Wednesday, December 12, 2012

Giving the celebs a break...

Why bloopers count even in the world of media & entertainment

Usually, it’s the celebs who walk aaway with honours when it comes to goof-ups and slip-ups in the world of media and entertainment; but once in a blue-moon, the blue-eyed boys do steal the show with billion-dollar bloopers! A few such rare moments follow...

Virgin Records, a British record label founded in 1972, was sold by Branson to Thorn EMI in June 1992 for a reported $1 billion, with a special non-competition clause that prevented Branson from founding another recording company over the following five years post-deal. Branson had a choice: to either sell-off his airline baby, Virgin Atlantic or his records business. In the process, he sold-off a profitable business (Virgin Records), to save a business which was in trouble, and was incurring losses. Even Time magazine documents that the sale of Virgin Records to Thorn EMI was the biggest mistake that Branson ever made. Today, Virgin Records is part of EMI, and is the 3rd largest music company in the world, and Virgin Atlantic is reportedly making losses.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 10, 2012

Perfect audience

Reaching out to the perfect audience in newer ways…

The chasm of connectivity between a filmmaker and his audience, unless the audience happens to be really mass, (when a festival movie first makes waves, theatres are unlikely to release it en masse depriving many of a viewing) may kill the critical ‘active window’ where the interest is high. And that’s where these new approaches help. The YouTube screening room could be the ‘Festival on Demand’ or the digital TV service provider could give these movies on demand. The filmmakers then can focus on a concerted campaign on these media.

Says Karnik, “I would certainly launch my movies through other mediums also because it depends on several things such as the budget of the movie and how much one can afford. It also depends on the target audience. By using all these different mediums, I am making sure that everyone can watch it.”

Call it the ‘Long Tail’ (in ‘The Long Tail’ Chris Anderson writes, ‘In the tyranny of physical space, an audience too thinly spread is the same as no audience at all.’) theory of movies, but as independent movies and their makers proliferate in a world full of choices, they’ll need to override the limitations of the physical space (like an audience under one roof in a theatre) and ‘distributed viewing’ could be the future. Quick, check your inbox or your mobile; your next favourite movie might be lying in there!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Saturday, December 8, 2012

Stuck in the Indian web!

After Cho’s failure to get the Orissa project up and running, Posco must look for an Indian CMD

A to-let signboard is hanging out side his rented house near Forest Park, his memorable words are still alive in the minds of his employees, but good ol’ Cho is not here to resound his words again. Soung-Sik Cho, the former Chairman-cum-Managing Director (CMD), POSCO India Private Limited (based in Orissa), a subsidiary of POSCO, has quit the coveted job out of the blue.

Indian business dynamics have often proven the nemesis for many globe trotting multi-national conglomerates. Failure to solve the riddle of the Indian work culture, government policies, people’s mind-set, et al has compelled many to give up on their ‘India’ dreams. Thus the obvious question that arises in corporate circles considering Posco’s travails in India so far, is whether Cho is the latest victim to succumb to the enigmatic Indian business environment?

Cho had been in the state since his company inked a MoU with the Orissa government for setting up of a 12 mtpa steel plant near Paradip with a whopping investment of Rs.510 billion (considered as the biggest FDI in India). “I hope we can swim with the positive tide and move closer to the shore with every stroke. If we diligently pursue our targets I am sure we can get our project well on its feet before this year end,” Cho had optimistically said to his employees on the occasion of the fourth foundation year of POSCO India on 23rd August 2008.

Optimism has been a scarce commodity, though, for Posco. The world’s third largest steel producer has been facing problems of all kinds from the very onset of its Indian journey. Currently reeling under delays in starting construction of the $12 billion plant, Asia’s biggest steelmaker by market value has been plagued with various issues, from irked environmentalists to tussles with the Oriya government over various land usage disputes.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Friday, December 7, 2012

Move ‘back’ men!

Reliance needs to engage with a global partner for its back end

The travails of Mukesh Ambani, Chairman, Reliance Industries Limited (RIL), have been the stuff of corporate legends. But he is in more than a spot of bother at the moment. A glance at the financial results of Reliance Industries for the quarter ending December 2008 reveals that its net profits stood at Rs.350.1 million as opposed to Rs.807.9 million recorded last year – a drastic fall of 56.67%. While RIL’s petroleum business got pummelled last year (as many as 1,432 petrol pumps were shut); the retail business too is not giving a moment’s relief. After deferring the launch of its wholesale market earlier, Reliance Retail finally scrapped its cash & carry (C&C) model and showed the door to the entire team of 36 professionals headed by Harsh Bahadur (erstwhile CEO of Metro AG’s C&C business in India). This was followed by news that Reliance Retail is planning to shut down 40 of its non-performing stores and rationalising its retail space of around 4.2 million sq. ft. In 2008, Reliance Retail axed almost 600 support jobs to manage costs. It was also speculated that the back-end operations as well as management of its hypermarkets, supermarkets and convenience stores would be merged to cut costs. Will Mukesh’s Rs.250 billion retail venture be able to sustain?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Thursday, December 6, 2012

PFIZER AND WYETH: ACQUISITION

Pfizer’s bid for Wyeth makes sense; but it suffers from the fundamental problem with M&As – high risk!

In brief, the diversification that the deal grants Pfizer will make its $70 billion annual revenue expectations by 2012 appear more realistic. It is also to be noted, that Wyeth’s share price & MCap at present is at levels that can be easily compared to the lowest in the past half-a-decade. This would therefore directly imply that purchase at this moment would make it cheaper for Pfizer.

Then come the challenges. One issue ahead is that Wyeth will lose its patent on two drugs, Effexor (anti-depressionary) and Protonix (for treating heartburn) in 2010 and 2011 respectively. Even Lugg states, “This acquisition however, doesn’t reduce the ‘overall’ exposure to patent expirations and the 2010-12 period will continue to be a challenge for Pfizer... It needs a couple of good new patents.” The vehicle that the company is using to finance the deal may also prove expensive as the above mentioned $22.5 billion debt, will be in the form of short-term borrowing that Pfizer will surely have to refinance. In the current downturn, this actually doesn’t sound easy as Brian Tempest, Chairman, Hale & Tempest Co. argues, “This funding is too surprising keeping the present financial environment in mind.”

Surely, Pfizer has done some great work with previous big-ticket acquisitions like Warner Lambert and Pharmacia, and this might just prove the third medallion! Call it ‘Pfyeth’ or what you please, but this was a necessary evil (as all acquisitions are!).


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Tuesday, December 4, 2012

Destroy age-old perceptions!

CEOs have ripped apart shareholders’ wealth globally under the guise of M&As; Indian firms more so! B&E’s Manish K. Pandey, Deepak R. Patra and Karan Mehrishi undertake the most radical analysis of the recent past and destroy age-old perceptions!

Charles Prince is an equal, if not better peer for these heroes. He, as the Chief Administrative Officer, engineered the utterly disastrous $140 billion merger of Citibank with Travelers Group ten years back. Then he ensured the company jumped into the mortgage black hole. Till date, Citigroup has been forced to write off almost $41 billion because of Prince’s royal exigencies! He was “eased out” in November 2007! Apart from his wholly owned $94 million vested stock holdings in Citi, he got $28 million further stock options, (not forgetting the $53 million during his last four years as Group CEO), plus a pension of $1.74 million; and this apart from a $10.4 million “bonus” that shareholders were made to pay him. [Citi has now recruited Vikram Pandit as the CEO, paying him a cannon ball destroying never before seen signing bonus of $241 million! Since he has arrived, Citi stock prices have tumbled by 25%!].

December 31, 2007, saw Richard Parsons resigning as the greatest CEO of Time-Warner. Greatest, because he joined the board in 1991 [became President in 1995] and oversaw the supernova of a merger between Time and AOL. The companies had a combined value of $247 billion during the deal. Today, the combined entity is worth a mind numbingly low $58 billion. Parsons earned on an average $10.64 million per year. By the way, he’s now the Chairman of the group!

With $37 billion involved, Dieter Zetsche, then on the Daimler Benz board, squeezed through the merger with Chrysler. In 2007, CEO Zetsche made Daimler Chrysler part ways with a deal worth only 21.5% ($7.4 billion) of the total acquisition value! Millionaire Patricia Russo, CEO Alcatel-Lucent, has a history of destroying shareholder wealth. At the time of the merger of Alcatel and Lucent, the entity had a share price of $15.4 (March 31, 2006). July 24, 2008, the price is $6.09 (62% fall). CEO Meg Whitman, who ensured eBay bought off Skype, also ensured eBay’s price fell from close to $40 (September 9, 2005), to $25 (July 24, 2008). Shareholders be damned; she donated $30 million of her personal wealth to Princeton in 2007 to start the Whitman College!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 3, 2012

Five reasons why rick wagoner should (not?) be fired

GM should file for bankruptcy -(JACK WELCH) RUBBISH! we’re still the us sales leader (RICK WAGONER)

Legacy (Oxford): Anything passed down from the past, as from an ancestor or a predecessor Let’s talk about the founding ancestors of the modern General Motors, or rather the two predecessors – Alfred Sloan and William Durant. They were not only the longest serving Chairpersons of GM, but were also the most successful ever! And what ‘legacy’ did they pass down? Well, their pioneering strategies saw GM take on the might of even Ford Motors, the champion who gave the world the popular Model-T. Yes, GM had become the largest car manufacturer in the world, mighty and strong... big and famous! But ‘big’ necessarily needn’t prove ‘beautiful’! At the turn of the 20th century, GM’s ‘market segregation’ strategy turned its fortunes for the better. As the then Chairman Sloan put it famously – “A car for every purse!” GM put it in practice by attending to segments, which differed from each other in preferences and propensities to consume (income). It was a time when the company had some of the best-known American automotive brands in its kitty, some like Chevrolet, Buick, Oldsmobile & Cadillac; yes, different cars for different groups. Differential pricing strategies were adopted, and GM started adhering to strictly defined consumer choices. And this ‘legacy’ was proudly passed on, and more successfully used, but only until recently! Here, you might just ask: “But what’s wrong with segmentation and pricing differentials?” The answer’s simple silly – selling the wrong product at the wrong price to the wrong segment at the wrong time; Rick mastered it all with the present day SUV!

Legacy: Pertaining to something old/outdated, does not work well with present up-to-date systems “We have proliferated our brands and dealer network to the point where we lost adequate focus on our core US market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in ‘today’s’ globally competitive industry!” 

Read more......

Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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Saturday, December 1, 2012

Opening a Pandora's Box

Alva's statement and resignation may start series of apprehensions

Bowing down to pressures, Congress General Secretary, Margaret Alva finally resigned from her post on November 11, 2008 – five days after she made derogatory remarks about the distribution of party seats during Karnataka Assembly elections. She claimed that the distribution was done on the basis of price one could attach with the seats. She said that the party was selling seats. "People who make guidelines are the ones who are breaking it," she said. The party was quick to react and her name was referred to the Disciplinary Action Committee.

The whole issue started when Alva showed her unhappiness over denial of an election ticket to her son, Nivedith during the recent Karnataka elections. She made the allegations after it became evident that as many as 23 candidates were relatives of senior Congress leaders. The party high command is tight-lipped over the issue, but this kind of events show that there is a gap rising in the party.


Source : IIPM Editorial, 2012.

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