July 2016

Dr. Rajesh Pillania

Faculty Mentor, Strategist

Strategy is one of the most widely confused, misunderstood and misused word in the business world. It
is a very fascinating but complex and challenging subject.
I am happy to see the members of Strategist, the Strategy & Consulting Club of Management
Development Institute Gurgaon, launching a student magazine on this fascinating subject of strategy. As
I have successfully demystified and added a new perspective of humour to strategy, I suggest keeping
this magazine simple and fun to read without compromising on the content and the quality.
I wish the team good luck and sustained success for this challenging assignment. I believe the magazine
adds value to the readers.
Dr. Rajesh K Pillania
Faculty Mentor
Strategist, The Strategy & Consulting Club

ABOUT THE MENTOR

Dr. Rajesh K. Pillania is a prolific researcher and writer on strategy. Recently he was given Best
Faculty for Strategic Management in India Award" in Education Excellence Awards by ASSOCHAM
(The Associated Chambers of Commerce of India) & Education Post.

For more see: www.pillania.org

Foreword

1i

EDITORIAL
July, 2016
It gives us immense pleasure to launch Stratelogue, the monthly magazine. Our aim with this magazine is
to cover the various dimensions of strategy and bridge the gap that exists between theory and practice.
While containing strategy through words is an onerous task in itself, our contributors for this edition have
done an excellent job at penning their thoughts and
In our endeavor, we have also tried to imbibe the Industry view of strategy, especially in this edition
through articles by Mr. Vikram Pawah, MD, Harley Davidson and Vivek Mehra, MD& CEO, Sage Publication.
Student articles have been contributed by Abhinav Srivastava, Student PGPM, MDI Gurgaon and Avishek
Agarwal, Student PGPM, MDI Gurgaon and Devasheesh Mathur, FPM Student, MDI Gurgaon. We also
thank our alum and ex-secretary Sudeshna Patnaik for article.
We also would like to thank all those from the 2016-18 batch who participated in the Student Article
writing competition organized by us.
We reserve a special mention for Utkarsh Choudhary, who helped out with the designs of the magazine.
The editing for the magazine has been done by Aiswarjya Mahapatra.
Let us know if you have any feedback for us at strategist@mdi.ac.in.

Team Strategist
MDI, Gurgaon

Editorial

ii1

Table of contents

Foreword..... ...

Dr. Rajesh Pillania

Editorial.... ...

ii

Team Strategist

The Life Of Strategy................ ..

Mr. Vikram Pawah (Guest Column)

Strategy is not Operational Efficiency...

Mr. Vivek Mehra (Guest Column)

Patanjali: Rise of the Dark Horse...

Sudeshna Patnaik

Strategic CSR: An Oxymoron or a Winning Mantra?.....

Devasheesh Mathur

Learning Ethics from a Carbon Isotope I.

Abhinav Srivastava

International Strategies Adopted by Indian Companies..

10

Avishek Agarwal (Student Competition Winner)

About Strategist 12

Table of Contents

iii1

Vikram Pawah
MD, Harley Davidson India
So the other day I typed up strategy in our omnipresent
search engine (I am sure you know the name)! And within 0.62
seconds it threw up 785 Million page results. Impressive isnt
it?
Clearly strategy is the centerpiece of todays society. All Bschools teach them some better than others, all political
parties deploy them in a bid to win our votes, each country
figures it out to be more competitive in trade, students use it to
crack the competitive exams, parents learn it to get through
the admission of our wards to the prestigious schools, and
every organization gets better at it to win the customers.
Who thought that the art of the general that came to use in
6th Century and then translated into western language in 18th
Century and further evolved into the current form in 20th
Century, will become an integral part of the modern day and
age. With such a glorious lineage and adaption one would think
that the science (or is it art) of strategy will be fairly well
evolved. But is it really the case?
The academia has provided many definitions that span from the
basic indication of it being a method or plan, to the much
acclaimed definition of performing different activities from
rivals, or performing similar activities in different ways.
During my 25 years of management experience, I have
pondered this question may times what is strategy? Not only
have I answered it differently depending on the context, but
have seen the definition change with time, with people and
situations. I encourage you to ask five people at random on
their understanding of strategy. You will possibly receive five
different versions, but there are likely to be common words
such as, plan, action, resource allocation, game plan etc.
In this fast paced age it is critical that everyone is aligned in
their understanding, otherwise we will be left with forces
pulling in different directions leading to either creation of
waste or missed opportunity. This is contrary to the basic
objective of having a strategy aka having common direction
/ game plan to achieve desired results. This is contrary to the
basic objective of having a strategy aka having common
direction / game plan to achieve desired results.
As we lay solid foundations for longevity of a building, a
common, easily understandable definition that cuts across all
demographics and psychographics is required. The aim of such
an endeavor will be to spend less time in defining strategies,
and instead reallocate energies towards execution and results
delivery. Not only will we be able to match up to the changing

The Life Of Strategy

Inspire strategy from life for life

is still bigger than anything
environment but also harness the energy of the entire
organization in putting together a greater strategy.
One of the classic comments I overheard once was someone
defining strategy as something that the top bosses do sitting
in board rooms! I am sure we all do not want to see the life of
strategy end with this.
To tackle this conundrum I take learnings from life itself. Our
lives revolve around three basic pillars of who we are (the why),
what we want to be (the what), and what we do to become
what we want (the how). At this point I need to put a
cautionary note, that this is not a full definition of life, and
neither do I intend to make a discourse on ones way of living
a mere mortal like me is just attempting to learn from what life
teaches.
Segway back to our topic - is it easier for us to define strategy,
by answering the three basic questions of the why, the what,
and the how?

Our identity Why does the organization exist?

Our intention What we want to achieve?
Our stance How will we make this happen?

I can continue to write this into micro detail, but that will take
me away from the purpose of encouraging the young
management minds to start a revolution of defining the
practical age of strategy something akin to a common mans
strategy.
So go ahead inspire strategy from life for life is still bigger
than anything. If you do not believe me type in life in the
search engine and you will get over 6 billion results. So believe
in the life of strategy!

ABOUT THE AUTHOR

Vikram Pawah is the MD of Harley Davidson India. He
has worked with the likes of Honda in the past. He did
his MBA from Victoria University, Australia.

Vivek Mehra
MD & CEO, SAGE Publications India
Pvt. Ltd.
For long I have heard young managers confuse operational
efficiency with strategy. Operations should be made efficient
and yes as a part of good housekeeping it is important to revisit
operations periodically. However, this revisiting of operations
with an outcome solely linked to efficiency is simply not
strategy.
Strategy is also not a business objective that is against a
competitor or a bunch of competitors. In other words, if costs
can be cut so that pricing is lowered and thus affecting the
competition, I wouldnt call any process or (again) operational
efficiency to be any sort of strategy.
There are many things strategy is, but it is difficult to truly hold
one definition to be the only truth. Here are some of my
definitions of strategy:
While customer creation is not strictly business strategy
(there is no business if there is no customer), value addition
to customers is a form of business strategy
Customer retention can be a serious business strategy
especially where client numbers are small but the value per
client is very high. (Can you think of industries where this is
very true?)
Revenue growth through innovation is a form of strategy
Introduction of a new business or product or service is a form
of strategy
My favorite one: closing down a business that isnt working or
will not work on your terms, is sound business strategy
So how does one begin thinking of strategy?
There are several indicators mentioned above that could drive
one or more business strategies. Here are some questions to
ask that could become the basis of good strategy.
Value addition to existing customers: This is one of the most
challenging and exciting areas of business strategy. To grow
revenue, a business needs more customers or existing
customers need to buy more.
What is the cost of acquiring a new customer? If it is very
high, then you need to investigate if customer
acquisitions should be a strategic focus or should moving
existing ones up the value chain be a more effective
strategy?

Revisiting of operations with an

outcome solely linked to efficiency
is simply not strategy.
What does my customer want?
What else can I induce him to buy?
Price cuts are short term measures to acquire customers
and many times it is at the cost of growing revenue. So
what should I do to grow both revenue and customer
value?
Assuming I know the answers to the questions, how do I
go about building a strategy devising and execution
framework?
Customer retention:
Is my customer satisfied with my product/services?
What causes him the most dissatisfaction?
Are my offerings similar to the ones customers expect to
buy? Have I benchmarked my offerings with the market?
What are some offerings or services that I am missing?
Assuming I know the answers to the questions, how do I
go about building a strategy devising and execution
framework?
Growing revenue through innovation: innovation can be of
two distinct types
The first is innovation that disrupts an existing market
even though a company is not known as being a player in
the market. Think of the iPhone that disrupted the mobile
phone market completely.
The second is innovation that creates new types of
customers or services existing customers with a new
product line that they didnt know they wanted. Cirque de
Soleil is one such company. The created a line of acts that
are very loosely based around traditional circus acts. They
serviced customers (corporate to begin with) who didnt

Strategy is not Operational Efficiency

2

know they wanted to see these acts. I am not going into the
communication strategy that the company employed as
that would be the subject of another complete paper.
Shutting down a business line when you know its not going
to be profitable. This is one of the hardest business
strategies to employ because as humans we dont want to
let go of things we are comfortable doing. Very early in my
career I realized the value of this strategy. I will share one
such incident from my own career.
Case study: CD scratch removal service
Market overview in the 1990s:
When the first CD ROM player was launched in India in the mid
1990s, it was priced at Rs. 24,000 and it came as a device that
had to be mounted on the desktop computer. At that time a
basic laptop running Windows 3.1 cost about Rs 100,000 and
didnt have a CD drive. I had seen the launch of music CDs in
1985 when I lived in the US. On my return to India in 1987 I
brought back with me a CD player and a bunch of very
expensive music CDs. While CDs were supposed to be scratch
resistant they werent really scratch proof. If one got scratches
on to a CD it would skip songs or like a software program, it
would hang. A typical musical CD in the mid 1990s had to be
imported and in India they cost upwards of Rs. 600. There were
CD lending libraries long before copyright infringement
grabbed the attention of our government.

Good strategy comes from

doing that which is not being
done already with a clear
objective of adding value to
stakeholders.

as soon as recordable CDs and DVDs entered the market. The

price of Rs. 100 for fixing scratches was suddenly unattractive. I
knew that if I dropped the price the same customer would view
me suspiciously. I couldnt explain
away the advent of technology as a factor for cost reduction
simply because I had spun a web of stories around the original
technology and its imported raw materials. I contemplated
working through marketing strategies but that too didnt fit
the bill. I came to the conclusion that to be able to remain
credible with the customers, I needed to stop the service. But I
didnt want to announce the closure of the service. I simply
refused to provide the service for less money. The lending
libraries had to shut shop when copyright infringement took
center-stage.
Good strategy comes from doing that which is not being done
already with a clear objective of adding value to stakeholders.
This is distinct from operational efficiency which could also be
loosely fitted into this definition

ABOUT THE AUTHOR

Vivek Mehra is the MD & CEO of SAGE
Publications India Pvt. Ltd. He started his career
in a major fashion house in New York and
gradually moved into publishing. He has done his
MBA from Columbia University, USA.

Identifying the problem:

When multiple clients handled CDs they invariably scratched
them because of sheer callousness. There was a reason clients
were careless, marketing companies (in the late 80s and 90s)
pitched CDs as a better option to Vinyl Records (they scratched
and gathered static noise very easily). Music cassettes were
notorious in getting caught in players. When scratched, the CDs
were near useless and the library incurred a serious loss. By
careful observation of a polishing machine at a plastic and
acrylic manufacturing unit, I figured out that a high-speed
buffing machine and a particular type of solid wax could easily
wipe off any sort of scratch from a CD.
The business and its closure:
I started hawking this service to libraries at around Rs. 100 per
CD. I recovered the cost of the high speed buffer (around Rs
4000) and the wax (around Rs. 200) in under a month. For the
next 8 or 9 months, I made money. As happens with
technology, the price of CDs started dropping

Strategy is not Operational Efficiency

7
3

Sudeshna Patnaik
Secretary, Strategist 2015-16

The 1950s saw the setting up of the first Indian born beauty
brand Lakme by the legendary JRD Tata in response to the
request from Pandit Nehru. Nehru wanted to curb the outflow
of valuable forex reserves caused by women splurging on
expensive foreign brands.
Come late 1990s, Baba Ramdev arrived on the Indian social and
political space with similar visions of promoting indigenously
produced items to take on the MNCs. In 1997, he co-founded
Patanjali Ayurved along with Acharya Balkrishna and entered
the market with Ayurvedic medicines.
In 2006, Patanjali Ayurvedic Limited (PAL) was set up by the
duo with the aim of popularizing the benefits of including
Ayurveda in our daily regime. With over 200 varieties of food
items, cosmetics and Ayurvedic Medicines, Patanjali has now
become a household name. It is today Indias fastest growing
FMCG Company. Just a decade old into business with revenue
of over Rs.2000cr. and PAT of over Rs.300cr. in FY 14-15, PAL is
the dark horse posing serious challenges to the biggies.
The market is already wishing for it to be listed on the stock
market. But the mystery is, how so much with so little and so
fast.
In this article, I seek to identify the strategic levers and basic
modus operandi of PAL that has contributed to making it as it
stands today.
Emphasis on National character and values
With emphasis on the use of indigenous knowledge and
ingredients in its products, PAL projects a distinctively national
character. The word Patanjali is strongly embedded in Indian
psyche and tradition.
Controlling Expenses and Aggressive Pricing
PAL sources its products directly from farmers and this helps it
to keep its costs low. While administrative costs for FMCG
companies are generally to the tune of 10% of sales, for PAL its
around 2%. PAL encourages its salespersons to use public
transport and minimize expenses as far as feasible. It generally
hires local people at modest salaries. The manufacturing costs
of the products are kept at minimum with products about 2030% cheaper than those of competitors. It has followed the
concept of more reach and less shout with low expenditure on
marketing. This attitude of stringent control on expenditure

Patanjali: Rise of the Dark Horse

has enabled huge profits even on cheaply priced products.

Promise of a Great Product
Baba Ramdevs campaign promoting and pressing the
importance of Ayurvedic products started long before PALs
inception. His established credibility in the field of Ayurveda
gives him the capability to achieve dramatic changes in
consumer behavior by putting in little efforts. For instance
when he compared soft drinks to toilet cleaners, the sale of
soft drinks plummeted. With Ramdev as the celebrity endorser
for the brand, people are more accepting of the claims of a
great product made by the company.
Engaging Website
The official website of PAL has a no-frills, easy to navigate
interface. The website stresses on their Swadesi focus. They
have very intelligently displayed all their quality standards
certifications on the home page itself thereby highlighting their
promise of excellence. Also a unique feature provided on their
website is the Verify Product tab. They have implemented a
Unique Identification System for each of their products so that
spurious products under the label of PAL do not find their way
into the market. This would go a long way in safeguarding the
confidence of their customers against cheap and specious local
products.
Distribution Channel
PAL sells its products through three different centers Patanjali
Chikitsalaya and Arogya Kendra, Patanjali exclusive mega
stores, Retail centres. Chikitsalaya are centers with doctors
practicing Ayurveda and Arogya Kendras are health and
wellness clinics. The exclusive mega stores also have an inhouse doctor. General retail stores have dedicated kiosks for
Patanjali products so that the products do not have to fight
for shelf space.
People at Store
The people selling products at Chikitsalaya, Arogya Kendra and
Mega stores are not just sales people but Authentic
Consultants, as Ramdev has described them. The products are
not just bought by customers but even prescribed by the inhouse Ved after he gives a decent hearing to the problems
faced by the individual. This further adds to the guarantee of
performance of the product.

Buzz using Alternate Media

While FMCG companies typically spend around 13-20% of their
revenue on promotions and advertising, PAL has adopted the
cheaper and more dependable word of mouth model of
publicity. The customer becomes the brand advocate. Also
Baba Ramdev regularly holds yoga events and free camps
throughout the country wherein he very subtly apprises the
crowd of the various benefits of his Ayurveda products. His
Yoga sessions are also telecasted on Aastha Channel wherein
on and off he demonstrates the various benefits of the
Ayurvedic way of life.
Ramdev, the Yoga Guru and controversys favorite child has
over a million followers, and with every controversy that he
gets roped into, he attracts headlines and drives up the
popularity of the brand. While he himself does not hold any
stake in PAL, his mere association with the brand ensures that
its popularity continues to sore.
As students of management, Patanjali is a case study that all of
us ought to read. PAL has put a halo around the concept of
Ayurveda and caught the imagination of the people by making
them truly believe in the goodness of organic, chemical free
products.
A Truly Make in India and Make for India concept, PAL harps
strongly on its national character. In that endeavor, it attacks
MNCs and describes their market activities as loot. This is
again a strategic move which attempts to dent the market
share of MNCs. Staying true to its vision PAL has already started
giving the big MNCs the jitters. Only time will tell if it is able to
sustain this meteoric growth and achieve its unique vision.
Source: All data has been collected from sources available online.

ABOUT THE AUTHOR

Sudeshna is an MDI alumnus from the PGPM
2014-16 batch. She also happened to be the
Secretary of Strategist during her time at MDI.
Currently she works with Tata Communications
Ltd.

Patanjali: Rise of the Dark Horse

Devasheesh Mathur
FPM, MDI Gurgaon
From Galilleo to Hawking, Rockefeller to Donald Trump, the
biggest obstacles to societal progress have always been
dogmas. Dogmas are like the chemical defects found in the
losing side, Sherlock Holmes might have said. They are the
parasites which eat into any organism resulting into eventual
demise. Businesses are most fraught with these parasites and
yet the last ones to identify them. In modern times of ultrasensitivities and pervasive social media, these parasites are
under the UV scanners and businesses are increasingly striving
to fight them. Strategic CSR is one of the measures and it is
here to stay.
Ethics in a business are inherited from the top-be it a family
business like Tata or a cola firm driven by a Nooyi at the helmbusinesses needs their heroes (or villains for the failed ones!).
This is a huge dependence over family heritage and values or
the corporate leadership. But, the ethos is changing faster than
the globe is warming up and businesses are struggling to strive
let alone grow. Society has become the Big Brother and
watches every move of a firm. If only every business had a
crystal ball, it would ask them how to clean up their act.
One such crystal ball prophecy is that businesses which are
socially and morally responsible would survive better in the
long run- businesses which do not merely rely on fads and
possess strong foundations. An age old myth is also being
broken now-being socially responsible actually pays off!
About INR 200 billion were supposed to be infused into CSR
activities by now. However, many corporations are still
grappling with the idea; they are still treating it as
Schrodingers cat, waiting on the verdict. The verdict is quite
evident though-the cats alive and kicking! The raison dtre is
shifting from merely focusing on profits towards doing well for
the community.
Being socially responsible lends corporations immense
competitive advantage and allows them to foster innovation.

Every firm creates value. Its

just that now a business has to
share the value that firm
creates

The fact that a business is environmentally conscious provides

them better public relations and publicity, which in turn creates
a better image in the customers thus creating a positive loop.
Strategic CSR allows a company to innovate and create new
markets for them. Doing good begets good for them as they
get better access to capital through funds and healthier stocks.
Ultimately, it fosters social innovation and therefore, evolved
market helps the company evolve!
The question remains where to begin. One good way is to
identify a social problem which aligns with the mission of the
corporation and start working on it as a social entrepreneur
would. This wing of the organization could then be
incorporated as an entirely different for-profit venture of the
firm. Raising money would not be an issue for the daughter
social enterprise.
India is witnessing such incorporations like the Shiv Nadar
foundation, Azim Premji foundation et al. The name flexes the
muscles of the parent company while the suffix of foundation
leads you to believe in their intent. The Shiv Nadar foundation
is solving the Mid Day Meal problems with corporate lan.
Premji foundation is similarly doing good in education.
However, the mission of these foundations doesnt completely
align with their parent firms. But thats the beauty of CSR.
Ultimately, every firm creates value. Its just that now a
business has to share the value that firm creates, which Michael
Porter calls as the Shared Value. Governments create public
value while businesses hitherto had been creating shareholder
value. CSR has fused them into the shared value creation by
making businesses socially responsible.
If one could draw a Holy Grail around strategic CSR, it would be
something like this:

Get Your Mission right

Once the mission is to solve a societal problem by the means of

a for-profit business, everything else falls into place.
Strategically, the firm receives impact investment, stock prices
rise, they fish out impressive PR and customers as well as
employees become loyal to the company. This takes care of
companys marketing, HR and finance in one stroke. Social

Strategic CSR: An Oxymoron or a Winning Mantra?

61

enterprises like Avanti Fellows and MeriAwaaz which have a

social mission at the core are stellar examples.

Get Your Communication right

Getting the communication with the community is critical to

serve the mission. The firm should get the word out on their
mission and their commitment to it. Unilever is a perfect
example of this with their Sustainable Living Lab. For large
corporations, taking up CSR projects is essentially a PR
exercise. Hence, picking the right social problem and then
spreading the word around lends the firm competitive
immunity. This eventually helps in partnering with the right
people.

Engage the right people

Since the governments around the world are extending the fig
leaf for societal good towards the businesses, its imperative
for the business leaders to engage with the right people at the
right time. Tata Nano project is a prime example of this.

Do the rest as the best business would be doing

For everything else, follow the best practices in the industry

and remember the socio-economic context in which the firm
operates. Once competition is taken care of, employees
welfare becomes equally important.

Lead the change you want to

see in the world, because
strategic CSR tells us that
theres good in doing good!
Milton Friedmans philosophy is quickly turning into a dogma
when he said that the only social responsibility of a business is
to earn profits. With the avant-garde of CSR, social media and
all kinds of crises in the world, the sensibilities are changing.
Today, its not only enough to be the change, for a business the
new age dictum can be Lead the change you want to see in the
world, because strategic CSR tells us that theres good in doing
good!

ABOUT THE AUTHOR

Devasheesh is a doctoral student at the School
of Public Policy & Governance, MDI. He is an
alumnus of IIT Bombay.

Strategic CSR: An Oxymoron or a Winning Mantra?

Abhinav Srivastava
PGPM 2015-17
De Beers used to be a monopoly. Through the formation of
cartels it successfully established control both on the demand
(Diamond Syndicate) and the supply side (De Beers). Before its
tussles with the U.S. Anti-Trust laws, it effectively controlled
80% of the diamond industry!! Nothing so shocking here. What I
was fascinated with, was a statement from my Strategy
professor that De Beers has successfully pulled the biggest
marketing coup in human history.
Which it really is. Think about it. How do you attribute a certain
value to diamonds? Typically, any product derives its value from
the extent to which it fulfills a particular need. While industrial
diamonds won't give you a hard time in estimation of value as it
can be derived from some operational benefit it provides, e.g.
fine cutting and trimming; but how does a consumer derive
value through the personal possession of a diamond? Is
diamond needed by people in the first place? Was it ever
needed? I find none.
Unlike diamonds, gold picked up in importance quite early
(owing to better availability) and time only impressed it harder
on our zeitgeist; our part of the world promoted it to the status
of a ritualistic necessity while others gradually brought it into
the economic system thereby ensuring a perpetuity for its
significance. Diamond, however, got left behind. How, then, did
diamond become so valuable? One factor is its rarity which
provides it its ornamental value (we shall ignore the industrial
usage of diamonds). This value was justified before the 19th
century's Industrial Revolution as its extraction was difficult.
But the technological advancements begotten by the
revolution made their extraction much easier. In a typical
scenario, such a boom is followed by mushrooming of small
entrepreneurs sprawled over the terrain, each fighting his own
way to prosperity and this whole process ending with a
reasonably sized miners controlling the resource supply in the
region at the least. However, diamonds were steered into a
detour by an Englishman named Cecil Rhodes.
A critique of the De Beers and commercial diamond industry
Cecil Rhodes knew that the then emerging diamond supply
explosion in South Africa would be corrosive to the mineral. He
therefore successfully attempted a consolidation and cartelization
of the demand and supply sides of diamonds through the
formation of De Beers and Diamond Syndicate.

Are diamonds a necessity?

This control over virtually the complete market for a commodity,

made it a monopoly.
The artificial scarcity of diamonds coupled with the much famed
marketing, converted what is technically a carbon isotope into an
eternal symbol of love, enabling it to reap higher revenues. The
point here is, was De Beers justified in creating a market out of
thin air? Diamonds don't have a necessity in our lives, yet we
spend extravagantly on them. Was it ethical of De Beers to lie to
its consumers and generate wealth?
Rights of Man
If my first contention is clear by now, I would argue that from a
purely philosophical perspective, it is unethical for any corporate
body to use its consumers as means to meet its ends of fattening
its bottom line and increasing shareholder value. Corporations
carry a fiduciary responsibility towards its stakeholders
(consumers always being predominant) of helping them meet
their ends. It is under this implied covenant ("social contract", if I
may call it) that law provides a corporation its legitimacy. Any
organization designed as an end in itself has no claim over legal
protection and is liable for the violation of the rights of man,
derived from Kantian ethics. Therefore, such autotelic
arrangements as De Beers have no ethical claim over their
existence. De Beers has created an illusion among its consumers
that diamonds are rare, effectively a misrepresentation about its
product's value.
Diamond is a natural resource. De Beers, through establishing a
tight grip over its production and supply chain, effectively secured
a patent over diamonds (as roughly any diamond being traded
anywhere was De Beers' which brought all the "royalties" to it
alone); I have argued why it is unethical to patent a natural
resource in a previous
post here. (http://here-ilie.blogspot.in/2013/04/philosophical-musings-andruminations_30.html)
Are diamonds a necessity?
All said and done, De Beers can still be vindicated from such
allegations if diamonds are shown to actually be a necessity and
not a luxury i.e. it has a "reasonable" need in human lives. I

Learning Ethics from a Carbon Isotope - I

mention reasonability owing to the fact that some of our needs

are not actually needs, but wants; e.g. a drug addict would
want his/her narcotic so bad that he/she is led into believing
that it is a need rather. Minding this caveat, it is prima facie
evident that diamonds don't have a necessity in our lives
except for industrial purposes. Although, some might argue
that diamonds are on the path which gold took centuries ago
and that diamonds are gradually acquiring the status of a
necessity; e.g. since diamonds have been closely associated to
relationships, diamonds have become, if not pure but symbolic
necessity, that it acts like a totem for your love, it is also eternal
and supposedly induces this eternity in your love. Could it not
be done with another gemstone, say, a ruby? Can't its red
colour signify the flame of your passion? Also, relative to human
longevity, a ruby is as eternal as a diamond. But the other three
precious stones viz. emerald, sapphire and ruby failed to attract
the human fascination and therefore were sent to the
nosebleed seats. My point being, that maybe, just maybe,
humanity needed one precious thing in its social evolution, that
fortune went to gold; we don't need another stone to waste
our resources on. Diamonds, therefore, are a luxury.
Although it can be argued that over the course of time, luxuries
gradually become necessities. Imagine air travel!! Ceiling fans
were found only in palaces once. New solutions to humanity's
problems are often valued more than older solutions and their
social status gradually subsides. A similar course could be
envisaged to claim that diamonds too are on a course to
becoming a necessity and will find a haven of needs in our
minds someday to unload their actual value, if they carry any.
To this, I would respond that other products derive value
essentially because they address a particular human need.
When a solution is introduced in the market, its
discoverer/inventor is morally justified in reaping the fruits of
his labour as a reward for his contribution to humanity's
progress. Diamonds repeatedly fail this test. They never
addressed any human issue in the first place!! A counterargument can be put forward that the diamond industry
supports millions of livelihoods and if the perceived value of
diamonds is undermined, the livelihood of, say, diamond miners
of Angola will be adversely affected. And what about those
who already own diamonds? Regarding these issues, I don't
have any concrete solutions to; for the marginal miners
working for De Beers it can be insulated from damage by
maintaining the same wage levels and the current owners can
maybe compensated for the decreased value in a phased and
proportionate manner. These solutions would need money,
which can be sourced by completely liquidating De Beers. The
diamond industry needs a reset and this fantastical proposition
is that reset.
Ferrari and a broken window
De Beers was never justified in creating this illusion of
preciousness for diamonds and reaping profits out of it. By
doing this, De Beers has constantly eaten into the consumers'
disposable incomes and "earned" money for diminishing the
consumer surplus; quite contradictory to its economic duty of
augmenting the consumer surplus

While it is true that many organizations levy premiums for their

luxury products; what ethical validation does, say, Ferrari have
that makes them charge inordinately for their automobiles
when what its products essentially address is our need for
transportation, just like another automobile. I contend that
they are not violating general ethics through their actions.
Because, Ferrari cars are nothing more than an option in the
whole global automobile market. You, as a potential car owner,
have a myriad of options to choose from. Ferrari never erects
barriers to prevent you from exploring other cars. I can, as a
thought experiment, evaluate Maruti 800 and a Ferrari, and
make my choice independently. Therefore, it can be argued
that firstly, unlike De Beers' diamonds, Ferrari's products fulfil a
need and have a legitimate value. Secondly, Ferrari doesn't
control the global output of cars; it can only influence the
production of its plants not Rolls Royce's. In this respect,
Ferrari, by acting in the economic environment is increasing
competition which, ceteris paribus, rationalizes the industrial
price point in due course of time. De Beers, by acting as a
monopoly, has an absolute control on the diamond's price; with
no market forces to decide the price in a fair manner, De Beers'
position proves detrimental to the consumer surplus in the
economy. These arguments impart legitimacy to both Ferrari's
products and its existence, which De Beers clearly fails to have
any claim on.

Diamonds then are broken

glasses,
De
Beers
the
unscrupulous carpenter
One last argument against the validity of commercial diamond
industry is the "Broken Window Fallacy" conceived by the
French economist, Frederic Bastiat. Broken Window Fallacy
states that just because breaking a glass window pane would
provide a commercial opportunity to a carpenter, it would be
ultimately harmful to the society if the carpenter decides to go
on breaking windows repeatedly to earn money by then
repairing them; because every such activity (of destruction) has
an opportunity cost (of the broken glass). Such an activity
would hinder the commercial activities of the carpenter's
victims, the money that would go in reparation could have
been used in something constructive, the carpenter could have
helped a genuinely needy customer, the list can go on. There is
a reason countries don't wage wars to boost their economic
activity, it is because "broken glasses" are never beneficial for
society. With no need to address in the first place, diamonds
consume huge amount of resources till they end up with a
consumer. Aren't these resources an opportunity cost to other
industries who could've used these resources for better
purposes? Diamonds then are "broken glasses"; De Beers the
unscrupulous "carpenter".

For more from Abhinav please visit:

http://here-i-lie.blogspot.in/

One stock argument against this contention could be that many

organizations earn their revenues solely from luxury products
e.g. Ferrari; the argument here can be extended to all such
organizations and the legitimacy of their returns stands to be
questioned.

Learning Ethics from a Carbon Isotope - I

Student Competition
winner
Avishek Agarwal
PGPM 2016-18
What is Internationalization?
Internationalization is when an organization decides to cross its
borders and enter a new market (country) to establish its
business operations away from home. Internationalization
serves as medium to increase revenues (profits), secure against
the periodical market downturns, increase innovation and cross
functional deployment, achieve economies of scale and gain
competitive advantage. It requires a company to gauge the
cultural, social, political, legal and financial norms along with the
consumer behavior inherent to the target geography among
other factors before beginning operations.
The current Business Scenario: India and the World
The world we live in is a no longer a collection of geographies
separated by land and water, each functioning in its own stride
independent of the rest of the world. With the advent of
internet and advancement in information technology, the world
is now a Global Marketplace functioning as a closely knit single
entity. As protectionist barriers crumble in emerging markets
around the world, multinational companies (MNCs) are rushing
in to find new opportunities for growth. Also, within the system,
countries are strategizing itself towards a liberal economy,
inviting MNCs to setup its operations in their countries, as an
effort to get a larger piece of the cake (no one wants to miss
out on the Global map).
With the inception of globalization and liberalization of the
Indian economy in the year 1991, India has evolved from a closed

counterparts technological know-how, expertise on important

global markets, and the influx of capital, which in-return will be
utilized by the Indian Inc. to target the international needs.
Case 1: Tata Consultancy Services
TCS is an Indian multinational information technology services,
consulting and business solutions company. It was founded in
the year 1968 as a subsidiary of Tata Sons Limited. It operates in
46 countries, and is the largest IT services provider in the
country (with a market capitalization of $80 Billion) and second
most valuable brand across the globe in information technology
after IBM.

Fig 2.1 Shows the increase in the

size of the IT industry in India,
exports forming a major part.

Fig 2.2 Growth in revenue of TCS

and Infosys in the last 5 years.

The Growth Strategy: Truly Global

Fig 1.1 Increase in FDI inflows in

India, seen as a result of policy
reforms

Fig 1.2 Drastic increase in net exports

for Indian corporations post the 1991,
policy reforms

community to become a global market. Indian organizations

started indulging in more of knowledge building and policy
reformulation to suit global needs. With the impetus provided
by the government in the form of FDI relaxation, Indian
organizations are going to benefit from their global

TCS started by providing punched card services to sister

company TISCO (now Tata Steel), working on an Inter-Branch
reconciliation System for the Central Bank of India, and
providing bureau services to Unit Trust of India. Following which
they conceptualized and developed the network offshore
delivery model, established Global Delivery Centre, among
others. While the company pioneered many firsts, TCS was a
very publicity shy and inherently reticent in nature. The PR
machinery of its Indian companies was well oiled that the lay
consumer often associated several of TCSs firsts with its Indian
rivals. TCS set sights at the global game and had resolved to be
amongst the global top 10 by the year 2010. Towards this end
the company had to unlock its hidden wealth.

The
Life Of
Strategy
International
Strategies
Adopted by Indian companies

101

Tata Group decided to launch the IPO of TCS in the year 2004.
The targets aimed at through the IPO are as follows:
Greater public attention and PR coverage across the globe
Build size and stature for TCS to compete with global majors
for mega-million dollar projects
Obtain sufficient financial muscle to pursue its aggressive
growth plans, both organically and through global acquisition

Cranbury, NJ, US to boost its production technology and supply

chain across the globe. The company earns more than 70% of its
sales from the global generic markets, mainly the US (45%).

With the IPO TCS went on to execute the following strategies to

pursue its Truly Global dream
Paradigm shift in focus from EU and US markets to the
emerging markets ( Middle-east and Australia)
Restructuring its Global Operations to adopt an integrated,
customer-centric approach
Global operations are now divided into five units
o Industry solutions
o Major markets (North America, Western Europe and UK)
o New Growth Markets (Latin America, Eastern Europe,
Middle East, Africa and India)
o Strategic Growth Business (TCS financial solutions, SMB
and Platform based BPO)
Strategic alliances, to effect joint research and leveraging each
others strength and development of best-of-breed offerings
Some of the strategic alliances are with Intel, SAP, Hewlett
Packard, and EMC2 among others
Acquisition & Joint venture strategy - Acquisitions in Ireland
and Latin America to create delivery centers of respectable
size outside India. It was the first company to setup a delivery
center in China
Acquired Citigroup services, Tata Infotech, UKs pearl group,
75% equity stake in Switzerlands TKS-Teknosoft (they were
the marketing agent for TCS in Europe)
Joint ventures with three Chinese partners in 2007, making it
the largest software company in China
TCS is truly the lighthouse of modern India a company that
has made every Indian proud and made the world take notice of
India.
Case 2: Sun Pharmaceutical
Sun Pharmaceutical Industries Ltd is an India multinational
pharmaceutical company (spread across 30 markets) that
manufactures and sells pharmaceutical formulations and active
pharmaceutical ingredients primarily in USA and India. It is the
largest chronic prescription company in India and a market
leader in various therapeutic areas. A 2014 acquisition of
Ranbaxy has made SunPharma the largest pharma company in
India, largest Indian pharma company in US, and the 5th largest
specialty generic company globally.
The inorganic growth strategy Acquire and Grow
SunPharma has adopted an inorganic growth strategy (partner,
collaborate or acquire) both in India and the US. It acquired
Ranbaxy in the year 2014 for $4 billion through an all stock
merger deal. This propelled the sales three times (from Rs. 2,725
crores to Rs. 7,731 crores) and also positioned it to become the
5th largest generic manufacturer in the world.
Prior to this in the year 1999 SunPharma took over the troubled
US drug marker Caraco Pharmaceutical Laboratories, followed
by a merger deal with Israels Taro Pharmaceutical Industries
and merger with ICN Hungary (now called Alkaloida Chemical
Company Exclusive Group). It also acquired internationally
approved plants at Halol, India as well as Bryan, Ohio, US and

Fig. 3.1 Increase in revenue and profits despite increase in size

SunPharma has been technologically strong and completely selfreliant; it enjoys low costs of production, low R&D costs,
innovative scientific manpower, and strength of national
laboratories. SunPharma with its rich scientific talents and
research capabilities, supported by Intellectual Property
Protection regime is well set to take on the international
market.

Fig. 3.2 Acquisition of high potential yet under-performing business;

successful turnarounds

Conclusion: The Way Forward

With further advancement in technology and policy reforms by
respective governments across the world, we can expect a
larger share of global revenues for corporations worldwide.
With the above two examples, it is clearly seen that India is
growing as a Global Economy and has developed a better
understanding of the international markets. Also, worth noting
is that in future, Indian firms and organizations planning to
compete effectively in world markets would need a clear and
well-focused international strategy that is based on a thorough
understanding of the markets which the company is targeting
or operating in. International markets are dynamic entities that
require constant monitoring and evaluation.
References:
www.sunpharma.com
http://www.slideshare.net/amandube31/marketing-strategy-of-sun-pharmaceuticals
http://www.tradingeconomics.com
www.economictimes.com
http://businessworld.in/article/Sun-Pharma-Acquiring-Growth/16-03-2016-91995/
www.wikipedia.com
http://www.slideshare.net/abhigyan2408/it-industry-tcs-strategic-analysis
http://www.tcs.com/about/corp_facts/alliances/Pages/default.aspx
http://hcd.ucdavis.edu/faculty/webpages/kenney/articles_files/Moving%20Tata%20C
onsultancy%20Services%20into%20the%20Global%20Top%2010.pdf

International Strategies Adopted by Indian companies

11

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