Presentation to Alagappa University College of Management

by

- Cecil M Sunder M.S, MBA, PMP

Introduction Target Growth Sectors for MNC’s Socio-Economic Impact Recession After effects Indian Market Conclusion

Target - Emerging markets BRIC & Asia Pacific Expected GDP growth better than

developed economies Sectors to monitor

Bio-Tech – low R&D cost & quality Infrastructure – need is the pull Automobiles – growing middles

class Insurance/Finance Telecom IT & ITES – ODC’s and Knowledge

Centers Real Estate – Direct FDI’s Aviation Other sectors to think??

Why Indian retail sector is not a free market? Barriers to entry - Wal-Mart

Emerging Market Drivers Liberalization & Free Market economy Globalization Minimal regulation FDI inflow – Investor confidence Creation of SEZ (Tax holidays), Clusters to

simulate local economy and investment FOREX reserve growth Growth of credit market Infrastructure development – Airports,

Communication, Roads, metros etc Availability of skilled labor and raw

material @ cheap Note - North American and Europe

Markets are flat

Aggressive Global Marketing aided by Media, Migrants, Immigrant upper middle

class Brand awareness – BMW, GM, Toyota,

Apple, Dell, Levis, L’Oreal, eBay, Samsung, Sony, UBS, Morgan Stanley etc

Is free market good for the economy & nation building?

Jobs - Outsourcing and Offshoring Value to buyer or seller? Quantity over Quality Creation of new jobs in the emerging

markets Quality workforce at affordable costs –

Impacts SGNA and Opex Stimulates seller economy Migration of skilled labor Attrition – Supply Vs Demand

Wealth – Inequality On demand pay Largest middle class with huge PPP in

BRIC Extraordinary bonuses in the financial

sector for ‘Extraordinary Risks’ Growing inequality – ‘haves & have-

nots’ Sourcing – Global supply chain

Sourcing from any part of the world optimal/cheap (raw material, skill, and labor)

“Goldman Sachs Group Inc. is on track to pay out as much as $20 billion this year, or about $700,000 per employee. That would be nearly double the firm's $363,000 average last year” – Wall Street Journal

Recession is the economy shrinking for 2 consecutive quarters with a decrease in the GDP.

If the recession continues for next quarter, (>6 months) then the economy goes through “DEPRESSION” Triggered by severe financial crisis

in developed economies Reliance on Market forces and

absence of regulatory and monitoring mechanism

Stock market meltdown across the globe and FIIs’ pulled out

washout of investors confidence.

In India BSE Sensex crashed Jan 2008 -21000 points Oct 2008 – 8701 Points Wealth lost by all shareholders -

$52 billion (Rs 210,000 crore)

Bankruptcies & Collapse of Financial Institutions Lehman Brothers, AIG, GM, Freddie Mac

and Fannie Mae etc Freddie Mac plummeted from $63 on

October 8, 2007 to $0.88 on October 28, 2008

Severe Credit tightening Absence of cash flow Slump in Housing, Automobiles, Retail,

Services etc Majority SMBs’ went out of business

Lay-offs Citigroup - 59,000 layoffs Bank of America - 35,000 layoffs HP Electronic Data Systems - 24,500 and still occurring

Bankruptcies & Collapse of Financial Institutions Lehman Brothers, AIG, GM, Freddie Mac

and Fannie Mae etc. Freddie Mac plummeted from $63 to

$0.88 on October 28, 2008 Severe Credit tightening, absence of cash

flow –Housing, Automobiles, Retail, Services etc.

SMB’s went out of business Lay-offs

Citigroup - 59,000 layoffs Bank of America - 35,000 layoffs HP Electronic Data Systems - 24,500

and still occurring Economic Stimulus Act of 2008 & The

American Recovery and Reinvestment Act $800 billion earmarked and spend started Coordinated effort by countries G8, G20

etc to infuse money Jobs & Infrastructure creation

Impact of Recession in India?

Services and Exports - Demand issues Absence of external demand for

sometime tied up with developed economies

Exports stagnant – Protectionist measures

Inventory piling up in housing sector Credit default rate and squeeze Short term Currency devaluation

‘Light at the end of the Tunnel’ Emerging markets not likely to face

recessionary trend – swings and panic attacks in short term.

Strong local consumers and demand irrespective economic conditions

FIIs’ will return to market – other places for ROI and stability?

GDP 6-8% projected better than expected Excellent Foreign Currency reserve. Better Regulatory & Government Control

INR Vs $

Change in landscape forever Agile, lean and trim – Flat structure Metrics, measurement & ROI based

investments Networking and reference markets JV & partnership

Innovation economy Knowledge based IP protection and patent Out of the box thinking - What value

addition can you provide ? Merger & Acquisitions

System Integration Process oriented, Process

reengineering Sectors at glance

Healthcare, Bio-tech Infrastructure IT & ITES Program Management