DoCoMo - The Japanese Wireless Telecom

Leader: The Tsunami in Trouble

In May 2002, NTT DoCoMo (DoCoMo) Inc., Japan's
largest mobile phone company, announced a net loss
of ¥ 116.19 billion1 and a goodwill write-off of ¥ 624.6
billion for the fiscal ending March 2002. Though the
company registered an increase in operating revenues
from ¥ 4,669.37 billion in 2000-01 to ¥ 5167.14
billion, the revenue growth was stated to be well
below its company expectations. Company sources
attributed this to the general decline in Average
Revenue Per User (ARPU) for voice services and
slower growth in new cellular subscribers across the
country (Refer Exhibit I for DoCoMo's financials and
ARPU data).

DoCoMo's announcement did not come as a major

surprise to industry observers, as media reports had
been forecasting losses for the company since early
2002 itself. What was noteworthy about this
development, however, was the fact that the company
was largely believed to be performing exceptionally
well in the recent past. The fact that DoCoMo had
roped in as many subscribers as the leading US-based
media company AOL, but much faster, was often cited
as a proof of Japan finally waking up to the challenges
of the 'new' economy.
Analysts claimed that DoCoMo was paying the price for its aggressive overseas expansion
drive during 1999-2002, in the form of these losses. DoCoMo had to take a huge write-off in
its books on account of a decline in the value of its foreign investments and the slump in the
global telecommunications market in 2001. While some analysts felt that DoCoMo should
revamp its global strategy, a few others said that the company should take measures to
increase ARPU. In the words of Hironobu Sawake, an analyst at J P Morgan (leading global
financial services firm), "The question is whether we can see a rise in profitability."

DoCoMo announced that its commitment towards globalization was intact. The company
also brushed off analysts' view that the focus should be on increasing the ARPU. Instead, it
announced that it would focus more on 3G (Refer Exhibit II for a note on 3G) initiatives
(developing and launching more innovative and new 3G technology products). While
DoCoMo was still lauded for its well designed and executed strategic and marketing game
plan that had helped it build a huge subscriber base over the years, these developments
had raised many doubts about its future prospects and its ability to turn itself around.
Branded Gold Jewellery Market in India: The Gold Rush
In the late 1990s, the Indian jewellery market
witnessed a shift in consumer perceptions of
jewellery. Instead of being regarded as only an
investment option, jewellery was being prized for its
aesthetic appeal. In other words, the focus seemed to
have shifted from content to design. Trendy,
affordable and lightweight jewellery soon gained
familiarity. Branded jewellery also gained acceptance
forcing traditional jewellers to go in for branding.

Given the opportunities the branded jewellery market

offered; the number of gold retailers in the country
increased sharply. Branded players such as Tanishq,
Oyzterbay, Gili and Carbon opened outlets in various
parts of the country. Traditional jewellers also began
to bring out lightweight jewellery, and some of them
even launched their in-house brands.

However, the share of branded jewellery in the total

jewellery market was still small (about Rs. 10 billion
of the Rs. 400 billion per annum jewellery market in
2002), though growing at a pace of 20 to 30 percent
annually.
The branded jewellery segment occupied only a small share of the total jewellery market
because of the mindset of the average Indian buyer who still regarded jewellery as an
investment. Moreover, consumers trusted only their family jewellers when buying jewellery.
Consequently, the branded jewellery players tried to change the mindset of the people and
woo customers with attractive designs at affordable prices.

Gold Jewellery Market in India

Before the liberalization of the Indian economy in 1991, only the Minerals and Metals
Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to
import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to
import gold freely.

Exporters in export processing zones were allowed to sell 10 percent of their produce in the
domestic market. In 1993, gold and diamond mining were opened up for private investors
and foreign investors were allowed to own half the equity in mining ventures. In 1997,
overseas banks and bullion suppliers were also allowed to import gold into India. These
measures led to the entry of foreign players like DeBeers, Tiffany and Cartiers into the
Indian market.

Rethinking Domino's Expansion Plan

In May 2001, Pavan Bhatia, CEO, Domino's Pizza India
Ltd.1 (Domino's) stepped down from his post. Earlier,
in March 2001, at a board meeting, Domino's top
management concluded that 'Pavan Bhatia's
performance during his 18-month tenure was not up
to the mark.' The board felt that Pavan Bhatia had
initiated an expansion strategy that was 'reckless and
not properly thought out.' However, many analysts
did not agree with the board's conclusion. They felt
that the board was not considering the possible long-
term benefits of Pavan Bhatia's strategy. During
March 2000-January 2001, Pavan Bhatia opened
Domino's outlets in small towns and cities. Pizza
consumption in these places was very low. Analysts
felt that even those willing to opt for the product
found the price unacceptable. The cost per meal was
too high. In September 2001, due to low footfalls 2and
lower volumes, Hari Bhartia 3 planned to shut down
Domino's outlets not only in some small cities 4 but
also a delivery outlet in the wealthy Gujranwala Town
in North Delhi. One of the two outlets in Ludihiana
was also planned to be shut down. (Refer Exhibit I for
post Pavan Bhatia strategy of Domino's)

Sky is the Limit

In November 1999, Pavan Bhatia took over as the CEO of Domino's. He seemed to be very
ambitious and wanted to make Domino's the largest fast-food chain in India. Pavan Bhatia
went about opening Domino's outlets across the country. The number of outlets multiplied
four fold to 100 between March 2000 and January 2001. It was the fastest growth Domino's
had in any of the 63 countries it operated in. From an average of four stores every year in
its first four years of operation, Domino's expanded to more than 100 outlets in 10 months
across 30 cities.

Domino's entered into an agreement with a real estate consultant CB Richard Ellis to help
with locations, conduct feasibility studies, and manage the construction. Pavan Bhatia said,
"We are in the business of selling pizzas, not hunting for real estate. And one of the biggest
impediments in retailing is real estate, so we decided to hand over the entire real estate
operations to estate consultants CB Richard Ellis." Pavan Bhatia realized that fast track
growth could be achieved only by focussing on the core business of selling pizza.

Doordarshan's Problems: Is DD Dead?

After years of falling revenues, in 1999-2000
Doordarshan (DD)1 had a revenue growth at 50%. In
1999-2000, DD earned revenues of Rs 6.1mn
compared to Rs 3.99 mn in 1998-99. DD showed
signs of revival with the launch of DD World (a
channel for NRIs) and had relative success with some
of its regional channels (Refer Table I for different DD
channels).

However by the end of 2000-01, DD's honeymoon

with success seemed to be over. In 2000-01, DD's
revenues were projected to grow at 6-15% while
private channels such as Zee TV, Star, Sony had
projected 40-50% revenue growth2. Analyst's felt that
DD's sagging revenues were only tip of the iceberg.
 DD was plagued by multiple problems, which found
their roots in the mismanagement of affairs. By the
late 1990's the private producers, advertisers and
audience had deserted DD. Not even one car company
advertised on DD and even two-wheeler
manufacturers kept a low profile 3. Ads of Pepsi and
Coca-Cola were found only during sports telecasts.
Only FMCG companies stuck to DD because of its terrestrial network to reach the rural and
semi-urban audience4. In spite of having over 21,000 employees 5, DD outsourced 50% of its
programmes from the private producers. In late 1990's DD faced number of allegations of
large-scale scams and irregularities. Under utilized infrastructure, improper investments and
poor financial management plagued the performance of DD. In 1992, when the Government
opened airwaves to private players, DD faced the heat of competition from private satellite
channels.

In the Cable & Satellite (C&S) homes it was found that there were hardly any viewers for
the DD programmes. The depleting Television Viewer Ratings (TVRs) 6 of the DD
programmes was also a cause of concern as advertisers deserted due to its low viewer
ratings. Analysts felt that DD would need a budgetary support of Rs 5 bn during the fiscal
2000-01 to sustain itself as its revenues would not be enough to meet its expenditure.
Analysts questioned the capacity of the Government to own DD and many felt that
privatization would be the only solution.

Cartoon Network - The Indian Experience: Cartoon

Crazy Kids (and Parents)
In March 2001, leading satellite television (TV)
channel, Cartoon Network, held a cricket tournament
titled 'Toon Cricket 2001,' in Mumbai, India. In the
tournament, famous cricket players were to play
against famous cartoon characters such as Scooby
Doo, Tom, Jerry, Fred Flintstone, Dee Dee, and
Johnny Bravo. The tournament was a promotional
exercise, aimed at increasing the popularity of the
channel and its cartoon characters. The match was
scheduled to begin at 2.30p.m, but the 35,000 plus
capacity stadium was almost full by 1.30 p.m. with
children and their parents.

By 2.30 p.m. the stadium was overflowing and many

were waiting outside trying to enter the stadium,
leading to a stampede. As the organizers kept trying
to manage the crowds, they had to delay the match
till 4.00 p.m. When the organizers announced the
start of the match, children and their parents went
wild with excitement and broke the barricades to meet
their favorite cartoon characters. When pleadings and
requests failed to control the crowd, the organizers
had to threaten the children with the cancellation of
the match to send them back to their seats.
Even then, when the match began, a ring of people stayed on the field, surrounding the
pitch, obstructing the view of the people who returned to the stands. The organizers and the
security people were helpless, as they did not want to physically force the children off the
field. By 5 p.m. many disappointed people left the stadium saying, "We can't see anything,
what's the point?" Observers remarked that judging by the number of people who were
there in the first place, the stadium was still probably full, even when half the crowd had
left.

The crowd eventually settled down and the second half of the match went well. The cartoon
characters entertained and delighted the crowds with their antics. This overwhelming
response to the tournament was beyond even Cartoon Network's expectations. A stunned
looking Cartoon Network official said, "I've never seen so many kids!" Though it was not the
first time Cartoon Network had organized such a promotional event, they had never seen a
response like this, where cartoon crazy children and their parents had gone so 'completely
berserk.' Even the organizers were amazed at the popularity of Cartoon Network's
characters.

Reviving Khadi in India: Khadi Loses its Sheen

Khadi1, which symbolized self reliance and
emancipation during the freedom struggle in
India2 has lost its sheen over the years. And there are
several reasons for the same. Post 1947, India opted
for state led large scale industrialization.

With many Indian industrialists setting up huge textile

mills, the mass production of fine cloth led to the
availability of cloth at lower prices. People began to
buy machine made textiles and thus Khadi began
losing out to the mill fabric. In January 1953, the All
India Khadi and Village Industries Board was set up to
provide employment to thousands of spinners all over
India.

In 1957, the Khadi and Village Industries Commission

(KVIC) was established to take over the work of the
board. KVIC was formed as a nodal agency to
promote Khadi all over India through its exclusive
outlets known as Khadi Bhandars3. The Government of
India (GoI) has ever since continued its support
to Khadi.
However, there were a few problems. According to designers, the production of Khadi was
inconsistent and the cloth was prone to shrinkage and fabric stretch. Besides, fabric colours
in khadi were also limited. Red tapism and bureaucracy prevalent in the Indian system,
further hampered the growth of the Khadi sector. Inspite of having a wide distribution
network, there were problems, especially middleman. Corruption was rampant. There were
many bogus Khadi units operating in the country, which made it extremely difficult to claim
rebates from the Government of India (GoI).

KVIC received huge financial assistance from the GoI in the form of subsidies and rebates.
In May 2000, the Ministry of Small Scale Industries, announced a special package of
Rs.12.16 billion to the industry. In order to face the challenges of globalization and
strengthen its position in the market, KVIC launched two separate
brands, Sarvodaya and Khadi in August 2001. Sarvodaya comprised consumer goods like
incense sticks, spices, honey, and pickles.

DS Group's Entry Into Food and Beverages

Sector: Introduction
In 1998, the DS Group1 set up a subsidiary, DS Foods,
to enter the food and beverages market and
transferred its flagship brand 'Catch' 2 (See Exhibit I on
DS Foods product list) to DS Foods. In October 1999,
DS Foods launched bottled natural spring water under
the 'Catch' brand.

The group announced that it would invest Rs 1

billion3 in the next three years, in its foods venture. In
1999, DS Foods launched the Pass Pass (Closeness)
mouth freshener. This was the first branded 'Indian'
mouth freshener. By mid 2001, Pass Pass was a Rs
350 million brand.

Pass Pass aimed at becoming a Rs 500 million brand

by the end of 2001. Similar products like Aas Paas,
and Saath Saath4 soon appeared in the market. DS
Foods also planned to enter other 'untapped' markets
like Club soda, flavored water, and iced tea.

While some analysts felt that DS Foods might not be

able to leverage the brand equity of Catch in the new
categories, DS Foods thought otherwise.

Background
Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in
1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco.
By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965,
they launched the first branded chewing tobacco in India.

This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group
launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder
mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobacco-
based products with brands like Baba, Tulsi and Rajnigandha.
Hindustan Motors' Struggle for Survival: Troubled Waters?
In October 1998, Hindustan Motors (HM), makers of
one of India's best known cars - the Ambassador -
launched a new car, the Mitsubishi Lancer (Lancer).
The launch of Lancer, a new car from the HM stable
after nearly two decades, was reported to be very
important for the company, whose market share was
on the decline.

HM was reportedly banking heavily on the Lancer's

success to fight competition from other car
companies. Lancer was positioned in the mid-size
luxury car segment, which was dominated by Maruti
Udyog's (MUL) Maruti Esteem and Honda's Honda
City.

Lancer was received very well by automobile experts

throughout the country, largely due to its technical
finesse. The car's sales reached 2,866 units by the
end of the fiscal 1998-99. Much to HM's delight,
Lancer was even ranked as the top vehicle in India for
the three consecutive years (1999, 2000 and 2001)
by J. D. Powers1 for the least number of defects and
high customer satisfaction in a countrywide survey of
car owners.
However, the company's euphoria was short-lived as Lancer's sales failed to pick up as
expected. While 7,621 cars were sold in 1999, HM managed to sell only 7,635 cars in 2000-
01 against a forecast of 8,000 2. On the other hand, sales of Honda City increased to 10,011
in 2001 from 9631 in 1999 (Refer Exhibit I for the sales comparison).

Meanwhile, HM's other offerings Ambassador and Contessa were also faring badly. In 1999,
Ambassador's sales were down to 15,374 from 18,312 in 1998 and Contessa's to 285 from
575 in 1998. This poor performance took a heavy toll on the company's bottomline and HM
reported a net loss of Rs 615.8 million for the fiscal 1999-00. (Refer Table I). The company
had reportedly accumulated losses worth Rs 1.1 billion during 1999-2001.

DS Group's Entry Into Food and Beverages Sector: Introduction

In 1998, the DS Group1 set up a subsidiary, DS Foods,
to enter the food and beverages market and
transferred its flagship brand 'Catch' 2 (See Exhibit I on
DS Foods product list) to DS Foods. In October 1999,
DS Foods launched bottled natural spring water under
the 'Catch' brand.

The group announced that it would invest Rs 1

billion3 in the next three years, in its foods venture. In
1999, DS Foods launched the Pass Pass (Closeness)
mouth freshener. This was the first branded 'Indian'
mouth freshener. By mid 2001, Pass Pass was a Rs
350 million brand.

Pass Pass aimed at becoming a Rs 500 million brand

by the end of 2001. Similar products like Aas Paas,
and Saath Saath4 soon appeared in the market. DS
Foods also planned to enter other 'untapped' markets
like Club soda, flavored water, and iced tea.

While some analysts felt that DS Foods might not be

able to leverage the brand equity of Catch in the new
categories, DS Foods thought otherwise.

Background
Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in
1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco.
By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965,
they launched the first branded chewing tobacco in India.

This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group
launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder
mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobacco-
based products with brands like Baba, Tulsi and Rajnigandha.

The Story of the Cellular Phone Brand Orange

By the end of 2000, the sun seemed to be setting on
the Hutchison empire in India, or at least on its
Orange1 brand. Hong Kong-based cellphone operator
Hutchison Max Telecom,2 which owned the popular
Orange brand in Mumbai (India) might soon have to
give it up in favor of the city's second operator, BPL-
France Telecom.

France Telecom, which acquired worldwide rights for

the Orange brand in May 2000 from Vodafone3, was
planning to enforce its ownership of the brand in India
in a bid to cash in on the popularity of the
brand.4 France Telecom was keen on using the brand
via its joint venture with BPL 5 in Mumbai. Said a
France Telecom official, "We are likely to retain the
brand for this part of the world. A final decision is
likely to be taken early next year". Analysts felt that
the Orange takeover could come as a severe blow to
Hutchison in Mumbai, as the company could lose its
leading position in this market. Hutchison would have
to re-invest huge amounts in building up a new brand
and giving it the same level of credibility that Orange
enjoyed.
Analysts also felt that Hutchison, which had controlling stakes in cellular operators in other
circles like Delhi, Calcutta and Gujarat, would have to develop a new brand for these
circles.6 The company might be hit particularly hard in Delhi, the second largest cellular
market in the country. The Hutchison Group had initially planned to launch the Orange
brand in Delhi, in May 2000, through its 49 per cent holding in Sterling Cellular. This was
later delayed to October 2000.

It became clear that the Orange launch in Delhi had run into rough weather. Sudarshan
Banerjee, CEO, Sterling Cellular, agreed that there was a delay in the Orange launch in the
Capital, but attributed it to an expansion in its network. He Said, "We might launch Orange
some time next year in Delhi." The Orange brand was also to be launched in Kolkata, where
The Hutchison Group held 49 per cent in Usha Martin. But France Telecom, the foreign
equity partner of Hutchison's Mumbai rival, BPL, seemed to be raising objections over the
use of the Orange brand name outside the Mumbai circle.

GE and Jack Welch: Introduction

On September 6, 2001, John Francis Welch Jr. (Jack
Welch), Chairman and Chief Executive Officer of
General Electric Co. (GE)1, retired after spending 41
years with GE. During the period, he made GE the
most valuable company in the world. Analysts felt
that, with his innovative, breakthrough leadership
style as CEO, Jack Welch transformed GE into a highly
productive and efficient company.

During Jack Welch's two decades as CEO, GE had

grown from a US$13 billion manufacturer of light
bulbs and appliances in 1981, into a US$480 billion
industrial conglomerate by 2000. Analysts felt that
Jack Welch had become a 'deal-making' machine,
supervising 993 acquisitions worth US$13 billion and
selling 408 businesses for a total of about US$10.6
billion.

Jack Welch was infact described as 'the most

important and influential business leaders of the 20th
Century' by some Wall Street analysts and academics
alike. Management experts felt that Jack Welch's
reputation as a leader could be attributed to four key
qualities: he was an intuitive strategist; he was willing
to change the rules if necessary; he was highly
competitive; and he was a great communicator.

The Making of a CEO

Jack Welch graduated in chemistry from the University of Massachusetts and in 1959 got a
Ph.D in chemical engineering from the University of Illinois. In 1960, he started his career at
GE as a Junior Engineer. However, in 1961, Jack Welch decided to quit the US$10,500 job
as he was unhappy with the company's bureaucracy. He was offended that he was given a
raise of only US$1000, the same amount given to all his colleagues. He had even accepted
a job offer from International Minerals and Chemicals in Skokie, Ill. 
However, Reuben Gutoff, an executive at GE convinced Jack Welch to stay back. Reuben
Gutoff promised that he would prevent him from getting entangled in GE red tape and
would create a small-company environment with big-company resources for him. This
theme of 'small-company environment' with 'big-company resources' came to dominate Jack
Welch's own thinking as the leader of GE. Jack Welch quickly rose to become the head of
the plastics division in 1968. He became a group executive for the US$1.5 billion
components and materials group in 1973. This included plastics and GE Medical Systems.

In 1981, Jack Welch became GE's youngest CEO ever (Refer Exhibits I & II). His
predecessor, Reg Jones said, "We need entrepreneurs who are willing to take well-
considered business risks - and at the same time know how to work in harmony with a
larger business entity...The intellectual requirements are light-years beyond the
requirements of less complex organizations."

Michael Dell - The Man Behind DELL: Background Note -

Dell
The story of the world's No 1 retailer of PCs over the
Internet, Dell Computer Corporation (DELL) goes back
to 1984, when Michael S. Dell (Michael) established
the company with a start-up capital of $1,000, in a
1000 square foot office space, in a small business
center in North Austin, Texas. Michael, then a
freshman pre-medicine student at the University of
Texas, began his business by selling computer chips
and disk drives for IBM PCs at meetings of computer
users in Austin.

In its first year of operations itself, DELL achieved

sales of approximately $ 6 million, which grew to $
257 million in the next four years. By 1987, DELL
opened a sales subsidiary in the United Kingdom to
tap the growing European market. European countries
had a lower PC saturation rate than the US and there
were no large PC manufacturers in Europe. In the
same year, DELL went public. During 1988-1991,
DELL expanded its operations worldwide and set up
wholly-owned sales subsidiaries in Canada, France,
Italy, Sweden, Germany, Finland, and the Netherlands
(Refer Table I).
Table I
Worldwide Presence of Dell
 HEADQUARTE  MANUFACTURING  OPERATING
CONTINENT
R FACILITIES SUBSIDIES
Austin, Texas; Canada, Chile,
America  Austin, Texas Nashville, Tennessee, Mexico, Colombia,
Eldora do Sul, Brazil Brazil, Argentina
AAsia  Singapore,  Malaysia, China Australia, China,
Pacific / Japan Japan, India,
 Malaysia, New
Japan Zealand, Thailand,
South Korea
Austria, Belgium,
Czech Republic,
Denmark, England,
Europe, France, Germany,
Middle East &  England  Ireland Italy, Ireland,
Africa Netherlands,
Norway, S. Africa,
Spain, Sweden,
Switzerland

Henry Ford - A Great Innovator

"I will build a motor car for the multitude. It shall be large enough for the family, but small
enough for the unskilled individual to operate easily and care for, and it shall be light in
weight and it may be economical in maintenance. It will be built of honest materials, by the
best workmen that money can hire, after the simplest designs that modern engineering can
devise. But it shall be so low in price that the man of moderate means may own one and
enjoy with his family the blessings of happy hours spent in God's great open spaces."
- Vision of Henry Ford (1903).
"Ford's action transformed American industrial society." 2
- Peter Drucker, economist and management guru.
"There was no way to escape the fact that Henry Ford was the great business impresario of
his era – or any era for that matter."3
- Douglas Brinkley, author, Wheels for the World.
Introduction
In November 1999, Fortune magazine named Henry Ford
(Ford), founder of the Ford Motor Company (Ford Co.)4 as the
'Businessman of the 20th Century.' Ford was accorded this honor
for transforming the lives of billions of people and
revolutionizing the automobile world by creating a car which
was affordable to the common working middle class.

Ford was chosen ahead of three other finalists – Alfred Sloan Jr.
(General Motors), Thomas Watson (IBM), and Bill Gates
(Microsoft) – as the 20th century business leader. Sheryl James
(James), Detroit Free Press, reporter, feature writer, and winner
of the 1991 Pulitzer Prize for feature writing (journalism), said,
"Ford Motor Co.'s founder was a charismatic risk-taker who
relentlessly pursued his vision." 5
Henry Ford - A Great Innovator - Next Page >>>
1] As quoted in the article, "Henry Had the Dream," by Sheryl James, Detroit Free Press, March 27,
2003.

2] As quoted in the article, "Ford At 100: 5 Ideas Shaped Industrial America," by Mark Phelan, Detroit
Free Press, May 29, 2003.

3] As quoted in the article, "Ford at 100: A Century of Audacious Tinkering," by Douglas Brinkley,
Detroit Free Press, June 12, 2003.

4] Ford Co. is the second largest automobile company in the world and ranked fourth in 2003 Fortune
500 list with revenues of $163.63 billion for fiscal 2003. It has approximately 13,000 dealers globally
and operates in 137 countries.

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

Shahnaz Husain - A Successful Indian Woman Entrepreneur

"I do not sell products. I sell an entire civilization in a jar."

- Shahnaz Husain
"She lives, sleeps, breathes her business. She is consumed with building a successful
company which she has done."
- Janine Sharell, Correspondent, CNN
Introduction
She captured the markets around the world and now she wants to conquer space. In an
innovative move, Shahnaz Husain has started work on formulations that astronauts could
carry with them in their extraterrestrial sojourns to protect their skin from the ravages of
space travel and slow down the ageing process. She has sent National Aeronautics and
Space Administration (NASA) free samples of her moisturizers, hoping that they will be used
on space expeditions. Shahnaz Husain is one of India's most successful women
entrepreneurs. Her company, Shahnaz Husain Herbals is one of the largest manufacturers of
herbal products in the world. It formulates and markets over 400 products for various
beauty and health needs and has a strong presence across the globe, from the USA to Asia.
In 2002, the Shahnaz Husain Group, based in New Delhi, was
worth $100 million. It employed about 4200 people in 650
salons spread across 104 countries. The Group has seen a good
growth rate in the 25 years that it has been in business.

The average growth rate in the initial years (late 1970s to the
early 1980s) was 15-20%. In the 1990s the average growth
rate was 19.4%. A number of awards, both national and
international have been conferred on Shahnaz Husain.

Some of them are "The Arch of Europe Gold Star for Quality",
"One of the Leading Women Entrepreneurs of the World", "The
2000 Millennium Medal of Honor", "Rajiv Gandhi Sadbhavana
 Award", etc. (Refer Exhibit I & II)

The Making of an Entrepreneur

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

Mc Donald’s Food Chain

Introduction
It was early evening and one of the 25 McDonald's
outlets in India was bustling with activity with hungry
souls trooping in all the time. No matter what one
ordered - a hot Maharaja Mac or an apple pie - the
very best was served every time. But did anyone ever
wonder as to how this US giant managed the show so
perfectly? The answer seemed to lie in a brilliantly
articulated food chain, which extended from these
outlets right up to farms all across India. 

US-based fast food giant, McDonald's success in India

had been built on four pillars: limited menu, fresh
food, fast service and affordable price. Intense
competition and demands for a wider menu, drive-
through and sit-down meals - encouraged the fast
food giant to customize product variety without
hampering the efficacy of its supply chain. Around the
world (including India), approximately 85% of
McDonald's restaurants were owned and operated by
independent franchisees. Yet, McDonald's was able to
run the show seamlessly by outsourcing nine different
ingredients used in making a burger from over 35
suppliers spread all over India through a massive
value chain.
Between 1992 and 1996, when McDonald's opened its first outlet in India, it worked
frenetically to put the perfect supply chain in place. It trained the local farmers to produce
lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain
in place. And explained to the suppliers precisely why only one particular size of peas was
acceptable (if they were too large, they would pop out of the patty and get burnt). These
efforts paid off in the form of joint ventures between McDonald's India (a 100% wholly-
owned subsidiary of McDonald's USA) and Hardcastle Restaurants Pvt. Ltd, (Mumbai) and
Connaught Plaza Restaurant (New Delhi).
Few companies appreciate the value of supply chain management and logistics as
much as McDonald's does. From its experience in other countries (Refer Exhibit II &
III), McDonald's was aware that supply chain management was undoubtedly the
most important factor for running its restaurants successfully. Amit Jatia, Managing
Director, Hardcastle Restaurants Private Limited said, "A McDonald's restaurant is
 just the window of a much larger system comprising an extensive food-chain,
running right up to the farms". McDonald's worked on the supply chain management
well ahead of its formal entry to India. "We spent seven years to develop the supply
chain. The first McDonald's team came to India way back in 1989," said S. D.
Saravanan (Saravanan), Product Manager, National Supply Chain, McDonald's India.

Titan - The Outsourcing Journey

Introduction
In late 1999, the top management of Titan Industries
Ltd. (Titan), India's leading watch, clock and jewelry
manufacturer, was surprised when several senior
executives threatened to resign. The threats
reportedly came after a long period of employee
unrest in the organization. The reason behind the
unrest was the company's decision to increase the
level of outsourcing in its manufacturing activities
while limiting production facilities for just assembling
purposes. 

Titan's Vice-Chairman and Managing Director Xerxes

Desai (Desai) quickly issued a statement stating that
the above was not true. However, this was in sharp
contrast to his earlier statements in the media. In an
interview to a business magazine 1, Desai had
remarked, "We will manufacture only if we can do it
faster and cheaper than anyone else in the world."
Even as the company worked towards explaining its
strategies clearly to the employees, analysts could not
help remark that Titan was already sourcing a large
part of cases and movements, key watch components,
from within and outside India.
Moreover, the company had always been sourcing a variety of raw materials such as
stainless steels, tool steels, engineering plastics, tools, consumables, components and
specialty movements2 for its watch manufacturing operations through vendors spread
across 20 countries, mainly in Asia and Europe. The company's management seemed to
have realized that global sourcing of certain components made better business sense. Media
reports even quoted watch industry officials claiming that companies like Titan had 'no
option but to move away from manufacturing and towards trading in the long run.'

XEROX - The Benchmarking Story

Background Note
The history of Xerox goes back to 1938, when Chester
Carlson, a patent attorney and part-time inventor,
made the first xerographic image in the US. Carlson
struggled for over five years to sell the invention, as
many companies did not believe there was a market
for it. Finally, in 1944, the Battelle Memorial Institute
in Columbus, Ohio, contracted with Carlson to refine
his new process, which Carlson called
'electrophotography.' Three years later, The Haloid
Company, maker of photographic paper, approached
Battelle and obtained a license to develop and market
a copying machine based on Carlson's technology. 

Haloid later obtained all rights to Carlson's invention

and registered the 'Xerox' trademark in 1948. Buoyed
by the success of Xerox copiers, Haloid changed its
name to Haloid Xerox Inc in 1958, and to The Xerox
Corporation in 1961. Xerox was listed on the New
York Stock Exchange in 1961 and on the Chicago
Stock Exchange in 1990. It is also traded on the
Boston, Cincinnati, Pacific Coast, Philadelphia, London
and Switzerland exchanges. The strong demand for
Xerox's products led the company from strength to
strength and revenues soared from $37 million in
1960 to $268 million in 1965.
Throughout the 1960s, Xerox grew by acquiring many companies, including University
Microfilms, Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company.
In 1962, Fuji Xerox Co. Ltd. was launched as a joint venture of Xerox and Fuji Photo Film.
Xerox acquired a majority stake (51.2%) in Rank Xerox in 1969. During the late 1960s and
the early 1970s, Xerox diversified into the information technology business by acquiring
Scientific Data Systems (makers of time-sharing and scientific computers), Daconics (which
made shared logic and word processing systems using minicomputers), and Vesetec
(producers of electrostatic printers and plotters).
Revamping the Supply Chain: The Ashok Leyland Way:
Introduction
V Ramachandran, (Ramachandran) deputy general
manager, Corporate Buying Cell, Ashok Leyland (AL),
the Chennai based manufacturer of medium and
heavy commercial vehicles was surfing the Internet at
midday in his office. A closer look at the screen
showed that he had logged on to an auction site. But
this auction site was different. Ramachandran was
looking for suppliers of some specific tyres in the
global market. At a price of $350, five suppliers were
interested. He then lowered the price by $5. Now
three of them were willing. Ramachandran kept
lowering the price, each time by $5. At $325, there
was only one response- the seller asked for an hour's
time to confirm. Within one hour, the Czechoslovakian
company confirmed it could supply the tyres. Both
parties then signed up by e-mail and the deal was
struck at $325, saving Ashok Leyland Rs 14,700 per
set. Known as reverse auction, this was one of the
many ways AL was reducing materials cost, which
accounted for nearly 70 per cent of its product cost.
In 1997-98, AL, recorded a profit-after-tax (PAT) of Rs. 18.4 crore 1 on sales of Rs. 2,014.3
crore. A look at the previous financial year's PAT showed that the profits for 1997-98 had
gone for a severe beating. In 1996-97 AL had a PAT of Rs. 124.9 crore on sales of Rs. 2,
482.5 crore. With the manufacturing Industry reeling under recession, the freight
generating sectors (manufacturing, mining and quarrying) saw a steep decline resulting in a
severe downturn of freight volumes. For AL, whose business was directly dependent on
moving material, goods and people across distances, this had come as a severe blow. AL's
supply chain2 had gone haywire under the recession which had eaten away 17.62 per cent
of its revenues in one year forcing the company to helplessly allow inventories to build up.
The results were showing on working capital. It had climbed from 33.34% of sales in 1993-
94 to 58.81% in 1997-98.

'Together We Can' - Beat the Recession

AL did not seem to succumb to the 'uncertainty gloom' that was playing havoc to its
business environment. It decided to meet the challenge by re-gearing its systems, be it
material order, procurement, material handling, inventory control or production. AL
conducted brainstorming sessions inviting ideas on cost cutting. Quality Circle 3 teams were
formed for this purpose. Said Thomas T. Abraham, deputy general manager, Corporate
Communications, "Our Quality Circle teams were very helpful at this juncture and the
worker involvement made it easier to address cost cutting." AL took every employee's ideas
into account and figured out a way to keep things going and reduce production without
inflicting pain.

The recession saw AL waging a war on wastage and inefficiency. AL took many initiatives
ranging from tiering its vendor network to reducing the number of vendors, and
consequently, moving to a just-in-time (J-I-T)4 ordering system, to joint-improvement
programmes (JIP), which were essentially exercises in value-engineering undertaken in
association with key vendors. It set up different tier-levels to improve the quality of the
suppliers. Tiering formed the basis of the vendor-consolidation drive. Till 1998, Ashok
Leyland used to source the 62 components that went into its front-end structure of its
trucks and buses, from 16 suppliers. In 2000, one tier-I vendor sourced the products from
the other vendors and supplied the assembly to the company. This saved cost and time
provided the vendor network was well coordinated with AL's own manufacturing operations.

Crompton Greaves' Operations Overhaul

The Bluechip's Downfall
Crompton Greaves Ltd. (CGL), the flagship company
of the L. M. Thapar group was one of India's leading
private sector electrical engineering companies. CGL
manufactured a wide range of transformers,
switchgears, control equipment, motors and related
products and railway signaling equipment besides
consumer products. 

CGL was incorporated in 1937 as a 100% subsidiary

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