Consulting Research Entrepreneurship Strategy
Issue 3
June ’09
Crest
E-Magazine of CRESCENT, XLRI
This issue I-phone in India P.2 A college start-up’s success story P.4 Consulting Experience P.5 Committee Report: 2008-09 P.6 News Watch P.8
Crescent The Committee for Research, Strategy, Consulting
and
Entrepreneurship
(CRESCENT) is the result of the en-
Editorial Dear Readers,
deavor of the student community of XLRI to promote an environment of creative
A new academic year. A new committee as well as a new editorial team in
solution building amongst the students of
place. Just the right time for the next issue of Crest to come out. We proudly present
the institute, while reaffirming high ethi-
before you the June 2009 issue of Crest.
cal standards and values, and fostering
In this issue, in the strategy section, we have included an article dealing with
personal development in the pursuit of
Apple’s marketing strategy of I-phone in India. This makes an interesting read and tries
excellence. It works with the two fold
to explain why the I-phone has been priced so exorbitantly in India compared to other
agenda of creating a brand presence of
countries like the US.
XLRI among the corporate and to help
In the section on entrepreneurship, we bring you the story of a college start-up
nurture ideas of budding entrepreneurs
from Kerala which is on its way to becoming to one of the most promising young com-
by providing a platform to them to show-
panies. Its co founder and CEO, Sanjay Vijayakumar shares his experiences on how
case their Ideas
he went about building his company from scratch and its growth story so far. In the section on consulting, three students from XLRI who undertook a live consulting project talk to Crest on how the project was, what were their expectations from the project, to what extent they were fulfilled, etc. We then bring you a special section on the activities of CRESCENT over the last academic year, and a few former members share their experiences about working in the committee.
Editorial Team
And last but not the least, there are our usual sections- News watch, and Fun
Mandar Kulkarni
corner, giving you your monthly share of news from the world of consulting and entre-
Manoj G. Kamath
preneurship, and a few lighter moments. Hope you will enjoy going through this issue. Happy Reading !! - Editorial Team
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The Editorial Team of CREST invites articles from readers for publication in forthcoming issues. If you have articles/ experiences/ studies to share in the areas of consulting, entrepreneurship, research or strategy, please do send them in to crest.xlri@gmail.com mentioning your name and institute name.
S T RA T E G Y
I-phone in India: Has Apple dialled the wrong number? Last year, Apple rolled out its iPhone in India and some 20 new countries. Rival phone makers in India were eager to claim victory in the first round, and say they are planning to build on that. However, despite the lack of buzz surrounding the iPhone and other potential hang-ups, some Wharton faculty see a clever strategy at work where Apple is "testing the waters" and getting prospective customers acquainted with its device before a full-scale marketing assault.
One reason for the lack of excitement could be the almost total absence of any marketing. Newspapers reported the coming launch based on statements from Vodafone and Airtel: Apple was nowhere to be seen. Vodafone and Airtel themselves are rivals. Cooperation between the two companies to promote the iPhone is not a likely scenario, and the advertising campaign announcing its arrival has been bland and basic. Skimming the Market Wharton marketing professor Peter Fader is inclined to believe that Apple may have a smarter strategy for its Indian iPhone launch than is immediately apparent. "If you compare [the iPhone's] U.S. launch to the India launch, it is a beautiful example of the distinction between a 'penetration strategy' and a 'skim strategy,'" he says. "Here in the U.S., Apple basically wanted to bust the market open all at once. So, they had all these people lined up all around the block, and when they flipped the switch -- boom! -- the market existed. In India, it's almost like they are doing a test market." In Fader's view, Apple's India strategy allows for much more flexibility. "It lets [the company] learn about the market in a much cheaper, lower-risk way." Apple could use that extra cushion to understand how its early users react to the product and its features, evaluate its distribution strategy and even reassess which service providers it should work with. Another albatross around the iPhone's neck is its price. The 8GB version costs Rs. 31,000 ($710) while the 16GB iPhone is priced at Rs. 36,100 ($825). The corresponding prices in the U.S. are $199 and $299. Subsidized Handsets Why does the iPhone cost so much in India? The simple reason is that, unlike in the U.S. and other countries, the service providers are not subsidizing the handset. In the U.S., AT&T recovers the subsidy amount from subscribers during a contract "lock-in" period. The ARPU (average revenue per user) for AT&T is $50 plus. In India, Airtel has an ARPU of Rs. 357 ($8.16) and Vodafone's is Rs. 350 ($7.99). These numbers don't allow the luxury of subsidies. Wharton professor of operations and information management Kartik Hosanagar says U.S. carriers are able to subsidize the cost of a mobile phone device not just because of contractual lock in periods but also because "the phone [itself] is locked so you can only use it with specific carrier." These practices allow U.S. carriers to recover their relatively high subscriber acquisition costs over the period of the contract, says Hosanagar. "But in India, the majority of consumers use prepaid cards and can easily switch carriers. The economics are not conducive to subsidizing the phone." The one reason why customers tend to stick with their service provider is that there is, as yet, no number portability in India; if you change carriers, you will have to change your mobile number, too. In August, the government approved number portability, though it will take some time to implement. When portability arrives, observers expect large-scale migration by disenchanted users; some estimate that it will be as high as 20%. Locking in customers through other routes -- such as Apple's strategy in the U.S. -- will thus become more important. AT&T reports that in the U.S., users of 3G (third generation) instruments such as the latest iPhone typically have ARPUs double those who use 2G devices. (contd. On Page 3)
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S T RA T E G Y (contd. from page 2) That won't help in India, because the country doesn't have a 3G network yet. "The iPhone 3G currently utilizes the EDGE network available in India," says Mitra of Apple. But EDGE (Enhanced Data rates for GSM Evolution) is technologically a poor cousin of 3G, used in countries that haven't yet made the transition. Wharton marketing professor Jagmohan Raju believes the absence of a 3G network in India explains why Apple "seems to be targeting a very narrow segment of the market -- one that uses the iPhone more as a status symbol." Besides that, he says the "superior design and ease of use" of Apple's products will bring in customers. "While a large majority of Indian consumers is price sensitive, there is a segment that is willing to pay for quality." Fader says the lack of a 3G network in India will not be a real issue. "People are not buying [an iPhone] necessarily for its functional reasons; they are buying it to be seen at the club with it." How many iPhones will sell? Optimists are looking at a full-year local sales figure of 500,000 -- the same number of users analysts estimate BlackBerry has in India. But not everybody using BlackBerry has a BlackBerry handset: Research in Motion (RIM), the company behind BlackBerry, had launched the Bold, seen as one of the iPhone's major rivals. Coming up soon is the touchscreen Blackberry Storm. India is now the third-largest smartphone market in the Asia-Pacific region, after Japan and China, says Canalys, a technology consultancy. Fader believes Apple could gradually broaden the Indian market for the iPhone by starting out with "leading-edge users who love to take on the challenge of a radically different device and can figure it out on their own." In the process, these leading-edge users "can not only help educate others (in how to use the phone), but also help Apple learn how to educate the others." Meanwhile, Apple's competitors are not relaxing. Nokia, the market leader by far, preempted the iPhone in India with its N96, priced at around Rs. 36,000. The campaign for the N96 began on August 19, three days before the iPhone's arrival. According to research firm Gartner, Nokia has a 45% share of the global smartphone market. RIM has 13.4%, with Apple just 5.3%. Rival Samsung has also thrown its hat into the ring with the Omnia. All things considered, Apple appears to be trying for "moderate success, at least in the short run," with its Indian iPhone launch, according to Fader. "There's every reason to believe they will achieve those goals and then bigger, better things later on," he says. "It's hard for me or any analyst to know what they have up their sleeve. So I am going to give them the benefit of the doubt." Source: India Knowledge @ Wharton
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ENTREPRENEURSHIP
Inventive. Adaptive. Effective It has been a rollercoaster ride for Sanjay Vijayakumar who bunked classes during the final year in engineering college to experiment with new ideas. He was lucky not to be thrown out of his college in Thiruvanathapuram for spending more time during his fifth semester envisioning a start-up, than concentrating on studies. His start-up, MobMe is the first college start up from Kerala. All the members of MobMe are classmates and friends. Incubated at The Technopark, Thiruvanathapuram, the company featured in the recently held Tata-NEN Hottest start-ups. A chat with Sanjay.
What are the features of MobMe? Mobshare is an innovative Mobile Content Sharing and Distribution Network and is MobMe's flagship platform. The peer to peer version allows users to share mobile photos and videos with multiple friends across multiple operators in a single click.The enterprise version allows media companies/brands to utilise this platform to distribute rich content directly onto a user's mobile as well as allow users to contribute mobile content.
Tell us more about work that goes behind such an innovation. More than a breakthrough in technology, this is a marketing innovation. We identified the normal problems that stop a user from sharing, like high cost of sending an MMS, inter-operator connectivity issues etc and developed a platform so that a user could seamlessly share mobile photos and videos. While we waited for six months to get Department of Telecommunications (DoT) approval for this P2P network, we successfully adapted the same platform for various enterprises like Kolkata Knight Riders, CNN -IBN, Mid-day, Kerala Tourism, PlanetM, DSNGlobal, Kerala Police, etc
How long did it take to develop this product? How many people were involved in the project? The basic platform was developed in January 2008 by a team of 4 software engineers in 25 days flat, working 16 hours a day. But since then, we have been continuously innovating and adapting to market situation. We now have half the team working on this and have a version release every 2 weeks.
How did you go about starting this company? Why mobile solutions? I was 21 when we started the company in December 2007, while in 5th semester in college out of a passion for technology and a desire to be job creators rather than be job seekers. We basically wanted to do something, which we enjoyed and felt would be useful for our peers. Mobile solutions was the obvious choice because we felt a large part of the target market would be of our age and it would be easy to identify with their needs. The fact that mobile value added services was booming at that time and that we had good working relationships with BPL Mobile, Kerala (due to a major marketing jig we pulled off with them pre-company days) made this decision simpler.
How difficult was it to convince people to join you? Is the remuneration at par with the industry standards? It was not very difficult. Most of us have known each other for 17 years. Other came to know about us through our network in college. We all share the passion to create something new instead of settling for a boring corporate job. Our salaries are compa-
rable with the industry. We also offer incentives which are directly linked to sales and revenue. (contd. On Page 5)
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ENTREPRENEURSHIP (contd. from page 4)
How has the experience been from the initial years till now? It's been a roller coaster ride, to say the least...it's a surprise they didn't throw us out of college. But to be fair, once we had convinced them that we were serious, we had the full support of the college and the university. I dropped out of college as we were getting the company started during the 7th semester. But I did write my exams after six months.
How many employees were there when you started and what is the strength now? We started as a team of seven. We are now 30 people strong and have presence in Delhi, Mumbai, Chennai and Cochin.
Finance must have been a major constraint for you. How did you manage? We've been very lucky to have what you call real 'angel' investors. We also got a strong backing from Technopark. We were offered a good facility free of cost for 18 months, we were also introduced to brilliant mentors who supported us at every stage. Sony Joy- COO, Sanjay Vijayakumar- CEO and Vivek Steve Francis- CFO of Mobme
What are the challenges that you face now? Scaling up is always the challenge. It's a challenge becoming a Rs 1-lakh (Rs 100,000) company. It's a different challenge becoming a Rs 1 crore (Rs 10 million) company and it will be an all together new challenge becoming a Rs 100 crore (Rs 1 billion) company. It is very difficult to convince clients. We don't get disappointed easily. We have strong competition in this space but our business model is different.
What is the company's financial position? How are company's revenues growing? The company now has a turnover of more than Rs 1 crore (Rs 10 million). It is profitable and growing exponentially. We broke even a couple of months ago and we are expanding our services in Mumbai and Delhi.
What are your company's future plans? We would like to be a Rs 100 crore (Rs 1 billion) company by 2012. We would like to foster innovation in the telecom space. We will promote entrepreneurship and incubation and lead by example.
What are the reasons for the company's success? I've to put this down to the team. We've got a simply great team who have been working like bulls and living like nomads.
What would be your advice to entrepreneurs in India? Let's together create a Silicon Coast in India. All you need is the courage to make a decision and the willingness to face the consequence what ever it might be. The economic recession has hit the job market. It is a great time to start your own venture and make it work instead of settling for an uncertain job. There are huge opportunities, which need to be tapped. You must start thinking about what you want to do right from the college days. It's always better great job in your own company than do a routine job in any company. The satisfaction and happiness you get from your own venture is priceless.
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CONSULTING
Our First Consulting Experience Akshay Jog, Mandar Kulkarni and Pooja Bhati (XLRI BM 2008-10) were part of a live consulting project from Usha Martin Limted . The project involved designing a marketing plan for Usha Martin Academy – a finishing school for shop floor leaders, and to conduct a market research for the same. They share their experience of working on this project with Crest.
What were your expectations when you took up the project? Since the management of Usha Martin had not completely explained the project in the communication sent to us, we weren’t very sure of the takeaways from the project. After detailed discussions with the company executives, we got a fair idea as to the kind of work they expected from us. Our expectations from the project were manifold: like to apply the concepts learned during the course in a real world situation, understand the nuances of conducting a marketing research, which is one of the most basic and fundamental activities done in any company, gain first-hand experience of working as consultants on a project, learn the negotiation process that is carried out between a consultant and a corporate client, etc.
How far were they met? We had a lot of expectations from the project and most of them were met satisfactorily. We were able to apply the concepts learned during the marketing, accounting and business research methods courses. This helped us better appreciate the classroom learning. We conducted an exploratory and primary survey for our project. This gave us an opportunity to interact with different people like students, college principals, HR professionals etc. We got an opportunity to interact with the corporate executives on an equal footing. The decisions on the deadlines, deliverables and various other details of the project were jointly taken through discussions with the executives, which was a lot different from the other academic projects we did during the year.
Can you stress a bit more on how you could relate classroom concepts to the project? It started off with us submitting a detailed plan of how we were planning to go about marketing the new academy that was being proposed by Usha Martin. Thus it involved all the concepts of marketing - starting from the need-gap analysis, the SegmentationTargeting- Positioning, and the 7 Ps that we proposed - it was like proposing an end-to-end marketing solution with all the real world data for us to explore. While actually implementing the project, we needed to use many concepts from our course on Business Research Methods. We essentially had to make a survey, conduct it, and then analyse the data. We even took the help of our course facilitator for BRM - Prof. Israel, while designing the survey, and we are indeed thankful to him for the help that he provided.
What were the challenges that you faced? The challenges we faced ranged from Valuation of the project - Usha Martin agreed in principle to pay us a stipend, but asked us to give them our expectations about how the stipend should be. This was a first for us; hence it was very difficult to come up with a specific number. After enlisting the various costs, one of the major challenges was trying to decide how much stipend to ask for. We consulted a few Faculty members regarding this - explaining to them the scope of the project, and asking them for an assessment of how much should we charge the client in terms of Rs-per-personhour. Finally after a lot of discussion we came up with a cost-sheet and submitted to the client.
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CONSULTING Scheduling - Having a tight schedule (in terms of classes/project submissions/quizzes) does not help! It was very difficult to create time for going out to visit different diploma colleges in the area - since on weekends when we have time, even these colleges would be closed. Designing the survey - While designing the survey, we needed to make sure that the language was kept simple and lucid. This was necessary as we were mostly targeting diploma colleges where students might lack English comprehension skills. We worked as a team and were successful in meeting the client expectations.
What were the key takeaways from the project? Usha Martin live project basically involved doing a market feasibility study for a business idea. We got hands on experience in understanding the clients’ business idea and converting it into a market research exercise. The major takeaways from the project were: Project pitching – During the initial phase, when we had to pitch for the project we had to prepare a detailed plan about how we are going to execute the project along with project timelines. The important thing at this stage was to stress upon the methodology of research. I think this was our winning point because of which we got the project. We had clearly delineated what all we were planning to do and how exactly we were planning to do it. Understanding the business needs – During the client meetings in Calcutta and over the phone, we had to clearly understand the business objectives of the client. We had to design and execute our market research keeping the end objectives in mind. The process was iterative with the client providing us feedback on each of our deliverables. Effective teamwork – As the project was quite extensive and required a lot of brainstorming, we worked as a team and were successful in meeting the client expectations.
What do you think can be done to encourage more students to take up live consult projects? The real incentive for taking up a live consult project lies in the exposure it gives to real world business problems. More students will be interested in taking up consult projects if the topic of research appeals to them and is in their area of interest. Also, getting a project from a renowned company can help in increasing the interest levels. Few of the live projects do not go through till the end because of the lack of commitment on the side of the company towards the project. Hence, only projects in which the client is really committed should be taken up to retain the interest of students throughout the project. A faculty coordinator could be appointed to mentor the live project to help the students break the initial inertia and also provide guidance in case of any roadblocks. Stipend commensurate with the efforts would obviously act like the icing on the cake to attract students towards live projects.
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COMMITTEE REPORT: 2008-09
The CRESCENT team for the academic year 2008-09 As part of Ensemble '08, XLRI's flagship annual management festival, CRESCENT conducted Samarpan, a social Bplan competition, conceptualized as a platform for participants to amalgamate their analytical skills and the urge to develop a sustainable plan that would reach out to the masses. CRESCENT along with Social Initiative Group for Managerial Assistance (SIGMA) also launched the Initiative for Social and Entrepreneurial Leadership (ISEL) as part of the summer internship placement process of students, to provide opportunities to a number of students in the batch who showed interest in working with social ventures and start-ups. CRESCENT also conducted a B-Plan competition in association with HCL in order to provide exposure to the students to B school competitions. In a follow up to this event, a talk on ‘How to prepare a B-Plan’ was conducted by Prof. Debabrata Sen, Consulting Professor, Strategic Management, XLRI. CRESCENT in association with industry leaders like Mahindra and Hindustan Unilever facilitated the campus editions of national competitions of ‘The War Room’ and ‘Boom’ respectively. Additional Industry interface was provided through an interactive session with the Project Controller of Punj Lloyd, Mr. Anirban Chakraborthy. A talk on the nuclear deal with the United States and its implications on India was conducted as a part of CRESCENTalk series by Rear Admiral Rakesh Chopra, Professor, Strategic Management, XLRI. A monthly e- magazine Crest containing the latest happenings in Consulting, Research, Strategy and Entrepreneurship and also some of the best articles in these fields was launched. Crest also contains the latest ventures of XLers, research work of the faculty and other developments in XL in the above mentioned areas. CRESCENT plans to launch a Crest annual issue containing the best articles of Crest which would showcase the ideas and activities of XLers to the B school community and the industry. CRESCENT also organized a live project in association with Gravitus, a technology solutions provider based in Sydney. The project involved understanding requirements for and the opportunities to introduce online learning in university or management school and to build a prototype for a University Course Management system to test the requirements and value proposition. How does it feel to be a part of CRESCENT and work for the committee? Crest asked some former members to find out... Bijananda Chabungbam (BM 2007-09): “Crescent has the highest potential amongst all the committees, maybe ‘coz it's so new. That's why working in Crescent was very challenging and interesting.” Ishneet Singh Kalra (BM 2008-10): “I have always been fascinated by the world of consulting and CRESCENT not only gave me the opportunity to work in that field but also work for others interested in this field.” Pradipta Banerjee (BM 2008-10): “It was wonderful being a part of the committee. CRESCENT gave me the freedom to innovate and work in the areas it deals with. My best wishes to the new team.” Reju Mathew (PMIR 2008-10): “Being in CRESCENT was challenging and fun. Many of the initiatives we took up, like ISEL, called for a lot of hard work and planning. Overall, CRESCENT is a young and exciting committee to be part of.” November 2008 CREST Siddharth Shah (BM 2007-09): “ With the committee still young, I found tremendous opportunity to grow it and to shape the way in which it functions. With a good dedicated team, I enjoyed the year I spent working with CRESCENT. It was really fun-filled.”
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NEWS WATCH Start-ups subscribing to virtual offices It’s a bit like driving a Mercedes Benz when you’ve paid for a Maruti 800. That is how Mathew Anthony likes to explain his plush office at the Bandra Kurla Complex, where he goes only when he has to have coffee with a client. The elegant boardroom, uniformed receptionists and business cards, make this head of a startup strategy consultancy appear incredibly successful. Most days, though, Anthony works from his bedroom. With Mumbai now ranking sixth in the world for the most expensive office space, the concept of ‘virtual offices’, which Anthony subscribed to some months ago, is fast gathering a following. Startups like Anthony’s, that can’t afford a physical office 24/7, can hire a readymade premium business address on a pay-to-use basis. As part of the agreement, they get to use the address on their business cards or letterheads, have a receptionist take their calls and are allowed access to the boardroom. “It not only builds a good reputation but is cost-effective,’’ says Anthony, who pays Rs 25,000 to Rs 40,000 per month to Servcorp, for space and facilities, which would otherwise have set him back by at least Rs 1.5 to 2 lakh per month. Since these serviced, virtual offices work on a sharing basis, they prove to be at least 20 to 40 per cent cheaper than owning an office. The costs are menu driven and start from Rs 2000 a month.At the Bandra Kurla Complex, the industrial heart of Mumbai which is 20 minutes away from the international airport, companies like Servcorp, Stylus and Regus straddle this new business of space which startups are grabbing as recession gifts.
CRESCENT MEMBERS Faculty Advisor Prof. Munish Thakur
Secretary Vishal Agarwal
Senior Executive Members Abhinav Singhal Ankit R. Agarwal Anwar Syed Mandar Kulkarni Manoj G. Kamath Sandip Shinde CRESCENT e-mail id
“Young entrepreneurs and startups make up 70% of our business,’’ says Madhusudhan Thakur, country general manager, Regus. Though the concept of the virtual office isn’t new, it has become far more appealing now because of the “human interface" with technology. For instance, a call is answered and mail sent in the language or script that the client wishes. Another advantage is the reduction in mental stress that comes with buying office space in Mumbai. According to Christina Martin, CEO of Stylus, the service helps “eliminate the substantial investment, restrictive lease terms and drain on management time normally involved in procuring office accommodation’’. Getting paperwork done itself, for instance, “can take a tedious 30 to 90 days where initial costs run up to Rs 15 lakh,’’ says Anthony. For the environmentally conscious, a virtual office also means a smaller carbon footprint. Source: The Economic Times
crescent@xlri.ac.in
FUN CORNER A man walked into a management consultant's office and inquired about the rates for undertaking an assignment. "Well, typically we scope, structure and plan the assignment in advance, and charge $50,000 (plus service tax and expenses) for three questions", replied the consultant. "Isn't that ridiculously expensive?" asked the man. "Yes," the consultant replied, "and what was your third question?"
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