Strategy Wall - 8th Edition-The Strategy & Consulting Club | IIM Rohtak

8TH EDITION

The Strategy Wall Strategy & Consulting Club || Indian Institute of managemen, Rohtak

Contents Banking Sector in India - Challenges and Opportunities Cyber risks in the financial sector and how to cope up?

Branding 2.0 : Influencing the Influencers Inorganic growth: Challenges & Benefits Walmart Flipkart Acquisition: A boon or bane for the Indian retail industry?

Troll Marketing: As a strategy Technology and the future of employment Nature and Business in Strategy Deployment

B A N K I N G S E C T O R I N I N D I A - C H A L L E N G E S & O P P O R T U N I T I E S Introduction to the Indian Banking System The CAGR of India’s banking sector is 8.5%, which is greater than the global banking industry having a CAGR of 4.5%. The Indian banking sector is currently worth $ 1.31 trillion, which contributes about 7.7% of India’s GDP. With such staggering numbers, the Indian banking sector has tremendous growth opportunities. To touch upon the banking sector in India a bit deeper, given below are some of the opportunities and challenges for the Indian banking sector.

Opportunities 1.

Merger and acquisition of the banking sector a. SBI is the 55th largest bank in the world (Total Assets worth $535.04 Billion), which is far behind Industrial & Commercial Bank of China (Total Assets worth $3.62 Trillion). [4] b. To fund huge infrastructure project in the country (Worth Rs. 2 lakh crores and above) for the growth of the economy, rather than relying on FDI’s, there is a tremendous opportunity for merger and acquisitions of banks. c. By doing so, the Total assets of the banks would increase, which enhance the capabilities of the banks to lend for such huge infrastructure projects.

2. In 2011, The RBI had released norms for classification of NBFC-MFIs and brought it under its purview. a. The microfinance industry has been growing at a 45% CAGR over the past 5 years. [6] b. The financial sector now stands in a better position not to repeat the 2010 crisis. c. Hence fostering a strong partnership with these institutes presents a tremendous opportunity for banks.

3. Internet banking presents a tremendous opportunity for banks. a. With advancements in FinTech, Cloud Computing, Blockchain etc., banks can hugely benefit from huge data storage, faster transaction speeds and lead time reductions in transactions. b. As of 2017 Total number of individuals holding a bank account = 200 million Total number of mobile phone user = 730 million The above numbers show a tremendous opportunity for mobile banking to grow further.

With the rise of mobile banking, there can be more bank accounts which would be open. c. With advancements of technology, while speed in banking is not necessarily a virtue, digital opportunities presents it as a virtue by retaining the core banking principals.

4. With an increase in India’s per capita income of CAGR of 9-10% [7], more wealth is getting generated every year.

a. Therefore, banks have a major role to play to not only to maintain but to expand the wealth for their customers via Investment Banking and other techniques. b. A lot of employment opportunities would thus be created in wealth management.

Challenges 1. Poor asset management: a. Rises in the Gross NPA’s for the banks and huge NPA divergence numbers shows the poor asset management of the banks (Especially the public sector banks). 2018 has been a major hit to the credibility of the Indian banking sector because of major events in banks such as PNB, Yes Bank and ICICI. b. Such huge NPA numbers are now being disclosed by the banks ever since the RBI tightened the disclosure norms of NPA’s. c. Hence keeping a control on the assets is a challenge to the banks.

2. Banks are major lenders to farmers. With the government potentially providing loan waivers up to Rs. 2.7 lakh crore to farmers, managing such loan waivers is a huge challenge to the banks. [5] 3. At times of liquidity crisis: a. Recently IL&FS had defaulted which has affected several infrastructure projects. The situation in the market has worsened with the recent event of DHFL. a. A Similar market situation occurred in 2008 because of the global economic slowdown. b. Such events lead to a situation of liquidity shortage in the market. c. Hence banks face its biggest challenge during this time as the RBI is actively involved in changing the interest rates. d. Another issue that the banks face is with NBFC’s, where NBFC’s raise capital for longterm projects via short-term bonds with higher return rates. Hence banks must monitor these situations when lending to NBFC’s. e. On a positive note, the Indian Banking sector has always been resilient to such crisis situations thanks to the strong regulations of RBI. 4. Cryptocurrency is the biggest threat to the future of traditional banking. a. Cryptocurrency has the following advantages compared to the traditional banking system: i. Faster transaction speed ii. peer-to-peer networking, etc. iii. They are decentralized b. To counter cryptocurrency, banks offer real-time services similar to or better than what people are getting with cryptocurrencies. c. Traditional banks must up their game in: i. Customer service ii. Digital offerings iii. Transaction fees charges. d. Therefore, banks must provide digital solutions beyond the standard mobile banking app, else they run the risk of losing out against cryptocurrency.

5.

Government policies: a. In 2015, the Indian government had launched a policy to open zero balance account in banks. b. Since banks must maintain CRR and SLR, opening such accounts could hamper the bank deposits, if implemented on a wider scale.

Hence the above policy must be regulated to prevent liquidity shortage in the market.

6. Global scenarios: a. Deutsche Bank posted losses of ÂŁ1.9 billion earlier this year. Since the world banking system is a tightly knitted, slowdown in any major bank could upset all other banks in this Ecosystem. b. With changes in the US government policies and rising US bond yields, directly or indirectly the banks must resist the challenges from the global scenarios.

7. With the rise of digital banking, cyber-attacks still serve as a major challenge for the banks.

Conclusion The Indian banking sector has a major role to play for the economic growth of India. Hence, it is important to leverage the opportunities and keep a lid on the challenges for the banks to function efficiently.

References 1. https://www.researchgate.net/publication/262144765_Indian_Banking_Industry_Challenges_An d_Opportunities 2. https://www.indiainfoline.com/article/news-top-story/banks-in-india-challengesopportunities-114070100334_1.html 3. https://www.caclubindia.com/articles/banking-sector-in-india-market-size-investmentsdevelopments-27549.asp 4. https://www.investopedia.com/articles/investing/122315/worlds-top-10-banks-jpm-wfc.asp 5. https://economictimes.indiatimes.com/markets/stocks/news/farm-loan-waivers-may-riseup-to-rs-2-7-lakh-crore/articleshow/64893632.cms 6. https://economictimes.indiatimes.com/small-biz/money/indian-microfinance-industry-willcontinue-to-demonstrate-sustainable-growth/articleshow/58311757.cms 7. https://economictimes.indiatimes.com/news/economy/indicators/indias-per-capita-incomegrows-by-8-6-to-rs-1-13-lakh-in-fy18/articleshow/64403632.cms by: Abhishek Bawa (SIMSR), Mumbai

C Y B E R R I S K S I N T H E F I N A N C I A L S E C T O R & H O W T O C O P E U P ?

The financial-services industry (FSI) is viewed as more mature than any other industry when we consider planning, preparation, and prevention of cybersecurity incidents. Cyber-threats have been constantly evolving over time and making a shift. FSI Organisations maintain valuable data and information that needs to be protected as they are a prime target for any cyber-criminal.

ATM “Jackpotting” (black-box “jackpotting”) which involves attaching a hard drive to the ATM, replacing the current ATM software and once ATM is running off this malware-infected hard drive, it can very well be controlled remotely so as to dispense cash as per demand. Malwareonly ATM attacks and network-based ATM attacks have taken place through social engineering.

How can we defend Physically hardened exterior of standalone (kiosk-style) ATMs are most prone to “black box” type attacks. Network segmentation is also a good strategy. Allowing passage of legitimate traffic only keeps critical resources safe. Financial services customers were victims of 70% more cyberattacks than other industries’ customers, a 35% increase from previous year.

Improving coordination between agencies which deal with cybersecurity and cyber risk and authorities of financial sector is very essential. World Bank report “Financial Sector’s Cybersecurity Regulatory Digest” provides ready reference of existing regulations and supervision practices including but not limited to guidelines, regulations and laws of for the financial sector.

Many leading jurisdictions are working towards strengthening regulation and supervision of cyber risks. The need of the hour is to establish coordination protocols between financial sector authorities and agencies who are involved in regulating and supervising cyber-risks.

Financial institutions need to develop a risk management framework and an ICT strategy, which includes succinct incident response plan determining a clear chain of commands so as to take the necessary business decisions. Many Organisations appoint an information security officer. As a part of regular drill process, financial institutions regularly test and simulate their incident response capabilities.

Endpoint vulnerabilities End-user PC and laptop vulnerabilities are a new threat nowadays. Phishing emails containing malicious attachments targets any device which can be exploited and access can be obtained for the network. Ability to ward off these endpoint attacks, the financial institutions prevent situations from aggravating. Protection of the endpoints is a core integral part of the cybersecurity initiatives.

Training, education and sensitisation of employees is very important for cybersecurity so as to respond to malicious attachments or any attempt made at socially engineering.

Apart from routine software patching and using antivirus and anti-malware software, use nextgeneration, advanced level endpoint-protection for better security.

What is to be done now?

In order to assist any organizations’ cybersecurity practices, procedures, controls, identifying and assessing areas for making potential improvements by considering a recurring evaluation which focuses on: internal controls and cybersecurity network defense, cybersecurity incident response, vulnerability assessments, and preparedness for planning and training.

Cyber risk is one of the biggest threats to the financial system. IMF estimates that the average annual losses to global financial institutions all over the world from cyber-attacks can reach hundreds of billion USD a year, which will erode bank’s profits and can be a potential threat to financial stability.

Surveys show that risk managers and financial institutions’ executives at are worried most about cyber-attacks, as depicted in the graphic below.

Vulnerability of financial sector The financial sector is most vulnerable to cyber-attacks. They are attractive targets as they play crucial role in intermediating funds.

Any successful cyber-attack from cyber criminals in one institution can easily spread through the highly interconnected financial system globally. Consequences include financial losses and indirect costs such as degraded reputation.

Potential loss estimation Using different quantitative techniques and modeling frameworks, having relevance to operational risk measurement and actuarial sciences for estimation of aggregate losses from such harmful cyber-attacks. Assessment requirement includes the frequency of cyberattacks on any financial institutions and a way to distribute these losses arising from such events.

Few recent studies claim that average annual potential losses from these kinds of cyberattacks is staggering `9% of any banks’ total net income globally, in numerical terms which come out to be USD `100 billion. Considering a severe scenario, frequency of cyber-attacks may be two times as high as what it used to be in the past with greater potential to cause harm including losses which can be 2-4 times as high equivalent to USD `280-360 billion.

Such estimations of losses are way more than the present size of the cyber insurance market. In spite of recent growth, the market has been very small with only USD `3 billion in premiums globally. Many financial institutions are even carrying cyber insurance. The coverage from insurance is limited and the insurers face great challenges in evaluating risks as uncertainty looms around possible contagion effects, lack of data and cyber exposures.

International standard setting frameworks and Regulatory trends examples 1. New York State kas recently enacted their own cybersecurity regulations and financial institutions need to have compliance to do business in New York and Colorado.

2. Hong Kong Monetary Authority (HKMA) recently started their Cyber Security Fortification Initiative (CFI), which is a multiyear initiative specifically designed to increase strength of the the security of local banks. Three-fold initiative is being taken up which includes: a) A cyber-resilience assessment framework, b) A professional development program, and c) A cyber-intelligence sharing platform.

3. The newly enacted European Union General Data Protection Regulation (GDPR) combines already existing data privacy laws applicable across Europe and requires companies to execute an oversight, security and notification protocols in case data breach takes place.

4. The BIS Committee on Payments and Market Infrastructures and the Board of the International Organization of Securities Commissions has issued detailed guidance on cyber resilience specifically for financial market infrastructures (FMIs) with high relevance in today’s time.

The way forward A lot of scope is there to improve assessments of risks. Report breaches requirements should improve knowledge of cyber-risks. A detailed Scenario analysis can be put to use for assessing comprehensively about response to cyber-attacks and designing adequate.

There is a need to understand strengthening of resilience of financial infrastructures and institutions, so as to thwart any cyber-attack attempt and to facilitate rapid and smooth recovery.

Conclusion Executive business leadership of every financial-service company needs to be up to date on the emerging cyber risks and cybersecurity scenarios in Asia and Europe which acts as testing ground, learnings later to be used in the U.S. Awareness of new state regulations should be of prime importance.

References: 1. World Economic Forum. (2018). This is what the financial sector can do to fight cyber attacks. [online] Available at: https://www.weforum.org/agenda/2018/06/estimating-cyber-riskfor-the-financial-sector [Accessed 21 Sep. 2018].

2. World Bank. (2018). Cybersecurity, Cyber Risk and Financial Sector Regulation and Supervision. [online] Available at: https://www.worldbank.org/en/topic/financialsector/brief/cybersecurity-cyber-risk-andfinancial-sector-regulation-and-supervision [Accessed 21 Sep. 2018].

3. Chin, L., Greengard, S., Perlman, A. and Perkowski, M. (2018). Financial Services: Emerging Cybersecurity Threats and Regulations. [online] SecurityRoundTable.org. Available at: https://www.securityroundtable.org/financial-services-emerging-cybersecurity-threatsregulations/ [Accessed 21 Sep. 2018].

4. Global News, Analysis, Awards for Banking, Finance, Technology sector. (2018). No Surprises: Cyber and Data Privacy Threats Remain Top Risk for Financial Services Industry. [online] Available at: https://www.globalbankingandfinance.com/no-surprises-cyber-and-dataprivacy-threats-remain-top-risk-for-financial-services-industry/ [Accessed 21 Sep. 2018].

5. Home.kpmg.com. (2018). [online] Available at: https://home.kpmg.com/content/dam/kpmg/co/pdf/2018/05/global-perspectives-on-cybersecurity-in-banking.pdf [Accessed 21 Sep. 2018].

6. Muncaster, P. (2018). Cyber Risk at All-Time High for UK Financial Sector. [online] Infosecurity Magazine. Available at: https://www.infosecurity-magazine.com/news/cyber-riskall-time-high-uk/ [Accessed 21 Sep. 2018].

7. DailyHunt. (2018). Cyber Risks For Financial Sector Aggravate - India Press Agency | DailyHunt. [online] Available at: https://m.dailyhunt.in/news/india/english/india+press+agencyepaper-indpres/cyber+risks+for+financial+sector+aggravate-newsid-90858197 [Accessed 21 Sep. 2018].

By: Rohit Dudi, IIM Lucknow, Batch 2017-19

B R A N D I N G 2 . 0 : I N F L U E N C I N G T H E I N F L U E N C E R S “Products are created in the FACTORY but Brands are made in the MIND”

In the digital age, it is of primary importance to target the right set of potential customers and don’t let the leads generated out of hands. In the gamut of potential customers, the ones which strikingly stand out are the influencers. It is so because, it is easy to influence them and we can not afford to neglect the magnanimous impact of social media and Word of Mouth (WOM) in the current times.

In today’s dynamic world, negative words or reviews spread approximately 5x times faster than positive words/reviews. Customers are becoming smart shoppers. They check Zomato before they step out to eat, they check MMT reviews of hotels before going for a vacation.

They check the traveller review before booking a bus ticket with a traveller. It is not only restricted to the people above 20 years of age. These days, students check reviews of coaching institutes online before joining, read about college reviews on Quora, Pagal Guy before joining one. Or for that matter, they connect with the alumni on LinkedIn and other social media platforms to learn about the college. And at times there are cases when they try to connect with someone who is from that college to learn about it.

So, we can clearly see that the customers try to learn about the product or service before using it and it is brand’s responsibility to reduce the probability of cognitive dissonance arising post purchase. Therefore, brands should target the right segment to promote their brand.

Net Promoter Score is a critical metric to learn about the Brand position in the market with respect to its total customers. A brand would like to have a core clientele. And it is recommended to invest in them because they like doing business, bring in more business for the brand via referrals and positive word-of-mouth. The reason behind their gratitude is their profitability, satisfaction and delight. In NPS, the quadrant to worry about the most is that of a Detractor. Ever wondered why? It is not only because they don’t like doing business with the company but also because they spread negative word-of-mouth. They hammer the reputation by voicing their grievances. So, they require immediate redressal. And Brand should make sincere efforts to hear their issues and give them a solution. These people bring more loss than brands can even think off.

Social media sites like Facebook, Instagram, Twitter, snapchat and Blogs are prominent mediums where people connect with the world. The evolution of Internet has made the world a small place.

We are only 6 people away from connecting with anyone in the world. The smaller link distance talks about the power of these means of communication. So, if the brands recognize this social media bubble, it would be easy to raise awareness amongst the masses at a fraction of cost. All they need to do is, incentivize their customers to write reviews about them, share their experiences, provide tips and suggestions. This art of co-creation would enhance customer involvement which would further lead to brand recall and positive attitude towards brand. Once customers have positive attitude towards brand they tend to spread positive WOM which in turn brings business for the company and improves brand image.

For E.g. A campaign taken up by Kisaan India to give away tomato seeds along with the ketchup bottle. The kids had sown the seeds and given it to Kisaan. Later on, the photographs of the kids was there on the packaging. This campaign was a big breakthrough for them.

Once the customers are made to feel privileged their self-image is enhanced and they go an extra mile to refer a brand to their social network and connections. So, in a nut shell, influencing the influencers is the new way of branding with loads of potential and companies should make an attempt to capitalize on it. The first mover would have the advantage in the competitive era. And who would not want their brand to be the one?

By: Twarit Saxena Great Lakes Institute of Management (GLIM), Chennai

I N O R G A N I C G R O W T H : C H A L L E N G E S & B E N E F I T S Introduction Innovation has accelerated with increasingly frequent technology disruptions. The industrial revolution across 18th and 19th centuries was succeeded by the scientific-technological revolution in the decades after the 2nd World War. This was followed by the computer and information technology revolution from the 1970s, and then by the telecommunications revolution from the 1990s. We are at the cusp of a digital revolution which will fundamentally alter the nature of most industries and businesses over the next decade or so.

Problem Definition Increasingly diverse industries are being disrupted by technological revolutions. In a global business environment, cross-pollination of business strategies across market geographies and segments has grown rapidly. As strategies evolve, short-term and long-term trade-offs occur.

In each revolution, incumbents adapt or perish. Previously, firms had years to formulate their strategy, with time to correct mis-steps and recover. Today, firms must respond in weeks or months, since they operate in an increasingly Volatile, Uncertain, Complex and Ambiguous (VUCA) world. With much higher stakes, firms must get the strategy right the first time or risk being disrupted out of business.

The primary risks for any firm, across industries, can be among the following: 1. Existential Risk A firm may face the risk of being driven out of the market due to new technology introduced by a competitor. A common reason for a firm to succumb to this risk is the under-appreciation of the gravity of the change by the incumbent market leader.

2. Parity Costs In a highly competitive industry, it becomes prohibitive for each firm to independently invest in technology and employee skill development. With competition for the same resources and customers, a winner-take-all situation incentivizes firms to push costs down.

3. Fragmentation Risk With no common standards or vendor inter-operability, customers see lower value in the offerings. This is common in sunrise industries where breakthroughs have no fully developed business applications. Blockchain and Internet of Things are examples where many firms are trying to solve similar problems.

Solution – Mergers and Acquisitions A firm may acquire other companies for a plethora of reasons. Cisco follows this strategy, with over 200 acquisitions [1] within 34 years, to augment its capabilities by acquiring those developed by another firm. The main benefit of inorganic growth for any firm across industries, can be any of the following: 1. Market Entry and Leadership Acquiring competitive technologies aids in survival and confers competitive advantage. It also helps in acquiring skilled talent and market information, which contributes to market share and customer wallet share. Additionally, it is a common vehicle for international expansion.

2. Cost Management Inorganic growth helps manage costs through economies of scale. It also unlocks synergies between firms leading to value creation for the customers and the firm. This improves profitability through increased revenues at lower costs.

Industry Standardization De-facto leadership enables a firm to set the industry direction. This can be achieved through industry consolidation via inorganic growth. Standardization unlocks more value for customers and vendors, thus improving profitability.

Challengesa Some of the challenges of inorganic growth are outlined below: Before With a short window to make an acquisition offer before competitors, firms may be unable to perform required due diligence. Hence, they may not unearth key friction points which can later derail the integration. Also, acquiring firms often over-pay beyond the fair value. Hence, integration synergies realized may be insufficient, causing shareholder value erosion.

During Often, acquisitions happen across geographies. Cultural differences and other seemingly obvious aspects may not get required priority, impacting the change management effectiveness.

Also, uniformly diffusing the parent culture across the target is a challenge proportionate to the size of the target firm. Maintaining regular operations during integration must be ensured.

After Losing key talent is a key risk facing both the acquiring and acquired firm, which can significantly erode the expected value realization. This happens due to ineffective goal communication or compensation and benefits are not perceived to be aligned with the value of the talent. Also, incoming employees from the target firm need adequate training on dynamics and internal processes of the parent firm to help acclimatise to the new work environment.

Mergers and Acquisitions – India perspective M&A activities are tied to the economic situation globally and within the country of the acquiring and acquired firms.

Figure 1 M&A activity within India

Acquisitions within India since 2016 in Figure 1 reflect a positive business climate, corroborated by the graph of foreign firms in M&A activity in India, in Figure 2. The 4 years of the current Government correspond to a strong return to M&A activity by foreign firms.

In contrast, Figure 3 shows the M&A by Indian firms abroad. Business optimism until 2007 and the subsequent crash are apparent, followed by recovery in 2010. However, since then, both the values as well as the number of deals have slumped, indicating lowered confidence of Indian firms in acquiring businesses in the global arena.

Figure 3 M&A activity abroad by Indian firms

Manufacturing and IT/ITES sectors account for half the deals, but only a third of total value.

However, telecom and energy which account for under 7% of all deals, correspond to a disproportionate 32% of the total value. These being capital-intensive industries operating at huge scales, the number of deals would be low, with a higher-than-average value.

Source: Venture Intelligence [2]

Summary In an increasingly VUCA world, firms are forced to minimize costs and mitigate risks. Huge benefits through inorganic growth and industry consolidation are accompanied by significant challenges, which can destroy the expected value of the acquisition. Despite this, with faster technology revolutions and shorter cycles in the years ahead, inorganic growth through mergers and acquisitions will continue for the foreseeable future.

References [1] Cisco acquisitions by year: https://www.cisco.com/c/en/us/about/corporate-strategyoffice/acquisitions/acquisitions-list-years.html [2] Venture Intelligence M&A Deal Database: https://www.ventureintelligence.com/ma/index.php By: Aravind Shankar Indian Institute of Management (IIM), Ahmedabad

W A L M A R T F L I A C Q U I S I T I O N : A B A N E F O R T H E R E T A I L I N D U

P K A R T B O O N O R I N D I A N S T R Y ?

“India is not only one country, it’s a continent of small regions that differ every 20 kilometres” – this adage has proven to toughen the strategies that foreign retailers who want to enter the market, but did not know how to make a move.

This barrier was broken in May 2018 with US Retail giant Walmart acquiring the leading ecommerce platform of India.

The great Indian dream came true in the retail sector, with the mind-boggling strategy that the offline retailer played in order to enter the untapped market.

The country had 60 million online shoppers in 2016, which is only 14% of the internet user base in the country. This will rise to over 50% by 2026, according to a report by Morgan Stanley, which justifies upcoming e-commerce deals.

Transformation of retail in India will be accelerated by this deal because of two major factors- Capital investment and technical know-how in the country - Robust supply chain helping the two poles of the consumption channel – consumers and farmers.

Not only this, Walmart will provide quality and affordable goods to consumers, create job opportunities for suppliers and contribute to the overall economic growth of the country. While exiting co-founder Binny Bansal focuses on combining Walmart’s omni-channel retail expertise, supply-chain knowledge and financial strength with Flipkart’s talent, technology and local insights, many retailers question their profitability in the long run. To make a sustainable model viable in India, Walmart will focus on Glocalisation, for the Indian markets need a touch of “Kirana” experience, connected to the online model.

“We hope we learn from you how to build an ecosystem, more about innovation and payments — we will help with sourcing, supply chain expertise,” Walmart chief executive Doug McMillon told Flipkart employees, after completing the 16 million deal.

How will the deal revolutionize Indian Retail? · Walmart has a huge experience in the economics, with direct sourcing, eliminating the middlemen in the distribution chain. This creates low prices of the products and in turn increases demand. It also helps farmers get their share of the profitability. · Other online players like Amazon, Big Basket and grocery e-tailers will ensure that prices are competitive, thus generating better consumption in the economy

· Consumers will have the benefit of choosing from a wide variety of products as Walmart specialises in such assortment planning. · It will create thousands of job opportunities for skilled workers · International quality, as liked by many Indians will finally come first-hand to the customers, with the standard benchmarking of Walmart quality.Flipkart will have an extended fund of operations and therefore be a global company · Global brands will be available to the Indians who savour the American food styles Additionally, Walmart will look at acquiring candidates in specialised skills like merchandising and machine learning, giving way to an emerging India.

Looking at the other side of the coin, initially Walmart will face weakened credit metrics, with its Debt-EBITDA ratio increasing. According to expectations of most analysts, Flipkart will also continue generating losses in the near future. Despite this deterioration, the acquisition is credit positive because it provides immediate scale in India’s burgeoning retail e-commerce sector. This scenario proves that the acquisition is an investment for the future. However, Flipkart boasts of a robust back end because of the demanding networking infrastructure of India and therefore is well placed to replicate such systems in other countries. Despite of all such current negative situations, the striking deal has many gains for the two companies and India as a whole.

Walmart said that the Flipkart Group recorded gross merchandise value of $7.5 billion for the year ended 31 March, an increase of 50% over the previous year. Flipkart’s net sales also jumped by 50% to $4.6 billion.

Walmart, which will retain the Flipkart brand, said it supports “Flipkart’s ambition to transition into a publicly listed, majority-owned subsidiary in the future”.

In emerging digital ecosystems, immediate profits do not matter; building relationships and market shares matters. This strategy is very well implemented by Walmart by creating this omni-channel retail model.

As the regulators did not allow Walmart to enter in India through a brick-and-mortar format, they chose the internet as the medium, creating a win-win situation for employees, ecosystem and ecommerce!

Owing to such net positive gains for all the stakeholders involved, the acquisition has proved to be a boon for the global retail world.

References https://www.forbes.com/sites/baxiabhishek/2018/04/19/walmarts-acquisition-of-flipkart-will-be-agood-deal-for-e-commerce-in-india/#33b5b89c458f https://economictimes.indiatimes.com/industry/services/retail/softbank-ceo-confirms-walmartflipkart-deal/articleshow/64093437.cms https://www.livemint.com/Companies/qOBduC3OBVpKTv9CpCYayH/Walmart-completes16billion-buyout-of-Flipkart.html https://www.livemint.com/Companies/PltclXOj0whPWMGUFWqs9O/Walmart-buys-controllingstake-in-Flipkart-for-16-billion.html

By Hiral Gogri (9619451045) Prin L. N. Welingkar Institute of Management, Mumbai

T R O L L

M A R K E T I N G S T R A T E G Y

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Trolling is so ingrained in the internet that, without even noticing, we’ve let it shape our most important communication systems.

- Christopher Mims Troll marketing is being practiced for ages to influence the buying decisions of consumers or to even downgrade the competitors. Companies, through advertisements or posts on digital platforms try to take-on their competitors by trolling them and ignite a brand war. A lot of traditional ads have used people’s emotions to gain visibility and trust.

Remember the ad where a kid bought two Coca-Cola cans and stood on them to buy a can of Pepsi from a vending https://www.youtube.com/watch? machine? Troll marketing in not a new phenomenon as most believe.

There are however reasons why troll marketing is so effective. The first one being, saturation of traditional modes of marketing brands. Today, brands need to constantly innovate to reach their customers who are eager to switch and have options to switch as well. The second reason why companies today are switching to troll marketing is the highly involved market in social media content. The consumers today are informed and influential.

The hype these posts on social media create among users gives them an opportunity to showcase themselves as people carrying opinions. This is one of the most important reasons why troll marketing is this effective and companies are using it as a strategy to gain market.

It is interesting to note that companies sometimes do not post these posters from their own handle to avoid the backlash that might be created.

In the era of memes and trolls, marketers have found another way of taking-on other brands in their categories and making profits out of them. Air India found an opportunity last year to troll India’s highest profit-making airline Indigo when a video of their ground staff mishandling a customer went viral. https://indianexpress.com/article They used two infographics which displayed their Maharaja with folded hands with a tagline that read “We raise our hands only to say Namaste”. Another one was released in the same time which said “Unbeatable Service”. These posts were considered both hilarious and offending. They had to take them down within hours of posting. It is interesting to note that companies sometimes do not post these posters from their own handle to avoid the backlash that might be created.

A post went viral which said “Jet Airways, we beat our competition, not you”. It went viral and was tagged as a fake post. They immediately clarified by tweeting that the creative used was does not reflect their ethos and is in bad taste. However, people still question it. This is an innovative technique to use troll marketing as a strategy, directly targeting your competitors and still playing safe. The case with Jet Airways is still not clear but, who knows.

https://ahmedabadmirror.indiatimes

Companies even move out of their category to troll others just to create a buzz. They sometimes have a trail of such posts. On the constant change in Zomato’s

logo, Amazon tried to troll the company by asking them if it was a part of their #AurDikhao campaign. Zomato came back with a shrewd reply. Amazon had to settle the argument with a weird smiley.

These are not only influential when it comes to the decision of purchase but if done correctly, creates enough buzz around your brand. Done incorrectly, it will make consumers question the brand. Troll marketing can either take your brand to new heights or can destroy the existing trust and goodwill the brand carries. The question, however is, is it worth the risk?

These are examples of companies effectively using troll marketing as a strategy to either gain market, troll competitors or create a buzz around their own brands but there are times when they fail miserably and the troll backfires. In 2014, when iPhone 6 plus was reported to bend under minimal pressure, LG tried to use troll marketing as a strategy to attract customers who are aware of the issue and gain out of the controversy. They posted an infographic which read “Our smartphones do not bend, they are naturally curved” which was

https://www.kulzy.com/posts/240 posted from an iPhone. This is when troll marketing turned out to be destructive for the brand

Smartest businesses today are turning to troll marketing and using it as a strategy to make their brand stand out in the market. Big brands with loyal customers can opt for traditional modes of advertising and promotions but troll marketing has turned out to be beneficial not just to them but to the not-so-old start-ups who are trying to make a mark in the commercial world. It helps them magnify their marketing messages. Research suggests that focus on emotions amplifies the promotional efforts of a https://twitter.com/LG_France/status brand. Troll marketing combines the positive and negative emotions for brands. The controversial content easily draws attention.

Troll marketing is not just limited to internet posts but companies such as Spotify have been able to take it to another level. Spotify at the end of 2017, compiled some user statistics and displayed results on huge billboards. They made fun of their customers and were able to take troll marketing to billboards, beyond internet.

With their “2018 Goals� marketing campaign, they gained mass media attention along with consumers. This could have easily back fired had Spotify not been careful enough.

http://www.buro247.com.au/ente

Modern consumer wants brands they associate with to be authentic and have a personality.

Companies who ‘get them’ are able to stand out. Using troll marketing as a business strategy is effective as long as it is done in a harmless manner. Yet, they are not always the go-to strategy for brands actively involved in troll marketing. It represents the freedom they carry. But it is important to assess the benefits and risks associated with it before using troll marketing as a strategy. Balance is the key.

By: Saloni Singh IIM Amritsar

T E C H N O L O G Y A N D T H E F U T U R E O F E M P L O Y M E N T How likely our jobs to be replaced by robots? Whose perspective of the argument do you side on, Musk's or Zuckerberg's?

In spite of the masses' speculation and frenzy around jobs being lost due to automation, there are still some reports and studies that add weight to each of those arguments.

Businessworld recently did a feature covering startup founders from various sectors. One major question it asked them all was: What is the possibility of shrinking jobs due to technology intervention in the sector?

The responses were varied: automation is a long-lasting challenge. Companies must set up processes where they help people rediscover themselves. Repetitive, automated tasks must be taken care of by technology leaving people the time and mind space to innovate.

In a recent guest lecture, Mr Sanjay Behl, current CEO of Raymond spoke about the compounding effect of technology and disruption being is at its peak in the last five years. Citing the example of Oculus, he argued that while in the past it took 20 years to build a Fortune $500 billion company, the same today takes two. The rate of disruption has increased manifold. The next big thing to happen is artificial intelligence learning to improve its own self.

Oculus, Netflix, Snapchats are examples of business model disruptions.

From an HR perspective, according to Darwinbox founder Rohit Chennamaneni, AI can work in tandem with humans, helping recruit, engage and reward deserving employees, enhancing engagement at the workplace. Blockchain, high potential technology, has applications in employee background verification and data security.

Technology simply means that skill set requirement for businesses change and employment opportunities will open up for people with expertise. Kumar, CTO at EP later says that in the new emerging skill areas, employment will become difficult for people who do not adapt. Cars did not eliminate jobs of horse Wagon drivers, it created an alternate industry of car drivers, car manufacturers mechanics et cetera.

Jobs involving perception and manipulation, creative and social intelligence will always be populated by humans, at least for the foreseeable future.

Similarly, agrees Devendra, co-founder of cover.Fox who are into insurance, that mundane jobs will be replaced by more meaningful and high skilled labour.

According to health sector start-ups new job opportunities and niche skill sets are bound to surface faster making skilling and reskilling much easier and thereby generating jobs in the Rural areas.

Supporting this point is a study titled Future of Employment in 2013. Statistical measure was used to find out the jobs at the highest risk of computerisation. Amongst these were sales and services, office and administration support and farming.

What does the chairman of McKinsey global Institute, one of the world’s best human knowledge repertoire’s claim? James believes the future of employment is not just about one or two questions. What’s now technically possible to automate? That’s an interesting question, but that’s just the first of four or five questions. The other questions include, what’s it going to cost to develop and deploy those technologies? How does that play into labor-market dynamics in terms of the relative cost of having people do that? What is the availability of people who can do that task instead of a machine? What is the quality needed? What are the skills associated with the labor force?

These labor-market dynamics are another important consideration, as well as other ultimate questions about regulation and social acceptability, and so forth. The question of what the rate of adoption will be, and the extent of adoption, depends on many more factors beyond just technical feasibility.

In that respect India can expect a much lower percentage of automation in the labour market.

So, what can we conclude from this?

1. Disruption is inevitable.

2. The most adaptable, will survive.

3. We can direct AI into working with humans, while it still listens to us.

Each of these reiterates, that on an individual and collective basis, acting in the now is of paramount importance!

By: PGDM-B Khushbu Chotalia

N A T U R E A N D B U S I N E S S I N S T R A T E G Y D E P L O Y M E N T Looking closely at birds and humans, we can see humans have learned a lot from birds when it comes to dance, hairstyles, dress designs, art and crafts and numerous other things to name a few. Similarly, we can compare the nature of Atoms and Companies.

Atoms come together to neutralize their charge and form a stable bond with another atom and build a more complex and functionally more active molecule. Same is the case with companies, giant companies or smaller companies come together to facilitate the building of a more meaningful union and enter a merger.

Companies that specialize in one aspect come in collaboration with other companies to either acquire, merge or collaborate to develop joint assets that are of high value to both the participating firms. Here the balancing act is played by the factors which include 1. Profitability and rate of return on investment 2. Strategic fit for the value chain and consumer demand 3. Unique value creation which is difficult to create The value of the firm is created by the synergies that the two firms bring together.

Synergy = Vab –(Va+Vb) Va – Value of Firm A Vb - Value of Firm B Vab - Value of combined firm As we can see the synergies of the firms are directly related with the individual contribution of each firm and the combined value of the collaboration. Similar, to the case of a molecule, whose properties are a result of the individual atoms and the combined effect of the molecule.

Another interesting comparison being the NASDAQ which exists because of the demand of audience that need trading platform that minimize the cost of trading. In all we can again see here that the two parties come together for mutual benefit and stabilize with the two parties fulfilling the need of each other and forming a collaborative group. We can here compare the collaborative group with a stable molecule formed after the interaction of two atoms together.

Live examples to prove this fact being the merger process of Red Hat and IBM, Monsanto and Bayer and Disney and Pixar.

Entrepreneurs who can understand and crack the code of identifying and predicting how to solve the mystery of how to become more stable and productive in terms of attaining long

term organizational goal of getting the right fit for forming the collaborative groups wins the rat race of business. This strategy has been adopted by PayTm, as it identified much before time the reactive need of consumers to have a easy wallet which could provide them the opportunity to go around cashless and add convenience to their online shopping experiences and at times local outlets.

Hence, we can see that biological world and the business strategies have the same principles of co-existence. Everyone wants to share their capabilities and become more stable i.e. attain their final expected goal; forming a stable molecule in terms of biological entities and forming a profitable enterprise in case of a business entity.

By: Sushmita Chaudhari IIM Ahmedabad

Strategy & Consulting club IIM Rohtak Members: Ijas MC Lavesh Bhandada Mayank Banka Nishant Garg Taslish Chadha Varun Parvathaneni Abhinav Tripathi Distinmathew Joseph Kajal Patil Kanuj Khurana Manohar Gupta Prateek Sareen