VOLUME-III ISSUE-01
NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Is Dollar’s Reign Near An End (07)
Interest, Inflation and India (23)
JANUARY 2012
DOMINATION
Editorial ……………………………………………………… Dear Readers, With a new year, we bring forth a brand new edition of 'Domination' for you. Amidst global economic instability and chaos, we talk of opportunities and openings for growth. Looking forward to the light at the end of the tunnel, we hope you find it worth the read.
World's Main Reserve Currency Near an End?? ‘debates on whether the currency is seeing the last days of its supremacy or if it is still holding fort. It goes on to discuss the various world
turn' describes the three disci-
rates, does the Indian economy
plines of IT risk management
hold good prospects in the next
and their implications for risk
one year?' sheds light on pre-
management value in an in-
vailing conditions and major
creasingly digitised and inter-
developments in the Indian
connected world.
economy. Further analysis of various factors presents a macroscopic picture of the economy for the year 2012 mainly on three domains: growth, in-
The article 'Is Dollar's Reign as
alternatives the
Amid inflation and high interest
has
against dollar and the different aspects of it. In the current scenario of inflation and high interest rates, '
flation and twin deficit. 'Employer
Branding'
talks
about the need of and lessons learnt from employer branding exercises undertaken by various
well-known
brands.
It
stresses the core principles for creating
a
compelling
em-
ployee value proposition.
'Is Poland ready to embrace the “Single Currency?' delivers an analysis of the costs and benefits, for Poland, of adopting Euro as its own currency. Furnished with knowledge and strengthened by hope, welcome the New Year with open arms and a smile on your face. Hoping that the zest of the new year will bring happiness, good fortune and good health to all our readers , its Team Domination wishing everyone “happy Reading”.
'IT Risk Management: Significance in an economic down-
s
- Regard n minatio
Team Do
……………………………………………………… DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Contents Newsletter Team :12 Aditi Joshi
04
Anuj Mody Anurag Agrawal
Employer Branding: Need Of The Hour
Chetna Yadav Is Poland Ready To Accept Single Currency
Jubin Mohapatra Manav Kaushik
07
Drawing Values From IT Risk Management
Mukesh Rathi Pawan Upadhyay Prateek Tomar Rajneesh Kumar
Is Dollar’s reign Near An End?
15
Saumya Verma Sayantan
23
Shibi Singh Shruti Goel
Design Team :Interest, Inflation and India Anurag Agrawal Saumya Verma
19 DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE
Qutopia Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: domination.doms.iitr@gmail.com Website: www.iitr.ac.in/departments/DM/Pages/Index.html
For private circulation only
21
DoMS da Evince
Perspective ………………………………………………………
Employer Branding- Need of the hour
“The package of functional,
ployer branding as ‘ the art and
alty and are more likely to en-
economic, and psychological
science of attracting, engaging
courage and contribute to or-
benefits provided by employ-
and retaining talent’. It aims at
ganizational success. But it
ment, and identified with the
creating compelling and differ-
must be kept in mind that poor
employing company”, Ambler
ent employee value proposi-
planning and implementation
& Barrow.
tions and is concerned with po-
of employer branding strate-
Relatively new as a topic, em-
sitioning the employer brand in
gies can do more damage than
ployer branding is already mak-
potential labor market. For
good. The role of employer
ing inroads into the main-
this, it requires embracing the
brand is important but highly
stream
lexicon.
principles and practices associ-
complex in its management.
Whilst Kotler has defined mar-
ated with external brand man-
According to Bergstrom et al, it
keting managing as ‘the art and
agement and marketing com-
is built on three core processes:
science of getting, keeping and
munication internally.
effective brand communication
growing
Brett
Businesses are now recognizing
to the employees, recognition
Minchington (author of Em-
that ‘engaged’ employees are
of its relevance and worth,
ployer
more
aligning the jobs with the
marketing
customers’, brand
leadership-A
global perspective) defines em-
productive,
lead
to
greater levels of customer loy-
‘brand essence’.
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
04 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Employer Branding - Need of the hour
……………………………………………………… Alternately, one can define six
principles that stand at its core,
At Pepsi, the following have
people. They came up with
namely, insight, focus, differen-
been recognized as conduits of
some reasons that necessitate
tiation,
talent sustainability:
the role of a strong employer
Globally consistent yet lo-
brand;
cally customized brand
benefit,
consistency
and continuity. The well known brand Philips, after implementing the em-
ployer brand development program, shared the following five
lessons learnt:
Think big, act small, fail fast
well as the learning quotient of
Effective and consistent in-
critical to commercial suc-
formation communication
cess
Engaging and motivating
employees
Motivated associates are
High turnover has a negative impact on results
People build your business
Traditional recruitment no
media through blogs, idea
longer works
network portals, etc
Making the most of social
High engagement increases corporate reputation
Employee opinions drive
• Be clear about your promise
According to the Coca Cola
behaviors that impact re-
Make it easy to do the right
Company, the ability to make a
sults.
things right
difference increases the fun as
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
05 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Employer Branding - Need of the hour
………………………………………………………
Clearly defined policy and
procedures.
These strategies go a long way
Aligning the employee and
in attracting talented work-
The following strategies can be
the employer goals and vi-
force, building an emotional
undertaken to further the em-
sion.
bond with the employees, re-
This
is
further
illustrated
through a survey undertaken
by the same.
Communication systems.
ployer brand building initiative:
Good work environment.
ducing attrition while enhanc-
Active employee involve-
Compensation and benefits.
ing performance and promot-
ment.
Scope of career develop-
ing overall organizational suc-
ment.
cess.
Identify the needs of employees and design program as per the requirements.
Sound reward and recognition system.
Article By -
Aditi Joshi aditijoshi.iitr@gmail.com
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
06 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Perspective ………………………………………………………
Is Dollar's Reign Near An End??
-Ticking Clock Begins...
The US dollar has become the
compared; and they are the
to identify the facts that led
most sought after currency in
currencies that most national
Dollar serve as world’s main
the world as all the major inter-
governments and central banks
reserve currency for decades.
national trade from coal to
hold as part of their national
Next,
crude and Gold to Grains takes
reserves. By implication, they
whether those factors still pre-
place using it. After the World
are therefore seen as the cur-
vail, followed by analyzing the
War II in 1944, the US Dollar
rencies of greatest stability and
alternatives available and fi-
got the status of the World
the ones that keep the world’s
nally the negative impacts of
Currency, the Reserve Currency
trade systems flowing. How-
replacing dollar on the global
or call it a Reserve currency,
ever since last 67 years, US Dol-
economy.
replacing
Kingdom’s
lar has seen major fluctuations
How the US Dollar achieved
Pound Sterling and maintains
in its value, experiencing a
the coveted status
its position till date. A global
peak in 2000-2001 with a con-
currency is one in which all key
stant devaluation and long
still raging, 730 delegates
commodities such as oil, gold,
term decline since then.
from 44 Allied nations gath-
steel and so on are priced; they
Before analyzing whether Dol-
ered in Bretton Woods,
are the primary currencies
lar’s reign as a global currency
New
against which all others are
has come to an end, we need
States, signed the Bretton
United
we
would
analyze
When the World war II was
Hampshire,
United
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
07 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
World Reserve Currency
………………………………………………………
Woods Agreements in July
porter of goods and services
1944. The significant features
to maintain its economy by
which gave the status of
of the Bretton Woods system
a trade deficit, thus helping
Global currency to the US
included an obligation for each
foreign governments keep
Dollar does not officially ex-
country to adopt a monetary
US Dollar in their exchange
ist today because on August
policy that maintained the ex-
through trade surplus and
15, 1971, President Richard
change rate by tying its cur-
prevent their currency from
Nixon
rency to the U.S. dollar, estab-
appreciating.
nated the convertibility of
The US Dollar is also the
Dollar to Gold, which was a
The US Economist, Henry Dex-
currency with the most pur-
significant reason of its
ter, thus negotiated in Bretton
chasing power and also the
dominance. This action is
Woods Agreement, resulting in
only currency backed with
referred to as ‘Nixon Shock’.
the US Dollar emerging as the
the power of Gold. Also af-
global reserve currency.
ter the World War II, all the
doubled from 2002 to 2011
After the end of World War
major European Countries
from $5.9 trillion to $14 tril-
II, of estimated total gold
were highly in debt and
lion due to the subprime
reserves of $40 billion, US
thus
large
crisis and recession, leading
held about $26 billion gold
amounts of Gold with US
the federal debt to about
reserves which accounts to
Dollar, thus contributing to
75% of United States’ Gross
approximately 60% share.
the supremacy of dollar’s
Domestic Product, thus re-
Also, the dollar was fixed to
power. Thus the US Dollar
quiring more flexible fiscal
Gold at a price of $35 per
strongly
policy.
ounce of Gold in order to
value in the global economy
bolster confidence in the
and had strong reasons to
promising customer any-
system. The nations further
lead the world as the Global
more and is already at the
agreed to buy and sell US
Currency.
verge of insolvency. The in-
lishing the dollar peg with gold.
exchanged
appreciated
in
The Bretton Woods System
unilaterally
termi-
The US debt has almost
The US has not remained a
Dollar to keep their curren-
Do the Conditions prevail in
flation rate has hit a 3-year
cies within 1% of the fixed
the Present Economy
high of 3.9% in September.
rate. This additionally en-
Unlike the past, the present
Unemployment is also held
couraged foreign govern-
scenario shares a different
at nearly double its pre-
ments and central banks to
story. Here we need to analyze
recession level, keeping in-
exchange dollars for gold.
the fact that whether the fac-
comes under pressure.
Another
the
tors that enforced US Dollar as
World War II, was US
the Global currency, still pre-
seems to come to an end.
emerging as the biggest im-
vails.
Today only a handful of oil-
impact
of
The Dollar’s Golden Era
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
08 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
World Reserve Currency
……………………………………………………… producing nations in the Mid-
China is moving rapidly to in-
Euro crisis had not disrupted
dle East hold a combined $2.1
ternationalize the Yuan, also
the whole European Union. The
Trillion in Dollars, which are
known as the Renminbi. Sev-
Euro has the maximum power
solely a product of selling oil in
enty thousand Chinese compa-
of eroding Dollar’s dominance
exchange for Dollars. China
nies are now doing their cross-
because it represents a larger
with other BRIC countries has
border settlements in Yuan.
size economy and has the pros-
formed a secret coalition to
Although the Renminbi option
pect of more countries adopt-
end the pricing of oil in dollars
seems quite possible, it is pres-
ing the euro as their national
by 2018. Also the Government
ently not the right answer. The
currency. Talking about the
of Iran has already declared
rise of China’s economic power
power of Euro, in December
that all of its future transac-
creates a case for the Renminbi
2006, it surpassed the dollar in
tions of reserves would be held
revaluation to make it a global
the combined value of cash in
in non-Dollar denominated as-
reserve currency but there are
circulation. The easiest way to
sets.
several fundamental barriers to
introduce Euro as the global
Changes in technology are
this. The controls exerted by
currency is by legalizing all oil
also undermining the dol-
the Chinese government on the
trades in Euro, thus forcing all
lar’s monopoly. Earlier trad-
Renminbi, for export advan-
countries to keep Euro as their
ers may face difficulty in
tage, makes it devalued against
key reserve currency.
comparing prices of com-
the world’s other currencies,
But replacing Dollar with Ren-
modities in different curren-
especially against dollar by
minbi or Euro is not a complete
cies, but today nearly every-
50%. Although the Chinese
solution because it will only de-
one carries handheld de-
government has started to re-
fer the problem for a few dec-
vices which can be used to
lax the pegging to the dollar in
ades. After some time the
compare prices in different
June 2010, the variation being
world economy would be at
currencies in real time.
allowed is only marginal.
the same position as it is right
Alternatives against Dollar
Euro:
now as the economy would be
After analyzing the position of
French
Nicolas
then again under the control of
US Dollar in the present sce-
Sarkozy before boarding a
a single country’s currency and
nario, we need to evaluate the
plane
hence dependent on its finan-
alternatives available against
George W. Bush proclaimed,
cial situation.
Dollar as the Global or Reserve
“Europe wants it. Europe de-
Special Drawing Rights
Currency.
mands it. Europe will get it."
On 26 March 2009, a UN panel
Other Foreign Currency
The "it" here is global financial
of expert economists called for
China’s Renminbi:
reform”. Evidently Sarkozy did
a new global currency reserve
not have to wait for too long if
scheme to replace the current
President to
meet
President
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
09 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
World Reserve Currency
……………………………………………………… US dollar-based system called
Basket of Commodities
union of nations with disparate
Special Drawings Rights. The
Another possibility is a cur-
languages, cultures, and econo-
IMF
Drawing
rency unit based on a basket of
mies.
Rights, or SDRs, could contrib-
commodities. After all, raw ma-
Negative impact of replacing
ute to global stability, eco-
terials are the one thing that
Dollar
nomic strength and global eq-
every country absolutely has to
A sudden dollar collapse would
uity. SDRs represent potential
have access to. And every form
create global economic turmoil
claims on the currencies of IMF
of money is a proxy for real
because investors would then
members and can be used to
stuff in one way or another.
rush to other currencies, such
convert into whatever currency
Hence, a unit that was one part
as the euro, or other assets,
a borrower requires at ex-
gold, one part oil, one part iron
such as gold or other commodi-
change
a
ore, and one part rice, would
ties. Demand for Treasuries
weighted basket of interna-
look like something that was
would plummet, driving up in-
tional currencies with a weight
going to hold its value for a
terest rates.
of 44% for the dollar, 34% for
long period of time.
would skyrocket, thus causing
the euro, and 11% each for the
New World Currency
inflation. Thus inflation and
yen and pound sterling. So, for
John Maynard Keynes at the
high interest rates would fur-
example if India wants to use
UN’s Bretton Woods confer-
ther suppress business growth.
its SDRs, it will typically ask the
ence in 1944, put forward the
The natural consequence of
IMF for dollars in exchange.
idea of a hypothetical single
these
The IMF will debit India’s SDR
global currency or supercur-
would be high rate of unem-
account, credit America’s SDR
rency, which till date, seems
ployment, further leading to
account, ask the US for the cor-
logical enough and can be
the economy back to recession
responding dollars, and hand
thought of. It will be adminis-
or worsening to depression.
these to India. The goal of SDR
tered by a global central bank
Also the alternative replacing
is to have a reserve asset for
and will be used for all transac-
Dollar should be in a position
central banks that better re-
tions around the world, regard-
to absorb all Dollar reserves
flects the global economy since
less of the nationality of the
from the economy. If the dollar
the dollar is vulnerable to
entities (individuals, corpora-
reserves are not in a position to
swings in the domestic econ-
tions, governments, or other
do so, the countries would rush
omy and changes in U.S. policy.
organizations) involved in the
to US or concerned monetary
Thus the risk of depending on
transaction. Supporters often
authorities. If the concerned
just a single currency would get
point to the euro as an exam-
authority is not in a position to
distributed in four different
ple of a supranational currency
do so, an economic disturbance
currencies.
successfully implemented by a
is sure to occur.
said
Special
rates based
on
Import prices
economic
situations
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
10 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
World Reserve Currency
……………………………………………………… Conclusion
biggest example being during
change transactions, compared
United States is the largest do-
recession where in spite of be-
with less than 40% for the euro
mestic economy in the world.
ing a capitalist economy, it
and 16% for the Japanese yen.
Its GDP is estimated to be
shifted to socialist economy by
Fortunately, it's highly unlikely
around $14.2 trillion in 2009.
giving bailout packages and na-
that the dollar will collapse in
American labor market has also
tionalizing the private entities.
the next two decades because
attracted immigrants from all
Thus we see that inspite of
any of the developed countries
over the world and has one of
some the negative implications,
who have the power to make
the world’s highest immigra-
US Dollar still holds more than
that happen - China, Europe
tion rates. It has world’s largest
60% of the foreign reserves of
and
and most influential financial
central
govern-
holders - don't want it to occur.
market. High stability and low
ments. The Organization of Pe-
It's not in their best interest.
level of corruption are the key
troleum Exporting Countries
The US consumer occupies the
factors in the US political Sys-
sets the price of oil in dollars.
major market share of the de-
tem. The US economic policies
Thus, U.S. dollar is involved in
veloped economies, so why
are highly flexible in nature, the
close to 90% of all foreign ex-
bankrupt your best customer?
banks
and
other
foreign
dollar-
Article By - Ruchi Gupta ruchigupta.iitr@gmail.com
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
11 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Perspective ………………………………………………………
Is Poland ready to embrace “Single Currency” ? When joining the European Un-
(NCBs) jointly contribute to
ion in 2004, Poland, along with
achieving:
the other new member states
Price Stability.
also agreed to join the euro
Financial stability and Finan-
zone meaning that it will adopt
A minimum of 2 years of membership in ERM II.
cial integration.
A maximum of 6.0% long term interest rates.
To decide whether the Euro is
the euro as its own currency.
To be able to join the Eurosys-
good news for Poland or not,
Unlike the United Kingdom,
tem, a country should be able
its costs and benefits need to
Sweden and Denmark before it,
to fulfil the Convergence Crite-
be analysed.
Poland does not have the op-
rion mentioned in the Maas-
1. COSTS
tion to opt out of the euro
tricht Treaty which requires a
Loss of monetary policy inde-
zone. As a result, the only
country to have:
pendence
question that remains valid, is
A maximum of 1.0% infla-
A floating exchange rate re-
tion rate.
gime, such as the one currently
A maximum of 3.0% annual
in place in Poland, gives the
government deficit to GDP.
central
A maximum of 60% gross
autonomy in setting its interest
government debt to GDP.
rates. Giving this up and adopt-
not whether Poland will adopt the euro, but when.
The mission statement of the Eurosystem says that the European Central Bank (ECB) and the
national
central banks
bank
considerable
ing the monetary union policy,
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
12 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Poland And single Currency
……………………………………………………… there is increased risk of eco-
into two groups. The first group
risk premium lead to a fall in
nomic fluctuations which may
comprises financial costs like
interest rates. Therefore, the
lead to an inefficient allocation
the fees accompanying foreign
cost of capital falls, which in
of resources having a negative
exchange operations and costs
turn implies a higher level of
impact on economic growth.
of hedging against exchange
domestic investment.
Labour
rate risk. The second one in-
Trade expansion
mechanism
cludes administrative costs in-
Joining the euro zone with its
After joining the euro area, real
curred by companies as a result
consequent elimination of bi-
wage adjustment or free move-
of committing resources to ac-
lateral exchange rate risk con-
ment of labour, will become
tivities related to foreign ex-
siderably
the only mechanism, apart
change operations. The more
conditions for economic agents
from fiscal policy, that can miti-
open an economy is towards
participating in international
gate the negative effects of
other currency union members,
trade. Growth of foreign trade
idiosyncratic disturbances.
the greater are the benefits
benefits the economy via in-
Convergence of business cy-
from the elimination of trans-
creasing specialisation and a
cles
action costs.
growing scale of production.
abandoning
Elimination of exchange rate
Integration of the financial
autonomous monetary policy is
risk and decline in interest
market
based on the extent to which
rates
Elimination of foreign exchange
the business cycles of the coun-
Exchange rate risk hinders the
fluctuations and the coordina-
try in question and the rest of
economic growth. It increases
tion of monetary policy within
monetary union are synchro-
the cost of capital and makes
the euro zone have been the
nised. If business cycles are
investment planning and opti-
main driving forces behind the
convergent, asymmetric shocks
mum use of available resources
financial integration in Europe.
are relatively less frequent.
more difficult. Elimination of
Entry to the monetary union
2. BENEFITS
exchange rate risk improves
will therefore enable Poland to
business conditions, triggering
deepen the benefits reaped
costs
adjustment processes in trade
from the participation in the EU
The elimination of transaction
and foreign and domestic in-
financial market.
costs incurred by enterprises
vestment.
CONCLUSION
and households in relation to
Impact of the euro on invest-
Macroeconomic policy pursued
the zloty/euro exchange rate is
ment
in Poland in the period preced-
among the most obvious bene-
Removal of exchange rate un-
ing the euro area accession
fits of the single currency.
certainty and, consequently,
should be oriented towards
These costs may be divided
the elimination of the currency
mitigating the risks stemming
The
market
cost
Elimination
of
of
adjustment
transaction
changes
business
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
13 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Poland And single Currency
……………………………………………………… from the conflict between sta-
relinquishing independent in-
cost of giving up autonomous
bilising the exchange rate and
terest rate policy involves a loss
monetary policy in Poland will
maintaining low inflation. Dur-
of an effective instrument for
most likely be smaller than the
ing ERM II participation, Poland
smoothing output fluctuations,
degree of Poland’s compliance
should pursue a tight fiscal pol-
the effectiveness of the floating
with traditional criteria of opti-
icy combined with a moder-
exchange rate as an economic
mum currency area would im-
ately tight monetary policy.
stabiliser in an open economy
ply.
Whereas there is no doubt that
is substantially limited. The
Article By -
Garima Lakhanpal garima.lakhanpal@gmail.com
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
14 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Perspective ………………………………………………………
Drawing Values From IT Risk Management
The ongoing economic down-
Technology risk managers need
that achieve maturity on the
turn has resulted in a lot of
to take into consideration gen-
disciplines not only manage risk
problems for IT organizations.
eral risk management guidance
better, but also can use IT risk
The role of IT risk management
to the specialized domain of IT.
management to improve IT
now is more important than
Both approaches provide some
management and business out-
ever. Organizations find them-
help, but neither can generate
comes. Their risk management
selves asking how to get more
the holistic view of IT risk as
investments pay new value in
value from their risk manage-
business risk that is becoming
four ways: fewer incidents,
ment activities as organizations
more important in an increas-
more efficient IT processes,
struggle to squeeze the most
ingly digitized and intercon-
better alignment with the busi-
value from all monies invested.
nected world.
ness and higher agility.
This includes using risk man-
This article describes the three
Three Disciplines of IT Risk
agement insights to improve
disciplines of IT risk manage-
Management:
the way IT and business proc-
ment, their implications for risk
In many organizations, the sole
esses are managed.
management value. Companies
objective of IT risk manage-
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
15 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Drawing Values From IT Risk Management ……………………………………………………… ment is to ensure that the com-
These three disciplines work
tions, supporting technology
pany does not experience any
together to ensure that an or-
and IT people who enable busi-
bad incidents because of IT,
ganization understands the IT
ness processes to run. Firms
whether from hacker attack or
risks it faces, makes good deci-
with a mature IT foundation
from project overruns. How-
sions about them and starts to
have a well-managed infra-
ever, the focus is often on pro-
reduce risk over time.
structure, a well-defined busi-
tection, not improvement, on
Mature risk governance is nec-
ness continuity plan, and a
spending, not value. A recent
essary but not sufficient. It
solid understanding of the links
Massachussetts
of
raises attention to risk, in-
between technology and busi-
research
creases stakeholder involve-
ness process. But, they go be-
study found that three IT risk
ment and provides information
yond this. They also have en-
management disciplines work
for decision making. However,
terprise architecture in place
together to address risks to
actual
and are working to ensure that
Technology
Institute
(MIT)
improvement
comes
four key enterprise
the IT foundation is
objectives:
no more complex
avail-
ability, access, ac-
than
curacy and agility.
Inconsistent
Companies that get
ware
higher value from
cause it to fail of-
IT
ten, make it diffi-
risk
manage-
necessary. soft-
updates
ment investments
cult
to
recover,
are mature in all
and make it more
three disciplines:
difficult to change.
• An IT foundation that is well
from driving change in the IT
An immature IT foundation
managed and only as complex
foundation and risk-aware cul-
eats up maintenance resources
as necessary.
ture. Firms with a more mature
and restricts agility.
• A risk governance process to
culture or foundation report
One firm experienced the same
understand what risks the en-
statistically
incidents
virus at three offices, six
terprise faces and to decide
than other firms, but the bene-
months apart, because IT staff
what to do about them.
fits go farther. They also report
in the affected sites did not in-
• A risk-aware culture where
statistically significantly higher
form other sites of the vulner-
people
efficiency,
ability. At another firm, IT staff
have
appropriate
awareness of risks and are comfortable
talking
them.
about
fewer
IT-business align-
ment and agility.
routinely missed a set of serv-
The IT foundation is the
ers when installing patches.
set of infrastructure, applica-
Key to keeping the IT founda-
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
16 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Drawing Values From IT Risk Management ……………………………………………………… foundation well maintained are
A mature risk-aware cul-
doing the basics. It is more
well-designed and well main-
ture does not happen acciden-
than identifying risks, protect-
tained controls and operational
tally. It must be consciously
ing existing assets and increas-
management processes.
built and reinforced by the
ing awareness of threats. Com-
The risk-aware culture is the
company’s leaders. Companies
panies with mature risk man-
third discipline. It is a culture
with a mature risk-aware cul-
agement capability use risk
where people recognize the
ture have employees who un-
governance to reduce complex-
risks inherent in their activities,
derstand risk and controls rele-
ity in the foundation. They go
can openly discuss their risks,
vant to their jobs, who can talk
beyond awareness to build a
and are willing to work to-
openly about risk without fear
culture in which safe discussion
gether to resolve risks or inci-
of reprisal, who include risk in
of
dents. Having a mature risk-
their business conversations,
through agility) is the norm.
aware culture makes a firm
and
encouraged
These companies not only pre-
both safer and more agile. Peo-
through frequent reminders
vent risk, but also can take new
ple know how to avoid overly
and top leadership reinforce-
risks safely. They not only re-
risky behaviors and resolve
ment. Companies that are ma-
duce incidents, but also im-
conditions that introduce un-
ture in all three disciplines—
prove efficiency. Then, the
necessary risk. When people
risk governance process, IT
company’s investments in risk
understand which risks are
foundation and risk-aware cul-
management pay off not only
worth taking and understand
ture— have statistically signifi-
in better risk management, but
which conditions and behav-
cantly fewer incidents, higher
also in better IT management
iours introduce unwanted risk,
IT efficiency, better alignment
and results.
the firm can take on more risk
and higher business agility. But
in pursuit of return.
maturity means more than just
who
are
risk
(from
availability
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
17 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Chlorophyll
……………………………………………………… Its wise to learn, its GOD like to create
“Worthless” Thunderstruck was I, when I first saw you starstruck, with that beautiful smile ... the cupid’s arrow somehow got through & I was mesmerized all the while.... When you look straight into my eyes, I sublime I am speechless, frozen with chills at the same time captivated, with those perfect imperfections that you possess I find myself lost in those beautiful eyes, I must confess..... your thoughts are like an incurable illness and they cloud my mind I lose my sense of conscience, girl your gestures drives me blind I try to close my eyes but in that dark its you all that I see I want 2 close my mind but in that emptiness, its only these words that come to me... Burning in this insatiable flame, I m waiting for the answers that are due It may seem foolish though, but my feelings for you will always remain true & now that I m drowning in my dreams, and I m falling 4 you Baby I m worthless, worthless as a friend to you...
Poem By -
Manav Kaushik manav2502@gmail.com
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
18 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Qutopia ………………………………………………………
It’s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? ‘Qutopia’ – A Utopia of the
best Biz Quiz Tidbits to wreck your brains! Rush in your answers to domination.doms.iitr@gmail.com or anur-
ag242@gmail.com before 30th January, 2012. The winner will have their names published in the next issue.
Also, person getting the highest score in the current quarter (Jan-July 2012) will get a gift voucher. Answers in the next issue of DoMination.
Section A (1 Point for each correct answer)
1. According to his sister’s eulogy, what were Steve Jobs’ last words? 2. Which previously free service is Google to start charging heavy users for? 3. What attraction has Disney won the rights to build at its Theme Parks? 4. Struggling retailer HMV has announced to diversify into which new segment?
Section B (2 Point for each correct answer)
1. Which iconic sports venue is to be renamed the Sports Direct Arena?
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
19 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Qutopia ……………………………………………………… 2. Identify this logo.
3. Identify this business tycoon.
Section C (3 Point for each correct answer)
1. Connect the images to a business tycoon.
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
20 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
DoMS-da-Evince ……………………………………………………… Lekshmi Sreedharan is 2011 batch pass out of DoMS, IIT Roorkee. She is currently working as Competitive Intelligence (CI) Analyst in Market Intelligence section of the Global Marketing Center at IBM Bangalore.
1.What are your roles and re-
was
sponsibilities with IBM?
whereas at IBM, flexibility is a
up, an arbitrary question may
I work as a Competitive Intelli-
key takeaway! The work cul-
pop up, like, "What is the cur-
gence (CI) Analyst in Market
ture is very smooth here with
rent situation at Brazil and why
Intelligence
the
no strict timings and we also
are our competitors winning
Global Marketing Center at
have the option of "Work from
more deals than us?" or, " Why
IBM Bangalore. As a CI analyst I
Home" which can be taken on a
is a certain competitor growing
asses the IBM's competitive
regular basis.
at 23% in France and us only at
landscape, assess competitive
3. What has been the most
18 odd %?" . Clearly, we have
behavior and initiatives, deter-
challenging role in your career
to be prepared to tackle any
mine possible successes and
so far?
question at any given time!
impact on IBM, and make rec-
Every day here at IBM offers a
4. How has DoMS, IIT Roorkee
ommendations
strategy,
new challenge. At Accenture
contributed to your success?
products/
my job was more of a repeti-
Well DoMS had a major role in
offerings.
tive one. Once you are done
this. Even the small facts given
2.How was your experience
with the trainings, there are
by our faculty turn out to be
working with Accenture Tech-
very less surprises coming your
huge help here in the corpo-
nology Solutions and how it is
way as we are very familiar
rate world. The various experi-
different from IBM?
with the domain we are work-
ences our faculty shared with
At Accenture I was in to a com-
ing. But my present job is a
us really worked miracles for
pletely technical role in SAP BI
highly challenging one as they
me in many situations here..
domain ( In simple words-
expect us to know everything
And it is because of DoMS, that
Software
Engineer!!!!),while
about every company in the
I am here at IBM now. And I
here in IBM I am working as a
world which is at competition
also got my Life Partner at
marketing person. Company
with IBM. Just for an example,
DoMS.
wise also Accenture, as such
when we present to a higher
marketing
section
for
and
of
strict
in
its
timings
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
21 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
DoMS-da-Evince ……………………………………………………… 5. Any message for the read-
to miss any class…Never take
will for sure make your life eas-
ers, especially the current
any subject light by thinking
ier in the corporate world. And
batches of DoMS?
that this will be never be useful
above all be confident and sin-
in my life. Trust me , if u listen
cere!!!
Be attentive in classes. Try not
and are regular in the classes, it
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
22 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Regardez I’economie ………………………………………………………
Interest, Inflation and India: Can They Survive Together Inflation is the biggest problem
answer “Amid inflation and
same. The different areas I
faced by the Indian economy
high interest rates, does the
studied and analyzed included
since past two years as it re-
Indian economy hold good
output, aggregate demand, ex-
mains stubbornly high. Several
prospects in the next one
ternal sector, liquidity, inflation
measures
year”.
and financial markets. Finally, I
(Reserve Bank of India), which
First of all, I have presented the
have presented a macroscopic
included increasing of reserve
current
Indian
picture of the Indian economy
rates 13 times or 375 basis
economy which includes the
for the next year by giving an
points in 18 months, have not
overview of major develop-
outlook mainly on three do-
yet shown any favorable re-
ments of economy in the cur-
mains: growth, inflation and
sults. Instead they have started
rent year, a view on inflation,
twin deficit.
hampering
GDP, foreign reserves and RBI
Indian Economy: Current Sce-
growth, investments and pri-
monetary measure.
nario
vate consumption of the econ-
Next I did a step by step analy-
On one hand, the Indian econ-
omy.
sis of various monetary and
omy rebounded back to growth
Through this whitepaper, I
macroeconomic developments
after the global crisis of 2009-
have tried to understand and
and gave an outlook for the
10 and on the other hand, it is
taken
the
by
RBI
industrial
scenario
of
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
23 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Interest, Inflation and India
……………………………………………………… facing
several
macroscopic
trol inflation but they did slow
country, which is expected to
problems starting from infla-
down the growth of Indian
exceed 4.6 per cent of gross
tion, falling rupee value, in-
economy and affected the in-
domestic product target.
creasing fiscal deficit. Though
dustrial expansion plans. After
Also, the Indian exports grew
the GDP has improved to 8.5
economic growth fell to 6.9 per
10.8 per cent in October to
per cent but still it is much be-
cent, industrial production has
$19.9 billion while the imports
low the expected GDP of 9 per
contracted 5.1 per cent in Oc-
grew 21.7 per cent because of
cent and experts feel that it
tober.
increase in prices of crude oil
might even remain 8.25 per
To add to the woes of RBI, the
and
cent if the current conditions
Indian rupee fell drastically i.e.
$39.5 billion, leaving a trade
prevail.
15 per cent against dollar fol-
deficit of $19.6 billion- highest
The problem began with infla-
lowing the downgrading of the
ever in past four years. India’s
tion which remained stub-
US economy by Standard and
foreign exchange reserves have
bornly high i.e. 9.6 per cent for
Poor which triggered greater
grown significantly. The re-
the last 10 months even after
uncertainty and turmoil in the
serves stood at US$ 304.8 bil-
aggressive interest rate hikes
global economy. This lead the
lion as on March 31, 2011.We
(13 times or 375 basis points
import of crude oil to be more
will now look step by step at
since March 2010) by RBI to
expensive which in turn has in-
various monetary and macro-
control the liquidity. These
creased the current account
economic developments in In-
measures were not able to con-
deficit and fiscal deficit of the
dian economy.
other
commodities to
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
24 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Interest, Inflation and India
……………………………………………………… Indian
Economy:
Develop-
tary policy by the Central Bank
as private spending towards
ments and Outlook Output
since March, 2010. However,
investment to sustain potential
During the third quarter of
several non-monetary factors
output growth.
2011, the global economic
such as hindrances to execu-
The External Sector
growth slowed down leading to
tion and environment of global
Though the exports this year
waning of business and con-
uncertainty have also adversely
have increased above the ex-
sumer confidence. As a result,
impacted
investment.
pectations, the import expendi-
the economic growth of India
Overall the Private final con-
ture has also increased sub-
decelerated to 7.7 per cent.
sumption expenditure (PFCE),
stantially due to increase in im-
The sectorial growth rate of
which is the main component
port of crude oil, gold, elec-
GDP is shown in Table 1.1,
of aggregate demand, declined
tronics and machinery, thus
which shows growth in agricul-
drastically mainly due to tam-
leading to overall increase in
ture sector but deceleration in
pering of demand in interest
CAD (Current Account Deficit).
growth of industrial andpro
rate sensitive sectors, particu-
Also, owing to current global
services sector. It is evident
larly the consumer durable
slowdown, the growth momen-
that slackening of industrial
goods sectors such as passen-
tum of exports does not seem
growth was in “mining and
ger cars, resulting again from
to be sustained. Also, due to
quarrying” and “manufacturing
pressure of inflation and tight
euro crisis, the inflow of FII has
sectors” while, there was a
monetary policies. Also, the fis-
reduced though FDI has in-
sharp deceleration in growth of
cal deficit and the revenue defi-
creased to somewhat balance
construction sector in case of
cit of the economy are increas-
it. The policy of government to
services. Since, construction
ing. The main reasons behind
allow 51 percent FDI in multi-
sector is important for its large
this are a sharp decrease in tax
brand retail may help further
employment potential, this can
revenues, increased expendi-
but it has been put on hold for
pose a serious issue. It can be
ture on subsidies and the fal-
now. Going forward, capital
concluded that this slow down
ling value of rupee, which is in-
flows into India will depend on
has been a result of high inter-
creasing government expendi-
the economic and financial
est rate hikes by RBI, which
ture on crude oil imports and
conditions in the US and the
have made the industries to
oil subsidies.
euro area, and whether the
delay their expansion plans.
In brief, we can conclude that
growth and interest rates are
Aggregate Demand
with investment declining and
able to remove the general risk
There have been signs of de-
with consumption responding
perception among foreign in-
crease in aggregate demand
less than intended to monetary
vestors. It is, therefore, impor-
which can be credited to the
policy, there is a need to chan-
tant to encourage FDI inflows
significant tightening of mone-
nelize the government as well
the
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
25 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Interest, Inflation and India
……………………………………………………… to impart stability to India’s
sumption. Also, the inflation
Financial markets
capital account.
due to manufactured non- food
The Indian equity and foreign
Liquidity Conditions and Infla-
products seems to be increas-
exchange markets are showing
tion
ing due to the combination of
great volatility owning to the
The liquidity conditions are in
high input costs and buoyant
deepening euro area sovereign
deficit mode following the tight
demand. The tight monetary
debt crisis. Due to global condi-
monetary policy by RBI to con-
policy of RBI has little effect on
tions and the monetary policies
trol high rates of inflation. It
demand in these sectors. Also,
by the central bank, the confi-
raised the rate 13 times over a
the inflation pressures have
dence of investors is shaking
period of 18 months since
been added up due to falling
leading to outflows of FIIs from
March, 2010 in order to con-
value of rupee against dollar
the Indian financial markets.
tain inflation but inflation re-
owing to the euro crisis which
The two key Indian equity indi-
mained sticky. The Chart 1.2
has increased the demand of
ces, Sensex and Nifty, declined
below shows the movement of
dollars.
India’s imports ac-
by about 14.5 percent and 14.7
WPI and repo rate. Thus , food
count for about 22 per cent of
percent, respectively, as on Oc-
products
major
GDP, and depreciation of the
tober 19, 2011. The movement
source of inflation despite nor-
rupee raises the risk of im-
of Sensex and nifty in the
mal monsoons and record food
ported inflation. Many of the
month of November from 2010
grain production. This can be
commodities having large com-
to 2011.Going forward, domes-
attributed to the increase in
bined weights in the WPI also
tic growth and inflation out-
income of people in rural areas
constitute jointly a significant
look, resilience of the banking
thereby, increasing the con-
proportion of total imports.
sector and the nature and
remain
a
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
26 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Interest, Inflation and India
……………………………………………………… depth of global uncertainty will
cost of capital due to monetary
Inflation Outlook
shape the developments in the
tightening and slow project
Inflation is still likely to remain
financial markets. The global
execution are some other fac-
one of the major problems of
markets will primarily track the
tors that are hampering the
the central bank. It is expected
international policy actions to
growth.
to remain high throughout the
address the problem of euro
Though the prospects of agri-
year and medium i.e. 7 percent
area sovereign debt crisis and
culture sector look encourag-
only towards the end of the
slowdown in advanced econo-
ing, industrial sector growth is
year.
mies.
likely to decelerate due to
With global growth environ-
Macroscopic View: The Com-
slowdown in investment. In ad-
ment
plete picture for 2012
dition to the impact of mone-
commodity prices, including
Growth Outlook
tary tightening, other factors
crude oil, have weakened but
The growth seems to follow a
affecting business sentiments
the benefits of the recent fall in
downward trend owing to in-
are:
global commodity prices have
crease in global uncertainties
a) With signs of global and do-
been largely offset by the ru-
and sticky inflation pressures.
mestic economy slowing down,
pee depreciation. If global oil
The IMF’s baseline projections
firms are reluctant to expand
prices stay at current level, fur-
suggest that there is a decel-
capacities.
ther increase in prices of ad-
eration in the growth of global
b)
The impact of perceived
ministered oil products will be-
economy and it will grow only a
governance issues have lin-
come necessary to contain sub-
medium pace. Recovery
gered.
sidies. Fertilizer and electricity
c) Business confidence has
prices will also require an up-
economies.
weakened due to correction in
ward revision in view of sharp
The estimates of GDP as 9 per
equity prices.
rise in input costs.
cent at the beginning of cur-
The growth of the services sec-
The
rent year have touched a low
tor will be driven by the unfold-
brought down the demand side
of 7 per cent. Indicators sug-
ing of the global and domestic
inflation to certain extent but it
gest that growth moderation
economic
is
still needs to play an important
has continued into Q2 of 2011-
largely expected to keep its
role to bring down the supply
12. Growth is also likely to stay
momentum.
side inflation so as to sustain
weak in the second half of 2011
Monetary and Fiscal policies
growth of the economy. In face
-12, especially if the global
need to be formulated with
of nominal rigidities and price
downturn continues.
great caution because further
stickiness, there are dangers of
raising the rates could greatly
accepting
hamper the industrial growth.
level as the new normal.
unlikely
Persistent
even
in
is
advanced
inflationary
pres-
sures, rising input costs, rise in
situation,
but
deteriorating,
monetary
global
policy
elevated
has
inflation
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
27 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Interest, Inflation and India
……………………………………………………… Outlook on Twin Deficit
downgrade of the US, slowing
Finally the impact of capital
If the global crisis deepens and
pace of global recovery and the
flows is more difficult to gauge.
domestic economy slows down
sovereign debt problems in the
Capital flows could surge or di-
beyond what is currently antici-
Euro area.
minish, depending upon the
pated, the fiscal slippage could
The robust performance of In-
degree of risk aversion along
turn out to be an issue of con-
dian exports also looks in dan-
with several other factors but if
cern.
gers due to growth slowdown
the global crisis worsens, then
Prospects for external Sector
of advanced economies but it
capital flows are most likely to
for 2011-12 look uncertain due
can be partly mitigated by di-
decrease as foreign investors
to global uncertainties arising
versification of exports in terms
will sell their equities to cover
from the financial turmoil that
of composition and as well as
risks elsewhere.
followed the sovereign rating
destinations.
Article By -
Ambika Garg ambika.nitj@gmail.com
……………………………………………………… Perspective | Chlorophyll | Qutopia | DoMS-da-Evince | Regardez I’economie
29 | DOMINATION, JANUARY 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
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