“India’s Trade (FTA)” pact’s queer “Pitch for Electronics, Appliance makers” | Business Standard

Around 70 % of Microwave Ovens sold in India are imported, mostly from Chinese manufacturers that make these cheap because they make too many. Also, India’s Duty-structure makes microwaves 15-20 % cheaper to import than manufacture here. Despite the Indian Rupee’s recent tumble.

The myth of India’s manufacturing prowess shows up starkly in consumer electronics Air-conditioners, Television sets, Set-top Boxes, Cameras, Music-systems, even Pencil Batteries. According to the Consumer Electronics and Appliances Manufacturers’ Association (CEAMA), 30-40 % of the over Rs 50,000-crore electronics and appliances sold in India are imported.

Free trade agreements (FTA), especially with Asean, the inverted tax structure and lack of government support have led to a surge of imports,” says a worried CEAMA secretary-general and a veteran in the business !!

He has reason to be worried. Around 65 % of all air- conditioners sold in India are imported and those that are not have a large import content. Compressors and indoor units of split air-conditioners are not made in the country. Only LG has a compressor plant here. “We have to import compressors because they are not available in India. Sales volumes in India do not warrant setting up compressor plants,” says Shantanu Das Gupta, senior vice-president of Whirlpool India. He points out that compressors constitute a quarter of the bill of materials for an air-conditioner.

 

Every second television set sold in the country has an LED or LCD panel, and a quarter of these are imported. Sony, which has off and on talked about manufacturing display panels in India, prefers to import these from its facility in Malaysia. Under a free trade agreement with the country, Sony has to pay a mere three per cent duty. “Manufacturing here is not viable,” says Kenichiro Hibi, managing director of Sony India…

Even those companies that assemble flat panel television sets in India add only 30 % value locally. The most expensive bit of these sets is the display panel, which has to be imported because there are no manufacturers in India. “While 95 % of our LED (panels) are assembled in India, 85-90 % of the components have to be imported because these are not available here,” says S Manish Sharma, managing director of Panasonic India.

A television manufacturing company executive says it takes $1 billion to set up a display panel plant, and technology is moving fast. It makes little sense to set up a plant in India because the market is not big enough. He gives the example of an Indian picture tube manufacturer that decided to invest in plasma technology just around the time these television sets were being phased out globally.

One reason for a weak component industry is the size of the market. In 2013, only 1.3 million microwave ovens were sold in India, for just over Rs 1,000 crore. Only 2-3 % of Indian households have air-conditioners.

Also, the government has made no effort to encourage local production. Domestic microwave manufacturers recently petitioned the government to allow them to import five key components at “zero duty”, instead of 7.5-10 %. In return, they promised at least 70 % of the ovens in the country would be made in India. But their proposal has met with silence from the government.

The commerce ministry has moved a proposal for a free trade agreement with China. That, say Indian consumer electronics companies, will cripple local production. China’s scale in manufacturing allows its companies to charge rock-bottom prices and could flood the Indian market. “Even Japan gave protection to its consumer electronics industry. But India opened it through free trade agreements and is now also thinking of China. The smaller companies will import. We, of course, have global operations, but the LCD panels that we make in India have 80 % imported components,” says Venugopal Dhoot, chairman of Videocon Industries.

In some areas, a nudge from the government would have helped. For instance, India’s broadcasting industry projects that the country will need over 75 million set-top boxes. Yet nearly Rs 12,000 crore will be spent on importing these from China, Taiwan and South Korea, among other countries. Local companies can make the boxes and match the Chinese price. But they must pay 12.5 % as value-added tax, which importers do not. Set-top box makers have petitioned the government but have had no response.

The issue is more acute in the Rs 10,000-crore home appliances market, dominated by small players that manufacture for large brands. As much as 30-40 % of components here are sourced from the grey market without paying duties. The government has not been able to stop the proliferation of the grey market. This is not only killing small appliance manufacturers but also the component industry that supported them.

India has become a dream market for electronics and appliance manufacturers as  consumers splurge on television sets, refrigerators and air-conditioners. It is already Sony’s fourth largest market worldwide, a target LG also hopes to meet. Yet, that growth is heavily dependent on imports, of finished goods and components…

“Lack of Dedicated Luxury Retail spaces” at High-street & Malls is “Restricting Presence of Luxury Brands in India” | Retail in Asia

” The lack of dedicated Luxury Retail spaces, the High-street and Premium Malls is restricting the presence of luxury brands in India, a new study reveals”…

The study entitled, “Challenges highlighted by luxury retailers in India”, was jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and KPMG.

One of the key findings of the study is that setting up stores in high streets affects luxury retailers’ profitability due to sky-rocketing rental costs. High streets are also very cluttered, crowded and are unsuitable due to the absence of the exclusive ambience that luxury retail demands.

The report noted that the Indian luxury market grew at a healthy rate of 30 % to reach USD 8.5 billion in 2013 and is likely to continue growing at a healthy pace of about 20 % reach USD 14 billion by 2016.

This is due to rising number of wealthy people, growing middle class, affluent young consumers and other related factors. However, India currently enjoys just 1 to 2 % share in the global luxury market though it is the fifth most attractive market for international retailers.

Fragmented and diversified consumer base in India is also another significant challenge being faced by luxury retailers in India as High net-worth individual (HNI) consumers are not easy to reach.

The ASSOCHAM-KPMG recommends luxury brands to strategically design their growth plans to tap demand across three categories of HNIs, namely – the inheritors (traditionally wealthy) who are habitual spenders; the professional elite who are discerning spenders; a large segment of business giants (entrepreneurs, owners of small and medium enterprises) who have the money but lack appreciation for fine luxury goods because of no prior exposure to such products.

“ There is a need for luxury brands to focus on expansion in the type and nature of products being offered and increasingly adopt innovative marketing plans to tap rapidly evolving consumer behavioral trends,” said D.S. Rawat, secretary general of ASSOCHAM in a statement during the official release of the study.

“Luxury is no longer a ‘status symbol’ but is now a lifestyle and the global brands need to fast evolve and learn ways to adapt within the local environment so that they can get accustomed to nuances of the market by understanding the cultural identity of Indian consumers,” he added.

Other challenges in luxury retail in the country include :

1. Lack of policy support for luxury brands – the study found that despite strong demand momentum, Indian luxury market has not been viewed as policies and regulations friendly for the luxury retailers. Import duties (20–150 percent), for one, are relatively higher and this is considered as a key apprehension factor among the international players, who may resist them to frame aggressive growth plans for India.

2. Clauses such as — 100 percent foreign direct investment (FDI) – in both single and multi-brand retail requires 30 percent of local sourcing, announced in the liberalized FDI policy in luxury retail in November 2013 could be difficult for the international luxury players to comply with,” the study noted.

Rawat said the duties are manifold, ranging from customs’ duty, counter veiling duty (CVD), special additional tax, and adding to the overall cost…

3. Lack of trained staff – the study cited that the shortage of skilled labour for the industry is a major cause of concern as it is difficult to make the local workforce understand the heritage and legacy of the brand along with the specific finishes involved in the manufacturing process.

“ In the absence of these requisite skill sets, brands have no option but to manufacture in their country of origin; lack of skilled workers can also be attributed to the sales function where presentation and interpersonal skills form an integral element for the business,” Rawat explained.

4. Growing prevalence of counterfeit luxury goods and a grey market – most of these products belong to segments such as apparel, perfumes and accessories, which are usually lower ticket items and can be easily placed in grey channels.

The study emphasized a collective, industry wide effort is likely to have a far-reaching impact in dealing with the issue – as seen in other industries such as films and music…

“ Corrective measures need to be taken to banish the growth of grey luxury goods’ market in India which results in sizeable revenue losses for firms,” said Rawat.

“A strong legal structure combined with effective framework of intellectual property protection would help prevent dilution of brand image and reduced consumer trust”…!!

“Think Differently” about “Protecting your Brand” : “difference between what’s Real & Fake” | by: Denise Lee Yohn | HBR

Licensing can generate big business for brands…The top 150 global licensors accounted in total for almost $230 billion, according to License !! Global.

Disney alone reported $39.3 billion in retail sales of licensed merchandise worldwide in 2012, fueled by the popularity of its Marvel Comics properties.

Brands in categories from apparel to automotive to sporting goods to spirits are licensed.  Even celebrities license their brands – Usher Cologne, anyone?

Licensing’s popularity makes sense. It can boost brand exposure and expansion without significant investment, helping companies enter international markets or play in new product categories without having to incur the usual product development costs and risks. Licensing can also be used to expand a brand’s footprint into adjacencies, as demonstrated by iPad cases, keyboards, and other accessories…

But the benefits of brand exposure and growth through licensing don’t come without risks. Counterfeiting and brand piracy have kept pace with the uptick in licensing. Legitimate companies aren’t the only ones who have benefitted from increasingly border-less commerce and improvements in the quality of manufacturing and materials in emerging markets.

The prevalence of licensed products combined with the sophistication of knock-offs make it more difficult to tell the difference between what’s real and what’s fake.  It’s also easier for branded goods to get into the wrong hands. Anyone can set up shop online and pose as an authorized dealer.  And even offline, the once-underground black market has become quite visible. In-authentic goods are now sold through unauthorized channels unabashedly, as the discovery of over 20 copycat Apple stores in Kunming, China, a couple of years ago revealed..

Another risk is old-fashioned over-exposure…When products with Nike logos or trademark Burberry plaid can be found everywhere, the exclusive appeal of those brands takes a hit. Market saturation of branded goods, genuine or fake, can lead to brand burnout – or even brand backlash. When Angela Ahrendts took over at Burberry, the brand had become so ubiquitous and watered down, with 23 licensees around the world each making their own versions of everything from dog leashes to polo shirts, that the company faced problems besides declining profits.  Far from being a luxury brand, its famous plaid had become associated with football hooligans and was even banned from some pubs.

However, when managed appropriately, even these downsides can actually benefit brand owners – Authorized or not, brand awareness in a new market is usually a good thing. And increased brand exposure can lead to a migration from counterfeit to original goods when the economic climate of that market improves or discretionary spending increases. Brand piracy can also be considered an indication of a brand’s health; only compelling brands are victims of counterfeiting.

On a recent trip to Shanghai, Italian designer Giorgio Armani purchased a fake Armani watch and explained, “It was an identical copy of an Emporio Armani watch…it’s flattering to be copied. If you are copied, you are doing the right thing.”

So companies must balance brand exposure with brand protection…Your attorneys may advise vigilant trademark monitoring and enforcement — but chasing down unauthorized products and dealers can be time-consuming and expensive — and ultimately, counterproductive. Starbucks seemed to understand this when it refrained from lambasting the comedian who recently set up a “Dumb Starbucks” store in Los Angeles. The city’s Health Department ended up shutting down the store after just a few days, sparing Starbucks the expense and negative press it might have incurred…

Instead, take a different approach to protecting your brand — one that optimizes factors that are directly under your control vs. trying to manage those that aren’t.  Ensure that you set, communicate, and deliver on your brand standards clearly and consistently in everything you do. Even, and especially, licensed products should appropriately reflect your brand promise and shine brightly in the constellation of your brand offerings..

Consistently excellent brand execution will ensure that purchasers of counterfeit products know they are fakes and therefore won’t expect the same performance from it.  If the quality of your brand is so well-known, knock-offs may be compelling but they will never be mistaken for the real thing. Those who know real Rolex watches, for example, can point to at least 10 telltale signs of fake ones, including a magnifying bubble that doesn’t magnify all that well. Fans of the Tiffany & Co. brand know that a Tiffany product for sale anywhere other than in a Tiffany-branded outlet is not real, thanks to the brand’s tightly controlled distribution.

And since your authorized product may not be the only representation of your brand out there, monitor the totality of your brand presence. You may need to temporarily scale back your own licensing or promotional efforts if a market is being flooded by unauthorized product. That’s what Ahrendts did at Burberry by centralizing their product line – even though in this case, the licensees weren’t doing anything illegal. To reassert Burberry as a luxury brand, she decreed that all clothing would be made in Britain; all designs would go through one “Brand Czar”, and that the company would pull back from offering so many types of products to focus on outerwear. It worked.

The best way to enhance and protect your brand at the same time is to extend your brand value beyond the product. When your brand is comprised of a complete customer experience — including service, environment, communications, shopping experience, personality, and values — it is inimitable and far more valuable. A pirated product may mimic your brand but it doesn’t replace it.  It simply whets consumer’s appetites for more of your brand.

Trademarks are some of companies’ most valuable assets and legal actions are sometimes necessary to defend them. But when it comes to brand protection, the adage “the best defense is a good offense” applies — and the best offense is a clear, well-cultivated brand identity….!! 

“Going-to-Market in Developing/Emerging Economies”: “Winning Big by Targeting Small” | BCG

With overall economic activity flattening and competition rising, many farsighted companies have started to recognize that their next wave of growth will come by fundamentally transforming their go-to-market activities…

Rather than dividing a country such as China or India into a few regions, they are slicing each one into thousands of customer or regional segments in order to unlock local opportunities that would otherwise go unnoticed.

When macroeconomic growth is strong or the market is relatively undeveloped, a broad plan of attack can work effectively to address the basic needs of most customers. But as growth slows and markets mature, companies need new ways to reignite growth. By catering to much smaller segments, companies can discover hidden pockets of opportunity in these richly diverse markets.

It takes more than just smaller slices of the pie to implement this approach. Companies need to arm their local sales managers and representatives with new Geo-analytical tools and the authority to create compelling offerings for customers in these small segments. Sales managers effectively become CEOs of their territories, with the freedom and decision rights to execute strategies that will appeal to local customers. We call this approach street-smart sales.

The payoff is considerable. Even in markets where growth is tapering, companies have consistently demonstrated revenue gains of 5 to 8 percent over business as usual by following this approach…

Why a Targeted Approach Works : 

The concept of dividing markets into small geographic or customer segments has been around for decades. What’s different now is that digital and mobile technologies allow access to and analysis of sales and marketing information at a more microscopic level than ever before. Companies can quickly gather data from the field without an army of IT specialists and data experts or massive expense.

A consumer goods company, for example, hired 4,000 part-timers to input sales and other retail data on their Android phones at hundreds of thousands of retail outlets in Southeast Asia. This level of detail enabled the company to create more than 1,500 segments from what had been two large regions and to see variations in performance that had previously been hidden. Especially in emerging markets, where so much growth is occurring outside the traditional major metropolitan areas, this approach will help companies focus more sharply on retail sales, consumer perception, and the competitive landscape.

To improve performance, an Asian mobile-telecommunications carrier resorted to this approach on the basis of the coverage footprints of cellular towers. Sales growth had shrunk from nearly 50 percent to single digits in just three years because of market and awareness saturation. By slicing up the market, managers were able to modify pricing and service levels according to available capacity. When a coverage area had available capacity, local managers were empowered to offer customers short-term discounts to encourage usage. On the other hand, when an area was nearing capacity, the carrier instituted tiered service levels so that its most profitable customers would not suffer dropped calls or poor call quality. In pilots, the areas that deployed these creative solutions saw faster revenue and subscriber growth than did other comparable areas.

Street-smart sales also make sense in business-to-business markets. An industrial goods company in India relied on this approach as part of a sales-force-effectiveness campaign in response to increasing competition.

The company’s products were sold in several customer segments, but the company’s understanding of its performance in those segments was limited, because sales data and industry research were based on product categories. By dividing the vast market into more than 1,000 customer segments, the company could see how end users actually used the products. By talking to local experts—financiers, large customers, and suppliers—the company could ascertain its market presence, competitive profile, and ability to win within each segment; this information had been unavailable or not easy to act upon in larger geographic segments.

These insights allowed the company to tailor its marketing and promotional moves and fine-tune sales and marketing interventions. They also helped it address specific gaps in repair and service availability, the quality and footprint of its sales network, and the competitiveness and brand strength of its products in specific segments. Early pilots suggest that the changes could increase market share by 3 to 5 percentage points.

How Street-Smart Sales Change Business as Usual : 

Street-smart sales require companies to work differently. As an initial step, companies need to splinter their regions or segments. The new groupings should be sufficiently specific that they display distinct customer, competitive, and performance profiles.

The creation of new boundaries is simply the start of what is essentially a more comprehensive approach to going to market, which involves FIVE Elements :

1. Capabilities – The field staff will have to learn new ways of thinking and working. It will need to combine the art of closing a sale with the science of analyzing market intelligence, sales, market share, and Geo-analytical data. This new approach requires training, development, and encouragement. Sales representatives are sometimes reluctant to take on these broader duties until they see the results.

2. Tools – The field staff will require technologies to capture market knowledge and generate dynamic Geo-analytical insights. As the Southeast Asian consumer-goods company discovered, these tools do not have to be industrial grade. Excel spreadsheets, cell phones, and foot soldiers work just fine.

3. Governance – Local managers will have more authority to tweak offerings and even pricing in some cases. The performance metrics of sales managers and field staff will need to be expanded to include their ability to develop insights from Geo-analytics and to devise go-to-market plans.

While less involved in top-down direction than in the past, the center will ensure a degree of consistency in pricing, distribution, and marketing segments. One option is for the center to develop a simple playbook that defines the scope of decision making available to the field—for example, the level of discounts or the degree of modification in the offering.

4. Organization – To facilitate the sharing of best practices and ensure that the new way of working is taking hold, organizations should assign managers or small teams to monitor the performance of these new segments and train the sales force. These teams must be viewed as the sales force’s allies, not adversaries.

5. Processes – Street-smart sales occur on the ground but should be integrated into business processes such as sales and operating planning, capital budgeting, and—for telecom companies—network planning. The data and inputs generated in the field must be fed back to the center so that the company can adapt to market conditions and spread best practices.

Getting It Right : 

Street-smart sales represent a departure from the traditional go-to-market approach, especially the relationship between the center and the sales force. Here are a few common protests that leaders may encounter in their effort to adopt street-smart sales:

1. Our people will resist – Sales teams are sometimes reluctant to take on more responsibility. They may be uncomfortable moving from a “doing” role to a “doing and thinking” role or they may initially be unwilling to perform work once conducted by the center. More likely, in our experience, the center might be wary of delegating analytical work to line employees. Company leaders can break through this resistance on both sides by visibly supporting the sales teams and providing them with resources such as training, tools, and redrawn decision rights. This approach will give the field staff a new source of insight and power, and the center the confidence that the field staff is prepared for its new duties.

2. The required data is too hard to get – In emerging markets, even reliable high-level data is hard to come by, let alone detailed data. However, a little resourcefulness and optimism can go a long way. Executives at the Indian industrial-goods company achieved a 70 to 80 percent confidence level in their insights by gathering estimates from local market experts, channel partners, and senior sales representatives.

3. Street-smart sales require fancy technology – In mature markets, this approach is often associated with sophisticated CRM software, big data, and heavy-duty analysis. In emerging markets, however, most of the basic tools are well within the reach of most companies. The Indian industrial-goods company started with fairly basic spreadsheet models and tools to monitor performance and suggest sales leads, while the consumer goods company built a simple smartphone application.

4. It will be too hard to implement – If street-smart sales were easy and obvious, the approach would have been adopted a long time ago. This approach works because it forces companies to make hard choices on the basis of their analysis of areas of strength, weakness, and vulnerability, and allows local managers to modify practices to address the differing landscapes.

For street-smart sales to work effectively, not all segments will be treated equally. They will receive different levels of resources and operate under different commission structures. This can be difficult for executives accustomed to equal treatment to accept. In our experience, people will accept the changes if they understand the rationale behind them and trust that they are being implemented fairly on the basis of solid analysis rather than hunches.

Street-smart sales represent the future of go-to-market activities in emerging economies. Regional, national, and often metropolitan-area segments do not capture the nuances and niches within these dynamic markets..

By breaking their marketing map into small pieces, companies are building a strong foundation for future growth. They will increase sales, strengthen the capabilities of their sales force, and gain an edge over competitors that don’t recognize that big things happen when you think small…

“Leadership Is About Emotion”: Ability to Reach people that Transcends the Intellectual & Rational |by: Meghan M. Biro | Forbes

Make a list of the 5 leaders you most admire. They can be from business, social media, politics, technology, the sciences, any field. Now ask yourself why you admire them. The chances are high that your admiration is based on more than their accomplishments, impressive as those may be. I’ll bet that everyone on your list reaches you on an Emotional Level..

This ability to reach people in a way that transcends the intellectual and rational is the mark of a great leader. They all have it. They inspire us. It’s a simple as that… And when we’re inspired we tap into our best selves and deliver amazing work.

So, can this ability to touch and inspire people be learned ? No and yes. The truth is that not everyone can lead, and there is no substitute for natural talent. Honestly, I’m more convinced of this now – I’m in reality about the world of work and employee engagement. But for those who fall somewhat short of being a natural born star (which is pretty much MANY of us), leadership skills can be acquired, honed and perfected.

Let’s Take A Look At Tools That Allow For Talent To Shine :

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Emotional intelligence – Great leaders understand empathy, and have the ability to read people’s (sometimes unconscious, often unstated) needs and desires. This allows them to speak to these needs and, when at all possible, to fulfill them. When people feel they are understood and empathized something, they respond PERIOD and a bond is formed.

Continuous learning – Show me a know-it-all and I’ll show you someone who doesn’t have a clue about being human. Curiosity and an insatiable desire to always do better is the mark of a great leader. They are rarely satisfied with the status quo, and welcome new knowledge and fresh (even if challenging) input. It’s all about investing in yourself.

Contextualize – Great leaders respond to each challenge with a fresh eye. They know that what worked in one situation may be useless in another. Before you act, make sure you understand the specifics of the situation and tailor your actions accordingly.

Let Go – Too many people think leadership is about control. In fact, Great Leaders inspire and then get out of the way. They know that talented people don’t need or want hovering managers. Leadership is about influence, guidance, and support, not control. Look for ways to do your job and then get out of the way so that people can do theirs.

Honesty – Not a week goes by that we don’t hear about a so-called leader losing credibility because he or she was dishonest. Often this is because of pressure to try and “measure up” and it’s not coming from a place of being real – often this relates to fear of not being accepted for your true self. We live in age of extraordinary transparency, which is reason enough to always be true to your core – your mission will be revealed, your motivations will show by your behaviors. But it goes way beyond this. It’s an issue that sets an example and elevates an organization. If you have a reputation for honesty, it will be a lot easier to deliver bad news and face tough challenges. Are you inspiring people from your heart ? ?

Kindness and respect – Nice leaders (people) don’t finish last. They finish first again and again. Ignorance and arrogance are leadership killers. They’re also a mark of insecurity. Treating everyone with a basic level respect is an absolute must trait of leadership. And kindness is the gift that keeps on giving back. Of course, there will be people who prove they don’t deserve respect and they must be dealt with. But that job will be made much easier, and will have far less impact on your organization, if you have a reputation for kindness, honesty and respect.

Collaboration – People’s jobs and careers are integral to their lives. The more your organization can make them a partner, the more they will deliver amazing results. This means, to the greatest extent possible, communicating your organization’s strategies, goals and challenges. This builds buy-in, and again is a mark of respect. People won’t be blindsided (which is a workplace culture killer) by setbacks if they’re in the loop.

Partner with your people – As I said above, people’s careers are a big part of their lives. That seems like a no-brainer, but leaders should have it front and center at all times. Find out what your employees’ career goals are and then do everything you can to help them reach them. Even if it means they will eventually leave your organization. You will gain happy, productive employees who will work with passion and commitment, and tout your company far and wide. This an opportunity to brand your greatness.

“Leadership is both an Art and a Science..” These tools are guidelines, not rigid rules. Everyone has to develop his or her own individual leadership style. Make these tools a part of your arsenal and use them well as you strive to reach people on an emotional level. Be Human. This Matters..

The “Secret Ingredient” in “GE’s Talent-Review System” | by: Raghu Krishnamoorthy | HBR

” GE is often highlighted as an organization that develops some of the most Effective Leaders. Most companies have a version of the talent-review system we use at GE “…

But judging from what I hear from managers of companies that visit us to benchmark our system, the difference between our approach and theirs does not lie in forms, rankings, tools, or technologies. It lies in the intensity of the discussion about performance and values. The debate, the dialogue, and the time taken to have an exhaustive view of an individual − evaluating them based on both what they accomplish and how they lead − are far more important than any of the mechanics.

The heart of our system has always been about the enormous time commitment the organization and the leadership devote to the conversation about people..

As the custodian of the talent-review process, I have been lucky to observe this at close quarters. Here is what I’ve learned :

a. It starts with the attention given to the individual appraisal – Managers are expected to dedicate time to prepare for a detailed discussion of a direct report’s performance and values, strengths, development needs, and development plans. Most employees spend over 1,800 hours a year working for the manager and the company. Is it unreasonable to expect the manager to spend at least a few hours thinking about and discussing the performance appraisal as part of a larger commitment to helping the employee be more successful ? (More about that in a moment). Individual appraisals are considered enormous opportunities for the candid, constructive conversations that employees deserve.

b. It is not uncommon for a manager’s assessment and feedback to be questioned by his or her own manager, if the commentary does not appear to reflect the individual accurately – I have seen our top leaders return an appraisal because it did not do justice to the feedback on the individual. Such a disconnect is the worst thing that can happen because it is a reflection of the manager, or the HR manager, as much as it is of the employee. This practice of multi-level engagement ensures that the quality of the appraisal is honest and comprehensive.

c. We continue to use a nine-block grid with quadrants that capture levels of performance and values not as a means of a forced ranking but as a way of facilitating differentiation – Here is how it is done. As our businesses and functions go through the process, the leaders justify the positioning of talent in different quadrants of the grid. The system allows us to link the grid straight to the appraisal. The chairman sets the overall tone and expectations, and leaders across the company make suggestions, comments, and additions to the feedback. While each leader may only have visibility into his or her particular business, the system ensures consistency and provides a consistent view and assessment of talent across the company.

d. Most of our leaders, including the chairman, spend at least 30% of their time on people-related issues – It’s part of our operating rhythm. These discussions are rich in making calls on leadership, succession, opportunities for development, organization and talent strategy, diversity, and global talent builds. The discussions also afford us the opportunity to assess performance more closely and holistically − including market factors, internal factors, organizational complexity, and risk elements. More importantly, it is the business leaders who take the lead on these discussions, not the HR person. This is consistent with our philosophy that talent development and assessment is a key business agenda, not just an HR activity.

e. Some skills are more important than others to be a great leader – As I have observed these discussions, some of the patterns are becoming increasingly obvious to me. For instance, the difference between a great leader and a good one is not just about intellectual capacity; it is often about judgment and decision-making. Likewise, a hunger to win, tenacity, customer advocacy, and resourcefulness can trump some of the skills we often look for − analytical skills, for instance. Such traits are best unearthed through discussions and become important considerations for future talent mapping.

Effective talent review is an intensely human process that calls for extensive demands on a leadership’s time…There are no formulas or equations..

The power lies in giving people the attention, candid feedback and mentoring they deserve through a company-wide commitment to human-capital development..!! 

“Indian E-commerce market” is “No-where near maturity” ; eBay India MD, Insights| by: Ramnath Subbu | The Hindu

It is the global ‘Big Daddy’ of the e-commerce business. After entering India through the acquisition of Baazee.com almost a decade ago, California-headquartered eBay has come a long way, ushering in a burgeoning e-marketplace…

Latif Nathani, Managing Director, eBay India, spoke to The Hindu about eBay’s “first mover” advantage in India, and the challenges facing the rapidly evolving industry. Edited excerpts :

The evolution of the e-commerce market in India has been quite remarkable over the last few years. What does the future hold for this fast-growing industry ?

E-commerce in India has evolved significantly in the last decade, and there are many aspects of e-commerce like TV shopping, online shopping and mobile, which are all part of what is digital commerce. That journey has happened over the last decade.

eBay entered India nine years ago through the acquisition of Baazee.com, and FIVE Years prior to that was the start of Organized Retail in India. So, it is about 15 years old.

What is interesting though in India is that the entire evolution of e-commerce happened over 15 years. In advanced markets like the U.S., it took over 50-60 years..

First you had Organized Big-box Retail, then Catalogue Shopping, then TV shopping, Internet and then the Mobile Shopping. In India, this entire journey is compressed into 15 years, and especially e-commerce has been compressed in nine years since we came in. It is moving forward quite rapidly. Industry statistics talk of a 55-60 per cent year-on-year growth, and moving from a $2.1 billion to a $3.2 billion market in 2014.

Given the size of the addressable market, what are the main challenges faced by the industry ?

India now has more than 200 million Internet users, with 89 million users visiting online shopping sites. The challenge though is that the number of people actually shopping is a fraction of that, at 14-15 million. That is because in developed markets, infrastructure was quite developed by the time e-commerce came in. People had credit cards, the market had gone through TV shopping, catalogue shopping etc. In India, all that is new.

The main challenges facing the e-commerce industry are infrastructure and trust-related challenges…We are working on both. On the infrastructure side, we work with the government and industry bodies. On the trust side, we have done a lot by ourselves. Having been here for nine years and having understood the Indian consumer and the landscape, we have innovated in areas of logistics with a service called “Power ship” and innovated in the area of trust with “Paisa Pay” and “eBay Guarantee” where we guarantee that whatever buyers buy, there is a 100 per cent guarantee up to 30 days for a full refund or replacement. We have taken these challenges head-on.

What can E-commerce do for India considering it is still a miniscule portion of the overall Retail-Pie ?

I make a very extreme statement usually that e-commerce is the future of India. I see India benefiting significantly from it. eBay was among the first to enter the country, and we have invested significantly here.

In our report, we have an example of a 24-year-old matriculate from a small shanty in Dharavi (Asia’s largest slum in Mumbai) making leather jackets and selling them on the eBay platform to 30 countries worldwide.

The report shows the picture of e-commerce in India today. We have 30,000 sellers on eBay India selling domestically, and 15,000 that sell across the globe. We are present in 201 countries with 128 million buyers. The 15,000 sellers here are micro-multi-nationals – small sellers who sell across the globe to 31 countries.

Other than the domestic market, which are the largest markets for Indian eBay sellers ? 

We are a trusted marketplace. Sellers list their goods, and we have 128 million buyers who visit our site. We facilitate the entire transaction. After listing, there is discovery where buyers find what they want. Then, we facilitate payment and create the trust aspect and then through intermediate logistics . The 30,000 sellers selling within India are selling on average across 19 states and 83 per cent of the value is being shipped across states. So, a small seller or artisan being able to sell across states.

Our biggest markets are the U.S., the U.K. and Australia with the fastest growing markets being Russia and Australia. Every 44 seconds someone buys a product from a mobile device, every eleven seconds, someone in the world is buying a product from an Indian eBay seller, and within India, we sell 16 products every minute.

In India, there has been a proliferation of E-commerce companies, several of whom have managed to get sizeable funding. What are the factors determining success in the Indian context ?

There are a lot of companies coming in, and the determining factor is understanding the Indian consumer. “Paisa Pay” was uniquely developed for the Indian market in India by Indian employees. It is not a technology used by eBay anywhere else in the world. So, understanding the Indian consumer is critical…

The evolution has been quick and with Indian consumers, trust has to be earned. That is based on the experience and how smooth the transaction flow is. Those are key determinants.

Are we likely to see a consolidation or shake-out in the near future ?

I think we are already seeing that. E-commerce is like any market that evolves. It has a lot of players coming in and then there is consolidation. Then again, players coming in have identified niches. We are seeing all that today. Companies identify a very narrow niche and are going into it as opposed to horizontals or say a marketplace.

Consolidation is a factor of quite a few things—it is a factor of your business model, your path to profitability and funding. It is very hard to predict…??

The Indian market is a huge market and we are nowhere near maturity. In terms of percentages, India has among the lowest Internet penetration in BRICS markets at around 12 per cent. In terms of online shopping we are very far behind BRICS and China in particular…In any market, consolidation happens due to multiple reasons and we are seeing that.

The spread of e-commerce is predicated on Internet access, which is poor here. What other barriers hinder the growth of e-commerce in India ? 

We have identified a couple of things. We know the government is trying to push towards a digital economy, which is there in the Reserve Bank’s vision statement . We know that in a market like India, cash-on-demand is very high.

There are certain states which have regulations which cause friction in the e-commerce experience. For example, some states need the buyer to fill a form and send to the seller before he can ship the product. That completely defeats the e-commerce experience..

The 15,000- odd micro-multinationals are doing an amazing service to India. These artisans make hand-made products and bring in valuable foreign exchange but are not recognized as exporters as they do not do bulk exports. We have made representations to the government with industry bodies like FIEO.

Steps in that direction would help e-commerce exports, which is a huge opportunity. There is also the point of trademark exhaustion. If someone procures a product legally outside India, he cannot sell it in India as it is a violation of the brand—trademark exhaustion. It is an industry issue that needs resolving…!!

Using “Analytics to Detect Retail-Fraud” : practices to “Help recover Margins Lost” | by: Deloitte | The Wall Street Journal

” Retail company CIOs are deploying “Predictive Capabilities”, continuous monitoring tools, and a host of innovative practices to help recover margins lost to criminals”…

As widely reported in 2006, a fraudster systematically deprived retailers of more than $600,000 over a three-year period by placing counterfeit bar codes on high-end toys, greatly reducing their price. The thief then bought the toys at their artificially low price and resold the items online for nearly full value. After monitoring sales reports for trends and anomalies, loss investigators eventually caught the perpetrator—but it took them three years.

Since this high-tech heist was exposed, “Shrinkage”—Retail inventory losses caused by fraud OR error—has not abated. In fact, global retail shrinkage increased worldwide 6.6 percent to $119 billion in 2011, an average of 1.45 % of retail sales…

Today, Retailers routinely find themselves battling attempted manipulation of their Financial-Statements & POS Transactions, collusion among Vendors, Shoplifting & Refund Fraud, plus a host of often elaborate schemes involving salaries, wages, and Employee-Theft / Pilferage..

“ It’s likely retailers will have to step up the pace of innovation in their fraud prevention and detection activities if they are to recover more of the margin currently being lost to fraudsters,” says Keith Denham, a principal in Deloitte’s Consumer Products, Retail, and Distribution Advisory practice.

“ It is time for the retail industry to consider how new technologies and data analytics may help to detect more fraud and improve margins.”

Common Fraud Management Challenges:

While designing and implementing strong internal controls in known risk areas is an important part of fraud management, it may not be enough to recover more of the margin currently being lost to fraud. Consider the limitations of traditional fraud prevention activities and how deploying analytics could help CIOs and business leaders transform their approaches for combating Retail Fraud :

Resource Constraints & In-efficiencies – The resources needed to prevent and detect fraud are often limited for budgetary reasons. Those that do exist are likely focused on traditional activities, such as internal audits and detection techniques chosen primarily for their simplicity and economy. For example, when a retailer has many locations, personnel experienced in audit and inspection processes and who possess historical knowledge of audit outcomes often determine which locations warrant increased scrutiny. Yet staff reductions throughout the retail sector have led to a loss of experienced personnel, thus hampering the effectiveness of traditional practices. “New analytics technology can help fill the void created when experienced personnel leave and take their accumulated knowledge with them,” says Darren James of Deloitte.

“ By using analytics to mine transactional, financial, and other data, auditors can flag investigation locations that display greater anomalies. Moreover, they can use these tools to learn from audit and inspection efforts, and retain that knowledge for ongoing data analysis and monitoring.”

Outdated Technologies & Limited Data Analytics – “In their use of analytics, some retailers appear to be playing catch-up,” observes James. “Basic point-of-service (POS) analytics only take you so far. By deploying predictive analytics to better understand anticipated sales volume of a given stock keeping unit (SKU) and anticipated sales of products in the secondary marketplace, retailers might be able to identify certain product transactions as outliers and alert stores to increase their scrutiny of such sales.”

Inadequate Control Activities – “Internal thefts are pervasive in the retail industry. Indeed, some of the most significant fraud is committed by employees who hold high positions and have the authority to override internal controls to achieve their goals”. For example, commissioned employees might abuse their power by selling below the company’s discount limit to reach a personal sales quota, and franchise owners may be tempted to under-report sales OR buy supplies from someone other than the franchiser to reduce franchise fees and procurement costs. Data analytics can provide a new level of transparency and insight into such activities.

Oversight & Lack of Continuous Monitoring – Traditional fraud prevention techniques tend to be historical rather than predictive. As such, effective oversight processes are often labor intensive and time consuming. In contrast, the credit card industry uses real-time alerts to flag unusual customer transactions, thereby triggering a hold on these transactions and avoiding potential losses. As a result, credit card companies can use employees to intervene, when necessary, in high-value transactions requiring more sensitive handling, such as those involving lucrative accounts. “In some ways, the retail industry has not kept up with other industries in implementing continuous monitoring techniques,” says Robert Fowlie, a partner in the Forensic practice of Deloitte.

“ Many retail companies have significant amounts of data at their disposal, captured daily through operations. But turning that data into insight through continuous monitoring and real-time feedback remains a challenge.”

Building an Effective Fraud-Risk Framework :

Retailers can often benefit from implementing a holistic fraud framework that supports the continuous innovation of fraud management strategies. Rather than simply augmenting traditional activities, this model takes a fresh approach to improving retailers’ ability to prevent and detect fraud. The framework comprises “FOUR Main components” :

1. Cultural Assessment – By examining a company’s culture, business ethics, and actions, decision-makers can focus their fraud management efforts and apply data analytics to important areas. One strategy for gaining needed insights could involve gathering anonymous feedback from a large group simultaneously using an established web-enabled survey tool. The survey can include six principal areas: awareness of relevant policies and follow-through; corporate culture; observed unethical or questionable actions; issues that either facilitate or reduce the likelihood of fraud occurring; respondents’ perceptions of the desired outcomes of ethics and compliance efforts; and specific risk issues. By evaluating the results of the survey, decision-makers can better identify areas of fraud risk using objective data rather than the potential biases and misinformation.

2. Technology & Data Analytics – Understanding the fraud-related challenges a company faces can help focus IT’s efforts to build and implement a tailored technology solution. An organization can likely accomplish this by analyzing data from daily transactions and activities such as purchasing, accounts payable, POS, sales projections, warehouse movements, employee shift records, returns and store-level video and audio recordings. Rigorous and regular sample-based analysis of data across the company can help pinpoint fraudulent activity and develop appropriate priorities for case management and investigation. It may also reduce the false positive rate of detection and prevention strategies.

3. Effective Control Activities – Many companies begin to build control frameworks and processes after a large and public fraud causes significant negative financial and reputational damage. All retailers—even those with established control activities—can benefit from reviewing their existing risk environment and processes, and identifying how innovation can enhance these activities before an incident occurs. One way of evaluating a control environment is to hold a series of facilitated stakeholder workshops, which can help the company assess the likelihood and potential impact of different types of fraud, as well as help to identify limitations in the control environment, such as potential management override.

4. Continuous Monitoring & Innovation – Fraudsters continuously adjust their activities to circumvent fraud prevention and detection controls. If retailers want to fight fraud effectively, they should take a similarly flexible approach. Continuous monitoring can include several tactics, such as tracking product and inventory movement for unusual patterns that may indicate shrink and store associate theft, and monitoring exceptions and trends, such as the number of invoices from suppliers over time, unusual invoice number sequencing, and the amount of money spent for goods and services purchased from a particular vendor. In addition, companies could consider building a model for a predicted number of product returns per shift. When numbers exceed a set threshold for returns by product or by individual, manager verification can be invoked.

Risk management programs will vary depending upon a Retailer’s Fraud-Risk profile and the current state of its controls. Increasingly, the effectiveness of these programs may hinge on the way a retailer leverages analytics. “ Staying one step ahead of the fraudsters is critical to protecting a company’s assets and reputation,” says Denham.

“Implementing Data Analytics into the elements of a company’s Fraud-Framework can help identify patterns, trends, and anomalies in the data. It can help detect a broader range of exposure, including previously unknown risks and uncover new patterns of fraud”.

Several Foreign Hotel-Chains like “Rotana, Meininger, Jumeirah & Six Senses” eye Indian market | ET Retail

A string of global Hotel Chains including “Rotana”, “Meininger”, “Jumeirah” and “Six Senses” is waiting to enter the country in the next Two years, attracted by the growth prospects this market offers..

” If you look at the global situation right now, for these brands, China and India are the two largest markets”.

“Everybody continues to believe that India has the potential, no matter how bad the numbers look.” As these brands are already present in China, their current focus is on India. They are in exploratory stages to launch a mix of their portfolio, mainly in the mid-market segment.

Berlin-headquartered Meininger, owned by travel major Cox & Kings, is considering operating leases and management contracts in India, through tie-ups with unbranded hotels operating in good locations.

The company’s chief executive, says India is one market no one can choose to ignore. “It is still relatively ‘un-hoteled’ and the travel market is expected to double in the next seven-eight years from 850 million travellers. And since Indians by nature are price sensitive and value conscious, our philosophy will fit right in.”

While hotel management companies are upbeat about the Indian market, finding the right partner here is proving to be a challenge for them. According to Senior vice president for South Asia and Southeast Asia at Rotana Hotel Management Corp, choosing the partner has been tough after the company decided to enter India about two years ago. “By the time we made our entry into the market, things had slowed down. That has made us work a little harder.

It is difficult to find long-term partners in India and since a lot of developers come from a residential development background, they expect quick returns,” he says….which they are coming to terms with, slowly.

However, adds that India is extremely under serviced and “Rotana” is looking at opening 20 operating hotels in the next decade. The Middle-East hotel chain plans to focus on the mid-market segment in the country, looking at the significant growth potential.

According to HVS, mid-market brands make up 34.4 per cent of the proposed branded hotel supply between 2012-13 and 2017-18. However says, that it is currently a wait and watch situation for these companies and while they are charting plans for the country, their actual entry will only happen post elections.

Dubai-based Jumeirah Group, a member of Dubai Holding, had been in talks to open properties in Mumbai and Goa. But owning to the macro-economic scenarios, timelines to conclude deals are getting longer and harder.

The new hotel companies will also have to face stiff competition from existing Indian brands like Citrus and Keys which are on an expansion drive. Citrus Hotels and Resorts, for instance, recently added five hotels in new micro-markets in India.

Keys Hotels has a pipeline of 22 properties that are expected to open in the next two years. The company is also in talks for 80 new deals and expects 20 per cent of them to convert into management contracts.

Typically, a mid-market or budget hotel would cost around Rs 20-25 lakh per room and would be sustainable at max 100 rooms. And banks are open to lending to the new wave of projects..

“Even if they are lesser-known brands right now, but with a good micro-market, banks would be willing to lend,” says Deven Shah, senior vice president for debt capital markets at Kotak Mahindra Bank that lends to hospitality projects.

Project cost for a Mid-market OR Budget-hotel would be around Rs 20-30 crore, excluding the land cost which would not be very high in these locations, he says…

Building “Lasting Leadership Models” : its about “Emotional Courage” | by: Richard Rekhy | People Matters

“Leadership is a Lot about Emotional Courage and the only way to teach courage is to demand it of people ”..

“Survival of the fittest is not the same as survival of the best. Leaving leadership development up to chance is foolish” Morgan McCall.

We are living in an increasingly interdependent world. Rapid shifts in technology, geopolitics, environment, economy and business models have created complexities that the world has not seen before. This era is hyper dynamic and threatens to overwhelm companies with its velocity of change.

Are we prepared to meet these challenges and take our companies through the next phase of growth? What is the one factor that will work across sectors and make companies robust enough to face the new world and carve out the road to success? We need more leaders, better leaders and we need them fast. We need leaders who add genuine value to people and organizations; we need leaders whose integrity is unquestionable; we need leaders who can inspire and motivate and we need leaders who have the capability to create a legacy.

“ It is important that identifying high potential leaders for future becomes a part of the DNA of an organization, followed by assessing their strengths and development needs, and then a plan that hones them into leaders Leadership development cannot be detached from business strategy. It must be a balance of body, heart and soul, of skills & knowledge, of execution and behaviour. Leadership development cannot be detached from business strategy. It must be a balance of body, heart and soul, of skills & knowledge, of execution and behaviour”..

The words of John Maxwell resonate with me – “ The single biggest way to impact an organization is to focus on leadership development. There is almost no limit to the potential of an organization that recruits good people, raises them up as leaders and continually develops them.”

It is true that one of the most critical factors of a company’s future is the depth and quality of its leadership. Companies that invest in leadership development find themselves future-proofed and better prepared to deal with uncertainties and a changing world. It is critical to realize that the ethos of leadership development lies in creating a culture of performance. Great leaders attract, hire and inspire great people. A mediocre manager will never attract or retain high-performing employees. A focus on leadership development attracts high-performers and promotes a high performance driven culture. Organizations that are ‘built to last’ are those that take leadership development seriously.

Is your organization focused on developing leaders who will be needed for long-term success? Is talent management, retention and successful leadership transition a part of your business plans? Are you building a leadership pipeline that is broad based and cuts across various levels in the organization? Succession planning usually focuses on the CEO or those who are a few levels below the CEO. In its true essence, the only way to build a leadership pipeline is to focus on each level within the organization. The objective should be to produce a continuous supply of leaders. It is important that identifying high potential leaders for future becomes a part of the DNA of an organization, followed by assessing their strengths and development needs, and then a plan that hones them into leaders.

It’s not just about achieving business results; it’s about nurturing people. In fact, business results cannot be obtained without energizing and challenging people who make it happen. Companies need leaders who truly care about people. It is time that leaders realized that the scope of succession planning must broaden, that building talent pipeline ought to extend beyond top management. It must include everyone who makes a meaningful contribution to the company’s plans. The talent pool within the company must match the pace of growth. Every leader at every level must work to create more leaders and not followers. People who are secure in themselves will have the courage to do this. Jack Welch articulates this well, “ I was never the smartest guy in the room. From the first person I hired, I was never the smartest guy in the room. And that’s a big deal. And if you’re going to be a leader – if you’re a leader and you’re the smartest guy in the world – in the room, you’ve got real problems.” – Jack Welch

While the process starts with the scouting and identification of leaders at each level in the organization, leadership development has to go beyond conventional skills training. You have to also look at attitude and behavioral aspects. The first and foremost focus must be on values and ethics. No amount of skill or knowledge can compensate for the lack of values. It doesn’t matter what your title is, if you don’t do the right things for the right reasons, you will fail. If an organization fails to assess the values test in potential leaders, it is letting itself up for future disaster. Ultimately, an organization lives and dies by its leadership; it must, therefore, aim for a value-based leadership development program. The former PepsiCo Chairman Wayne Calloway has rightly said, “I’ll bet most of the companies that are in life-or-death battles got into that kind of trouble because they didn’t pay enough attention to developing their leaders.”

Leadership development cannot be detached from business strategy. It must be able to uncover skill gaps that can disrupt the growth of the most promising leaders. Getting the right skills in the right place must be the fundamental goal. The education and development process must be embedded in the business and married to key strategic initiatives of the company. Training must be continuous and on the job. It cannot be event driven. It must offer practical, real world connections. The connection to reality must never be lost. The development programs must offer different modules that aim and target different aspects. Cramming too many things together will result in a loss of focus. Effective leadership development programs will be a balance between formal learning approaches, learning on the job, learning by doing and learning from others. There must be an opportunity for application of knowledge on the job. There must be real life exposure to a variety of jobs, situations and bosses.

Leadership is a lot about emotional courage – and that is difficult to teach theoretically. The only way to teach courage is to demand it of people. A leadership development plan must put people into real life situations where their ability to take courageous decisions is tested, where they have the opportunity to demonstrate that they can remain steadfast in uncertainty, remain pleasant and unfazed in the face of opposition and demonstrate that they have the courage and the conviction to stand by their values. These traits cannot be learnt by attending a lecture or by reading a book. That is why leadership development must be integrated into work.

In the words of Albert Einstein, “ Learning is experience, everything else is just information”..

The power of motivation and inspiration must not be forgotten. A good leadership development program must theforefore make space for coaching and mentoring. Real life leaders are greatly positioned to train and motivate people to higher levels of performance. Existing leaders have a wealth of knowledge and experience that they can share with potential leaders. If existing leadership can be the icons that people within the organization look up to, great aspirational energies are created. A mentor or coach can provide leadership training in its most holistic aspect. A mentor who believes in an individual can inspire the individual to greatness. A lot of people have gone further than they thought they could because someone else believed in them and guided them.

To be a leader means to be an influencer ; it means that you have the power to shape the lives of others and have a significant impact on the organization. Any leadership program, therefore, must emphasize how a leader should think and act. He must realize what it means to be in a leadership role. He must be trained to understand power, dealing with politics in the organization, how to influence people, how to build trust and create alliances that will increase his ability to get positive results. Leadership development must be a balance of body, heart and soul; of skills & knowledge, and of execution and behavior.

Despite the tough economic conditions, opportunities abound. Companies will do themselves and the world a great favour by creating a pipeline of leaders who are prepared to face the new world. Organizations need to have strong processes in place before promotions take place for senior leadership positions. This group of people needs to be aligned to the vision. It’s important that promotions are based on merit and not on emotions. If we have to create leaders of the future, the young must be guided, their skills honed, their attitudes set in the right direction, their bodies prepared for the grind of hard work, their minds strengthened with emotional courage and their hearts grounded.

In the words of Noel Tichy, “Winning companies win because they have Good Leaders who nurture the development of other leaders at all levels of the organization”..