IIT Roorkee Domination February 2012 by Zigu MBA

VOLUME-III ISSUE-02

NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Kingdom of Lights “Creativity at its best” (08)

Sailing in Difficult Water (11)

FEBRUARY 2012

DOMINATION

Editorial ……………………………………………………… Dear Readers,

lars , and we present an in depth

the good old Human resource.

It's February 2012, the

analysis of the pros and cons of

We have the article unraveling

shortest and the most distinctive

investing in one of the biggest

the doctrines of “Employee en-

month of the year ; the month

IPOs of the year.

gagement” depicting the eclectic

of zest and intrigue !!! Bursting

Next we have an article "Sailing

tango of manpower and the

forth from the romance of St.

in Difficult Waters" , taking a

strategic onus on the higher

Valentine's Day to the auspicious

look at probable solutions to the

echelon professionals of the cor-

occasion of Maha Shivratri the

imminent Economic turmoil in-

porate ; to keep the human fuel

mood of the hoi poloi swings

cluding the sovereign debt crisis

going in order to propel the or-

from that of excitement to rev-

from the vantage point of vari-

ganization towards its vision and

erence. As all of you bid adieu to

ous crisis tools like DuPont and

mission.

the chilly winter mornings ; we

Johnson & Johnson models.

In the newly added section of

bring another fresh edition of

Enthusiasm is excitement with

Success stories; we have a cov-

the Domination to perk up your

inspiration , motivation and a

erage of the rags to riches story

busy schedule with some new-

pinch of creativity. Our next arti-

of one of the brightest young

fangled ideas and fresh food for

cle "The Kingdom of Light" justi-

entrepreneurs of the country

thought.

fies it all vis-a-vis the fancy ads

Mr. Sachin Bansal , CEO of Flip-

We phase in with the all novel

of Peferetti's Happydent White ;

kart.com.

possibility analysis of the public

presenting a quintessential mix

Last but not the least we have

enlisting of the largest Social

of humor and marketing acu-

the metrically composed poesy "

networking site " Facebook" . If

men.

Sameer Shah " for the connois-

the rumors are to be believed

From financial analyses to eco-

seurs of verses, leading up to

the sensational debut venture of

nomics to marketing promo-

this months' Qutopia ,for the

Mark Zuckerburg is all set to pile

tions; where does the buck stop

ardent quiz followers ...

up an IPO worth 100 billion dol-

next ?? Where else other than

COUP DE GRACE !!!

ards - Reg ination Dom m a e T

……………………………………………………… 02 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Contents Newsletter Team

Aditi Joshi Anuj Mody Anurag Agrawal

Facebook IPO - The biggest in 2012

Chetna Yadav

Employee Engagement

Jubin Mohapatra Manav Kaushik Mukesh Rathi

Pawan Upadhyay

Kingdom of Lights - Creativity at its best

Rajneesh Kumar Ruchi Gupta Saumya Dani

Sailing Difficult Water

Saumya Verma Sayantan Shibi Singh

Shruti Goel

Design Team

The Unfinished Business

Anurag Agrawal

China Property Bubble - A Correction Imminent

Saumya Verma

19 DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

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

23 Qutopia

Success Story

DoMS da Evince

……………………………………………………… 03 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Perspective ………………………………………………………

Employee Engagement -Employing & Fostering a Productive Work Force Year 2011 faced a deluge of

iary activities by the manage-

employees motivated, inspired

strikes - the Maruti strike, the

ment. The workers accused

and engaged with the organiza-

Bosch strike, the Coal India

management for them chang-

tion not only to create an envi-

strike, the endless Air India

ing their stance and recanta-

ronment of harmony at work-

strike to name a few. With the

tion from promises of not do-

place but also to improve the

demand to form a separate un-

ing so. This strike too ended

productivity of the employees.

ion by workers at a particular

without any agreement and the

Here

plant, continued on workers

case has been summoned for

“Employee

dissension to sign a ‘good-

adjudication.

comes to rescue. It is rapidly

latest

cant

called

Engagement”

conduct bond’ as directed by

In both these cases the

gaining popularity, use and im-

the management, the Maruti

disengagement of employees

portance in the workplace and

strike flunked to achieve any-

was obvious. It was apparent

is impacting organizations in

thing significant except causing

that a grave lack of trust and

many ways.

the company to lose on critical

low engagement was a bigger

sales.

reason for these strikes, than

was conceptualized by Kahn

strike,

any other cited by the workers

(1990), as the ‘harnessing of

workers protested against the

or the management. Clearly,

organizational members’ selves

purported outsourcing of auxil-

the need of the hour is to keep

to their work roles.

the

Bosch

Engagement

work

04 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Employee Engagement ……………………………………………………… In

employee

engage-

ment, people employ and ex-

extent of disrupting the normal

environment, the need to con-

functioning.

nect and link with employees in

press themselves physically,

It has been found that

emotionally, and cognitively

fewer than 1 in 3 employees

organizational

during role performances.

worldwide (31%) are engaged.

greater.

Employee

order to provide them with an

Nearly 1 in 5 (17%) are actually

is a combination of commit-

Disengaged. Engagement levels

different sectors touching dou-

ment to the organisation and

vary by region from 37% in In-

ble-digits, retention through

its values plus a willingness to

dia to 17% in China.

novel forms of employee en-

across

engagement

gagement has become essen-

almost

is vital to any company that

tial. In 2010-11, attrition in the

every workplace can be bifur-

seeks to retain their valued em-

telecom sector was at 20% -

cated into four categories:

ployees. The Watson Wyatt

23%; in ITeS, it ranged some-

highly engaged, engaged, dis-

consulting companies proved

where between 29% - 55%;

engaged

that there is an intrinsic linkage

24% in IT; 13% in manufactur-

between

engage-

ing, and12% in FMCG, accord-

While engaged employ-

ment, consumer loyalty, and

ing to Pune based executive

ees contribute to the optimum,

profitability. As the organiza-

search firm Absolute HR Inter-

the disengaged ones just follow

tions are globalizing and are

national. In such a competitive

the routine. Those who are

becoming more dependent on

hiring market, where supply is

highly disengaged, go to the

technology in a virtual working

limited and every component

Employees

and

Employee

attrition

Engagement

help out colleagues.

With

‘identity’

highly

disen-

gaged.

employee

05 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Employee Engagement ……………………………………………………… 90 80 70 60 50 40 30 20 10 0

of salary becomes bait, getting

On-boarding, Sales Collabora-

system, Competitor

Contact

employees to structure their

tion,

approval/reporting

system,

take-home makes them feel

Alumni Networks etc.

wanted.

Knowledge

Networks,

Conflicts of Interest approval/

Tata AIG General Insur-

reporting system, Compliance

Today many companies

ance Co. Ltd follows a system-

Plaza,

incorporating this tool

atic sustainable & participative

Board, Collection of acknowl-

called employee engagement

model by actively involving em-

edgement

to increase the level of engage-

ployees, soliciting ideas and en-

Evaluation system to bring the

ment or job satisfaction of their

couraging employee involve-

employees in the state of satis-

employees. Infosys for exam-

ment. They conduct Employee

faction, passion and commit-

ple, has started its Infosys So-

Engagement Activities like an-

ment.

cialEdge Employee Engagement

nual celebration, the success

Platform,

improves

matrix, sports tournaments etc

true employee engagement:

workforce productivity and effi-

where they touch the employ-

1) Career: To give employees,

ciency, deepens employee en-

ees and their family in the vari-

the opportunity to enhance

gagement, and enables faster

ous forms.

their career through promo-

are

which

innovation by connecting and

Employee

Engagement

Compliance from

Review

employees,

There are 3 C’s to earn

tions, change in roles and re-

engaging with employees. It

Program at HYUNDAI incorpo-

sponsibilities and

includes a range of employee

rated various systems like-

assignments are the most im-

engagement

Skill

Whistle-blowing system, Om-

portant needs of employees.

Management, Employee Net-

budsperson system, Gift & En-

Employees will unquestionably

work Management, Employee

tertainment approval/reporting

feel engaged if the company

initiatives:

significant

06 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Employee Engagement ……………………………………………………… and its managers devote mean-

caring can also be experienced

a man’s time, you can buy a

ingful and genuine time in help-

by small day-to-day gestures of

man’s physical presence at a

ing the employees move ahead

manager. The managers should

given place; you can even buy a

in their careers.

be sensitive to the 'mood' of

measured number of skilled

2) Competency: While career

their employees, should know

muscular motions per hour or

is all about actual growth, com-

employees

and

day; but you cannot buy enthu-

petency is about the ability to

should do something about

siasm, you cannot buy initia-

grow. Competency grows with

easing their stress. There are

tive; you cannot buy loyalty;

the opportunities to learn and

many day-to-day gestures that

you cannot buy devotion of

employ the learning in real life

constitute caring - which no in-

hearts, minds and souls. You

tasks. Most employees today

vestment in ostentatious gyms

have to earn these things.” An

look for competence-boosting

and food courts can replace.

organization should thus recog-

chances. They would like to

Caring can be considered as a

nize employees, more than any

learn, stretch and improve as

culture that big companies nur-

other variable, as powerful

long as they feel they are im-

ture through sensitive manag-

contributors to a company's

proving on their marketable

ers who counterbalances tasks

competitive position. Therefore

skills.

well with relationships.

employee should engage in a

workload,

3) Care: Caring is an art that

A highly engaged em-

demands managers to be ten-

ployee will deliver beyond ex-

improvement,

der, empathic and spontane-

pectations. As rightly said by

and action.

ous. Not necessarily by the

Mr. Clarence Francis (Chairman

grand policies of company, the

- General foods) - “You can buy Article By -

continuous process of learning, measurement

Saumya Dani saumyadani2205@gmail.com

07 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Perspective ………………………………………………………

Kingdom of Lights: Creativity at its best! A young man is seen running

to colossal proportions of ab-

efit that the product would

barefooted across a city with

surdity is what makes it tick. An

offer to a crowded market that

men perched atop poles, walls,

exemplary audio-video experi-

was not very high on the health

tables, bonnet of a car and

ence for the users, it success-

consciousness quotient: spar-

even beneath the water in a

fully puts across its point and

kling shiny teeth.

swimming pool. But the object

etches the brand in the minds

Playing with different

of his interest is a chandelier

of the audience through sheer

elements of the marketing mix

above the king. He quickly

entertainment factor. It pro-

i.e. price, promotion media,

slides in as its center-piece,

motes the recipe for a success-

packaging and product vari-

pops something in his mouth

ful promotional campaign as a

ants, Happydent has continu-

and lo and behold, the entire

unique combination of creativi-

ously been trying to capture

city flickers to life (read light).

ty, humor, grandeur and per-

the essence of Indian audience.

This ad campaign: King-

fect execution. In a low differ-

With such an entertainer to

dom of Lights, for Perfetti’s

entiation and low involvement

beat, and in trying to recreate

Happydent White, took the ad

product category, instant recall

the magic, the ad was followed

world by storm. The way it

plays the key role. But the first

by a series of TVCs, print ads

builds up the humour quotient

task was to determine the ben-

and saw the creation of inter-

08 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Kingdom of Lights; Creativity at its best

……………………………………………………… net and mobile touch points for

quired to clear the third level

Smiles of the Week’ promoting

the Happydent brand. A quick

without ramming his car with

the feeling of fun and friend-

review of the different media

other cars on the track. In case

ship that has come to be relat-

vehicles used for the promo-

of collision, the car’s headlights

ed with the brand’s image.

tion of brand Happydent would

break and one need to use a

(5) Print Ads: Use of print me-

be useful in obtaining a macro-

‘Happydent White’ to light up

dia was made to capture the

scopic picture of the campaign.

the street and thereby com-

masses by crafting the images

(1) Interactive online ad: The

plete the racing challenge.

of iconic leaders entirely from

ad strip shows a sad and bored

(3) Internet: ‘Happydent Shine-

dental gum. The bold initiative

girl with a slider to her right

shah Challenge’: The initiative

quoted ‘Giving millions a rea-

that reads, “Move the slider to

is designed as an amalgam of

son to smile’ attracted appreci-

see my smile”. As you slide it

an animated story and a game.

ation as well as flak in the same

up, the Happydent pack pops

It milks the ‘light vs. dark’ or

measure.

open and the girl can be seen

‘good over evil’ philosophy

(6) Point of purchase promo-

smiling. This is a simple yet ex-

while

tion: Happydent comes under

tremely eye-catching tactic.

proposition- Happydent Wave.

the impulse product category,

(2) Mobile based Happydent

(4) ‘Social Media Marketing ini-

where the decision making

White game: Perfetti Van Melle

tiative” on Facebook (www.fac-

often happens at the point of

India launched an exciting mo-

Ebook.com/happydent): Social

purchase. Hence, posters, jars

bile based car racing game that

media is used to engage the

and danglers as a media vehicle

consisted of three levels. To

core target group through con-

may be effective but has short-

win the race, the player is re-

tests like ‘Happydent Sparkling

er lifespans.

promoting

its

brand

09 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Kingdom of Lights: Creativity at its best

……………………………………………………… In a country where con-

marketplace of the future. The

doubling over the previous

fectionary products were yet to

campaign proved to be one of

year) and brand awareness

pick up and the bulk of sales is

the

grew dramatically striking a

through

trade:

launched in India. Not only did

small shops, kirana outlets,

it manage to remain top-of-the

Looks like, an ad well

etc., it was a challenge for

-mind among its customers,

executed is a work almost

PVMI to position its brand. As

but was also acclaimed global-

done.

they say, innovation is the sole

ly. Its market share zoomed

key to becoming a leader in the

past expectations (more than

unorganized

most

creative

ones

Article By -

chord with consumers all over.

Aditi Joshi aditijoshi.iitr@gmail.com

10 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Perspective ………………………………………………………

Sailing in difficult water According to a recent New York

Collins, are premier institutions

ing

ethical

and

customer-

Times report, the World Bank

in their industries, widely ad-

oriented.

has urged developing nations

mired by their peers and hav-

Innovation by DuPont during

to start planning for a major

ing a long track record of mak-

Great Depression

slowdown in global growth in

ing a significant impact on the

Every economic crisis has been

the year 2012. The bank also

world around them. I have cho-

followed by bankruptcies and

warned of the continued threat

sen two such visionary compa-

cost-cuttings. The great depres-

of a global financial shock

nies – DuPont and Johnson &

sion was no exception. The

“similar in magnitude to the

Johnson- and illustrated how

stock market crash of 1929 was

Lehman crisis,” because of the

they have sailed their business-

followed by four years of GDP

possibility that a major Europe-

es in difficult water.

contraction in US. Patents fol-

an economy could be shut out

DuPont proved to the

lowed the same pattern; lag-

of the global debt markets. In

business world that innovation

ging behind by one year. In the

these tough times, business

is not just for good times – it is

following years, most compa-

managers would have to exhib-

possible even during major

nies stopped or reduced invest-

it leadership skills like those of

economic downturn. Johnson

ment in R&D. DuPont was an

visionary companies. Visionary

& Johnson showed how best a

exception. In April 1930, a not-

companies, according to Jim

crisis could be handled by be-

ed DuPont research scientist

11 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Sailing in Difficult Water

……………………………………………………… Wallace Carothers, recorded

the major architect of the strat-

sumer Healthcare (a subsidiary

the initial discovery of neo-

egy for commercializing neo-

of Johnson & Johnson), was the

prene (synthetic rubber). In

prene, suggested finding uses

leading painkiller medicine in

that year, the company’s price

for neoprene where rubber

US at that time with a 37%

levels and sales fell by roughly

was not used or where it was

market share.

10 and 15 percent, respective-

used but performed unsatisfac-

There was an immediate

ly. Yet, DuPont boosted R&D

torily. Neoprene was a new

meeting in James Burke’s, CEO,

spending to develop the new

material with new properties;

office with top executives. All

technology commercially. Neo-

markets should be developed

the executives were in great

prene, which DuPont publicly

by emphasizing its unique qual-

fear. There was no warning, no

announced in November 1931

ities, not by emphasizing its

pro-dromes. Nothing like this

and introduced commercially in

similarity to rubber.

had ever happened to them or

1937, became one of the 20th

• Du Pont decided to commer-

any other company that pro-

century’s major innovations. By

cialize neoprene despite the

vides products for human con-

1939, every automobile and

Depression. Du Pont developed

sumption. When the story ran

airplane manufactured in the

it slowly and cautiously. Re-

in the media, public was also

United States had neoprene

search personnel had time to

afraid. The very idea that a per-

components.

improve the product, manufac-

son could take a capsule for

The following factors lead to

turing personnel had time to

headache and die was terroriz-

the success of neoprene, a new

learn to make it, and sales per-

ing. Here is how Johnson &

substance resembling natural

sonnel had time to develop sig-

Johnson handled this crisis:

rubber in composition and

nificant markets.

• A 7-member crisis team was

structure:

Neoprene

set up. With Burke’s approval,

• Neoprene had some superior

profitable product almost ten

the team decided to recall all

properties over rubber such as

years after its discovery. Simi-

Tylenol capsules from stores in

resistance to degradation by oil

larly, DuPont discovered nylon

Chicago area. The recalled

and gasoline. Whereas it was

in 1934 and introduced it in

batch was tested and two addi-

inferior to rubber for many

1938 after intensive R&D and

tional cyanide-laced capsules

purposes

product development.

were found. Still, the team or

such

tire

became

threads. At the time when neo-

Dealing with organiza-

the company was uncertain of

prene was discovered, the

tional crisis, the Johnson &

how the cyanide got into the

price of rubber was falling and

Johnson way In 1982, 7 people

capsule. Johnson & Johnson

hence it would not be viable

died from cyanide-laced Ty-

had one overriding priority –

for neoprene to directly com-

lenol capsules in Chicago. Ty-

warn the public. The company

pete with rubber. Bridgwater,

lenol, a product of McNeil Con-

did just that by being com-

12 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Sailing in Difficult Water

……………………………………………………… pletely open and co-operative

of-proportion (as had hap-

Johnson & Johnson’s work was

with the media in getting the

pened with other crises). The

far from over. It had to come

news out.

newspapers merely reported

up with a campaign to re-

• Johnson & Johnson installed

the information revealed. Fos-

introduce its product and re-

33 telephones to communicate

ter realized that his positive

store confidence back to the

with the public during the cri-

dealings with the media over

consumer. According to a varie-

sis. Pre-taped statements were

the years had paid off.

ty of academic studies of the

put on special toll-free tele-

The FBI and FDA didn’t

Tylenol case; Johnson & John-

phone lines to expedite news

find any evidence of tampering

son took the following steps to

gathering. The messages were

at Johnson & Johnson manu-

regain market share:

regularly updated. A full page

facturing plants. It was report-

• Tylenol products were re-

advertisement was placed in

ed that unknown suspect(s) re-

introduced containing a triple-

major

placed Tylenol Extra-Strength

seal tamper resistant packag-

capsules

cyanide-laced

ing. It became the first compa-

change of Tylenol capsules for

capsules, resealed the packag-

ny to comply with the Food and

tablets. In the first month after

es, and deposited them on the

Drug Administration mandate

the deaths, two thousand calls

shelves of at least a half-dozen

of tamper-resistant packaging.

were taken from media and

or so pharmacies.

Furthermore, they promoted

thirty thousand calls from con-

The three most important fac-

caplets, which are more re-

sumers.

tors that helped Johnson &

sistant to tampering.

• When asked by media if there

Johnson in coping with the cri-

• In order to motivate consum-

was cyanide in the manufactur-

sis were:

ers to buy the product, they

ing plant, Foster, a spokesper-

• It was open to the media and

offered coupons on the pur-

son of Johnson & Johnson, in-

using media it reached its cus-

chase of their product. They

formed that a small amount

tomers.

were available in the newspa-

was used in the manufacturing

• It was willing to recall its

pers as well as by calling a toll-

plant

products no matter what that

free number.

testing. However it was kept in

meant to the company.

• To recover loss stock from

a completely separate facility

• It appealed to the American

the crisis, Johnson & Johnson

from the production line. Also,

sense of fair play and asked for

made a new pricing program

none of it was missing. The re-

public’s trust.

that gave consumers up to 25%

offering

Chicago

newspapers

consumers

for

ex-

quality-assurance

with

sulting stories had very little

Although it had been

off the purchase of the prod-

impact as it was run in insignifi-

proved that Johnson & Johnson

uct.

cant places in the newspapers

was not responsible for the



and facts were not blown out-

tampering and the deaths,

made presentations for the

Over

2250

sales

people

13 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Sailing in Difficult Water

……………………………………………………… Medical company to restore

sponsibility to its consumers

was the key to the brand’s sur-

confidence on the product.

proved to be its most effi-

vival.

Johnson & Johnson’s re-

cientpublic relations tool. It

Article By -

Sayantan Chattopdhyay sayantanuit@gmail.com

14 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Perspective ……………………………………………………… Facebook: The Biggest IPO of year 2012

Facebook, as we know is one of

Public Offering. Some of these

is concerned with the fact why

the most phenomenal social

are why is Facebook going pub-

now, why not some few years

networking medium for every

lic, how to carry forward with

back when the economy was

internet user, or it cannot be

such a huge valuation, what

far superior to as of now. More

said with much difficulty that

can a potential investor has to

likely, Facebook has now more

the term social network is now-

look upon from such a huge

than 500 stakeholders, accord-

adays synonymous with Face-

IPO, and what could be the

ing to US Laws, which makes it

book. Mark Zuckerberg’s Brain-

pros and cons of investing in it.

a requirement for Facebook to

child is most likely to go public,

Taking the above as-

go public. By rules defined by

as the rumours have already

pects one by one, firstly why

SEC, Facebook has to disclose

spread across the world over

Facebook is getting public, the

its financials, so why not charge

the biggest IPO of 100 billion

answer could be simple as

the people to see the stash by

dollars valuation. Facebook will

‘raising more capital from the

going public and raising some

not be the day to day activity of

market’ to ‘enriching the pock-

more capital from the market.

internet users but also of the

ets of the owners and the em-

According to experts, Facebook

investors in Wall Street. There

ployees of Facebook’. But the

made a net profit of 714 million

are many facets of Facebook

situation is quite different as it

dollars and has some 3.5 billion

15 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Facebook: The Biggest IPO of Year 2012

……………………………………………………… dollars in cash, so they do not

from the advertising, Facebook

ers of Facebook are not just

need stakeholder money to run

Fan pages and Display Ads. If

feeding off to Facebook, but

the social network. But they

Facebook raises $100 Billion,

also feeding off of each other.

will make more money by spec-

then Mark Zuckerberg will

It is a self sustaining model that

ulation of IPO itself. Adding to

make around 25$ Billion, which

will operate and grow in realm

the above points, emergence

makes it equal to fifty dollars

of Google+ can be a serious

from each of facebook daily us-

whether the site has 80 or 800

competition to Facebook. So to

ers. The projected revenue at

million members. So Just be-

content with the growing rival-

the end of 2011 was around 4.2

cause some firms are not doing

ry and before the rivalry starts

$ Billion, out of which 89% has

well does not define that Face-

to erode its market position in

been accounted from Advertis-

book won’t have its way along

the social networking business,

ing and 11% from Facebook

with others in Wall Street. Se-

it is most logical for facebook

Credits. Though Facebook is in

cond,

to have the listings and raise

the forth position for Unique

shareholders along with the

the capital as of now. Another

daily US visitors (first three be-

customers of size more than

most speculated reason could

ing Google, Yahoo and Mi-

the population of any country

be the acquisitions of firms like

crosoft respectively), it comes

(except two). So the Facebook

Zynga and Twitter. Acquiring

in first position as far as Ads

shareholders will have to care

these firms will put Facebook in

revenue is concerned (around

about their customers because

better position to compete

17.7%).

there are so many of them. For

against Google and confirm its

From

the

present

social

Facebook

scenario,

will

have

investors’

example, recently when Face-

position as the acme of social

point of view, whether this IPO

book has changed its interface,

networking.

is good or bad, it’s too early to

the members got very angry, or

Facebook has already

make that call. But the fair

when private policies have

planned to raise 10Billion Dol-

analysis of pros and cons of Fa-

been changed, there was a

lars or more at the end of this

cebook IPO will definitely put

sharp reaction from members.

year, and this will help the Fa-

some light on the matter. Talk-

So if Facebook shifts its focus

cebook Inc. to push its public

ing about the pros of Facebook

from members to sharehold-

value near to 100Billion Dollars.

IPOs, it could be termed good

ers, members will react in a

This is much more than some

for two reasons. First, all inter-

way for which social network

of the well established firms

net companies that has gone

may have to pay hefty price.

like Disney ($61 Billion), Ama-

public in recent years except

There has been 1.86 billion Dol-

zon ($88.3 Billion) and McDon-

LinkedIn every other firm has

lars growth recorded from ad-

alds ($95.6 Billion). Facebook

not remained above their IPO

vertising, and there are other

will try increasing its revenue

prices. The millions of subscrib-

avenues of growth like Mobile

16 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Facebook: The Biggest IPO of Year 2012

……………………………………………………… market where Facebook has

this growth

rate

obviously

number of stakeholders al-

been just surfaced upon and

would not be for long as the

ready crossed 500, and the

whether the company launches

limited number of persons on

company is most likely to go

its Smartphone or not, there is

this planet. So in a year or two,

public this May. It has already

always an opportunity for the

the growth rate will also be

drawn too much hype with re-

company to improve the mo-

lessened for Facebook, which

gard to its huge valuation of

bile offering of Facebook itself.

means limited profits for the

around 100 billion dollars. The

Many experts have quite

people buying the IPO. And the

year 2012 will witness the

different opinion about Face-

growing competitions from the

mammoth IPO and this will

book IPO, forecasting that the

Google will also harm Face-

make Facebook the second

Wall Street will not ‘like’ the

book, and the shareholders.

most valuable tech company in

entry of social marketing giant

Facebook as a company

the world. As far as, the mem-

on the stocks. The biggest

has emerged and transformed

bers of Facebook are con-

downside of IPO is that it will

from a social networking hobby

cerned, this IPO will indirectly

expose both good and bad fi-

for kids into incredible media

give them more saying regard-

nancial details of the company.

powerhouse. It could be sever-

ing changes in Facebook. And

If you have large debt or unu-

al billion dollars richer if it goes

after judging the pros and cons

sually high salaries for the ex-

public. Mark Zuckerberg is still

for investors, the 100 billion

ecutives, the annual report will

reluctant to go public as he

dollar

expose the same to whole

managed to grow Facebook

whether should I invest in Face-

world. Facebook have grown

much longer and comfortably

book IPO or why should I not

nearly 800 million users, but

in private. But the growing

invest in Facebook.

Article By -

question

would

be,

Shibi Singh Shibi.singh@gmail.com

17 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Chlorophyll

……………………………………………………… Its wise to learn, its GOD like to create

The Unfinished Business Lost in her thoughts she began to search For memories from her distant past Things that she knew would forever and yet never last A lurking smile from the corner of her eyes Crossed her face as she remembered by Time and tide had once held her captive How she fluttered her wings in desperation When all she wanted was just to fly active She tried her best yet the winds were against her All her efforts went in vain, the pain seemed to last forever Hope was but, what she never left, The winds blew again and now in favour Time could not bow, the spirit of this young bird Winter didn’t wither her, summer didn’t feel too dry Coz she was waiting for the spring to come And it sure did…. Coz she took it in her stride When it was all against and high And now it was time for her to bask in its glory Her struggle she did surpassed And now was as free as her unchained melody……………

Poem By -

Juhi Gupta juhi.gupta1908@gmail.com

18 | DOMINATION, FEBRUARY 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 anu-

rag242@gmail.com before 28th February, 2012. The winner will have their names published in the next issue. Also, person getting the highest score in the current quarter (Jan-June 2012) will get a gift voucher. Answers in the next issue of DoMination.

Section A (1 Point for each correct answer)

1) Facebook founder Mark Zuckerberg intends to change his annual salary to what amount? 2) Former boss of RBS has been stripped off his Knightwood. What was his nickname at RBS? 3) What reason has consoles manufacturer Nintendo given for recording a heavy loss? 4) Missionary Church in Sweden- Kopimism. What is unique about them? 5) A senior executive of which business sold more than £200,000 of shares just before a profits warning? Section B (1 Point for each correct answer)

1) Which firm announced that its total bill for pay and bonuses in 2011 was £8 billion?

19 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Qutopia ……………………………………………………… 2) Identify this logo.

3) Connect “H&A store logo, Weet-bix, backyard Cricket, Travelex”. Section C (3 Point for each correct answer)

1) Connect the Images to a business tycoon.

Answers to Jan’12 Qutopia Section A: Section B: 1. “Oh wow, Oh Wow, Oh Wow”. 1. St James' Park Newcastle 2. Google Maps 2. Zynga, The gaming company 3. Avtar Attractions 3. Norbert Reithofer, BMW Chairman 4. Online Movies Rental Section C 1. Elon Musk (Cofounded Tesla Motors, X.com which later merged with Confinity to become Paypal and according to Jon Favreau, director of the Iron Man movies, he is the inspiration for Favreau's and Robert Downey Jr.'s interpretation of the genius Tony Stark.) Winner of Qutopia (Jan 2012) 1. Prateek Jain (Batch of 2008-10, DoMS IIT Roorkee)

20 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DoMS-da-Evince ……………………………………………………… Sameer Shah is 2007 batch pass out of Department of Management Studies, IIT Roorkee. He is currently working as Manager in the Project Advisory and Structured Finance department at SBICAPS, Mumbai.

1. What are the common chal-

banks?

lenges being faced in Finance

Ans: There is always a stigma

number of hours needed to be

related projects due to current

attached to the Public sector.

spent in office. To be better

market situation?

However, Public sectors now

equipped to face the corporate

Ans: The number of projects in

can be associated with good

world you can utilize the re-

the past one year have gone

job profiles and travels, as far

sources of the department,

down because of too many is-

as projects in finance sector are

read case studies available, in-

sues: the initial 2008 Boomer-

concerned, Public sector banks,

teract with people across the

ang, then the EuroZone Crisis,

led by SBI dominate the area.

department, institute and the

now some internal issues re-

The kind of work, and number

industry.

garding Policies. There is lack of

of projects that these banks

interest on promoters side be-

have is significantly better than

kee contributed to your suc-

cause of the capital markets, so

that of private sector. Moreo-

cess?

overall scenario in the past

ver, the private sector has its

Ans: In DoMS while being in-

year has not been promising

own issues which we could see

volved in activities like organiz-

and led to the fall of new pro-

in 2008 crisis as well, wherein

ing events and the independ-

jects coming in.

some of the private sector

ence given to us for the same

However, Looking at India and

banks stopped lending com-

we were able to build over

its potential to grow, from six

pletely.

selves. If you have an idea you

months to one year down the

3. What has been the most

can go ahead and implement it.

line we are expecting very good

challenging role in your career

There is no interference from

projects. There will be lot of

so far?

faculty. This is what manage-

opportunities across the fi-

Ans: One thing that we don’t

ment is all about when you are

nance sector.

face while we are in DoMS is

working in something like or-

2. How does Image of a Public

rigor and stress, which we ex-

ganizing the whole event, be-

Firm like SBI helps it to be dis-

perience when we go out in the

ginning from the idea/concept

tinguished from Private Sector

field for example in terms of

to getting the committee in

How has DoMS, IIT Roor-

21 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DoMS-da-Evince ……………………………………………………… place and finally bringing out a

certifications combined with

nition of MBA from IIT, and

successful event. Each and eve-

our regular course helps us

that can be done only through

ry aspect of management is im-

gain practical knowledge as

rigour. We need to organize

portant what you learn in this

they deal a lot in case studies.

more events than IIMs, like if

place.

6. Any message for the read-

they conduct 10 events, we

5. How has CFM (Certified Fi-

ers, especially the current

have to conduct 100s of them.

nancial Manager) helped you

batches of DoMS?

So, current batches needs to

in your career?

Ans: We are not IIMs, We are a

get out of their comfort zone

Ans: Certificates are Addons.

IIT, that implies we need to

and start working with the real

These course like CFM provides

take things more seriously.

spirit.

us with good knowledge. These

There is still a need for a recog-

22 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Success Story ……………………………………………………… Adding Superior Value to Customers’ Cart... Sachin Bansal CEO and Co-Founder, Flipkart

In a country like India, where our purchase decisions are triggered by our senses - seeing, touching, smelling, feeling, FLIPKARTtasting, were on the flip side of the cart. But Sachin Bansal  Ranks in the top 30 Websites in India (As per Alexa ratings)

with Binny Bansal co-founded Flipkart, an e-commerce company in 2007 by adding superior experience to each cart. Sachin Bansal, an IIT Delhi graduate in computer engineering with his classmate and colleague Binny Bansal, left Amazon.com to start a venture naming it flipkart. With the embryonic idea, they started with an initial invest-



11,500,000 book titles available



8,000,000 visits every month



4500 current team strength



30000+ items shipped per day



27 cities with own delivery network

ment of 5 lakh. They began working in a two bedroom apartment from Bangalore and personally purchased books from distributors for their own catalogue and made packages to give to the courier agencies. Now , Flipkart has a team of around 4500 members and the company operates from offices in Bangalore, Mumbai, Delhi, Chennai and Kolkata. They have their own delivery network in 27 cities. Flipkart has delivered to every pin code in Kerala and also almost every pin code of India. For the discoverability, the company relied on viral and social networking. They learned SEO and Google Adwords from scratch and very effectively used SEO and blogoshere. Later, the goodwill they earned by providing superior customer experience helped them to be pioneer in e-commerce. Now, the company records consistently high repeat purchase rate of 70%. The company started with books as they have 20% margin and the risk associated with the purchase of books is very less. They continued their business only with books for 2 years and even today 50% of their revenue is from books. Earlier they used Consignment model of e-commerce but now they are on warehouse model. Today, the company is quickly gaining dominance in product categories like music, video, games, computers, electronics, mobile phones, healthcare and personal product categories.

23 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Success Story ……………………………………………………… The challenges faced by Flipkart were that none of the Sachin’s Mantradistributors and suppliers were ready to share their in-  Be very focused on consumers. ventories and also the VCs could not understand the



Flipkart model in it’s nascent stage.

Build amazing experiences for customers.

Now, Flipkart secures largest investment till date in an



Continuously innovate with product.

Indian online space valued $ 150 million from Accel



Never Promise something that you

Partners and Tiger Global Management in its fourth

don’t have. Always keep optimum in-

round of funding. In previous three rounds it raised $31

ventory level

million collectively. In a cash based economy like India, path breaking features like cash/card on delivery , 30 days replacement, EMI options, free shipping, equated monthly instalment and 24X7 made Flipkart different from other players in this space. Today, they have 60-65 per cent in COD. In terms of revenue, company is looking at Rs 500 crore to Rs 600 crore in the current financial year. The company had clocked a revenue of Rs 50 crore in 2010-11 making a 10 fold expected growth in revenue in FY12. With 80% market share and clocking daily sales of Rs. 2.5 crore approx., Flipkart is confident of retaining the leadership position in e-commerce. Company’s future plans are to invest in supply chain and technology resulting in large warehouses and increased automation of process with plans to enter more product categories. Sachin is an avid gaming enthusiast and likes to spend most of his free time with his family.

24 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Regardez I’economie ………………………………………………………

China Property Bubble - A Correction Imminent About 300 early buyers of

taken to curb property prices

2008, the prices then fell back

home in Shanghai real estate

need to be imminent or China’s

considerably. But again the

gathered to protest on October

growth and urbanization could

prices started rising in 2009,

23, 2011 against company that

easily absorb the property

when government directly in-

has announced to drop prices

price rise. Debate starts that

tervened to boost the property

of properties. This was just the

whether there is really a bub-

business after recession to set

beginning of series of protest

ble in China similar to the one

China’s economy on growth

across Shanghai and China

existed in US or Dubai.

path. The government reversed

against the falling property

China’s Property Industry- Why

its attitude and policies and im-

price in response of Govern-

such a price rise? :-

plemented fiscal measures to

ment measures to deflate the

China’s private residen-

encourage demand for residen-

so called ‘CHINA PROPERTY

tial property market is just two

tial property where it announc-

BUBBLE’. The protest even

decades old ,as before that on-

es a $585 billion stimulus pack-

leads to violence making things

ly government allotted the

age in November 2008. Reduc-

worst at some places raising a

houses to people. In the wake

tion in property taxes and free-

debate on Government inter-

of recession and government

ing of stamp duty and land val-

vention and hence measures

tightening policies in early

uing taxes were the measures

25 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

China Property Bubble - A Correction Imminent

……………………………………………………… which stimulated a growth in

Those who delayed purchasing

ees of state owned enterprises

the property sector. Lending

due to tightening of govern-

are mandated to take part in

policies were also loosened to

ment policies and slowdown

the scheme which encourages

a large extent facilitating buy-

rushed to take advantage of

workers to save a portion of

ers to take more loans at much

price drops and relaxed hous-

their earning to purchase resi-

lower interest rates and build-

ing policies which leads to al-

dential plots in which he have

ers to easily acquire huge capi-

most 150% of increase in resi-

to commit 5% of his salary on

tals for development of proper-

dential sales in 2009 in compar-

monthly basis and also employ-

ty.

ison of 2008.

er have to contribute same

Figure: Average House price rise in China

Banks were very eager

amount. The employee is not

to lend at that time after Peo-

allowed to withdraw the pro-

ple’s Bank of China(PBOC) re-

gram and have to contribute to

laxed lending rules and be-

monthly saving regularly. In

cause of these circumstances

this way the national saving of

home loans grew up by 29.5%

China grew at very fast ace and

to US$565 billion. The growth

that saving is directed to the

was very rapid and surpassed

property industry leading to

government

increase in demand and subse-

expectation,

(source: CEIC Data company

where home mortgage loans

quently to prices.

Ltd)

grew by 88% in Q1 of 2009

The

Shanghai was the host

existing

housing

stated by National Develop-

supply was surely not sufficient

of 2010 world expo, which

ment and Reform Commission.

to meet the surging demand.

meant development and build-

Figure: Real estate loan

Then to stimulate the raid con-

ing of new infrastructure to ac-

struction of new residential

commodate almost 70-75 milli-

properties,

lon visitors. Shanghai regis-

along with loose lending policy

tered an average increase of

also reduced minimum capital

19% price from March 2009 to

requirement limit to 20% from

July 2009 quoted by CHINA

35%.

the

Because

government

these

DAILY (daily newspaper). Bei-

growth, China and others

measures, the access to fund-

jing, which is considered as Chi-

(source: CEIC Data company

ing was very easy and riding on

na’s administrative capital, rec-

Ltd and GFSR april 2010)

these policies the purchase of

orded an increase of 26.5% of

Housing Provident Funds

residential plots in Beijing in-

price in real estate according

(HPF) was also a major reason

creased by 52.4% from H2 2008

to Beijing Real Estate Transac-

for property surge. Govern-

to H1 2009.

tion

ment employees and employ-

Management

Center.

Retail market in China is

26 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

China Property Bubble - A Correction Imminent

……………………………………………………… heavily regulated and favors

mortgage rate and degree of

including rental income and

landlords

encouraging

urbanization. By findings of

returns from property transac-

more individuals to buy resi-

them on the basis of this ap-

tions accounts for only about 2

dential plots.. According to

proach, the property prices ap-

percent of China’s total per

Global

re-

pear to be out of line with long-

capita income in urban areas.

search, major Chinese cities

term fundamentals in some big

There is a strong storage link-

have average rental yield of

cities including Beijing, Shang-

age between real estate and

4.42%. Government allocated

hai, ,Fuzhou, Xiamen, Shenzhen

other industries in China. The

US$ 1.9 billion to fund the con-

and Ningbo .

real estate sector is most close-

thus

Property

Guide

struction of residential plots for low

income

groups

Another approach which

linked

with

the

metal

which

they follow is known as the as-

smelting and rolling sector , fol-

would further encourage the

set pricing approach used to

lowed by non-metal mineral

increase in property business.

estimate how much the price is

products and chemical sectors.

Is it really a BUBBLE?:-

deviating from benchmark lev-

the amount of loans to the sec-

els reflecting the fundamentals

tors that are closely linked with

in order to compare prices.

the property market is large,

Financial stability always depends on the extent of price misalignment and the

accounting for about

nature of their adjust-

24.0 percent of total

ment toward equilibri-

loans in 2009(from fig-

um. The larger the risk

ure below). The falling

of rampant falling of

prices

prices the more alarm-

affect these sectors

ing the situation is.

and could erode their

Based on the finding

ability to repay loans

of Wu, J., J. Gyourko and Y. Deng (2010). “Evaluating conditions in major major Chinese

Table: Mortgage market depth and growth ( sources: OECD, DTZ property research)

will

deeply

to banks leading to severe debt default across Chinese economy. Though Banking sectors

housing markets,” NBER Work-

The current steps of govern-

direct impact on property price

ing Paper 16189, National Bu-

ment and its probable impact

fall looks manageable as direct

reau of Economic Research,

on Chinese economy:-

loans for property sectors still

MA., (July), the panel regres-

Research findings buy econo-

accounts for less than 20% and

sion approach explains that the

mist and researcher in the case

is much less in comparison with

major factors which affect long

of China, private consumption

other countries. The share of

term house price estimated

is not going to be affected sig-

land sales revenue to local gov-

trajectory are real income per

nificantly by this price correc-

ernment revenue at provincial

capita, past land prices, real

tion as income from properties

levels varies significantly.

27 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

China Property Bubble - A Correction Imminent

……………………………………………………… So a decrease in property

for them. Now if a property

cities—such as Shanghai and

would directly hit local govern-

correction takes place abruptly,

Shenzhen, and the luxury seg-

ment collections of cities such

it will result in panic amongst

ment in Beijing and Nanjing—

as Chongqing who have 30% of

citizens and investors which is

do appear to be increasingly

land sales revenue of total rev-

evident from series of protest

disconnected from fundamen-

enue. This is the reason why

and violence. The government

tals. Its impact on private in-

some of the local governments

would need to take steps to

vestment and local government

are still not finding it convinc-

raise real interest rates, impose

revenue are sizable, particular-

ing to implement these price

a meaningful property tax and

ly in cities that have high real

curbing measures strongly.

ensure that leverage does not

estate investment.

The Real Hidden Problem be-

accelerate to handle the situa-

The Surge is needed to

hind Property Surge:

tion. With these measures

be controlled but the impact of

The regulatory measur-

there are risks , but if well cali-

an abrupt price correction in

es may not be enough to ad-

brated, such steps should re-

real estate could lead to a debt

dress property price surges

duce the risk of a disorderly fall

failure by many related indus-

which is in fact fundamentally a

in prices.

tries as Chinese economy de-

structural problem. The most

Conclusion:-

pends on real industries. The

basic cause of high demand for

On analyzing the whole

Chinese government’s policy

real estate in China is low per-

reason of this current Chinese

measures to cool down the

ceived

cost of homeowner-

property surge, we can under-

markets unveiled in April 2010

ship. Low real interest rates,

stand the current price surge is

appear to have some impact on

high saving, lack of alternative

due to conservative mortgage

price growth. The gaps be-

investment and property tax all

lending standards, trends of

tween market prices and fun-

work to promote excessive

increasing urbanisation, rising

damental based benchmarks

house price inflation.

incomes and real savings and

have become smaller in a few

very low rent to property ratio.

cities. So, need of the day is in-

China’s households are

that

crease in real interest rates, a

from past experience of robust

house prices were not signifi-

higher carrying cost of home-

growth, have no other invest-

cantly overvalued in China as a

ownership and broad financial

ment alternatives either locally

whole during the first half of

market development to alter-

or overseas for high saving. So

2010. However, the

native investment vehicles to

real estate is the natural choice

market segment in a few large

more likely to be optimistic

have

seen

mass-

Article By -

housing.

Pawan Ku. Upadhyay pawan.domsiitr@gmail.com

28 | DOMINATION, FEBRUARY 2012

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Department of Management Studies, IIT Roorkee Roorkee - 247667, INDIA Comment/Feedback Mail to : - domination.doms.iitr@gmail.com Contacts: Anurag Agrawal (+917579072360), Shibi Singh (+918958055603) Follow us :Blog Page- http://domsiitroorkee.blogspot.com/ Twitter Page- http://twitter.com/#!/doms_iitroorkee Facebook Page- https://www.facebook.com/pages/DoMS-IIT-Roorkee/156383884413349