DoCoMo - The Japanese Wireless Telecom

Leader: The Tsunami in TroubleIn May 2002, NTT DoCoMo (DoCoMo) Inc., Japan's largest mobile phone company, announced a net loss of 116.19 billion1 and a goodwill write-off of 624.6 billion for the fiscal ending March 2002. Though the company registered an increase in operating revenues from 4,669.37 billion in 2000-01 to 5167.14 billion, the revenue growth was stated to be well below its company expectations. Company sources attributed this to the general decline in Average Revenue Per User (ARPU) for voice services and slower growth in new cellular subscribers across the country (Refer Exhibit I for DoCoMo's financials and ARPU data). DoCoMo's announcement did not come as a major surprise to industry observers, as media reports had been forecasting losses for the company since early 2002 itself. What was noteworthy about this development, however, was the fact that the company was largely believed to be performing exceptionally well in the recent past. The fact that DoCoMo had roped in as many subscribers as the leading US-based media company AOL, but much faster, was often cited as a proof of Japan finally waking up to the challenges of the 'new' economy. Analysts claimed that DoCoMo was paying the price for its aggressive overseas expansion drive during 1999-2002, in the form of these losses. DoCoMo had to take a huge write-off in its books on account of a decline in the value of its foreign investments and the slump in the global telecommunications market in 2001. While some analysts felt that DoCoMo should revamp its global strategy, a few others said that the company should take measures to increase ARPU. In the words of Hironobu Sawake, an analyst at J P Morgan (leading global financial services firm), "The question is whether we can see a rise in profitability." DoCoMo announced that its commitment towards globalization was intact. The company also brushed off analysts' view that the focus should be on increasing the ARPU. Instead, it announced that it would focus more on 3G (Refer Exhibit II for a note on 3G) initiatives (developing and launching more innovative and new 3G technology products). While DoCoMo was still lauded for its well designed and executed strategic and marketing game plan that had helped it build a huge subscriber base over the years, these developments had raised many doubts about its future prospects and its ability to turn itself around.

Branded Gold Jewellery Market in India: The Gold RushIn the late 1990s, the Indian jewellery market witnessed a shift in consumer perceptions of jewellery. Instead of being regarded as only an investment option, jewellery was being prized for its aesthetic appeal. In other words, the focus seemed to have shifted from content to design. Trendy, affordable and lightweight jewellery soon gained familiarity. Branded jewellery also gained acceptance forcing traditional jewellers to go in for branding. Given the opportunities the branded jewellery market offered; the number of gold retailers in the country increased sharply. Branded players such as Tanishq, Oyzterbay, Gili and Carbon opened outlets in various parts of the country. Traditional jewellers also began to bring out lightweight jewellery, and some of them even launched their in-house brands. However, the share of branded jewellery in the total jewellery market was still small (about Rs. 10 billion of the Rs. 400 billion per annum jewellery market in 2002), though growing at a pace of 20 to 30 percent annually. The branded jewellery segment occupied only a small share of the total jewellery market because of the mindset of the average Indian buyer who still regarded jewellery as an investment. Moreover, consumers trusted only their family jewellers when buying jewellery. Consequently, the branded jewellery players tried to change the mindset of the people and woo customers with attractive designs at affordable prices.

Gold Jewellery Market in IndiaBefore the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely. Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players like DeBeers, Tiffany and Cartiers into the Indian market.

Rethinking Domino's Expansion PlanIn May 2001, Pavan Bhatia, CEO, Domino's Pizza India Ltd.1 (Domino's) stepped down from his post. Earlier, in March 2001, at a board meeting, Domino's top management concluded that 'Pavan Bhatia's performance during his 18-month tenure was not up to the mark.' The board felt that Pavan Bhatia had

initiated an expansion strategy that was 'reckless and not properly thought out.' However, many analysts did not agree with the board's conclusion. They felt that the board was not considering the possible long-term benefits of Pavan Bhatia's strategy. During March 2000-January 2001, Pavan Bhatia opened Domino's outlets in small towns and cities. Pizza consumption in these places was very low. Analysts felt that even those willing to opt for the product found the price unacceptable. The cost per meal was too high. In September 2001, due to low footfalls2and lower volumes, Hari Bhartia3 planned to shut down Domino's outlets not only in some small cities4 but also a delivery outlet in the wealthy Gujranwala Town in North Delhi. One of the two outlets in Ludihiana was also planned to be shut down. (Refer Exhibit I for post Pavan Bhatia strategy of Domino's)

Sky is the LimitIn November 1999, Pavan Bhatia took over as the CEO of Domino's. He seemed to be very ambitious and wanted to make Domino's the largest fast-food chain in India. Pavan Bhatia went about opening Domino's outlets across the country. The number of outlets multiplied four fold to 100 between March 2000 and January 2001. It was the fastest growth Domino's had in any of the 63 countries it operated in. From an average of four stores every year in its first four years of operation, Domino's expanded to more than 100 outlets in 10 months across 30 cities. Domino's entered into an agreement with a real estate consultant CB Richard Ellis to help with locations, conduct feasibility studies, and manage the construction. Pavan Bhatia said, "We are in the business of selling pizzas, not hunting for real estate. And one of the biggest impediments in retailing is real estate, so we decided to hand over the entire real estate operations to estate consultants CB Richard Ellis." Pavan Bhatia realized that fast track growth could be achieved only by focussing on the core business of selling pizza.

Doordarshan's Problems: Is DD Dead?After years of falling revenues, in 1999-2000 Doordarshan (DD)1 had a revenue growth at 50%. In 1999-2000, DD earned revenues of Rs 6.1mn compared to Rs 3.99 mn in 1998-99. DD showed signs of revival with the launch of DD World (a channel for NRIs) and had relative success with some of its regional channels (Refer Table I for different DD channels). However by the end of 2000-01, DD's honeymoon with success seemed to be over. In 2000-01, DD's revenues were projected to grow at 6-15% while private channels such as Zee TV, Star, Sony had projected 40-50% revenue growth2. Analyst's felt that DD's sagging revenues were only tip of the iceberg.

DD was plagued by multiple problems, which found their roots in the mismanagement of affairs. By the late 1990's the private producers, advertisers and audience had deserted DD. Not even one car company advertised on DD and even two-wheeler manufacturers kept a low profile3. Ads of Pepsi and Coca-Cola were found only during sports telecasts. Only FMCG companies stuck to DD because of its terrestrial network to reach the rural and semi-urban audience4. In spite of having over 21,000 employees5, DD outsourced 50% of its programmes from the private producers. In late 1990's DD faced number of allegations of large-scale scams and irregularities. Under utilized infrastructure, improper investments and poor financial management plagued the performance of DD. In 1992, when the Government opened airwaves to private players, DD faced the heat of competition from private satellite channels. In the Cable & Satellite (C&S) homes it was found that there were hardly any viewers for the DD programmes. The depleting Television Viewer Ratings (TVRs)6 of the DD programmes was also a cause of concern as advertisers deserted due to its low viewer ratings. Analysts felt that DD would need a budgetary support of Rs 5 bn during the fiscal 2000-01 to sustain itself as its revenues would not be enough to meet its expenditure. Analysts questioned the capacity of the Government to own DD and many felt that privatization would be the only solution.

Cartoon Network - The Indian Experience: Cartoon Crazy Kids (and Parents)In March 2001, leading satellite television (TV) channel, Cartoon Network, held a cricket tournament titled 'Toon Cricket 2001,' in Mumbai, India. In the tournament, famous cricket players were to play against famous cartoon characters such as Scooby Doo, Tom, Jerry, Fred Flintstone, Dee Dee, and Johnny Bravo. The tournament was a promotional exercise, aimed at increasing the popularity of the channel and its cartoon characters. The match was scheduled to begin at 2.30p.m, but the 35,000 plus capacity stadium was almost full by 1.30 p.m. with children and their parents. By 2.30 p.m. the stadium was overflowing and many were waiting outside trying to enter the stadium, leading to a stampede. As the organizers kept trying to manage the crowds, they had to delay the match till 4.00 p.m. When the organizers announced the start of the match, children and their parents went wild with excitement and broke the barricades to meet their favorite cartoon characters. When pleadings and requests failed to control the crowd, the organizers had to threaten the children with the cancellation of the match to send them back to their seats.

Even then, when the match began, a ring of people stayed on the field, surrounding the pitch, obstructing the view of the people who returned to the stands. The organizers and the security people were helpless, as they did not want to physically force the children off the field. By 5 p.m. many disappointed people left the stadium saying, "We can't see anything, what's the point?" Observers remarked that judging by the number of people who were there in the first place, the stadium was still probably full, even when half the crowd had left. The crowd eventually settled down and the second half of the match went well. The cartoon characters entertained and delighted the crowds with their antics. This overwhelming response to the tournament was beyond even Cartoon Network's expectations. A stunned looking Cartoon Network official said, "I've never seen so many kids!" Though it was not the first time Cartoon Network had organized such a promotional event, they had never seen a response like this, where cartoon crazy children and their parents had gone so 'completely berserk.' Even the organizers were amazed at the popularity of Cartoon Network's characters.

Reviving Khadi in India: Khadi Loses its SheenKhadi1, which symbolized self reliance and emancipation during the freedom struggle in India2 has lost its sheen over the years. And there are several reasons for the same. Post 1947, India opted for state led large scale industrialization. With many Indian industrialists setting up huge textile mills, the mass production of fine cloth led to the availability of cloth at lower prices. People began to buy machine made textiles and thus Khadi began losing out to the mill fabric. In January 1953, the All India Khadi and Village Industries Board was set up to provide employment to thousands of spinners all over India. In 1957, the Khadi and Village Industries Commission (KVIC) was established to take over the work of the board. KVIC was formed as a nodal agency to promote Khadi all over India through its exclusive outlets known as Khadi Bhandars3. The Government of India (GoI) has ever since continued its support to Khadi. However, there were a few problems. According to designers, the production of Khadi was inconsistent and the cloth was prone to shrinkage and fabric stretch. Besides, fabric colours in khadi were also limited. Red tapism and bureaucracy prevalent in the Indian system, further hampered the growth of the Khadi sector. Inspite of having a wide distribution network, there were problems, especially middleman. Corruption was rampant. There were many bogus Khadi units operating in the country, which made it extremely difficult to claim rebates from the Government of India (GoI). KVIC received huge financial assistance from the GoI in the form of subsidies and rebates. In May 2000, the Ministry of Small Scale Industries, announced a special package of

Rs.12.16 billion to the industry. In order to face the challenges of globalization and strengthen its position in the market, KVIC launched two separate brands, Sarvodaya and Khadi in August 2001. Sarvodaya comprised consumer goods like incense sticks, spices, honey, and pickles.

DS Group's Entry Into Food and Beverages Sector: IntroductionIn 1998, the DS Group1 set up a subsidiary, DS Foods, to enter the food and beverages market and transferred its flagship brand 'Catch'2 (See Exhibit I on DS Foods product list) to DS Foods. In October 1999, DS Foods launched bottled natural spring water under the 'Catch' brand. The group announced that it would invest Rs 1 billion3 in the next three years, in its foods venture. In 1999, DS Foods launched the Pass Pass (Closeness) mouth freshener. This was the first branded 'Indian' mouth freshener. By mid 2001, Pass Pass was a Rs 350 million brand. Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. Similar products like Aas Paas, and Saath Saath4 soon appeared in the market. DS Foods also planned to enter other 'untapped' markets like Club soda, flavored water, and iced tea. While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories, DS Foods thought otherwise.

BackgroundDharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco. By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965, they launched the first branded chewing tobacco in India. This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobaccobased products with brands like Baba, Tulsi and Rajnigandha.

Hindustan Motors' Struggle for Survival: Troubled Waters?In October 1998, Hindustan Motors (HM), makers of one of India's best known cars - the Ambassador launched a new car, the Mitsubishi Lancer (Lancer). The launch of Lancer, a new car from the HM stable after nearly two decades, was reported to be very important for the company, whose market share was on the decline. HM was reportedly banking heavily on the Lancer's success to fight competition from other car companies. Lancer was positioned in the mid-size luxury car segment, which was dominated by Maruti Udyog's (MUL) Maruti Esteem and Honda's Honda City. Lancer was received very well by automobile experts throughout the country, largely due to its technical finesse. The car's sales reached 2,866 units by the end of the fiscal 1998-99. Much to HM's delight, Lancer was even ranked as the top vehicle in India for the three consecutive years (1999, 2000 and 2001) by J. D. Powers1 for the least number of defects and high customer satisfaction in a countrywide survey of car owners. However, the company's euphoria was short-lived as Lancer's sales failed to pick up as expected. While 7,621 cars were sold in 1999, HM managed to sell only 7,635 cars in 200001 against a forecast of 8,0002. On the other hand, sales of Honda City increased to 10,011 in 2001 from 9631 in 1999 (Refer Exhibit I for the sales comparison). Meanwhile, HM's other offerings Ambassador and Contessa were also faring badly. In 1999, Ambassador's sales were down to 15,374 from 18,312 in 1998 and Contessa's to 285 from 575 in 1998. This poor performance took a heavy toll on the company's bottomline and HM reported a net loss of Rs 615.8 million for the fiscal 1999-00. (Refer Table I). The company had reportedly accumulated losses worth Rs 1.1 billion during 1999-2001.

DS Group's Entry Into Food and Beverages Sector: IntroductionIn 1998, the DS Group1 set up a subsidiary, DS Foods, to enter the food and beverages market and transferred its flagship brand 'Catch'2 (See Exhibit I on DS Foods product list) to DS Foods. In October 1999, DS Foods launched bottled natural spring water under the 'Catch' brand. The group announced that it would invest Rs 1 billion3 in the next three years, in its foods venture. In 1999, DS Foods launched the Pass Pass (Closeness) mouth freshener. This was the first branded 'Indian' mouth freshener. By mid 2001, Pass Pass was a Rs

350

million

brand.

Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. Similar products like Aas Paas, and Saath Saath4 soon appeared in the market. DS Foods also planned to enter other 'untapped' markets like Club soda, flavored water, and iced tea. While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories, DS Foods thought otherwise.

BackgroundDharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco. By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965, they launched the first branded chewing tobacco in India. This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobaccobased products with brands like Baba, Tulsi and Rajnigandha.

The Story of the Cellular Phone Brand OrangeBy the end of 2000, the sun seemed to be setting on the Hutchison empire in India, or at least on its Orange1 brand. Hong Kong-based cellphone operator Hutchison Max Telecom,2 which owned the popular Orange brand in Mumbai (India) might soon have to give it up in favor of the city's second operator, BPLFrance Telecom. France Telecom, which acquired worldwide rights for the Orange brand in May 2000 from Vodafone3, was planning to enforce its ownership of the brand in India in a bid to cash in on the popularity of the brand.4 France Telecom was keen on using the brand via its joint venture with BPL5 in Mumbai. Said a France Telecom official, "We are likely to retain the brand for this part of the world. A final decision is likely to be taken early next year". Analysts felt that the Orange takeover could come as a severe blow to Hutchison in Mumbai, as the company could lose its leading position in this market. Hutchison would have to re-invest huge amounts in building up a new brand and giving it the same level of credibility that Orange enjoyed. Analysts also felt that Hutchison, which had controlling stakes in cellular operators in other circles like Delhi, Calcutta and Gujarat, would have to develop a new brand for these

circles.6 The company might be hit particularly hard in Delhi, the second largest cellular market in the country. The Hutchison Group had initially planned to launch the Orange brand in Delhi, in May 2000, through its 49 per cent holding in Sterling Cellular. This was later delayed to October 2000. It became clear that the Orange launch in Delhi had run into rough weather. Sudarshan Banerjee, CEO, Sterling Cellular, agreed that there was a delay in the Orange launch in the Capital, but attributed it to an expansion in its network. He Said, "We might launch Orange some time next year in Delhi." The Orange brand was also to be launched in Kolkata, where The Hutchison Group held 49 per cent in Usha Martin. But France Telecom, the foreign equity partner of Hutchison's Mumbai rival, BPL, seemed to be raising objections over the use of the Orange brand name outside the Mumbai circle.

GE and Jack Welch: IntroductionOn September 6, 2001, John Francis Welch Jr. (Jack Welch), Chairman and Chief Executive Officer of General Electric Co. (GE)1, retired after spending 41 years with GE. During the period, he made GE the most valuable company in the world. Analysts felt that, with his innovative, breakthrough leadership style as CEO, Jack Welch transformed GE into a highly productive and efficient company. During Jack Welch's two decades as CEO, GE had grown from a US$13 billion manufacturer of light bulbs and appliances in 1981, into a US$480 billion industrial conglomerate by 2000. Analysts felt that Jack Welch had become a 'deal-making' machine, supervising 993 acquisitions worth US$13 billion and selling 408 businesses for a total of about US$10.6 billion. Jack Welch was infact described as 'the most important and influential business leaders of the 20th Century' by some Wall Street analysts and academics alike. Management experts felt that Jack Welch's reputation as a leader could be attributed to four key qualities: he was an intuitive strategist; he was willing to change the rules if necessary; he was highly competitive; and he was a great communicator.

The Making of a CEOJack Welch graduated in chemistry from the University of Massachusetts and in 1959 got a Ph.D in chemical engineering from the University of Illinois. In 1960, he started his career at GE as a Junior Engineer. However, in 1961, Jack Welch decided to quit the US$10,500 job as he was unhappy with the company's bureaucracy. He was offended that he was given a raise of only US$1000, the same amount given to all his colleagues. He had even accepted a job offer from International Minerals and Chemicals in Skokie, Ill. However, Reuben Gutoff, an executive at GE convinced Jack Welch to stay back. Reuben Gutoff promised that he would prevent him from getting entangled in GE red tape and

would create a small-company environment with big-company resources for him. This theme of 'small-company environment' with 'big-company resources' came to dominate Jack Welch's own thinking as the leader of GE. Jack Welch quickly rose to become the head of the plastics division in 1968. He became a group executive for the US$1.5 billion components and materials group in 1973. This included plastics and GE Medical Systems. In 1981, Jack Welch became GE's youngest CEO ever (Refer Exhibits I & II). His predecessor, Reg Jones said, "We need entrepreneurs who are willing to take wellconsidered business risks - and at the same time know how to work in harmony with a larger business entity...The intellectual requirements are light-years beyond the requirements of less complex organizations."

Michael Dell - The Man Behind DELL: Background Note DellThe story of the world's No 1 retailer of PCs over the Internet, Dell Computer Corporation (DELL) goes back to 1984, when Michael S. Dell (Michael) established the company with a start-up capital of $1,000, in a 1000 square foot office space, in a small business center in North Austin, Texas. Michael, then a freshman pre-medicine student at the University of Texas, began his business by selling computer chips and disk drives for IBM PCs at meetings of computer users in Austin. In its first year of operations itself, DELL achieved sales of approximately $ 6 million, which grew to $ 257 million in the next four years. By 1987, DELL opened a sales subsidiary in the United Kingdom to tap the growing European market. European countries had a lower PC saturation rate than the US and there were no large PC manufacturers in Europe. In the same year, DELL went public. During 1988-1991, DELL expanded its operations worldwide and set up whollyowned sales subsidiaries in Canada, France, Italy, Sweden, Germany, Finland, and the Netherlands (Refer Table I). Table I Worldwide Presence of Dell MANUFACTURING CONTINENT HEADQUARTER FACILITIES Austin, Texas; America Austin, Texas Nashville, Tennessee, Eldora do Sul, Brazil AAsia Pacific Singapore, / Japan Japan

Malaysia, China

OPERATING SUBSIDIES Canada, Chile, Mexico, Colombia, Brazil, Argentina Australia, China, Japan, India, Malaysia, New Zealand, Thailand, South Korea

Europe, Middle East & England Africa

Ireland

Austria, Belgium, Czech Republic, Denmark, England, France, Germany, Italy, Ireland, Netherlands, Norway, S. Africa, Spain, Sweden, Switzerland

Henry Ford - A Great Innovator"I will build a motor car for the multitude. It shall be large enough for the family, but small enough for the unskilled individual to operate easily and care for, and it shall be light in weight and it may be economical in maintenance. It will be built of honest materials, by the best workmen that money can hire, after the simplest designs that modern engineering can devise. But it shall be so low in price that the man of moderate means may own one and enjoy with his family the blessings of happy hours spent in God's great open spaces." - Vision of Henry Ford (1903). "Ford's action transformed American industrial society."2

- Peter Drucker, economist and management guru. "There was no way to escape the fact that Henry Ford was the great business impresario of his era or any era for that matter."3 - Douglas Brinkley, author, Wheels for the World. Introduction In November 1999, Fortune magazine named Henry Ford (Ford), founder of the Ford Motor Company (Ford Co.)4 as the 'Businessman of the 20th Century.' Ford was accorded this honor for transforming the lives of billions of people and revolutionizing the automobile world by creating a car which was affordable to the common working middle class. Ford was chosen ahead of three other finalists Alfred Sloan Jr. (General Motors), Thomas Watson (IBM), and Bill Gates (Microsoft) as the 20th century business leader. Sheryl James (James), Detroit Free Press, reporter, feature writer, and winner of the 1991 Pulitzer Prize for feature writing (journalism), said, "Ford Motor Co.'s founder was a charismatic risk-taker who relentlessly pursued his vision."5Henry Ford - A Great Innovator - Next Page >>>

1] As quoted in the article, "Henry Had the Dream," by Sheryl James, Detroit Free Press, March 27, 2003.

2] As quoted in the article, "Ford At 100: 5 Ideas Shaped Industrial America," by Mark Phelan, Detroit Free Press, May 29, 2003. 3] As quoted in the article, "Ford at 100: A Century of Audacious Tinkering," by Douglas Brinkley, Detroit Free Press, June 12, 2003. 4] Ford Co. is the second largest automobile company in the world and ranked fourth in 2003 Fortune 500 list with revenues of $163.63 billion for fiscal 2003. It has approximately 13,000 dealers globally and operates in 137 countries. 5] As quoted in the article, "Henry Had the Dream," by Sheryl James, Detroit Free Press, March 27, 2003.

Shahnaz Husain - A Successful Indian Woman Entrepreneur"I do not sell products. I sell an entire civilization in a jar." - Shahnaz Husain "She lives, sleeps, breathes her business. She is consumed with building a successful company which she has done." - Janine Sharell, Correspondent, CNN Introduction She captured the markets around the world and now she wants to conquer space. In an innovative move, Shahnaz Husain has started work on formulations that astronauts could carry with them in their extraterrestrial sojourns to protect their skin from the ravages of space travel and slow down the ageing process. She has sent National Aeronautics and Space Administration (NASA) free samples of her moisturizers, hoping that they will be used on space expeditions. Shahnaz Husain is one of India's most successful women entrepreneurs. Her company, Shahnaz Husain Herbals is one of the largest manufacturers of herbal products in the world. It formulates and markets over 400 products for various beauty and health needs and has a strong presence across the globe, from the USA to Asia. In 2002, the Shahnaz Husain Group, based in New Delhi, was worth $100 million. It employed about 4200 people in 650 salons spread across 104 countries. The Group has seen a good growth rate in the 25 years that it has been in business. The average growth rate in the initial years (late 1970s to the early 1980s) was 15-20%. In the 1990s the average growth rate was 19.4%. A number of awards, both national and international have been conferred on Shahnaz Husain. Some of them are "The Arch of Europe Gold Star for Quality", "One of the Leading Women Entrepreneurs of the World", "The 2000 Millennium Medal of Honor", "Rajiv Gandhi Sadbhavana Award", etc. (Refer Exhibit I & II)

The Making of an Entrepreneur Shahnaz Husain belongs to a royal Muslim family which migrated from Samarkhand to India and later held high positions in the princely kingdoms of Bhopal and Hyderabad before India's independence. Shahnaz received her schooling in an Irish convent and because of the influence of her father, Chief Justice N.U. Beg, she developed a love for poetry and English Literature.

Mc Donald s Food Chain

IntroductionIt was early evening and one of the 25 McDonald's outlets in India was bustling with activity with hungry souls trooping in all the time. No matter what one ordered - a hot Maharaja Mac or an apple pie - the very best was served every time. But did anyone ever wonder as to how this US giant managed the show so perfectly? The answer seemed to lie in a brilliantly articulated food chain, which extended from these outlets right up to farms all across India. US-based fast food giant, McDonald's success in India had been built on four pillars: limited menu, fresh food, fast service and affordable price. Intense competition and demands for a wider menu, drivethrough and sit-down meals - encouraged the fast food giant to customize product variety without hampering the efficacy of its supply chain. Around the world (including India), approximately 85% of McDonald's restaurants were owned and operated by independent franchisees. Yet, McDonald's was able to run the show seamlessly by outsourcing nine different ingredients used in making a burger from over 35 suppliers spread all over India through a massive value chain. Between 1992 and 1996, when McDonald's opened its first outlet in India, it worked frenetically to put the perfect supply chain in place. It trained the local farmers to produce lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain in place. And explained to the suppliers precisely why only one particular size of peas was acceptable (if they were too large, they would pop out of the patty and get burnt). These efforts paid off in the form of joint ventures between McDonald's India (a 100% whollyowned subsidiary of McDonald's USA) and Hardcastle Restaurants Pvt. Ltd, (Mumbai) and Connaught Plaza Restaurant (New Delhi). Few companies appreciate the value of supply chain management and logistics as much as McDonald's does. From its experience in other countries (Refer Exhibit II & III), McDonald's was aware that supply chain management was undoubtedly the most important factor for running its restaurants successfully. Amit Jatia, Managing Director, Hardcastle Restaurants Private Limited said, "A McDonald's restaurant is just the window of a much larger system comprising an extensive food-chain, running right up to the farms". McDonald's worked on the supply chain management well ahead of its formal entry to India. "We spent seven years to develop the supply

chain. The first McDonald's team came to India way back in 1989," said S. D. Saravanan (Saravanan), Product Manager, National Supply Chain, McDonald's India.

Titan - The Outsourcing Journey

IntroductionIn late 1999, the top management of Titan Industries Ltd. (Titan), India's leading watch, clock and jewelry manufacturer, was surprised when several senior executives threatened to resign. The threats reportedly came after a long period of employee unrest in the organization. The reason behind the unrest was the company's decision to increase the level of outsourcing in its manufacturing activities while limiting production facilities for just assembling purposes. Titan's Vice-Chairman and Managing Director Xerxes Desai (Desai) quickly issued a statement stating that the above was not true. However, this was in sharp contrast to his earlier statements in the media. In an interview to a business magazine1, Desai had remarked, "We will manufacture only if we can do it faster and cheaper than anyone else in the world." Even as the company worked towards explaining its strategies clearly to the employees, analysts could not help remark that Titan was already sourcing a large part of cases and movements, key watch components, from within and outside India. Moreover, the company had always been sourcing a variety of raw materials such as stainless steels, tool steels, engineering plastics, tools, consumables, components and specialty movements2 for its watch manufacturing operations through vendors spread across 20 countries, mainly in Asia and Europe. The company's management seemed to have realized that global sourcing of certain components made better business sense. Media reports even quoted watch industry officials claiming that companies like Titan had 'no option but to move away from manufacturing and towards trading in the long run.'

XEROX - The Benchmarking Story

Background NoteThe history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time inventor, made the first xerographic image in the US. Carlson struggled for over five years to sell the invention, as many companies did not believe there was a market for it. Finally, in 1944, the Battelle Memorial Institute in Columbus, Ohio, contracted with Carlson to refine his new process, which Carlson called 'electrophotography.' Three years later, The Haloid Company, maker of photographic paper, approached Battelle and obtained a license to develop and market a copying machine based on Carlson's technology. Haloid later obtained all rights to Carlson's invention and registered the 'Xerox' trademark in 1948. Buoyed by the success of Xerox copiers, Haloid changed its name to Haloid Xerox Inc in 1958, and to The Xerox Corporation in 1961. Xerox was listed on the New York Stock Exchange in 1961 and on the Chicago Stock Exchange in 1990. It is also traded on the Boston, Cincinnati, Pacific Coast, Philadelphia, London and Switzerland exchanges. The strong demand for Xerox's products led the company from strength to strength and revenues soared from $37 million in 1960 to $268 million in 1965. Throughout the 1960s, Xerox grew by acquiring many companies, including University Microfilms, Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company. In 1962, Fuji Xerox Co. Ltd. was launched as a joint venture of Xerox and Fuji Photo Film. Xerox acquired a majority stake (51.2%) in Rank Xerox in 1969. During the late 1960s and the early 1970s, Xerox diversified into the information technology business by acquiring Scientific Data Systems (makers of time-sharing and scientific computers), Daconics (which made shared logic and word processing systems using minicomputers), and Vesetec (producers of electrostatic printers and plotters).

Revamping the Supply Chain: The Ashok Leyland Way: IntroductionV Ramachandran, (Ramachandran) deputy general manager, Corporate Buying Cell, Ashok Leyland (AL), the Chennai based manufacturer of medium and heavy commercial vehicles was surfing the Internet at midday in his office. A closer look at the screen showed that he had logged on to an auction site. But this auction site was different. Ramachandran was looking for suppliers of some specific tyres in the global market. At a price of $350, five suppliers were interested. He then lowered the price by $5. Now three of them were willing. Ramachandran kept lowering the price, each time by $5. At $325, there was only one response- the seller asked for an hour's time to confirm. Within one hour, the Czechoslovakian company confirmed it could supply the tyres. Both parties then signed up by e-mail and the deal was struck at $325, saving Ashok Leyland Rs 14,700 per set. Known as reverse auction, this was one of the many ways AL was reducing materials cost, which accounted for nearly 70 per cent of its product cost. In 1997-98, AL, recorded a profit-after-tax (PAT) of Rs. 18.4 crore1 on sales of Rs. 2,014.3 crore. A look at the previous financial year's PAT showed that the profits for 1997-98 had gone for a severe beating. In 1996-97 AL had a PAT of Rs. 124.9 crore on sales of Rs. 2, 482.5 crore. With the manufacturing Industry reeling under recession, the freight generating sectors (manufacturing, mining and quarrying) saw a steep decline resulting in a severe downturn of freight volumes. For AL, whose business was directly dependent on moving material, goods and people across distances, this had come as a severe blow. AL's supply chain2 had gone haywire under the recession which had eaten away 17.62 per cent of its revenues in one year forcing the company to helplessly allow inventories to build up. The results were showing on working capital. It had climbed from 33.34% of sales in 199394 to 58.81% in 1997-98.

'Together We Can' - Beat the RecessionAL did not seem to succumb to the 'uncertainty gloom' that was playing havoc to its business environment. It decided to meet the challenge by re-gearing its systems, be it material order, procurement, material handling, inventory control or production. AL conducted brainstorming sessions inviting ideas on cost cutting. Quality Circle3 teams were formed for this purpose. Said Thomas T. Abraham, deputy general manager, Corporate Communications, "Our Quality Circle teams were very helpful at this juncture and the worker involvement made it easier to address cost cutting." AL took every employee's ideas into account and figured out a way to keep things going and reduce production without inflicting pain. The recession saw AL waging a war on wastage and inefficiency. AL took many initiatives ranging from tiering its vendor network to reducing the number of vendors, and consequently, moving to a just-in-time (J-I-T)4 ordering system, to joint-improvement programmes (JIP), which were essentially exercises in value-engineering undertaken in association with key vendors. It set up different tier-levels to improve the quality of the

suppliers. Tiering formed the basis of the vendor-consolidation drive. Till 1998, Ashok Leyland used to source the 62 components that went into its front-end structure of its trucks and buses, from 16 suppliers. In 2000, one tier-I vendor sourced the products from the other vendors and supplied the assembly to the company. This saved cost and time provided the vendor network was well coordinated with AL's own manufacturing operations.

Crompton Greaves' Operations Overhaul The Bluechip's DownfallCrompton Greaves Ltd. (CGL), the flagship company of the L. M. Thapar group was one of India's leading private sector electrical engineering companies. CGL manufactured a wide range of transformers, switchgears, control equipment, motors and related products and railway signaling equipment besides consumer products. CGL was incorporated in 1937 as a 100% subsidiary of the UK based Crompton Parkinson Ltd., (CPL), under the name of Parkinson Works Ltd. (PWL). In 1948, the L. M. Thapar group company, Greaves Cotton & Co Ltd. (GCCL), acquired a 26% stake, which was later increased to 50% in 1956. In 1966, a joint venture company (between GCCL & CPL), Greaves Cotton & Crompton Parkinson Ltd. was amalgamated with PWL. The company was renamed as Crompton Greaves Ltd. Over the years, CGL evolved from being a single location company manufacturing ceiling fans and AC industrial motors, into a multi location, multi product company. In the late 1970s, CGL entered into various technical collaboration agreements with renowned companies from USA, UK, Europe and Japan. These activities (many undertaken as joint ventures), were in related products, supplementing the company's main business. While many of these companies were amalgamated with CGL, some of them were divested as well during the following years. In 1987, CGL began its diversification moves and entered the telecommunications and industrial electronics arena. The company also undertook turnkey engineering projects and began providing information technology services.