Strategy Wall - 16th Edition by Wazir- The Strategy and Consulting Club IIM Rohtak

STRATEGY WALL THE STRATEGY AND CONSULTING CLUB OF IIM ROHTAK

DICHOTOMY OF STRATEGIC CONSULTANCY FIRM

CUSTOMER LIFETIME VALUE AND FIRM VALUATION

HUMAN RESOURCES MANAGEMENT AND TECHNOLOGY

16TH

EDITION

â&#x20AC;&#x153;Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.â&#x20AC;?Miyamoto Musashi

Contents 01

DICHOTOMY OF STRATEGIC CONSULTANCY FIRMS â&#x20AC;&#x201C; IS AUDITING AND STRATEGIC CONSULTING COMPATIBLE?

CUSTOMER LIFETIME VALUE AND FIRM VALUATION: UNION OF MARKETING WITH FINANCE

HUMAN RESOURCES MANAGEMENT AND TECHNOLOGY

MANAGEMENT CHALLENGES OF THE 21ST CENTURY

SHIFT FROM INDIVIDUALISTIC GROWTH TO MERGERS AND ACQUISITIONS

GREEN MARKETING AND ITS RELEVANCE IN SUSTAINABLE DEVELOPMENT

REIMAGINING SUPPLY CHAIN POST PANDEMIC

INDUSTRIAL REVOLUTION 5.0: INDUSTRIAL, ENVIRONMENTAL AND SOCIAL IMPACT

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DICHOTOMY OF STRATEGIC CONSULTANCY FIRMS â&#x20AC;&#x201C; IS AUDITING AND STRATEGIC CONSULTING COMPATIBLE? -Pranjal Paikray and Prajyut Kar, Xavier School of Rural Management "What is Right (Dharma) is known to your Mind (conscience). No matter how much unfairness we got, how many times we were disgraced, how many times we Fall, what is important is how you 'Reacted' at that time. Life's unfairness does not give you license to walk the wrong path. Always remember, Life may be challenging at a point, but DESTINY is not created by the SHOES we wear, but by the STEPS we take" by Lord Krishna to Karna in Mahabharata. Every individual seems to be quiet an expert about strategy, isn't it? However, even Carnot's engine was not ideal. The concept of operational effectiveness is used interchangeably with strategy. Both these terms have their own significance. Strategy refers to making trade-offs while competing, performing a different or similar set of activities in different ways or unique interlinkages formed between various activities. Thus, it assists in problem-solving or providing a higher value proposition to the clients in terms of product or services offered. From the B-Schools perspective, we often tend to analyze the company which might be performing well or another way round through the lens of existing methodologies like SWOT, PESTLE, Financial Ratios, to name a few. We are not claiming that it is a right or wrong approach, but what we want to convey through this article is something eccentric. The point is we want to focus on the

organizations who usually provide strategic enlightenment and consultancy to those firms who wish to compete in the outside world and maintain their brand image. However, when auditing incorporates strategic consulting, problems are inevitable to happen. As of now, it might be obvious which sector we are earmarking. Yes, we are referring to the Big 4 along with the Top 3 consulting firms. Big 4 namely Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG bestows their audits for 283 companies in the Nifty 500 Index for 2019-20. It indicates the oligopoly nature of their operations which is further backed by the Government since an audit is a necessity everywhere. The types of strategic consultancy offered by these firms are Corporate Strategy, Business Model Transformation, Economic Services, Merger & Acquisition (M&A) and Organizational strategy. Briefly covering the aspects of the consultancy services offered include widely designing the vision and mission statement, implementation roadmaps, future proof strategies, business operations considering the external environment, advisory services to government institutions for policy setting or formulation, recommending a set of activities for pre- and post-M&A integration phase,

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assessing competitiveness to name a few. Looking at the plethora of services provided by the big giants is self-sufficient to highlight their supremacy in the existing market. There are some noticeable differences in the " operating models and recruitment processes, facilitating the little differentiation for the Big 4 and Top 3. The Big 4 deals majorly with middle management in the business whereas the Top 3, namely McKinsey, Boston Consulting Group (BCG) and Bain works with the C-Suites. The difference is primarily due to Big 4's repetitive nature, where they primarily spend up to six to twelve months with the clients. Whereas in comparison, the Top 3's work for two to four months with clients taking herculean as well as diverse nature of work, operating extended hours and thus accrediting more. Big 4 firms differentiate from Top 3 firms in terms of recruitment where Top 3 are far more selective. In 2018, while McKinsey, BCG and Bain (MBB) have 27000, 20000 and 8000 employees respectively whereas Big 4 has a strength of 2,00,000 to 3,00,000 employees. While MBB is only involved in consulting, Big 4 does both auditing and consulting across the globe. There had been significant investments made in Artificial Intelligence (AI) by Big 4 to maintain the competitive edge in comparison to the threat posed by Top 3. For instance, KPMG invested $5 Billion for five years (2019) for creating cloud-based technology and innovative solutions to enhance decision making via AI. Similarly, EY invested $1 Billion for two years (2018), PwC invested $3 Billion, and Delloite planned to automate processes saving time, crucial for the firms.

Everything seems like tranquility around consultancy firms. Well, there are some of the astonishing facts which portray an entirely out of the box picture about Big 4 consultancy firms in particular. In the year 2017, the Italian scandal of Italian unit of the British company BT Global services emerged was to meet the bonus targets has disguised the company's proper financial performance, PwC is involved for auditing. The high-profile corporate collapses in Britain - Serco Geografix Ltd. in 2011 audited by Deloitte, retail giant BHS in 2016 audited by PwC and construction company Carillion in 2018 audited by KPMG where they were criticized and fined humongous. EY audited the Financial Crisis of 2008, where the collapse of Lehman Brothers is referred to as case studies in B-schools. Satyam scam in India of 2009 is a brilliant example where PwC has audited. Institute of Chartered Accountants of India (ICAI) ordered the Big 4 to refrain from acquiring Indian audit outfits. The role of accounting practices in corporate frauds led to the fundamental conclusion that when auditing and consulting are in conglomeration, and past experiences hint that frauds are bound to happen. The design and marketing of tax avoidance schemes are the nascent examples of profit-maximizing tools. Government authorities maintain a "Faustian relationship" with Big 4 as they symbolize the hallmark of purity in auditing. UK, India, USA and other countries are bust to the gut to some extent, but it looks like hope from barren land.

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Question to ponder In Nifty 500, for the year 2019-20, the Big 4 audited 283 companies alone as per the report of NSE and Prime Database Group. Forecast India's fate, and we rest the case.

Source - The Top 10 accounting firms in Nifty 500, NSE & Prime Data Base, Bloomberg

Source - Top 10 Consulting Providers by Revenue, Worldwide, 2017-2018 (Millions of U.S. Dollars), Gartner -2019

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CUSTOMER LIFETIME VALUE AND FIRM VALUATION: UNION OF MARKETING WITH FINANCE

- Suranjana Banerjee (NMIMS), Mumbai

According to Peter Drucker, an Australian-American. Management consultant, "Innovation and marketing are the only two valuable activities of a firm. The rest are costs." Still, marketing heads are always under pressure to show a Return on Investment (ROI) for its marketing activities. The process of allocating millions of dollars to marketing activities is easy as compared to showing how this investment will profit the firm. Improving marketing metrics such as brand awareness, customer satisfaction, etc., unfortunately, fail to predict sales and profitability of a brand in the long run. Following the skepticism about the efficacy of marketing metrics to determine the return on investment; Customer Lifetime Value (CLV), is one marketing metric, which can bridge the gap between marketing and finance, and make the former more accountable to provide return estimates for its marketing spends.

Secondly focusses on long-term profitability instead of current market share, third addresses value of each customer and targets them through customised product offerings, fourth, availability of customer-level transaction data through advanced technologies such as Artificial Intelligence (AI) to perform complete analysis rather than relying on survey-based studies such as satisfaction. CLV is dependent on- acquisition, retention, and cross-selling or margin expansion. In terms of practical implication, such factors determine which customers to acquire, which customer to retain, which customer to shed off, and what to sell to whom at what time.

CLV is defined as the present value of profits obtained from a customer over a certain duration of time during the relationship with a firm.

For example, if average sales for clothing retailer is Rs.4000 and average customers who shop with them is 4 times per year in 3 years, Then, Lifetime Value = Rs.4,000*4*3 = Rs. 48,000

This marketing metric is considered to have immense importance as firstly, it forces a firm to be customer-centric.

Mathematical formula for Customer Lifetime Value (CLV) is as follows:Lifetime Value= Average Value of Sale* No. of Transactions * Retention Time Period Customer Life Time Value = Lifetime Value* Profit Margin

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After calculating cost of goods sold (COGS), overhead, marketing, and other administrative expenses, profit margin is 20%. Then, CLV= Rs. 48,000* 20% = Rs. 9,600 A firm’s value is based on current and future cash flow. Forecasting cash flow have always belonged to the finance department. Financial executives are usually responsible for anticipating cash flow, forecasting a firm’s cost structure and discount rate and then deriving the firm’s value and stock price based on discounted cash flow (DCF analysis). On the other hand, marketing focusses on meeting customers’ needs and offering better products than its competitors in the marketspace. Point to note here is- cash flow, which forms the fundamental aspect for firm valuation come from customers buying the product or service offerings of the firm. In this scenario, if life-time value of a customer is known, then the same can be calculated for the entire customer base. So, the value of a firm is quiet dependent on its future growth. Acquisition rate and customer retention, being components of CLV, are important factors to forecast the frequency and future value of future customers, and in turn, estimate the future cash flow and value of a firm. Apart from this, financial executives use linear growth projections to estimate future firm value a company.

For example, financial analysts use average growth rate of the last five years, with an assumption that the percentage growth will be same in future- for the next five to ten years. However, this assumption fails to consider business fundamentals which are acquisition, retention, expansion costs etc. Also, firms which show negative earnings ; calculating P/E ratio, where E is negative, becomes difficult. In such scenario, CLV projections, not only considers the business fundamentals to provide better estimates, it also provides better diagnostics such as identifying the most impactful factors to estimate the firm value firm. Concerning marketing managers, they need to focus on establishing a meaningful link between marketing activities and components of CLV. For example, focussing on customer satisfaction (marketing activity) which leads to greater customer retention (CLV component). Only then cash flow and return on investment can be assessed. Also, the impact of marketing programs should be revealed in terms of customer profitability rather than discussing only brand awareness, customer behaviour, etc. On the other hand, two different firms which has same earnings or cash flow but differs in customer retention rates, then, the company with higher retention rate will have higher firm value in future.

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So, as standalone financial metrics such as earnings or cashflow, might not be sufficient to determine firm value in future; financial analysts should always track customer metrics such as retention, acquisition rateon which CLV is dependent on. For example, Netflix has already moved in such direction and presents customer metrics to financial analysts.

Since there is a strong link between customer and value of the firm; a firm invests in a customer to receive greater return from them and provide current and future profits to the firm. This makes marketing more accountable and suggests marketing expenditures to be considered as investments (like R&D) instead of expenses. Customer lifetime value facilitates to take decisions based on customer retention, acquisition and profit margin to bridge the gap between marketing and finance to provide more accurate estimate of future firm value.

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HUMAN RESOURCES MANAGEMENT & TECHNOLOGY - Ezhil SS, XLRI i

Human Resources isn’t a thing we do. It’s the thing that runs our business - Steve Wynn The evolution of Human Resources Hiretual: Helps in gathering information Management from being mere and provides a platform to track the administrative support to personnel recruitment management to today’s strategic business Textio: AI & augmented writing to partners or effective talent managers has target the potential candidates, helps in been a long journey travelling across diverse hiring disciplines ranging from scientific HireVue: AI-based automation of large management of work to application of applicants human psychology to drive the desired behaviour inside the organization. This Onboarding discipline, after its decades of gradual Click Boarding: Automates to train & evolution right now is in the eye of a onboard the recruits through mobile disruptive change in its process brought by tools notifying what needs to be done technology. Performance Management The Invasion of Technology & its Impact Namely, Taleo, Workday, Silkroad are Technology has invaded every piece of HR some of the software organization to process be it talent acquisition, engagement engage for their performance and managing performance & compensation management. These tools are based and rewards. It has given the power of on analytics and provide tools for connectivity in the hands of organizations career development as well making operations more effective and purposeful. Technology (AI) has rectified a Solutions for New Challenges significant problem that existed with the The workplace has undergone drastic conventional processes, i.e. unconscious changes like the workforce, moving away biases, especially in recruitment and from the fixed employee payroll system to management. A few tech tools used in ‘work shredded into pieces’ and carried out HR processes in the firms. by people at their convenience. Recruitment Chatbots: Cost & effective filtering process through intelligent automation. E.g. Mya, GoHire, Ideal

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The ‘gig workers’, ‘casual workers’, ‘platform workers’, the crowd employment’, the ‘employee sharing’ all these names mean a monumental challenge to the organization to manage their workforce, to recruit, to engage them continuously, to retain them and comply with the locallaws & regulations. This changing nature of the workforce is not a transient phenomenon but the Future of Jobs in the world, especially in the developing market The conventional system would not work here because the gig workers data is constantly changing and not captured in the core data processes of the organisations so that we cannot measure cannot be managed effectively here. The solution to this HR challenge again comes in the form of technology. People Analytics gives organisation the ability to capture voluminous data from multiple sources and help them manage. Technology again goes a step ahead to insights & value paths to the organisations to take effective actions to align their workforce with their business strategy. Will outsourcing of HR process will be the new norm? With the organization bringing a sleuth of tools and software to automate the processes & build in house talent, this disruption has led to enormous growth in startups offering HR Tech solutions.

The HR Tech startups in India are already touching a value of $ 400 B and has seen rapid progress in the last five years. These startups are also bridging the employment gap in Tier 2 & 3 cities by facilitating the ease of recruitment and assessment. This trend indicates that in the near future, there could be largescale outsourcing of HR processes to these startups. This would help the organization to ease the burden of developing their tools and managing them at the same time make the process more effective and unbiased Data Privacy & Protection In the heart of this technological progress in HR, the process is the data, so its protection and the way it is collected becomes very important for the firms as well as the employees. The recent issues of data theft and misuses highlight the lack of regulatory checks in the processes and developing countries are more vulnerable in this case because of a lack of awareness. This demands an immediate statutory provision to check the abuse India does not have a standalone data protection act, but ta few clauses are included in the Information Technology Act 2000.

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MANAGEMENT CHALLENGES OF THE 21ST CENTURY - Muskan Garg (SRCC), Delhi AChange is the law of life. And those who look only to the past and present are certain to miss and crack the future. The quote above is by John F. Kennedy which is universal in nature and it is exigent in nature. Business by its very nature is never static. Business is affected by different factors which collectively form the business environment. These include economic, social, legal, technological and political factors. Any minute change is directly proportional to organisation and management of business enterprises and thus can exercise a significant influence on them. The changes will create new challenges and opportunities for managers. A manager has to decide to either open the window of opportunity or to pull down the shade. In the global scenario managers are facing several challenges, some of which are as follows:-.

1. Indian firms are facing increasing competition from goods produced worldwide by foreign multinationals in India and imports. In the current scenario it is seen that a company that fails to go global is in the danger of losing its business to competitors and would have to set global standards for production and marketing to flourish. For eg: Nirma faces competition from Hindustan

Unilever, Procter & Gamble etc. World has become a global market place. business cycles in one region increasingly affect other regions so companies that forge opportunities out of challenges emerge as the most enduring and endearing enterprises. 2. As global economic processes intensify, corporations must focus on creating a competitive and sustainable cost structure. Some critical steps have to be taken to gain lasting cost excellence. As physical boundaries across the globe become obsolete and companies being global, it becomes necessary to develop leaders who can effectively manage global giants. Such leaders have the ability to interact with p company should have a simple user interface and customer friendly as well. eople across the globe. It is imperative to understand the beliefs and values embodied in different cultures. a compelling message describing why the program is essential for future success of organisation must be sent to all stakeholders, selecting right methodology , setting targets for change, developing a plan , implementing the plan and making the changes sustainable is very important.

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3. The World Wide Web has a pervasive impact on both individuals and organisations. They are walking towards e-commerce. Companies which do not exist on net do not have a reliable stand in the reality and consumers have less confidence about them. The site of company should have a simple user interface and customer friendly as well. 4. In this era when change is constant, innovation has become a great necessity. Innovation would refer to systematic development and practical application of new ideas. Innovation requires thinking of an idea, developing a working proto type and the last step as to create a profitable relationship between quantity, quality and process. The time taken to convert a new idea into demand is called innovation lag. The longer the innovation lag, the longer the society has to wait. 5. In this era, managers are expected to consider ecological impact of business in their decisions and actions. Relationship of people and other living things with their environment is called ecology.ISO 14001 and other standards and regulations are meant to ensure that companies address public concerns including pollution. For eg: Union Carbide had to close down its operations in india when its Bhopal plant killed more than 2000 people and injured 5000 others due to leakage of methyl gas. 6.With globalisation and increasing competition, companies must continuously improve the quality of their products and services which are difficult as no company would like to increase its cost and developing a low cost better quality model is difficult.

These challenges require a solution so some of modified tasks of future managers are as follows:1. The subordinates of future will be more educated and will have higher level of aspirations. Therefore managers will have to help subordinates lay down their objectives which are in fusion with the organisational objectives. This can also be termed as management as objectives. 2. Management will have to d technological forecasting to avoid blocking up of capital in those technologies which are going to be obsolete very soon. Social forecasting will be required to anticipate expected trends in the value systems of people and their impact on organisational design and processes. 3. The managers of the future will have to serve as a trustee for various stakeholders like investors, consumers, employees, government and the community. 4. With increase in education and self consciousness, management will have to provide jobs that offer self-fulfilment and participation. Equitable compensation plans, planned promotions, programmes of self development will become necessary to face the new labour face. Job enlargement and job enrichment, flexible work scheduling, liberal control methods, self coordination, sophisticated planning and other changes will be more commonly used than today.

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SHIFT FROM INDIVIDUALISTIC GROWTH TO MERGERS AND ACQUISITIONS - Aadita Gandhi, Great Lakes Institute of Management, Gurugram

Globalization and liberalization have made restructuring of business units an integral part of modern business, which further has generated new waves of competition and trade. The shift in corporate strategies and restructuring has made mergers and acquisitions one of the most talked-about subjects in the market. While being a regular feature of developed economies, mergers, and acquisitions in India also, have become a part of corporate strategy today. There have been many corporate rivalries in the markets that have gained significant limelight. Coke-Pepsi, Nike-Reebok, AirbusBoeing has been a few prevalent names when it came to extreme competition over similar products. But today as we see Vodafone and Idea becoming VI, it can be inferred that now the market is in general shifting from individualistic growth and competitive to mergers and acquisitions i.e. mutual growth and settlement. The idea of acquiring was first introduced when Swaraj Paul tried to take over escorts in October 1983. Since then, India has seen many takeovers such as Ceat tires by Goenka, Consolidated Coffee by Tata tea, etc. The takeovers of many corporate giants like ITC, McDowells, Somani Group were arranged by The Board for Industrial and Financial Reconstruction (BIFR). With globalization coming into the picture, corporate restructuring has gained

momentum, and undertakings and companies are merging, demerging, divesting, and taking in or taking over companies and undertakings, both registered and unregistered. Against this corporate backdrop, mergers and acquisitions have to be encouraged in the interest of the general public and for the promotion of industry and trade. There are multiple reasons as to why many successful brands have taken the path of merging with competitors. Airtel acquired Loop Mobile in 2014 in Mobile Telecom Circle to get better market share, for instantaneous growth, and to snuff out competition. Here, the acquiring company, i.e. Airtel avoids all sorts of delays associated with the purchase of multiple assets and market share which further enables the firm to grow at a faster growth. A similar reason was behind the acquisition of WhatsApp by Facebook. Burger King (US) acquired Tim Hortons (Canada) in 2014 to get taxation benefits. The provisions of set-off and carry forward of losses as per the Income Tax Act give the acquirer a very strong reason, further leading to the reduction of tax liability of the merged firm. The amalgamation of WBPCDL and Durga Projects Limited (DPL) in 2014 also occurred for tax benefits so that DPLâ&#x20AC;&#x2122;s loss could be carried forward and setoff.

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Flipkart poised to strengthen its competency in the apparel e-commerce market and acquired Myntra in 2014. Google got access to Motorola’s 17,000 issues patents and 7500 applications. In both these cases, the two parties have been competitors that ultimately settled to merge and function as

a single unit and capture the market as a single unit. Today, we live in a time of considerable fiscal shift. Many companies have realized the consequences of corporate rivalries and bankruptcy and have started to choose to survive in the market over being an independent body.

Source: Patricia L Anslinger and Thomas E Copeland, ‘Growth Through Acquisitions: A fresh Look’, Harvard Business Review, Jan-Feb., 1996

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GREEN MARKETING AND ITS RELEVANCE IN SUSTAINABLE DEVELOPMENT - Christine Ann Mathew and Nikhitha Mathew Saintgits Institute of Management

Over the last few years, societies have become more concerned with the natural environment and increasingly conscious about eco-friendly products or green products. The majority of the firms have started using a sustainable development framework, known as green marketing. Green marketing is a much broader concept, which includes all marketing activities that are developed to stimulate and to sustain consumer’s environmentfriendly attitudes and behaviors. Mainly, Green marketing aims at how marketing activities utilize these limited resources while satisfying the needs and wants of individuals and industries. Alsmadi (2007) investigated the consumer behavior of Jordan consumers reveals environment consciousness. But a positive tendency in “Green Products” did not show have a positive impact on buying decisions. According to Simons and others (2006), with the application of more innovative technology, stricter state imposition on misleading claims, government regulations, and incentives as well as a detailed inspection from various environmental organizations, many green products have greatly improved and regained consumer confidence. Polonsky (2003) inferred that green marketing enfold more than firms marketing claims, firms must carry more of the responsibility of the environment.

Green Marketing is the marketing that produces goods or services based on the needs and wants of customers without harming the physical environment. It consists of all schemes designed to create and aid in any exchanges intended to satisfy human needs or wants, till the satisfaction of these needs and wants occurs, with a very less deleterious impact on the natural environment. Sustainable development is a progressed economic development that is based on the needs and wants of contemporary mankind without jeopardizing the means of future generations to meet their own requisites. Sustainable development can be classified into three constituent parts; environmental sustainability, economic sustainability, and socio-political sustainability.

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Since 2005, Starbucks has been certified by LEED. They are planning to eliminate all plastic straws by 2020 and open 10,000 environmentally friendly stores by 2025. Starbucks tried its best to engage its community in sustainable issues. Green materials are used for producing, packaging, and delivering their product to customers. Starbucks plans to reduce its waste and use 30 percent less water and 25 percent less power during the production processes as part of the Green Store initiative. The brand designs disposable coffee cups that are recycled, and they also, support farmers and the environmentally sustainable community by communicating these messages to its target audience. The waste which is generated always does not necessarily have to be an unhelpful result of production processes. The idea of waste has given birth to a new market for recycled products. Pricing may become a cause of concern when it comes to selling the product in the market, as its manufacturing may be expensive due to new technology involved. So, it is the responsibility of the manufacturer to decide the price of the product. A business that manufactures and packages products can easily convert to eco-friendly packaging.

Consumers need to be educated and made aware of environmental threats and how green marketing activities can help in saving our environment. The green marketing activities do have an impact on achieving sustainable development because they are linked with common goals. As sustainable marketing entails, it means meeting the current needs without sacrificing the benefits of the prospective generations that are to come, the implementation of green marketing is one of the methods to bring it into practice, because it promotes ways to save and rationally utilize limited resources. Due to the existence of the demand for green products, Green Marketing provides an opportunity for organizations to uplift their market share with the inclusion of the eco-friendly products. Green marketing is being more significant to businesses because of the consumerâ&#x20AC;&#x2DC;s genuine concerns about the planetâ&#x20AC;&#x2122;s scarce resources. By achieving green marketing initiatives to save the world's resources through their manufacturing, packaging, and functions, the organizations do convey to the consumers that they also share the same interests on these issues.

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REIMAGINING SUPPLY CHAIN POST PANDEMIC - Tanusha (IIM), Indore

Health and economy are facing unprecedented challenges owing to the COVID-19 pandemic. The increasing health concerns mandated governments to partial and complete lockdown in certain parts of the world, leading to shutting down of factories and transport. According to a 2020 survey available on Statista, only 1% of the respondents stated that the pandemic has not affected their supply chain and only 9% of respondents stated that their supply chain partners were fully prepared for it.

With this high frequency, supply chain companies must focus on building new capabilities, improving resilience, expediting shift to a data-driven strategy, and positioning themselves better than the competitors. According to a 2020 on Statista, 42% of the respondents feel that they plan to change their supply chain and shipping strategies post COVID-19. These extraordinary circumstances come with numerous challenges, if tapped properly, will help companies sail through the shock and stay well ahead of their competitors. In the immediate aftermath of the shock, companies should deploy a ‘control tower model’ which is a cross-functional team of leaders from all functions like logistics, production, marketing, etc. This team will overview whatever is happening in the value chain and expedite decision making. For this, there should be a seamless flow of information based on real-time data.

The frequency of disruptions has increased with time. It is estimated that disruptions that have a time frame of more than a month happen in every 3.7 years.

Having only a single supplier or diversified suppliers from a concentrated region poses structural vulnerabilities. But due to economies of scale and resource availabilities, most companies’ supplier base is concentrated in certain parts of the world.

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According to a Dun & Bradstreet study, 163 of the Fortune 1000 companies have a tier 1 supplier base in the most impacted areas of China. The semiconductors industry has 72% of the outsourced assembly and testing in mainland China and Taiwan[4]. Shortages of Chinese parts during the initial days of lockdown lead to a ripple effect forcing assembly lines in other parts of the world to shut down. Thus, companies should evaluate risk by region by region. Their aim should be to diversify and localize their supply chain. But, at the same time, ensure minimum costs and stock-outs. Supplier engagement and understanding of their value chain will allow better visibility in the system. Not only is improving visibility and analyzing the supplier base essential but also very complex. A global multinational company might have thousands of tier-1 suppliers, which in turn migh have hundreds of tier-2 suppliers. Thus, advanced digital capabilities are required to fully identify the current and potential constraints and analyze the risk. Reducing the number of unique parts through the adoption of modular designs will simplify the complexities and generate faster lead times. An incident shook Toyota in 2011 when a magnitude-9 earthquake and tsunami hit Japan. For more than two months, its domestic production facilities were closed. As a corrective action, Toyota standardized components across most of its vehicles. Components could now be shared across locations globally and shift production

across various sites, thereby improving flexibility. It then identified single-sourced suppliers and asked them to disperse production to multiple sites. These efforts allowed Toyota to restart operations in less than two weeks during the 2016 and 2019 earthquakes. For decades now, most companies have been focusing to build â&#x20AC;&#x2DC;just-in-timeâ&#x20AC;&#x2122; model to reduce inventory to the level of forecasted safety stock. However, forecasting still depends heavily on past sales. Advanced forecasting techniques like predictive and prescriptive analytics will enable companies to factor in various external agents like the latest trends, technological disruptions, industry dynamics, and macroeconomic policies. Optimal inventory will both effectively reduce inventory carrying cost and enable to meet a sudden spike in demands. Giants such as Nike used predictive analytics to selectively markdown goods and reduce production early on to minimize impact during the pandemic Reskilling of the employees will enable faster adoption of new digital, analytical, and intelligence capabilities. However, this comes with another set of challenges. According to a 2020 survey by Accenture, 51% of respondents state security to be the greatest challenge for implementing big data n their companies. Thus, cybersecurity will play a pivotal role in meeting the goal of maximum visibility in the supply chain.

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Once these measures are in their day-today operations, companies should resort to scenario planning to mitigate risks in the future. Scenario planning models various possible scenarios of risk, to both supply and demand, and analyze their implications and trade-offs. Based on the analysis, companies can prepare the most optimal action plans for each scenario. This will minimize the reaction time and gain customer trust. In 2017 Hurricane Maria struck Puerto Rico, which supplied 10% of the total US drug supply, and hampered the production of 17 major drugs to be exported to the USA for two months. Biogen, through scenario planning, taking experience from past hurricanes Irma and Harvey, arranged alternate procurement sources for essential materials and shifted its production to Kentucky. As a result, Biogenâ&#x20AC;&#x2122;s stock price recovered within two weeks after the hurricane struck.

Companies can even venture into new business avenues like online retailing. With the closure of physical stores, there was an increase in online and direct to consumer sales in many product categories. The weekly increase in online grocery sales was 57% in y-o-y terms, a trend which is likely to continue for coming quarters. This will, however, require a focus on building capabilities, especially in last-mile deliveries, and collaborating with direct to consumer and omnichannel retail companies for future market potential. Thus, a robust strategy, discipline, and commitment from all members of the organization are required to achieve a common goal of improving agility and resilience in the organization.

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INDUSTRIAL REVOLUTION 5.0: INDUSTRIAL, ENVIRONMENTAL AND SOCIAL IMPACT - Kumar Rishav (Institute of management technology), Hyderabad

Recently, Elon Musk was in the news because his company Neuralink achieved a milestone. Elon Musk has unveiled a pig called Gertrude, having a coin-sized computer chip in her brain to demonstrate the brain-to-machine interface's working. This kind of interface can help people to control phones or computers with their minds. It is just a glimpse of the Industrial revolution 5.0.

So we should not wonder if the Industrial process 5.0 starts to show its footprints after 20 years.

Let us know about various industrial revolution first. Industrial revolution 1.0 began in the 18th century through the use of steam power and mechanization of production. Industrial Revolution 2.0 started in the 19th century through the discovery of electricity and assembly line production. Industrial Revolution 3.0 began in the '70s in the 20th century through partial automation using memoryprogrammable controls and computers. Industrial revolution 4.0 emphasis on digital technology from recent decades to a whole new level with the help of interconnectivity through the Internet of Things (IoT), access to real-time data, and the introduction of cyber-physical systems.

Source:https://www.sciencedirect.com/science/article/ pii/S1877050919312748

It is true that we are yet to see the Industrial revolution 4.0 in its highest form, but we all are aware that scientific development is exponential and rapid.

only talks about controlling and connecting physical devices through the internet and computer algorithms and about other things like cloud computing, but what about human involvement?

But why do we need an Industrial revolution 5.0 and what sorts of problems will it solve? Let us understand by understanding its various social, environmental, and industrial impacts. Social Impact: Industrial revolution 4.0 sole focus is to improve the efficiency of the process, thereby inadvertently ignoring the human cost resulting from the optimization of processes.

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It can lead to an unemployment increase and the mass layoff of existing employees. These are the reasons behind the birth of the concept of Universal Basic Income. But Industrial revolution 5.0 focuses on the return of human hands and minds into the industrial framework so that man and machine reconcile and find ways to work together to improve the means and efficiency of production. Industrial Impact: Industry 5.0 is the most improved version of the industrial revolution, which has more effective processes. Industry 5.0 ends the search for business models that use the least resources to obtain the highest profits because this revolution can achieve the highest level of perfection to the date since man and machine will work together to make the best financial decisions for a company as well as by pairing humans and machines, we will utilize human brainpower and creativity further for increasing process efficiency by combining workflows with intelligent systems. The least use of resources and high output has always been the motive of sustainable development. In Industry revolution 5.0, there is a concept of a cobot. It is a robot designed to interact with people in a shared workplace physically. Cobots are distinct from industrial robots, which are designed to operate independently and with no

human involvement. Cobots are equipped with integrated sensors with advanced features. Working together with human coworkers will significantly improve processes and efficiency, assisting them in finishing their work. Not just that, cobots will also improve human-based workmanship by improving accuracies, speed, precision, and output. From making finely crafted goods to complex goods, cobots will assist, and these things will happen much more quickly and in larger quantities. Although industrial robots may cause severe injuries to humans, cobots are specifically designed with safety in mind. Industry revolution 5.0 will solve the need for mass customization of products for clients. Even now, It is still challenging to achieve mass customization for maximum companies because the industry can either achieve mass production or customization. Since robots become a part of organizations, human resources departments will face new and complex challenges. Apart from their current responsibilities, they will also need to identify the jobs to be handled by robots. They will also decide the jobs to give to robots. The importance and responsibilities of human resources departments will increase. Eventually, human resources departments will evolve, and they may even be named differently in the future.

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Environmental impact:

Conclusion:

Industrial transformations never took conservation of the environment as a top priority. It is hoped that with the Industrial revolution 5.0 and new corporate technology, this trend will change. This will result in the advent of environmental policies. For instance, a negligible production of waste material and its management may become indispensable, cross-cutting processes, making the organization more efficient.

Since scientific growth is exponential, we have to adapt ourselves according to rapid scientific change. Just ten years ago, we started to talk about Industry revolution 4.0, and now today, we have started to discuss a new change: Industry revolution 5.0. If we continue to grow like this, one-day cobots will also become an integral part of our lives. But many challenges are that waiting for us like we have to conduct skill training programs for employees and workers, spread technical awareness among the general masses, and make the industrial revolution 5.0 more effective in various aspects. But at least we can hope that whatever in the Industrial revolution 1.0-4.0 is missing, Industrial revolution 5.0 will fulfill those things.

SOURCE: - HTTPS://WWW.SCIENCEDIRECT.COM/SCIENCE/ARTICL /PII/S1877050919312748

THE STRATEGY AND CONSULTING CLUB OF IIM ROHTAK snc@iimrohtak.ac.in AKANKSHA LAWHALE AMRISH RAI MEDHA WAGHÂ SAURABH AZGAONKAR TANVI RANE TEJASWI NETTAM VARIS KUMAR KALIA ANKIT PALIWAL GARGI GARIMA KUMARI KRITI SETHI MADHU PRIYA MACHADI PARNIKA SHARMA POOJA CHAUDHARY RASTRA KUNWAR MAURYA RUDRAJIT BANERJEE FOLLOW US ON: DISCLAIMER: THE VIEWS AND OPINIONS EXPRESSED IN THIS MAGAZINE ARE THOSE OF THE AUTHOR AND DO NOT NECESSARILY REFLECT THE OPINION OF THE STAKE HOLDERS OF IIM ROHTAK