Aloha (October 2005) - University School of Management Studies Newsletter

GOVERNMENT National Rural Employment Guarantee Act has been recently been launched by the Manmohan Singh government. ASHISH KAUSHIK explains its real effects and implications. MARKETING Changing business scenario HARPREET KAUR presents the newly evolving purchasing practices in the country. HEALTH Medical tourism is on an upswing in the country with the growth projected to increase steadily in the coming times. SACHIN GUPTA identifies the reasons for this sudden spurt of health travelers.

TAXATION SUMIT MAHAJAN presents the highly controversial FRINGE BENEFIT TAX in a new perspective.

BE POSITIVE The key to success in today’s competitive world is to have a Can – Do Attitude. NEHA TIKOO explains 5 easy steps to building a ‘Can-Do Attitude’.

SECTOR ROUNDUP This month PRABHAT JHA rounds up the major happenings in the Automobile sector in the past few months.

SPECIAL FOCUS The launch of Club One Air gives India its first fractional cost based airline.

BIJOYENDRA SANYAL explores the future scope in this month’s special focus!

BOOKWORM In this month’s edition of the bookworm LATIKA MAHER presents her views on Stephen R. Covey’s highly appreciated best-selling work – 7 Habits of Highly Effective People. CAMPUS CATCHUP Get to know all the latest happenings on the campus of University School of Management Studies with MAYANK GOEL’s first hand reporting.

FACE-TO-FACE In the interview of the month Mr. D. P. Nanda, GM, Moser Bear spoke to RAHUL BHIMRAJKA about the future plans of the company.

BIG BULLY HIMANSHU NAUTIYAL and VIDHI tame the bulls and bears of the sensex in this monthly roundup of the stock market.

QUIZZLER Update your business knowledge with this month’s edition of QUIZZLER compiled by quizmaster BIJOYENDRA SANYAL.

GURU COOL This month ASHISH KAUSHIK talks about the works of the famous business guru Michael Porter. Click here to know your guru!

Includes ALOHA

Connecting Thoughts

ALOHA Connecting Thoughts

GOVERNMENT

EDITOR’S NOTE Welcome to the inaugural issue of ALOHA – Communicating Thoughts, the monthly magazine of the University School of Management Studies. We, the students of the country, have the task of shaping tomorrow. We have the potential to transform and transcend all – be it old conventions, standards or above all, our own limitations. Strangely enough, for a group as important as this, our voice is still not heard. There is no proper channel for us to speak out – for what we think is right or against what we feel is wrong. ALOHA is just a small step towards setting that right. It is the voice of the students of USMS – the mouthpiece through which we would make our opinion known. The views expressed in here are purely those of the authors, and thus bear no necessary relationship with the institution. And that’s what ALOHA is – a way to reach out to the rest of the world. This first issue marks the fruition of months of hard work and planning. Right from the initial concept to the final design, everything has been managed by us students. The issue spans a gamut of articles on varied topics to make this one of the most comprehensive mirrors of the managerial and economic issues gripping the country. I am proud to present to you ALOHA – Communicating Thoughts. Hope you like this small effort on our part. ABHINAV PUROHIT Editor - ALOHA

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India's rural job guarantee scheme The World Bank says that more than 30 per cent of the Indian population lives on less than $1 (Rs 43.50) a day, but Indian economists believe the figure of poor -- especially rural poor -- could be much higher. We have tried to fight poverty by various means, but have met with little success. So what India needs is something more lasting than patchwork policies to help its millions of poverty stricken people. The government feels that the National Rural Employment Guarantee Act can solve that problem, given that it has the potential to provide a livelihood to millions. But will the plan succeed? Why is there resistance to it? What will it cost the nation?

According to the last Census, 72 crore (720 million) people live in rural areas. Currently at around 7.8 per cent, the unemployment has been steadily rising in India. This has led to a migration of huge numbers of people from rural to urban areas. With over 65 per cent of India's population under the age of 35, the country needs to create 6 crore (60 million) jobs over the next five years to prevent the unemployment rate from gaining unmanageable proportions.

Jean Dreze, a Belgian economist, who is currently with the Delhi School of Economics, is the chief author of the National Rural Employment Guarantee Bill, 2004 promises wage employment to every rural household, in which adult members volunteer to do unskilled

manual work. Through this Bill the government, aims at removing poverty by assuring at least 100 days' employment. The minimum daily wage had been pegged at Rs 60. State governments, Panchayati Raj institutions as well as non-government organizations would be involved in implementing the law.

The National Rural Employment Guarantee Act will cost about Rs 40,000 (Rs 400 billion) crore annually. According to another estimate, however, it could cost about Rs 50,000 crore (Rs 500 billion) annually, or about slightly less than 2 per cent of GDP. The Rural Development Ministry currently is allocated Rs 24,000 crore (Rs 240 billion) annually for all its schemes. To meet the total cost of this ambitious scheme, states will still have to shell out Rs 4,000 crore (Rs 40 billion). The rest of the Rs 12,000 crore (Rs 120 billion), assuming the total cost works out to Rs 40,000 crore, might be raised from other schemes whose allocations may now be merged into this project.

GOVERNMENTALOHA

Connecting Thoughts

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Finance Minister P Chidambaram says that the government will meet the requirement for the job guarantee scheme by:

• Normal increase in budgetary support;

• Savings from existing employment schemes; and

• Additional allocation in gross budgetary support to states.

Chidambaram said the states' share in the funding is only 10 per cent. In his Budget for 2005-06, Chidambaram had stated that the National Food for Work

Programme would be converted into the National Rural Employment Guarantee Scheme with an allocation of Rs 11,000 crore.

To begin with, as many as 200 districts, including 150 districts under the Food for Work Programme, would be covered under the Bill. It would be extended to all the 600 districts in the country within five years. The Bill also provides for unemployment allowances if the job, under the scheme, is not provided in the rural households.

With UPA government taking all the credit for the bringing the bill out, Rural Development Minister Raghuvansh Prasad Singh stressed on the point that employment would be generated through development works, solving the two

major problems of employment and development.

The opposition party BJP on the other hand brought out the major demerits of the bill, which are as follows:

• The decision to provide Rs 60 per day for a guaranteed 100 days rural employment translated to only Rs 500 a month, which is not sufficient to run a family.

• The law could lead to friction within a family over selection of the member to be provided the job.

• It is feared that in the process women and physically challenged could be left out.

• The decision to make the state governments finance 10 per cent of the scheme could lead to financial problems because of the poor financial conditions of some states.

With back up of such arguments BJP demanded inclusion of the urban sector in the bill or a separate bill for the urban sector as 4 crore urban poor are still living in slums. There were also concerns about increasing fiscal deficit, rising interest rate and corruption level as past initiatives such as food-for-work programme have all resulted in the above-mentioned problems creating an insecure environment

.ASHISH KAUSHIK


GOVERNMENT

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Status of purchasing practices & IT in India The business world is changing rapidly and newer innovations in every field are ruling the roost. The purchasing trends of Indian industries have similarly undergone a radical transformation in the last couple of decades. In 1980s, companies could reduce cost of their products and services to compete in the market through the application of strategies like time and lean manufacturing (this means manufacturing products according to the time period or according to the seasonal trends), total quality management amongst others. But these strategies do not help now in further cost reduction, so many of the companies discovered effective Supply Chain Management as the next step to increase profit and market share. Better purchasing practices and integration of the processes of the supply chain members are two key elements of supply chain management. Purchasing practices can be hailed as the foundation on which the whole Supply Chain Management structure is based. For effective management of the supply chain, these practices need to be supplemented with the integration of processes of the supply chain members.

This integration calls for accurate & timely flow of information throughout the supply chain. Various effective purchasing practices could be: -

1. Single Sourcing - It implies that number of suppliers should be reduced to minimum; ideally to one only.

2. Supplier Involvement – Initially this practice characterized only a buyer - seller relationship, with price-based decisions being the sole determinant. But now, both parties, buyers as well as sellers, are interested in long-term profits. Thus long-term cost cutting, quality, capability and services form the basis of purchasing decisions.

3. Strategic Purchasing - It can be viewed as the pattern of decisions related to acquiring required materials and services that support operations and activities of the organization. These have to be consistent with the overall corporate competent strategy. It means that the various business practices adopted by the organization so as to survive in this competitive business world like diversification of products, price and quality management etc. are well aligned with the purchasing plan for the future.


MARKETING

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Adoption of the above purchasing practices has benefited numerous organizations around the world.

USE OF INFORMATION TECHNOLOGY Exchange of information at each and every level at appropriate time by appropriate personnel is the need in today’s business scenario. Organizations have to work in coordinated manner with their suppliers, distributors, and the retailers. Information about consumers purchases, sales forecasts, promotion activities, on-hand inventory and production schedules is required to be exchanged among the chain members in real time to effectively manage the supply chain. For this there should be integration along the supply chain. It can be of two forms. The first type of integration involves coordinating and integrating the physical flow of

deliveries between manufacturers, suppliers, distributors and customers. Second one involves the backward coordination of information, which flows from customers to suppliers and for this real time exchange modern IT tools need to be used rather than traditional paper based information systems.

USE OF INFORMATION TECHNOLOGY IN PURCHASE PRACTICES IN INDIA

A survey conducted among 273 companies results that Indian Companies have adopted new purchasing practices to a large extent but the use of IT is very less. Among the top 5 IT technologies, fax is the most commonly used as a communication technique. E-mail is the next most used whereas use of bar coding and e-commerce is almost nil. Thus, Indian companies are at the preliminary stage of employing supply chain management. Because real integration can only be achieved through the application of IT tools.

HARPREET KAUR


MARKETING

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Medical Tourism When multi-specialty luxurious private hospitals came on the horizon in the early 80’s , many people scoffed at their classy comforts, 5 star facilities & air conditioned atmosphere. But today we are living in an era where all these facilities are prerequisite to a good, hospital. Now it looks like as if hospitals are not attracting patients, rather they are attracting customers who are willing to pay more for availing these facilities. The mushrooming of new private hospitals, coupled with the rise of an urban & middle class willing to pay more for quality healthcare and the hype surrounding medical tourism in India, is forcing large private hospitals to act like a corporate house with marketing & PR department and spend huge amount of money on just marketing . Reasons, why private hospitals are going for aggressive marketing look very apparent: 1] There is a shortage of good medical facilities in some parts of India and these private hospitals want to fill this gap. 2] Rising Income of people of India is enabling them to demand not only the basic medical facilities but some of the extended benefits like – air conditioned rooms, state of art infrastructure etc. also. 3] A huge chunk of foreign patients are coming to India for availing cheap medical facilities. 4] Competition in the urban markets is forcing these hospitals to differentiate themselves through their facilities.

Current Scenario: Referrals and word of mouth used to be the mantra for the hospitals. But now these private hospitals are realizing that this mantra is loosing its sheen. So they coming up with some of the innovative marketing strategies like - sponsoring events, associating with neighborhood doctors through which doctors are referred. Some cases to these hospitals & in return they will get some of the perks like – invitation to medical seminars, discount for themselves & their family at these hospitals. Some of the other strategies adopted include tie-up with medical insurance companies, opening call centers to enquire about the health of the patients & reminding them about their regular health check-ups after they have been discharged. Some of the big private hospitals like Apollo, Escorts and Max Healthcare are adopting all these strategies.


HEALTH

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Future trends: It is expected that more and more private hospitals will come up with all their kind of innovative marketing strategies. Competition will increase in this sector, as some of the foreign hospital chains like Fortis, Wookhardt, and Duncan etc. will enter the Indian market soon. Hospital rooms with facilities like TV, refrigrator, telephone, sofa set, easy chair & dining chairs will become the norms of day. International patients to India, which currently stood at 1.5 lakhs

a year, are expected to double within the next 2 to 7 years. More and more private hospitals will go rural to tap up this huge market and more and more schemes like “kisan card” by Escorts hospital which requires the farmers to “save a rupee a day “ to finance their medical bills will come up. Corporation of the Indian Medical Sector will pick up fast and the process from illness to recovery is going to be very smooth and patients in the hospitals will have an amazing experience in the hospitals.

SACHIN GUPTA

ALOHA Connecting ThoughtsHEALTH

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Fringe benefit tax: a new look

If you thought that the fringe benefit tax was to be paid by the employer only for the expenses incurred or benefits provided to the employee then the latest circular from the government will make you change your mind. Various explanations & clarifications shows that expenses on a client or a customer & even dealers would see the fringe benefit tax (FBT) springing into effect. If a company incurs an expenditure for the client & this out-of-pocket expense is reimbursed by the client, then the company that has incurred the expenditure has to pay FBT on this. The client will not pay FBT on this. The logic here is that head of expense is covered under FBT as a deemed fringe

benefit & hence tax has to be paid. A point to be noted here is that there might not be any benefit to the employee because the expense is incurred on behalf of the client but still the amount is taxable under FBT. There is further reiteration of this point as another clarification says that if the employer has incurred any expense for any one of the purposes enumerated in the relevant section, then the whole of the expense shall be deemed to have been provided. No segregation of expenses for employees & for others is to be allowed. The only saving grace is that the same amount would not be taxed as FBT in the hands of the client. There are occasions when some expense has to be incurred with respect to the customer or the client. An entity would incur such expenses & there might not be employee in this situation also. Some of the common expenses in this area include hotel stay & air ticket charges. These expenses would be classified as being taxable & hence FBT will have to be paid on this. Next time HLL, NESTLE or COLGATE offer freebies such as cups with a pack of tea leaves, cold coffee shakers with instant coffee powder or a free toothbrush with pack of toothpaste, they will have to cough up FBT on such expenditure. All these expenses are to be treated as sales promotion expenditure and therefore, are liable to attract FBT.

TAXATION ALOHA

Connecting Thoughts

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Similarly, free samples of medicines distributed by pharmaceutical companies to doctors also qualify as sales promotion expenditure & would attract FBT. Consumer durable companies that give away freebies, such as a DVD player with a colour tv or film/music software with a player, could be asked to pay FBT on the expenditure incurred on free offers. The summer holidays of employees may now prove expensive for the employers. It now appears that the employer will have to pay FBT in the years that in which employee claims the income tax exemption on leave travel assistance (LTA). When the LTA is not included in the salary, the expense would be taxable in the hands of the employer. The tax liability of companies providing medical reimbursements to their employees is to rise. The central board of direct taxes (CBDT) has made it clear that companies will have to pay FBT on reimbursements up to Rs 15,000 for medical expenses incurred by their employees in unapproved hospitals.

Right now, employees are liable to pay tax if the company reimburses expenses of over Rs 15,000 a year for medical treatment in unapproved hospitals. This is because expenses above this threshold are treated as a perquisite. However, the CBDT has now clarified those expenses on medical reimbursement for treatment in unapproved hospitals will be taxed. The employer will have to pay FBT if the amount is below Rs 15,000 & the employee will have to pay tax if the amount exceeds Rs 15,000.

SUMIT MAHAJAN


TAXATION

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Boost your attitude !!! Accomplish your goals!!! "A positive attitude is the one characteristic that all successful people have in common." Anon

“Attitude”- What is attitude? It is a manner in which one feels, thinks, or acts that shows one’s disposition, opinion, or frame of mind etc. In today’s world, having a positive attitude is often considered a secret to success, but for maintaining that attitude; ‘will’ is the main prerequisite. The power of positive attitude can help us in accomplishing whatever goals we set for our selves in life. Conversely, negative thoughts and feelings can prevent us from living the life we really want. It is a positive state of mind, which manifests in the way one thinks and acts. One can develop it through the following steps:

5 Steps to building a ‘Can-Do Attitude’:

1. When you hear yourself say you can't do something, stop! Resist going down this path – it's a one-way STREET, WHICH lowers our confidence and demotivates us. Refraining our selves from saying “I can’t” can work wonders. Remember, it's a habit – and it can be broken. 2. Develop a problem solving mind-set Look beyond the "can't" to the reason

why. We should believe in our selves and believe that nothing is impossible because the word impossible itself says that ‘I-M-POSSIBLE’. 3. With the problem in mind, focus on what you can do about it Finding ways to use what we’re good at is to solve the problem. Generally, whenever we face a problem we tend to think negatively and feel low about it, we should curb this habit by looking at the problem from different perspective and thinking about the alternative ways of solving our problem. 4. Be open to trying a different approach By perceiving from different outlooks we can solve any problem that we face. Whatever we do, we should take interest in it and make it enjoyable and fun for ourselves.


BE POSITIVE

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5. Do it your way We should make things work for ourselves, on our own terms. We should leave a mark on what ever we do and be our selves and not imitate anyone.

A positive attitude leads to happiness and success. It possesses the power to change our whole life. When we see the bright side of life, our life becomes filled with light. This light affects not only us, and the way we look

at the world, but also our whole environment and the people around us.

Negative attitude says: “You cannot achieve success”

Positive attitude says: “You can achieve success, and that is what everyone wants and strives for”

Even one single step towards manifesting a positive attitude will bring more light into our life!!!!!!

NEHA TIKOO

Your erroneous zones Have you ever looked into the mirror and asked yourself what’s wrong with you? Or have you ever said ‘Yes’ when you wanted to say ’No’? Or do you feel that it’s not you but others in your life that controls your feelings? If your answer to any one of these is yes then they reflect your erroneous zones. An erroneous zone is a kind of self-destructive behavior that may seem perfectly acceptable, but in reality, is harmful to your own happiness. So how does one go about overcoming his/her erroneous zones?

• Taking charge of yourself Don’t judge your intelligence on the basis of your ability to solve complex problems. A truer barometer of intelligence is effective, happy life lived each day and each present moment of life. You are intelligent if you know how to choose happiness over depression. Feelings are not just emotions to you. They are reactions you choose to have and so once you learn that you can feel what you choose to feel, you will be on the road to intelligence – a road where there are no bypaths that lead to nervous breakdowns.

• Self love and self worth If you love someone then don’t judge your self worth on the basis of whether the other person feels the same for you or not. You might want the other person’s love but it is not essential to your self

worth. Remember, at no time, under no circumstance is self-hate healthier than self-love. Even if you have behaved in a way that you dislike, loathing yourself will only lead to immobilization and damage. So instead of hating yourself, develop positive feelings. Learn from the error and resolve not to repeat it but don’t associate it with your self-worth.

• You don’t need their approval Needing approval is tantamount to saying “your view of me is more important than my opinion of myself”. You can never escape disapproval no matter how much you want it to go away. For every opinion you have, there is a counterpart out there with exactly the opposite view.

• The useless emotions – guilt and worry If you believe that feeling bad or worrying long enough will change a past or future event, then you are residing on another planet with a different reality system. Learning from your mistakes is healthy but guilt is unhealthy because you are ineffectively using up your energy in the present feeling hurt, upset and depressed about a historical happening. So break yourself from the past and free yourself from all the pressures that drive you towards your past. Past is over and don’t let your past occupy your future.” Your future is an empty canvass and you can paint it the way you want” SUCHITRA AHUJA


BE POSITIVE

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Automobiles Sector The growth in Indian Automobiles Sector has been high for the past few years, since 2001-02 to be precise. Post liberalization, the arrival of new and contemporary models, easy availability

of finance at relatively low rates of interest and price discounts offered by the dealers and manufacturers have stimulated the demand for vehicles and a strong growth of the industry.

Passenger Car Market

Projected CAGR 12.3%

Compact55%

Mid-size17% Mini

26%

Premium & Luxury

2%Executive

0%

Compact56%

Mid-size20%

Mini19%

Premium & Luxury

3%Executive

2%

2002-03 (A)Total Units - 547,083

2007-08 (P)Total Units - 975,703


SECTOR ROUNDUP

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Two Wheeler Market

Present estimated size 5.4 mn units per yearCAGR (last 5 years) 10%

Average two-wheelers per 1000 people

India 27China 08

Advantage India • Largest Two-Wheeler

Manufacturer in the World • 2nd Largest Tractor Manufacturer

in the World • 5th Largest Commercial Vehicle

Manufacturer in the World • Number 1 in Global Motorcycle

Manufacturer is in India • 4th Largest Car Market in Asia -

crossed the 1 million mark

Industry Milestones 2003-04

• Car production crosses 1 million mark.

• Car exports cross US$ 1 million mark.

• Auto component exports cross US$ 1 billion mark

PRABHAT JHA


SECTOR ROUNDUP

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Fractional cost based airline model-the Indian perspective The airline sector in India has grown by leaps and bounds in the past few months and that has opened a lot of interesting possibilities. While most of the new entrants are in the low cost segment one airline that stands out is Club One Air; India’s first airline based on fractional ownership model. Promoted by Manav Singh, it caters to the top executives and businessmen allowing them to pick up a stake in the venture and fly wherever and whenever they want. Besides the flying charges, the fractional ownership costs between Rs 50 lakh and Rs 2 crore, ranging between one-eighth and one-fourth of an aircraft cost thus enabling a person to own an aircraft at a fraction of the cost. Fractional cost based airline model have been in vogue in the west for some time. One of the factors driving the business jet

market is growing

frustration with travel

on commercial

airlines. Polls and surveys, as well as considerable

anecdotal evidence, indicate that many corporate executives resent time spent waiting for commercial flights at airports, seeing it as lost productivity.

The Indian economy is growing at a berserk speed and business travel is also grown rapidly. The inconvenience and frequent delays of airline travel increasingly may cause companies to turn to business aircraft to help solve at least part of their air transportation needs. Many companies recognize that business aircraft are tools to enhance productivity. Through point-to-point, on-demand, private transportation, the use of business aircraft can result in considerable timesavings. The need for connecting flights disappears, while the time spent at airports is minimized as companies can control their employees' travel schedules. Employees also can use travel time more effectively, as business jets provide quieter working environments than the commercial flights. However many Indian corporate and even MNC’s may not want to bear the cost of buying an aircraft. These companies could own them jointly with others through a fractional ownership program, thus providing a lucrative market to Club One Air and others of its ilk. The number of customers for fractional programs may expand, as they may prove more attractive to first-time business aircraft users than outright purchases. In the west, fractional ownership is an important element in the business jet market; and its growth has been phenomenal.


SPECIAL FOCUS

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In the Indian context its success is largely dependent on how the market shapes up in the coming years. One of the factors that they need to be careful about is price. Even the top segments of Indian corporate sector are frigidity about the expenses they acquire. It is expected to face competition from airlines offering club card or jet card programs, which are popular in the west. Already there has been a buzz in the industry that Kingfisher is eyeing this market. In general, the card programs provide the benefits of fractional ownership, but without the need for capital investment in a full share. Essentially, the programs are simply a means to market block charters. Another aspect airlines like Club One Air need to keep in mind is the fact that making money with fractional operations is difficult. Unless the airline has a tremendous market presence (in terms of bases and airplanes), it will need to fly a large number of non-revenue-producing flights. Planes will often need to fly empty somewhere to pick up a customer; they might also need to fly empty after dropping one off.

It may also end up with planes that produce no revenue but still have capital and operating costs attached. Club One Air must also be extremely sensitive to demand surges, and the fleet must be sized to meet the greatest of these. If it is not done, customers will have to be paid for any violation of timing and availability guarantees. To avoid this, it will need to supplement their fleets by chartering other people’s planes, which is an expensive proposition.

Despite all possible roadblocks it may face, the future of fractional cost based airlines in India, seem to be bright. Its success will go a long way making our civil aviation sector truly international.

BIJOYENDRA SANYAL

SPECIAL FOCUSALOHA

Connecting Thoughts

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7 habits of highly effective people In The 7 Habits of Highly Effective People Stephen R. Covey presents a holistic, integrated, principle centered approach for solving personal and professional problems. Covey, one of the famous management gurus, reveals a step-by-step pathway for living with fairness, integrity, honesty and living with dignity. He makes us realize how important an aspect of our lives ‘change’ is, and how we can take the advantage of

the opportunities that change creates. The book is divided into four parts. The first part talks about the paradigms and principles. A paradigm is how we see the world, how we perceive, understand and interpret what we see. Covey states that if we want to make a significant,

quantum change, we need to work on our basic paradigms. Then he talks about principles. He makes us aware of the fact that principles are like lighthouses. They are natural laws that cannot be broken. They have an enduring and permanent value. He blends our basic paradigms with these principles. The more closely our paradigms are aligned with these

principles, the more accurate and functional they will be. The book is based on 7 habits, three of which pull us from the level of dependence, where the actions we take are a result of the situations we are in or behavior of people around us, to the level of independence, where we act rather than being acted upon. Independence is the paradigm of I — I can do it; I am responsible; I am self-reliant; I can choose. These are included in the second part, PRIVATE VICTORY. These three habits are:

1. Be proactive…. Where proactivity signifies that we do not blame the circumstances for our actions. Rather we hold ourselves responsible for everything we do. Proactivity is the freedom to choose our response to any stimulus in life.

2. Begin with the end in mind……

Where Covey lays stress on imagining what kind of thoughts would we like to hear from the people associated with us after our death, and act accordingly. He very effectively exemplifies the fact that whatever we do, we should keep in mind the long-term results emerging from it.

BOOKWORM ALOHA

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3. Put first things first….. Where he explains the concept of personal management through the “Urgent Vs Important” quadrants. One realizes how to prioritize in order to succeed.

The third part, PUBLIC VICTORY, is where we reach the level of interdependence. Interdependence is the paradigm of we — we can do it; we can cooperate; we can combine our talents and abilities and create something better together. Covey includes the next three habits in this part. These are:

4. Think Win/Win…. Where the author emphasizes on going for a deal in which both the parties win which will lead to active efforts from both sides and best results.

5. Seek first to understand and

then to be understood… A very important aspect of an interdependent living, where Covey introduces the term ‘empathy’.

6. Synergize…. Which means that

in an organization, two plus two is not four, its much more than that. Synergy is the power where

a team achieves much more than all the members would individually.

Part four of this book, RENEWAL, talks about the seventh habit: 7. Sharpen the saw…. It’s the habit

that surrounds all the other habits and makes all these habits possible. It’s renewing the four dimensions of nature - physical, spiritual, mental and social/emotional.

All in all with penetrating insights and powerful anecdotes, this book teaches us principles - principles of personal vision, personal leadership, personal management, interpersonal leadership, empathic communication, creative cooperation and balanced self-renewal. It’s a book that gives you not just essential tips, which can be used to become good managers, but also can help a layman to become an effective and efficient human being. Its for this reason that it is hailed as one of the best ever written management book and I recommend you to get a copy for yourself without further adieu!

LATIKA MAHER

BOOKWORM ALOHA

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CAMPUS ROUNDUP August 1st marked the induction of the 6th batch of University School of Management Studies MBA programme-+. The whole batch of new comers of all the courses of the university were addressed by the Vice Chancellor Prof. K.K Aggarwal at the University Auditorium. Prof Aggarwal introduced all the Schools and the Head of different departments. The students were informed about the infrastructure of the university. Also included was a visit to the University Information Resource Center. The students were then offered refreshments at the end of the programme.

Then the Dean of University School of Management Studies, Dr R.K. Mittal at the seminar hall of USMS, separately oriented the new batch of MBA students. The event began with the dean giving a brief introduction about the school’s infrastructure and the facilities. All the faculty members gave an introductory speech about their background and vision for the university.

The students body of USMS- Synergy, was introduced to the freshers by the President of the body Mr. Ravi Dhanwariya. Synergy’s structure, goals and operations were explained in detail to the rapt audience. Some of the newcomers then took the podium to share their impressions of the first day at USMS. The rest of the day saw the healthy interaction between the newcomers and their seniors. This is what some of the new comers had to say: “This (university) is a whole new experience for me and I am glad that I am here” Himanshu Nautiyal “I never thought the student body Synergy would be so active….” Sumit Mahajan

“The faculty is illustrious” Akanksha Gupta


CAMPUS CATCHUP

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The fresher party of USMS was held at the BLUES Discothèque on the 28th of August. The place was rocked by the students of USMS with all of them arriving in style, putting on the hippest outfits in town. The party began at 11 in the morning with a bang and the dance floor was set on fire. The music was loud and rocking with DJ Sunny exciting the souls. The party saw some commendable dance performances and happening moves. Everybody had a ball and unlimited snacks and soft drinks helped the matter. The dance session lasted for four hours followed by the Miss & Mr. Fresher competition. There was fierce competition amongst the

participants for the title with over 15 guys and 10 girls putting in their best effort. The first round was the ramp walk in which the contestants showed some style and attitude on the ramp. Then came the introduction round with the brief introduction by the participants. The final was the talent round in which the contestants flaunted the various talents they possessed. Eventually the results came out with Miss & Mr. Fresher award going to Latika Mahar & Gaurav Sharma in that order. Another jam session followed for an hour and a half. This was a memorable occasion with everybody enjoying the moment to the fullest.

MAYANK GOYAL


CAMPUS CATCHUP

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General Manager of Moser Bear, Mr. D. P. Nanda In a candid talk with Rahul Bhimrajka, the General Manager of Moser Bear, Mr. D. P. Nanda explains the secrets behind the run-away success of Moser Bear. He also talks about the future expansion plans of Moser Bear in India and abroad. The excerpts of the interview are: Rahul Bhimrajka: - With two-production unit in NCR, one in Noida, and the other in New Delhi, it has been seen that the company is experiencing high communication and traveling costs. What has been done to minimize these costs? D. P. Nanda: - We have a hotline between our Delhi and Noida offices, and we have our own logistic facilities apart from the hired truck capacity. We have also shifted our loading operations from Tuglakabad and moved to a much closer location in Dadri. These small changes have contributed several millions to our savings. Rahul Bhimrajka: - What is the reason that despite stable prices of Polycarbonate in the market, the company has seen an increase of around 25% in average costs? D. P. Nanda: - The raw materials used apart from Polycarbonate, have been steadily rising in the international market. Moreover, the overall

inflationary conditions prevailing in the economy has also contributed to our price tags! Rahul Bhimrajka: - Moser Bear, despite being a benchmark in quality, has reported heavy profit cuts of the past one year. Comment. D. P. Nanda: - This can be attributed to two distinct reasons. Firstly as I mentioned earlier, the increasing prices of raw materials has hit us badly. Secondly the international CD sale has taken an unprecedented and unexpected dip. To counter this, we are launching some new formats in the CDs, which would help us in creating a steady demand. But, as of now, the market demand does not argue well for us. Rahul Bhimrajka: - the one problem that has plagued every corporate in the country is that of Power. How do you deal with it? D. P. Nanda: - As power is the backbone of our industry, only a small fluctuation too can greatly affect the quality of our products. To tackle this, we have our own powerhouse that generates nearly 40 MW of electricity everyday. We use filter water for the smooth working of the power plant. Rahul Bhimrajka: - What are your plans to explore the domestic market?


FACE-TO-FACE

20

D. P. Nanda: - It is growing. In fact, we believe that the real India lies in its villages, and as the computer penetration in these areas is increasing, now electricity and other infrastructure facilities too reaching here, the rural market is opening up and we are gong to market our products more aggressively in these areas. Also, we would now look to grab a better hold over the urban market by launching some new format CDs and other products in the urban markets. Rahul Bhimrajka: - What was the motive behind joining the Blu-ray Disc Association? D. P. Nanda: - Currently our brand is not very well known in the international market, so tie-ups with these types of associations will get us some exposure as well as popularity in the global market space. Rahul Bhimrajka: - Why was HP chosen to manufacture optical media using the unique “light scribe” technology? D. P. Nanda: - It is the need of the hour; we are paying royalty to HP to get its services. Rahul Bhimrajka: - What is your competency in?

D. P. Nanda: - We are known in the market for our quality price and logistics, which we handle brilliantly. Our reach with the suppliers is excellent which help us having a very good credibility with our clients. Our major threat is from China, as they produce products low in quality and price. But because of price difference they are eating our share. But we will come out of it soon. Rahul Bhimrajka: - How does the attrition rate affect you as compared to other industries? D. P. Nanda: - The attrition rates is not an issue with us as the salaries, perks, quality, that we are offering to our clients is as per the existing industry structure. Rahul Bhimrajka: - tell me about the latest MOU signed between IIT, Delhi and Moser Bear. D. P. Nanda: - We engage in extensive R&D for the format of our CDs and other products. The MOU is towards that end too. As the rural market is still to capture, we are banking heavily upon our solar energy products to succeed in these markets. Rahul Bhimrajka: - Thank you.

RAHUL BHIMRAJKA

FACE-TO-FACEALOHA

Connecting Thoughts

21

"Psychology of trading" Successful futures traders always acknowledge the importance of psychology in their trading. Traders must be disciplined and remain emotionally detached from the market. Trading requires management of the emotional states. Emotional imbalance impairs the ability to make congruent decisions. The most optimal state is one of complete emotional detachment, to remain calm and to act in accordance to the markets. That includes negative as much as positive emotions - the key word is to stay "cool". Following are the some important points that a trader should observe in his or her trading strategy…. 1. DISCIPLINE Like most things in life, without it you won't succeed. Discipline is sticking to your plan, including your "stops" and entry points. It is the hardest, but most important rule of all. 2. KNOW YOUR PURPOSE Know why you are trading, if it is for the thrill, to make a living, whatever it is…. you will enjoy it more and trade better if you know why you are doing it. 3. TRADE ONLY WHAT YOU CAN AFFORD TO LOSE Futures trading are risky; so don't fund your trading with money, which, if lost, could put you into financial difficulty.

4. MAINTAIN MENTAL CLARITY One of the keys to successful trading is mental independence and clarity - the ability to free you from concerns that might distract you from trading. Whether they be family, friends, or financial concerns, always aim for a complete clarity of mind in your trading. Being clear in your goals and maintaining your mental focus will help you stick to your plan and not make rash decisions based on emotion. 5. DON'T PLACE ALL YOUR EQUITY IN ANY SINGLE POSITION One of the keys to success in trading is lasting in the game. Don't over commit your account to any single position. 6. ACCEPT THAT THE MARKET IS ALWAYS RIGHT The market cannot be controlled by one person so it has to be accepted that it will move regardless of what you want it to do. Fear, greed and hope can cloud your vision of the market and can cause emotional responses detrimental to your trading. The market will go where it wants to go.

“THE BIGGEST RISK IN LIFE IS NOT TO TAKE RISK.”


BIG BULLY

DID YOU KNOW? Bombay Stock Exchange

Limited is the oldest stock exchange in Asia

22

7. TRADE WITH DEFINITE GOALS IN MIND Profits belong to those who make decisions and act, not those who react. Your trading plan should not only focus on the best time to get in but also when to get out. This involves setting a view for profit taking or loss minimization. It is better to set a stop for a loss amount and stick to it. If in profit it is a good plan to set a stop to take a minimum profit while still giving the trade the potential for further profit. 8. DON'T TRADE TOO MANY MARKETS Concentrate and focus on a few select markets and completely master them; this is what professional traders tend to do.

9.ADMIT THAT YOU ARE WRONG Don't fall in love with a losing position. If you get it wrong, admit it, get out, conserve your equity and wait for another opportunity. 10. LET PROFITS RUN UNTIL YOU HAVE A REASON TO CASH IN Let profits run until you are given a reason to cash in, whether that be a trading system signal, a fundamental factor or your initial objective.

HIMANSHU NAUTIYAL and VIDHI


BIG BULLY DID YOU KNOW? Bombay Stock Exchange was established as "The Native Share & Stock

Brokers Association" in 1875

23

Benefits of online trading Trading futures online is not magic. Even though the information is moving at the speed of light, success in the market still requires discipline, knowledge, and patience. There are several benefits to online trading:

• Convenience. The financial information you need for your trading decision - your outstanding futures positions, the amount of cash you have in your account, and the amount of margin required for your intended trade - can be found on your computer screen.

• Speed. Futures prices can move quickly. Once you have made your trading decision, you want to place your order ASAP. Speed of the execution is

especially important if you are placing a market order. Online orders get to the trading floor faster than telephoned orders.

• Lower Commissions. Brokerage firms usually charge less for handling an online transaction because fewer of their resource are tied up in executing a trade.

• Control. When you trade online, you decide (no one else) what to do and when to do it.

Accuracy. Occasionally, messages between you, your broker, and the trading floor can be mis-communicated. Online trading reduces the number of steps in the order process, therefore reducing the chances of a misunderstanding.

HIMANSHU NAUTIYAL and VIDHI

BIG BULLY ALOHA

Connecting Thoughts

STOCK JAGRONS Dear Money A situation in which money or loans are very difficult to obtain in a given country. If you do have the opportunity to secure a loan, then interest rates are usually extremely high. Also known as "tight money". Trend Trading A trading strategy that attempts to capture gains through the analysis of an asset's momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs). Effective Date The date, declared by the Securities & Exchange Commission (SEC), on which shares can start trading. This usually refers to the date when shares become available for sale in an initial public offering.

24

1 Which major car company owes its postwar existence to British army officer Major Ivan Hirst, who scrounged steel and other materials to keep the heavily bombed plant going and then secured a British Army order for 20,000 vehicles?

A. Land Rover B. Bentley C. Volkswagen D. Jaguar

2 Which famous cheese is made in the town of Hawes in Yorkshire?

A. Cheddar B. Wensleydale C. Stilton D. Ticklemore

3. In which year was the Polo mint launched in the U.K., initially being marketed as `the peppermint ring made wholly by Rowntree'?

A. 1930 B. 1941 C. 1948 D. 1955

4.What does CNN stand for on the TV or Internet?

A. Cable News Network B. Cental News Network C. Complete News Now D. Crisp Noodle Nest

5. 'Quality first, cost second' is used by which pen company?

A. ADD Gel B. Cello C. Reynolds D. Oliver

6. 'Prepared to be watched' is used by which cycle company?

A. TI Cycles B. Hero Cycles C. Avon Cycles D. BSA

7. 'No one can eat just one' is used by which chips company?

A. Uncle chips B. Lays C. Cheetos D. None of these

8. 'Think bright, not white' is used by which company?

A. National B. Onida C. Samsung D. LG

9. What is the alternative name for Consumer Price Index (CPI)?

A. Laspeyres Index B. Keynes Index C. Paasche Index D. Mundell Index

10. Who introduced the concept of 'Permanent Income Hypothesis'?

A. Adam Smith B. Milton Friedman C. Franco Modigliani D. Irving Fisher

11. In what year was the WTO (World Trade Organisation) created?

A. 1993 B. 1992 C. 1994 D. 1995

12. According to Okun's Law, a 1% increase of unemployment rate results in a loss of GDP of how many percentage points?

A. 3 B. 5 C. 4 D. 2

13. If an economy uses a floating exchange rate system then what will happen to GDP if the government decided to use expansionary fiscal policy?

A. Increases B. No change C. Decreases D. Nobody knows


QUIZZLER

25

14. What was the first Indian luxury hotel established by the Tatas?

A. Taj Mahal Hotel B. Hotel President C. Watson Hotel D. Hilton Hotel

15. The Tata group consists of how many companies?

A. 60 B. 80 C. 125 D. 26

16. The merger of which two large pharmaceutical majors created a new company Aventis?

A. Ciba and Sandoz B. Rhone-Poulenc and Hoechst C. Glaxo and SmithKline Beecham D. Ranbaxy and Cipla

17. Which is India's largest pharmaceutical company?

A. GlaxoSmithKline B. Dr Reddy's C. Ranbaxy D. Cipla

18. Who is the CEO of Dr Reddy's Laboratories?

A. G V Prasad B. Satish Reddy C. Dr Anji Reddy D. Dr Ramoji Reddy

19.Which pharmaceutical company recently acquired a UK-based firm called CP Pharmaceuticals?

A. Pfizer B. Cipla C. Wockhardt D. Ranbaxy

20. What is the headquarters of the Tata group called?

A. Tata House B. Jasmshedji House C. Bombay House D. TISCO House

21.The Tatas built India’s first steel mill. In which year was it completed?

A. 1902 B. 1905 C. 1911 D. 1945

22. Which of the following appliance names once were part of the GM family of companies?

A. Westinghouse B. Frigidaire C. General Electric D. Whirlpool

23. Which Vice-President of General Motors left the company, formed his own company and named a car after himself?

A. Hernando DeSoto B. Barney Oldfield C. John Z. Delorean D. Edsel Ford

24.'We move the world' is used by which courier company?

A. Professinal Couriers B. None of these C. Blue Dart D. DHL

25.'Spoil yourself' is used by which car company?

A. General B. Toyota C. Tata D. Opel

BIJOYENDRA SANYAL


QUIZZLER

1-a, 2-b, 3-c, 4-a, 5-a, 6-b, 7-b, 8-c, 9-a, 10-b, 11-d, 12-b, 13-b, 14-a, 15-a, 16-b, 17-c, 18-a, 19-c, 20-c, 21-c22-b, 23-c, 24-d, 25-c

26

MICHAEL PORTER

One of the world’s most

sought-after business guru, strategists and

business conference

speakers, Michael Porter brings phenomenal knowledge and insight that helps corporations achieve greater performance. The leading authority on competitive strategy and international competitiveness, he is Harvard Business School’s C Roland Christensen Professor of Business Administration. Porter speaks to government and business audience around the world, including AT&T, First Boston and Proctor & Gamble, focusing on necessary strategies. Author of 14 books and more than 50 articles, his competitive strategy: Techniques for Analyzing Industries and Competitors is the leading work in its field. Traditionally, a nation's international competitiveness has been explained by international trade theories originating from Adam Smith. However, today's global economy is too complicated to be explained by the traditional trade theories. Porter introduced a new competitiveness theory, the so-called diamond model. He differentiated his theory from the traditional trade theories by arguing that national prosperity is not inherited, but created by choices; in other words, national wealth is not set by factor endowments, but created by

strategic choices. He showed different choices of creating wealth, which had been quite limited in the world of traditional trade theories. Several scholars have lately extended his diamond model. There are four factors, Porter suggested, that help to make a nation competitive: - 1 .Tough Domestic Rivalry 2. Country Resources 3. Country Infrastructure (including the educational quality of its workforce) 4. The Cluster Phenomenon Porter also suggested that there were just three generic strategies for managers to choose from if they wanted to gain competitive advantage, something that he believed was the underlying purpose of every business. These could be briefly identified as under: -

• Things could be made as cheaply as possible and the firm could become the lowest cost producer in a market.

• Alternatively it could offer

something special or different which would allow it to command a premium price.

• Or, thirdly, it could choose to be

what Porter calls a focused producer, looking to dominate in a niche market, so that others would find it too difficult to challenge the firm.


GURU COOL

27

To help the firm choose which strategy to adopt, Porter has said that it needs to decide which of five types of industry it is operating in: -

1. Fragmented 2. Emerging 3. Mature 4. Declining 5. Global

Porter has also said that every firm needs to examine the following five forces of competition: -

• The threat of substitute products • The threat of new entrants • The bargaining power of

suppliers • The bargaining power of buyers • The state of rivalry among

existing companies Always try to do things in ways that are hard for other companies to copy, says Porter. He further adds that finding that unique position isn't always obvious; in the end, it comes down to creativity and

insight - and strong leadership, the willingness to make hard choices and to take a stand against the conventional wisdom of the industry.

Honored with numerous titles and awards, he earned Harvard’s, David A. Wells Prize in Economics for his research in industrial organization, two McKinsey awards and many others.

ASHISH KAUSHIK

ALOHAConnecting Thoughts

GURU COOL

The Opinion expressed in this Magazine are solely the author views and should not be interpreted as those of University School Of Management Studies. The Institute and

Editorial Board does not take any responsibility of the facts, views publishes here in.

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Aloha (October 2005) - University School of Management Studies Newsletter

Education