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Campus: Stream: Level: ACL- 1 Year/Semester Marketing Module Assignment Module Name: Assignment Type: Fundamentals Student’s Name: Assessor’s Name: AMIT NAGPAL Reqd. Submission 12.12.09 Issued on: 28.10.09 Date: Actual Submission Submitted to : Date: Higher Level Skills Students are expected to develop the following skills in this assignment: • Cognitive skills of critical thinking, analysis and synthesis. • Effective use of communication and information technology for business applications. • Effective self-management in terms of planning, motivation, initiative and enterprise. Certificate by the Student: Plagiarism is a serious College offence. I certify that this is my own work. I have referenced all relevant materials. EXPECTED OUTCOMES ________________________ (Student’s Name/Signatures) Assessment Criteria – To achieve each outcome a Achieved (Y/N) student must demonstrate the ability to :
Understand clearly the new That he is aware of what is happening in India. positioning of the Indian consumer. Appreciate the increased purchasing That he is able to see the changes in power of the Indian woman. Be consumer aware of the boom and buoyancy in Behaviour and discern the trends of the the market place. times. Be able to critically examine the That he is able “to see ” – visualize and conceptualize current issues in the business sphere the future for his brands from a brand manager’s perspective. Assignment Grading Summary (To be filled by the Assessor) Grades Grade Descriptors Achieved Yes/No (Y / N) P A Pass grade is achieved by meeting all the requirements defined. M1 Identify and apply strategies to find appropriate solutions. M2 Select/design and apply appropriate methods/techniques. M3 Present and communicate appropriate findings. Use critical reflection to evaluate own work and justify valid D1 conclusions. Ability to anticipate and solve complex tasks in relation to the D2 assignment. D3 Demonstrate convergent, lateral and creative thinking.
OVERALL ASSESSMENT GRADE: TUTOR’S COMMENTS ON ASSIGNMENT: SUGGESTED MAKE UP PLAN (applicable in case the student is asked to re-do the assignment) REVISED ASSESSMENT GRADE
TUTOR’S COMMENT ON REVISEDWORK (IF ANY) Date: Assessor’s Name / Signatures:
THE SMILING FACE OF BOOM In 2006, Indians bought 65 million mobile phones, 10 million television sets, and 6.34 million personal Computers and over a million new cars. A consumer boom of this kind has not been seen in India ever before. But all that happened last year. This year is expected to be still better, through not many are willing to hazard a guess on what these numbers will be. The Delhi based Manufacturers Association of Information Technology (MAIT) estimates Pc sales to touch 8 million this year. The growth is not restricted to just products. It is being driven be big infrastructure projects like the new airports that are coming up in Bangalore and Hyderabad. Also, the existing airports at Delhi and Mumbai are being revamped. By the time these airports are up and running, work would have started on new airports at Navi Mumbai and Noida. The rising incomes in India have seen people investing in new flats and apartments. All this has resulted in a sharp increase in demand for basic items like cement and steel. This boom is clearly reflected in the gross domestic product (GDP) growth. During the last fiscal, GDP grew by 9.4 per cent, which makes India the second fastest growing major economy after China, which grew at a shade over 10 per cent. Among the sectors that are driving the Indian growth story are telecommunications, retail information technology (IT) and the IT enabled services (ITES). Not surprisingly, telecommunications is amongst the fastest growing industries. Already, the market for mobile phones in India is a neat $ 16.7 billion. More importantly, it is growing at over 20 per cent annually. That’s being driven by the addition of 6 million plus new mobile subscribers every month. To cater to these new subscribers, each of the top telecom service providers is investing in the region of $ 2-3 billion a year in capital expenditure alone. Plus handset manufacturers like Nokia, Motorola, Sony Ericsson and Samsung do simultaneous launches of their phones in India and the west. According to the Delhi-based Cellular Operator Association of India (COAI), the fastest growth in mobile telephony is happening in states like Orissa, West Bengal and Uttar Pradesh, which were till quite recently considered to be laggards. In comparison, the $ 5.6 billion consumer electronics and appliance market is growing at around 10 per cent. The huge middle class and youth are driving the growth in both these sectors. Again the growth is coming from small towns and rural India. That’s clearly evident from the increased sale of refrigerators, washing machines and television sets in what were till recently perceived to be back of beyond. But hardly anyone replaces their television sets every two years like they do with mobile phones. But, in urban India, the real growth is happening in the housing and retail sectors. Already there are malls sprouting up in almost all locations, though the big growth is happening in the National Capital Region, Mumbai, Bangalore, Hyderabad and Kolkata. This has driven the construction industry to new heights. It is also spurred by the demand for new apartments in the suburbs of the metropolitan cities. But with loans becoming expensive, there has been a gradual showdown in the housing business. Retail consulting and research agency KSA-Technopak predicts that there will be 600 new shopping malls in India by 2010. It also points out that by 2010, organized retailing in India will cross the us$ 21.5 billion mark from the current us$7.5 billion That’s almost trebling the market in just five years. The big drivers for the growth of retails are due to rising family incomes, growing consumerism in urban youth and the sheer diversity of products available. While global retail chains like Wal-Mart and Tesco are yet to make their entry into India thanks to opposition by the left parties, domestic chains are already creating a niche for themselves. The future group, Reliance Fresh, subhiksha and shoppers” Stop are expanding their reach by the day. While their has been some opposition to their entry, it has not resulted in any of the chains slowing their plans. These outlets cater to the
needs of the masses, but now luxury goods are also making their presence felt. Global luxury brands like Chanel, Hugo Boss, Christian Dior and LVMH have opened outlets in Mumbai, Delhi and Bangalore. But, all of them are looking at first expanding their reach in the big cities before opening shop in smaller cities. The quick way is to import these products into India. While that can be done for specialized products and food items (like chocolates, candy etc) that may not be feasible for larger products thanks to import duties. So to cater to the growing needs of a billion people, host of multinationals have already set up, or are in the process of setting up manufacturing facilities in India. That could over a period of time gradually reduce the dependence of the Indian economy on the services sector. A quick look at some of the new entrants: • • • • • Nokia, Elcoteq, LG, Motorola and Samsung have set up mobile handset plants. Dell Computers and Flextronics are setting up plants to make PCs and laptops. Samsung is investing $ 100 million to set up a plant in Chennai to meet increased domestic demand for white goods. Global electronic manufacturing services company, Taiwan-based Foxconn is setting up a plant to make a variety of products. Taiwanese chip manufacturers have been scouting for setting a manufacturing base in India.
As these companies expand their India presence, they are getting their global vendors to set up plants in India that will bring in further industrial growth. Some of that is visible in towns like Sriperumbudur, just 40 kilometers outside of Chennai. What were rice fields till about a decade ago has given way to string of hi- tech factories spewing out a medley of electronic products. Among the sectors driving growth, but is not clearly visible are the small and medium enterprises (SMEs). These enterprises account for nearly half of India’s industrial output and contribute to 35 per cent of exports. Any adverse impact on this sector can have long-term implications on the country’s economic health in general. While all this sounds hunky dory, the big question is whether this growth can be sustained? This time round, the 9.4 per cent GDP growth has been fuelled largely by industrial growth in industrial output during 2006-07 is driven by a 12.5% growth in manufacturing 11.5% in electricity. The July 2007 issue of the confederation of Indian Industry’s (CII) quarterly state of the economy report shows that there are signs of decline in the capital goods sector. It goes on add “the fact that increases in interest rates does affect growth in certain sectors where demand is credit driven.” The growth in production of consumer durables fell to 5.3 per cent against 7.4 per cent last year. Not surprisingly, the biggest culprit could be the high interest rates. That could end up slowing down the growth. Already the first signs of a slowdown are visible. Car sales growth fell to 11 per cent in April and May, as opposed to 20.7 per cent in the previous year. That’s because most Indians buy their cars by taking on loans. As the equated monthly installment (EMI) rises, the demand for cars has slowed down. After all, small cars account for the bulk car sales in the country. The rising interest rates have also dented the budget of families that had opted for a floating rate of interest for their housing loans. Unless there is a lowering of interest rates, there will definitely be a slowdown in loans to buy cars and houses. Another possible kink in the industrial production could come with exports slowing downs as the rupee surges to a nine-year high Exports, which account for two fifths of India’s industrial output rose 18 percent in may after increasing 23 percent in the previous month But, many exporters are facing a crisis as the rupee gets stronger. The third problem could arise from higher global commodity prices. While consumer durable manufacturers are banking on the coming festive season for increasing sales that could be hit since prices have risen on the basis of higher commodity prices. With steel prices rising, the cost of a car will also go up. As loans are expensive, many people will stay away from picking up a car.
India’s apex chamber, C11 has projected that with interest rates rising demands contracting and exports slowing down, very soon the manufacturing sector will also come under pressure and may slow down. Based on that Premise, C11 has forecast GDP to grow at 8.5 per cent in 2007-2008, looking at the global moderation of growth, inflation, falling demand as a result of spiraling interest rates, appreciating rupee and significant supply shortages, in the global and Indian economy. Till now the Indian consumer has been protected from the rise in oil prices. But that cushion may not last for long. In all likelihood petroleum product prices will be hiked over the next few weeks. That could result in slowing down things further. But despite all this, tax collections of the government are on a high. There are not enough company results for the first quarter available now. But, the results that are available show that both revenues and profits are higher. However, there is no reason to get worried. That’s because the Indian economy today has the resilience to overcome such problems. After all with higher incomes, demand for most products is expected to rise substantially. It remains to be seen whether the India can catch up with China in the not too distant future.
Questions Q1. • • • You are requested to read the document, reproduced above. Thereafter, please provide an analysis for the prevailing market situation. In your view, is the trend likely to continue? Take a stand and argue. Your presentation has to be in ppt of minimum 20 slides. (Submit a hard copy of the PPT)
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