IIT Roorkee Domination January 2012

DOMINATION

Is Dollar’s Reign Near An End Interest, Inflation and India

(07) (23)

JAN

UA

RY

20

12

NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

VOLUME-III ISSUE-01

- Regards

Team Domination

Editorial ………………………………………………………

Dear Readers,

With a new year, we bring

forth a brand new edition of

'Domination' for you. Amidst

global economic instability and

chaos, we talk of opportunities

and openings for growth. Look-

ing forward to the light at the

end of the tunnel, we hope you

find it worth the read.

The article 'Is Dollar's Reign as

World's Main Reserve Currency

Near an End?? ‘debates on

whether the currency is seeing

the last days of its supremacy

or if it is still holding fort. It

goes on to discuss the various

alternatives the world has

against dollar and the different

aspects of it.

In the current scenario of infla-

tion and high interest rates, '

Amid inflation and high interest

rates, does the Indian economy

hold good prospects in the next

one year?' sheds light on pre-

vailing conditions and major

developments in the Indian

economy. Further analysis of

various factors presents a mac-

roscopic picture of the econ-

omy for the year 2012 mainly

on three domains: growth, in-

flation and twin deficit.

'Employer Branding' talks

about the need of and lessons

learnt from employer branding

exercises undertaken by vari-

ous well-known brands. It

stresses the core principles for

creating a compelling em-

ployee value proposition.

'IT Risk Management: Signifi-

cance in an economic down-

turn' describes the three disci-

plines of IT risk management

and their implications for risk

management value in an in-

creasingly digitised and inter-

connected world.

'Is Poland ready to embrace the

“Single Currency?' delivers an

analysis of the costs and bene-

fits, for Poland, of adopting

Euro as its own currency.

Furnished with knowledge and

strengthened by hope, wel-

come the New Year with open

arms and a smile on your face.

Hoping that the zest of the new

year will bring happiness, good

fortune and good health to all

our readers , its Team Domina-

tion wishing everyone “happy

Reading”.

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

………………………………………………………

Contents Newsletter Team :-

Aditi Joshi

Anuj Mody

Anurag Agrawal

Chetna Yadav

Jubin Mohapatra

Manav Kaushik

Mukesh Rathi

Pawan Upadhyay

Prateek Tomar

Rajneesh Kumar

Saumya Verma

Sayantan

Shibi Singh

Shruti Goel

Design Team :-

Anurag Agrawal

Saumya Verma

Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: [email protected] Website: www.iitr.ac.in/departments/DM/Pages/Index.html For private circulation only

DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

04 12

07

23

19

Employer Branding: Need Of The Hour

Is Poland Ready To Accept Single Currency

Is Dollar’s reign Near An End?

Interest, Inflation and India

Qutopia

Drawing Values From IT Risk Management

15

DoMS da Evince

21

mailto:mailto:[email protected]?subject=Feedback

http://www.iitr.ac.in/Departments/DM/Pages/Index.html

Perspective ………………………………………………………

“The package of functional,

economic, and psychological

benefits provided by employ-

ment, and identified with the

employing company”, Ambler

& Barrow.

Relatively new as a topic, em-

ployer branding is already mak-

ing inroads into the main-

stream marketing lexicon.

Whilst Kotler has defined mar-

keting managing as ‘the art and

science of getting, keeping and

growing customers’, Brett

Minchington (author of Em-

ployer brand leadership-A

global perspective) defines em-

ployer branding as ‘ the art and

science of attracting, engaging

and retaining talent’. It aims at

creating compelling and differ-

ent employee value proposi-

tions and is concerned with po-

sitioning the employer brand in

potential labor market. For

this, it requires embracing the

principles and practices associ-

ated with external brand man-

agement and marketing com-

munication internally.

Businesses are now recognizing

that ‘engaged’ employees are

more productive, lead to

greater levels of customer loy-

alty and are more likely to en-

courage and contribute to or-

ganizational success. But it

must be kept in mind that poor

planning and implementation

of employer branding strate-

gies can do more damage than

good. The role of employer

brand is important but highly

complex in its management.

According to Bergstrom et al, it

is built on three core processes:

effective brand communication

to the employees, recognition

of its relevance and worth,

aligning the jobs with the

‘brand essence’.

Employer Branding- Need of the hour


………………………………………………………04 | DOMINATION, JANUARY 2012

Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie

………………………………………………………

Employer Branding - Need of the hour Alternately, one can define six

principles that stand at its core,

namely, insight, focus, differen-

tiation, benefit, consistency

and continuity.

The well known brand Philips,

after implementing the em-

ployer brand development pro-

gram, shared the following five

lessons learnt:

People build your business

Traditional recruitment no

longer works

• Be clear about your promise

Make it easy to do the right

things right

Think big, act small, fail fast

At Pepsi, the following have

been recognized as conduits of

talent sustainability:

Globally consistent yet lo-

cally customized brand

Effective and consistent in-

formation communication

Engaging and motivating

employees

Making the most of social

media through blogs, idea

network portals, etc

According to the Coca Cola

Company, the ability to make a

difference increases the fun as

well as the learning quotient of

people. They came up with

some reasons that necessitate

the role of a strong employer

brand;

Motivated associates are

critical to commercial suc-

cess

High turnover has a nega-

tive impact on results

High engagement increases

corporate reputation

Employee opinions drive

behaviors that impact re-

sults.

………………………………………………………



05 | DOMINATION, JANUARY 2012

………………………………………………………

Employer Branding - Need of the hour

This is further illustrated

through a survey undertaken

by the same.

The following strategies can be

undertaken to further the em-

ployer brand building initiative:

Active employee involve-

ment.

Identify the needs of em-

ployees and design program

as per the requirements.

Clearly defined policy and

procedures.

Aligning the employee and

the employer goals and vi-

sion.

Good work environment.

Compensation and benefits.

Scope of career develop-

ment.

Sound reward and recogni-

tion system.

Communication systems.

These strategies go a long way

in attracting talented work-

force, building an emotional

bond with the employees, re-

ducing attrition while enhanc-

ing performance and promot-

ing overall organizational suc-

cess.

………………………………………………………



Article By - Aditi Joshi [email protected]


mailto:mailto:[email protected]

………………………………………………………

Perspective ………………………………………………………

The US dollar has become the

most sought after currency in

the world as all the major inter-

national trade from coal to

crude and Gold to Grains takes

place using it. After the World

War II in 1944, the US Dollar

got the status of the World

Currency, the Reserve Currency

or call it a Reserve currency,

replacing United Kingdom’s

Pound Sterling and maintains

its position till date. A global

currency is one in which all key

commodities such as oil, gold,

steel and so on are priced; they

are the primary currencies

against which all others are

compared; and they are the

currencies that most national

governments and central banks

hold as part of their national

reserves. By implication, they

are therefore seen as the cur-

rencies of greatest stability and

the ones that keep the world’s

trade systems flowing. How-

ever since last 67 years, US Dol-

lar has seen major fluctuations

in its value, experiencing a

peak in 2000-2001 with a con-

stant devaluation and long

term decline since then.

Before analyzing whether Dol-

lar’s reign as a global currency

has come to an end, we need

to identify the facts that led

Dollar serve as world’s main

reserve currency for decades.

Next, we would analyze

whether those factors still pre-

vail, followed by analyzing the

alternatives available and fi-

nally the negative impacts of

replacing dollar on the global

economy.

How the US Dollar achieved

the coveted status

When the World war II was

still raging, 730 delegates

from 44 Allied nations gath-

ered in Bretton Woods,

New Hampshire, United

States, signed the Bretton

Is Dollar's Reign Near An End?? -Ticking Clock Begins...

………………………………………………………




………………………………………………………

World Reserve Currency Woods Agreements in July

1944. The significant features

of the Bretton Woods system

included an obligation for each

country to adopt a monetary

policy that maintained the ex-

change rate by tying its cur-

rency to the U.S. dollar, estab-

lishing the dollar peg with gold.

The US Economist, Henry Dex-

ter, thus negotiated in Bretton

Woods Agreement, resulting in

the US Dollar emerging as the

global reserve currency.

After the end of World War

II, of estimated total gold

reserves of $40 billion, US

held about $26 billion gold

reserves which accounts to

approximately 60% share.

Also, the dollar was fixed to

Gold at a price of $35 per

ounce of Gold in order to

bolster confidence in the

system. The nations further

agreed to buy and sell US

Dollar to keep their curren-

cies within 1% of the fixed

rate. This additionally en-

couraged foreign govern-

ments and central banks to

exchange dollars for gold.

Another impact of the

World War II, was US

emerging as the biggest im-

porter of goods and services

to maintain its economy by

a trade deficit, thus helping

foreign governments keep

US Dollar in their exchange

through trade surplus and

prevent their currency from

appreciating.

The US Dollar is also the

currency with the most pur-

chasing power and also the

only currency backed with

the power of Gold. Also af-

ter the World War II, all the

major European Countries

were highly in debt and

thus exchanged large

amounts of Gold with US

Dollar, thus contributing to

the supremacy of dollar’s

power. Thus the US Dollar

strongly appreciated in

value in the global economy

and had strong reasons to

lead the world as the Global

Currency.

Do the Conditions prevail in

the Present Economy

Unlike the past, the present

scenario shares a different

story. Here we need to analyze

the fact that whether the fac-

tors that enforced US Dollar as

the Global currency, still pre-

vails.

The Bretton Woods System

which gave the status of

Global currency to the US

Dollar does not officially ex-

ist today because on August

15, 1971, President Richard

Nixon unilaterally termi-

nated the convertibility of

Dollar to Gold, which was a

significant reason of its

dominance. This action is

referred to as ‘Nixon Shock’.

The US debt has almost

doubled from 2002 to 2011

from $5.9 trillion to $14 tril-

lion due to the subprime

crisis and recession, leading

the federal debt to about

75% of United States’ Gross

Domestic Product, thus re-

quiring more flexible fiscal

policy.

The US has not remained a

promising customer any-

more and is already at the

verge of insolvency. The in-

flation rate has hit a 3-year

high of 3.9% in September.

Unemployment is also held

at nearly double its pre-

recession level, keeping in-

comes under pressure.

The Dollar’s Golden Era

seems to come to an end.

Today only a handful of oil-

………………………………………………………




………………………………………………………

producing nations in the Mid-

dle East hold a combined $2.1

Trillion in Dollars, which are

solely a product of selling oil in

exchange for Dollars. China

with other BRIC countries has

formed a secret coalition to

end the pricing of oil in dollars

by 2018. Also the Government

of Iran has already declared

that all of its future transac-

tions of reserves would be held

in non-Dollar denominated as-

sets.

Changes in technology are

also undermining the dol-

lar’s monopoly. Earlier trad-

ers may face difficulty in

comparing prices of com-

modities in different curren-

cies, but today nearly every-

one carries handheld de-

vices which can be used to

compare prices in different

currencies in real time.

Alternatives against Dollar

After analyzing the position of

US Dollar in the present sce-

nario, we need to evaluate the

alternatives available against

Dollar as the Global or Reserve

Currency.

Other Foreign Currency

China’s Renminbi:

China is moving rapidly to in-

ternationalize the Yuan, also

known as the Renminbi. Sev-

enty thousand Chinese compa-

nies are now doing their cross-

border settlements in Yuan.

Although the Renminbi option

seems quite possible, it is pres-

ently not the right answer. The

rise of China’s economic power

creates a case for the Renminbi

revaluation to make it a global

reserve currency but there are

several fundamental barriers to

this. The controls exerted by

the Chinese government on the

Renminbi, for export advan-

tage, makes it devalued against

the world’s other currencies,

especially against dollar by

50%. Although the Chinese

government has started to re-

lax the pegging to the dollar in

June 2010, the variation being

allowed is only marginal.

Euro:

French President Nicolas

Sarkozy before boarding a

plane to meet President

George W. Bush proclaimed,

“Europe wants it. Europe de-

mands it. Europe will get it."

The "it" here is global financial

reform”. Evidently Sarkozy did

not have to wait for too long if

Euro crisis had not disrupted

the whole European Union. The

Euro has the maximum power

of eroding Dollar’s dominance

because it represents a larger

size economy and has the pros-

pect of more countries adopt-

ing the euro as their national

currency. Talking about the

power of Euro, in December

2006, it surpassed the dollar in

the combined value of cash in

circulation. The easiest way to

introduce Euro as the global

currency is by legalizing all oil

trades in Euro, thus forcing all

countries to keep Euro as their

key reserve currency.

But replacing Dollar with Ren-

minbi or Euro is not a complete

solution because it will only de-

fer the problem for a few dec-

ades. After some time the

world economy would be at

the same position as it is right

now as the economy would be

then again under the control of

a single country’s currency and

hence dependent on its finan-

cial situation.

Special Drawing Rights

On 26 March 2009, a UN panel

of expert economists called for

a new global currency reserve

scheme to replace the current

World Reserve Currency ………………………………………………………




………………………………………………………

US dollar-based system called

Special Drawings Rights. The

IMF said Special Drawing

Rights, or SDRs, could contrib-

ute to global stability, eco-

nomic strength and global eq-

uity. SDRs represent potential

claims on the currencies of IMF

members and can be used to

convert into whatever currency

a borrower requires at ex-

change rates based on a

weighted basket of interna-

tional currencies with a weight

of 44% for the dollar, 34% for

the euro, and 11% each for the

yen and pound sterling. So, for

example if India wants to use

its SDRs, it will typically ask the

IMF for dollars in exchange.

The IMF will debit India’s SDR

account, credit America’s SDR

account, ask the US for the cor-

responding dollars, and hand

these to India. The goal of SDR

is to have a reserve asset for

central banks that better re-

flects the global economy since

the dollar is vulnerable to

swings in the domestic econ-

omy and changes in U.S. policy.

Thus the risk of depending on

just a single currency would get

distributed in four different

currencies.

Basket of Commodities

Another possibility is a cur-

rency unit based on a basket of

commodities. After all, raw ma-

terials are the one thing that

every country absolutely has to

have access to. And every form

of money is a proxy for real

stuff in one way or another.

Hence, a unit that was one part

gold, one part oil, one part iron

ore, and one part rice, would

look like something that was

going to hold its value for a

long period of time.

New World Currency

John Maynard Keynes at the

UN’s Bretton Woods confer-

ence in 1944, put forward the

idea of a hypothetical single

global currency or supercur-

rency, which till date, seems

logical enough and can be

thought of. It will be adminis-

tered by a global central bank

and will be used for all transac-

tions around the world, regard-

less of the nationality of the

entities (individuals, corpora-

tions, governments, or other

organizations) involved in the

transaction. Supporters often

point to the euro as an exam-

ple of a supranational currency

successfully implemented by a

union of nations with disparate

languages, cultures, and econo-

mies.

Negative impact of replacing

Dollar

A sudden dollar collapse would

create global economic turmoil

because investors would then

rush to other currencies, such

as the euro, or other assets,

such as gold or other commodi-

ties. Demand for Treasuries

would plummet, driving up in-

terest rates. Import prices

would skyrocket, thus causing

inflation. Thus inflation and

high interest rates would fur-

ther suppress business growth.

The natural consequence of

these economic situations

would be high rate of unem-

ployment, further leading to

the economy back to recession

or worsening to depression.

Also the alternative replacing

Dollar should be in a position

to absorb all Dollar reserves

from the economy. If the dollar

reserves are not in a position to

do so, the countries would rush

to US or concerned monetary

authorities. If the concerned

authority is not in a position to

do so, an economic disturbance

is sure to occur.





………………………………………………………

Conclusion

United States is the largest do-

mestic economy in the world.

Its GDP is estimated to be

around $14.2 trillion in 2009.

American labor market has also

attracted immigrants from all

over the world and has one of

the world’s highest immigra-

tion rates. It has world’s largest

and most influential financial

market. High stability and low

level of corruption are the key

factors in the US political Sys-

tem. The US economic policies

are highly flexible in nature, the

biggest example being during

recession where in spite of be-

ing a capitalist economy, it

shifted to socialist economy by

giving bailout packages and na-

tionalizing the private entities.

Thus we see that inspite of

some the negative implications,

US Dollar still holds more than

60% of the foreign reserves of

central banks and govern-

ments. The Organization of Pe-

troleum Exporting Countries

sets the price of oil in dollars.

Thus, U.S. dollar is involved in

close to 90% of all foreign ex-

change transactions, compared

with less than 40% for the euro

and 16% for the Japanese yen.

Fortunately, it's highly unlikely

that the dollar will collapse in

the next two decades because

any of the developed countries

who have the power to make

that happen - China, Europe

and other foreign dollar-

holders - don't want it to occur.

It's not in their best interest.

The US consumer occupies the

major market share of the de-

veloped economies, so why

bankrupt your best customer?




Article By - Ruchi Gupta [email protected]



………………………………………………………

Perspective ………………………………………………………



Is Poland ready to embrace “Single Currency” ?

When joining the European Un-

ion in 2004, Poland, along with

the other new member states

also agreed to join the euro

zone meaning that it will adopt

the euro as its own currency.

Unlike the United Kingdom,

Sweden and Denmark before it,

Poland does not have the op-

tion to opt out of the euro

zone. As a result, the only

question that remains valid, is

not whether Poland will adopt

the euro, but when.

The mission statement of the

Eurosystem says that the Euro-

pean Central Bank (ECB) and

the national central banks

(NCBs) jointly contribute to

achieving:

Price Stability.

Financial stability and Finan-

cial integration.

To be able to join the Eurosys-

tem, a country should be able

to fulfil the Convergence Crite-

rion mentioned in the Maas-

tricht Treaty which requires a

country to have:

A maximum of 1.0% infla-

tion rate.

A maximum of 3.0% annual

government deficit to GDP.

A maximum of 60% gross

government debt to GDP.

A minimum of 2 years of

membership in ERM II.

A maximum of 6.0% long

term interest rates.

To decide whether the Euro is

good news for Poland or not,

its costs and benefits need to

be analysed.

1. COSTS

Loss of monetary policy inde-

pendence

A floating exchange rate re-

gime, such as the one currently

in place in Poland, gives the

central bank considerable

autonomy in setting its interest

rates. Giving this up and adopt-

ing the monetary union policy,


………………………………………………………

there is increased risk of eco-

nomic fluctuations which may

lead to an inefficient allocation

of resources having a negative

impact on economic growth.

Labour market adjustment

mechanism

After joining the euro area, real

wage adjustment or free move-

ment of labour, will become

the only mechanism, apart

from fiscal policy, that can miti-

gate the negative effects of

idiosyncratic disturbances.

Convergence of business cy-

cles

The cost of abandoning

autonomous monetary policy is

based on the extent to which

the business cycles of the coun-

try in question and the rest of

monetary union are synchro-

nised. If business cycles are

convergent, asymmetric shocks

are relatively less frequent.

2. BENEFITS

Elimination of transaction

costs

The elimination of transaction

costs incurred by enterprises

and households in relation to

the zloty/euro exchange rate is

among the most obvious bene-

fits of the single currency.

These costs may be divided

into two groups. The first group

comprises financial costs like

the fees accompanying foreign

exchange operations and costs

of hedging against exchange

rate risk. The second one in-

cludes administrative costs in-

curred by companies as a result

of committing resources to ac-

tivities related to foreign ex-

change operations. The more

open an economy is towards

other currency union members,

the greater are the benefits

from the elimination of trans-

action costs.

Elimination of exchange rate

risk and decline in interest

rates

Exchange rate risk hinders the

economic growth. It increases

the cost of capital and makes

investment planning and opti-

mum use of available resources

more difficult. Elimination of

exchange rate risk improves

business conditions, triggering

adjustment processes in trade

and foreign and domestic in-

vestment.

Impact of the euro on invest-

ment

Removal of exchange rate un-

certainty and, consequently,

the elimination of the currency

risk premium lead to a fall in

interest rates. Therefore, the

cost of capital falls, which in

turn implies a higher level of

domestic investment.

Trade expansion

Joining the euro zone with its

consequent elimination of bi-

lateral exchange rate risk con-

siderably changes business

conditions for economic agents

participating in international

trade. Growth of foreign trade

benefits the economy via in-

creasing specialisation and a

growing scale of production.

Integration of the financial

market

Elimination of foreign exchange

fluctuations and the coordina-

tion of monetary policy within

the euro zone have been the

main driving forces behind the

financial integration in Europe.

Entry to the monetary union

will therefore enable Poland to

deepen the benefits reaped

from the participation in the EU

financial market.

CONCLUSION

Macroeconomic policy pursued

in Poland in the period preced-

ing the euro area accession

should be oriented towards

mitigating the risks stemming

Poland And single Currency ………………………………………………………




………………………………………………………

from the conflict between sta-

bilising the exchange rate and

maintaining low inflation. Dur-

ing ERM II participation, Poland

should pursue a tight fiscal pol-

icy combined with a moder-

ately tight monetary policy.

Whereas there is no doubt that

relinquishing independent in-

terest rate policy involves a loss

of an effective instrument for

smoothing output fluctuations,

the effectiveness of the floating

exchange rate as an economic

stabiliser in an open economy

is substantially limited. The

cost of giving up autonomous

monetary policy in Poland will

most likely be smaller than the

degree of Poland’s compliance

with traditional criteria of opti-

mum currency area would im-

ply.

Poland And single Currency ………………………………………………………



Article By - Garima Lakhanpal [email protected]



………………………………………………………

Perspective ………………………………………………………

The ongoing economic down-

turn has resulted in a lot of

problems for IT organizations.

The role of IT risk management

now is more important than

ever. Organizations find them-

selves asking how to get more

value from their risk manage-

ment activities as organizations

struggle to squeeze the most

value from all monies invested.

This includes using risk man-

agement insights to improve

the way IT and business proc-

esses are managed.

Technology risk managers need

to take into consideration gen-

eral risk management guidance

to the specialized domain of IT.

Both approaches provide some

help, but neither can generate

the holistic view of IT risk as

business risk that is becoming

more important in an increas-

ingly digitized and intercon-

nected world.

This article describes the three

disciplines of IT risk manage-

ment, their implications for risk

management value. Companies

that achieve maturity on the

disciplines not only manage risk

better, but also can use IT risk

management to improve IT

management and business out-

comes. Their risk management

investments pay new value in

four ways: fewer incidents,

more efficient IT processes,

better alignment with the busi-

ness and higher agility.

Three Disciplines of IT Risk

Management:

In many organizations, the sole

objective of IT risk manage-

Drawing Values From IT Risk Management




………………………………………………………

Drawing Values From IT Risk Management ment is to ensure that the com-

pany does not experience any

bad incidents because of IT,

whether from hacker attack or

from project overruns. How-

ever, the focus is often on pro-

tection, not improvement, on

spending, not value. A recent

Massachussetts Institute of

Technology (MIT) research

study found that three IT risk

management disciplines work

together to address risks to

four key enterprise

objectives: avail-

ability, access, ac-

curacy and agility.

Companies that get

higher value from

IT risk manage-

ment investments

are mature in all

three disciplines:

• An IT foundation that is well

managed and only as complex

as necessary.

• A risk governance process to

understand what risks the en-

terprise faces and to decide

what to do about them.

• A risk-aware culture where

people have appropriate

awareness of risks and are

comfortable talking about

them.

These three disciplines work

together to ensure that an or-

ganization understands the IT

risks it faces, makes good deci-

sions about them and starts to

reduce risk over time.

Mature risk governance is nec-

essary but not sufficient. It

raises attention to risk, in-

creases stakeholder involve-

ment and provides information

for decision making. However,

actual improvement comes

from driving change in the IT

foundation and risk-aware cul-

ture. Firms with a more mature

culture or foundation report

statistically fewer incidents

than other firms, but the bene-

fits go farther. They also report

statistically significantly higher

efficiency, IT-business align-

ment and agility.

The IT foundation is the

set of infrastructure, applica-

tions, supporting technology

and IT people who enable busi-

ness processes to run. Firms

with a mature IT foundation

have a well-managed infra-

structure, a well-defined busi-

ness continuity plan, and a

solid understanding of the links

between technology and busi-

ness process. But, they go be-

yond this. They also have en-

terprise architecture in place

and are working to ensure that

the IT foundation is

no more complex

than necessary.

Inconsistent soft-

ware updates

cause it to fail of-

ten, make it diffi-

cult to recover,

and make it more

difficult to change.

An immature IT foundation

eats up maintenance resources

and restricts agility.

One firm experienced the same

virus at three offices, six

months apart, because IT staff

in the affected sites did not in-

form other sites of the vulner-

ability. At another firm, IT staff

routinely missed a set of serv-

ers when installing patches.

Key to keeping the IT founda-

………………………………………………………




………………………………………………………

foundation well maintained are

well-designed and well main-

tained controls and operational

management processes.

The risk-aware culture is the

third discipline. It is a culture

where people recognize the

risks inherent in their activities,

can openly discuss their risks,

and are willing to work to-

gether to resolve risks or inci-

dents. Having a mature risk-

aware culture makes a firm

both safer and more agile. Peo-

ple know how to avoid overly

risky behaviors and resolve

conditions that introduce un-

necessary risk. When people

understand which risks are

worth taking and understand

which conditions and behav-

iours introduce unwanted risk,

the firm can take on more risk

in pursuit of return.

A mature risk-aware cul-

ture does not happen acciden-

tally. It must be consciously

built and reinforced by the

company’s leaders. Companies

with a mature risk-aware cul-

ture have employees who un-

derstand risk and controls rele-

vant to their jobs, who can talk

openly about risk without fear

of reprisal, who include risk in

their business conversations,

and who are encouraged

through frequent reminders

and top leadership reinforce-

ment. Companies that are ma-

ture in all three disciplines—

risk governance process, IT

foundation and risk-aware cul-

ture— have statistically signifi-

cantly fewer incidents, higher

IT efficiency, better alignment

and higher business agility. But

maturity means more than just

doing the basics. It is more

than identifying risks, protect-

ing existing assets and increas-

ing awareness of threats. Com-

panies with mature risk man-

agement capability use risk

governance to reduce complex-

ity in the foundation. They go

beyond awareness to build a

culture in which safe discussion

of risk (from availability

through agility) is the norm.

These companies not only pre-

vent risk, but also can take new

risks safely. They not only re-

duce incidents, but also im-

prove efficiency. Then, the

company’s investments in risk

management pay off not only

in better risk management, but

also in better IT management

and results.

Drawing Values From IT Risk Management ………………………………………………………




Chlorophyll ………………………………………………………

Poem By - Manav Kaushik [email protected]

Thunderstruck was I, when I first saw you

starstruck, with that beautiful smile

... the cupid’s arrow somehow got through

& I was mesmerized all the while....

When you look straight into my eyes, I sublime

I am speechless, frozen with chills at the same time

captivated, with those perfect imperfections that you possess

I find myself lost in those beautiful eyes, I must confess.....

your thoughts are like an incurable illness and they cloud my mind

I lose my sense of conscience, girl your gestures drives me blind

I try to close my eyes but in that dark its you all that I see

I want 2 close my mind but in that emptiness, its only these words that come to me...

Burning in this insatiable flame, I m waiting for the answers that are due

It may seem foolish though, but my feelings for you will always remain true

& now that I m drowning in my dreams, and I m falling 4 you

Baby I m worthless, worthless as a friend to you...

“Worthless”

Its wise to learn, its GOD like to create

………………………………………………………DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE




………………………………………………………

Qutopia ………………………………………………………

1. According to his sister’s eulogy, what were Steve Jobs’ last words?

2. Which previously free service is Google to start charging heavy users for?

3. What attraction has Disney won the rights to build at its Theme Parks?

4. Struggling retailer HMV has announced to diversify into which new segment?

1. Which iconic sports venue is to be renamed the Sports Direct Arena?

It’s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? ‘Qutopia’ – A Utopia of the best Biz Quiz Tidbits to wreck your brains! Rush in your answers to [email protected] or [email protected] before 30th January, 2012. The winner will have their names published in the next issue. Also, person getting the highest score in the current quarter (Jan-July 2012) will get a gift voucher. Answers in the next issue of DoMination.

Section A (1 Point for each correct answer)

Section B (2 Point for each correct answer)




mailto:[email protected]

………………………………………………………

Qutopia ………………………………………………………

2. Identify this logo.

3. Identify this business tycoon.

1. Connect the images to a business tycoon.

Section C (3 Point for each correct answer)




………………………………………………………

DoMS-da-Evince

Lekshmi Sreedharan is 2011 batch pass out of DoMS, IIT Ro-orkee. She is currently working as Competitive Intelligence (CI) Analyst in Market Intelligence section of the Global Mar-keting Center at IBM Bangalore.

1.What are your roles and re-

sponsibilities with IBM?

I work as a Competitive Intelli-

gence (CI) Analyst in Market

Intelligence section of the

Global Marketing Center at

IBM Bangalore. As a CI analyst I

asses the IBM's competitive

landscape, assess competitive

behavior and initiatives, deter-

mine possible successes and

impact on IBM, and make rec-

ommendations for strategy,

marketing and products/

offerings.

2.How was your experience

working with Accenture Tech-

nology Solutions and how it is

different from IBM?

At Accenture I was in to a com-

pletely technical role in SAP BI

domain ( In simple words-

Software Engineer!!!!),while

here in IBM I am working as a

marketing person. Company

wise also Accenture, as such

was strict in its timings

whereas at IBM, flexibility is a

key takeaway! The work cul-

ture is very smooth here with

no strict timings and we also

have the option of "Work from

Home" which can be taken on a

regular basis.

3. What has been the most

challenging role in your career

so far?

Every day here at IBM offers a

new challenge. At Accenture

my job was more of a repeti-

tive one. Once you are done

with the trainings, there are

very less surprises coming your

way as we are very familiar

with the domain we are work-

ing. But my present job is a

highly challenging one as they

expect us to know everything

about every company in the

world which is at competition

with IBM. Just for an example,

when we present to a higher

up, an arbitrary question may

pop up, like, "What is the cur-

rent situation at Brazil and why

are our competitors winning

more deals than us?" or, " Why

is a certain competitor growing

at 23% in France and us only at

18 odd %?" . Clearly, we have

to be prepared to tackle any

question at any given time!

4. How has DoMS, IIT Roorkee

contributed to your success?

Well DoMS had a major role in

this. Even the small facts given

by our faculty turn out to be

huge help here in the corpo-

rate world. The various experi-

ences our faculty shared with

us really worked miracles for

me in many situations here..

And it is because of DoMS, that

I am here at IBM now. And I

also got my Life Partner at

DoMS.

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 21 | DOMINATION, JANUARY 2012


………………………………………………………

………………………………………………………

DoMS-da-Evince 5. Any message for the read-

ers, especially the current

batches of DoMS?

Be attentive in classes. Try not

to miss any class…Never take

any subject light by thinking

that this will be never be useful

in my life. Trust me , if u listen

and are regular in the classes, it

will for sure make your life eas-

ier in the corporate world. And

above all be confident and sin-

cere!!!



………………………………………………………

………………………………………………………

Regardez I’economie ………………………………………………………

Inflation is the biggest problem

faced by the Indian economy

since past two years as it re-

mains stubbornly high. Several

measures taken by RBI

(Reserve Bank of India), which

included increasing of reserve

rates 13 times or 375 basis

points in 18 months, have not

yet shown any favorable re-

sults. Instead they have started

hampering the industrial

growth, investments and pri-

vate consumption of the econ-

omy.

Through this whitepaper, I

have tried to understand and

answer “Amid inflation and

high interest rates, does the

Indian economy hold good

prospects in the next one

year”.

First of all, I have presented the

current scenario of Indian

economy which includes the

overview of major develop-

ments of economy in the cur-

rent year, a view on inflation,

GDP, foreign reserves and RBI

monetary measure.

Next I did a step by step analy-

sis of various monetary and

macroeconomic developments

and gave an outlook for the

same. The different areas I

studied and analyzed included

output, aggregate demand, ex-

ternal sector, liquidity, inflation

and financial markets. Finally, I

have presented a macroscopic

picture of the Indian economy

for the next year by giving an

outlook mainly on three do-

mains: growth, inflation and

twin deficit.

Indian Economy: Current Sce-

nario

On one hand, the Indian econ-

omy rebounded back to growth

after the global crisis of 2009-

10 and on the other hand, it is

Interest, Inflation and India: Can They Survive Together



………………………………………………………


………………………………………………………facing several macroscopic

problems starting from infla-

tion, falling rupee value, in-

creasing fiscal deficit. Though

the GDP has improved to 8.5

per cent but still it is much be-

low the expected GDP of 9 per

cent and experts feel that it

might even remain 8.25 per

cent if the current conditions

prevail.

The problem began with infla-

tion which remained stub-

bornly high i.e. 9.6 per cent for

the last 10 months even after

aggressive interest rate hikes

(13 times or 375 basis points

since March 2010) by RBI to

control the liquidity. These

measures were not able to con-

trol inflation but they did slow

down the growth of Indian

economy and affected the in-

dustrial expansion plans. After

economic growth fell to 6.9 per

cent, industrial production has

contracted 5.1 per cent in Oc-

tober.

To add to the woes of RBI, the

Indian rupee fell drastically i.e.

15 per cent against dollar fol-

lowing the downgrading of the

US economy by Standard and

Poor which triggered greater

uncertainty and turmoil in the

global economy. This lead the

import of crude oil to be more

expensive which in turn has in-

creased the current account

deficit and fiscal deficit of the

country, which is expected to

exceed 4.6 per cent of gross

domestic product target.

Also, the Indian exports grew

10.8 per cent in October to

$19.9 billion while the imports

grew 21.7 per cent because of

increase in prices of crude oil

and other commodities to

$39.5 billion, leaving a trade

deficit of $19.6 billion- highest

ever in past four years. India’s

foreign exchange reserves have

grown significantly. The re-

serves stood at US$ 304.8 bil-

lion as on March 31, 2011.We

will now look step by step at

various monetary and macro-

economic developments in In-

dian economy.




………………………………………………………


………………………………………………………Indian Economy: Develop-

ments and Outlook Output

During the third quarter of

2011, the global economic

growth slowed down leading to

waning of business and con-

sumer confidence. As a result,

the economic growth of India

decelerated to 7.7 per cent.

The sectorial growth rate of

GDP is shown in Table 1.1,

which shows growth in agricul-

ture sector but deceleration in

growth of industrial andpro

services sector. It is evident

that slackening of industrial

growth was in “mining and

quarrying” and “manufacturing

sectors” while, there was a

sharp deceleration in growth of

construction sector in case of

services. Since, construction

sector is important for its large

employment potential, this can

pose a serious issue. It can be

concluded that this slow down

has been a result of high inter-

est rate hikes by RBI, which

have made the industries to

delay their expansion plans.

Aggregate Demand

There have been signs of de-

crease in aggregate demand

which can be credited to the

significant tightening of mone-

tary policy by the Central Bank

since March, 2010. However,

several non-monetary factors

such as hindrances to execu-

tion and environment of global

uncertainty have also adversely

impacted the investment.

Overall the Private final con-

sumption expenditure (PFCE),

which is the main component

of aggregate demand, declined

drastically mainly due to tam-

pering of demand in interest

rate sensitive sectors, particu-

larly the consumer durable

goods sectors such as passen-

ger cars, resulting again from

pressure of inflation and tight

monetary policies. Also, the fis-

cal deficit and the revenue defi-

cit of the economy are increas-

ing. The main reasons behind

this are a sharp decrease in tax

revenues, increased expendi-

ture on subsidies and the fal-

ling value of rupee, which is in-

creasing government expendi-

ture on crude oil imports and

oil subsidies.

In brief, we can conclude that

with investment declining and

with consumption responding

less than intended to monetary

policy, there is a need to chan-

nelize the government as well

as private spending towards

investment to sustain potential

output growth.

The External Sector

Though the exports this year

have increased above the ex-

pectations, the import expendi-

ture has also increased sub-

stantially due to increase in im-

port of crude oil, gold, elec-

tronics and machinery, thus

leading to overall increase in

CAD (Current Account Deficit).

Also, owing to current global

slowdown, the growth momen-

tum of exports does not seem

to be sustained. Also, due to

euro crisis, the inflow of FII has

reduced though FDI has in-

creased to somewhat balance

it. The policy of government to

allow 51 percent FDI in multi-

brand retail may help further

but it has been put on hold for

now. Going forward, capital

flows into India will depend on

the economic and financial

conditions in the US and the

euro area, and whether the

growth and interest rates are

able to remove the general risk

perception among foreign in-

vestors. It is, therefore, impor-

tant to encourage FDI inflows





………………………………………………………

………………………………………………………DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE


to impart stability to India’s

capital account.

Liquidity Conditions and Infla-

tion

The liquidity conditions are in

deficit mode following the tight

monetary policy by RBI to con-

trol high rates of inflation. It

raised the rate 13 times over a

period of 18 months since

March, 2010 in order to con-

tain inflation but inflation re-

mained sticky. The Chart 1.2

below shows the movement of

WPI and repo rate. Thus , food

products remain a major

source of inflation despite nor-

mal monsoons and record food

grain production. This can be

attributed to the increase in

income of people in rural areas

thereby, increasing the con-

sumption. Also, the inflation

due to manufactured non- food

products seems to be increas-

ing due to the combination of

high input costs and buoyant

demand. The tight monetary

policy of RBI has little effect on

demand in these sectors. Also,

the inflation pressures have

been added up due to falling

value of rupee against dollar

owing to the euro crisis which

has increased the demand of

dollars. India’s imports ac-

count for about 22 per cent of

GDP, and depreciation of the

rupee raises the risk of im-

ported inflation. Many of the

commodities having large com-

bined weights in the WPI also

constitute jointly a significant

proportion of total imports.

Financial markets

The Indian equity and foreign

exchange markets are showing

great volatility owning to the

deepening euro area sovereign

debt crisis. Due to global condi-

tions and the monetary policies

by the central bank, the confi-

dence of investors is shaking

leading to outflows of FIIs from

the Indian financial markets.

The two key Indian equity indi-

ces, Sensex and Nifty, declined

by about 14.5 percent and 14.7

percent, respectively, as on Oc-

tober 19, 2011. The movement

of Sensex and nifty in the

month of November from 2010

to 2011.Going forward, domes-

tic growth and inflation out-

look, resilience of the banking

sector and the nature and


………………………………………………………


………………………………………………………depth of global uncertainty will

shape the developments in the

financial markets. The global

markets will primarily track the

international policy actions to

address the problem of euro

area sovereign debt crisis and

slowdown in advanced econo-

mies.

Macroscopic View: The Com-

plete picture for 2012

Growth Outlook

The growth seems to follow a

downward trend owing to in-

crease in global uncertainties

and sticky inflation pressures.

The IMF’s baseline projections

suggest that there is a decel-

eration in the growth of global

economy and it will grow only a

medium pace. Recovery is

unlikely even in advanced

economies.

The estimates of GDP as 9 per

cent at the beginning of cur-

rent year have touched a low

of 7 per cent. Indicators sug-

gest that growth moderation

has continued into Q2 of 2011-

12. Growth is also likely to stay

weak in the second half of 2011

-12, especially if the global

downturn continues.

Persistent inflationary pres-

sures, rising input costs, rise in

cost of capital due to monetary

tightening and slow project

execution are some other fac-

tors that are hampering the

growth.

Though the prospects of agri-

culture sector look encourag-

ing, industrial sector growth is

likely to decelerate due to

slowdown in investment. In ad-

dition to the impact of mone-

tary tightening, other factors

affecting business sentiments

are:

a) With signs of global and do-

mestic economy slowing down,

firms are reluctant to expand

capacities.

b) The impact of perceived

governance issues have lin-

gered.

c) Business confidence has

weakened due to correction in

equity prices.

The growth of the services sec-

tor will be driven by the unfold-

ing of the global and domestic

economic situation, but is

largely expected to keep its

momentum.

Monetary and Fiscal policies

need to be formulated with

great caution because further

raising the rates could greatly

hamper the industrial growth.

Inflation Outlook

Inflation is still likely to remain

one of the major problems of

the central bank. It is expected

to remain high throughout the

year and medium i.e. 7 percent

only towards the end of the

year.

With global growth environ-

ment deteriorating, global

commodity prices, including

crude oil, have weakened but

the benefits of the recent fall in

global commodity prices have

been largely offset by the ru-

pee depreciation. If global oil

prices stay at current level, fur-

ther increase in prices of ad-

ministered oil products will be-

come necessary to contain sub-

sidies. Fertilizer and electricity

prices will also require an up-

ward revision in view of sharp

rise in input costs.

The monetary policy has

brought down the demand side

inflation to certain extent but it

still needs to play an important

role to bring down the supply

side inflation so as to sustain

growth of the economy. In face

of nominal rigidities and price

stickiness, there are dangers of

accepting elevated inflation

level as the new normal.




………………………………………………………


………………………………………………………Outlook on Twin Deficit

If the global crisis deepens and

domestic economy slows down

beyond what is currently antici-

pated, the fiscal slippage could

turn out to be an issue of con-

cern.

Prospects for external Sector

for 2011-12 look uncertain due

to global uncertainties arising

from the financial turmoil that

followed the sovereign rating

downgrade of the US, slowing

pace of global recovery and the

sovereign debt problems in the

Euro area.

The robust performance of In-

dian exports also looks in dan-

gers due to growth slowdown

of advanced economies but it

can be partly mitigated by di-

versification of exports in terms

of composition and as well as

destinations.

Finally the impact of capital

flows is more difficult to gauge.

Capital flows could surge or di-

minish, depending upon the

degree of risk aversion along

with several other factors but if

the global crisis worsens, then

capital flows are most likely to

decrease as foreign investors

will sell their equities to cover

risks elsewhere.



Article By - Ambika Garg [email protected]




ROORKEE - 247667, INDIA

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