Once bitten, twice shy!

Invariable issuance of pink slips has been a norm amongst companies over the last one year – well, to beat the downturn blues. But, not all have been successful in implementing the same. Naresh Goyal’s Jet Airways, in October last year, was forced to take back 1,900 employees after it faced wrath and protests across the country. But, this private airline has once again unveiled its plans to cut down the extra flab in its workforce (by 2,000 employees) to save cost and stem its bleeding bottomline. But, then the real question arises too – Will it succeed in terminating the jobs this time or will it be forced to eat the humble pie once again? Certainly, with an aircraft to employee ratio of 1:145, the total manpower of Jet Airways currently stands at 12,000 and as such it’s planning to bring it to 10,000. “Streamlining the number of employees and capacity cut is imperative for Jet Airways to stem its current losses,” agrees Hatim Broachwala, aviation analyst, Khandwala Securities. However, learnt his lesson from the last fiasco, Goyal is strategically implementing the job cuts in various phases this time. Jet Airways, which pocketed a heartrending Rs.225 crore loss in Q1 FY 2009-10, is certainly cautious enough this time to not to go for a mass retrenchment. More importantly the airline is rightsizing the number of personnel in various verticals this time rather than churning out people from just one department. In fact, the process of issuing pink slips has already started in the company as 50 employees were off loaded last week. So, with this slow and steady approach (and without much noise), it seems that Jet might succeed in its endeavour without much fuss this time.

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Source : IIPM Editorial, 2010.

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

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Of booms and busts...

Affordable housing has come as relief for the Indian realty sector. But, does it really need another boom?

The real estate sector seems to be on a recovery track as sales of housing and residential properties have started picking up, thanks to the concept of affordable housing. But what really is affordable housing? Affordable housing was perceived to be as property in the range of Rs.20-30 lakh and affordable to the mid-income group. Apart from clearing the myth of affordable housing, Kumar Gera, Chairman and Santosh Rungta, President – CREDAI (Confederation of Real Estate Developer’s Association of India), reason why there should not be another boom in the real estate sector.

4Ps B&M: What exactly is the concept of affordable housing?
SR: Generally speaking, affordability is linked with houses being cheap. But it’s different from the common myth. For various levels of income group, the affordability is different. A person who is earning Rs.2,000-3,000 per month also needs a house and that should be affordable to him. Affordability is dependant upon the earning capacity of an individual. The right interpretation of the word affordability means to be in a situation to provide a product, which is affordable to each section of the society – low-income group (LIG), mid-income group (MIG), economically weaker segments (EWS) as well as the high-income group (HIG).

4Ps B&M: But, why did prices bloat in the first place?
SR: Price is always the mechanism of demand and supply. For developers, 30-40% of the component of price is that of the cost of the land. As cities grow, cost of land increases, and therefore cost of apartments also increases.

KG: In addition to that, input costs, material costs, steel, cement, labour cost, development charges as levied by local authorities, cost of power, et al, have sky-rocketed. Price is in fact a function of all these factors.

4Ps B&M: What issues are you discussing with the government to develop affordable housing?
SR: First of all there are land issues. Government has some land and we’re discussing how that land can be converted into housing. Then, some states still continue with the Urban Land Ceiling Act that needs to be immediately removed. There is also a question of land convertibility of agricultural land into housing land. The second most important issue is the creation of infrastructure. The land is expensive in the main cities and therefore we’ve to look at the suburban land. And for that there should be a good transportation network as every person living there needs to come to city to work. Roads are not laid out, so there has to be a policy on roads as well. Then it should also be known in which direction is the town moving, for which a masterplan has to be made and pockets have to be identified.

4Ps B&M: Region wise how is the sector performing?
KG: Pretty much the same. Areas which are IT centric may be suffering more than areas which have their economies based on certain other sectors that are more stable. In fact, real estate certainly depends upon the economy of a particular region to a marked extent.

4Ps B&M: So, when do you foresee the next real estate boom?
SR: I’ve been in this business for the last 40 years and I don’t want any boom in the sector. It is not in the interest of the sector. Our ideal dream is to move with the economy and let there not be a situation where real estate moves ahead of the economy. We don’t want prices to rise suddenly but to move progressively in line with the growth of the GDP.

KG: Sector will move up as input costs will increase and there will be a reasonable price increase, which people can accept. If prices go up, profit margins will go up, but then how many units will be sold? Volumes will go down, which will bring down the sector. So, there should always remain a healthy demand at price points.

Savreen Gadhoke

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Source : IIPM Editorial, 2010.

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

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Branding dead celebrities is a multi-billion dollar business and a slew of smart entrepreneurs are cashing in on the positive feelings associated

with the celebrity’s image. By Sray Agarwal

No matter how morbid it sounds, Michael Jackson’s death has given a new lease of life to Hollywood’s ailing economy. As in life, even in death, everyone and anyone remotely associated with Michael Jackson (including his dear dad) is busy using his name to build up their respective bank balance. Just a couple of hours after Jackson’s death, the music industry re-launched many albums of Jackson and overnight a few of his songs booked top slots of charts. So much so that even eBay, iTunes and Amazon saw a new surge in demand related to Jackson products and merchandise. His father also joined the frenzy. Just three days after his son’s death, Joe Jackson was spotted on CNN’s Red Carpet casually plugging his new record label, Ranch Records. Buzz is that Joe is even lining up Michael’s children for a world tour as The Jackson Three next year. Even rapper Akon is suddenly touting a song with Jackson in his new record; and earlier this month Madonna too paid tribute to the singing sensation at London’s O2 Arena – where Jackson was supposed to perform – of course, to packed audience!

Gloomy as it may seem, marketing the dead is actually a billion dollar industry. A dead product (read: a dead celebrity!) has all the attributes that are required to make a brand. They have a fan following, they are idols, they are memorable, they are likeable, they are valuable and above all, as they are no more present to pamper their fans with their performance, their very names are cash cows for smart entrepreneurs. Barry Silverstein, a marketing consultant and co-author of the McGraw-Hill book, The Breakaway Brand spoke to 4Ps B&M and gave his take on the trend. “I believe using dead celebrities as part of a marketing program is both a short and long-term strategy. It’s short-term because marketers can capitalise immediately on a dead celebrity who dies, but it’s long-term because, as has been proven with Elvis Presley, a dead celebrity’s aura can live ten, twenty, or fifty years, thus providing a smart marketer with an ongoing path to potential sales and profits,” he says.

As per the Forbes’ list, the top 13 dead celebrities generated $242 million in 2007. Firms like CMG Worldwide and the Richman Agency (now a part of Corbis) buy the licence and intellectual property rights of dead celebrities. CMG boasts (even today!) clients like Rosa Parks, Marilyn Monroe, James Dean, Jesse Owens and Babe Ruth among its clientele. While the Richman Agency has few from non-glam world, CMG and Corbis receive 20% of the profits from any endorsement. Adds Barry, “Once a celebrity is gone, they will never act, sing, dance, speak, or perform again and that makes every collectible and every image associated with that person truly valuable.” Take Elvis Presley. He has still not lost his essence and stands firm in this highly competitive world... uh, the world of dead celebrities. According to Forbes Magazine, around 600,000 people visit Presley’s home every year. Elvis has already sold 118 million record albums and around 500 million commemorative Elvis US postage stamps were sold after 16 years of his death. But with Michael Jackson’s sad and untimely death, Presley’s top slot seems to have found a close competitor. Marketers are even planning to commercialise Michael Jackson’s estate in the lines of Elvis’ estate.

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Source : IIPM Editorial, 2009

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

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