STRATEGY WALL 7th Edition
GDPR
10 Years After the Global Financial Crisis IIM Rohtak
The Strategy and Consulting Club
CONTENTS GDPR
by Prateek Sarin
PSB mergers - Good or Bad? by Abhinav Tripathi
10 Years by Kanuj Kunal after the Global Financial Crisis
CONTENTS Billboard advertising getting modified by GOOGLE by Distin Mathew
Block Chain beyond Cryptocurrency by Manohar Gupta
Higher education in India by Rashi Baghel
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Ten Years after the Global Financial Crisis On Monday September 15th, 2008, Americans woke to the news that Lehman Brothers, one of the giants of US banking, was filing for bankruptcy. By the end of the week, the then president George W Bush had announced an unprecedented $700 billion bailout, Bank of America had bought Merrill Lynch and the Federal Reserve had staged a multi-billion dollar rescue of insurance giant AIG.
How the Crisis Began Led by a booming housing market since the mid-1990s, mortgage lenders in the US started handing out home loans like free candies — almost every passing person got one. Lenders did not even mind “subprime” borrowers — those who do not earn enough to afford a home loan. These borrowers were charged a nominal rate initially. This drove up housing prices.
Complex financial instruments had emerged in the years running up to the crash. Credit default swaps – where investors would insure against the possibility of a debt default – became an instrument of choice for investors. Securitisation – the process of repackaging bundles of loans and selling them on under fancy names such as “collateralised debt obligations” – also took off Lehman was at the forefront of the dependence on securitisation, having aggressively moved into mortgage-backed assets in the preceding years. Housing prices started falling in 2006 and homebuyers began defaulting on their loans, which meant insurance companies couldn't honour all their credit default swaps. Investment banks and investors were left holding the can. In all, the Great Recession led to a loss of more than $2 trillion in global economic growth. Unemployment climbed, peaking at 10 percent in October 2009. Americans lost $9.8 trillion in wealth as their home values plummeted and their retirement accounts vaporized.
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10 years later Adam Tooze, a historian noted for his works on the interwar period, is aiming to be less entertaining than authoritative: he takes on the financial and economic history of the last decade in a monumental tome of nearly 700 pages. Four big themes emerge from Mr Tooze's account of the post-2008 era. The first was the immediate post-crisis response, in which the banks were rescued and both the monetary and fiscal taps were loosened. The second was the euro-zone crisis, which hit Greece and Ireland hardest, but also affected Portugal, Italy and Spain. The third was the shift in the developed world after 2010 to a more austere fiscal policy. The fourth was the rise of populist politics in Europe and America. Mr Tooze sides with most economists in taking the view that the immediate postcrisis response was necessary, but unfortunate in that executives in the banking industry paid too low a price for their folly; that Europe was slow and narrow-minded in dealing with the peripheral countries; and that the switch to austerity was a mistake. Taken together, the backlash against bankers, frustration with EU governments and the impact of austerity led to the rise of populism, the election of Donald Trump and the Brexit vote. Perhaps the most dangerous failure, though, lies in the unwillingness to deal with problems which lie at the heart of the system and persist today. The finance sector, which caused the crisis, looks remarkably unaltered. Banks may now hold more capital and their bonuses are now tied to longer-term performance. But bonuses are still very high; the average pay out on Wall Street last year was $184,220, just shy of the 2006 record. Scandals over banks' bad behaviour, in areas such as price-fixing and money laundering continue to come to light.
The big change has been in the public mood. The idea that trade makes everyone better off in the long run is no longer universal. Even the Republican Party in America has swallowed its freemarket instincts and is tolerating President Trump's protectionist measures and threatening behaviour towards firms he takes against. Many British Conservatives have been overtly hostile towards those business leaders who express fears about Brexit. This change of mood raises fears about what will happen when another storm hits the world economy. The level of cooperation that occurred in 2008 and 2009, such as when America's central bank made dollars available to its cashstrapped European counterparts, may not be easy to achieve next time around. Central banks brought a global economic heart attack to an end by performing emergency surgery. But the patient has gone back to his old habits of smoking, heavy drinking and gorging on fatty foods. He may be looking healthy now. But the next attack could be even more severe and the medical techniques that worked a decade ago may not be successful a second time.
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Billboard advertising getting modified by GOOGLE Google is thinking about to compile all the data which it has on users' web browsing with the ads displayed on public billboards. Google is presently in talks with German officials to introduce such advertising projects. According to a Business Insider report, Google tested a programmatic ad buying platform for out-of-home advertisements in London back in 2015 through its DoubleClick offering, which has since been rebranded as Google Ads. We can say this that Google can easily beat any other player with the kind of reach they have. But privacy advocates have problem with how Google will collect this data and how they will use it for this? Since, Google is planning to introduce this in Germany. Then they will face many regulatory roadblocks because of stronger laws which are implemented under General Data Protection Regulation. Comparatively to USA, Germany has a stricter laws regarding privacy. What are their main goals and how they are going to achieve it? For Example: When a train full of Borussia Dortmund fans arrives at Munich's main station ahead of the Bayern Munich fixture, the advertising hoarding changes to show soccer cleats or beer, while on a Monday morning at rush hour it displays BMW ads for well-to-do commuters. This is something they want to achieve. Google has a dominant presence in mobile operating systems which is not hidden to anyone. Android runs around on three quarters of all of the phones in Europe so it is able to track users' location. They can easily pull off demographic data on what kind of people are in a given place at a given time. use it for this? Since, Google is planning to introduce this in Germany. Then they will face many regulatory roadblocks because of stronger laws which are implemented under General Data Protection Regulation. Comparatively to USA, Germany has a stricter laws regarding privacy. What are their main goals and how they are going to achieve it? For Example: When a train full of Borussia Dortmund fans arrives at Munich's main station ahead of the Bayern Munich fixture, the advertising hoarding changes to show soccer cleats or beer, while on a Monday morning at rush hour it displays BMW ads for well-to-do commuters. This is something they want to achieve. Google has a dominant presence in mobile operating systems which is not hidden to anyone. Android runs around on three quarters of all of the phones in Europe so it is able to track users' location. They can easily pull off demographic data on what kind of people are in a given place at a given time. Digital outdoor ad spending is growing at a very good pace which is 15 percent annually, and they will clearly overtake traditional outdoor outlays by 2020 which is according to PwC. The major plus about this idea is many mass market consumer brands still feel that billboards ads is a cost effective option and it caters to maximum number of audience. This is still a difficult stuff to deal with and Google knows it well. And the Ad industry knows it well the kind of threat Google can be in the area of advertising. The most lucrative billboard locations will be of train stations, bus stops and arterial roads which can be leased for long term contracts.
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While spending in the out-ofhome advertising industry has been growing since 2009, according to an Outdoor Advertising Association of America Inc. report released in May, Google or a similar tech giant could be poised to disrupt a supply chain that billboard operators have dominated. Traditionally, to purchase out-of-home advertisements, agencies representing brands would work directly with the owners of the billboards, like Clear Channel Outdoor Holdings Inc. or Lamar Advertising Co., to help their campaign come to life.
If Google decided to enter the market, it could offer its digital advertiser clientele the option to work through Google's existing ad exchanges to advertise directly on a billboard or other out-of-home location, instead of having to go through a billboard owner for all of its needs. It's known to everyone that Google is one of the dominant player in the markets now and the amount of data they have is very is huge and its only them who needs to answer this whether they want to enter now, later or not at all.
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GDPR
In January 2012, the European Commission set out plans for data protection reform across the European Union in order to make Europe 'fit for the digital age'. Almost four years later, agreement was reached on what that involved and how it will be enforced. One of the key components of the reforms is the introduction of the General Data Protection Regulation (GDPR). This new EU framework applies to organisations in all member-states and has implications for businesses and individuals across Europe, and beyond. At its core, GDPR is a new set of rules designed to give EU citizens more control over their personal data. It aims to simplify the regulatory environment for business so both citizens and businesses in the European Union can fully benefit from the digital economy. Fundamentally, almost every aspect of our lives revolves around data. From social media companies, to banks, retailers, and governments -- almost every service we use involves the collection and analysis of our personal data. Your name, address, credit card number and more all collected, analysed and, perhaps most importantly, stored by organisations. The reforms are designed to reflect the world we're living in now, and brings laws and obligations - including those around personal data, privacy and consent - across Europe up to speed for the internet-connected age. JURISDICTION OF GDPR GDPR applies to any organisation operating within the EU, as well as any organisations outside of the EU which offer goods or services to customers or businesses in the EU. That ultimately means that almost every major corporation in the world will need to be ready when GDPR comes into effect, and must start working on their GDPR compliance strategy.
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There are two different types of data-handlers the legislation applies to: 'processors' and 'controllers'. A controller is "person, public authority, agency or other body which, alone or jointly with others, determines the purposes and means of processing of personal data", while the processor is "person, public authority, agency or other body which processes personal data on behalf of the controller". If you are currently subject to the UK's Data Protection Act, for example, it's likely you will have to look at GDPR compliance too. GDPR ultimately places legal obligations on a processor to maintain records of personal data and how it is processed, providing a much higher level of legal liability should the organisation be breached. Controllers will also be forced to ensure that all contracts with processors are in compliance with GDPR. EFFECT OF GDPR ON BUSINESSES GDPR establishes one law across the continent and a single set of rules which apply to companies doing business within EU member states. This means the reach of the legislation extends further than the borders of Europe itself, as international organisations based outside the region but with activity on 'European soil' will still need to comply. It's hoped that by slim-lining data legislation with GDPR, it can bring benefits to businesses. The European Commission claims that by having a single supervisor authority for the entire EU, it will make it simpler and cheaper for businesses to operate within the region. Indeed, the Commission claims GDPR will save â‚Ź2.3 billion per year across Europe What that means, they say, is regulation will guarantee data protection safeguards are built into products and services from the earliest stage of development, providing 'data protection by design' in new products and technologies. Organisations will also be encouraged to adopt techniques like 'pseudonymization' in order to benefit from collecting and analysing personal data, while the privacy of their customers is protected at the same time. (Although some groups have argued that this already comes too late, given the number of connected devices in the world.) EFFECT ON CONSUMERS AND CITIZENS Because of the sheer number of data breaches and hacks which have occurred over the years, the unfortunate reality for many is that some of their data -- be it an email address, password, social security number, or confidential health records -- has been exposed on the internet. One of the major changes GDPR will bring is providing consumers with a right to know when their data has been hacked. Organisations will be required to notify the appropriate national bodies as soon as possible in order to ensure EU citizens can take appropriate measures to prevent their data from being abused. Consumers are also promised easier access to their own personal data in terms of how it is processed, with organisations told that they need to detail how they use customer information in a clear and understandable way.
STRATEGY WALL
Some organisations have already moved to ensure this is the case, even if it is as basic as sending customers emails with information on how their data is used and providing them with an opt-out if they don't issue their consent to be a part of it. Many organisations, such as those in the retail and marketing sectors, have contacted customers to ask if they want to be a part of their database. In these circumstances, the customer should have an easy way of opting out of their details being on a mailing list. Meanwhile, some other sectors have been warned that they have a lot more to do in order to ensure GDPR compliance especially when consent is involved. out of their details being on a mailing list. Meanwhile, some other sectors have been warned that they have a lot more to do in order to ensure GDPR compliance - especially when consent is involved. GDPR is also set to bring a clarified 'right to be forgotten' process, which provides additional rights and freedoms to people who no longer want their personal data processed to have it deleted, providing there's no grounds for retaining it. Organisations will need to keep these consumer rights in mind once GDPR comes into force. FINES AND PENALTIES Failure to comply with GDPR can result in a fine ranging from 10 million euros to four per cent of the company's annual global turnover, a figure which for some could mean billions. Fines will depend on the severity of the breach and on whether the company is deemed to have taken compliance and regulations around security in a serious enough manner. The maximum fine of 20 million euros or four percent of worldwide turnover -whichever is greater -- is for infringements of the rights of the data subjects, unauthorised international transfer of personal data, and failure to put procedures in place for or ignoring subject access requests for their data. A lower fine of 10 million euros or two percent of worldwide turnover will be applied to companies which mishandle data in other ways. They include, but aren't limited to, failure to report a data breach, failure to build in privacy by design and ensure data protection is applied in the first stage of a project and be compliant by appointing a data protection officer -should the organisation be one of those required to by GDPR.
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PRESENT AND FUTURE As of May 25th, GDPR has now come into force, with the days and weeks prior to it seeing a surge in companies sending emails to customers asking them to opt-in to new privacy and consent policies. Emails came so thick and fast in the last 24 hours, that many web users felt overwhelmed. In the run up to the date, some organisations and platforms, including social media site scoring site Klout simply shut down operations - Klout didn't explicitly point to GDPR, but the date of May 25th probably isn't a coincidence. It isn't the only service to shut down operations or restrict access to European users. European users who visited high profile US news websites such as The LA Times, The Chicago Times and The Baltimore Sun on the morning of May 25th found that they weren't able to access the websites, with the publishers pointing to GDPR as the reason." Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and are committed to looking at options that support our full range of digital offerings in the EU market," said a statement on the Los Angles Times website. Similar statements were posted across news publications operated by the Lee Enterprises and Tronc groups. Denying users access to products - at least for the time being - is viewed by many as a price worth paying to avoid potential fines. Although some would ask the the question, what were they doing with user data and what consent did they have?
STRATEGY WALL
Block Chain beyond Cryptocurrency Recently, Cryptocurrencies have made a strong buzz in media for their sky high prices and rapid volatility, Cryptocurrencies like Bitcoins (BTC), Ethereum (ETH) have made common people at large familiar with this advance technology1,2. But this noise should not deviate us from the most important innovative and fundamental technology underlying these cryptocurrencies- Block chain Technology. A blockchain simply put provides an immutable store of facts, a distributed ledger. Technology that build trust among two parties to carry out any transaction. This irrefutable record of all the transaction could be very useful for all regulatory compliance and audit real time, responsive and transparent. Due to this intrinsic feature some even refer to these uses of a blockchain as enterprise resource planning (ERP) 2.0. There are three main components required to deliver these benefits: a shared distributed ledger smart contracts, and consensus.
Private Blockchain provides many potential benefits for most organizations. The combination of a shared distributed ledger, smart contracts, and consensus can provide value proposition across industries and application areas. It have potential to bring disruptive changes in multiple industries, organisation structure and regulatory framework. Multiple verticals which are facing immediate impact of this technology:
Shared distributed ledger Main attribute of a ledger is that one cannot go back and edit a single entry without having to rewrite the entire ledger. This proves useful when you have to deal with regulatory bodies, as the amount of work required to falsify information is immense—and with all controls in place, it becomes impossible. The distributed capability is very crucial for business processes it ensures high availability and redundancy for cases such as disaster recovery. The final piece is the shared aspect of the ledger. Consider a two-party agreement and an online notary service. If each party has a copy of the contract, either could tamper with it and claim their copy is the correct copy, but with an online notary having a third-party copy which cannot be changed, suddenly we have created a case of irrevocable proof. This is a fundamental feature of a blockchain.
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The concept of smart contracts While initially blockchain implementation such as bitcoin wasn't designed to deliver a smart contract platform, it inherently contained a mechanism for keeping track of ownership of bitcoins. Ethereum capitalized on this inherent feature and built a smart contract, putting it simply, it is a mechanism for ensuring that software can be executed, audited, and prove what it did. Essentially, a smart contract can be created with nothing more than a microservice with a trigger event, otherwise known as function-as-a-service (FaaS) or a serverless model. The concept of consensus Blockchain implementations rely heavily on the concept of consensus, for this is the determining factor for who can write to the blockchain. For bitcoin, this must be done in a distributed manner so no single person can own the entire blockchain. Within an enterprise, consensus may be built like voting or a request for approval and a sign-off approving said request. It could also include features of quorum as well.
Financial Services: Services like Banking, payment and Remittance have already beginning to see the impact of Block Chain Technology on their business features like smart contract and ledger are challenging existing model of financial service industry.
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Insurance Industry Smart contracts and Record of parties on block chain it will reduce the time taken for insurance claim. Also, for Insurance Company they can have complete history of product on block chain and thus will better able to judge the risk associated with the product and charge premium accordingly. The saving incurred by adopting the technology can use to reduce the premium charged and improve the coverage. Healthcare Industry Health record to be shared across hospitals and research center to develop better quality drugs Government3 Voting: Election is a very costily affair for governments all across the world Block Chain technology provide us with technology required to conduct hack proof voting online this could help government to save huge cost incurred on paper and ballot voting system. Land titles and transfer4: Most of the dispute and ligation are filled due to discrepancy in land records. Adopting Block chain to record all the land titles have a proven record of saving huge cost and time and improve ease of doing business performance of the nation. Award of contracts: Smart contracts on Block Chain can help governments to expedite the work pending with government and save cost as well. Shipping Industry6: Keeping track of their specialty packing containers. The act of transferring the goods has two points of consensus. The person with the container and the person receiving the container. Each time these containers change hands, both the provider and receiver provide their consent through an end-user application that triggers the execution of a smart contract behind the scenes to show that the packing container has changed possession. This is how blockchain will go far beyond a distributed ledger and serve as an integrated and intelligent underpinning for businesses.
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PSB mergers - Good or Bad? Public Sector Banks (PSBs) are banks where a lion's share stake (i.e. over half) is held by a government. There is an aggregate of 21PSBs in India and a year ago government pushed the subject of PSU merger when finance minister reported that he would combine the public bank business in India. he gave different rationale to help his case yet the fundamental bring up turned out was the issue of nonperforming asset in India increasing month after month and little banks are packaged under the debt. the greater part of public sector banks have net non-performing assets (NPAs) more than their total worth. Hence, producing no value to the investor. With their net worth dissolved, a few PSU banks are in no situation to provide loans. They are the strolling dead of Indian banking industry.
The government is genuinely considering lessening the quantity of public sector banks (PSUs) from the current 21 to 12 with a view to making 3-4 worldwide measured banks. The current count of these banks can get diminished to 10-12 in the medium term, while there would be 3-4 banks of the span of State Bank of India (SBI) according to the 3-tier structure. What's giving more grub to the government to proceed with the merger is the great achievement SBI accomplished by joining its five partner banks and Bhartiya Mahaila Bank to shape a solitary entity. The five partner banks included State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Mysore (SBM).
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By uprightness of the merger, SBI got into the hall of fame by making an entry into the list of top 50 banks in the world. The merger has helped the bank take its client check to 37 crores and include a huge system branches and ATMs that went up to 24,000 and 59,000, individually. It is accepted, and which is all well and good, that there is a prominent rationale in compelling PSU bank mergers. There is gigantic duplication of branch systems and furthermore of exercises that can be shared. These expenses can be pointedly lessened through mergers. Furthermore, each bank runs its own treasury which tends to be sub-optimal in most cases. This merger of PSU banks will result in bigger treasury work areas and will give more prominent bartering capacity to banks in the bond markets. SBI is an exemplary case of treasury clout. Most importantly, this will give them the vital asset report size to develop. While there will be challenges on rationalization, expenses and incomes, the genuine test will be on the milder perspectives. Firstly, for PSU bank mergers to be meaningful there will have to be a real rationalizing of costs including manpower costs. That is a delicate issue especially with strong bank unions and the forthcoming general elections in 2019. That is a sensitive issue particularly with solid bank unions and the general election in 2019. Secondly, even though the merger would be between PSU banks, there is always going to be a culture mismatch risk. That is again a delicate issue to handle. Yet, the greatest test will be furnishing these banks with the fortitude to maintain in another period of managing an account that is driven by innovation.
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Likewise, since public sector moneylenders can't fire overabundance staff, voluntary retirement benefits would punch a gap into their profit for the time being. Also, which bank presently has the cash for a VRS.Merit and demerits of merger are summarized below :Merits of Merger · A large capital base would help the acquirer banks to offer a large loan amount · Delivery of services would improve · Recapitalization required from the government to lessen · Customers will have a wide array of products like mutual funds and insurance to choose from, in additional to the traditional loans and deposits · Upgradation in systems to increase efficiency Demerits of Merger · It is difficult to oversee issues relating to human resources · Difficulty for new entrant to establish new banks hence reducing competition · The local identity of small banks won't be that prominent
Recommendation to reduce losses and get back NPA : 1. Sarfaesi Act 2002 / Insolvency code 2017 :The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) empowers Banks / Financial Institutions to recover their non-performing assets without the intervention of the Court. 2. Lok Adalats: Lok Adalat is for the recovery of small loans. According to RBI guidelines issued in 2001, they cover NPA up to Rs. 5 lakhs, both suit filed and non-suit filed are covered. 3. Compromise Settlement: It is a plan which gives a basic component to recuperation of NPA. It is connected to progresses underneath Rs. 10 Crores. 4. Credit Information Bureau: A Credit Information Bureau help banks by keeping up an information of an individual defaulter and gives this data to all banks with the goal that they may abstain from loaning to him/her. 5. Debt Recovery Tribunals: The debt recovery tribunal act was passed by Indian Parliament in 1993 with the objective of facilitating the banks and financial institutions for speedy recovery of dues in cases where the loan amount is Rs. 10 lakhs and above.
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Higher education in India
Current scenario and possible steps to increase enrolment
Even after 71 years of independence, India is still far away from the goal of universal literacy. There are several problems existing in the education system including lack of basic infrastructure. But, looking at the positive side, India is involved in the use of higher education as an influential tool to build a knowledge-based information society of the 21st Century. High qualified Indian professionals are among the best in the world and are in great demand. This signifies the inherent strength of Indian education system. Higher education in India suffers from multiple systematic deficiencies. Some of the problems include the unwieldy affiliating system, strict academic structure, uneven capacity across various subjects, declining autonomy of academic institutions, and the low level of public funding. The major problems in today's education system are 路 Low quality of teaching and learning- Various reports say that around 30-40% of seats are unfilled resulting in high student to faculty ratio 路 Supply-demand gap- Despite an average growth rate of over 7% in the last decade, India's GER in higher education is very low 路 Uneven growth and access to opportunity- There is wide variation, particularly between urban and rural areas, but also between states 路 Constraints on research and innovation- In the Times Higher Education World University Rankings 2014-15, not a single university from India could make it to the list of top 275 universities in the world and no Indian institute for engineering and technology figures in the list of top 100 universities for that category Some of the other countries in the world who have a better education system include Japan, Singapore, Hong Kong, Finland and UK. Taking cues and implementing them in our system might improve the quality of education in India.
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Finland has one of the world's best education system. There are many factors that differentiates its education system from the one that are followed in India. Below is the comparison of the two countries on those factors1. In Finland there is only one standardized test during their entire primary and secondary schooling whereas in India the pattern of annual examination is followed. Students in India are constantly overburdened with the test, exams not only held at school but also at their coaching centres. This kind of culture is not followed in Finland. 2. Students in Finland spend less time on homework and more time on playing outdoor games. According to OECD (Organization for Economic Co-operation and Development) Finnish students spend 2.8 hours a week on homework. The lack of time devoted to games and other physical activity in India leads children to anxiety and pessimism. 3. In Finland, teaching is one of the most revered professions with a relatively high barrier to entry. According to CIEB (Centre on International Education Benchmarking) only 10 students who apply to teacher education program are admitted, whereas in India the situation is completely opposite. There is no standardized criteria for teachers in India. This majorly impacts the students and their grasping power. 4. In Finland, not only are bachelor's degree programs completely free of tuition fee, so are master and doctoral programs. Students pursue higher education goals without the mountains of student loan debt that many Indian students face. Indian students who pursue post-graduation program abroad has on an average of 30 to 40 lakhs of loan.
To increase the number of enrolments in the education system of India, it requires a few steps to be taken, including1. Establish a brand campaign to educate, and influence parents and students community 2. Creating and budgeting brand campaigns and assign necessary funds for the same 3. Determine the target segment and unique selling points. Select appropriate marketing channel and create appropriate content specific to the media 4. Focussing on the needs of the parents and students, and marketing accordingly.
The Strategy and Consulting Club IIM Rohtak
Members Ijas MC Lavesh Bhadada Mayank Banka Nishant Garg Taslish Chadha Varun Parvathaneni Abhinav Tripathi Distinmathew Joseph Kajal Patil Kanuj Khurana Manohar Gupta Prateek Aniruddha Sarin