IIT Roorkee Domination February 2012
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Transcript of IIT Roorkee Domination February 2012
DOMINATION
Kingdom of Lights Sailing in Difficult Water
“Creativity at its best” (08) (11)
FE
BR
UA
RY
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NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
VOLUME-III ISSUE-02
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Editorial ………………………………………………………
- Regards
Team Domination
Dear Readers,
It's February 2012, the
shortest and the most distinctive
month of the year ; the month
of zest and intrigue !!! Bursting
forth from the romance of St.
Valentine's Day to the auspicious
occasion of Maha Shivratri the
mood of the hoi poloi swings
from that of excitement to rev-
erence. As all of you bid adieu to
the chilly winter mornings ; we
bring another fresh edition of
the Domination to perk up your
busy schedule with some new-
fangled ideas and fresh food for
thought.
We phase in with the all novel
possibility analysis of the public
enlisting of the largest Social
networking site " Facebook" . If
the rumors are to be believed
the sensational debut venture of
Mark Zuckerburg is all set to pile
up an IPO worth 100 billion dol-
lars , and we present an in depth
analysis of the pros and cons of
investing in one of the biggest
IPOs of the year.
Next we have an article "Sailing
in Difficult Waters" , taking a
look at probable solutions to the
imminent Economic turmoil in-
cluding the sovereign debt crisis
from the vantage point of vari-
ous crisis tools like DuPont and
Johnson & Johnson models.
Enthusiasm is excitement with
inspiration , motivation and a
pinch of creativity. Our next arti-
cle "The Kingdom of Light" justi-
fies it all vis-a-vis the fancy ads
of Peferetti's Happydent White ;
presenting a quintessential mix
of humor and marketing acu-
men.
From financial analyses to eco-
nomics to marketing promo-
tions; where does the buck stop
next ?? Where else other than
the good old Human resource.
We have the article unraveling
the doctrines of “Employee en-
gagement” depicting the eclectic
tango of manpower and the
strategic onus on the higher
echelon professionals of the cor-
porate ; to keep the human fuel
going in order to propel the or-
ganization towards its vision and
mission.
In the newly added section of
Success stories; we have a cov-
erage of the rags to riches story
of one of the brightest young
entrepreneurs of the country
Mr. Sachin Bansal , CEO of Flip-
kart.com.
Last but not the least we have
the metrically composed poesy "
Sameer Shah " for the connois-
seurs of verses, leading up to
this months' Qutopia ,for the
ardent quiz followers ...
COUP DE GRACE !!!
02 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Contents Newsletter Team
Aditi Joshi
Anuj Mody
Anurag Agrawal
Chetna Yadav
Jubin Mohapatra
Manav Kaushik
Mukesh Rathi
Pawan Upadhyay
Rajneesh Kumar
Ruchi Gupta
Saumya Dani
Saumya Verma
Sayantan
Shibi Singh
Shruti Goel
Design Team
Anurag Agrawal
Saumya Verma
Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: [email protected] Website: www.iitr.ac.in/departments/DM/Pages/Index.html
DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE
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Facebook IPO - The big-gest in 2012
Employee Engagement
Sailing Difficult Water
Kingdom of Lights - Creativity at its best
The Unfinished Business China Property Bubble - A Correction Imminent
Qutopia
DoMS da Evince
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Success Story
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Year 2011 faced a deluge of
strikes - the Maruti strike, the
Bosch strike, the Coal India
strike, the endless Air India
strike to name a few. With the
demand to form a separate un-
ion by workers at a particular
plant, continued on workers
dissension to sign a ‘good-
conduct bond’ as directed by
the management, the Maruti
strike flunked to achieve any-
thing significant except causing
the company to lose on critical
sales.
In the Bosch strike,
workers protested against the
purported outsourcing of auxil-
iary activities by the manage-
ment. The workers accused
management for them chang-
ing their stance and recanta-
tion from promises of not do-
ing so. This strike too ended
without any agreement and the
case has been summoned for
adjudication.
In both these cases the
disengagement of employees
was obvious. It was apparent
that a grave lack of trust and
low engagement was a bigger
reason for these strikes, than
any other cited by the workers
or the management. Clearly,
the need of the hour is to keep
employees motivated, inspired
and engaged with the organiza-
tion not only to create an envi-
ronment of harmony at work-
place but also to improve the
productivity of the employees.
Here a latest cant called
“Employee Engagement”
comes to rescue. It is rapidly
gaining popularity, use and im-
portance in the workplace and
is impacting organizations in
many ways.
Engagement at work
was conceptualized by Kahn
(1990), as the ‘harnessing of
organizational members’ selves
to their work roles.
Employee Engagement -Employing & Fostering a Productive Work Force
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 04 | DOMINATION, FEBRUARY 2012
Perspective
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
……………………………………………………… In employee engage-
ment, people employ and ex-
press themselves physically,
emotionally, and cognitively
during role performances.
Employee Engagement
is a combination of commit-
ment to the organisation and
its values plus a willingness to
help out colleagues.
Employees in almost
every workplace can be bifur-
cated into four categories:
highly engaged, engaged, dis-
engaged and highly disen-
gaged.
While engaged employ-
ees contribute to the optimum,
the disengaged ones just follow
the routine. Those who are
highly disengaged, go to the
extent of disrupting the normal
functioning.
It has been found that
fewer than 1 in 3 employees
worldwide (31%) are engaged.
Nearly 1 in 5 (17%) are actually
Disengaged. Engagement levels
vary by region from 37% in In-
dia to 17% in China.
Employee engagement
is vital to any company that
seeks to retain their valued em-
ployees. The Watson Wyatt
consulting companies proved
that there is an intrinsic linkage
between employee engage-
ment, consumer loyalty, and
profitability. As the organiza-
tions are globalizing and are
becoming more dependent on
technology in a virtual working
environment, the need to con-
nect and link with employees in
order to provide them with an
organizational ‘identity’ is
greater.
With attrition across
different sectors touching dou-
ble-digits, retention through
novel forms of employee en-
gagement has become essen-
tial. In 2010-11, attrition in the
telecom sector was at 20% -
23%; in ITeS, it ranged some-
where between 29% - 55%;
24% in IT; 13% in manufactur-
ing, and12% in FMCG, accord-
ing to Pune based executive
search firm Absolute HR Inter-
national. In such a competitive
hiring market, where supply is
limited and every component
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Employee Engagement
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Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
of salary becomes bait, getting
employees to structure their
take-home makes them feel
wanted.
Today many companies
are incorporating this tool
called employee engagement
to increase the level of engage-
ment or job satisfaction of their
employees. Infosys for exam-
ple, has started its Infosys So-
cialEdge Employee Engagement
Platform, which improves
workforce productivity and effi-
ciency, deepens employee en-
gagement, and enables faster
innovation by connecting and
engaging with employees. It
includes a range of employee
engagement initiatives: Skill
Management, Employee Net-
work Management, Employee
On-boarding, Sales Collabora-
tion, Knowledge Networks,
Alumni Networks etc.
Tata AIG General Insur-
ance Co. Ltd follows a system-
atic sustainable & participative
model by actively involving em-
ployees, soliciting ideas and en-
couraging employee involve-
ment. They conduct Employee
Engagement Activities like an-
nual celebration, the success
matrix, sports tournaments etc
where they touch the employ-
ees and their family in the vari-
ous forms.
Employee Engagement
Program at HYUNDAI incorpo-
rated various systems like-
Whistle-blowing system, Om-
budsperson system, Gift & En-
tertainment approval/reporting
system, Competitor Contact
approval/reporting system,
Conflicts of Interest approval/
reporting system, Compliance
Plaza, Compliance Review
Board, Collection of acknowl-
edgement from employees,
Evaluation system to bring the
employees in the state of satis-
faction, passion and commit-
ment.
There are 3 C’s to earn
true employee engagement:
1) Career: To give employees,
the opportunity to enhance
their career through promo-
tions, change in roles and re-
sponsibilities and significant
assignments are the most im-
portant needs of employees.
Employees will unquestionably
feel engaged if the company
Employee Engagement
0102030405060708090
06 | DOMINATION, FEBRUARY 2012
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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
and its managers devote mean-
ingful and genuine time in help-
ing the employees move ahead
in their careers.
2) Competency: While career
is all about actual growth, com-
petency is about the ability to
grow. Competency grows with
the opportunities to learn and
employ the learning in real life
tasks. Most employees today
look for competence-boosting
chances. They would like to
learn, stretch and improve as
long as they feel they are im-
proving on their marketable
skills.
3) Care: Caring is an art that
demands managers to be ten-
der, empathic and spontane-
ous. Not necessarily by the
grand policies of company, the
caring can also be experienced
by small day-to-day gestures of
manager. The managers should
be sensitive to the 'mood' of
their employees, should know
employees workload, and
should do something about
easing their stress. There are
many day-to-day gestures that
constitute caring - which no in-
vestment in ostentatious gyms
and food courts can replace.
Caring can be considered as a
culture that big companies nur-
ture through sensitive manag-
ers who counterbalances tasks
well with relationships.
A highly engaged em-
ployee will deliver beyond ex-
pectations. As rightly said by
Mr. Clarence Francis (Chairman
- General foods) - “You can buy
a man’s time, you can buy a
man’s physical presence at a
given place; you can even buy a
measured number of skilled
muscular motions per hour or
day; but you cannot buy enthu-
siasm, you cannot buy initia-
tive; you cannot buy loyalty;
you cannot buy devotion of
hearts, minds and souls. You
have to earn these things.” An
organization should thus recog-
nize employees, more than any
other variable, as powerful
contributors to a company's
competitive position. Therefore
employee should engage in a
continuous process of learning,
improvement, measurement
and action.
Employee Engagement
Article By - Saumya Dani [email protected]
07 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
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Perspective ………………………………………………………
A young man is seen running
barefooted across a city with
men perched atop poles, walls,
tables, bonnet of a car and
even beneath the water in a
swimming pool. But the object
of his interest is a chandelier
above the king. He quickly
slides in as its center-piece,
pops something in his mouth
and lo and behold, the entire
city flickers to life (read light).
This ad campaign: King-
dom of Lights, for Perfetti’s
Happydent White, took the ad
world by storm. The way it
builds up the humour quotient
to colossal proportions of ab-
surdity is what makes it tick. An
exemplary audio-video experi-
ence for the users, it success-
fully puts across its point and
etches the brand in the minds
of the audience through sheer
entertainment factor. It pro-
motes the recipe for a success-
ful promotional campaign as a
unique combination of creativi-
ty, humor, grandeur and per-
fect execution. In a low differ-
entiation and low involvement
product category, instant recall
plays the key role. But the first
task was to determine the ben-
efit that the product would
offer to a crowded market that
was not very high on the health
consciousness quotient: spar-
kling shiny teeth.
Playing with different
elements of the marketing mix
i.e. price, promotion media,
packaging and product vari-
ants, Happydent has continu-
ously been trying to capture
the essence of Indian audience.
With such an entertainer to
beat, and in trying to recreate
the magic, the ad was followed
by a series of TVCs, print ads
and saw the creation of inter-
Kingdom of Lights: Creativity at its best!
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Kingdom of Lights; Creativity at its best ………………………………………………………
net and mobile touch points for
the Happydent brand. A quick
review of the different media
vehicles used for the promo-
tion of brand Happydent would
be useful in obtaining a macro-
scopic picture of the campaign.
(1) Interactive online ad: The
ad strip shows a sad and bored
girl with a slider to her right
that reads, “Move the slider to
see my smile”. As you slide it
up, the Happydent pack pops
open and the girl can be seen
smiling. This is a simple yet ex-
tremely eye-catching tactic.
(2) Mobile based Happydent
White game: Perfetti Van Melle
India launched an exciting mo-
bile based car racing game that
consisted of three levels. To
win the race, the player is re-
quired to clear the third level
without ramming his car with
other cars on the track. In case
of collision, the car’s headlights
break and one need to use a
‘Happydent White’ to light up
the street and thereby com-
plete the racing challenge.
(3) Internet: ‘Happydent Shine-
shah Challenge’: The initiative
is designed as an amalgam of
an animated story and a game.
It milks the ‘light vs. dark’ or
‘good over evil’ philosophy
while promoting its brand
proposition- Happydent Wave.
(4) ‘Social Media Marketing ini-
tiative” on Facebook (www.fac-
Ebook.com/happydent): Social
media is used to engage the
core target group through con-
tests like ‘Happydent Sparkling
Smiles of the Week’ promoting
the feeling of fun and friend-
ship that has come to be relat-
ed with the brand’s image.
(5) Print Ads: Use of print me-
dia was made to capture the
masses by crafting the images
of iconic leaders entirely from
dental gum. The bold initiative
quoted ‘Giving millions a rea-
son to smile’ attracted appreci-
ation as well as flak in the same
measure.
(6) Point of purchase promo-
tion: Happydent comes under
the impulse product category,
where the decision making
often happens at the point of
purchase. Hence, posters, jars
and danglers as a media vehicle
may be effective but has short-
er lifespans.
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Kingdom of Lights: Creativity at its best ………………………………………………………
In a country where con-
fectionary products were yet to
pick up and the bulk of sales is
through unorganized trade:
small shops, kirana outlets,
etc., it was a challenge for
PVMI to position its brand. As
they say, innovation is the sole
key to becoming a leader in the
marketplace of the future. The
campaign proved to be one of
the most creative ones
launched in India. Not only did
it manage to remain top-of-the
-mind among its customers,
but was also acclaimed global-
ly. Its market share zoomed
past expectations (more than
doubling over the previous
year) and brand awareness
grew dramatically striking a
chord with consumers all over.
Looks like, an ad well
executed is a work almost
done.
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Article By - Aditi Joshi [email protected]
10 | DOMINATION, FEBRUARY 2012
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Perspective ………………………………………………………
According to a recent New York
Times report, the World Bank
has urged developing nations
to start planning for a major
slowdown in global growth in
the year 2012. The bank also
warned of the continued threat
of a global financial shock
“similar in magnitude to the
Lehman crisis,” because of the
possibility that a major Europe-
an economy could be shut out
of the global debt markets. In
these tough times, business
managers would have to exhib-
it leadership skills like those of
visionary companies. Visionary
companies, according to Jim
Collins, are premier institutions
in their industries, widely ad-
mired by their peers and hav-
ing a long track record of mak-
ing a significant impact on the
world around them. I have cho-
sen two such visionary compa-
nies – DuPont and Johnson &
Johnson- and illustrated how
they have sailed their business-
es in difficult water.
DuPont proved to the
business world that innovation
is not just for good times – it is
possible even during major
economic downturn. Johnson
& Johnson showed how best a
crisis could be handled by be-
ing ethical and customer-
oriented.
Innovation by DuPont during
Great Depression
Every economic crisis has been
followed by bankruptcies and
cost-cuttings. The great depres-
sion was no exception. The
stock market crash of 1929 was
followed by four years of GDP
contraction in US. Patents fol-
lowed the same pattern; lag-
ging behind by one year. In the
following years, most compa-
nies stopped or reduced invest-
ment in R&D. DuPont was an
exception. In April 1930, a not-
ed DuPont research scientist
Sailing in difficult water
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Sailing in Difficult Water ………………………………………………………
Wallace Carothers, recorded
the initial discovery of neo-
prene (synthetic rubber). In
that year, the company’s price
levels and sales fell by roughly
10 and 15 percent, respective-
ly. Yet, DuPont boosted R&D
spending to develop the new
technology commercially. Neo-
prene, which DuPont publicly
announced in November 1931
and introduced commercially in
1937, became one of the 20th
century’s major innovations. By
1939, every automobile and
airplane manufactured in the
United States had neoprene
components.
The following factors lead to
the success of neoprene, a new
substance resembling natural
rubber in composition and
structure:
• Neoprene had some superior
properties over rubber such as
resistance to degradation by oil
and gasoline. Whereas it was
inferior to rubber for many
purposes such as in tire
threads. At the time when neo-
prene was discovered, the
price of rubber was falling and
hence it would not be viable
for neoprene to directly com-
pete with rubber. Bridgwater,
the major architect of the strat-
egy for commercializing neo-
prene, suggested finding uses
for neoprene where rubber
was not used or where it was
used but performed unsatisfac-
torily. Neoprene was a new
material with new properties;
markets should be developed
by emphasizing its unique qual-
ities, not by emphasizing its
similarity to rubber.
• Du Pont decided to commer-
cialize neoprene despite the
Depression. Du Pont developed
it slowly and cautiously. Re-
search personnel had time to
improve the product, manufac-
turing personnel had time to
learn to make it, and sales per-
sonnel had time to develop sig-
nificant markets.
Neoprene became a
profitable product almost ten
years after its discovery. Simi-
larly, DuPont discovered nylon
in 1934 and introduced it in
1938 after intensive R&D and
product development.
Dealing with organiza-
tional crisis, the Johnson &
Johnson way In 1982, 7 people
died from cyanide-laced Ty-
lenol capsules in Chicago. Ty-
lenol, a product of McNeil Con-
sumer Healthcare (a subsidiary
of Johnson & Johnson), was the
leading painkiller medicine in
US at that time with a 37%
market share.
There was an immediate
meeting in James Burke’s, CEO,
office with top executives. All
the executives were in great
fear. There was no warning, no
pro-dromes. Nothing like this
had ever happened to them or
any other company that pro-
vides products for human con-
sumption. When the story ran
in the media, public was also
afraid. The very idea that a per-
son could take a capsule for
headache and die was terroriz-
ing. Here is how Johnson &
Johnson handled this crisis:
• A 7-member crisis team was
set up. With Burke’s approval,
the team decided to recall all
Tylenol capsules from stores in
Chicago area. The recalled
batch was tested and two addi-
tional cyanide-laced capsules
were found. Still, the team or
the company was uncertain of
how the cyanide got into the
capsule. Johnson & Johnson
had one overriding priority –
warn the public. The company
did just that by being com-
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Sailing in Difficult Water ………………………………………………………
pletely open and co-operative
with the media in getting the
news out.
• Johnson & Johnson installed
33 telephones to communicate
with the public during the cri-
sis. Pre-taped statements were
put on special toll-free tele-
phone lines to expedite news
gathering. The messages were
regularly updated. A full page
advertisement was placed in
major Chicago newspapers
offering consumers an ex-
change of Tylenol capsules for
tablets. In the first month after
the deaths, two thousand calls
were taken from media and
thirty thousand calls from con-
sumers.
• When asked by media if there
was cyanide in the manufactur-
ing plant, Foster, a spokesper-
son of Johnson & Johnson, in-
formed that a small amount
was used in the manufacturing
plant for quality-assurance
testing. However it was kept in
a completely separate facility
from the production line. Also,
none of it was missing. The re-
sulting stories had very little
impact as it was run in insignifi-
cant places in the newspapers
and facts were not blown out-
of-proportion (as had hap-
pened with other crises). The
newspapers merely reported
the information revealed. Fos-
ter realized that his positive
dealings with the media over
the years had paid off.
The FBI and FDA didn’t
find any evidence of tampering
at Johnson & Johnson manu-
facturing plants. It was report-
ed that unknown suspect(s) re-
placed Tylenol Extra-Strength
capsules with cyanide-laced
capsules, resealed the packag-
es, and deposited them on the
shelves of at least a half-dozen
or so pharmacies.
The three most important fac-
tors that helped Johnson &
Johnson in coping with the cri-
sis were:
• It was open to the media and
using media it reached its cus-
tomers.
• It was willing to recall its
products no matter what that
meant to the company.
• It appealed to the American
sense of fair play and asked for
public’s trust.
Although it had been
proved that Johnson & Johnson
was not responsible for the
tampering and the deaths,
Johnson & Johnson’s work was
far from over. It had to come
up with a campaign to re-
introduce its product and re-
store confidence back to the
consumer. According to a varie-
ty of academic studies of the
Tylenol case; Johnson & John-
son took the following steps to
regain market share:
• Tylenol products were re-
introduced containing a triple-
seal tamper resistant packag-
ing. It became the first compa-
ny to comply with the Food and
Drug Administration mandate
of tamper-resistant packaging.
Furthermore, they promoted
caplets, which are more re-
sistant to tampering.
• In order to motivate consum-
ers to buy the product, they
offered coupons on the pur-
chase of their product. They
were available in the newspa-
pers as well as by calling a toll-
free number.
• To recover loss stock from
the crisis, Johnson & Johnson
made a new pricing program
that gave consumers up to 25%
off the purchase of the prod-
uct.
Over 2250 sales people
made presentations for the
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Sailing in Difficult Water ………………………………………………………
Medical company to restore
confidence on the product.
Johnson & Johnson’s re-
sponsibility to its consumers
proved to be its most effi-
cientpublic relations tool. It
was the key to the brand’s sur-
vival.
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Article By - Sayantan Chattopdhyay [email protected]
14 | DOMINATION, FEBRUARY 2012
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Perspective ………………………………………………………
Facebook, as we know is one of
the most phenomenal social
networking medium for every
internet user, or it cannot be
said with much difficulty that
the term social network is now-
adays synonymous with Face-
book. Mark Zuckerberg’s Brain-
child is most likely to go public,
as the rumours have already
spread across the world over
the biggest IPO of 100 billion
dollars valuation. Facebook will
not be the day to day activity of
internet users but also of the
investors in Wall Street. There
are many facets of Facebook
Public Offering. Some of these
are why is Facebook going pub-
lic, how to carry forward with
such a huge valuation, what
can a potential investor has to
look upon from such a huge
IPO, and what could be the
pros and cons of investing in it.
Taking the above as-
pects one by one, firstly why
Facebook is getting public, the
answer could be simple as
‘raising more capital from the
market’ to ‘enriching the pock-
ets of the owners and the em-
ployees of Facebook’. But the
situation is quite different as it
is concerned with the fact why
now, why not some few years
back when the economy was
far superior to as of now. More
likely, Facebook has now more
than 500 stakeholders, accord-
ing to US Laws, which makes it
a requirement for Facebook to
go public. By rules defined by
SEC, Facebook has to disclose
its financials, so why not charge
the people to see the stash by
going public and raising some
more capital from the market.
According to experts, Facebook
made a net profit of 714 million
dollars and has some 3.5 billion
Facebook: The Biggest IPO of year 2012
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 15 | DOMINATION, FEBRUARY 2012
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………………………………………………………
Facebook: The Biggest IPO of Year 2012 ………………………………………………………
dollars in cash, so they do not
need stakeholder money to run
the social network. But they
will make more money by spec-
ulation of IPO itself. Adding to
the above points, emergence
of Google+ can be a serious
competition to Facebook. So to
content with the growing rival-
ry and before the rivalry starts
to erode its market position in
the social networking business,
it is most logical for facebook
to have the listings and raise
the capital as of now. Another
most speculated reason could
be the acquisitions of firms like
Zynga and Twitter. Acquiring
these firms will put Facebook in
better position to compete
against Google and confirm its
position as the acme of social
networking.
Facebook has already
planned to raise 10Billion Dol-
lars or more at the end of this
year, and this will help the Fa-
cebook Inc. to push its public
value near to 100Billion Dollars.
This is much more than some
of the well established firms
like Disney ($61 Billion), Ama-
zon ($88.3 Billion) and McDon-
alds ($95.6 Billion). Facebook
will try increasing its revenue
from the advertising, Facebook
Fan pages and Display Ads. If
Facebook raises $100 Billion,
then Mark Zuckerberg will
make around 25$ Billion, which
makes it equal to fifty dollars
from each of facebook daily us-
ers. The projected revenue at
the end of 2011 was around 4.2
$ Billion, out of which 89% has
been accounted from Advertis-
ing and 11% from Facebook
Credits. Though Facebook is in
the forth position for Unique
daily US visitors (first three be-
ing Google, Yahoo and Mi-
crosoft respectively), it comes
in first position as far as Ads
revenue is concerned (around
17.7%).
From the investors’
point of view, whether this IPO
is good or bad, it’s too early to
make that call. But the fair
analysis of pros and cons of Fa-
cebook IPO will definitely put
some light on the matter. Talk-
ing about the pros of Facebook
IPOs, it could be termed good
for two reasons. First, all inter-
net companies that has gone
public in recent years except
LinkedIn every other firm has
not remained above their IPO
prices. The millions of subscrib-
ers of Facebook are not just
feeding off to Facebook, but
also feeding off of each other.
It is a self sustaining model that
will operate and grow in realm
of present social scenario,
whether the site has 80 or 800
million members. So Just be-
cause some firms are not doing
well does not define that Face-
book won’t have its way along
with others in Wall Street. Se-
cond, Facebook will have
shareholders along with the
customers of size more than
the population of any country
(except two). So the Facebook
shareholders will have to care
about their customers because
there are so many of them. For
example, recently when Face-
book has changed its interface,
the members got very angry, or
when private policies have
been changed, there was a
sharp reaction from members.
So if Facebook shifts its focus
from members to sharehold-
ers, members will react in a
way for which social network
may have to pay hefty price.
There has been 1.86 billion Dol-
lars growth recorded from ad-
vertising, and there are other
avenues of growth like Mobile
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 16 | DOMINATION, FEBRUARY 2012
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………………………………………………………
Facebook: The Biggest IPO of Year 2012 ………………………………………………………
market where Facebook has
been just surfaced upon and
whether the company launches
its Smartphone or not, there is
always an opportunity for the
company to improve the mo-
bile offering of Facebook itself.
Many experts have quite
different opinion about Face-
book IPO, forecasting that the
Wall Street will not ‘like’ the
entry of social marketing giant
on the stocks. The biggest
downside of IPO is that it will
expose both good and bad fi-
nancial details of the company.
If you have large debt or unu-
sually high salaries for the ex-
ecutives, the annual report will
expose the same to whole
world. Facebook have grown
nearly 800 million users, but
this growth rate obviously
would not be for long as the
limited number of persons on
this planet. So in a year or two,
the growth rate will also be
lessened for Facebook, which
means limited profits for the
people buying the IPO. And the
growing competitions from the
Google will also harm Face-
book, and the shareholders.
Facebook as a company
has emerged and transformed
from a social networking hobby
for kids into incredible media
powerhouse. It could be sever-
al billion dollars richer if it goes
public. Mark Zuckerberg is still
reluctant to go public as he
managed to grow Facebook
much longer and comfortably
in private. But the growing
number of stakeholders al-
ready crossed 500, and the
company is most likely to go
public this May. It has already
drawn too much hype with re-
gard to its huge valuation of
around 100 billion dollars. The
year 2012 will witness the
mammoth IPO and this will
make Facebook the second
most valuable tech company in
the world. As far as, the mem-
bers of Facebook are con-
cerned, this IPO will indirectly
give them more saying regard-
ing changes in Facebook. And
after judging the pros and cons
for investors, the 100 billion
dollar question would be,
whether should I invest in Face-
book IPO or why should I not
invest in Facebook.
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Article By - Shibi Singh [email protected]
17 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
Chlorophyll ………………………………………………………
Poem By - Juhi Gupta [email protected]
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……………
The Unfinished Business
Its wise to learn, its GOD like to create
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 18 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
Qutopia ………………………………………………………
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?
1) Which firm announced that its total bill for pay and bonuses in 2011 was £8 billion?
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 [email protected] or [email protected] 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)
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Section B (1 Point for each correct answer)
19 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
Qutopia ………………………………………………………
2) Identify this logo.
3) Connect “H&A store logo, Weet-bix, backyard Cricket, Travelex”.
1) Connect the Images to a business tycoon.
Section C (3 Point for each correct answer)
Winner of Qutopia (Jan 2012)
1. Prateek Jain (Batch of 2008-10, DoMS IIT Roorkee)
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Answers to Jan’12 Qutopia
Section A: -
1. “Oh wow, Oh Wow, Oh Wow”.
2. Google Maps
3. Avtar Attractions
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.)
Section B: -
1. St James' Park Newcastle
2. Zynga, The gaming company
3. Norbert Reithofer, BMW Chairman
20 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
DoMS-da-Evince
Sameer Shah is 2007 batch pass out of Department of Man-agement Studies, IIT Roorkee. He is currently working as Manager in the Project Advisory and Structured Finance de-partment at SBICAPS, Mumbai.
1. What are the common chal-
lenges being faced in Finance
related projects due to current
market situation?
Ans: The number of projects in
the past one year have gone
down because of too many is-
sues: the initial 2008 Boomer-
ang, then the EuroZone Crisis,
now some internal issues re-
garding Policies. There is lack of
interest on promoters side be-
cause of the capital markets, so
overall scenario in the past
year has not been promising
and led to the fall of new pro-
jects coming in.
However, Looking at India and
its potential to grow, from six
months to one year down the
line we are expecting very good
projects. There will be lot of
opportunities across the fi-
nance sector.
2. How does Image of a Public
Firm like SBI helps it to be dis-
tinguished from Private Sector
banks?
Ans: There is always a stigma
attached to the Public sector.
However, Public sectors now
can be associated with good
job profiles and travels, as far
as projects in finance sector are
concerned, Public sector banks,
led by SBI dominate the area.
The kind of work, and number
of projects that these banks
have is significantly better than
that of private sector. Moreo-
ver, the private sector has its
own issues which we could see
in 2008 crisis as well, wherein
some of the private sector
banks stopped lending com-
pletely.
3. What has been the most
challenging role in your career
so far?
Ans: One thing that we don’t
face while we are in DoMS is
rigor and stress, which we ex-
perience when we go out in the
field for example in terms of
number of hours needed to be
spent in office. To be better
equipped to face the corporate
world you can utilize the re-
sources of the department,
read case studies available, in-
teract with people across the
department, institute and the
industry.
4. How has DoMS, IIT Roor-
kee contributed to your suc-
cess?
Ans: In DoMS while being in-
volved in activities like organiz-
ing events and the independ-
ence given to us for the same
we were able to build over
selves. If you have an idea you
can go ahead and implement it.
There is no interference from
faculty. This is what manage-
ment is all about when you are
working in something like or-
ganizing the whole event, be-
ginning from the idea/concept
to getting the committee in
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 21 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
………………………………………………………
DoMS-da-Evince place and finally bringing out a
successful event. Each and eve-
ry aspect of management is im-
portant what you learn in this
place.
5. How has CFM (Certified Fi-
nancial Manager) helped you
in your career?
Ans: Certificates are Addons.
These course like CFM provides
us with good knowledge. These
certifications combined with
our regular course helps us
gain practical knowledge as
they deal a lot in case studies.
6. Any message for the read-
ers, especially the current
batches of DoMS?
Ans: We are not IIMs, We are a
IIT, that implies we need to
take things more seriously.
There is still a need for a recog-
nition of MBA from IIT, and
that can be done only through
rigour. We need to organize
more events than IIMs, like if
they conduct 10 events, we
have to conduct 100s of them.
So, current batches needs to
get out of their comfort zone
and start working with the real
spirit.
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 22 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
Success Story ………………………………………………………
………………………………………………………
Adding Superior Value to Customers’ Cart...
In a country like India, where our purchase decisions are trig-
gered by our senses - seeing, touching, smelling, feeling,
tasting, were on the flip side of the cart. But Sachin Bansal
with Binny Bansal co-founded Flipkart, an e-commerce com-
pany 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 Ama-
zon.com to start a venture naming it flipkart.
With the embryonic idea, they started with an initial invest-
ment of 5 lakh. They began working in a two bedroom apart-
ment 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 Ban-
galore, Mumbai, Delhi, Chennai and Kolkata. They have their own delivery network in 27 cities. Flip-
kart 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, comput-
ers, electronics, mobile phones, healthcare and personal product categories.
Sachin Bansal CEO and Co-Founder, Flipkart
FLIPKART-
Ranks in the top 30 Websites in
India (As per Alexa ratings)
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 net-
work
23 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
………………………………………………………
Success Story
The challenges faced by Flipkart were that none of the
distributors and suppliers were ready to share their in-
ventories and also the VCs could not understand the
Flipkart model in it’s nascent stage.
Now, Flipkart secures largest investment till date in an
Indian online space valued $ 150 million from Accel
Partners and Tiger Global Management in its fourth
round of funding. In previous three rounds it raised $31
million collectively.
In a cash based economy like India, path breaking features like cash/card on delivery , 30 days re-
placement, EMI options, free shipping, equated monthly instalment and 24X7 made Flipkart differ-
ent 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 re-
taining 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.
Sachin’s Mantra-
Be very focused on consumers.
Build amazing experiences for custom-
ers.
Continuously innovate with product.
Never Promise something that you
don’t have. Always keep optimum in-
ventory level
………………………………………………………24 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
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………………………………………………………
………………………………………………………
Regardez I’economie ………………………………………………………
About 300 early buyers of
home in Shanghai real estate
gathered to protest on October
23, 2011 against company that
has announced to drop prices
of properties. This was just the
beginning of series of protest
across Shanghai and China
against the falling property
price in response of Govern-
ment measures to deflate the
so called ‘CHINA PROPERTY
BUBBLE’. The protest even
leads to violence making things
worst at some places raising a
debate on Government inter-
vention and hence measures
taken to curb property prices
need to be imminent or China’s
growth and urbanization could
easily absorb the property
price rise. Debate starts that
whether there is really a bub-
ble in China similar to the one
existed in US or Dubai.
China’s Property Industry- Why
such a price rise? :-
China’s private residen-
tial property market is just two
decades old ,as before that on-
ly government allotted the
houses to people. In the wake
of recession and government
tightening policies in early
2008, the prices then fell back
considerably. But again the
prices started rising in 2009,
when government directly in-
tervened to boost the property
business after recession to set
China’s economy on growth
path. The government reversed
its attitude and policies and im-
plemented fiscal measures to
encourage demand for residen-
tial property where it announc-
es a $585 billion stimulus pack-
age in November 2008. Reduc-
tion in property taxes and free-
ing of stamp duty and land val-
uing taxes were the measures
China Property Bubble - A Correction Imminent
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 25 | DOMINATION, FEBRUARY 2012
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………………………………………………………
China Property Bubble - A Correction Imminent
………………………………………………………which stimulated a growth in
the property sector. Lending
policies were also loosened to
a large extent facilitating buy-
ers to take more loans at much
lower interest rates and build-
ers to easily acquire huge capi-
tals for development of proper-
ty.
Figure: Average House price
rise in China
(source: CEIC Data company
Ltd)
Shanghai was the host
of 2010 world expo, which
meant development and build-
ing of new infrastructure to ac-
commodate almost 70-75 milli-
lon visitors. Shanghai regis-
tered an average increase of
19% price from March 2009 to
July 2009 quoted by CHINA
DAILY (daily newspaper). Bei-
jing, which is considered as Chi-
na’s administrative capital, rec-
orded an increase of 26.5% of
price in real estate according
to Beijing Real Estate Transac-
tion Management Center.
Those who delayed purchasing
due to tightening of govern-
ment policies and slowdown
rushed to take advantage of
price drops and relaxed hous-
ing policies which leads to al-
most 150% of increase in resi-
dential sales in 2009 in compar-
ison of 2008.
Banks were very eager
to lend at that time after Peo-
ple’s Bank of China(PBOC) re-
laxed lending rules and be-
cause of these circumstances
home loans grew up by 29.5%
to US$565 billion. The growth
was very rapid and surpassed
government expectation,
where home mortgage loans
grew by 88% in Q1 of 2009
stated by National Develop-
ment and Reform Commission.
Figure: Real estate loan
growth, China and others
(source: CEIC Data company
Ltd and GFSR april 2010)
Housing Provident Funds
(HPF) was also a major reason
for property surge. Govern-
ment employees and employ-
ees of state owned enterprises
are mandated to take part in
the scheme which encourages
workers to save a portion of
their earning to purchase resi-
dential plots in which he have
to commit 5% of his salary on
monthly basis and also employ-
er have to contribute same
amount. The employee is not
allowed to withdraw the pro-
gram and have to contribute to
monthly saving regularly. In
this way the national saving of
China grew at very fast ace and
that saving is directed to the
property industry leading to
increase in demand and subse-
quently to prices.
The existing housing
supply was surely not sufficient
to meet the surging demand.
Then to stimulate the raid con-
struction of new residential
properties, the government
along with loose lending policy
also reduced minimum capital
requirement limit to 20% from
35%. Because of these
measures, the access to fund-
ing was very easy and riding on
these policies the purchase of
residential plots in Beijing in-
creased by 52.4% from H2 2008
to H1 2009.
Retail market in China is
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 26 | DOMINATION, FEBRUARY 2012
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………………………………………………………
China Property Bubble - A Correction Imminent ………………………………………………………
heavily regulated and favors
landlords thus encouraging
more individuals to buy resi-
dential plots.. According to
Global Property Guide re-
search, major Chinese cities
have average rental yield of
4.42%. Government allocated
US$ 1.9 billion to fund the con-
struction of residential plots for
low income groups which
would further encourage the
increase in property business.
Is it really a BUBBLE?:-
Financial stability always
depends on the extent of price
misalignment and the
nature of their adjust-
ment toward equilibri-
um. The larger the risk
of rampant falling of
prices the more alarm-
ing the situation is.
Based on the finding
of Wu, J., J. Gyourko and Y.
Deng (2010). “Evaluating condi-
tions in major major Chinese
housing markets,” NBER Work-
ing Paper 16189, National Bu-
reau of Economic Research,
MA., (July), the panel regres-
sion approach explains that the
major factors which affect long
term house price estimated
trajectory are real income per
capita, past land prices, real
mortgage rate and degree of
urbanization. By findings of
them on the basis of this ap-
proach, the property prices ap-
pear to be out of line with long-
term fundamentals in some big
cities including Beijing, Shang-
hai, ,Fuzhou, Xiamen, Shenzhen
and Ningbo .
Another approach which
they follow is known as the as-
set pricing approach used to
estimate how much the price is
deviating from benchmark lev-
els reflecting the fundamentals
in order to compare prices.
Table: Mortgage market depth
and growth ( sources: OECD, DTZ property re-
search)
The current steps of govern-
ment and its probable impact
on Chinese economy:-
Research findings buy econo-
mist and researcher in the case
of China, private consumption
is not going to be affected sig-
nificantly by this price correc-
tion as income from properties
including rental income and
returns from property transac-
tions accounts for only about 2
percent of China’s total per
capita income in urban areas.
There is a strong storage link-
age between real estate and
other industries in China. The
real estate sector is most close-
ly linked with the metal
smelting and rolling sector , fol-
lowed by non-metal mineral
products and chemical sectors.
the amount of loans to the sec-
tors that are closely linked with
the property market is large,
accounting for about
24.0 percent of total
loans in 2009(from fig-
ure below). The falling
prices will deeply
affect these sectors
and could erode their
ability to repay loans
to banks leading to severe debt
default across Chinese econo-
my. Though Banking sectors
direct impact on property price
fall looks manageable as direct
loans for property sectors still
accounts for less than 20% and
is much less in comparison with
other countries. The share of
land sales revenue to local gov-
ernment revenue at provincial
levels varies significantly.
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 27 | DOMINATION, FEBRUARY 2012
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………………………………………………………
China Property Bubble - A Correction Imminent ………………………………………………………
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Article By - Pawan Ku. Upadhyay [email protected]
So a decrease in property
would directly hit local govern-
ment collections of cities such
as Chongqing who have 30% of
land sales revenue of total rev-
enue. This is the reason why
some of the local governments
are still not finding it convinc-
ing to implement these price
curbing measures strongly.
The Real Hidden Problem be-
hind Property Surge:
The regulatory measur-
es may not be enough to ad-
dress property price surges
which is in fact fundamentally a
structural problem. The most
basic cause of high demand for
real estate in China is low per-
ceived cost of homeowner-
ship. Low real interest rates,
high saving, lack of alternative
investment and property tax all
work to promote excessive
house price inflation.
China’s households are
more likely to be optimistic
from past experience of robust
growth, have no other invest-
ment alternatives either locally
or overseas for high saving. So
real estate is the natural choice
for them. Now if a property
correction takes place abruptly,
it will result in panic amongst
citizens and investors which is
evident from series of protest
and violence. The government
would need to take steps to
raise real interest rates, impose
a meaningful property tax and
ensure that leverage does not
accelerate to handle the situa-
tion. With these measures
there are risks , but if well cali-
brated, such steps should re-
duce the risk of a disorderly fall
in prices.
Conclusion:-
On analyzing the whole
reason of this current Chinese
property surge, we can under-
stand the current price surge is
due to conservative mortgage
lending standards, trends of
increasing urbanisation, rising
incomes and real savings and
very low rent to property ratio.
We have seen that
house prices were not signifi-
cantly overvalued in China as a
whole during the first half of
2010. However, the mass-
market segment in a few large
cities—such as Shanghai and
Shenzhen, and the luxury seg-
ment in Beijing and Nanjing—
do appear to be increasingly
disconnected from fundamen-
tals. Its impact on private in-
vestment and local government
revenue are sizable, particular-
ly in cities that have high real
estate investment.
The Surge is needed to
be controlled but the impact of
an abrupt price correction in
real estate could lead to a debt
failure by many related indus-
tries as Chinese economy de-
pends on real industries. The
Chinese government’s policy
measures to cool down the
markets unveiled in April 2010
appear to have some impact on
price growth. The gaps be-
tween market prices and fun-
damental based benchmarks
have become smaller in a few
cities. So, need of the day is in-
crease in real interest rates, a
higher carrying cost of home-
ownership and broad financial
market development to alter-
native investment vehicles to
housing.
28 | DOMINATION, FEBRUARY 2012
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie
Department of Management Studies, IIT Roorkee
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