3 Ways to enhance your performance at workplace

Tough times bring tough situations. Workplaces are no different. In times of uncertainty and job cuts, how to enhance performance at the workplace ? has become even more critical. Based on my experience, I believe these three steps will help boost your output at the workplace. 

1. Establish Positivity vibes: Performance is the result of our mental and emotional states. With depressing News and WhatsApp forwards, at times, we become cynical and hopeless about things at the workplace too, which further deteriorates our performance. In such a case, It is essential to draw positivity around you to keep these states vital. Reading self-help books, watching inspiring movies, doing what you love most, or even conversation with your mentor can bring back that shot of positivity, which is required to catapult your performance at the workplace to the next level. 
2. Focus on output, not just efforts. In tough times, people tend to overwork and try to show how busy they are and how much midnight oil they are burning. Working on weekends and taking work home becomes new normal. This habit would kill your ability to work hard and will have ill effects on your health. Better to focus on output rather than efforts. Output means meeting expectations of customers for whom your work will matter. Understanding customers and their needs is a smart way of planning your job. This clarity would bring down your efforts considerably, and you can achieve your desired output too. Effective communication is the key to enhance your job output.
3. Learn to unlearn to relearn- With continuous change in the environment around, keeping abreast with the latest is quintessential for effectiveness at the job. We must make sincere efforts to learn new skills on our own, rather than waiting for the organization to create learning opportunities. New Language, new technology, New methods, and New proficiency will boost your confidence and enhance your competitiveness. As you will move up the ladder, learning behavioral science becomes even more critical. Efforts to learn concepts of Psychology, Anthropology, Organisation behavior will be a new addition to your quiver of competencies. 

These three steps can help to improve your performance in difficult times, such as now. We must sincerely make efforts to enhance our capabilities without losing focus on the end goal. Self-belief and positivity will sail you through this time. All the best. 

Skills and Competencies...

As per book " Creative Destruction" by Richard Foster , average life span of companies ( S&P 500) has fallen from 61 years in 1958, to 18 years in 2018. At this rate 75% of the companies will be replaced by 2027. One of the major reason is disruption in Technology such as cloud and internet. In such a VUCA world, Organisation needs to rethink their Human Resource management Strategy. They have to focus on the development of competencies and not merely on skills .

To gain best out of people culture and continuous learning attitude plays critical role. To fulfill this responsibility , organisations should think beyond skill charts which have become just a formality in most of the organisations.

Absence of long term scenarios building aligned to long term corporate strategies leads leads to vacuum of the required competencies. It finally results into faltering organisations because of inability to face the wind of in competitive market.

Absence of AI Professionals, Lack of Machine Learning programmers and paucity of Data Scientists are some examples where organisations could not prepare themselves and faced adverse situations in the markets even to the extent of extinction. 

We all are Earthlings.

#originalideas

We all are earthlings. We are interrelated in many ways. First is Earth, which unites us physically. Second is Air, which we can not see but definitely is same and unites us when we breathe. Water is third thing, which through oceans unites us . All the rivers passing through different countries finally  merged into oceans. Fourth thing is sun, which is responsible for the life on this planet. Its intensity might be different for earthlings but light is common for all. Fifth thing is Sky/Space, which fills our earth sphere and protects us through different layers. So irrespective of our Nationality, Race, Caste, and Creed, we all are one. This oneness is fundamental concept of being earthling.

Three way to Develop Competitive Advantage in New Age.

In nutshell, Strategy is all about gaining sustainable competitive advantage. This competitive advantage is what creates value for the organisation to maintain its sustainable profits year on year basis. Normally this competitive advantage is gained over the competitors who are offering similar product in same competitive market. But creating the Competitive advantage is not easy as all the players have similar assessment of external market/ environment which is based upon 3rd party independent market research . So when all the players have similar findings of " What Customer wants" then competitive advantage is more about the harnessing the "Internal Environment" and less about "External Environment". Aim is to maximize the fit of my internal Environment/ Capabilities to harness the External Environment ( Opportunity). Following are the three ways of developing Competitive Advantage or ways to maximize my "Internal Environment".

Think differentiation not in product but in business model - At times too much focus on adding additional feature for creating differentiation is lost battle. Often, we stuck into small items and misses out at the unexplored options in the Business Model itself such as Revenue Generation Mechanism, Product/ Service Offering, Peace of Mind of customer, and added advantage of owning the brand. For this Innovation workshop to be crafted to identify opportunities to create differentiation for which buyer would be ready to pay. This innovation can be in product, Customer service, user interface, convenience , Supply Chain, Manufacturing or out of the box design. All areas are to be explored.  Google's competitive advantage over Microsoft is of business model not of product/ Service.

  

Focus on Strategic Human Resource: This is the most trickiest part of creating competitive advantage. Competitive advantage is created first in mind of employee before it comes on paper and finally in the learning systems of organisation. Identify these critical resources, Nurturing them and providing them resources ( Environment) is one of the major function of Top Management. These Strategic Human resources are pillar of Innovative organisation, as they are from different fields such as researcher, Designer, Engineering, Business Strategy, Marketing, Sales and Service. Here decisive action is identifying the motivating factor of these employees, which is very unique to each individual. This unique addressal of aspirations of these Strategic Human Resources is quint essential for the innovative Organisation. Apple's competitive advantage is out of the sheer passion of few individuals.

Diversify the risk: Often focus on creating competitive advantage channelize organisation's energy/ resources on profit generating products/ services. This leads to unpreparedness for unnoticed changes happening in consumer preferences, regulation and other market forces. So Diversify the competitive advantage , distinct from the previous in unexplored territory and completely unique. This might be in exploratory/ research phase or less profitable generating phase. This diversification is very critical competitive advantage. End of KODAK is good example of inability to de-risk the business from digital photography.

These three items are very essential to develop true competitive advantage , in turn preparing successful strategy for the organisation. 

2 Reasons Why we could not see the Slow Down

Recent ongoing slow down in economy is because of  reasons, some are structural while others are cyclical.But following two reasons are distinct and profound and gives insight into why we could not gauge the Current Economic slow down.

1. Minimization is not always optimization: Increased length of Value chain: To reduce the cost, manufacturers are sourcing the sub components from far off places. Distributional channels are spread across geographies. The last nod of value chain is delivery , which is only focused about delivering the product at doorstep of the customers. This value chain has become so long that any feedback from the customer  to manufacturer, reaches very late. and by the time we know we have produced surplus, which feels like knee jerk reaction to the sales team. 

2. Face Less Business- Diminishing interactions with Customers Interaction between the supply side and demand side is becoming near to NIL. Thanks to AI/ Digital world/ Whatsapp/ Online purchase. Here technology is tracking everything about the transaction but it is not noticing anything about interaction. It went to what part but could not track why part. Technology was not meant for interactions so it just did what it was suppose to do- The tracking. This is the reason dealers/ retailers could read the mind of the customer as purchases were happening online and there was no mechanism to understand the customer's mind, his anxieties, his fear, and above all his sentiments of purchase.

Summary and way forward

These are two important reasons, which should not be ignored. We must reflect upon our business models to streamline the feedback mechanism in "Large Value Chains" and "Increase the personal interaction between the retailers and customers". Digitization and Technology must support the purchase but not replace the human interaction.  

3 Important Perspective before Defining your Business

Entrepreneurship is often result of sheer passion of an Individual  or group of Individuals. It starts with an idea which takes the form of business with Individual's immense energy, focus and true spirit of making difference in the world. The journey starts with problem finding and ends with finding the solution for that problem. Identifying the problem is easier part while solution in the form of Business Model is difficult part because this solution must be innovative, cost effective and sustainable.

Business Model has many aspects to it ,At the nascent stage of Business  Model Formulation, if following three perspectives ( 3P Framework) are taken it would definitely help in building right capabilities and Scaling up the business in the long run/ future.

Periphery: What business we are  ?

Often this is described narrowly in terms of Solution to some problem. Many firms which were very successful initially are not able to achieve the height of greatness mainly because of the non clarity of the purpose. It is very Important we focus on the bigger picture of the firms's existence. Car Business is too narrow as compare to MOBILITY Solutions. Similarly Mobile Business should be replaced with Communication Business and Movie making business should be replaced with Entertainment business. So this purpose define the focus point which has potential for the expansion in future.

Process: How you are doing ?

Business Model is mainly about this process of creating sustainable Value for the firm. How you are meeting the purpose should be clearly communicated in terms of Value creation, whether it will be done as Manufacturer, Trader, Product aggregator, Platform provider or combination of these. This process of value creation can be Soft ( Design/ Ideas/ Innovation/ Strategy/ Planning) or hard ( Manufacturer/ Trader/ SCM etc.) or even combination of the two. This understanding of the process or Value chain entities where firm is operating is critical because other planning and processes  are dependent Upon it. It also determines the vulnerability of the business as risk taking entity.

Performance :What is the Social impact/ Outcome ?

True Business outcome does not lies in balance Sheets. True outcomes gets imprint in the minds of the customers, which in its totality is reflected in terms of Social impact. For an exmaple- Invention of Bulb, its Social Impact is far beyond the narrow measure of Quarterly financial results of the Bulb making firm. Focus should be on how Humans are getting impacted by it.  The foremost measure the Business Outcome is judged by Which of customer's need / latent desire is getting fulfilled ?

Summary

Even before starting the business, this 3P Framework can truly form the foundation of "Concept of the Business". This framework is about the Human connect of the Business, where it finds purpose in the Mind of Customer  as problem, and firm adopts an approach to address the problem , the result of which can be measured by Performance in terms of the Social impact firm is making in terms of Happiness Quotient of Customers.

5 Easy to Understand Reasons of Slow down in Indian Economy.

Continuous slow down of Indian Economy is evident from various macroeconomic factors. Understanding these factors and making complete sense out of this scenario is not only difficult but cumbersome too. Lets understand it from layman's point of view.  Five major reasons are following. 

1. People are not able to take Loans as easily as before:  

Other than big famous banks such as ICICI, SBI, HDFC, AXIS etc. bigger chunk of GDP is financed by NBFC ( Non banking Finance Corporations). These institutions forms strong foundation for growth of Indian Economy in the areas of rural projects, riskier businesses and meeting the financing needs of marginalized population which are not supported / touched by structural banking process.
These institutions are not structured in terms of their client profile check, IT intervention in the financial transactions and 100% transparency of the dealings. To improve the situation, Government / RBI has given instruction that by Sep'18 ,all their processes are to made transparent and digitized. because of such major interventions NBFC's have withhold their unbridled Loans to the masses. It has reduced the Consumption appetite and major reason for fall in demand.

2. Agriculture Sector is in really bad shape: 

70% of Indian population is dependent upon Agriculture sector. Low inflation ( Price index of basic items) is good sign from the middle class consumer's point of view but it is also vital sign of deprived farmers who are getting less for their output. Farmer's distress is because of several fundamental reasons such as Inefficient Value chain, several intermediaries and unpredictable/ unfavorable Weather conditions. Off late this low income of farmers has resulted into less purchasing power and muted demand of basic items such as white goods, bikes, tractors etc.

3. GST/ Demonetization/ Stringent Tax collection mechanism: 

Good things come at the cost. Initiative taken by NDA government have been really phenomenal and will benefit economy in longer run,but in shorter run it has created nervousness in the mind of Small businesses, Service providers and Black money market operators that their business models are going to fall apart. This has resulted into stalling the businesses out of fear/ anxiety till the time they find the alternative business models. Further government's actions to catch hold of tax evaders  percolated the fear/ anxiety/ nervousness among them after GST/ Demonetization. This fear is quiet palpable now in  terms of India Inc. business sentiment.  

4. Too much of commotion in Automotive Industry:

Automotive Sector contributes to majority of Manufacturing Sector, which is 30% of total Indian GDP. This sector is critical not only from the point of view of its GDP contribution but also because of vastness of its value chain. It starts from Steel Industry, Plastic Industry, Technology firms, Rubber Industry and huge supplier base of auto component Industry. Further it intrudes into service sector such as Dealerships, Insurance Industry, Financing Industry and Peripheral Transport Industry. 
This multi faced Industry  is affected by three major knee jerks trends.

A. Government Regulations : BSVI ( Stricter fuel Efficiency), CAFE Norms ( More Mileage per liter) and Electric Vehicles ( Reduce Carbon footprints/ Pollution Control) , these have created more confusion in the minds of consumers and Uncertainty in the minds of business houses as these changes require major investments in Technologies, Clear govt Policy ,Supportive public Infrastructure and adoption by the masses to make hem cost effective.

B. Increased Fuel Prices/ Insurance Costs: In last 7-8 Years, fuel prices have risen(>50%)  so much that personal vehicle ownership has become dearer. further it has been aggravated by rising Insurance costs ( 30% rise). These two factors are critical from the owners point of view. Recent survey by JDPOWAR reflects the same trend among millennial who are questioning the purpose of Car ownership. They are preferring car sharing o meet their commutation requirements. 


C.Erratic Competitive Market : The rising costs of vehicle ownership have given rise to intrusion of Technological companies in the territory of Automotive OEMs. This is the reason for the parallel Business models such as OLA/ UBER/ Shared mobility and New entrants such as KIA and several Chinese giants have made the competitive markets quite erratic.

Emergence of Electric Car would be the biggest change after 1920s in the auto sector, where value chain will change drastically. Further autonomous Cars , High R&D Costs, Fierce competitive market has created commotion in fundamental Industry which drives the economy in a big way. The spillover effect is evident in Economic slow down as well.

5. Global Unrest ( Trade/ Social/ Environmental)

It is not only India, which is getting feelers of Slow down. UK, China , US , Japan all major markets are witnessing the signs of weak Economy. This has further been dampened by Rising Crude Oil prices, US- China Trade war, US sanctions on Iran Support Countries, US-Russia Cold war, Trump's random comments on major events and rise of terrorism & War/ Strife in Syria, rising concerns over Global warming, Natural disasters ( Sultry Europe, Flood in US, China, Brazil) because of erratic weather patterns. These Global events had spill over effect on Indian subcontinent because of which consumer has either delayed or withhold its purchasing decisions among global uncertainty. 

Summary & Ray of hope
These five factors are major reasons for the slowing down of Indian Economy. This situation would persist for how long is not easy to predict, but I am sure this is going to change partially from April 2020 given that Govt take positive actions to create clarity of its policies and efforts to build foundation for growth , simultaneously Business houses need to adopt Innovative Partnership based business Models to cater this VUCA world.

Decoding Budget 2019- My Takeaways for Automotive Sector- Electric Mobility

This budget has been in continuation of the intention of Government to go full throttle for Electric Vehicles Manufacturing and Ecosystem Development in the country. Madam FM clearly said that Government is aiming to make India a global hub of electric vehicle manufacturing.

Three major initiatives taken in this direction are following

1. Entry of New players

A new scheme has been proposed to  invite global companies through a transparent competitive bidding process to set up mega manufacturing plants in sunrise and advanced technology areas including lithium storage batteries, and charging infrastructure.

2. Incentive for the Buyers:

Income Tax benefit of Rs 1.5 Lac on the Interest paid on Purchase of EV as private buyers, who were earlier not considered for a subsidy through FAME 2 will be encouraged for Electric Vehicle purchase.

3. Support for Manufacturing ( EVs and EV components)

           A.      Decision on supporting EV manufacturing by extending benefits under Section 35AD(1).

           B.      Proposed GST Reduction on EV Manufacturing from 12% to 5%

           C.      Duty Reduction of Lithium Iron batteries from 5% to Zero

           D.      Extension of FAME 2 Benefits , 10,000 Crore for Hybrid and Electric Vehicle promotion  till  2022. ( Limited to Advanced Batteries and Registered Vehicles). It is aimed to support 10 Lakh two-wheeler, 5 Lakh three-wheeler, 55K four-wheeler, and 7K buses that operate on lithium-ion batteries or other electric power-trains.

Conclusion

In India, EV Penetration is just 0.06% while it is among top 3 Largest importer of Crude Oil in the world, So move towards adopting and promoting Electric Mobility is urgent need of hour. This budget has paved firm ground for the long journey of Electric Mobility in India by addressing multiple challenges lying ahead in the time of stagnant automotive Industry.

5 Ideas for Truly Lean and Agile Organisation in this VUCA World

Business world is witnessing a state of flux. Every business entity is going through sudden and abrupt change. It has made business world fiercely competitive. Though Agile and Lean seems oxymoron but these two in unison are the only way to manage the Business Risk in this VUCA World. 

Following 5 Original ideas are to be included by every organisation in their thinking Process. 


1. Always believe that impossible will happen

It always seems impossible until its done. As Organisation it must always believe that Impossible will happen. So explore, think, explore and draw impossible Scenarios in your planning Stage. 180 Degree Change in Business Model, Customer requirement, Technology, Govt. Regulation, Competition needs possible way. 

2. Act on Future Now

When change is fast you have to change faster. Capturing the change and ways to addressing it is prerequisite to develop adequate capabilities. Developing the think tanks in the Organisation is first step to act on future. This is entirely different BALL GAME than Working on Cost Reduction, Process Improvements and Efficiency Improvements. 

3. Aim is to address Aspirations not Requirements

There are some attributes which customer knows that he wants and then there are some which even customer doesn't know that he wants . Aim is to offer all these attributes in your product with elements of Genuineness, Surprise and personal Human touch. This task would require extensive collaborative efforts of all  functions of organisation. 


4. Develop Distinct Capabilities fast

If you will Tread same path, you will reach same destination. Organisations needs to develop distinct Capabilities quickly to achieve sustainable Competitive Advantage. There should not be one or two capabilities as a pillar but there should be options of capabilities depending upon various thought off business scenarios. To develop distinct Capabilities organisations need to explore not only Organic options but also partnerships/ collaboration with organisations, Incubation Centers, Start Ups, Universities and Freelancers.


5. Humans vs Humans 

At the End it is Customer vs Employees. These are two clear ends of the Business but both are equally important for Organisation.  While Customers are in Uncontrolled environment, Employees are together in Controlled Environment. Goal of Agile and Lean Organisation is to exceed customer aspirations by fostering abilities and attitude of employees to win this game.

Conclusion

Adaptive Learning Organisation is the need of hour. It can only be achieved by leveraging True Human Potential. When Each Employee will fight for the cause of Sustainable Existence of  Organisation to make this Society better place to live, We will see Better world around us. Ideas can be further discussed with Author on one to one Basis by reaching him on ajaysingh290881@gmail.com

Automotive Industry is in state of FLUX

First Stationary Gasoline Engine was Patented by Carl Benz in 1879. After 140 Years , this Engine is seeing potential extinction as Electric Cars are taking small but firm steps ahead.

In these 140 years, Automotive Industry has been pioneer in leading the Industrial Progress across the globe. This Industry has not only been source to biggest Technical Innovations but also to Best Management Practices such as Assembly Line, Time & Motion Study, Productivity Enhancement, Shop Floor Management, JIT, TQM, Cost Management etc.

With Assembly Lines in 1915-1935, Ford  brought Economy of Scale in Model T, when Wages of Labor increased 5 fold and First Motor Revolution took place. General Motors Lead the Industry from 1935-1960s when it mixed the Economies of Scale with Economies of Scope to give the differentiation to the products. 1960s saw the Age of Japanese Manufacturers who brought Fuel Efficiency and impeccable Reliability to their products. Toyota, Honda, Nissan were the New Emerging Leaders along with VW - the German Power House of Innovation. This pack of  American, German and Japanese Manufacturer ruled the World Economy in a big way. It was 2008 when Elon Musk changed the Landscape of Industry by Introducing Electric Cars to US. Since then this Industry is not the same because It was not more  Japanese vs American Vs Germans, but it was ELECTRIC vs GASOLINE Engine.

Emergence of Electric Cars

Since 2008, There has been reluctance that whether it would be commercially viable to run the Electric Cars, as this Project was once Crushed by US governments when all the electric Cars of GM were scrapped in a big blow to this technology in early 2000. Whether It was political or Economical Matter, that I would not comment upon, but Yes It was POWER Game of Lobbyists as OIL was at the center of all and Whole world was seeking Oil Reserves and Cartel of Arab countries was posing greater threat to the World Economies.

2008 on wards,  Global Warming, Environmental Impacts of Vehicle Pollution and health Hazard was the first reason because of which Emissions Norms were made even more stringent, . Second Reason was Trade Imbalance because of Oil imports , which were impacting Emerging Economies badly. These Two factors were major reasons for the Big push of Electric Vehicles.

Breakthrough Innovations in Mobile Technologies

In these last 10 Years another Parallel wave has been witnessed by consumers in the Field of Mobile Technologies. Internet brought things too near to consumers. with 4G/ 5G Connectivity become the part and parcel of Consumer's life, Data consumption and Consumer Pattern completely changed towards Technology usage. This pattern further percolated to Automobiles too. Customer Expectation became too high and they expect the same form the Vehicles too.

Shared Mobility- Threat from "Non- Manufactures"

Another  very important factor  in Mobility Market  is Shared Mobility Business. Uber / OLA / DIDI and other Technology firms are giving the OEMs nightmare of their Life. With Cost of Ride sharing at nearly same level as of Car owning,  the preposition of Vehicle OWNERSHIP is really a great question Mark for the Consumer.

Impact of Above on Auto Manufactures

With Above Market Forces and Changes Automotive Industry by now has become very competitive. As Quality/ Reliability has becomes Standard norm across Industry, Competitive Advantage of the OEMs is getting lost. This trend resulted into reduced Profit Margins of Big Auto players to bring out as requirement of the Market is to bring competitive products on affordable prices. On the one hand there is Huge cost of bringing New technologies ( Connected Cars, AI, Autonomous Cars, Stringent Emission Norms), while on the other Hand prices can not be  further increased because of competitive Market Forces such as Shared Mobility.

Way Forward

With No choice left with OEMs,  Collaboration/ Partnerships/ Mergers/ Acquisitions seems the only choice they are left with. This Collaboration Model may bring some relief by sharing the cost of Product Development, Technology Development and to invest in Future R&D ( To develop Electric Cars ). This would definitely give some breathing space to OEMs to challenge the Shared Mobility Providers and explore new Business models.

But 2020- 2030 - Indian Automotive Industry is in Flux. 

This is one of the most challenging yet exciting decade in the History of Automotive Industry.  This flux is mainly because of following reasons.

1. Mobility Technologies are not yet fixed. Gasoline, Mild Hybrids, Plug in Hybrid, Full Hybrid, Full Electric, Hydrogen Based Fuel Cells,.

2. Driving Technologies are evolving- Driver/ Driver Less

3. Safety Technologies are becoming Norm- Sensots/ Radars, ABS, Driver Assists, LAN Assist etc.

4. Business Models are Evolving- Car Manufacturer / Mobility Solution Provider/ Technology Provider

5. Stringent Govt Regulation- Emission Norms, Safety Norms, Electric Cars Norms, Crude Oil prices

6. Erratic Consumer Behavior- OWN vs RENT, Personalized Mobility, High Level of Customer Service and 5G Level of connectivity, Millennial with Great Purchasing Power

7. Balance of Global Power- US- CHINA- RUSSIA- INDIA- ASEAN

This is big Flux in which OEMs have to find the way out to make the future Strategies to build a Sustainable and Profitable Business Case for the Future.

Next Article- New Emerging Supply Chain.

GST and its Impact on Automoble Industry

In one of the biggest tax reforms since independence, the national sales tax or GST Bill was on Wednesday approved by the Rajya Sabha to replace a complex and diversified  state and local taxes with a single unified value added tax system to turn the country into world's biggest single market.

GST Bill  is an excellent opportunity, when Government is thinking of rationalising the existing differential tax structure on vehicles based on physical dimensions and simplifying taxation burden.

Automobile industry contributes close to 45 per cent in the manufacturing GDP, so tax rationalization will have great impact on overall functioning. 

GST will drive overall consumer demand since the cost for the logistics and supply chain inventory will be curtailed by almost 30-40 per cent, as experts suggested,  the benefits of which will reach to consumers.

The auto industry has four different slabs of excise duty based on dimensions and engine capacity. 

- Small cars that are less than four meters in length attract excise duty of 12.5 per cent, 
- Cars longer than four meters but with engine of less than 1,500 cc capacity attract a duty of 24 per cent.
- Vehicles with engine capacity of more than 1,500 cc are charged an excise duty of 27 per cent and 
- Vehicles with ground clearance of more than 170 mm attract an excise duty of 30 per cent.


GST will definitely unify the market, widening the tax net and generating efficiencies throughout the value chain.


What will be impact on Green Vehicle/ Electric Vehicle, and what provision Government keeps is something to watch for. 

Currently, the tax levied by state governments on 
- These vehicles are varied between 0- 5 % per cent. Only  Uttar Pradesh, Punjab and Bihar charges more than 14 per cent. Road tax is almost nil in majority of the states on Green Cars, 

If we consider the average VAT levied on green vehicles across India it comes up to approximately 4 per cent

What will be impact on Luxury cars, that is also something to watch for. 

But I think, from currently 45% Tax to 18% ( As suggested), Automobile Industry would be biggest beneficiary of GST Bill.

What is wrong with Japanese Way...

Osamu Suzuki, chairman of SuzukiBSE 0.67 % Motor Corporation (SMC) has always emphasised on and tutored his Indian managers that cost reduction and improvement is a continuous process. It's the reason why Japan has emerged as the lowest-cost manufacturer of cars in the world. On a particular occasion, he told RC Bhargava, now chairman of Maruti Suzuki IndiaBSE 0.67 %, that back home in Japan, they were veritably wringing water out of a dry towel. By comparison, the Indian towel, he added, was .. 

Read more at:
http://economictimes.indiatimes.com/articleshow/32746066.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

2012-2013 Budget 8- Major implications over Automotive Industry !!!

1. Fuel Prices: No direct price increase, but we can hear the government talking about increasing petrol prices in the coming days, murmurs of slowly decontrolling diesel prices are also getting stronger. Expect to see the diesel prices go up and the trend to continue in the coming years


2. Extra tax on diesel cars: Breathe easy. No extra tax on diesel cars as of now.



3. Excise Duty: The government has increased the excise duty on cars. Here’s the impact on various segments



4. Luxury Cars: This segment will see the highest increment in prices. CBUs costing more than 40,000 dollars will have to face a flat 15% hike in excise duty. Shouldn’t impact the mainstream buyer much.



5. Cars over 4 meters: A 3% increase in the excise duty for cars falling out of the ‘Small Car’ definition. These are cars more than 4 meters in length and powered by a motor bigger than 1.2 liters for petrol, and 1.5 liter for diesel driven cars. Expect the prices to increase slightly.



6. Small cars: Cars coming under the Small Car definition will also witness a 2% increase in excise duty. Again, expect the prices to go up, but not as much as in the upper segments.



7. Hybrids and EVs: No change in tax structure for parts imported for the manufacture of such vehicles.



8. All in all, we see driving and riding getting more expensive, not by a great margin though. No new sops for the industry, but the government has allocated good funds for Infrastructural development. If implemented properly, and it’s a big if, it may help the auto industry grow that minute bit. We don’t see the auto industry reacting to this budget very positively.

Brand Valuation Framework for mergers and Acquisitions !!!

“If this business were split up, I would give you the land and bricks and

mortar, and I would take the brands and trade marks, and I would fare better than you.”

— John Stuart, Chairman of Quaker (ca. 1900)

In the age of  high business growth Companies prefer both organic and

inorganic path for expanding their businesses.  Either to enhance their

product offerings or to target newer markets  , companies are preferring

route of mergers and acquisitions.

During mergers and acquisitions one company buy target company. This

buy  out consist of two parts. One is the assets of the targets companies,

which are reflected in book value, while there is another component

that need be assessed is that is intangible, often referred as brand

equity. This intangible part at times is of equal weightage as that of

tangible assets part.

During Mergers and Acquisition how this is to be valued becomes

utmost important. The objective of this paper is to understand the

factors that determine the value of target firms’ brands in the context of

mergers and acquisitions.

In this paper we are developing a framework for measuring brand equity

in  case of Mergers and Acquisitions. This framework can be applied in

all those cases where brand equity is comprised of all similar assets as

assumed in this  paper.

Key Terms:  Brand Equity, Valuation, Merger and Acquisitions

This is abstract of the Term paper submitted for Brand Management subject by the Author at Department of Management Studies, IIT Delhi. This frame work has been developed by the Author under supervison of Dr Mahim Sagar, Astt professor, DMS, IIT Delhi.

2011: Indian Automotive Industry - Road Ahead !!!

Automobiles industry in India – Brief Overview

The Indian automobile industry, the seventh largest in the world, has demonstrated a phenomenal growth. The industry has grown significantly over the last ten years, during which industry volumes have increased by 3.2 times, from a level of 4.7 million numbers to 14.9 million numbers, according to Vishnu Mathur, Director General, Society of Indian Automobile Manufacturers (SIAM).
The industry, by virtue of its deep connects with several key segments of the economy, occupies a prominent place in the country’s growth canvas. It exhibits a strong multiplier effect and has the ability to be the key driver of economic growth. A robust transportation system plays a key role in a country's rapid economic and industrial development, and the well-developed Indian automotive industry justifies this catalytic role by producing a wide variety of vehicles, which include passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.

Auto Industry in India – Growth Drivers

The automobile sector in India has been experiencing significant growth in the last few years on the back of factors that include:

• Favourable demographic distribution with rising working population and middle class Urbanisation
• Rising affluence of the average consumer as per capita income rises - According to McKinsey, the middle class in India will grow from 50 million to 550 million by 2025. With a tremendous growth in wealth as the economy grows, there will be significant increases in spending on discretionary items and consumer durables
• Increasing disposable incomes in rural agri-sector
• Overall GDP growth, with a rise in industrial and agricultural output
• Introduction of ultra-low-cost cars
• Increasing maturity of Indian original equipment manufacturers (OEMs)
• Availability of a variety of vehicle models meeting diverse needs and preferences – robust production
• Greater affordability of vehicles
• Easy finance schemes
• Favourable government policies

Indian Automobile market – Key statistics

India's automobile industry, currently estimated to have a turnover of US$ 73 billion, accounts for 6 per cent of its GDP, and is expected to hit a turnover of US$ 145 billion by 2016.
The automobile industry currently contributes 22 per cent to the manufacturing GDP and 21 per cent of the total excise collection in the country, according to Mr Praful Patel, Minister, Heavy Industries and Public Enterprises. In 2010-11, the total turnover and export of the automotive Industry in India reached a new high of US$ 73 billion and US$ 11 billion respectively. The cumulative announced investments reached US$ 30 billion during this period. He also said that the forecasted size of the Indian Passenger Vehicle Segment is nearly 9 million units and that of 2 wheelers, close to 30 million units – by 2020.
India achieved the position of the top growing passenger car market in the world during the January-June period in 2011, overtaking the US, which grew at 14.40 per cent, according to SIAM. In passenger vehicles, India was the fastest growing market at 18.20 per cent during the six month period.
India's automobile industry is expected to grow by 11 to 13 per cent in the fiscal year ending March 2012, according to Pawan Goenka, President, SIAM. The industry body said that Indian automakers sold 143,370 cars in June 2011.
The four-wheel passenger vehicle market has grown impressively at the hands of the new middle class, and there is huge opportunity, as market penetration remains low.

Domestic market share for 2010-11

India’s automobile industry is growing fast, but two wheelers remain a dominant category. More than 78 percent of motor vehicles on the road are two-wheelers, their popularity driven by low price, high fuel mileage, and an ability to drive efficiently through dense traffic. The share of different types of vehicles during 2010-11 was passenger vehicles (16.25), commercial vehicles (4.36), three wheelers (3.39), and two wheelers (76.00).

Recent Investments/ Trends

The auto industry has made huge investments in the country. As per 2008-09, the total investment of auto industry in India was Rs 60,952 crore (US$ 13.89 billion). Another Rs 78,000 crore (US$ 17.78 billion) of new investments have been announced by the auto industry out of which some have already been made and the rest will come up over the next 2-3 years. The industry, therefore, is keeping pace with the growing demand for vehicles in all segments.
The Karnataka government has cleared investment proposals amounting to more than Rs 8,662 crore (US$ 19.74 billion), which include the plans of Honda Motorcycle India plans for a manufacturing unit in the State. Mr Murugesh Nirani, Karnataka Industries Minister, has said that Honda Motorcycles and Scooter India would be investing Rs 1,350 crore (US$ 307.7 million) in Narsapur Industrial area of Kolar district of the State.
Demand for two-wheelers from six of the eight domestic mobike manufacturers rose 16 per cent in June to more than 880,000 units, compared to 761,000 units in June 2010.
Australia is looking at possibilities of building better relations between its world-class firms and rapidly growing Indian automotive industries with an objective to create new export opportunities.
Pune-based Force Motors has signed an agreement with Daimler AG, under which Daimler will supply technology for the development of a multi-purpose vehicle (MPV) by Force Motors
Swedish automobile manufacturer Volvo Cars Corp is looking at introducing corporate editions of its luxury sedans S60 and S80 to shore up volumes in the Indian automobile market.
French car maker PSA Peugeot Citroen has selected a site near Sriperumbudur, to the west of Chennai, in Tamil Nadu for setting up its car plant. The company is planning to invest Rs 4,000 crore (US$ 911.72 million) in an integrated automobile project.
Toyota has launched its first made-for-India small car, the EtiosLiva, in the intensely competitive hatchback segment. The car, priced between Rs 399,000 and 599,000 (US$9,094 and 13,653), will compete with Maruti Suzuki Swift, Hyundai i20, Volkswagen Polo and Ford Figo.

Auto industry in India – Government Initiatives

With the gradual liberalisation of the automobile sector since 1991, the number of manufacturing units in India has grown progressively.
Currently, 100 per cent Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological upgradation on the royalty payment of 5 per cent without any duration limit and lump sum payment of US$ 2 million is also allowed under automatic route in this sector.
The automobile industry is delicensed, and import of components is freely allowed.
With an objective of accelerating and sustaining growth in the automotive sector and to steer,co-ordinate and synergise the efforts of all stakeholders, the Automotive Mission Plan (AMP) 2006-2016 was prepared. The plan aims at making India global automotive hub.The AMP 2006-2016 aims at doubling the contribution of automotive sector in GDP by taking the turnover to US$ 145 billion and providing additional employment to 25 million people by 2016.
In the long term, the government has expressed plans to follow a two pronged strategy for spurring automotive Research &Development (R&D). The first is aimed at addressing the existing infrastructure gap in the field domain of automotive testing and homologation through the Department’s flagship National Automotive Testing and R&D Infrastructure Project(NATRiP), which is being implemented at a cost of Rs 2,288 crores (US$ 521.5 million), and is expected to be completed by the end of 2012. The second part of the strategy is aimed at leveraging the investments being made in NATRiP facilities for collaborative R&D with the industry, especially for the small and medium enterprises (SMEs) in the auto component space.
Further, with the recent announcement of the launch of the National Mission for Electric Mobility and the setting up of the National Council and Board for Electric Mobility, Mr Patel emphasised on the commitment of the government for early adoption of electric vehicles, including hybrid vehicles, and the manufacturing of these vehicles and their components.
The government is considering setting up two automotive manufacturing hubs spread over 10,000 acres each in central and eastern India.The new hubs, aimed at consolidating India's position as an important destination for low-cost automotive production, will be in addition to the three existing zones — Haryana, Maharashtra and Tamil Nadu.

Auto Industry in India – Road Ahead

The automotive industry is at the core of India’s manufacturing economy - India is all set to become one of the world’s most attractive automotive markets for both manufacturers and consumers. The resulting benefits to society, such as economic growth, increased jobs, and stability for families employed by the automotive industry, are significant.
The long-term potential for growth of the auto industry is very favourable, on account of low vehicle penetration in the country. As income levels rise and easy finance is available, the industry will continue to see a healthy growth rate. SIAM estimates that the growth of the auto industry in FY12 will be in the region of 12-15 per cent.
Exchange Rate Used: INR 1 = US$ 0.0227929, as on July 27, 2011

References: Society of Indian Automobile Manufacturers (SIAM), Press Information Bureau, Press Releases, Report by Booz & Company - Revving theGrowth EngineIndia’s AutomotiveIndustry Is on aFast Track, Automotive Component Manufacturers Association of India (ACMA)

Strategic Planning !!!

Strategic Planning is an umbrella that has following streams under it..

• Market analysis, which illuminates economic and political trends, industry and competitor factors and key value drivers. 
• Tools used for this purpose are PESTEL Framework, conjoint analysis and perceptual mapping
  
  
• Scenario analysis, which explores a limited set of future market scenarios based on the market analysis. 
• Tools used are HARVA Method
  
  
• Opportunity identification, which reveals innovative and attractive business opportunities in the future market. 
• SWOT Analysis, Abell's Framework
  
  
• Internal analysis, which uncovers distinctive capabilities, market focus and positioning, and performance anatomy that can drive high performance. 
• Competitive Advantage Mapping, DCF Model
  
  
• Strategy formulation, which provides strategic direction designed for the future, taking into account market opportunities, internal capabilities and future financial performance. 
• MPOG Frame work
  
  
• Organizational alignment, which translates strategy into action, providing a high-level roadmap of the realization process. 
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• Financial modeling, which predicts future financial performance of a given strategic direction, including net present value and future shareholder value.
• NPV, DCF Model, CAPM Model, Strategic Cost Management.

Above Mentioned are some of the tools available for different strategic Planning assignments.

Brand Management in Automotive Industry !!!

For the auto industry, 2011 has been a year of feverish growth. Worldwide, 58.9 million cars were sold in 2010, and this year, the figure is expected to rise to 62.1 million. Projections suggest sales in excess of 65 million passenger cars in 2012 and over 75 million units in 2015. Two factors are driving this growth: On the one hand, the economic recovery in classic European markets and the U.S. is taking hold in the wake of the slump in 2009. The socalled cash-for-clunkers initiative in Western Europe continued to influence sales well into the first half of this year. The other, more important factor is the expanding market in China. The demand for cars in the People’s Republic is considerable. Disposable incomes are steadily rising and market saturation relative to market potential is still thin. China’s global market share in cars sold has already climbed to 20.1 percent and is poised to keep increasing. Then again, China is not the only growth engine in the automobile market: India is moving in the same direction. The year 2011 also marks a major auto industry anniversary. In 1886, Carl Benz filed a patent for his motor vehicle. This event is considered to be the dawn of the modern automobile. Shortly thereafter, Gottlieb Daimler and Wilhelm Maybach followed suit. 


Now, 125 years later, Daimler AG is one of the most successful automakers, and Mercedes has reclaimed the status of the world’s most valuable automotive brand in the Best Global Brands Ranking 2011. With its core Mercedes-Benz brand, the Daimler group is a benchmark innovator. For years, it has been pursuing research into fuel cells. Now hybrid vehicles are on the street, and an electric vehicle is in the pipeline. Together with specialty chemicals
manufacturer Evonik, Daimler established a joint venture for the production of lithiumion batteries that will power the Mercedes-
Benz electric car set to debut in 2012. Indeed, innovation permeates the entire automotive sector. For decades, the focus has been on innovation in product design, production methods, and technologies. But today, more and more automakers are also developing innovative mobility and rental-car share concepts. Daimler’s “Car2Go” mobility project, which resembles the archetypal car-sharing concept, is being launched in Canada, the U.S., and Germany. What’s new about the model, however, is that after it has
served its purpose, the vehicle can be parked anywhere within a defined geographical area. Meanwhile, Peugeot has already kicked off its “Mu” concept, and Volkswagen has entered the car-sharing market with its “Quicar” approach. These concepts are being buoyed by the changing mobility needs of young urban consumers. There are two positives to the initiative: not only are the vehicles
equipped with electric motors and therefore better for the environment, but beacuse users share the cars, the environmental impact is also lessened. For many of the world’s trafficplagued
big cities, this is one way to sensibly evolve personal mobility.
Some 125 years after the invention of the automobile, electric vehicles are beginning to roll off the assembly line, headed up by
the Nissan Leaf and soon followed by the Mitsubishi i-MiEV, Chevrolet’s Volt, the Opel Ampera, and the E6 developed by Build Your Dreams (BYD). And the strategies involved with the rollout of these innovative power train concepts have been noteworthy. With
the Prius, Toyota integrated its hybrid drive into a totally new model. This precedent inspired Audi and its e-tron sports car, and in mid-2011, BMW announced the “BMW i” as a sub-brand for the so-called Megacity Vehicle. Currently, branded sustainability concepts are being prioritized over sustainable brands. As such, it is not surprising that Toyota occupies the numberone slot among the Best Global Green Brands 2011, with VW and Honda ranking sixth and seventh, respectively. The positive rankings for automotive brands corroborate that innovations in sustainability have become a
hallmark for success in the sector. Taking it a step further: those makers who fail to anchor sustainability and ecological stewardship
in their brand values will be passed over by tomorrow’s consumers.
Another change suggests a turning point in the automobile’s 125-year heritage. Until recently, the U.S., Western Europe, and Japan were the big auto industry players, but now, the cars have a new center of gravity: China. Even if the Best Global Brands rankings do not yet list a Chinese brand, the country is literally turning the auto industry inside out. While joint ventures with foreign brands are still
dominant in China, the acquisition of Volvo by Geely implies international ambitions. So does BYD’s desire to collaborate with Daimler, and VW, and Shanghai Automotive (SAIC) has plans with the Roewe (formerly Rover) brand. Additionally, China’s Chery brand already has a presence in Eastern Europe with low-budget compacts. China is evolving its own auto industry—quickly,efficiently, and successfully.


Source: Interbrand Article over Automotive Industry