With sound branding strategies and robust profits, Master-Card & Visa look poised for better days ahead...

IIPM PUBLICATION

Plastic may not be good for the environment but it’s surely driving the money market and how! With 59% consumers worldwide nodding with approval to credit cards as a primary means of payment, one can well expect the bonanza of profits that credit card companies are enjoying of late.

Indeed, both MasterCard and Visa are having a ball. An unprecedented gain in profits of 70% for MasterCard in the current quarter has enthralled shareholders. Robert Selander, the company’s president and CEO, stated, “These results continue to demonstrate the strength of our business model and growth in electronic forms of payment.” The boost in this hike comes more from markets like India, China and Brazil.

The two companies have also built a phenomenal branding strength over the years. Talking about branding power of Visa, Michael Beindorff, Executive VP, Visa USA, said, “Rather than promoting their own brand name, banks want to build their house on the foundation of Visa, which is already so powerful and strong”. The positive traits attached to the brand name Visa, are confidence, comfort, high acceptance and reliability. However, with a decline of 56 points in market share for 2006, Visa (market share of 60.29%) announced the launch of “Life Takes Visa” brand campaign (for the first time in 20 years) and talks about evolution of Visa from a top credit card company to leader in electronic payments.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Vijay Mallya’s new spirits

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Finally the wait is over! It’s now confirmed that the King of Good Times, liquor baron Vijay Mallya’s United Spirits has snapped up Scottish whiskey-maker Whyte & Mackay (W&M) for a whopping Rs.48.19 billion. After buying out Shaw Wallace for Rs.13 billion in 2005, and French winemaker Bouvet Ladubay (a subsidiary of Champagne Taittinger) for $20 million last year, Mallya, the Chairman of UB Group is on a high. The company has already informed the Bombay Stock Exchange that it has acquired 100% stake in Whyte and Mackay. “The potential for premium Scotch whiskey in India is enormous and with the acquisition of Whyte and Mackay, we now have a strong portfolio of internationally recognised brands that we will immediately introduce in the Indian market and use our strong distribution muscle fully to our advantage,” said Mallya about the acquisition. W&M has brands like Whyte & Mackay Scotch Whiskey, Highland Malt, Isle of Juara Malt Whiskey, Glayva Liquer and Dalmore Single Highland Malt, John Barr, Mackinlays, Cluny and Claymore in its portfolio. Earlier, W&M had said in a statement: “The business is extremely valuable to us on a standalone basis and we understand why UB group has been so interested in acquiring us, given their additional capability to sell and market our brands in all key growth markets, including India and China.” Here’s to some good Scotch then!

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Saving the Indian farmer

IIPM PUBLICATION

The Prime Minister needs to move beyond posturing

Beginning with Andhra Pradesh, the Prime Minister, Manmohan Singh, is launching a tour of various states to assess the unprecedented crisis that confronts Indian agriculture. According to his spin doctors, the Prime Minister is now convinced that something urgent and drastic needs to be done with Indian agriculture before things get out of hand. After all, you cannot really claim to represent the ‘masses’ if farmers commit suicide in their thousands. So while criss-crossing the country, the Prime Minister will be consulting and seeking the cooperation of chief ministers to find durable solutions to this crisis. As the spin doctors elaborate, stagnant and declining productivity levels are a key area of concern, apart from issues like lack of institutional credit, declining quality of soil and the lack of infrastructure that prevent Indian farmers from reaping the fruits of globalisation.

But does Manmohan Singh really need to travel across the length and breadth of the country to find out what ails Indian agriculture. Sitting in his fortified Race Course Road residence, or the even more heavily fortified office at South Block, Dr. Singh, being the good economist that he is, cannot only dissect the crisis; he would also know exactly what steps can be taken to rescue Indian agriculture sector and the farmers from its current state of misery. For that matter, even a college student of Economics, who is even remotely familiar with Indian agriculture, knows what the solutions are. And economists and analysts have been talking their throats hoarse about this issue.

Being the good economist that he is, Dr. Singh would know that Indian farmers, like producers and suppliers anywhere in the world, will benefit immensely if they have better access to markets. Far from ensuring that the Indian farmer can sell across the globe, the government persists with the insanely repressive law that makes a farmer selling his output outside his state, a criminal. Being the decent democrat that Dr. Singh is, he also could not have failed to note the sheer arrogance and anti-farmer stance of his own government when private companies like Reliance and ITC were warned against buying food grains directly from farmers. That’s because the private players were offering much more to the farmer, creating a situation in which the Food Corporation of India was not able to buy stocks.

Why does Dr. Singh need to do a cross country marathon in this searing heat when he knows all this and much more? He could do better by advising his Agriculture Minister, Sharad Pawar, to pay more attention to the farmer and less to the state of Indian cricket. Then again, is he in a position to do even that?

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative