STRATEGY WALL THE STRATEGY AND CONSULTING CLUB OF IIM ROHTAK WHAT MAKES TIKTOK TICK? PRODUCT PLACEMENT AND ITS STRATEGIES INDIAN OTT MARKET & THE RISE OF DISNEY+ HOTSTAR
15TH EDITION
“Designing a winning strategy is the art of asking questions, experimenting and then constantly renewing the thinking process by questioning the answers. No matter how good today’s strategy is, you must always keep reinventing it.” Constantinos Markides
Contents 01
WHAT MAKES TIKTOK TICK?
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PRODUCT PLACEMENT AND ITS STRATEGIES
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INDIAN OTT MARKET & THE RISE OF DISNEY+ HOTSTAR
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ANOTHER DECADE, ANOTHER RECESSION.
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AUSTRALIAN ECONOMY
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REIMAGINING SUPPLY CHAIN POST PANDEMIC
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OLA FROM 4 STRATEGIC LENSES
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IMPACT OF COVID-19 ON THE DOMESTIC TEXTILES INDUSTRY
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CERTAINLY UNCERTAIN – NEED OF A CAPITAL
USING ARTIFICIAL INTELLIGENCE MODELS FOR INVESTMENT/TRADING STRATEGIES
THE STRATEGY AND CONSULTING CLUB
WHAT MAKES TIKTOK TICK? - Anoushka Banavar (IIM), Lucknow TikTok is a phenomenon that has taken the world by storm – be it for all the right and wrong reasons. But have you ever wondered what makes ByteDance’s short-form video app such a runaway success? Through this article we try to decode the two main elements that make TikTok worth more than 20 Bn dollars (as estimated by a Bloomberg Report) with over 800 Mn monthly active users worldwide. The “content” network effect We have all heard the term “network effect” in some or the other context. For those of you for whom the term is new – a network effect or network externalities, refers to the additional value that every new user creates for the existing network users. Would you have joined Facebook if none of your friends were already on the platform?
The more friends that you have on Facebook, the more valuable is the network to you. The strength of this network for you depends on the number of connections, the strength of these connections and the combined resources controlled by these relationships. However, TikTok relies on what Techcrunch’s Josh Constine calls the “content” network effect. Since, TikTok’s competitive strategy is largely reliant on the power of remixing existing trending videos to create new hits, every new video added to the platform makes the next video even more valuable. This combination and recombination of videos has not only created a “bottomless well” of content on the platform, but the added benefit of sharing TikTok watermarked videos on other social media platforms has created an allpervasive new bite sized video market.
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The decision making AI algorithm
by AI as the algorithm simplifies video editing, suggests trending music, hashtags, To quote Zhang Yimimg, the billionaire filters and other proven popular add-ons. founder of TikTok, his mission for the app was to “combine the power of AI with the The combination of a strong content growth of mobile internet to revolutionize the network locking in an ever expanding way people consume and receive userbase backed by an AI algorithm to keep information.” users hooked, are the two driving factors behind what keeps millennials with low Unlike other social media platforms that attention spans hooked to this new style of recommend content relevant to a user, content. It will be some time before imitators based on previous preferences, TikTok’s AI such as Lasso, Shots, Reels are able to algorithm takes over the decision-making beat this twin-pronged formula of process for the user through the “For You” competitive advantage. feed. The algorithm is built based on data collected from the numerous new age apps in ByteDance’s portfolio. By dictating content that a user views, the algorithm further customizes content by collecting every reaction, every comment, every new influencer followed, and also the speed at which a user swipes a video away! AI controls not only the demand side user group, but the supply side user group as well. All the content on TikTok is enhanced
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Product placement and its strategies - P Prudvi Teja (SIBM), Bengaluru
He steps on the accelerator of his Aston Martin and with a powerful jolt, the opposite car crashes with its tires burst open. Our protagonist gets out of his car and walks towards the villain. The camera pans gradually from the foot to the face of our protagonist. He takes out his Marlboro cigarette and lights it. With a smile on his face, he says – The name’s Bond. James Bond!
In the year 2019, the iconic car Aston Martin DB5 which was used to promote the iconic James Bond film Thunderball was sold for a whopping $6.4 million.
We all love this, don’t we? But what is the key takeaway from the above-described scenario? It’s the careful placement of the brands Aston Martin and Marlboro. In the marketing terms, we call this ‘Product Placement’. By doing this, the brands have two major advantages – Increasing their brand awareness and a steep rise in the sales of their products. These two brands have now become synonymous to the character of James Bond.
advertisement. It has an emotional appeal at its core. It comes under one of the important aspects of 4 Ps of marketing, i.e. Promotion.
Product placement, in most people's mind, is highly associated with paid advertising. Most of them assume it to being invasive and the brands selling themselves out. But in reality, it is more than just an
From the early newspaper advertisements, poster distribution to the mainstream advertising on TV and radio stations, everything comes under promotion. As time progressed, they have become old and slowly product placement is replacing them.
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It costs way less and is more effective too. It bypasses the usual routine of shooting the advertisement by investing lakhs of rupees. Product placement isn’t a recent phenomenon in Bollywood too. The 1973 movie ‘Bobby’ unknowingly did it by promoting the Rajdoot 75 GTS bike, which became famous as ‘Bobby Bike’. Earlier the product placement was blatant and unapologetic, but now it has been refined in Bollywood. The placement needs to be organic. It needs to be properly fit into the script. If not, the audience is smart enough and they’ll spot it, which is counterproductive. Over the Top (OTT) platforms like Amazon Prime Video, Netflix and Disney Plus have learned this craft and are coming up with innovative strategies each day. YouTube creators are also leveraging this by subtly inserting the product into the
mainstream content. Who could forget Pitchers, the iconic web series of TVF? One could see the products of brands like Uber, Kingfisher and Pond’s all over the series. It was a delightful experience to see such an organic ‘brand integration’. Sometimes platforms may adopt a different pathway. For example, Netflix often says that it doesn’t promote ads. So to protect its ad-free image, it distances itself from any sort of paid promotion. But this is just one form of product placement. There are different marketing strategies and merchandising deals which Netflix is using with the big brands and in turn, these brands too promote the film on their media handles. The new series ‘Stranger things’ and ‘To all the boys I’ve loved before’ had a plethora of placements of Coca-Cola and Subway. Amazon Prime Video is also venturing into different shoppable product placements. Sometimes there’s no exchange of money.
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Instead, the brands provide assistance to the show’s producers by lending them cruise ships or even letting them use the premises of their property, which would, in turn, increase the sales. Caesars Palace, a hotel-casino in Las Vegas, did this for the movie ‘The Hangover’, which was a blockbuster. The PR bonanza which the hotel received was noteworthy. This kind of assistance from brands in return for product placement can help producers save big and stay under budget. And it's good for the OTT platforms too. Bigger brands rarely need any extra promotions. They advertise in movies or series just to stay relevant in the mainstream media. It’s the smaller brands that need more exposure and competes for product placement. What needs to be kept in mind is that just promoting the product isn’t enough if the audience doesn’t know
about it. So, the brands increase their awareness levels among the audience beforehand. This saves them a lot of money. Ultimately, it’s we, the audience that is reaping the benefits of such seamless innovative brand integration. The quality and variety of content we get are being refined every day. The brands too are striving hard to be relatable and approachable. The products which once struggled hard to find a slot on the TV advertisements are straightaway bypassing them. So, the next time you see a character in a movie or a web series eating a burger in McDonald’s while talking to somebody on his OnePlus phone, pause for a second and notice how subtle were they in placing the brands and how you are psychologically affected by this!
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INDIAN OTT MARKET & THE RISE OF DISNEY+ HOTSTAR - Team Shadowfax (S.P. Jain Institute of Management)
Over-the-top (OTT) media services enable content to be distributed over the internet. Consumers have on demand access to their favourite TV shows, movies, and documentaries on the go. OTT platforms work on three basic models - AVOD, SVOD, and TVOD. AVOD (Advertising based video on demand) - This model generates revenues primarily from advertisements. E.g. YouTube SVOD (Subscription based video on demand) - This model generates revenues from users who pay a monthly or annual subscription fee. E.g. Netflix TVOD (Transactional based video on demand) - This model operates on the pay-per-view purchasing. E.g. Apple iTunes, Google Play OTT media content became popular in India with the entry of Netflix, although some players were already present. Rise of OTT platforms in India: Cheap mobile data prices accompanied by 4G penetration in the rural areas has enabled the meteoric rise of OTT platforms in India. The demand of Indian millennials to watch their favourite foreign shows was fulfilled by these platforms. The growth of the OTT market can also be directly attributed to the rising number of
smartphone users in the country. As the traditional Indian consumer moves towards being a digital consumer, this will change the mode of consumption of media and entertainment.
India has currently more than 40 service providers in the OTT space. The OTT market is dominated by players such as Amazon, Netflix, and Disney+ Hotstar. Media houses backed smaller players such as ZEE5 and Alt Balaji also offer a variety of regional content. With the focus on differentiation, OTT platforms are investing heavily in original content and making content available in regional languages. The race to sign on the next 100 million subscribers is truly on.
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9 months. Disney has entered these markets either through independent Over-the-top media services have become Disney+ platform or acquisition of existing quite popular not just in India but all over the platforms. world. With an increase in demand and rapid adoption of OTT based viewing, the India’s OTT market is one of the fasteststreaming market is expected to grow to $5 growing, making it an important market for billion by 2023 from $0.5 billion, 2 years ago. Disney+. However, with its cultural & With more and more platforms being demographic diversity, many different and price conscious launched by different entertainment languages, companies, the streaming war has just begun customers, it is fairly a complex market. and is expected to become more competitive Because of these complexities and its aim in the future. The latest addition to this is to expand rapidly, Disney bought Hotstar Disney+. Disney+ the much-awaited video through its $71.3 billion acquisition of 21st streaming service from Walt Disney was Century Fox assets, which included Hotstar’s parent company - Star India. launched on November 12, 2019. Disney’s India Strategy:
Disney’s global expansion strategy has 2 Why Hotstar?: India's largest watched streaming components: platform. Hotstar has a 29% market share, Aggregation (Global-For-Local): In order to Amazon Prime has 10% and Netflix deliver economies of scale, Disney has has 5%. Hotstar has 300 million active expanded operations into other global users & 8 million subscribers. markets. This includes distributing global Reason Hotstar dominated the market content to local regions. For example, users was its affordable annual subscription can see famous Disney movies such as The (Premium: 1499 per year and VIP: 399 Lion King, Marvel Avengers, Finding Nemo, per year) etc. anytime and anywhere in any corner of Hotstar has an extensive content the world. library (10,000 hrs of drama and movies in 17 different languages) Adaptation (Local-For-Local) approach: In comprising television daily soaps, order to boost revenues and market share, reality shows, documentaries, and Disney tailored products and services to suit movies. local tastes and needs. This includes Hotstar’s presence in live telecasting producing or modifying content as per the of sports, especially IPL, gave them a culture, local languages, demographics, and lead in customer subscriptions. To put other such factors of the region. in numbers, 18.6 million viewers watched the IPL’s championship game As a part of its rapid expansion strategy, last May, setting a global record in live Disney is now present in 18+ countries in just streaming.
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Hotstar had brought rights to exclusive HBO shows like Game of Thrones, Billions, Westworld, Homeland, and other popular shows. Covid-19 Impact: With movie theatres still closed due to the ongoing Covid-19 pandemic, consumers have shifted to digital platforms. The average viewing time has seen a spike in the lockdown with an increase of 8%. The overall viewing time increased by 70 billion minutes in this phase. This black swan event has accelerated the adoption of digital content among consumers.
Conclusion & Road Ahead: Disney’s existing media portfolio of Pixar, Marvel, National geographic coupled with Hotstar’s regional content and presence in live streaming of sports, gives Disney+ Hotstar a unique competitive edge over the rivals. Disney+ Hotstar’s new concept of ‘Multiplex’, has changed the way of releasing new movies. Multiplex will premier new movies similar to a theatre directly to millions of viewers across the country. This concept could prove to be a game-changer in the coming years, raking in additional revenues and solidifying Disney’s place in the OTT market.
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ANOTHER DECADE, ANOTHER RECESSION. - Aayush Raj Singh (IIM), Indore
The global economy has seen steady but continuous growth since the onset of the last decade, until recent times. Financial systems across the world were hit hard in 2008, and though the start of the decade involved the after-effects of the 2008 crisis to linger, but globally the domestic demand led its revival, especially in the growing economies. Now at the start of another decade, the world finds itself standing again at a similar junction. Experts from various international organisations like the IMF and the World Bank had predicted a synchronised global economic slowdown that would lead to widespread unemployment across the countries. Cracks had begun to appear in the health of the global economy as apparent with the slowdown experienced by most of the countries in their growth rate. The COVID fiasco has just accelerated what was always coming but in a more dramatic manner. The never before lockdown (read The Great Lockdown) and the resulting stoppage of
economic activity across the world has shaken even the well-established and unthinkable giants. With oil prices increasing, stock markets across the world reached record highs in December’19 and January’20. The vertical rally that happened around this time was one of the best rises in the history of markets across the world. With exchanges worldwide trading in the green, the markets peaked in around 20th February, and this was when a combination of factors struck the exchanges across the world. The world had seen the start of trade wars between various countries across the continents. With trade agreements being negotiated in almost every part of the world and WTO being flooded with disputes, the business had slowed down around the globe.
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The various geopolitical tensions added fuel to the fire as global security became more unstable. The US treasury security for twoand ten-year bonds fell to their lowest levels by the first week of March, which led to the inverse yield curve. This ‘2-10’ inversion situation has been one of the most consistent predictors that have historically preceded almost every recession. The pandemic in China took a serious turn in around January and so a total lockdown was put in place in the first week of February. This directly began to have an impact on the supply chain of raw materials across sectors. Furthermore, the actual impact in the markets began to be felt in the first half of March when production narrowed down, and consumers began to
feel the brunt. The start of March was also the time when the cases surged in East Asia, impacting various businesses located in the region. The WHO declared COVID-19 to be a pandemic on March 11, and this was when countries across the world beg to go for a shutdown to control the spread of the virus. This had a direct and a drastic impact on the local markets, as evident in India when Bombay Stock Exchange tanked to its lowest level on March 23, 2020. The three back to back record droppings unbridled global fears about the spread of the coronavirus, oil price drops, and the possibility of a 2020 recession. During March 2020, global stocks saw a downturn of at least 25%, and 30% in most G20 nations.
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All in all, companies went about losing their revenue and began exercising cost cutting strategies with the most common being downsizing of the workforce. Much of the resources were restructured to oversee the financial health in the near future. The crisis has led to selling of every asset class from stocks to bonds to gold — in order to raise cash. The fear of pandemic staying longer led to reduced shareholder confidence in the markets and further dwindled investments. Most awaited deals like the
Aramco-Reliance in India and SoftBank’s offer for $3 billion WeWork shares have been put on hold as the crisis has jolted the valuation of sellers and appetite of buyers. The crisis is not merely a market adjustment but an awareness of the changing world order. This is the beginning of a new chapter in the history of world economics and it remains to be seen how the world tides over this one and changes that it will bring to the lives of ordinary people across the world.
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AUSTRALIAN ECONOMY - Team Arpan (Shri Ram college of commerce)
Australian economy, also known as "miracle economy", was successful in avoiding recession during the 2007-2008 financial crisis, and the worst of the 1997 Asian financial crisis. But, the year 2020 started as a nightmare for the economy and it could no longer do any miracle. The Australian Bushfire catastrophe started in the year 2019 and entered the new year with a lot of destruction and devastation in the form of damage to homes and businesses, job and wage losses, farm and crop losses, infrastructure damage, auxiliary business losses, school closures and the costs of power outages to businesses. The economy estimates losses as much as A$50 million each day. The country was covered with a toxic haze from smoke billowing in from the fires. Sectors from agriculture to property to tourism were adversely affected due to this bushfire.
Along with this, the whole world is facing another dilemma of China-borne virus, COVID-19. The widespread started from the months of March and still exists in most of the countries. Australian economy witnessed the same and has faced many negative economical impacts. The entire economy was in a lockdown situation and the fact that in a week about one million Australians became unemployed shows the seriousness of the outbreak of virus in Australia. The figures from the Bureau of Statistics show that the Australia’s economy shrank around 0.3% of its GDP in the last quarter, amid bushfire and early stages of the coronavirus pandemic. The economy could not show any magic as it used to and got trapped by the two hindrances and suffered its first recession in 29 years.
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Drop in the consumption level of household Households constitutes 56% of the entire economy, so if households stop spending, the economy is in big trouble. Due to the strict lockdown situation, households spending reduced and in turn impacted the economy and its GDP. Household consumption dropped 1.1% (the biggest one-quarter fall since 1986). The unemployment rate had risen to 6.2% till May and the rate is constantly increasing. People have lost income and there are little chances of increment in the wages for the entire year. Falling house prices are another threat to the financial outlook for many households when added to loss of incomes. Hence, rising unemployment, loss of income and falling house prices will lead to greater drop in the household behaviour. Reduction in Imports contributing to GDP It is rightly calculated that net exports adds to the national income. Due to the pandemic situation, household spending, firms manufacturing units and everything has come to standstill. This has led to fall in export and imports of goods and services: with import falling much more. Reduction in import adds to the growth because import reduces national income. Though GDP increases, but it is not a good sign for an economy because fall in import also shows household and businesses are less inclined to spend money.
Moreover, some of Australia’s major exports include iron ore, metallurgical and thermal coal, and liquefied natural gas and energy products, and China is one of the biggest consumers of those products. The virus made other countries rely less on China and this has also led to some negative trading relations with other countries. So, due to this export quantity might decrease as well. Government spending to the economy The Government's economic response to the coronavirus pandemic has been sweeping, including payments for job seekers and "job keepers", as well as wage subsidies and support for businesses. Government has spent a lot in order to recover the economy but in order to have long term benefits, it is necessary that the Government ramps up the investment quickly. It announced the stimulus package of worth to be estimated as 3.3 per cent of Australia's gross domestic product this budget year — and 6.1 per cent next year. The Central Bank has already cut the cash reserve ratio by 1% which needs to be increased. So far, direct aid to the business has been of around A$200bn, which has never happened before. The UK, the US are bigger, wealthier countries and are spending more to prop up their economies, but Australia's Covid-19 rescue packages are its greatest ever financial gamble since it has never announced such a high amount of package before.
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These were the pillars of national income of the Australian Economy. It has been hit by recession with numerous steps taken by the Government to solve the situation. Both the demand and supply side have been shrunk making all the sectors face a disequilibrium condition. But the economy has to prove how MIRACULOUS it has been and accept the current hindrances in a positive way and again revive back to normalcy. Some of the steps which the Government and the Reserve Bank can take are: To combine long-term structural policy measures with short-term demand management. The point of having a floating exchange rate and an inflationtargeting central bank is that fiscal policy does not have to worry about short-term demand management. Unemployment itself is a major issue. It needs to be tackled on a priority basis. The government must focus on job creation, especially for older and uneducated workers.
Reforms need to be made in the legal compliances requirements so that it is easier for the employers. The government needs to change Australian tax rates, so that more business can come up, FDIs can beattracted and more money in the form of tax can be given to the Government. Tax reform including a GST increase and higher land tax will be needed to avoid the debt burden of the $214bn Covid-19 economic response falling on young people. As mentioned earlier, the Reserve Bank of Australia (RBA) reduced its cash rate to an all-time low of 0.25%. It might need to make some other monetary reforms if it does not help them to revive. These are some of the reforms which can be made in a nutshell. This may actually help the Australian Government revive their economy and contribute more to their allies in helping them in reviving.
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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 ‘just-in-time’ 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, Biogen’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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OLA FROM 4 STRATEGIC LENSES - Team Doctor Strange (IIM), Kozhikode
Introduction
b) Dropping trend of Ola’s Revenue growth (2018-24)
Ola is an Indian ridesharing company (TNC) started in 2010 in Mumbai (India). It collaborated with taxi drivers and owners, added a touch of modern technology to the whole setup, to enable the customers to book cars at short notice via their app. Competitive Landscape Taxi industry is expected to show an annual growth rate (CAGR 2020-2024) of 19.1%, resulting in a market volume of US$52,538m by 2024. Meru, which has once been the leading player in the cab business in India, lost its position to the digital disrupter Ola in 2015. Ola had the first-mover advantage in app-based platform in India, leading to high revenues from high penetration across the cities. However, a plunge in the revenue growth even with rise in # of Users indicates a mature phase of the S curve.
International rival, Uber entered in 2013 and claims to garner over 50% of the market share in India. Uber is still in the Emergent phase in India, but unable to expand to a significant # of local geographies, hence lacks dominance in the country. Ola continually introduced successive S-Curve by Exogenous technological change in its existing business model, like it ventured into Bus shuttles and Auto services to tap opportunities in an unorganized ridesharing market. Ola followed the Theory of Schumpeterian Rent and tried to venture into new related domains, resulting in steady flow of revenue. Internationalization Strategy:
a) Rising trend of Ola Users (2017-24) Also, used the strategy of Local responsiveness to adapt to local conditions via collaborating with DriveTech, Mercer and Pearson in London.
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In other business like Cloud kitchen, it competes with the regional players like Swiggy, Zomato and Uber Eats, and has a huge opportunity to improve its market share. Diversification Strategy Ola is also trying to get NBFC license so that it can expand the operations of Ola Money Postpaid, or Ola Credit, which is a buy-now-pay-later product. Ola Foods has also taken the transition from a food delivery company to a food-first company, to make a prominent visibility in this low-entry market, which was dominant by Swiggy and Zomato. Ola initiated its electric vehicles business into a separate unit called Ola Electric along with the operations on charging solutions, EV batteries and orchestrating viable infrastructure to allow commercial EVs to operate at scale. Stakeholder Mapping Ola has been able to develop a competitive position that allows it to create value to its key stakeholders. The company clearly projects how it creates value to everyone across the globe.
There still lies a huge scope of improvement to first start inter-city trips from tier1 to tier2/tier 3 and then establishing itself in the same market, with lower price range services As the focus laid on Cost effectiveness, Innovation and Customer Centricity, Ola needs to incorporate it in its services to grow in an already matured domestic market Currently, in the COVID situation, OLA should leverage the diversified portfolio including OLA Money and Cloud Kitchen to generate the revenues Ola Revenue Share/Breakdown for FY19
Ola vs Uber Tier wise reach (Dec’2017)
Stakeholder Mapping Ola has been able to develop a competitive position that allows it to create value to its key stakeholders. The company clearly projects how it creates value to everyone across the globe.
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Ola Competitive Life Cycle
International Rivals to Ola
Optimize the cost at all the levels More customer Centric HIghly Innovative
International Trade v/s FDI Mapping
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Diversification Matrices Tool
Stakeholder Map
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IMPACT OF COVID-19 ON THE DOMESTIC TEXTILES INDUSTRY - Jitesh Parab (Chetana’s Institute of Management & Research)
India has always believed in the philosophy of ‘Vasudhaiva Kutumbakam’ translating into the facts that the world is one family and there has been no such time in human history that this concept has been tested and found to be true Now the world is in the gulf of coronavirus and the fight against it will be a testimony to humanity.
kits and over 3 lakhs N-95 masks every day. The Tripura region and Coimbatore region who us to supply only t-shirts, now they all are getting calls from the international buyers saying that- Can they match the t-shirts with the face cover as well? This means that when we are talking about the reorientation of manufacturing processes we are also seeing reorientation of demand in the global market.
India covers 61% of the international textile market and 22% of the global market. There are 2000+ spinning mills with spindle capacity in India which were in the doldrums. India is the 2nd biggest employer after agriculture which has been hit hard due to the pandemic. There was a huge loss of jobs when the lockdown was announced. On 27th February 2020, WHO released the guidelines of PPE kits. The discussion was carried on 1st March 2020, whether we can rely on the import of PPE kits the answer was NO. Till that day we were not having even a single PPE kit in India. PreCOVID we had only one lab in our country in Coimbatore called Citra that was doing testing. DRDO the ordnance factory team reoriented their labs for testing facilities for PPE specimens. From zero we had come a long way and as of date, India is the 2nd largest exporter of PPE kits. We can produce 5 lakhs PPE
Geotextile The National Textile mission was announced on the 1st February 2020, with an allocation of 1,480 crores. It was unfortunate that we were immediately struck with the COVID-19 but what cannot drop is that the plan of uplifting the Industry as a whole. We are now in stages of looking at how to provide certified seeds to the farmers. So, the production of the high-quality Jute can take place in India which will an opportunity to diversify and
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get into Geotextile. Jute will not only be reduced to just making gunny bags but also fir constructions of roads token destructions and support of irrigation system. It helps to control erosion and maintain soil erosion as well. So, Geotextile is the new hero of the Indian Textile Industry. Indian Textile and ISRO The Textile Industry is huge and extremely important which was now worth Billions of dollars before the pandemic. Never the less we are ready to again stand on our own feet and make a difference by increasing our exports in other countries. It is not only just about clothing, we make carbon fibre base Textile support system for ISRO because we need fibre a technical textile which actually works as a sheet for those antennas of the spacecraft sent to space. High modulus carbon fibre reinforced laminates are the standard for many composite spacecraft’s applications. This helps maintain extreme dimensional stability over high temperature and in the vacuum of the space. So apart from the Tshirt, Saris we also help to make satellites which is the area generally ignored. This pandemic has thrown up another big new dynamic even for our security forces, the frontline workers, at all levels at the point of Textile will have a role to play as an agent. Ratings to farmers Providing rating services is an initiative taken by PM Narendra Modi where the agenda is not only doubling farmer’s income but also better health services which will indirectly come because they
were working in a cleaner environment. The beauty of the Textile Industry is that it impacts many layers of the economy be it raw material, be it cotton, be it jute, be it silk, it impacts the farm community and our chain has upstream than. The Textile Industry is working with the collaboration of the scientific community of India as well. Textile Industry is also connected with the tourism Industry, Arm force, etc. Implementation is key. There is a lot of planning which is done continuously by the concerned authorities. While we are looking at the high-end product the cloth of the mask can be woven by a weaver locally, which can be stitched by a woman who do not have possibly marketing capacities need to reach out to the dealers and can be a source of income for many households. So, we need to do commerce with compassion. There are plenty of forethoughts that can be seen in terms of, What will be the road map ahead for the country? Even if the Industry is slowdown today. Tomorrow will be ours and India is all set to fly in bright colors after the end of the pandemic.
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CERTAINLY UNCERTAIN – NEED OF A CAPITAL -Krishnan Lakshmanaperumal (IFMR) Sri City
At this moment we have successfully crossed 1.5 million corona cases in India. Every passing day new cases are arising and deaths are increasing and each day we are touching new peaks. We have already lost more than 35,000 Indians to this pandemic. Millions of job losses, studies, and careers of around 30 crores Indian students are uncertain. The migrant workers who moved to their villages from big cities carried the virus as well. Now the cases in the rural villages started increasing and will continue to do so because of the poor medical, housing, and infrastructure facilities in rural India. The unacceptable truth is that the actual cases and death bound to be much higher than the Government’s data. The number of tests conducted is much lower if you consider the country as a whole and unfortunately, we don’t have the required infrastructure facilities to do enough testing. Life Vs livelihood The initial purpose of the lockdown is to control the pandemic but that did not happen even after the series of Lockdowns. This is not only happening in India, the condition is the same a around the world. On March 23, the lockdown was a decision of tradeoff between Life and Livelihood of the Indians. The Indian government decided to save a life over the
livelihood of Indians. But livelihood got a huge hit. Down the line, today now because of the increasing number of cases both life and livelihood are uncertain because of the continuous lockdown and infections. The only hope for us is that the death rate in India is lower than the other countries, Because of the lower death rate the hospitals are not overcrowded now. But in case if they shout up then the fear of death will create a panic and chaos among the common man, which will again disrupt both life and livelihood. The Great Pandemic After three months of the lockdown being imposed, it is very evident that the economy got disturbed and it is going to be very difficult to come back to the precorona state. Almost all the recent estimates state that in 2020 Indian GDP will shrink more than 5% and getting a positive growth even in 2021 is also going to be challenging. It is not going to be easy for Businesses to resume their operations even after the lockdown. They will be facing cash flow issues, interest burden will hit badly to those who have higher operating leverage. Unfortunately, those sectors are the labor-intensive manufacturing and automobile sectors. This will further lead to job losses and business closer. Moreover, the lockdown
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continues with few relaxations and it seems like there is no dead end in the near future. Banks are not lending yet raisng Funds Banks said they will raise capital by tapping the value markets or through debt instruments. HDFC Bank said on 20 June that it has gotten barricade endorsement to raise to ₹50,000 crores in the following a year by giving debt protections, while State Bank of India (SBI) said on 16 June that it intends to raise ₹20,000 crores of value capital in FY21.
There is a flood in the number of banks and other financial institutions hitting the market for capital, yet institutional speculators are looking for extra defends, There is a great deal of vulnerability in the market and financial specialists are happy to hold up before submitting reserves. This will, in any case, not be an issue for enormous manages an account with better asset quality.
The government and RBI tried to increase the credits by continuously reducing the repo rates. But banks are not ready to provide any additional loans at this moment. It is not only because of the crisis it is also because of their NPA profile. Already in the last 2-3 years, the banks became more cautious in lending. They learned a lesson from the bad boys of India like Vijay Mallya, Nirav Modi, etc. It is also true that they don’t want to lend in this uncertain period. Already Indian banks allotted around 13,500crs only for COVID provisions
based on the moratorium amount of each bank. The amount is expected to increase further because of continuous lockdowns. Since the banks are not willing to lend money they are depositing huge amounts of money in the safe custody of the reserve bank of India.
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If the banks are not ready to lend money then why to raise capital? There are two main reasons to be considered
As mentioned above the NPA might rise drastically, to handle NPA pressure all the banks need additional capital. Another potential reason is that the Economy may recover within 3-6 months once the economy started recovering there will be a need for fresh capital for the businesses. After every crisis, the economy will get a boost for the next 12-24 months to clearing the supply-demand backlogs.
3 of testing as on 20th July 2020. In the past two months, we lost trust in other human beings that we had for years. We may not have the confidence to touch or to move close to other human beings. Even
after getting the vaccine for COVID, it is going to be difficult to gain trust back. But it is also true that India was a dominant player in the Pharma Industry for years. India has better Production facilities than many of the developed nations in the world. So now the key is to get the vaccine, if that happens we will be able to deliver the vaccine to the entire world as Microsoft Co-founder Bill Gates rightly said.
When this crisis and Lockdown is going to end? The only hope to come out of this uncertainty and economic crisis is the vaccine for the COVID -19. Until then the uncertainty, Economic Crisis, Chaos; panic will be there with us. There is around 163 vaccines are under different stages of testing. There are three vaccines in phase
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USING ARTIFICIAL INTELLIGENCE MODELS FOR INVESTMENT/TRADING STRATEGIES - Team NewNITIE (NITIE), Mumbai
Introduction Neural Networks and AI models are revolutionizing every aspect of our lives and continually impact more and more facets of decision making be it Medical, Financial, Social or Strategic decisions. Let us first understand the difference between Machine Learning (ML), Artificial Intelligence (AI) and Neural Networks. Artificial Intelligence is a branch of computer science that focuses on developing machines that are capable of making Human-like decisions for complex tasks.
Machine Learning is a subset of Artificial Intelligence which enables machines to learn from past mistakes automatically without any explicit programming. Deep Learning or Deep Neural Learning takes ML concepts and uses complex Neural Networks to gather insights from Unstructured data. This type of learning is known as Unsupervised Learning. Since the advent of Information age, there has been a huge focus on Machine Learning based decision-making algorithms taking over human decisions. AI models are the next logical step in this evolution and NN based models have
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been impacting the way we derive insights out of data. For the past 20 years, Financial firms have been focusing on NN based AI models for improving trading strategies and helping portfolio managers make better investment decisions. Recently, these models have become open source and available for academic research. These models can be easily used by individuals to gauge portfolio performance as well as short term investment strategies. There are different strategies to use Deep Learning one of which is discussed in this article. Neural Network A Neural Network consists of an Input Layer, an Output Layer and a Hidden Layer. This Hidden Layer may contain multiple number of layers and multiple neurons to increase complexity of network.
Modelling and training the network Input layer is fed with stock prices for a particular instrument from historical data easily available from finance.yahoo.com or Tickdata.com after which the model is trained and tuned for parameters which govern model’s accuracy. This process is time consuming and requires perquisite knowledge about Unsupervised models. After Hyperparameter-tuning, the model is tested on real stock price trends and evaluated further for usage. The results from training model govern the strategy of short-term investment and can be changed dynamically depending on the input data sample used as well as the model’s accuracy. Choosing Investment Strategy
Let us understand how we can use the results of a NN model for an investment strategy. 1. Consider the output of a NN model plot simultaneously with real stock prices of SBI(NIFTY) The Input variable is daily closing price of SBI over a period of 4
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years. The time axis shows daily predictions (future) and the axis labelled stock price shows closing price for SBI. As the predictions are made on a daily sample data, this prediction strategy can be used for a 2-3-week time frame or weekly options.
Advantages of using an NN model 1. High accuracy can be achieved. 2. Can be used for any type of data (primary/secondary). 3. After initial modelling and training, the results can be used for extended periods without need for training again.
2. Consider the output of a NN model plot simultaneously with real stock prices of Google (NASDAQ).
The input to NN model in this case is a minute by minute sample of closing price for Google from NASDAQ recorded over a 3-month range. As is clear from the plot, the prediction line(blue) follows the real market price of Google with high accuracy. This plot is a 2-hour plot and thus this strategy can be used as an intraday trading strategy. The rms between prediction and real stock price for this plot is 0.448.
Disadvantages of using an NN model 1. Initial modelling requires expertise. 2. Initial training and Hyper parameter tuning requires a lot of time. 3. Predictions can not be used for automated trading without considering factors like news about and instrument, results, projects or general status of the company.
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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