Rider of the Storm

IIPM, GURGAON

He’s blunt, bold and transparent. And he’s set his eyes on reversing Yamaha’s fortunes in India

“When I first came to India, this place (the Yamaha India plant at Greater Noida) was a zoo. The workers in the factory did pretty much as they desired. And at any given point of time, nearly 30-40% of the labour was not working,” is the brutally frank admission of Tomotaka Ishikawa, MD & CEO of Yamaha Motor India today. Sitting pretty in his casually elegant room in the plant, with an entire wall plastered with various pictures of him and bikes, he can afford to be candid. After all, since his arrival in India more than a year ago, he’s managed to not only resolve Yamaha India’s labour troubles, but has also crafted a ‘fun’ game plan to help the Japanese two-wheeler major break new ground in the country, which includes getting Yamaha’s big racer bikes R1 and MT01 to India.

And you’d better believe the man. He may look unassuming and petite in his spectacles and conservative business suit, but this samurai is a fierce fighter all the way. Credited with the turnaround of Yamaha’s fortune in a series of south East Asian markets, his particular brand of strategies have particularly worked wonders in Thailand’s two-wheeler mart.

Faced with the rising onslaught of Honda and Suzuki, Yamaha was a dying bike brand in Thailand (their market share had plummeted to about 9% from the earlier 30%), before Ishikawa began to wreak havoc on competitors in 2001. “I gave the Thailand management three choices. I told them either you be a quick adaptor of lower prices like Suzuki; or you find Honda’s weak point; or else find a niche for yourself. We finally settled in for the third option,” affirms Ishikawa.

He introduced automatic engines, targeted the younger generation with stylized accessories, and introduced swanky new merchandising. Honda slashed its rates by 15%. The unconventional Ishikawa, instead of crumbling under pressure, retaliated by upping Yamaha prices. Ishikawa reminisces on how his distributors in Thailand at the time thought him insane, but the strategy ultimately paid off. In just 4 years Yamaha had got back to nearly 25% market share in Thailand. Ishikawa became the blue eyed boy of the Yamaha head office in Tokyo.

Ishikawa’s Thailand experience has set the alarm bells ringing for rivals in the Indian market. The two wheeler giant made its India foray in 1985, in partnership with Escorts, making inroads into the hearts of Indian bikers by offering them sporty, performance driven products.

The RX100 tasted phenomenal success, but the momentum died half way through. Ask him, what went wrong with Yamaha’s India strategy in the first place and you’re almost astounded by this CEOs honest and frank assessment. “There was a gap between what the Indian customers wanted and what we gave them. They wanted an RX100 type of vehicle but we gave them what everyone else offered – nothing unique or different. We got caught in the volumes game and developed products that lacked Yamaha’s genes,” he pointed out. Hero Honda and Bajaj had a better product line up and walked away with all the glory.

In fact, for the month of May 2007 Yamaha India saw a whopping 100% drop in sales! Ask Ishikawa and you get another straight Ishikawa-style reply: “We didn’t have anything to sell!” No mincing words, for sure.

Adrenalin levels in Yamaha India are at an all time high now. Since Ishikawa joined Yamaha India, Gladiator has already won the 125cc Bike of the year award in 2006. And with ‘Kando’ (a Japanese word meaning “Touching Your Heart”) – as their corporate ethos, the buoyancy has touched every Yamaha employee.

Ishikawa is borrowing heavily from his Thailand experience to get a one up on his Indian rivals, and that too with a planned investment of a jaw-dropping Rs.1000 crores. “We are just going to go back to the 4Ps of marketing for the Indian market,” he avers, adding that a new product line up had already been finalised. Refusing to divulge more details at this stage, he only says that, “The product will be affordable and attract the younger generation. It would be a product uniquely designed for bikers, and not commuters.” The idea behind the emphasis on bikers (instead of the earlier commuters) is to come up with hi-sense, hi-fashion, cool products that will be ‘fun’ and attract the younger generations. The new model line-up is set to be introduced in the Auto Expo in January 2008. “I’m not greedy, I’m realistic. We hope to grab 19% of the motorcycle market in the next five years,” says Ishikawa.

Believing the Yamaha India employees to be his biggest asset today, Ishikawa is in awe of the mathematical and engineering abilities of Indian people. “The Thai’s are just no comparison,” he says. He believes, that employee retention is one of the key factors that would make the company attractive in the eyes of the public. “I want people to say that God! I’m so lucky to be working with Yamaha.” In the same spirit, Ishikawa is working closely with his team to change the work culture of Yamaha India. In fact, he says that whatever HRM systems initiatives he has introduced so far, have brought fruitful results.

In line with this new vision, Ishikawa rolled out a new internal mission statement in July 2007 - New Yamaha, my promise dil se! And mind you, these are not just empty words. The CEO himself amply displays his heart’s commitment to turnaround Yamaha India’s fortunes, when he says that the primary reason why he has not invited his wife to come and live with him in India is because he needs “no distractions.” Now that’s really dil se dedication Mr. Ishikawa!

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Source : IIPM Editorial, 2008

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

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Sleeping...? Still?

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Hope our ministers read this!

Ah! There you have it! The perfect answer to your wife’s unstoppable truculent Sunday nagging intended to make you work. Tell her you are suffering from a condition called ‘Chronic Fatigue Syndrome’, or simply CFS (leading to a serious drop in physical activity levels) for those ‘fatigued’ lazybones! Well, according to a BBC Research, even till as recently as 2002, “doctors had been sceptical as to whether CFS exists as a real disease or is ‘all in the mind’...” But most recent research, specifically the one conducted by the Journal of Clinical Pathology, proves that not only is CFS as real as your intelligence (!!!), but that, in fact, it may be linked to a common stomach virus! The research, which was headed by Dr. John Chia, tested 165 patients with extremely long-term CFS issues, out of which a whopping 80% and more showed gastro-intestinal virus complications! But hold on, you enervated brain fag! Before you rush to your bellicose wife militantly brandishing this research accusing her ‘virulent’ cooking for your woes, digest this. International research proves that only 0.2 to 0.4% of the global population suffers from CFS. Ok, we heard you... All this seems perfectly alright... Still, why do we have this lingering suspicion that all of this 0.2 to 0.4% is based out of India? And that they might all belong to the Indian Parliament?!?!

Edit Bureau: Pooja Priyadarshini

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
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Wilfried Aulbur, CEO, DaimlerChrysler, India

IIPM - Admission Procedure

BMW has outsold Merc in some segments. Comment.

When you enter the market there is a novelty factor and they might have shown a high growth in a particular quarter. But, we are closely watching competition. Only we had the guts & determination to put our money on the table (in 1995) when nobody else believed in India’s potential. What’s the extent of localisation you enjoy in India?

The localisation in the C class is about 50%. This includes all the local value additions. E & S are less comparatively.

Potential of Indian market?

We are making money here and we have been doing that since the year 2000. Fact of the matter is that, India in 10 to 20 years will be a market you simply cannot afford to NOT be in.

What strategies to sustain Brand Mercedes in India?

There is a combination of various factors; one of them is strong products. Indian customers are very discerning and we make sure to offer the latest product. Plus, interaction with the customer is very important for us, reflected in our global golf tournaments & our support to Merc clubs.

Plans for the commercial vehicle () segment?

CVs revolve around cost of ownership, reliability and maintenance; therefore we will focus on after sales. With the experience of over a 100 Actros trucks already in India, we are confident enough.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

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HDFC General Insurance

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T he good times are back again for HDFC General Insurance Company Ltd.. After breaking-up with its international partner, Chubb, the company has found a new partner in the form of ERGO, which is part of the Munich Re group, and has picked up 26% stake in HDFC General Insurance. This marks an important event in the history of HDFC as the new partner is set to bring in all necessary ingredients which would propel the company forward. The company registered total premiums of Rs.190.16 crores in FY ’07. As Deepak Parekh puts it, “I am convinced that ERGO will bring in the vast insurance expertise, top-quality technical and operational know-how that made the ERGO Insurance Group a leading player in Germany and throughout Europe to the joint-venture company.” Of course performance in the upcoming fiscal will give some indication to where this combination is headed.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
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Riders of the rural storm

When IIPM comes to education, never compromise

They are slowly emerging from the mess of the last four years. Now they are combining CSR with their rural business agenda.

Remember the legendary Steel Authority of India Ltd. (SAIL) tagline: “There’s a little bit of SAIL in everybody’s life.” Apply the thought to the FMCG segment and the tagline sits perfectly on the shoulders of global FMCG behemoth, Hindustan Unilever (HUL). From soaps to salt, toothpastes to tomato sauce, HUL has got the unique distinction of touching everyday lives of consumers, with its battery of brands targeted at the affluent, as also the price conscious segments.

Ask any housewife – in this case, Sujata Singh, a homemaker for the past 12 years, and she swears by Surf (a leading HUL brand), a brand which even her mother used in her time. “Hindustan Lever cannot be equated to just another company,” says the elderly owner of a local supermarket, Mangesh Tarole, in Mumbai’s Malad area, adding that HUL brands are deeply entrenched into her life. She is succinctly hinting at Unilever’s success at transforming mere soaps and shampoos – Hamam, Dove, Lifebuoy, Liril, Lux – into products with a deep societal connect, in other words, making them household names.

What’s more, the beating that the company had taken over the last four years, both in its financial performance as also in its market share, is now visibly subsiding. Compared to 2004-05, the years 2006-07 have been particularly invigorating for HUL. A result perhaps, of enhanced focus on innovations, both marketing and social, that seem to be paying dividends to the company.

In as much, HUL is more or less secure, so far as its stranglehold in the urban households is concerned. Rivals, both big and small, like P&G, Marico and Nirma, are decisively behind in the race. The last frontier for this global Goliath is India’s rural hinterlands. HUL is now going the whole hog to tap rural markets, slated as a $1 billion opportunity for FMCG sector.

HUL’s rural thrust is not new. They have been there, done that. Remember how in the early 90s, little known Chik shampoo sachets, priced at Re.1, completely usurped the rural market from HUL? The company had to re-strategise, re-group, attack afresh and steal back the sachet advantage from Chik. Thanks to a more powerful distribution network, HUL was successful in this attempt. But now, their latest opponent is the cigarettes – FMCG major ITC, which definitely has a comparable distribution muscle, thanks to its vast distribution network of over two million tobacco retailers. ITC, in fact, is also creating a parallel distribution network (grocery stores & modern retail formats) for its FMCG range, through its e-Chaupal network. If that was not enough, rivals P&G, Marico, Dabur and Godrej are also flexing their rural muscles.

So though HUL is already present in the hinterland, it has now put rural propaganda at the forefront of its corporate blueprint. Harish Manwani, Chairman, HUL, believes that the best way to do this is to bring social responsibility to the heart of HUL’s business, by putting their respective brands in the forefront. Here’s why? “It is because brands are at the heart of our business. It is through our brands that we engage with and build relationships with our consumers and communities,” he said at the company’s annual meet this August, adding that HUL’s business success depends on how well the company’s brands are able to integrate with the socio-economic agenda.

Take Lifebuoy – a brand which is being marketed in India since 1895 – that has forged a renewed bond with the masses through HUL’s Lifebuoy Swasthya Chetna project that aims to educate 200 million persons about personal hygiene. To make the soap bar widely accessible, HUL has repackaged Lifebuoy’s 50g bars, selling them at a price point of Rs.5 only.


Another big ticket rural connect is being made via the Annapurna initiative, through which HUL seeks to reduce iodine deficiency amongst those who cannot afford iodised salt in India. For the same, HUL overhauled its entire supply chain, to provide the undernourished with 100g sachets at price points as low as Rs.3 only.

In addition, Unilever’s ongoing Project Shakti (aimed at liberating rural women from financial clutches) or Pure-it – a product that delivers clean drinking water at very affordable prices – are among HUL’s far-sighted enterprising initiatives that combine business acumen with corporate social responsibility.

“The simple truth is that in the long run you cannot have a thriving business in a failing society. It is this recognition which will help drive actions that will contribute to India’s equitable growth,” says Manwani.

And if you are wondering how HUL is enforcing this rural agenda, the company has a dedicated workforce, a few of them even trained in rural farmlands. After all, it’s people that acquire centre stage when it comes to creating and sustaining a vibrant corporate culture and an ambitious outreach programme. Through its managerial prowess, the corporation has already managed to stay ahead of ruthless competition, both national and local. In fact, certain brands like Vim, Lifebuoy and Annapurna have connected to local folks in a way that others can only envy.

Corporate honchos at ITC may well be burning midnight oil to be crowned as the rural FMCG kings, but HUL will yet put up a tough fight, all the way till the last mile is covered!


Edit Bureau: Shashank Shekhar

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM, GURGAON
IIPM - Admission Procedure
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