Saturday, August 23, 2008

Business Planning Manager

Recently , I found some of the corporates looking people for the role of Business Planning Manager.It is true that the role of Business Planning manager is more operational than strategic . I have been doing Business planning for last 8 years , and I always found that there is a great loop in business planning, where you move from strategy to operation , and then you research your operation and build new strategy .

Strategy -> Operation ---> Research --> Strategy

Infact, this is how the array of combination between Product,People,Services and Brand is inter played in a marketing battle.The winners of marketing battle not necessarily have best of Product,People,Services and Brand . But they have a great combination , which they build by their business planning skills , where they could balance between the weakness and the strength of each of the component . There is no other way, you can create such an wining combination other than a proper Business planning, which can be both strategic and operational.

Friday, August 22, 2008

Hygiene Battlefield : What's wrong in our sanitation planning ?

The cost of poor sanitation is excessive in terms of health . Yet major part of India , lack the basic sanitation services . There is a huge death toll due water born disease in India . Still, these issues often fail to get attention of social and political activism and also media.

However , there is also a fault in the way we try to handle our sanitation problem . The fault is in planning . Our Sanitation planning lacks the vision , of how this apparent problem could be turned into an opportunity with an innovative approach . There are instances where the waste water generated from the sanitation could be feed to soil bacteria or the plants which survive on waste water . In this process , the waste water product can be converted into fertilizers which could help to improve the production of our agricultural output.

The Cost of Poor Sanitation in India

Sanitation is the most basic service for health and hygiene of masses . Yet somehow it is not , addressed as importantly as it should be .The severity of the Sanitation problem in India could be judged from the fact that hardly 33% population has sanitation facility available. In rural area percentage coverage is only 22%, however it is 59% in urban areas. (WHO/UNICEF Sanitation Assessment Report 2004). In recent years there is continuous progress in the sector, however a lot is required to meet the Millennium Development Goal on sanitation. Majority of the people defecate in the open. Open defecation defiles ecology, fouls water resources and causes stink in inhabitated areas. Of the estimated 2 million children who die from diarrhoeal diseases each year in developing countries, almost 600,000 die from sanitation related ailments alone. This disease is endemic throughout the world. Refugee populations and children suffering from malnutrition are among the worst affected.

The sustainability of water and sanitation services depends on many factors, including financial viability. The economics is complex and we are still learning about them throughout the world, through both successes and failures. The most important economic point is that failure to meet basic water requirements generates major social costs, both economic and financial. In 1970, water-related diseases cost an estimated $125 billion per year in direct medical costs and lost work time for sick people plus the (unquantified) social costs of lost education, family disruption and shortened life expectancy. A major water-related disease outbreak could cost far more in medical care and lost productivity than the universal provision of safe water and sanitation .

There has to be a 'war-like approach' to solve the Sanitation problem faced by India. It is the root of health and Hygiene. The poor sanitation is a costly affair for the population of India , as there more money to be invested to get free from the outcome of poor sanitation.

2008 : U.N.'s International Year for Sanitation

2008 is the U.N.'s International Year of Sanitation. So, there is renewed focus on Sanitation by UN. However, the expansion of world population is making it hard for UN to reach it's MDG goals on Sanitation within 2015.The U.N. set a millennium goal of halving the proportion of people with no access to sanitation -- even simple latrines rather than sewers -- by 2015 from 40 per cent of humanity or 2.6 billion people now.A 2007 scorecard showed the sanitation goal was likely to be missed by 600 million people worldwide on current trends.U.N. estimates show it would cost only about $10 billion a year to reach the 2015 sanitation target. And every dollar spent on sanitation creates spin-offs worth $7 on average, largely because of less disease.A 2006 U.N. Human Development Report said rich donor nations gave about 5 per cent of total overseas aid, or between $3-4 billion a year, to water and sanitation. Excluding big investments in Iraq, the recent trend was down. Though many donors view water investments as too risky, partly because of problems of accountable financing, it said, adding that sanitation progress since the 1970s had been "glacial",Goldman Sachs sees prospects for growth in the water sector -- from drinking water to processing waste.

Many firms stand to benefit from a focus on water and sanitation.In rich nations such as the United States, upgrading water and wastewater infrastructure should bring 4-5 per cent growth and in markets such as China, new infrastructure should mean 10-15 per cent growth over 5-10 years, it said in a December 2007 report. It is expect in long term that the global water sector to surge towards a global water oligopoly, where the market for water equipment and services will be dominated by a few multi-industry companies, including General Electric, ITT Industries, Danaher and Siemens," it said.

In most part of the world still now water is not an important political agenda . Yet the supply of water is important for human life . That's why it is important exploit new innovative ways of handling waste water by planting plants and soil bacteria that feeds on waste, to cut water born disease for the rural poor. The waste water can be recycled and used as a fertilizer also, as it is done by building an artificial wetland at a jail in Mombasa, Kenya, to process sewage from 4,000 inmates that now flows untreated into a creek, or ponds in South Africa where algae purify waste and are then used as fertilizer. Infact , for sanitation it is more intelligent decision to bring the nature on the side, on building sanitation solutions.

The OECD said that more than five billion people -- or 67 per cent of the world's population -- are expected to be without a connection to public sewerage in 2030.That is up by 1.1 billion from 2000, when 71 per cent of a smaller world population had no connection.
About 1.1 billion people lack drinking water -- another millennium goal is to halve that proportion by 2015. The World needs to be in war-front to address water related problems.

Thursday, August 21, 2008

Electric Fan market

Electric Fans is a high market penetration product category and is very high in terms of purchase priority amongst durables. It is a matured product category with a stagnant growth rate during the period 1990-2002. The domestic market size of fans in India is around 20 Million units. The share of the organised sector stands at 45 per cent and of the unorganised sector at 55 per cent. The figures were exactly the opposite in the early Nineties. Low technology manufacturing process, quality norms, lower overheads and tax evasion methods have enabled the un-organised sector to gain larger share of the market by ensuring a significant price difference. The local/unorganised brands are quite appealing to a large section of the price-conscious Indian consumers, for their lower price points.

The organised sector is dominated by national brands that have built their brand image over a period of time, through sustained advertising and a good dealer network. The market size in value terms of the fans category is quite large at around Rs.1500 Crores and it is the largest selling item in the brown goods category. Bajaj had a basic presence in the Fans Business since the Fifties and was a respected household name in the country. It had the potential to achieve a stronger presence in the Fans market and become a leading player in the category. What was required was to get the marketing, sales and the organisation act right.

There are 6 major brands in the organised sector namely: Crompton, Orient, Polar, Khaitan, Usha and Bajaj. All large players in the industry have their own manufacturing facilities, which is helping them in reaping the benefits of economies of scale. Intense competition in the market has transformed the fan industry into a high-volume, low-margin business. To remain profitable and competitive, it becomes imperative to have high-volumes and a reasonable market-share, to enjoy the related economies of scale.

With liberalisation of imports, low cost world-class manufacturers of Table, Pedestal and Wall fans from China offer an active threat to Indian manufacturers. There has to be a sustained effort that the low priced manufacturer could survive from the Chinese threat.

SME Marketing Strategy- The Strategic Group

1.1 SME-Strategic Groups

Strategic groups are very important component of Small and Medium Enterprises (SMEs) , which is characterized by limited resources in terms of manpower, finance and infrastructure as compared to large enterprises. SME's are often owner driven with little or no formal organizational structures. Often they are over dependent on few large customers and vulnerable to environmental changes. SMEs however have some inherent advantages as compared to large enterprises. Their smaller scale allows for greater flexibility in operations in order to respond to changing customer needs. They also respond to change faster , then their larger counter part.

It is found that ,SMEs are right now competing with large enterprises in several product markets. The challenge for them is to remain competitive and consistently deliver value to customers given their limited resources. This impacts their scale of operations. They are over-dependent on few large customers and are vulnerable to environmental changes. However they have some inherent advantages as compared to large enterprises. Their smaller scale allows for greater flexibility in operations and greater scope for customization in order to respond to changing customer needs. SMEs compete with large enterprises in several product markets. What strategies can they adopt to remain competitive and deliver customer value despite their small scale of operations? .

Within an industry there exist several ‘strategic groups ’i.e. groups of firms that have similar resources and pursue similar competitive strategies (Aaker, 2001). Strategic groups have entry as well as exit barriers.

A supplier group may be powerful if:
  1. It is dominated by a few companies and is more concentrated than the industry it sells to.
  2. Its product is unique and it has built up switching costs.
  3. It does not have any competitors in selling to the industry.
  4. It can integrate forward into the industry’s business.
  5. The industry is not an important customer of the supplier group.

A buyer group may be powerful if:

  1. It purchases in large volumes.
  2. The products it purchases from the industry are standard and undifferentiated
  3. The products it purchases form a component of its product and make up a significant fraction of its cost.
  4. It earns low profits and is therefore price sensitive.
  5. The industry’s product is unimportant to the quality of the buyer’s product.
  6. The industry’s product does not lead to cost reduction for the buyer.
  7. The buyer group can integrate backward into the industry’s business.

Substitute products place a ceiling on the prices charged by the industry and therefore limit the growth potential of the industry.

Marketing Strategy and Overall Business Strategy for Strategic Groups (SG):

Marketing Strategy flows from the overall business strategy of the organization. While the main focus of business strategy is to enhance economic value added (EVA) for the business, the main focus of Marketing Strategy is to enhance customer value (Brown, 1997). Business strategy is concerned with developing and allocating resources to achieve competitive advantage (Porter, 1980). Marketing strategy is concerned with creation of a market position based on this competitive advantage and customer perceptions of value. Marketing as a functional area has an interface with the external environment of the organization. Strategic activities in marketing are aimed at segmenting and targeting markets which an enterprise finds attractive and which it can effectively serve, as also the creation of a competitive position through its ‘offering’, i.e. the product and other elements of the marketing mix. Strategic activities in marketing have strong linkages with other functional areas of the business.

Attractiveness of a segment may depend on:

  • Resources available with the enterprise to create value for the segment through its offering
  • Macro environmental factors, which can impact consumer-buying behavior in the segment as well as value of resources.
  • Level of competitive activity in the segment in terms of number and size of competitors as well as value of competitive offerings.

Growth Strategy and Marketing Strategy for Strategic Groups (SG) of SME:

Most SG enterprises today operate in a dynamic business environment where growth has become a necessary objective for the survival and viability of the enterprise. However the growth strategy an enterprise selects will depend on its own resources to enhance customer value as well as the extent of competitive activity. Ansoff (1965) has suggested the following strategies that an organization can adopt in order to grow:

Present Products

New Products

Present Markets

Market Penetration:
-Increasing market share
-Increasing product usage

Product Development:
-Adding product features
-Developing new products

New Market

Market Development:
-Expand geographically
-Target new segments


Source: Aaker, 2001.


Aaker, David A (2001), ‘Strategic Market Management’, Sixth Edition, John Wiley and Sons, Inc.
Ansoff, H I (1965), ‘Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion’, McGraw Hill.
Brown, L (1997), Competitive Marketing Strategy.
Iyengar, G, Bhupatkar, A P, Kandalgaonkar, S P (1998), ‘Strategic Planning and Organisational Development: The case of a technology company’, Management of Development, AMDISA-Excel Books.

Wednesday, August 20, 2008

PE deals in BPO sector

BPO industry was always a poster child for Private Equity Players.

According to industry estimates, at least 10 of the top 15 third party BPO companies have received PE backing in one form or the other.

PE firms invested $227 million in 12 BPO firms in the first nine months of 2007, according to data from Venture Intelligence.

PE firms have invested over $1.2 billion in the sector (across 50 deals) since 2004.

However presently with the changing economic condition , there was a little reluctance seen on PE players on putting more investment in BPO market.

The Positive effect in the state economy by the Private Equity deals

Kolkata is again seeing the confidence of Private Equity player with Yatra Capital (A Private Equity firm) scheduled to invest 4.4 million euros in an upcoming Taj hotel in Calcutta.The hotel will cater to the needs of IT and ITeS companies located in Sector V of Salt Lake, Rajarhat and New Town.

The economic situation of the state will have definitely a positive impact once there is such kind of Private Equity deal flow in reasonable projects. However,It is also true that in present scenario , it is important to look after also the social impact and the environmental friendliness of any project, whatsoever it is, that economic progress is not in direct collision with social development and environmental friendly agenda.Otherwise , the project will face problems in achieving its long term goal . A strong legal framework will be added help , which can ensure the solution of the problem , before it arise.

Tuesday, August 19, 2008

Kolkata experiencing a rise of Foriegn Private Equity deals

There is some light in the end of the tunnel. The investment scenario of kolkata, looks better with new experience of rising Foreign Private Equity deals.Mostly they are on the real estates.In addition over past 18 months, several large PE transactions have been concluded, including to an enterprise level hospitality exposure by Credit Suisse, in Park Hotels.

The inflow of organized private equity began with New Vernon taking exposure in an IT building project developed by Sureka Group in association with Bikram Dasgupta's Globsyn. UK REIT then invested a significant amount in residential projects being developed by the Eden group.

The largest private equity exposure in terms of project size came from Starwood Capital and Walton Street into a 150 acre mixed use project being developed by the Sriram group in Hindustan Motors near Uttarpara. Both have pumped $50 million each into the development. The PE funds have started operation for quite some time. Now,they are concluding transactions and deploying money into projects.

Factors which has gone in favor of kolkata on the rise of P.E deals

1. Educated population and qualified workforce
2. Good Infrastructure
3. Stable Government
4. Bright Future with abundant talent pool

2008, will witness the conclusion of 10 more private equity investments in Kolkata, taking the total investments from PE funds into projects in Kolkata to over Rs 1,000 crore.

However , there has to be some mechanism also developed that the enemy of Bengals, are somewhat managed in a proper way,that the friction free growth of private equity continues. One of the most significant enemy, for the investment situation Bengal , is the propensity of calling strike on any and every occasions and paralyzing the investment prospect of the state.

Sunday, August 17, 2008

Bengal deadly needs an Entreprenuerial Ecosystem

Another successful Strike. The tradition of strikes, are showing signs of long term stability.Much like the State Government . Though the frequency of strike, has lowered in comparison to what was happening, on the early part of these year. Still the tradition continues.

In a democratic society, strikes are one important element on the overall political activism process . However administration of strike could be instrumented, in a better fashion by shortening it into few hours rather than a 24 hours program. There has to some kind of innovation, implemented that the strike remains as a effective political activism tool, and the development agenda of the state is not also compromised.

These are the some of the important reasons, that Bengal deadly needs an Entrepreneurial Ecosystem, to successfully encounter both its internal and external threats on its development agenda by effectively innovating in all levels.

Dependence on Crude Oil has to be lowered for India

One of the main reason , why we are facing the present economic crisis is our extensive dependence on crude oil, to meet our energy needs. We have to soon divert our extra dependence on crude oil, to renewable sources. Besides,there is a need for innovation to make this energy sources convert into scalable commercial applications. One of the major problems of our metro environment, is the way we manage our solid municipal waste. Doing some engineering process, in the waste dumping ground, we can segregated the solid waste, into renewable energy generator waste. These can be further , converted into renewable energy, which could be distributed in commercial arena .

Most of our energy is build from either crude oil, coal or hydropower. All of them have negative environmental implication . On these burning coal and crude oil, creates Green House Gases (GHG).These has to be minimized in all circumstance. Generating electricity from municipal solid waste help us in that. It creates electricity in an environmental friendly way without emitting Green House Gases(GHG) . Not only that, once the solid waste is re-cycled, then the usual methane emission from municipal solid waste is also controlled.

Renewable the new area of profit and growth for India ?

There has been growing implementation of clean and green, energy solutions in business arenas. Renewable is now not only an Government agenda, but is a business agenda too.There is a need of private participation to build bases for renewable energy. Infact, this is where most of Public-Private-Participation (PPP) is required. Further,there has to be a lot of entrepreneurial efforts in this arena to make India energy-independent.There is a urgent need of building an entreprenuerial ecosystem where Goverment,Investors,Entreprenuer can come together to make India self-sufficient on energy, by building competent organization on renewable energy sector. At the same time there is also growing need of awareness on the social and environmental implication of renewable energy .

For instance, recently electricity is produced from Bio-mass(Cow-dung) in Purulia ,West Bengal. Though the entire mechanism is technologically sophisticated, and some of the equipment used in the process are imported, still the social and environmental benefits, of using renewable energy is extremely high. There are certain section of business community, who may be concerned about the profitability of a renewable business model as the cost of energy is going to be higher then the conventional energy .However, in recent times, with the growth of sensitivity regarding environment, the general consumer has become more agreeable, in paying extra prices for renewable energy services and products.

Startup Business Plan

There are number of issues, to keep in mind, while doing Business-plan for startup . The most important one, is a startup has to play aggressive role in the market . To get the initial momentum ,there is a need of more aggressive stance. Often, it is seen that the startup, faces a very tough time, with a far competitor, creating linkage with nearest competitor, to create a entry barrier for startups. This is a very dangerous form of competetive pressure, as it raise the entry barrier for startup,even much higher . The need of aggression for startup, is quite justified, as they need an escape velocity, to cross the entry barrier. There are also different strategic means, to pass on the entry barrier. Most of the industry has regulation, that large corporate has to follow inorder to maintain the nuetrality of the market. At the same time , there are often good govermental schemes for startup. Only the process is so tedious, that it seems impossible to get those benefit . That's why, there is a need of multi-direction effort to the break the entry barrier imposed by different large corporates, and good relation with Goverment departments could be helpful for startups.

Considerations on Grant Writing

There are certain consideration which a Grant writer has to take , in comparison to Business plan writing . One of the most important consideration, is to understand the regulatory framework under which the Grant is granted. All grants, are a practical way to manifest certain policy objectives, through well defined programs . Without understanding the underlying policy framework, and program objectives, it is always impossible to write a grant proposal. Most of the NGO's are runned by individuals, who have a passion towards solving certain problems of society, or acting against a social evil. In the process, lot of times they undermine the importance of undersrtanding the policy framework and the institutionalised support, available to make there vision a reality . That's why essentially a grant writer has to take care, both side of coin . They has to artculate the passion and emotional part of the NGO, with a clear fit-in strategy aligned to the policy framework and program objectives. They also has to understand the civil service regulation, which will help them to practice there rights in a better fashion, and not become a prey of the bureacracy and corruption, which might exsist in some level of Goverment.