“Intel and Qualcomm are Two Different Rivals”

Eight years back, Advanced Micro Devices (AMD) promised to become ‘the’ Intel-killer. It still does. With a modest market share of 12.1% in the microprocessor space, AMD believes that its Fusion and Vision technologies will work magic in the notebooks & mobility devices platforms and enhance consumer experience radically. B&E’s steven philip warner discusses AMD’s status and strategies with Marty Seyer, Global Chief Strategy Officer, AMD.

B&E: AMD has had a rather modest time during the past few years. But it’s still willing to bet on the “next era” of computing. Could you share something about AMD’s future launches?
Seyer: As the only company in the world that develops and designs both x86 CPUs and discrete Graphics Processing Units (GPUs), AMD will play a critical role in pioneering the next era of computing with the first Accelerated Processing Unit (APU) that combines graphics & computing technologies onto one chip. This new processing approach, which AMD calls Fusion, uniquely capitalises on the company’s strengths, while forging into new technology that is designed for a better, faster, more seamless computing experience. Directly tied into our Fusion approach, looking ahead, AMD has a strong focus on enabling a complete computing experience with stunning graphics, accelerated application performance and video capabilities to fulfil consumer demand

B&E: Late last year, AMD settled a $1.25 billion anti-trust complaint with Intel. What are the benefits from this settlement to AMD and what’s your growth strategy for 2010?
Seyer: The November 2009 legal settlement with Intel paved the way for both companies to look ahead and finally compete on a level-playing field. We enter 2010 with one of the strongest platform & technology road maps in our history. AMD’s strategy is to continue delivering exceptional platforms, serving as a one-stop-shop with the essentials for customers across server technology, client platforms & graphics.

B&E: AMD is investing heavily on server & graphic technology. What’s all the talk about your new ‘Vision’ approach that follows the ‘Fusion’?
Seyer: We are seeing strong demand in a variety of markets, including a rebounding server industry that is being driven by cloud computing and virtualisation, among other technologies. On the graphics side, there’s unprecedented demand for immersive graphic experiences, be it gaming, video or otherwise. In fact, in just the three months after the launch of the ATI Radeon HD 5800 series, the first DirectX 11-capable graphics products from AMD, we have shipped more than 2 million DX11 cards. In 2009, we introduced Vision Technology from AMD, a new way of communicating with consumers, retailers and PC manufacturers that breaks the traditional model of how PC benefits are communicated by emphasising real-world usage models that communicate the value of the whole system, not technical specifications. The positive response to the Vision approach prompted the launch of Vision Pro at The Consumer Electronics Show 2010, which expanded the program to AMD’s enterprise customers. At CES, Lenovo debuted its first AMD-powered ThinkPad notebooks, using Vision Pro.

B&E: Intel & Qualcomm are two of AMD’s biggest competitors. What challenges do they pose to AMD?
Seyer: Intel and Qualcomm are two different competitors. The former is well established in the computing market, and the latter in the communications market and is just beginning to enter the computing market through smartbooks. The key to success won’t be based on past achievements, but on forward-looking innovations and through our Fusion approach, we have plenty of capability and assets to lead in our target markets. The semiconductor market has always been, and always will be fiercely competitive, but AMD is keenly focused on what we need to do to succeed.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

BRIC: Is it still relevant to India?

Contrary to the belief that BRIC would overtake the economic might of the West, the lack of progress of the bloc due to China’s hegemony and pessimism calls for a rethink of policies, especially for India. Perhaps, it is time for us to look at other partners that could actually help India’s growth story.

Bilateral problems between India and China have existed for long and border disputes keep simmering every now and then, especially in relation to Kashmir, the Aksai Chin area and Arunachal Pradesh. Experts believe that China, because of its own domestic politics and strategic interests, would never foresake its claim from Arunachal and return Aksai Chin to India. The government of India has claimed and reclaimed this area, which legitimately belongs to India and was captured by China during the 1962 Indo-China war, every now and then. China, however, due to its own strategic policies does not seem to be in any mood to give up this land which is basically a corridor connector between the Xinjiang and Tibet. China has constructed an all weathered metal road through Aksai Chin which starts from Lhasa and goes all the way upto the capital of Xinjiang. A part of this metal road (called the Karakoram Highway) also passes through Pakistan occupied Kashmir (PoK) and connects Islamabad with China. It’s said that China even has plans to link Karachi with Gwadar, a sea port that China is developing in Pakistan’s Balochistan province (Makran coast area). There is a strategic motive of China behind this and the question of China giving up the Aksai Chin territory does not seem likely to arise. As long as this dispute remains, the relation between India & China is not going to be cordial in the real sense of the term.

The relevance here is that border disputes between India and China are going to have a major repercussions on the BRIC bloc. For the sustainability of BRIC as a viable alternative to the West, it is extremely crucial that India has a friendly and cordial relation with China. Historically, India has very friendly ties with the other nations of BRIC, i.e, Russia and Brazil. The only problem for India lies with China which is a major component of BRIC. Even thinking of BRIC as a bloc without China is not practical. But then, because of historical differences, territorial claims and counter claims, reasonable relations between India and China also do not seem likely in the near future.

Apart from the territorial disputes, there is also a huge trade imbalance between these two countries. The balance of trade is abnormally tilted towards China and despite India making repeated requests to China to give it the most favoured nation status for several goods, the Chinese leadership is yet to oblige. Even though Indian companies have requested the Indian government to take up this issue with China, no fruitful results have emerged yet. On the flipside, when it comes to Chinese companies, they are making huge profits here in India. India’s trade imbalances, as a result, have been increasing everyday.

If we come to the question of power play within the BRIC nations itself, Russia still has major problems with China with respect to Central Asia and countries around it. The problems are in relation with countries such as Uzbekistan, Kazakhstan, Turkmenistan, Azerbaijan, Georgia, Kyrgyzstan, Armenia, which have huge reserves of natural resources, especially oil and gas. While China has major interests in staking claim and forging partnerships with all these countries for exploration of oil and natural gas, Russia does not seem too happy with it as it does not want any other power to have stake in any of these countries which are close to its sphere of influence. China already has problems with India and with the Indo-China dispute over the South China Sea that has recently come up, things have gone from bad to worse. Further, India’s penetration into the South China Sea for oil exploration (after Vietnam’s invitation to ONGC and OIL for exploration on a 50:50 basis) has Russia’s tactic support because of its interests in Central Asia. South China Sea (SCS) is an inland sea which has a stake of four nations – Philippines, Vietnam, China and Taiwan. The SCS has huge reserves of natural oil and gas, uranium, thorium, plutonium etc. The dispute here is territorial between the four countries as China feels that it has the right to claim this whole area of Spartly Islands as the area historically belonged to it before the United Kingdom took over. The stakes have gone high after the discovery of oil. Today, these four nations have staked claim to portions of the SCS, which happens to be in accordance with the international jurisprudence. China here is just playing the big bully and its claims are against the international jurisprudence on the laws of the sea, according to which the South China Sea should be equally divided between the four surrounding nations.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

B&E highlights the possible opportunities and imperatives for the company

As Reckitt Benckiser’s India business heads towards contributing more than 5% to global revenues, B&E highlights the possible opportunities and imperatives for the company.

Reckitt Benckiser India’s turnover is just over Rs.20 billion (of which Dettol alone makes over Rs.10 billion). With the assimilation of Paras Pharma, which has a turnover of around Rs.5 billion, and Reckitt’s own CAGR of around 40% should see it rise the Indian FMCG ladder and soon match the likes of GCPL and Dabur (revenues of around Rs.40 billion), in near future. Moreover, Reckitt’s India division is well on its way to cross the 5% contribution (to global turnover) benchmark, even before HUL & P&G.

Reckitt is investing over Rs.2 billion in a Paras manufacturing facility near Badii to further strengthen its OTC offerings. Chander Mohan Sethi, MD, Reckitt Benckiser India informs, “Currently, OTC comprises 15-20% of business, and is one of our strategic growth pillars.” With Reckitt’s track record for innovation – 40% of its sales comes from products developed over the last three years better times are expected. Besides, it gives Reckitt the opportunity to enter hitherto unknown categories like haircare/body care (Set-Wet deodorants & hair gels), hair oil (Livon). Reckitt has already moved up to the third spot in the Rs.75 billion soap market with its Dettol variants.

But one of Reckitt’s biggest weaknesses has been that its brands are more popular than the company itself unlike the Unilevers and P&Gs. While individual product brands & extensions have worked since ages, the aura of a strong parent brand does lend a great degree of credibility and preference. Heritage brands like Dettol, and high performing brands like Harpic and Lizol are doing well, but since Reckitt banks too much on new innovations, and has to invest heavily on marketing each of these products (it spends 12% of revenues on marketing, highest among top FMCG players), it would do well to ensure that corporate branding initiatives get stronger. To be fair, it has started the process in two markets Germany (developed) and Brazil (emerging) to gauge the results. Ramping up these initiatives across countries is critical. Akshay Bhalla, MD, Protiviti Consulting comments, “Reckitt has lagged in bringing some of its brands in time unlike HUL and P&G. It has to ensure that it comes up with more homogenous products in tune with changing consumer habits and preference in India.” Also, as the company gets more aggressive in rural areas, it has to fix its relatively low penetration. The company has distributors across 3000 towns via a hub & spoke model compared to 5500 for HUL and 4000 for Godrej Consumer Products Ltd. Finally, its flagship Dettol has a very strong presence in the health segment; but beauty still leads the FMCG space, where Reckitt still lacks as much as a foothold. It would be risky to let Dettol do the honours as it would interfere with its traditional positioning. Perhaps the situation calls for another big brand acquisition!

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Survival of the Weakest, the new mantra for Responsible Leadership!

This is one of the most challenging pieces that I have ever written for this magazine. In Business & Economy, I generally limit myself mainly to writing the back of the book column. However, this time, when my editorial team requested me to write for the cover story as well, since the cover topic was on responsible leadership – one of my key areas of passion – I got excited immediately and gave my consent. Then came the bombshell. India’s pride, the Dean of Harvard Business School, Dr. Nitin Nohria was also writing for the same cover story! As if that were not enough, they also told me that the two people I personally admire the most, J. J. Irani and Kris Gopalakrishnan were also contributing! I was left stumped and excited at the prospect of writing for a cover story which was to have such luminaries contributing! And that’s why it was a great challenge to decide what to write on. After putting considerable time to it, I thought that it was pertinent to write about a personal favourite theory of mine that I wrote about in my book The Great Indian Dream; and the theory is the Survival of the Weakest! Although it was intended to be more of an economic theory, I think that it is perhaps the most important aspect of responsible leadership that our country’s leaders – political as well as corporate – need to follow.

I have always believed that driving an organisation by looking only into profits is like driving a car by looking only into the rearview mirror: it tells you about the road you have been through but not about the road ahead. Today’s entrepreneurs, leaders and businessmen carry the responsibility to take India into the new world order. This requires leaders with a vision who understand the seriousness of the responsibilities they carry. But for this, they first need to understand their country well.

India is ranked 119th out of 169 countries in the world in the Human Development Index for 2010. Today, around 37% of the Indian population is living below the poverty line as per the Tendulkar committee report in 2010. As recently as in 2004-05, the government estimated that 25.7% of the population (and not 37%) was living below the poverty line! The Director of the UN Research Institute for Social Development, Thandika Mkandawire, has commented that the Indian data (with respect to poverty estimates) is “always controversial”. As is known, the poverty line in India was recently defined at Rs.32 per person per day for urban areas and Rs.26 per person per day for rural areas. Only Indian politicians and economists with all their insincerity have the ability of calling this a poverty line. This should be called the destitution line. As per the government, earning Rs.960 per head per month is enough to be above the poverty line in urban India! No wonder that in the red light district of Bombay, Kamathipura, women are bonded into prostitution today because years ago their grandparents took loans ranging from Rs.12 to Rs.50! Today, we contribute 1.32% to the world’s total exports (WTO figures for 2009). Compare it with China, which contributes 9.6%. Their percentage might still seem lower because of their phenomenally competitive prices.

But to realise the Chinese impact, one has to just visit the shops of Europe and USA and pick up any product – from the cheapest of utility items to the costliest of designer goods – to discover that they are all ‘Made in China’. India alone accounts for around 35.5% of the total adult illiterate population of the world (283.1 million illiterate adults in 2010); yet, we are excited about being the country with the most qualified & educated human resource. In India, we have 1 Indian doctor per 2,400 Indians but we have 1 Indian doctor serving every 1,325 Americans in the US!

Today, 40% of Bombay is a slum and 35% of Delhi defecates in the open. Only 232 towns in India have a working sewer system and that too partially including Delhi. Around five lakh people still carry human excreta on their heads everyday. India ranks 67 on the Hunger Index for 2010 taken out by the International Food Policy Research Institute (IFPRI) and is home to 42% of the world’s underweight children under the age of five (Nepal, Pakistan, Sri Lanka are better, and so are Sudan, Lesotho, Uzbekistan and Rwanda). We created such a lot of noise when just about 50 people died of plague because the richer segments of our economy were also under danger. But when around 370,000 people die every year of T.B. and nearly half a million people suffer from diarrhoea everyday, no one raises a whisper. China has around 60% of arable land compared to India. Their annual food production at the same time is 550 million tonnes (2011 projections) as against the 241.56 million tonnes that we produce (RBI, FY 2010-11).

We still see leaders in India who just talk or play the unending blame game, a corporate world which still cannot go beyond seeking concessions from the government, an NGO sector which has become an industry in itself and also the rest of us, who have little choice but to watch helplessly, waiting for crusaders like Anna Hazare to come along. With a crippling lack of leadership at the government level in the country and oceans of sufferings around us, one often wonders if India truly is a democracy, when people don’t have basic rights to food, drinking water, health, sanitation – in short, the right to a life of dignity, or in most cases, the right to life itself. Contrast this with neighbouring China, where things happen through massive top down planning from the government at the centre. Growth in China has also succeeded in rapidly lifting people out of poverty. UNDP data states that incidence of rural poverty went down in China from 30.7% in 1978 to just 1.6% in 2007. Clearly, this makes it not only a country which has taken far better care of the poorest of poor, but even a far more strong market for business as compared to India.

What has worked, to the extent it has, in India is the private sector post the liberalisation era. We would realise that entrepreneurs and leaders of the India of today have this tremendous responsibility of taking this country of poor, uneducated, unemployed and ill-fed ahead towards a new beginning. Looking at the central leadership issues, India has to necessarily be a bottom-up growth story led by private enterprise. For this, the private enterprises need to realise the importance of utilising the various lobbies that they control like CII, FICCI et al to pressurise the government to come out with pro-people and anti-poverty policies to help this country grow. Private players need to come out of their petty and short sighted vision and focus upon the larger interests of the country.

They need to realise that in the country’s interest lies their interest. No amount of management and marketing techniques can enable corporations to have a more than 10 to 15% growth in their market – but the market can be expanded by more than 1000% by increasing the purchasing power of the people. Then, instead of the middle class being an approximate 100 million, it would become more than 500 million. This common sense economics should be clear to everybody. Otherwise, we will keep standing and watching most FDI flow into China with its much larger market base. If the purchasing power levels in India increase, these very entrepreneurs who command no respect in the global arena today will walk with their heads held high tomorrow. This is exactly where survival of the weakest comes in.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

In an exclusive conversation with B&E’s Mona Mehta, M. V. Nair, Chairman and Managing Director, Union Bank of India (UBI), talks about the expected growth of the bank in the coming year

In an exclusive conversation with B&E’s Mona Mehta, M. V. Nair, Chairman and Managing Director, Union Bank of India (UBI), talks about the expected growth of the bank in the coming year and the initiatives UBI is planning to take to make retail lending more consumers oriented. 

B&E: Your retail lending portfolio grew over 28% (y-o-y) last year. In fact, it’s around 11% of your total loan book at present. Are there any plans on the anvil to expand it further this fiscal?

MVN: UBI is focused on increasing its retail loan portfolio. There is a huge opportunity in retail loan segment due to favourable demographic profile, increasing migration to urban centers and a general rise in consumer aspiration. The retail penetration in India, measured by retail loans to GDP ratio, is about 9.5%, quite lower when compared to mature markets where this ratio ranges from 15 to 20. Considering this potential, UBI is gradually building a robust retail lending model. In fact, today we have 46 specialised branches called, ‘Union Loan Points’ for retail loans. These branches have exclusive focus on retail loans and also leverage the lead management technology for converting the leads from other branches into real business. We are also offering specific loan products in order to meet the customised needs of various segments. Today, technology can be leveraged in many ways and one interesting thing can be tracking the number of products availed by an average customer and then cross-selling to those whose availment is below the average. We are gradually building this capability that would provide us advantage in deepening the retail lending customer base.

B&E: What about UBI’s rural presence? How do you plan to augment it further?
MVN: Rural and agricultural banking are significant areas of priority for the bank. Almost 55% of our branches are located in centers which cater to the needs of people whose livelihood is dependent upon agriculture and allied activities. Going forward, bank will open significant number of branches in rural centres in order to facilitate meaningful financial inclusion. This will include at least 25% of new branches in unbanked rural centres (Tier 5 & Tier 6). Any one technology can not suffice the needs of rural areas due to the locational issues and different comfort of the people for a particular technology. Therefore, UBI is using a host of technology platforms to reach out to the masses. This includes biometric cards, ATMs and mobile banking. In fact, we have recently tied up with Nokia for our co-branded product ‘Union Money’. Under this a person can transfer the money, pay his utility bills just by visiting any Nokia outlet. Then there are business correspondents who reach out to the people using biometric card technology.

B&E: Your expansion plans for the current fiscal...
MVN: UBI today has more than 3,000 branches and nearly 2,700 ATMs across the country. There is still vast scope for deepening our presence in pockets of emerging growth centres. In FY 2012, a total of 400 branches are likely to be opened. Of the new branches, significant share will be for branches in hitherto under-banked centres. Similarly, we are planning to increase our ATMs to 5,000 by end of the current fiscal. As far as international expansion plans are concerned, UBI would expand in select geographies. Presently, the bank has approvals from the Reserve Bank of India (RBI) for converting the representative office in London (United Kingdom) into a subsidiary and representative office at Sydney into a branch. The bank also has approvals for opening a branch each in Antwerp (Belgium) and Dubai International Financial Centre and representative offices at Johannesburg (South Africa) and Toronto (Canada). The process of obtaining approvals from the respective foreign country regulators are at various stages.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting