Quarterly periodical of International Business Society @ SIMSR

1. January-March 2010
Volume I Issue II
e-GlobuzZ
International Business Society @ SIMSR
Cover Story
How “SOUR” is the SWEET Industry?
S I MSR
K J Somaiya Institute of Management Studies & Research

2. Foreword
Dear Readers,
It gives me immense pleasure to bring to you the second issue of e-Globuzz, Jan-
Mar '10. We hope you liked our first issue, Nov-Dec '09.The International Business
Society (IBS@SIMSR) organized during the last four months some important
events like an interactive session with international experts on WTO for students
and faculty.We interacted with a delegation of Management faculty and students
from Deakin University, Australia. We had the privilege of hosting an interactive
session with Mr. O K Kaul, Executive Director,TATA International Limited, for our
students and faculty. In fact, this issue includes highlights of Mr. O K Kaul's
interview taken by our students of International Business this week. We also had
an interactive session with Mr. Walter Stechel, the Consul General for Federal
Republic of Germany (FRG) in India. As a part of the International Business
celebration at Samavesh '09, we had the privilege of having with us eminent
speakers from ECGC and TATA International Limited, who gave us meaningful
insights on country risk evaluation and international transfer pricing.
These sessions hosted by IBS@SIMSR attended by a large cross section of SIMSR
students and faculty went a long way in complementing the classroom learning at
SIMSR with the expertise of industry leaders, international professionals,
students and faculty from universities abroad.
Continuing with the format of the inaugural issue of e-Globuzz, which was highly
appreciated, we have covered in this issue, Mr. O K Kaul's interview and articles
contributed by SIMSR students, Corporate Executives and Industry Experts on
various aspects of international trade, international marketing, international
finance, international logistics and world affairs, complete with a popular
crossword.
Our next issue is planned in July '10, which we trust gives you enough time to send
us your articles for the third issue of e-Globuzz. We also look forward to your
feedback and continued support.
Till then we will miss you.
Prof C P Joshi
Faculty Mentor

3. 6
01
Cover Story
The Confectionery Sector
How “SOUR” is the SWEET Industry?
Business Leader in Focus: Aiko Toyoda
02 Company in Focus: Wal-Mart
03 Country in Focus: Germany
04 International Logistics: Green Supply Chain
05 USA Health Reforms
06 Cover Story: How “Sour” is the Sweet Industry?
The Confectionery Sector
09 International Marketing: Marketing of Avatar
10 Interview with Mr. O.K. Kaul, ED, TATA International
12 Debate – Copenhagen: Success or Failure for India?
14 Book Review: The New Age of Innovation
15 International Business News
16 Did you know these terms?
17 Crossword # 02

4. TOYOTA
Business Leader in Focus
Aiko Toyoda - President, Toyota Motors
He likes to race cars and just completed a 24-hour endurance competition accelerator problems were generated under the control of his two
with three other team members in a Toyota supercar at Germany's famed predecessors. Mr Toyoda very nearly predicted a crisis of some sort when
Nürburgring, a Grand Prix-style race. When the 52 year old Toyoda he said last June that the company had grown too fast. When he
Nicknamed as "Prince" by Japanese media took over the post from Toyota reiterated there was a faint glint behind the apology; it may never work,
President, Katsuaki Watanabe, in June 2009, the company expected but he may have it in mind to trim the behemoth his forebears created.
Toyoda to inject an international approach to correct the miserable
performance of the company's overseas operations which led to the first
major losses in 70 years and he may not have expected the kind of
He vows to rein in overcapacity,
situation he is facing.
reorganize operations to
strengthen control, and get the
While getting his law degree from Tokyo's prestigious Keio University, he
company back to basics. He
dreamt of playing Olympic field hockey. Instead, he went on to get his
especially wants to reinstill
master's degree in business administration at Babson College in
Wellesley, Mass. He set out on a career away from autos by joining an
dedication to one of the pillars
investment bank and working as a management consultant, living on
of Toyota's production system:
Manhattan's Upper East Side, then moving to London. At Toyota his
genchi genbutsu, meaning
musings about a possible career were met with a lukewarm response
“go and see for yourself."
from his father, Shoichiro Toyoda, who told his son: "No one wants to be
The toughest task ahead of Mr. Toyoda is to regain and maintain the faith
your boss." But he believed he could make a unique contribution because
in brand. In case of Toyota the quality of its product, the honesty of its
he was a young president by Japanese standards.
claims and continuous improvement are at its core, and the recent recalls
But, seven months into his job and one month into the worst crisis in his have shaken the foundation of the brand. The company has already
company's history, the grandson of the company's founder is facing strong started taking essential steps by the recall of vehicles worldwide,
questions from all corners of the world for manufacturing of defective maintaining communication through democratic channels (e.g. Twitter)
vehicles. The company is under scanner over the company's handling of to maintain a dialogue with its customer base reinforces its intent to make
customer safety concerns and its series of recalls over potentially faulty good. He vows to rein in overcapacity, reorganize operations to
accelerators and braking systems. Mr Toyoda is facing harsh criticism for strengthen control, and get the company back to basics. He especially
shattering the Japanese manufacturer's management. Mr Toyoda, a wants to re-instill dedication to one of the pillars of Toyota's production
corporate implant of mighty Japan, groomed from birth for leadership, system: genchi genbutsu, meaning "go and see for yourself." These strong
educated abroad has followed steady ascent through the ranks of the moves show a commitment to its brand positioning values and promise.
company reflecting a man with a decent grasp of the business, a hands-on
approach to management and a relatively high level of international
sophistication. by
If Toyoda is fazed by the challenges awaiting him, he never betrays it. The Anirudha Kandharkar,
all criticism does not mean, he will fall and resign. The much talked PGDM IB 2009-11
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 1

5. Company in Focus
Company Overview: Servicio, Chile.In February 2007, the Company announced the
If you feel that your purchases have become convenient and cost purchase of a 35% interest in BCL. BCL operates 101 hypermarkets
effective, then here is the company to know about. Wal-Mart in 34 cities in China under the Trust-Mart banner. In August 2007,
Stores, Inc. was established in 1962 and only to change the way the Company announced an agreement between Wal-Mart and
retail industry operates all over the globe. Its unique strategic Bharti Enterprises, to establish a joint venture called Bharti Wal-
position is the outcome of hard work of the founder Mr. Sam Mart Private Limited to conduct wholesale cash-and-carry and
Walton David, and subsequent President and Chief Executive back-end supply chain management operations in India, in
Officers, Mr. David Glass, Mr. Lee Scott and recently appointed Mr. compliance with Government of India guidelines. In addition,
Michael T. Duke. “My Dad created Wal-Mart to help people save Bharti Retail entered into a franchise agreement with an Indian
money so they can have a better life. This mission remains as subsidiary of Wal-Mart to provide technical support to Bharti
relevant now as it was in 1962”, says Rob Walton, Chairman of the Retail's retail business.
Board for Wal-Mart. In sync with it the company focuses entirely
on EDLC-EDLP, that is, Everyday Low Cost- Everyday Low Prices.
Walton opened his first Wal-Mart in Rogers, Arkansas. The
company went public in 1970 and added more stores every year. In
1990, Wal-Mart surpassed key rival Kmart in size. Two years later, it
surpassed Sears. The store formats include the Discount Stores,
Super Centers and the Neighborhood Markets. Their way to
success was by balancing the deliverance of value, variety and
quality to satisfy customers and build long term relationships with
suppliers, and its employees whom they refer as-'associates'. Wal-
Mart efficiently deployed technology for operational efficiency in
its logistical and marketing processes. Wal-Mart has sustained
firmly on its business model. Wal-Mart's cost leadership position is
derived from firstly, the economies of scale. Thus thinner margin is
compensated by volume. Secondly, economies of scope, wherein
emphasis is laid on categories in which the Wal-Mart's brand has
authority and can offer a full line of products. Third is the stability Wal-Mart, Partners and Society:
and consistency of the management. Wal-Mart created more than 63,000 jobs worldwide in 2009. Its
“Sustainability 360” is the Companywide effort to take
Financial Performance: sustainability beyond their direct footprint to encompass Wal-
Of the total business 63.7% is contributed by Wal-Mart's Mart's associates, suppliers, communities and customers. As the
operations in the USA where Texas and Florida have highest purchasing agent for the customers, Wal-Mart's goal is to
concentration of stores, 24.6% sales come from International encourage improvements in sustainability and ethical practices
operations where Mexico(1197), Central America(502) and among suppliers. The Wal-Mart Foundation is dedicated to
UK(358) have maximum number of stores, and remaining 11.7% supporting programs that help people live better, primarily by
comes from the Sam's Club. expanding access to education, health care, and job opportunities,
as well as by promoting responsible sourcing. Wal-Mart is an
Global Presence: economic force, a cultural phenomenon and a lightning rod for
With a clear intention to focus on price leadership in every market controversies. Be its unprecedented power to shape labor
to drive global leadership, it has set up 3615 international stores, markets globally or changing the way entire industry operates, and
in total of 7873 stores. It entered various markets recently by way pressurize the suppliers to sell at cheaper prices. Wal-Mart has
of joint- ventures, and acquisitions. Some of its recent moves explored new sectors of retail, used technology favorably and
include opening a Hong Kong regional office to facilitate long-term adopted a frugal corporate culture to clearly be the leader in retail
opportunities in Asia with focus on Japan, India and China. In and make its Frugality, the global in thing.
October 2007, the Company acquired the majority of the common
shares and all minority preferred shares in its own Japanese by
subsidiary, The Seiyu Ltd. In January 2009, the Company acquired Anchal Sachan
approximately 58.2% of the outstanding D&S shares Distribución y PGDM IB 2009-11
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 2

6. Country in Focus
GERMANY
Located in the heart of Western Europe, Germany is the continent's Protection of Property Rights
most industrialized and populous country. It is a federal Intellectual property is well protected in Germany. Germany is a
parliamentary republic of sixteen states (Länder), and is a major member of the World Intellectual Property Organization and a party
power with the world's fourth largest economy by nominal GDP and to most of the major international intellectual property protection
the fifth largest in purchasing power parity. Germany is recognized agreements.
as a scientific and technological leader in several fields. Culture
Brief History Germany, in general, is a very conservative country and this feature
The Great Depression, which began in 1929, led to a polarization of is also reflected in their way of business. They have very distinct,
German politics and to an upsurge in support for the Communist somewhat formal, ways of working. Prescribed rules, distinct
and Nazi parties. In 1933, the Nazis under Adolf Hitler gained power. etiquettes are what they adhere to. Besides their conservatism,
The Nazis imposed a totalitarian regime and followed an their innovation, productivity and excellence are distinct
expansionist foreign policy that led to World War II. After Nazi characteristics of German business. The Germans emphasize on
Germany's defeat, the country was divided into democratic West individualism, masculinity, and uncertainty avoidance. Power
Germany and communist East Germany. In 1990, East Germany was distance and long-term orientation are both ranked considerably
reunited with West Germany. lower than the others. This illustrates Germany's belief in equality
Government and Legal System and opportunity for each citizen, as well as its ability to change and
Germany is a federal, parliamentary, representative, democratic adapt rapidly.
republic, with rights guaranteed by the Basic Law, or constitution.
The Chancellor is the head of government and exercises executive Foreign Relations
power, where as The President is the head of state, invested Germany has played a leading role in the European Union since its
primarily with representative responsibilities and powers. inception. It is also a partner of NATO and is fully protected by NATO
The Judiciary of Germany is independent of the executive and the agreements. As one of the world's leading industrial nations,
legislative branches. Germany has a civil or statute law system that Germany has partnerships and special agreements with countries
is based on Roman law with some references to Germanic law. all around the globe. That makes it a safe place to do business in. In
Economy the area of development aid, Germany is one of the largest net
Germany is the largest national economy in Europe. In 2008 contributors of the UN and has several development agencies
Germany's GDP was about US$2.9 trillion on a purchasing power working in Africa and the Middle East.
parity (PPP) basis and nearly US$3.65 trillion at current exchange Conclusion
rates. Germany is the world's second largest exporter with $1.170 From manufacturers of complex nanotechnology solutions to
trillion exported in 2009. Most of the country's products are in energy efficiency consultancies, Germany has become a pacesetter
engineering, especially in automobiles, machinery, metals, and for modern products and services on highly competitive
chemical goods. Germany is the leading producer of wind turbines international markets. It has the capability to become Europe's
and solar power technology in the world. most successful economy. Already today, Germany has attracted
Investment Climate the highest concentration of American investment in Europe
Germany has a modern financial market sector and transparent and totalling more than 130 billion euros and directly creating more
effective laws and policies to promote competition. It has strict than 800,000 jobs. In the year 2020 no international company will
domestic anti-corruption and anti-bribery laws and is considered be able to ignore Germany as a business location. As the continent's
one of the least corruption-plagued countries of the industrialized entrepreneurial hub, the country is the best address for every
world. Foreign and domestic entities have the right to establish investor in Europe.
and own business enterprises, engage in all forms of remunerative by
activity, and to acquire and dispose of interests in business Lubna Akhtar
enterprises.
PGDM IB 2009-11
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 3

7. International Logistics - Green Supply Chain
Anil Kumar, Sr. Consultant, IBM Global Business Services SAP Practice
What is the one of the questions that is one of the top priority of all In US, Wal Mart has redesigned its stores to reduce energy and
executives across the globe apart from the economic scenario? water consumption. It has started harvesting sunlight to reduce
According to a recent 'Top of the Mind' study by 'The Consumer the usage of electricity in its stores. This has not only made the
Goods Forum', sustainability and corporate social responsibility stores Greener but also has helped Wal Mart in reducing the
feature amongst the top three priorities of the consumer goods overall cost of its operations.
industry. A similar finding is resonated in the IBM Institute for
Business Value study. IT companies have also joined the bandwagon and are coming up
with innovative products which have reduced energy usage. IBM
Many of us would be thinking why companies and businesses are through its smarter planet initiative is working with organizations
thinking about Green Initiatives, when they should be focusing both public and private to help them turn smarter and more
their energies on growth and other strategic issues. Energy and efficient.
water efficiency not only helps the planet, but also saves on bills.
The technology employed to optimize logistics not only reduces
fuel usage and toxic emissions, but makes for a leaner, more
efficient and cheaper supply chain. Aligning an organization's
“green strategy” with its overall business strategy is paramount.
This begins with a clear understanding of the overall corporate
objectives and priorities, followed by carefully defined programs,
goals and tasks that address environmental and stakeholder
views. It creates a positive perception about the company and
companies are better prepared to meet the regulations as and
when they come. Sustainability makes perfect business sense.
By driving operational efficiencies and adopting Lean and Green
Supply Chain Management practices, companies are trying to
reduce their carbon foot print. Below are the key areas where
companies are channeling their efforts to turn their supply chains
greener:
Sustainability and CSR can also help companies in creating a brand
Product Design and Redesign – Companies are redesigning presence. Consider the example of the 'Save our Tigers' campaign
products to reduce energy consumption in the production and by Aircel. By associating itself with the noble cause of saving the
distribution. Innovations in product design are leading to tigers, Aircel has created a unique brand presence in the minds of
reduction of some of the processes leading to Greener products. the consumers. So when we think of saving the tigers, Aircel's
name is always there in the back of our minds.
Green Manufacturing – Reduced energy usage through
streamlined production and greener supplier networks are In Bihar's rice belt, a group of individuals have founded a company,
helping companies become manufacturing Greener products. Husk Power Systems, which caters to the energy needs to the
villages. The company uses rice husk to produce sustainable and
Route Planning and Shipment Consolidation – By consolidating renewable energy and is electrifying the remotest villages in Bihar.
logistics and shipment dispatch companies are reducing their
carbon foot print. Route planning has made the supply chain Sustainability and Clean Technology have become the focus of the
greener. governments and enterprises worldwide. From energy efficiency
and renewable energy to efficient and lean manufacturing and
Well, how does all this translate into business and what have been supply chains, clean technologies have opened huge market for
the results so far. Let us examine a few examples on how innovation. The entire Clean Technology industry is estimated to
companies have used Sustainability, Green initiatives and CSR to be worth more than trillions of dollars. Organizations and
achieve spectacular business results. countries which are prepared to take on this new opportunity will
emerge as leaders in the coming decades. So, start thinking how
Many times sustainability helps you beyond the usual cost saving. you can contribute and catch up on the business opportunity that
When a company champions of a cause, customers associate it is good for the world.
with something good and are willing to pay premium price for
their products. Consider the case of US clothing and adventure
gear maker, Patagonia. Patagonia turned its fortunes by adopting
an eco friendly product range by switching to organic cotton and
changing the packaging to reduce impact on environment and a
lot of other such initiatives. Patagonia's products not only became
a big hit with the consumers but also allowed the company to
charge a premium price. This strategic change turned Patagonia
from near bankruptcy in 1996 to a company with thirty nine stores
in seven countries and $ 270 million in revenue in 2006.
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 4

8. USA Health Reforms
Puneet Kumar, Business Analyst, Accenture USA
US Health Reform remaining 43% is financed from general revenues. Because of
rising health care costs, general revenues would have to pay for
United States's health care reform plan is one of the most
62% of Medicare costs by 2030.
important bill which will have a major impact on US health care
system, private health care insurers and on US economy in near
Impact on Private Insurers:
future. US badly needs to revive its poor health care system filled The Insurance business is dominated by a small group of large
with insurance frauds, skyrocketing premiums, uninsured companies that has been gobbling up their rivals. In recent years,
families, unaffordable medical bills and personal bankruptcy. On for-profit companies have bought up not-for-profit insurers
February 22, 2010, President Barack Obama launched a new around the country. There have been over 400 health care
health care reform plan that is mainly modeled after the Senate mergers in the last 10 years and just two companies dominate a
Health Care Reform Bill. It will regulate the health insurance full third of the national market.These changes were supposed to
make the industry more efficient, but instead premiums have
industry under a seven-member Health Insurance Rate Authority
skyrocketed.This bill if gets passed will hurt the firm's bottom line
that could deny or limit substantial premium increases. This has
and lead to much more competitive market. Health insurance in
traditionally been a state responsibility. Like the Senate Bill, it will itself is not a quiet profitable line of business as critics seems to
create an exchange that allowed families and small businesses to think. For every dollar paid as premium, 83 cents goes out in
shop for insurance plans. It will restrict on federal funding for medical costs – doctors, hospitals, and drugs. However consider
abortion, but cuts back taxes on the high end health plans. WellPoint, the biggest private health insurer on Wall Street,
which paid out 83.6% of revenues in expenses but the net profit
after tax deduction came out to be princely 4.1%. Returns on
Plan: assets are also key measure in profitability and are typically
· Insurance will be more affordable pretty modest. The health-care reform was dominated by the
· Sets up new competitive health insurance market issue of the so-called "public option" - whether the government
should offer an insurance plan that competes with those offered
· Greater accountability to health care by keeping
by private insurers. But that is out of picture now as per the new
premiums down and prevent insurance industry plan. If public option of health insurance would have come into
abuses and denial of care picture then this 4.1% profit would have made quiet a significant
· End of discrimination for patients with pre existing difference between government and private sector.
conditions
· Stability in economy by reducing the deficit by more
NAIC Response:
State regulators are working closely with congressional drafters
than $100 billion over next ten years and about $1
to make certain that the legislation preserves the critical role of
trillion over second decade state regulators and continues the use of objective standards in
rate review process. State regulators are pleased that President's
Reasons for Reform: Health insurance premiums have doubled in proposal emphasizes state-based reforms but are concerned for
last 8 years, rising 3.7 times faster than wages, and increasing co- about the inadequacy of the individual mandate which could lead
pays and deductibles threaten access to care.This forces families to a dysfunctional market place and higher rates for consumers.
to sit around kitchen table and decide whether to pay rent or The members of the NAIC are strongly opposed to any bill in
health premium. Many insurance plans cover only a limited which the federal government allows insurance carriers to sell
number of doctors' visits or hospital days, exposing families to their products in our states using the regulatory rules of another
unlimited financial liability. Unaffordable medical bills are state. This misguided proposal would increase premiums for
responsible for more than 50% of all personal bankruptcies today. those who need insurance the most and eliminate important
Lack of affordable health care is compounded by serious flaws in consumer protections. It would also fragment the insurance
health care delivery system. One-quarter of all medical spending market and expose consumers to increased fraud and abuse.This
goes to administrative and overhead costs, and reliance on concept must be rejected and the decision whether to allow, and
antiquated paper-based record and information systems under what conditions to allow, interstate sales of insurance
needlessly increases these costs. should be left up to the individual states.
Impact onUSA Economy:
The rising health care cost will devastate the federal budget in
future. The US health care system contributes $2.5 trillion or
nearly 18% to GDP, the highest percentage in the developed
world. Health care reform is needed to stem the economic costs
of frauds. Between 3-10% ($60-$200 billion) is lost to fraud. If
those same percentages are applied to the proposed $436 billion
Medicare program, the cost of Medicare fraud is $14-30 billion.
Without health care reform, government spending on Medicare
and Medicaid is unsustainable. These costs will rise from 6%
(current) to 15% of GDP by 2040.That's because Medicare payroll
taxes and premiums cover only 57% of current benefits. The
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 5

9. Cover Story - Sector in Focus
Confectionery Sector
How “Sour” is the Sweet Industry?
“Sour”
Market Overview: Confectionery is undeniably a part of expected CAGR of 2.2% during the same period.Out of the
everybody's everyday life.All of us reach for chocolates and broad categories in the confectionery industry, chocolate
candies at virtually every meal and many times during the confectionery is the largest sector, accounting for almost
day. Almost two-thirds of all confectionery consumption is 60% of total sales in value terms. By volume, however,
driven by "emotional" as opposed to functional "need sugar confectionery accounts for the majority of sales, with
states"--presenting endless consumption opportunities to a share of 51% and gum holds only a 14% stake but is the
the buyers and myriad branding opportunities to fastest-growing segment. The per capita consumption of
manufacturers. Not surprisingly, the global confectionery confectionery in most of the developed countries averages
market is expected to reach $152.37 billion by the end of almost 11 kilograms. Also, per capita consumption of
2010. chocolate confectionery tends to be higher in northern
Much of this recent growth has come from developing European countries, while the Scandinavian markets
regions and countries, aided by the spread of multinational command high per capita rates for sugar confectionery.
companies and their brands, as well as a growing base of The per capita consumption of chocolate is highest in
increasingly affluent consumers in places such as Russia, countries like Switzerland, Germany, Austria, United
China and India. In the developed world, much of the Kingdom and Belgium.
market's recent growth can be attributed to niche sectors,
such as low-fat, low-sugar, organic and fair trade products.
Mergers and acquisitions in this sector have also
contributed immensely to growth and penetration in the
developing markets. In 2012, the confectionery market in
the BRIC (Brazil, Russia, India, China) nations is forecasted
to have a value of $25.6 Billion.
The confectionery sector is highly dependent on two
primary ingredients; Sugar and Cocoa. Unfortunately,
Major Players: The global confectionery market remains
these commodities are subject to high price volatility
relatively fragmented, with big names like Hershey, Kraft-
which, in turn, puts an upward price pressure on production
Cadbury, Mars, Nestle, Ferrero, Lindt, Lotte Confectionery,
costs and consumer prices. This seriously affects the
Perfetti Van Melle, Meiji Seika Kaisha etc.accounting for
industry's sales volumes and profit margins.
less than half (45%) of value sales. Some of the brands
under established names are M&M by Mars, Cadbury's
Market size and growth: The confectionery industry is
Dairy Milk and Trident, Wrigley's Orbit, Mars's Snickers,
categorized as follows:
Hershey's Kisses, Kraft's Tobolerone, Meiji Seika Kaisha's
· Chocolate confectionery: molded bars, boxed Meiji etc.
chocolate, chocolate countlines, novelties and In recent years, this sector has seen many mergers and
chocolate straightlines. acquisitions. Companies have been buying high growth
· Sugar confectionery: caramels and toffees, hard segments and utilizing their existing distribution channels
boiled sweets, gums and jellies, medicated not only for market penetration but also increasing their
confectionery, regular mints, and power mints. geographical spread. A special mention of the two recent
big deals sealed cannot be missed in this segment. The
· Gum: sugar free gum, regular chewing gum,
Kraft-Cadbury deal has put Kraft on the top position in the
functional chewing gum and bubblegum
chocolate and confectionery segment. The group will have
· Cereal bars: sports and energy bars and other bars. 40 confectionery brands, each having an annual sale of
The market for confectionery is valued according to retail $100 million. This deal will help Kraft reach leading
selling price (RSP) and it includes applicable taxes. By the positions in developing markets, including BRIC nations
end 2012, the global confectionery market is expected to be and Mexico. Another deal between Mars and Wrigley in
worth USD 161.39 billion in terms of value, with an 2008 boosted Mars position in the global market through
expected CAGR of 3% between 2007 and 2012, while the its acquisition of The Wrigley Company, the leader in the
market, by volume, will total 16.18 billion kg, with an chewing and bubble gum subsector.
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 6

10. Cover Story - Sector in Focus
Global Confectionery Value Region-wise Forecast, 2010-2012 (USD billion, nominal prices)
Region 2010 2011 2012
Western Europe 53.75 54.50 56.12
Eastern Europe 17.80 18.83 19.84
North America 38.21 39.19 40.15
Asia Pacific 26.45 27.25 28.07
Latin America 10.98 11.32 11.67
Middle East and Africa 5.18 5.36 5.54
OVERALL 152.37 156.86 161.39
Source: Datamonitor
Growth Drivers and MarketTrends: local manufacture, transportation and shelf-
1. Consumer's purchasing power: Demand for stability of sugar products.
premium varieties is not only increasing in 5. Kids Confectionery: Primarily, kids remain the
developed nations, but is also witnessing a growth main target group for confectionery items. To
in developing countries owing to stable economic create a buzz among target consumers is a very
growth, rising middle class incomes and increasing tedious and capital intensive activity. A kid these
spending power. days is very selective and has approximately 14
2. Innovation: New Product Development taking brands in his/her preference set (lack of product or
local factor into consideration in the form of flavour brand loyalty), luring him/her towards products is
extensions, innovative packaging and variety of extremely difficult. Companies come out with many
new combinations are being developed by “firsts” in sales promotions (freebies such as tazos,
manufacturers to cater to the taste buds of the giga cards, temporary tattoos, magic candles) to
masses. expand and sustain market shares.
3. Healthy lifestyles: Consumer concerns over 6. Imported confectionery items: Consumers are
portion sizes and emerging natural and wellness choosing chocolate according to region and the
trends is forcing companies to come up with level of cocoa solids, an approach similar to that in
offerings providing functional health benefits such wine and cheese tasting. Single-origin chocolate
as oral health care, skin care, low sugar, low fat, low will experience high growth over the next five years.
calorie and low carbohydrate kind of products. All the big global players in confectionery sector
Companies in certain countries have introduced export in large quantities as confectionery is
nutritional labeling for their brands displaying becoming a part of developing nations' growing
calorie content on pack fronts and guideline daily appetite forWestern food products.
amounts (GDA) on the reverse. 7. Seasonality: Sale of confectionery items is
4. Sugar confectionery remains an important induced by festivities or other social occasions.
category: Sugar confectionery is still the most Hence, special packaging for promotional activities
dominating and important confectionery category including “one-off” promotions — is increasingly in
due to its lower unit price than chocolate and gum. demand. Companies engage in special limited
In addition, consumer awareness of the dangers of editions products and packaging to promote their
sugar-based confectionery on oral health is still products and build brand strength thereby grabbing
relatively poor among consumers in these not only the share of consumers' wallet but also
countries. They have a strong holding in developing their minds.
regions for cultural reasons, in addition to ease of 8. Increase in supermarkets /hypermarkets: With
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 7

11. Cover Story - Sector in Focus
the booming retail sector, confectionery products The Road Ahead: Chocolates will remain the more
have managed to get an increased presence on promising area of opportunity for confectionery giants
shelves and also in inducing impulsive buying, thus because it lends itself better to the increasingly accessible
gaining much greater visibility, enhanced sales and (high-end, high income) markets. Sugar confectionery will
increased penetration. be next, with the best opportunities being captured by
9. Prices of factor inputs: Heavy fluctuation in the unique novelty/specialty candies. Gum is the challenging
price of cocoa is adversely impacting the profit
category going forward, as price points are low, volumes are
margins of companies operating in this sector, as
small, distribution costs are high, and competition is fierce.
chocolate based confectionery generates higher
Sugar-free confectionery demand is expected to grow
sales revenues compared to other two components
of this sector. The recent hike in sugar price has rapidly as there is a considerable increase in health
become another area of concern for the companies, conscious population. In future, the main trend in
thereby bringing tremendous pressure on these confectionery will be of experimenting with flavours and
players. variety, specifically a growing demand for health benefits
10. Horizontal Integration: All most all the global and 'better for you' ingredients, boosting the `natural'
players have been integrating horizontally by credentials of brands through the removal of artificial
acquiring or merging with other food giants in sub colours and preservatives and replacing them with
sectors like Kraft bought Danone biscuits, Nestle ingredients such as fruit juices etc. Eco-friendly
bought Kraft's Pizza business, thus expanding their manufacturing efforts, like recyclable packaging, will
product portfolio and increasing reach by using influence product development and consumer purchasing.
existing distribution networks. Another factor that companies need to look into is their
communication strategies. Since in many countries,
Promotional Strategies: Confectionery brands rely on objections have been raised regarding advertising to kids, so
advertising for brand building. In fact, TV advertising spend
future growth can be dependent on creating sweets that are
is second highest for the confectionery segment. To enhance
as popular with adults as children.
visibility, companies engage in ATL activities and focus on
BTL as well in order to complement the overall marketing
programme. Confectionery sales are primarily retail sales
thus laying emphasis on point of purchase promotions like
posters, danglers, jars, 3-tier,5-tier stands, as confectionery
purchases are generally driven by impulse. Innovations,
limited editions and brand extensions including flavour and
texture developments such as Snickers Cruncher (from
Mars) or KitKat Orange (from Nestlé) are being launched to
sustain consumer interest.
Distribution Strategies: There is lot of pressure on
companies to ensure retailers stock their products all the
time to bring about deeper market penetration and thus
enabling more products to reach more consumers. There is
heavy reliance on convenience stores and other formats of
organised trade. In developing nations however small retail
outlets and other unorganized formats like small grocery
stores, tobacconists result in the bulk of the sales. Supplying
to fragmented retail channels in developing nations is quite
costly, so it becomes absolute necessary for companies to
develop a comprehensive distribution network.
Issues/ challenges
1. Highly competitive market due to fragmentation
by
2. Plethora of spurious products available
3. Huge investments in innovation and new product Astha Pasricha
development Sukhmani Grewal:
PGDM IB 2009-11
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 8

12. International Marketing
Marketing of ‘AVATAR’
The movie Avatar directed by famous James square boxes that showcase many of the
Cameron who made a comeback after 12 yrs digital initiatives that make this movie stand
was a smashing hit at the box office. out. Fans had access to the story, character
According to the Los Angeles Times, the cost bios, the music, and wallpaper downloads;
of making and marketing this magnum opus and they also had opportunities to contribute
from the “Titanic'' director James Cameron content and showcase their interest in the
was $430 million, though some have film -- including Pandorapedia, a wiki for all
suggested $500 million. This state-of-the-art things "Avatar," and the previously discussed
blockbuster which is about an evil 22nd- blogging community. Moreover the self crash
century corporation raping a pure-utopian of the site by the viewers trying to book
planet, brought healthy profit to its makers, advance tickets in August added fuel to the
with more to come in line with DVDs, action fire and in way was related to the concept of
figures, books, video games, and sequels the movie, that is, Humans trying to destroy
This movie has revolutionized the 3D industry. home tree.
In India, Reliance Big TV bagged the deal and Avatar also exploited Social network sites as
entered into strategic alliance with Fox Star they are popular marketing tool nowadays for
Studios. As by its very nature movies have a launch of any new product in the market and
short life time as they need to make an impact they also have the potential of roping in a
in the first week of their release or they are large number of viewers. It built successful
swiped from the minds of consumers. With connections and conversations with the
world entering into digital era, it opens the visitors on Facebook (close to 1.3 million fans),
opportunity for the marketers to a wide MySpace (close to 800,000 friends) and
population but this needs to be carefully fine Twitter (over 25,000 followers). Due to its
tuned to its last detail. wide reach, these sites were able to create
A lot has been talked about the success of the enthusiasm among the viewers and the AVATAR built
movie. But the strategy and the effort that marketing team of Avatar fuelled it by adding
went into the making of a trendsetter is worth “Tweet to Listen" promo that required fans to successful
revealing. Marketing of the movie was done send a message onTwitter in order to listen to
at International level with attention paid to music from the film. Avatar social media
connections
every miniscule detail. strategy also extended toYouTube with close and
The comeback of a great director James to 11 million viewers, Flikr with 1 million
Cameron itself created curiosity among the viewers and TypePad blogging community conversations
viewers. The audience was waiting eagerly to (close to 4,000 members).
see the brainchild of James on which he has Avatar also had interactive trailers added to with the
spent so much of time. This in itself drew a lot the success of the movie. It had 11 points of
of attention and created a buzz. August 21, interaction and provided viewers with one
visitors on
2009 was celebrated as Avatar's day with 100
IMAX 3-D theaters worldwide showcased 16
click access to each character. Mattel created
"Avatar" toys that buyers could activate and
Facebook (close
minutes of footage for the movie. The same "bring to life" through webcams and special to 1.3 million
day Ubisoft made a debut with a trailer for a product tags, while Coke Zero produced
videogame based on the film and Mattel custom cans that opened up the world of fans), MySpace
unveiled action figures inspired by the film's Pandora atAVTR.com.
characters. A day earlier, the teaser for the The end result is that "Avatar" is now the (close to
very same film broke a record on Apple.com
after bong streamed more than four million
biggest box office movie of all time. The
movie has eclipsed $2 billion in total ticket
800,000
times on its first day. sales, driven largely by 3-D revenues and friends) and
The website of the movie was itself creative international interest.
that it had all the elements of pull strategy. Twitter (over
Visitors had access to more than the standard by
fare of trailers, images and background Shilpi Tayal 25,000
materials. The website offered side-scrolling PGDM IB 2009-11
followers)
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 9

13. Q&A
Mr. OK Kaul joined the leather business of Tata
International in 1975.He was promoted to vice
Excerpts of talk of
Mr O K Kaul, Executive Director, TATA International
with Shashi Shekhar and Manish Raj of PGDM IB 2008-10
& Sukhmani and Vikash of PGDM IB 2009-11, SIMSR
segment to begin with and then diversify into leather
accessories and garments. The move to enter retail
president of the Leather & Leather Products division in space is triggered by the simple fact that the sheer
1993 where Tata became the first leather company in consumption drives promising growth rate to Indian
Asia to be certified with ISO 9000 and ISO 14000. O K retail industry. As of now we are limiting it to Indian
Kaul was later appointed as President of the Leather & markets, however we will expand our operations to few
Leather Products Business. In April 2009, he was neighbouring countries, but not in the immediate
appointed executive director of Tata International Ltd future.
Worldwide encompassing leather & leather products,
engineering and new business opportunities. Students should dirty their
SIMSR STUDENT: Tata Group has several companies in hands in the industry rather
diversified businesses under its umbrella. How you do
you manage to tap group synergies for growth in
than just focusing on
International Business? Have you ever felt that the
presence of so many companies has proved to be
powerpoint presentations
disadvantageous to the prospects of Tata from day one. They should get
International?
Mr. O.K. Kaul involved in the entire vicious
Tata International has many businesses ranging from
aluminium, steel, auto components, solar circle of activities.
engineering to trading and modular housing. It's
primarily a trading organization. We do “Opportunity
Management education adds
Trading” – Somebody somewhere wants something, value when you have prior
Tata International fulfils it. Since Tata International
has a strong foothold and sound infrastructure in the work experience. Internship
African continent; we act as distributor for Tata
Motors and not its competitor. After all we all fall should focus on deliverables
under one umbrella-Tata Group. Our role is to
promote small companies and is involved in total
rather than just getting a
supply chain. Tata International works with a trading certificate. And to achieve
mindset adding value at each stage of the value chain.
Tata International runs on a model where it deliverables, two months is
empowers all its employees to operate as
entrepreneurs. We run Strategy workshops and too short a time.
sessions wherein each vertical proposes its Business
Plan for the next five years, this is then discussed with SIMSR STUDENT: How do you view the marketing
the whole team. Feedback is taken from other alliance in Tata International entered with Tata
verticals, the technical team and the senior Strategic Management Group?
management on the feasibility aspects of the business
Mr. O.K. Kaul: TSMG is Tata Group's consulting arm.
plan and only then is it taken forward. This may be
Tata International provides its local domain
confusing for an outsider but this enables in quick
knowledge to TSMG in the countries where TIL is
decision making and allows for flexibility.
present. Tata International Ltd scans the country and
explores market opportunities and risks. The alliance
SIMSR STUDENT: Will we see Tata International between TSMG and Tata International enhances the
entering into retail and FMCG sector in the near reach of TSMG in these international markets.
future? If so, is it going to be India specific or abroad as Additionally, Tata International provides business
well? development and infrastructure support to TSMG for
Mr O.K. Kaul: We entered the retail space last year in project execution, local business knowledge and
the bicycles segment in the north east India. We are identifying opportunities in these geographies.
also considering into entering the leather shoes
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 10

14. SIMSR STUDENT: How do you view Agriculture as a since average and bound tariffs for leather still remain
potential lucrative sector and how can Tata high for developed countries, while for other categories
International leverage its competencies to tap this it has fallen with the advent of WTO.
sector at a global scale for International markets? Mr. O.K. Kaul: This is specifically a problem with leather
Mr. O.K. Kaul:. With the population increasing manifold industry since there have been oppositions by the PETA
and the demand for food soaring, the agriculture sector and other similar organizations. Leather industry is
demands a lot of attention from both the government fragmented and issues such as child labour and
bodies and corporate sector. Tata International wants to degradation of environment have been raised several
create a business model whereby it can partner with times. There is a need now for organised players to
universities to conduct R&D programs to enhance come together and be vociferous about their practices.
productivity in this sector. This project is still in the Tata has never been media shy and has been proactive
nascent stage and it purely depends on the availability to communicate its practices and norms to the people.
of land and productivity potential. So if there is land But we need to be more aggressive to showcase our
available for R&D in Latin America or Africa, we would norms and practices. To sum up, Corporate initiative is
go there and conduct soil-crop fit testing and other the key in this regard and role of WTO can only be
relevant tests. We could collaborate with either foreign leveraged if the organization takes the first step.
universities or Indian universities and other IT firms to
help us carry out this project. These projects are long SIMSR STUDENT: What in your opinion could be the key
drawn and require time and effort to be brought to changes you would like to see in the current
maturity to meet its objective. management education in India?
Mr. O.K. Kaul: Keep yourself updated. READ. Students
SIMSR STUDENT: Tata International is an end to end should dirty their hands in the industry rather than just
SCM Solution provider in India through its Joint venture focussing on PPT presentation from day 1.They should
DIESL. Will we see the value chain expanding to tap the get involved in the entire circle of activities in the total
global logistics market of 3.5 trillion USD? value chain. Management education adds value when
Mr. O.K. Kaul: Yes, expansion is certainly on the cards. you have prior work experience. Internship should focus
Our next step is to make our global presence felt. Drive on deliverables rather than just getting a certificate. And
as we call it and DIESL as you call, is growing very fast to achieve deliverables, two months is too short a time.
and so is the logistics sector. It has few organised players Neither the intern nor the company employee has the
and the unorganised ones are integrating with motivation to give the best or take the best. American
organised players to increase value. Moreover, the Universities have mastered these very effectively and
logistics sector is directly related to the growth in the result is clearly evident all over the world. We have to
retail, hospitality and services sector. Thus with the take a cue and emulate the same here.
strengthening of these sectors, Logistics and our role to
provide value addition to these sectors has immense
scope. Solution # 01
SIMSR STUDENT: What do you think have been the
effects of the Copenhagen summit on international
business environment?
Mr. O.K. Kaul: The greatest achievement of this summit
has been that it has been able to create awareness
among people, governments and the corporate sector.
It has helped people to have a GO GREEN mindset.
Companies have started thinking in this direction and
gauging opportunities to benefit from it too. Issues
related to global warming, carbon emissions and
related aspects such as carbon credits are being talked
about. Tata as a group has worked diligently on these
areas and has given its best to make the world a better
and greener place to live in. For instance, in the African
continent people prefer to deploy solar panels in the
new residential and office buildings. We have boarded
the wagon long back to address this.
SIMSR STUDENT: What is your view on Technical
Barriers to Trade (TBT) as non-tariff barriers to restrict
leather exports from developing countries like India,
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 11

15. Debate: COPENHAGEN - Success or Failure for India?
Success for India
by Abhay K Agrawal, Technologist, GE Energy
th
Before going to the 15 Conference of Parties (COP) at the Danish capital i.e. Copenhagen Summit, India had three
key objectives. They were: No legally binding emission cuts;No peaking year; No international review of domestic
funded mitigation actions.Also Indian govt said that the outcome of the talk must be within UN framework
convention on climate change (UNFCCC), countries especially developed polluting countries who are put inAnnex-I
of Kyoto Protocol (KP) should stick to it even after its expiry in 2012 and also should abide by the Bali action plan on
long-term cooperative action.
Looking at the outcome of the conference which sets global warming target of
below 20 temp rise than that of 1990 and $100B annual financing by
Annex-I countries to the developing & poor countries to
fight the climate change, one can observe that it does
not meet the expectations of the world. The
CopenhagenAccord does not put any legally binding
emission cuts on any country, does not provide any
mechanism on how to achieve the temperature
target and how to raise & finance the fund to
developing & poor nations. Thus, it failed to stick or
strengthen the KP.Also the accord was made
between few (26) countries including India inside closed
room and was not accepted by all the193 participating parties.
Coming to the positives from this summit, One of the most valuable
outcome has been the guarantee of the continuity of UNFCCC negotiations,
which will now continue atleast for a year despite the accord. Another success for
developing countries like India was that they
ensured that primary agenda of developed countries
to dilute the KP principle of “ c o m m on b u t
differentiated responsibilities and respective
capabilities” were pushed back.Their attempts to dump the KP and alter significantly the terms ofUNFCCC were not
succeeded at the formal level. The developing countries' position that their voluntary mitigation actions, which are
not financially assisted, will be reported only through periodic national communication and will be reviewed only
domestically has been partially preserved.
By looking at the objectives of India & the outcome of the summit, I can easily say that India was able to meet its key
principles and was partially successful in others. Now after 3 months of the summit, the Copenhagen accord has
been endorsed by more than 100 nations, which provides a small boost to the accord.Thus, the summit was not the
last hope but it is “an important beginning” as termed byUNSecretaryGeneral Ban Ki-moon.
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 12

16. Debate: COPENHAGEN - Success or Failure for India?
Failure for India
by Pratik Jha, Territory Manager, Hindalco Industries Ltd.
As Kyoto protocol is about to expire in 2012, a strong conclusion was needed from Copenhagen, to address the global
climate change. The Final document that emerged from the summit has no firm commitments in it at all. Instead the
agreement simply stuck to the normal diplomatic nonsense about the necessity of tackling the problem, reflects the
global failure.
India had set two distinct goals for itself when deciding its strategy for Copenhagen negotiations. First, it wanted to
leave no room for the western media and politicians to paint India as obstructionist. Second, being firmly of the view
that in the long run India will suffer disproportionately more from catastrophes resulting from global warming, it
wanted to cut a deal that would lead to major reductions in carbon emissions worldwide.
Mr. Manmohan Singh went so far as to state in his maiden speech in
Copenhagen that India will deliver on its promise of bringing down
its 2005 emission intensity by 20 percent by 2020 even if an
agreement were not reached in Copenhagen. This
somehow initially managed to achieve its first goal. But it
can cost dearly to India. On one hand, it will not have
achieved the goal of avoiding environmental
catastrophes and on the other; it would have ended up
compromising growth and poverty alleviation.
Prime Minister Singh will need to carefully weigh this
cost of India's own mitigation commitments against the
benefits to be reaped from improved commitment
offers from industrial countries in the negotiations for a final
climate accord. He must remember that given just 4 percent share in
global emissions, mitigation by India by itself has virtually no impact on
future global warming. His commitments will acquire value only if major emitters
countries sign on to an ambitious mitigation agreement. Under existing
technologies, cuts in emissions or their growth are almost sure to translate into
cuts in energy consumption or its growth, which would in turn adversely impact
India's GDP growth and poverty alleviation.
With India's initial stand, that given the country's low
per-capita emissions, India should not be subjected
to any mitigation commitments Singh went on step-by-
step to raise the level of his country's voluntary
commitments. After bringing down emission by 20 %, he proceeded to commit to the goal of holding the average
temperature increases around the globe to 2°C. This was followed by the announcement of eight national missions
aimed at mitigation.
As a part of as yet non-binding Copenhagen Accord, Singh also accepted the U.S. demand for submission of mitigation
plans & progress report on mitigation to the UNFCCC. In principle, this provision can be seen as a first step towards the
conversion of what are currently “voluntary” steps towards mitigation into internationally mandated commitment
that Singh has promised not to accept under any circumstances.
These progressively rising levels of concessions have not led to any improvement in the offer by the United States,
which currently stands at cutting it's country's 1990 emissions by merely 3 percent by 2020. This meager U.S.
response testifies to Singh's failure to achieve his second objective.
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 13

17. Book Review
THE NEW AGE OF INNOVATION
THE KEY TO CREATING VALUE & THE FUTURE GROWTH
The book co-authored by C K Prahalad and M K distinct tension between the two and it is often not
Krishnan is about co-creation of value by companies resolvable. The chapter also discusses problems
and customers together. moving from the old way to the new way. The final
chapter, An Agenda for Managers, promises that the
The fabric of the book is woven from two threads, author's model is the one that will be the basis for
expressed as formulas. N = 1 means focussing on “one innovation and value creation. There are some good
consumer experience at a time"; R = G means that advice like "learn by doing, take small steps" and "A
"resources from multiple vendors and often from long-term focus with short-term actions is the
around the globe". N=1, is different from mass essence of organizational transformation."
customisation offered by companies. Moreover, the
range of skills needed for N=1 approach, can only be They include examples of failures and mistakes. In
achieved by building collaborative networks by one powerful example, the authors discuss about a
companies. Also, there are certain capacities, "major auto supplier" in the U.S shifting the sourcing
capabilities and flexibilities that one needs to build in of various parts toChina. Unexpectedly, what seemed
one's business systems, in one's human capital and like a clear-cut business decision had a negative
one's geographical reach. Prahalad and Krishnan impact on many levels: The logistics of air-freighting
write that all firms will access resources from a wide parts from China wiped out any cost benefits, while
variety of other big and small firms—a global the resulting lack of flexibility and longer lead times
ecosystem. Company's internal focus should be on meant that the company's internal design process
gaining access to resources, not necessarily owning also had to be entirely rethought. The example
them. provides a salient reminder of the importance of
stepping back and thinking about the big picture, to
Further in the book, the authors emphasize the need consider the existence of less codified processes and
of information and communication technology (ICT) systems, and to identify and pre-empt the potential
architecture that can connect business processes and consequences of any decision.
analytics to data and application. In a rapidly
changing environment business process cannot be Although, the concept has been beautifully packaged
static. There is a need for continuous innovation. and presented, it is tough to fully agree with the
Continuous Analysis is required for insights for next universality of this concept. At times the book gives a
innovations in the organizations. They also feeling of being written for IT companies, especially
emphasize how legacy systems need to be replaced those having their primary base in India. It would have
to make the organization more flexible to been better if there were as many cases or examples
accommodate the N=1, R=G model. They present a from old traditional companies who have
case of lot of Indian companies who have adapted this transformed or remodeled themselves to adapt to
model and have built flexibilities in their systems. the model proposed in the book.
They make a case for the strategic importance of IT
and how organizations cannot afford to write it off as SometimesThe New Age of Innovation veers into the
a commodity. academic speak and formulaic structures so beloved
of college professors, and there's a fair amount of
Further they explain the mindset changes that the management jargon that can be grating at times. But,
managers need to go through to accept and be the in the main, this is a fairly breezy and informal read
change that would enable the organization for this that provides a timely snapshot of a rapidly
new model. They talk about the new requirements in transforming business landscape. As the authors
talent management which again needs to be both make clear, this transformation is neither optional nor
flexible and mobile.Authors also talk about the role of reversible. This book provides a valuable primer for
leadership in bringing in these changes in the those wishing to stay on for the ride.
organization.
by
The chapter on Efficiency and Flexibility highlights a Parul Shrivastava
challenge that every company that has ever tried to Mitul Shah
be both nimble and efficient has faced. There is a PGDM IB 2009-11
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 14

18. International Business News
India-EU FTA to be
Kraft takeover Cadbury
completed by Oct 2010
India and the European as one of the first ten Cadbury, a leading sweets they might have to face
Union will be entering a nations. "Once the FTA is and chocolate challenges from Hershey.
Free Trade Agreement finalized, business manufacturing company It has been reported that
(FTA) by the end of this between the two will go up of the world has lost its Kraft's next aim would be
year which could open up several folds." Trade independence after they to persuade the major
new export opportunities between India and the EU accepted the deal with stakeholders of Cadbury,
worth USD 9 billion for currently stands at 78 Kraft, one of the food as the time for counter
India. Daniele Smadja, billion euro (USD 107 giants of the United offer will remain open till
Ambassador, Head of EC billion), but is still less than States. As per the reports, January 25. They will have
Delegation to India, said one-fifth the value of the the board members of to act cautiously as
the exact date for signing EU's trade with China. In Cadbury has decided to Hershey might use this
the pact would be decided recent years trade sell the brand to Kraft opportunity and try to win
after the final round of between India and EU after they modified the the ownership of the
talks in March. Indian countries had been deal and increased the company. The takeover
Prime Minister growing at 16% a year amount of money. The creates fresh worries for
Manmohan Singh and EU compared to EU's overall takeover battle between Cadbury workers in this
Commission President growth rate of trade of ten Kraft and Cadbury was c o u n t r y, w i t h K r a f t
Jose Manuel Barroso per cent on account of the going on for several promising hundreds of
would be finalizing the growth performance of months and the final millions of dollars in
agreement soon the Indian economy. decision ultimately came annual savings from the
Terming India for its fast in favour of the Kraft deal, which analysts say
emergence as a major Company. means some of Cadbury's
power in the region, Though the US food 45,000 workers around
Smadja said the country company, Kraft has been the world will lose their
figured in the EU's list of successful in acquiring the jobs.
significant trading partners ownership of Cadbury,
Toyota's ongoing troubles…It's not stopping...
Toyota's recall of almost 8 acceleration”. Toyota has himself. models. The charge sheet
million cars across the put the cost of the recalls Other carmakers, notably against the company
world and the subsequent at $2 billion in the first Ford and the ambitious lengthens daily too.
suspension of sales and quarter alone. Toyota's Volkswagen Group, have Toyota probably faces an
p ro d u c t i o n o f e i g h t sales in America last closed the quality gap and avalanche of class-action
models with potential month plunged by 16% are offering more lawsuits in America which
faulty accelerator pedals compared with a year interesting cars. It is the will prolong the adverse
has sent shock waves earlier, while those of world's best selling hybrid publicity. What is clear for
through the industry. General Motors rose by car and Japan's most To y o t a a n d o t h e r
Toyota announced on 15% and Ford's by 24%, popular new car of all. companies that may find
February 1st that it had allowing it to reclaim the Around half of the cars themselves in a similar
come up with a cure for number-two slot in the affected by this recall are position is that swift and
the sticking pedals which, market it lost to Toyota in Priuses in Japan. This will decisive action may be
along with badly fitting 2 0 0 7 . M r To y o d a undoubtedly do no good painful but less agonising
floor mats have been p ro m i s e d a v i s i t t o for a company that is than letting a problem boil
blamed for at least 19 America, the car attempting to maintain its over and then attempting
deaths and more than company's largest market, lead in hybrid cars as to clear up afterwards.
2,000 incidents of to see the damage to competitors line up to
“ u n i n t e n d e d Toyota's reputation for launch competing green
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 15

19. HARMONIZED SYSTEMS
A provision that establishes international uniformity for product classifications.
HUSBANDING
Term used by steamship lines, agents, or port captains who are appointed to handle all matters in
assisting the master of the vessel while in port to obtain bunkering, fresh water, food and supplies,
payroll for the crew, doctors appointments, ship repair, etc.
BUNKER ADJUSTMENT FACTOR
A Fuel Surcharge expressed as a percentage added or subtracted from the freight amount, reflecting
the movement in the market place price for bunkers.
FORCE MAJEURE
The title of a standard clause in marine contracts, exempting the parties for non-fulfillment of their
obligations, as a result of conditions beyond their control, such as earthquakes, floods, or war.
LAYCAN
Stands for "laydays commencing / laydays cancelling" and is a spread of dates which provides for the
earliest date for the ship to arrive and for laytime to commence
DUNNAGE
Materials of various types, often timber or matting, placed among the cargo for separation, and hence
protection from damage, for ventilation
MALA FIDES
A seller's representation that goods are usable for a particular purpose, when in fact the seller knows
that the goods are not.
JETSAM
Articles from a ship or ship's cargo that were thrown overboard
ALL RISKS CLAUSE
An insurance provision, which provides
additional coverage to an Open Cargo
Did Policy, usually for an additional premium.
you SNAKE LOADING
Loading products into a container in the
sequence with which the goods will be
know unloaded and stored in at destination.
PRO FORMA INVOICE
these Draft invoice sent to an importer by the
exporter prior to order confirmation and
terms? shipment to assist in obtaining import
licences or foreign exchange allocations.
FOUL BILL OF LADING
A receipt for goods issued by a carrier
bearing a notation that the outward
containers or goods have been damaged.
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 16

20. CROSSWORD #02
DOWN
9. A government grant that gives 5. A form of corporate acquisition in
1. The process by which a country
inventors exclusive right of making, which one firm absorbs another and
becomes a member of an
using, or selling the invention. (6) the assets and liabilities of the two
international agreement, such as the
10. A document issued by a bank at the firms are combined. (6)
WTO or the European Community.
buyer's request in favor of the seller, 6. Collaborative groups of vertically and
(9)
promising to pay an agreed amount horizontally integrated firms with
2. Official discussion with another
of money upon receipt by the bank of extensive share cross-holdings and
government carried out on
conforming documents with a with a major Japanese bank or
instructions. (8)
specified time. (3) corporation at the center. (8)
3. A document that establishes the
11. An agreement among, or an 7. A community made up of Bolivia,
terms and conditions of a contract
organization of, suppliers of a Colombia, Ecuador, Peru and
between a shipper and a shipping
product to limit production in order Venezuela. (6)
company under which freight is to be
to minimize competition and 8. An arrangement which establishes
moved between specified points for
maximize market power. (6) unimpeded exchange and flow of
a specified charge. (3) ACROSS goods and services between trading
4. The means companies select to 1. The treaty, formally known as the partners regardless of national
achieve their objectives. (8) Treaty on European Union, signed in borders. (3)
5. An intermediary storage facility 1992 that led to the unification of 9. A simultaneous spot and forward
where goods are kept temporarily for many European countries. (10) foreign exchange transaction. (4)
distribution within a country or for re 2. Korean business groups that are 10. A treaty between two countries to
export. (8) similar to keiretsu and also contain a ensure that investments between the
6. The Japanese process of continuous trading company as part of the two countries receive the same
improvement, the cornerstone of group. (7) treatment as domestic or other
TQM. (6) 3. The act of seizing commercial international investments. (3)
7. The practice of charging or paying exchange with a particular country. 11. A domestic tax assessed on the
exorbitant interest on a loan or other Such act is common during wartime. manufacture, sale, or use of a
transaction. (5) (8) commodity within a country. Usually
8. Taxes on imported goods and 4. In an acquisition or merger, when the refundable if the product is exported.
services, levied by governments to value of the combination is greater (6)
raise revenues and create barriers to than the sum of the individual parts.
trade. (6) (7)
e-Globuzz, Volume I, Issue II Jan-March 2010 Page 17