IIT Roorkee Domination February 2012

DOMINATION

Kingdom of Lights Sailing in Difficult Water

“Creativity at its best” (08) (11)

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NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

VOLUME-III ISSUE-02

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Editorial ………………………………………………………

- Regards

Team Domination

Dear Readers,

It's February 2012, the

shortest and the most distinctive

month of the year ; the month

of zest and intrigue !!! Bursting

forth from the romance of St.

Valentine's Day to the auspicious

occasion of Maha Shivratri the

mood of the hoi poloi swings

from that of excitement to rev-

erence. As all of you bid adieu to

the chilly winter mornings ; we

bring another fresh edition of

the Domination to perk up your

busy schedule with some new-

fangled ideas and fresh food for

thought.

We phase in with the all novel

possibility analysis of the public

enlisting of the largest Social

networking site " Facebook" . If

the rumors are to be believed

the sensational debut venture of

Mark Zuckerburg is all set to pile

up an IPO worth 100 billion dol-

lars , and we present an in depth

analysis of the pros and cons of

investing in one of the biggest

IPOs of the year.

Next we have an article "Sailing

in Difficult Waters" , taking a

look at probable solutions to the

imminent Economic turmoil in-

cluding the sovereign debt crisis

from the vantage point of vari-

ous crisis tools like DuPont and

Johnson & Johnson models.

Enthusiasm is excitement with

inspiration , motivation and a

pinch of creativity. Our next arti-

cle "The Kingdom of Light" justi-

fies it all vis-a-vis the fancy ads

of Peferetti's Happydent White ;

presenting a quintessential mix

of humor and marketing acu-

men.

From financial analyses to eco-

nomics to marketing promo-

tions; where does the buck stop

next ?? Where else other than

the good old Human resource.

We have the article unraveling

the doctrines of “Employee en-

gagement” depicting the eclectic

tango of manpower and the

strategic onus on the higher

echelon professionals of the cor-

porate ; to keep the human fuel

going in order to propel the or-

ganization towards its vision and

mission.

In the newly added section of

Success stories; we have a cov-

erage of the rags to riches story

of one of the brightest young

entrepreneurs of the country

Mr. Sachin Bansal , CEO of Flip-

kart.com.

Last but not the least we have

the metrically composed poesy "

Sameer Shah " for the connois-

seurs of verses, leading up to

this months' Qutopia ,for the

ardent quiz followers ...

COUP DE GRACE !!!

02 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Contents Newsletter Team

Aditi Joshi

Anuj Mody

Anurag Agrawal

Chetna Yadav

Jubin Mohapatra

Manav Kaushik

Mukesh Rathi

Pawan Upadhyay

Rajneesh Kumar

Ruchi Gupta

Saumya Dani

Saumya Verma

Sayantan

Shibi Singh

Shruti Goel

Design Team

Anurag Agrawal

Saumya Verma

Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: [email protected] Website: www.iitr.ac.in/departments/DM/Pages/Index.html

DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

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Facebook IPO - The big-gest in 2012

Employee Engagement

Sailing Difficult Water

Kingdom of Lights - Creativity at its best

The Unfinished Business China Property Bubble - A Correction Imminent

Qutopia

DoMS da Evince

21

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 03 | DOMINATION, FEBRUARY 2012

Success Story

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15

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mailto:[email protected]?subject=Feedback

http://www.iitr.ac.in/Departments/DM/Pages/Index.html

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Year 2011 faced a deluge of

strikes - the Maruti strike, the

Bosch strike, the Coal India

strike, the endless Air India

strike to name a few. With the

demand to form a separate un-

ion by workers at a particular

plant, continued on workers

dissension to sign a ‘good-

conduct bond’ as directed by

the management, the Maruti

strike flunked to achieve any-

thing significant except causing

the company to lose on critical

sales.

In the Bosch strike,

workers protested against the

purported outsourcing of auxil-

iary activities by the manage-

ment. The workers accused

management for them chang-

ing their stance and recanta-

tion from promises of not do-

ing so. This strike too ended

without any agreement and the

case has been summoned for

adjudication.

In both these cases the

disengagement of employees

was obvious. It was apparent

that a grave lack of trust and

low engagement was a bigger

reason for these strikes, than

any other cited by the workers

or the management. Clearly,

the need of the hour is to keep

employees motivated, inspired

and engaged with the organiza-

tion not only to create an envi-

ronment of harmony at work-

place but also to improve the

productivity of the employees.

Here a latest cant called

“Employee Engagement”

comes to rescue. It is rapidly

gaining popularity, use and im-

portance in the workplace and

is impacting organizations in

many ways.

Engagement at work

was conceptualized by Kahn

(1990), as the ‘harnessing of

organizational members’ selves

to their work roles.

Employee Engagement -Employing & Fostering a Productive Work Force


Perspective

Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie

………………………………………………………

……………………………………………………… In employee engage-

ment, people employ and ex-

press themselves physically,

emotionally, and cognitively

during role performances.

Employee Engagement

is a combination of commit-

ment to the organisation and

its values plus a willingness to

help out colleagues.

Employees in almost

every workplace can be bifur-

cated into four categories:

highly engaged, engaged, dis-

engaged and highly disen-

gaged.

While engaged employ-

ees contribute to the optimum,

the disengaged ones just follow

the routine. Those who are

highly disengaged, go to the

extent of disrupting the normal

functioning.

It has been found that

fewer than 1 in 3 employees

worldwide (31%) are engaged.

Nearly 1 in 5 (17%) are actually

Disengaged. Engagement levels

vary by region from 37% in In-

dia to 17% in China.

Employee engagement

is vital to any company that

seeks to retain their valued em-

ployees. The Watson Wyatt

consulting companies proved

that there is an intrinsic linkage

between employee engage-

ment, consumer loyalty, and

profitability. As the organiza-

tions are globalizing and are

becoming more dependent on

technology in a virtual working

environment, the need to con-

nect and link with employees in

order to provide them with an

organizational ‘identity’ is

greater.

With attrition across

different sectors touching dou-

ble-digits, retention through

novel forms of employee en-

gagement has become essen-

tial. In 2010-11, attrition in the

telecom sector was at 20% -

23%; in ITeS, it ranged some-

where between 29% - 55%;

24% in IT; 13% in manufactur-

ing, and12% in FMCG, accord-

ing to Pune based executive

search firm Absolute HR Inter-

national. In such a competitive

hiring market, where supply is

limited and every component

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Employee Engagement

05 | DOMINATION, FEBRUARY 2012


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of salary becomes bait, getting

employees to structure their

take-home makes them feel

wanted.

Today many companies

are incorporating this tool

called employee engagement

to increase the level of engage-

ment or job satisfaction of their

employees. Infosys for exam-

ple, has started its Infosys So-

cialEdge Employee Engagement

Platform, which improves

workforce productivity and effi-

ciency, deepens employee en-

gagement, and enables faster

innovation by connecting and

engaging with employees. It

includes a range of employee

engagement initiatives: Skill

Management, Employee Net-

work Management, Employee

On-boarding, Sales Collabora-

tion, Knowledge Networks,

Alumni Networks etc.

Tata AIG General Insur-

ance Co. Ltd follows a system-

atic sustainable & participative

model by actively involving em-

ployees, soliciting ideas and en-

couraging employee involve-

ment. They conduct Employee

Engagement Activities like an-

nual celebration, the success

matrix, sports tournaments etc

where they touch the employ-

ees and their family in the vari-

ous forms.

Employee Engagement

Program at HYUNDAI incorpo-

rated various systems like-

Whistle-blowing system, Om-

budsperson system, Gift & En-

tertainment approval/reporting

system, Competitor Contact

approval/reporting system,

Conflicts of Interest approval/

reporting system, Compliance

Plaza, Compliance Review

Board, Collection of acknowl-

edgement from employees,

Evaluation system to bring the

employees in the state of satis-

faction, passion and commit-

ment.

There are 3 C’s to earn

true employee engagement:

1) Career: To give employees,

the opportunity to enhance

their career through promo-

tions, change in roles and re-

sponsibilities and significant

assignments are the most im-

portant needs of employees.

Employees will unquestionably

feel engaged if the company

Employee Engagement

0102030405060708090



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and its managers devote mean-

ingful and genuine time in help-

ing the employees move ahead

in their careers.

2) Competency: While career

is all about actual growth, com-

petency is about the ability to

grow. Competency grows with

the opportunities to learn and

employ the learning in real life

tasks. Most employees today

look for competence-boosting

chances. They would like to

learn, stretch and improve as

long as they feel they are im-

proving on their marketable

skills.

3) Care: Caring is an art that

demands managers to be ten-

der, empathic and spontane-

ous. Not necessarily by the

grand policies of company, the

caring can also be experienced

by small day-to-day gestures of

manager. The managers should

be sensitive to the 'mood' of

their employees, should know

employees workload, and

should do something about

easing their stress. There are

many day-to-day gestures that

constitute caring - which no in-

vestment in ostentatious gyms

and food courts can replace.

Caring can be considered as a

culture that big companies nur-

ture through sensitive manag-

ers who counterbalances tasks

well with relationships.

A highly engaged em-

ployee will deliver beyond ex-

pectations. As rightly said by

Mr. Clarence Francis (Chairman

- General foods) - “You can buy

a man’s time, you can buy a

man’s physical presence at a

given place; you can even buy a

measured number of skilled

muscular motions per hour or

day; but you cannot buy enthu-

siasm, you cannot buy initia-

tive; you cannot buy loyalty;

you cannot buy devotion of

hearts, minds and souls. You

have to earn these things.” An

organization should thus recog-

nize employees, more than any

other variable, as powerful

contributors to a company's

competitive position. Therefore

employee should engage in a

continuous process of learning,

improvement, measurement

and action.

Employee Engagement

Article By - Saumya Dani [email protected]



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Perspective ………………………………………………………

A young man is seen running

barefooted across a city with

men perched atop poles, walls,

tables, bonnet of a car and

even beneath the water in a

swimming pool. But the object

of his interest is a chandelier

above the king. He quickly

slides in as its center-piece,

pops something in his mouth

and lo and behold, the entire

city flickers to life (read light).

This ad campaign: King-

dom of Lights, for Perfetti’s

Happydent White, took the ad

world by storm. The way it

builds up the humour quotient

to colossal proportions of ab-

surdity is what makes it tick. An

exemplary audio-video experi-

ence for the users, it success-

fully puts across its point and

etches the brand in the minds

of the audience through sheer

entertainment factor. It pro-

motes the recipe for a success-

ful promotional campaign as a

unique combination of creativi-

ty, humor, grandeur and per-

fect execution. In a low differ-

entiation and low involvement

product category, instant recall

plays the key role. But the first

task was to determine the ben-

efit that the product would

offer to a crowded market that

was not very high on the health

consciousness quotient: spar-

kling shiny teeth.

Playing with different

elements of the marketing mix

i.e. price, promotion media,

packaging and product vari-

ants, Happydent has continu-

ously been trying to capture

the essence of Indian audience.

With such an entertainer to

beat, and in trying to recreate

the magic, the ad was followed

by a series of TVCs, print ads

and saw the creation of inter-

Kingdom of Lights: Creativity at its best!



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Kingdom of Lights; Creativity at its best ………………………………………………………

net and mobile touch points for

the Happydent brand. A quick

review of the different media

vehicles used for the promo-

tion of brand Happydent would

be useful in obtaining a macro-

scopic picture of the campaign.

(1) Interactive online ad: The

ad strip shows a sad and bored

girl with a slider to her right

that reads, “Move the slider to

see my smile”. As you slide it

up, the Happydent pack pops

open and the girl can be seen

smiling. This is a simple yet ex-

tremely eye-catching tactic.

(2) Mobile based Happydent

White game: Perfetti Van Melle

India launched an exciting mo-

bile based car racing game that

consisted of three levels. To

win the race, the player is re-

quired to clear the third level

without ramming his car with

other cars on the track. In case

of collision, the car’s headlights

break and one need to use a

‘Happydent White’ to light up

the street and thereby com-

plete the racing challenge.

(3) Internet: ‘Happydent Shine-

shah Challenge’: The initiative

is designed as an amalgam of

an animated story and a game.

It milks the ‘light vs. dark’ or

‘good over evil’ philosophy

while promoting its brand

proposition- Happydent Wave.

(4) ‘Social Media Marketing ini-

tiative” on Facebook (www.fac-

Ebook.com/happydent): Social

media is used to engage the

core target group through con-

tests like ‘Happydent Sparkling

Smiles of the Week’ promoting

the feeling of fun and friend-

ship that has come to be relat-

ed with the brand’s image.

(5) Print Ads: Use of print me-

dia was made to capture the

masses by crafting the images

of iconic leaders entirely from

dental gum. The bold initiative

quoted ‘Giving millions a rea-

son to smile’ attracted appreci-

ation as well as flak in the same

measure.

(6) Point of purchase promo-

tion: Happydent comes under

the impulse product category,

where the decision making

often happens at the point of

purchase. Hence, posters, jars

and danglers as a media vehicle

may be effective but has short-

er lifespans.



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Kingdom of Lights: Creativity at its best ………………………………………………………

In a country where con-

fectionary products were yet to

pick up and the bulk of sales is

through unorganized trade:

small shops, kirana outlets,

etc., it was a challenge for

PVMI to position its brand. As

they say, innovation is the sole

key to becoming a leader in the

marketplace of the future. The

campaign proved to be one of

the most creative ones

launched in India. Not only did

it manage to remain top-of-the

-mind among its customers,

but was also acclaimed global-

ly. Its market share zoomed

past expectations (more than

doubling over the previous

year) and brand awareness

grew dramatically striking a

chord with consumers all over.

Looks like, an ad well

executed is a work almost

done.


Article By - Aditi Joshi [email protected]



mailto:[email protected]

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Perspective ………………………………………………………

According to a recent New York

Times report, the World Bank

has urged developing nations

to start planning for a major

slowdown in global growth in

the year 2012. The bank also

warned of the continued threat

of a global financial shock

“similar in magnitude to the

Lehman crisis,” because of the

possibility that a major Europe-

an economy could be shut out

of the global debt markets. In

these tough times, business

managers would have to exhib-

it leadership skills like those of

visionary companies. Visionary

companies, according to Jim

Collins, are premier institutions

in their industries, widely ad-

mired by their peers and hav-

ing a long track record of mak-

ing a significant impact on the

world around them. I have cho-

sen two such visionary compa-

nies – DuPont and Johnson &

Johnson- and illustrated how

they have sailed their business-

es in difficult water.

DuPont proved to the

business world that innovation

is not just for good times – it is

possible even during major

economic downturn. Johnson

& Johnson showed how best a

crisis could be handled by be-

ing ethical and customer-

oriented.

Innovation by DuPont during

Great Depression

Every economic crisis has been

followed by bankruptcies and

cost-cuttings. The great depres-

sion was no exception. The

stock market crash of 1929 was

followed by four years of GDP

contraction in US. Patents fol-

lowed the same pattern; lag-

ging behind by one year. In the

following years, most compa-

nies stopped or reduced invest-

ment in R&D. DuPont was an

exception. In April 1930, a not-

ed DuPont research scientist

Sailing in difficult water



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Sailing in Difficult Water ………………………………………………………

Wallace Carothers, recorded

the initial discovery of neo-

prene (synthetic rubber). In

that year, the company’s price

levels and sales fell by roughly

10 and 15 percent, respective-

ly. Yet, DuPont boosted R&D

spending to develop the new

technology commercially. Neo-

prene, which DuPont publicly

announced in November 1931

and introduced commercially in

1937, became one of the 20th

century’s major innovations. By

1939, every automobile and

airplane manufactured in the

United States had neoprene

components.

The following factors lead to

the success of neoprene, a new

substance resembling natural

rubber in composition and

structure:

• Neoprene had some superior

properties over rubber such as

resistance to degradation by oil

and gasoline. Whereas it was

inferior to rubber for many

purposes such as in tire

threads. At the time when neo-

prene was discovered, the

price of rubber was falling and

hence it would not be viable

for neoprene to directly com-

pete with rubber. Bridgwater,

the major architect of the strat-

egy for commercializing neo-

prene, suggested finding uses

for neoprene where rubber

was not used or where it was

used but performed unsatisfac-

torily. Neoprene was a new

material with new properties;

markets should be developed

by emphasizing its unique qual-

ities, not by emphasizing its

similarity to rubber.

• Du Pont decided to commer-

cialize neoprene despite the

Depression. Du Pont developed

it slowly and cautiously. Re-

search personnel had time to

improve the product, manufac-

turing personnel had time to

learn to make it, and sales per-

sonnel had time to develop sig-

nificant markets.

Neoprene became a

profitable product almost ten

years after its discovery. Simi-

larly, DuPont discovered nylon

in 1934 and introduced it in

1938 after intensive R&D and

product development.

Dealing with organiza-

tional crisis, the Johnson &

Johnson way In 1982, 7 people

died from cyanide-laced Ty-

lenol capsules in Chicago. Ty-

lenol, a product of McNeil Con-

sumer Healthcare (a subsidiary

of Johnson & Johnson), was the

leading painkiller medicine in

US at that time with a 37%

market share.

There was an immediate

meeting in James Burke’s, CEO,

office with top executives. All

the executives were in great

fear. There was no warning, no

pro-dromes. Nothing like this

had ever happened to them or

any other company that pro-

vides products for human con-

sumption. When the story ran

in the media, public was also

afraid. The very idea that a per-

son could take a capsule for

headache and die was terroriz-

ing. Here is how Johnson &

Johnson handled this crisis:

• A 7-member crisis team was

set up. With Burke’s approval,

the team decided to recall all

Tylenol capsules from stores in

Chicago area. The recalled

batch was tested and two addi-

tional cyanide-laced capsules

were found. Still, the team or

the company was uncertain of

how the cyanide got into the

capsule. Johnson & Johnson

had one overriding priority –

warn the public. The company

did just that by being com-



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pletely open and co-operative

with the media in getting the

news out.

• Johnson & Johnson installed

33 telephones to communicate

with the public during the cri-

sis. Pre-taped statements were

put on special toll-free tele-

phone lines to expedite news

gathering. The messages were

regularly updated. A full page

advertisement was placed in

major Chicago newspapers

offering consumers an ex-

change of Tylenol capsules for

tablets. In the first month after

the deaths, two thousand calls

were taken from media and

thirty thousand calls from con-

sumers.

• When asked by media if there

was cyanide in the manufactur-

ing plant, Foster, a spokesper-

son of Johnson & Johnson, in-

formed that a small amount

was used in the manufacturing

plant for quality-assurance

testing. However it was kept in

a completely separate facility

from the production line. Also,

none of it was missing. The re-

sulting stories had very little

impact as it was run in insignifi-

cant places in the newspapers

and facts were not blown out-

of-proportion (as had hap-

pened with other crises). The

newspapers merely reported

the information revealed. Fos-

ter realized that his positive

dealings with the media over

the years had paid off.

The FBI and FDA didn’t

find any evidence of tampering

at Johnson & Johnson manu-

facturing plants. It was report-

ed that unknown suspect(s) re-

placed Tylenol Extra-Strength

capsules with cyanide-laced

capsules, resealed the packag-

es, and deposited them on the

shelves of at least a half-dozen

or so pharmacies.

The three most important fac-

tors that helped Johnson &

Johnson in coping with the cri-

sis were:

• It was open to the media and

using media it reached its cus-

tomers.

• It was willing to recall its

products no matter what that

meant to the company.

• It appealed to the American

sense of fair play and asked for

public’s trust.

Although it had been

proved that Johnson & Johnson

was not responsible for the

tampering and the deaths,

Johnson & Johnson’s work was

far from over. It had to come

up with a campaign to re-

introduce its product and re-

store confidence back to the

consumer. According to a varie-

ty of academic studies of the

Tylenol case; Johnson & John-

son took the following steps to

regain market share:

• Tylenol products were re-

introduced containing a triple-

seal tamper resistant packag-

ing. It became the first compa-

ny to comply with the Food and

Drug Administration mandate

of tamper-resistant packaging.

Furthermore, they promoted

caplets, which are more re-

sistant to tampering.

• In order to motivate consum-

ers to buy the product, they

offered coupons on the pur-

chase of their product. They

were available in the newspa-

pers as well as by calling a toll-

free number.

• To recover loss stock from

the crisis, Johnson & Johnson

made a new pricing program

that gave consumers up to 25%

off the purchase of the prod-

uct.

Over 2250 sales people

made presentations for the



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Medical company to restore

confidence on the product.

Johnson & Johnson’s re-

sponsibility to its consumers

proved to be its most effi-

cientpublic relations tool. It

was the key to the brand’s sur-

vival.


Article By - Sayantan Chattopdhyay [email protected]




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Perspective ………………………………………………………

Facebook, as we know is one of

the most phenomenal social

networking medium for every

internet user, or it cannot be

said with much difficulty that

the term social network is now-

adays synonymous with Face-

book. Mark Zuckerberg’s Brain-

child is most likely to go public,

as the rumours have already

spread across the world over

the biggest IPO of 100 billion

dollars valuation. Facebook will

not be the day to day activity of

internet users but also of the

investors in Wall Street. There

are many facets of Facebook

Public Offering. Some of these

are why is Facebook going pub-

lic, how to carry forward with

such a huge valuation, what

can a potential investor has to

look upon from such a huge

IPO, and what could be the

pros and cons of investing in it.

Taking the above as-

pects one by one, firstly why

Facebook is getting public, the

answer could be simple as

‘raising more capital from the

market’ to ‘enriching the pock-

ets of the owners and the em-

ployees of Facebook’. But the

situation is quite different as it

is concerned with the fact why

now, why not some few years

back when the economy was

far superior to as of now. More

likely, Facebook has now more

than 500 stakeholders, accord-

ing to US Laws, which makes it

a requirement for Facebook to

go public. By rules defined by

SEC, Facebook has to disclose

its financials, so why not charge

the people to see the stash by

going public and raising some

more capital from the market.

According to experts, Facebook

made a net profit of 714 million

dollars and has some 3.5 billion

Facebook: The Biggest IPO of year 2012



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Facebook: The Biggest IPO of Year 2012 ………………………………………………………

dollars in cash, so they do not

need stakeholder money to run

the social network. But they

will make more money by spec-

ulation of IPO itself. Adding to

the above points, emergence

of Google+ can be a serious

competition to Facebook. So to

content with the growing rival-

ry and before the rivalry starts

to erode its market position in

the social networking business,

it is most logical for facebook

to have the listings and raise

the capital as of now. Another

most speculated reason could

be the acquisitions of firms like

Zynga and Twitter. Acquiring

these firms will put Facebook in

better position to compete

against Google and confirm its

position as the acme of social

networking.

Facebook has already

planned to raise 10Billion Dol-

lars or more at the end of this

year, and this will help the Fa-

cebook Inc. to push its public

value near to 100Billion Dollars.

This is much more than some

of the well established firms

like Disney ($61 Billion), Ama-

zon ($88.3 Billion) and McDon-

alds ($95.6 Billion). Facebook

will try increasing its revenue

from the advertising, Facebook

Fan pages and Display Ads. If

Facebook raises $100 Billion,

then Mark Zuckerberg will

make around 25$ Billion, which

makes it equal to fifty dollars

from each of facebook daily us-

ers. The projected revenue at

the end of 2011 was around 4.2

$ Billion, out of which 89% has

been accounted from Advertis-

ing and 11% from Facebook

Credits. Though Facebook is in

the forth position for Unique

daily US visitors (first three be-

ing Google, Yahoo and Mi-

crosoft respectively), it comes

in first position as far as Ads

revenue is concerned (around

17.7%).

From the investors’

point of view, whether this IPO

is good or bad, it’s too early to

make that call. But the fair

analysis of pros and cons of Fa-

cebook IPO will definitely put

some light on the matter. Talk-

ing about the pros of Facebook

IPOs, it could be termed good

for two reasons. First, all inter-

net companies that has gone

public in recent years except

LinkedIn every other firm has

not remained above their IPO

prices. The millions of subscrib-

ers of Facebook are not just

feeding off to Facebook, but

also feeding off of each other.

It is a self sustaining model that

will operate and grow in realm

of present social scenario,

whether the site has 80 or 800

million members. So Just be-

cause some firms are not doing

well does not define that Face-

book won’t have its way along

with others in Wall Street. Se-

cond, Facebook will have

shareholders along with the

customers of size more than

the population of any country

(except two). So the Facebook

shareholders will have to care

about their customers because

there are so many of them. For

example, recently when Face-

book has changed its interface,

the members got very angry, or

when private policies have

been changed, there was a

sharp reaction from members.

So if Facebook shifts its focus

from members to sharehold-

ers, members will react in a

way for which social network

may have to pay hefty price.

There has been 1.86 billion Dol-

lars growth recorded from ad-

vertising, and there are other

avenues of growth like Mobile



………………………………………………………

Facebook: The Biggest IPO of Year 2012 ………………………………………………………

market where Facebook has

been just surfaced upon and

whether the company launches

its Smartphone or not, there is

always an opportunity for the

company to improve the mo-

bile offering of Facebook itself.

Many experts have quite

different opinion about Face-

book IPO, forecasting that the

Wall Street will not ‘like’ the

entry of social marketing giant

on the stocks. The biggest

downside of IPO is that it will

expose both good and bad fi-

nancial details of the company.

If you have large debt or unu-

sually high salaries for the ex-

ecutives, the annual report will

expose the same to whole

world. Facebook have grown

nearly 800 million users, but

this growth rate obviously

would not be for long as the

limited number of persons on

this planet. So in a year or two,

the growth rate will also be

lessened for Facebook, which

means limited profits for the

people buying the IPO. And the

growing competitions from the

Google will also harm Face-

book, and the shareholders.

Facebook as a company

has emerged and transformed

from a social networking hobby

for kids into incredible media

powerhouse. It could be sever-

al billion dollars richer if it goes

public. Mark Zuckerberg is still

reluctant to go public as he

managed to grow Facebook

much longer and comfortably

in private. But the growing

number of stakeholders al-

ready crossed 500, and the

company is most likely to go

public this May. It has already

drawn too much hype with re-

gard to its huge valuation of

around 100 billion dollars. The

year 2012 will witness the

mammoth IPO and this will

make Facebook the second

most valuable tech company in

the world. As far as, the mem-

bers of Facebook are con-

cerned, this IPO will indirectly

give them more saying regard-

ing changes in Facebook. And

after judging the pros and cons

for investors, the 100 billion

dollar question would be,

whether should I invest in Face-

book IPO or why should I not

invest in Facebook.


Article By - Shibi Singh [email protected]




………………………………………………………

Chlorophyll ………………………………………………………

Poem By - Juhi Gupta [email protected]

Lost in her thoughts she began to search

For memories from her distant past

Things that she knew would forever and yet never last

A lurking smile from the corner of her eyes

Crossed her face as she remembered by

Time and tide had once held her captive

How she fluttered her wings in desperation

When all she wanted was just to fly active

She tried her best yet the winds were against her

All her efforts went in vain, the pain seemed to last forever

Hope was but, what she never left,

The winds blew again and now in favour

Time could not bow, the spirit of this young bird

Winter didn’t wither her, summer didn’t feel too dry

Coz she was waiting for the spring to come

And it sure did…. Coz she took it in her stride

When it was all against and high

And now it was time for her to bask in its glory

Her struggle she did surpassed

And now was as free as her unchained melody……………

The Unfinished Business

Its wise to learn, its GOD like to create




………………………………………………………

Qutopia ………………………………………………………

1) Facebook founder Mark Zuckerberg intends to change his annual salary to what amount?

2) Former boss of RBS has been stripped off his Knightwood. What was his nickname at RBS?

3) What reason has consoles manufacturer Nintendo given for recording a heavy loss?

4) Missionary Church in Sweden- Kopimism. What is unique about them?

5) A senior executive of which business sold more than £200,000 of shares just before a profits warning?

1) Which firm announced that its total bill for pay and bonuses in 2011 was £8 billion?

It’s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? ‘Qutopia’ – A Utopia of the best Biz Quiz Tidbits to wreck your brains! Rush in your answers to [email protected] or [email protected] before 28th February, 2012. The winner will have their names published in the next issue. Also, person getting the highest score in the current quarter (Jan-June 2012) will get a gift voucher. Answers in the next issue of DoMination.

Section A (1 Point for each correct answer)


Section B (1 Point for each correct answer)






………………………………………………………

Qutopia ………………………………………………………

2) Identify this logo.

3) Connect “H&A store logo, Weet-bix, backyard Cricket, Travelex”.

1) Connect the Images to a business tycoon.

Section C (3 Point for each correct answer)

Winner of Qutopia (Jan 2012)

1. Prateek Jain (Batch of 2008-10, DoMS IIT Roorkee)


Answers to Jan’12 Qutopia

Section A: -

1. “Oh wow, Oh Wow, Oh Wow”.

2. Google Maps

3. Avtar Attractions

4. Online Movies Rental

Section C

1. Elon Musk (Cofounded Tesla Motors, X.com which later merged with Confinity to become Paypal and according to Jon Favreau, director of the Iron Man movies, he is the inspiration for Favreau's and Robert Downey Jr.'s interpretation of the genius Tony Stark.)

Section B: -

1. St James' Park Newcastle

2. Zynga, The gaming company

3. Norbert Reithofer, BMW Chairman



………………………………………………………

DoMS-da-Evince

Sameer Shah is 2007 batch pass out of Department of Man-agement Studies, IIT Roorkee. He is currently working as Manager in the Project Advisory and Structured Finance de-partment at SBICAPS, Mumbai.

1. What are the common chal-

lenges being faced in Finance

related projects due to current

market situation?

Ans: The number of projects in

the past one year have gone

down because of too many is-

sues: the initial 2008 Boomer-

ang, then the EuroZone Crisis,

now some internal issues re-

garding Policies. There is lack of

interest on promoters side be-

cause of the capital markets, so

overall scenario in the past

year has not been promising

and led to the fall of new pro-

jects coming in.

However, Looking at India and

its potential to grow, from six

months to one year down the

line we are expecting very good

projects. There will be lot of

opportunities across the fi-

nance sector.

2. How does Image of a Public

Firm like SBI helps it to be dis-

tinguished from Private Sector

banks?

Ans: There is always a stigma

attached to the Public sector.

However, Public sectors now

can be associated with good

job profiles and travels, as far

as projects in finance sector are

concerned, Public sector banks,

led by SBI dominate the area.

The kind of work, and number

of projects that these banks

have is significantly better than

that of private sector. Moreo-

ver, the private sector has its

own issues which we could see

in 2008 crisis as well, wherein

some of the private sector

banks stopped lending com-

pletely.

3. What has been the most

challenging role in your career

so far?

Ans: One thing that we don’t

face while we are in DoMS is

rigor and stress, which we ex-

perience when we go out in the

field for example in terms of

number of hours needed to be

spent in office. To be better

equipped to face the corporate

world you can utilize the re-

sources of the department,

read case studies available, in-

teract with people across the

department, institute and the

industry.

4. How has DoMS, IIT Roor-

kee contributed to your suc-

cess?

Ans: In DoMS while being in-

volved in activities like organiz-

ing events and the independ-

ence given to us for the same

we were able to build over

selves. If you have an idea you

can go ahead and implement it.

There is no interference from

faculty. This is what manage-

ment is all about when you are

working in something like or-

ganizing the whole event, be-

ginning from the idea/concept

to getting the committee in



………………………………………………………

………………………………………………………

DoMS-da-Evince place and finally bringing out a

successful event. Each and eve-

ry aspect of management is im-

portant what you learn in this

place.

5. How has CFM (Certified Fi-

nancial Manager) helped you

in your career?

Ans: Certificates are Addons.

These course like CFM provides

us with good knowledge. These

certifications combined with

our regular course helps us

gain practical knowledge as

they deal a lot in case studies.

6. Any message for the read-

ers, especially the current

batches of DoMS?

Ans: We are not IIMs, We are a

IIT, that implies we need to

take things more seriously.

There is still a need for a recog-

nition of MBA from IIT, and

that can be done only through

rigour. We need to organize

more events than IIMs, like if

they conduct 10 events, we

have to conduct 100s of them.

So, current batches needs to

get out of their comfort zone

and start working with the real

spirit.



………………………………………………………

Success Story ………………………………………………………

………………………………………………………

Adding Superior Value to Customers’ Cart...

In a country like India, where our purchase decisions are trig-

gered by our senses - seeing, touching, smelling, feeling,

tasting, were on the flip side of the cart. But Sachin Bansal

with Binny Bansal co-founded Flipkart, an e-commerce com-

pany in 2007 by adding superior experience to each cart.

Sachin Bansal, an IIT Delhi graduate in computer engineering

with his classmate and colleague Binny Bansal, left Ama-

zon.com to start a venture naming it flipkart.

With the embryonic idea, they started with an initial invest-

ment of 5 lakh. They began working in a two bedroom apart-

ment from Bangalore and personally purchased books from distributors for their own catalogue and

made packages to give to the courier agencies.

Now , Flipkart has a team of around 4500 members and the company operates from offices in Ban-

galore, Mumbai, Delhi, Chennai and Kolkata. They have their own delivery network in 27 cities. Flip-

kart has delivered to every pin code in Kerala and also almost every pin code of India.

For the discoverability, the company relied on viral and social networking. They learned SEO and

Google Adwords from scratch and very effectively used SEO and blogoshere. Later, the goodwill they

earned by providing superior customer experience helped them to be pioneer in e-commerce. Now,

the company records consistently high repeat purchase rate of 70%.

The company started with books as they have 20% margin and the risk associated with the purchase

of books is very less. They continued their business only with books for 2 years and even today 50%

of their revenue is from books.

Earlier they used Consignment model of e-commerce but now they are on warehouse model. Today,

the company is quickly gaining dominance in product categories like music, video, games, comput-

ers, electronics, mobile phones, healthcare and personal product categories.

Sachin Bansal CEO and Co-Founder, Flipkart

FLIPKART-

Ranks in the top 30 Websites in

India (As per Alexa ratings)

11,500,000 book titles available

8,000,000 visits every month

4500 current team strength

30000+ items shipped per day

27 cities with own delivery net-

work

23 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE


………………………………………………………

Success Story

The challenges faced by Flipkart were that none of the

distributors and suppliers were ready to share their in-

ventories and also the VCs could not understand the

Flipkart model in it’s nascent stage.

Now, Flipkart secures largest investment till date in an

Indian online space valued $ 150 million from Accel

Partners and Tiger Global Management in its fourth

round of funding. In previous three rounds it raised $31

million collectively.

In a cash based economy like India, path breaking features like cash/card on delivery , 30 days re-

placement, EMI options, free shipping, equated monthly instalment and 24X7 made Flipkart differ-

ent from other players in this space. Today, they have 60-65 per cent in COD.

In terms of revenue, company is looking at Rs 500 crore to Rs 600 crore in the current financial year.

The company had clocked a revenue of Rs 50 crore in 2010-11 making a 10 fold expected growth in

revenue in FY12.

With 80% market share and clocking daily sales of Rs. 2.5 crore approx., Flipkart is confident of re-

taining the leadership position in e-commerce.

Company’s future plans are to invest in supply chain and technology resulting in large warehouses

and increased automation of process with plans to enter more product categories.

Sachin is an avid gaming enthusiast and likes to spend most of his free time with his family.

Sachin’s Mantra-

Be very focused on consumers.

Build amazing experiences for custom-

ers.

Continuously innovate with product.

Never Promise something that you

don’t have. Always keep optimum in-

ventory level

………………………………………………………24 | DOMINATION, FEBRUARY 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE


………………………………………………………

………………………………………………………

Regardez I’economie ………………………………………………………

About 300 early buyers of

home in Shanghai real estate

gathered to protest on October

23, 2011 against company that

has announced to drop prices

of properties. This was just the

beginning of series of protest

across Shanghai and China

against the falling property

price in response of Govern-

ment measures to deflate the

so called ‘CHINA PROPERTY

BUBBLE’. The protest even

leads to violence making things

worst at some places raising a

debate on Government inter-

vention and hence measures

taken to curb property prices

need to be imminent or China’s

growth and urbanization could

easily absorb the property

price rise. Debate starts that

whether there is really a bub-

ble in China similar to the one

existed in US or Dubai.

China’s Property Industry- Why

such a price rise? :-

China’s private residen-

tial property market is just two

decades old ,as before that on-

ly government allotted the

houses to people. In the wake

of recession and government

tightening policies in early

2008, the prices then fell back

considerably. But again the

prices started rising in 2009,

when government directly in-

tervened to boost the property

business after recession to set

China’s economy on growth

path. The government reversed

its attitude and policies and im-

plemented fiscal measures to

encourage demand for residen-

tial property where it announc-

es a $585 billion stimulus pack-

age in November 2008. Reduc-

tion in property taxes and free-

ing of stamp duty and land val-

uing taxes were the measures

China Property Bubble - A Correction Imminent



………………………………………………………

China Property Bubble - A Correction Imminent

………………………………………………………which stimulated a growth in

the property sector. Lending

policies were also loosened to

a large extent facilitating buy-

ers to take more loans at much

lower interest rates and build-

ers to easily acquire huge capi-

tals for development of proper-

ty.

Figure: Average House price

rise in China

(source: CEIC Data company

Ltd)

Shanghai was the host

of 2010 world expo, which

meant development and build-

ing of new infrastructure to ac-

commodate almost 70-75 milli-

lon visitors. Shanghai regis-

tered an average increase of

19% price from March 2009 to

July 2009 quoted by CHINA

DAILY (daily newspaper). Bei-

jing, which is considered as Chi-

na’s administrative capital, rec-

orded an increase of 26.5% of

price in real estate according

to Beijing Real Estate Transac-

tion Management Center.

Those who delayed purchasing

due to tightening of govern-

ment policies and slowdown

rushed to take advantage of

price drops and relaxed hous-

ing policies which leads to al-

most 150% of increase in resi-

dential sales in 2009 in compar-

ison of 2008.

Banks were very eager

to lend at that time after Peo-

ple’s Bank of China(PBOC) re-

laxed lending rules and be-

cause of these circumstances

home loans grew up by 29.5%

to US$565 billion. The growth

was very rapid and surpassed

government expectation,

where home mortgage loans

grew by 88% in Q1 of 2009

stated by National Develop-

ment and Reform Commission.

Figure: Real estate loan

growth, China and others

(source: CEIC Data company

Ltd and GFSR april 2010)

Housing Provident Funds

(HPF) was also a major reason

for property surge. Govern-

ment employees and employ-

ees of state owned enterprises

are mandated to take part in

the scheme which encourages

workers to save a portion of

their earning to purchase resi-

dential plots in which he have

to commit 5% of his salary on

monthly basis and also employ-

er have to contribute same

amount. The employee is not

allowed to withdraw the pro-

gram and have to contribute to

monthly saving regularly. In

this way the national saving of

China grew at very fast ace and

that saving is directed to the

property industry leading to

increase in demand and subse-

quently to prices.

The existing housing

supply was surely not sufficient

to meet the surging demand.

Then to stimulate the raid con-

struction of new residential

properties, the government

along with loose lending policy

also reduced minimum capital

requirement limit to 20% from

35%. Because of these

measures, the access to fund-

ing was very easy and riding on

these policies the purchase of

residential plots in Beijing in-

creased by 52.4% from H2 2008

to H1 2009.

Retail market in China is



http://www.colliers.com/Content/Repositories/Base/Markets/China/English/Market_Report/PDFs/Beijing_Research_Bulletin_Residential.pdf

http://www.colliers.com/Content/Repositories/Base/Markets/China/English/Market_Report/PDFs/Beijing_Research_Bulletin_Residential.pdf

http://www.chinadaily.com.cn/bizchina/2009-08/10/content_8549328.htm

http://www.chinadaily.com.cn/bizchina/2009-08/10/content_8549328.htm

………………………………………………………

China Property Bubble - A Correction Imminent ………………………………………………………

heavily regulated and favors

landlords thus encouraging

more individuals to buy resi-

dential plots.. According to

Global Property Guide re-

search, major Chinese cities

have average rental yield of

4.42%. Government allocated

US$ 1.9 billion to fund the con-

struction of residential plots for

low income groups which

would further encourage the

increase in property business.

Is it really a BUBBLE?:-

Financial stability always

depends on the extent of price

misalignment and the

nature of their adjust-

ment toward equilibri-

um. The larger the risk

of rampant falling of

prices the more alarm-

ing the situation is.

Based on the finding

of Wu, J., J. Gyourko and Y.

Deng (2010). “Evaluating condi-

tions in major major Chinese

housing markets,” NBER Work-

ing Paper 16189, National Bu-

reau of Economic Research,

MA., (July), the panel regres-

sion approach explains that the

major factors which affect long

term house price estimated

trajectory are real income per

capita, past land prices, real

mortgage rate and degree of

urbanization. By findings of

them on the basis of this ap-

proach, the property prices ap-

pear to be out of line with long-

term fundamentals in some big

cities including Beijing, Shang-

hai, ,Fuzhou, Xiamen, Shenzhen

and Ningbo .

Another approach which

they follow is known as the as-

set pricing approach used to

estimate how much the price is

deviating from benchmark lev-

els reflecting the fundamentals

in order to compare prices.

Table: Mortgage market depth

and growth ( sources: OECD, DTZ property re-

search)

The current steps of govern-

ment and its probable impact

on Chinese economy:-

Research findings buy econo-

mist and researcher in the case

of China, private consumption

is not going to be affected sig-

nificantly by this price correc-

tion as income from properties

including rental income and

returns from property transac-

tions accounts for only about 2

percent of China’s total per

capita income in urban areas.

There is a strong storage link-

age between real estate and

other industries in China. The

real estate sector is most close-

ly linked with the metal

smelting and rolling sector , fol-

lowed by non-metal mineral

products and chemical sectors.

the amount of loans to the sec-

tors that are closely linked with

the property market is large,

accounting for about

24.0 percent of total

loans in 2009(from fig-

ure below). The falling

prices will deeply

affect these sectors

and could erode their

ability to repay loans

to banks leading to severe debt

default across Chinese econo-

my. Though Banking sectors

direct impact on property price

fall looks manageable as direct

loans for property sectors still

accounts for less than 20% and

is much less in comparison with

other countries. The share of

land sales revenue to local gov-

ernment revenue at provincial

levels varies significantly.



………………………………………………………

China Property Bubble - A Correction Imminent ………………………………………………………


Article By - Pawan Ku. Upadhyay [email protected]

So a decrease in property

would directly hit local govern-

ment collections of cities such

as Chongqing who have 30% of

land sales revenue of total rev-

enue. This is the reason why

some of the local governments

are still not finding it convinc-

ing to implement these price

curbing measures strongly.

The Real Hidden Problem be-

hind Property Surge:

The regulatory measur-

es may not be enough to ad-

dress property price surges

which is in fact fundamentally a

structural problem. The most

basic cause of high demand for

real estate in China is low per-

ceived cost of homeowner-

ship. Low real interest rates,

high saving, lack of alternative

investment and property tax all

work to promote excessive

house price inflation.

China’s households are

more likely to be optimistic

from past experience of robust

growth, have no other invest-

ment alternatives either locally

or overseas for high saving. So

real estate is the natural choice

for them. Now if a property

correction takes place abruptly,

it will result in panic amongst

citizens and investors which is

evident from series of protest

and violence. The government

would need to take steps to

raise real interest rates, impose

a meaningful property tax and

ensure that leverage does not

accelerate to handle the situa-

tion. With these measures

there are risks , but if well cali-

brated, such steps should re-

duce the risk of a disorderly fall

in prices.

Conclusion:-

On analyzing the whole

reason of this current Chinese

property surge, we can under-

stand the current price surge is

due to conservative mortgage

lending standards, trends of

increasing urbanisation, rising

incomes and real savings and

very low rent to property ratio.

We have seen that

house prices were not signifi-

cantly overvalued in China as a

whole during the first half of

2010. However, the mass-

market segment in a few large

cities—such as Shanghai and

Shenzhen, and the luxury seg-

ment in Beijing and Nanjing—

do appear to be increasingly

disconnected from fundamen-

tals. Its impact on private in-

vestment and local government

revenue are sizable, particular-

ly in cities that have high real

estate investment.

The Surge is needed to

be controlled but the impact of

an abrupt price correction in

real estate could lead to a debt

failure by many related indus-

tries as Chinese economy de-

pends on real industries. The

Chinese government’s policy

measures to cool down the

markets unveiled in April 2010

appear to have some impact on

price growth. The gaps be-

tween market prices and fun-

damental based benchmarks

have become smaller in a few

cities. So, need of the day is in-

crease in real interest rates, a

higher carrying cost of home-

ownership and broad financial

market development to alter-

native investment vehicles to

housing.




Department of Management Studies, IIT Roorkee

Roorkee - 247667, INDIA

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Contacts: Anurag Agrawal (+917579072360), Shibi Singh (+918958055603)

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IIT Roorkee Domination February 2012

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