind bicycles about 10 years back.
His dream was to “Develop a clean, inexpensive and durable transport solution that
would help a billion people reach their destination safely”
Over the past 10 years, Arvind bicycles had grown to a turnover of Rs 200 crores,
manufacturing 1 million bicycles every year, and building a reputation of providing durable bicycles at the right price. In the last few years, the company had started investing in research and development, a move initiated by Kunal. This move had resulted in higher margins with rise in exports especially to the developed countries. The R&D team was currently working on developing an electric bicycle that could be launched in India
The Indian bicycle market was also growing at very high rate over the past few years with India China India
Arvind bicycles had its headquarters in Mumbai and two plants located in Maharashtra (Pune) and Uttaranchal (Pantnagar) with a pan India China
The company was aiming to reach a target of more than Rs 1000 crores in the next 5 years and needed to raise investments for all its new initiatives. A task made difficult by the current financial market situation. Kunal had to develop a growth strategy roadmap and present it to the board to get approval for the various expansion initiatives.
Kunal knew that given the current situation, it would not be feasible to start all the initiatives at the same time and he had to prioritize it. As always, he decided to have a discussion with his management team to help him with this.
The management team comprised of :-
1. Vishal Jain, R&D Head :- He had been part of the R&D team since its inception. He
was heading the development of the electric bicycle (e-bike), a project he believed
had huge potential especially in India
the company about the e-bike project and was frustrated with the pace. He was
seriously considering leaving the company and has sounded off Vishal in the past
about his intentions.
2. Romesh Tiwari, Product Head :- Romesh was a new face in the management team,
having joined the company 2 months back from Arvind’s rival company. He was
eager to implement his ideas in rationalizing and restructuring Arvind’s product
portfolio as well as introduce niche bicycles – a strategy that his old company had
successfully implemented and seen results.
3. Manisha Banarjee, Sales and Distribution Head:- She had joined a few years back
and was instrumental in developing the international markets for Arvind bicycles. She
believed that international markets could provide the big push especially the
European countries which its consumer friendly laws that encouraged usage of
bicycles for commuting and leisure.
4. Sangeeta Bhat, HR Head:- She had joined the organization 3 years back and had
developed the current HR processes across the organization. She had been
successful in stemming the labour crisis that had erupted at the Pune plant and which
would have resulted in the closure of operations for an indefinite period.
5. Gurpreet Singh, Operations Head : - He was part of Arvind bicycles from its inception
and had grown from a production line supervisor to the current role. He had played a
major role in setting up and improving the efficiency and productivity of both the
plants.
6. Lokesh Joshi, CFO :- Lokesh had been with the company since the last 5 years.
Kunal and Lokesh worked together to raise the finances required for both the R&D
facility and the second plant.
At the meeting, Kunal sought each team member’s opinion on the matter. The tension in the team was palpable as each member realized the importance of this meeting to push and gain acceptance for his / her project.
Vishal spoke first stressing that the e-bike project was almost over and that Arvind bicycles should start production to tap this potential before the competition intensifies, a mistake they made by delaying their entry into the high value segment. A thought shared by Kunal but he realized that he needed enough evidence of market potential to gain acceptance of the Board.
Manisha believed that growth and margins would have to be driven by international markets especially with rising cost of fuel and the favourable currency situation. She believed Arvind bicycles which sold bikes internationally under the Max brand had enough brand equity to capture 2-3% of the international markets especially in developed countries. She argued passionately that Arvind would be better off investing in overseas markets with the current models than backing a new product such as e-bike.
Gurpreet also believed that they should try and increase demand for existing range. He could see huge cost savings due to economies of scale in procurement of raw material and parts.
An ardent proponent of JIT he preferred setting up a plant near one of the existing locations and was skeptical of the advantages of importing components. His main concern in production of e-bikes was ensuring a continuous and reliable supply of quality batteries a vital component of e-bikes.
Vishal was keen to manufacture batteries in-house and had developed a prototype, an Idea which Lokesh was not comfortable with. He believed, it meant raising more capital which was getting increasingly difficult in the current scenario. Lokesh had managed to raise capital effortlessly in the past but was not very confident that they could raise money for the initial investments planned for all the initiatives. He had started thinking of options like a Joint Venture to implement the initiatives and had submitted a detailed report to Kunal about the potential partners.
“But how do we decide what to do!” asked Sangeeta who believed that all the ideas had merit but was concerned about the resource requirement for the kind of growth envisaged, especially for the e-bike initiative. She was also trying to reduce Kunal’s involvement in the day to day functioning of the company, something that was restricting his bandwidth and affecting growth.
Romesh was unduly silent in the meeting and did not support or contradict any of the ideas proposed by the team. Kunal was unsure whether this was on account of him absorbing all the information or his disinterest in the entire proceedings. The latter was concerning as Kunal had paid a hefty premium to attract Romesh to Arvind and would be seriously handicapped should he decide to leave.
Kunal realized that he would need to approach the situation in a structured way and position the options in a way which would be acceptable to both, his management team and the Board. At this stage, he could not afford to lose any of his team members. They decided to meet in a week’s time.
Case Analysis
1. Define the approach that Kunal should use to generate and evaluate the strategic
options?
2. Which strategic option(s) would result in an exponential growth for Arvind bicycles?
3. Design the framework to evaluate the various production strategies?
4. How should Kunal present his strategy roadmap to get buy-in from his Board ?
CASE STUDY ( HRM)
Mr. Naveen has been working as a Manager (Credit Appraisal) in Andhra Bank since 1990. He got first rank in his M.Com. from S.V. University
1. Why was Mr. Naveen reluctant undergo training? Explain.
Focus – Day Tip Education should inculcate in students the spirit of self-reliance and self-confidence. |
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