Strategy of Tata Coffee

The strategy laid out by Tata Coffee has been explained in the article 'Back to beans' by Surajeet Das Gupta which appeared in Business Standard dated 4-Oct-10.

Over the next few years Tata Coffee will move its brands like Tata Cafe, Mr. Bean, and Coorg to group company Tata Global Beverages (earlier Tata Tea) so that it can focus on commodities.
In March, the Tata Coffee brass began to brainstorm and came up with a four pronged plan.

1. To get out of the brands and leave the task to other group companies like Tata Global Beverages.

2. To expand the plantation business by acquiring estates overseas.

3. To reduce the dependence on coffee and sell other commodities as well.

4. To collaborate with Tata companies as well as others to sell its products the world over. By 2015, 40% of the company's revenues would come from inorganic growth.

According to Hameed Huq, MD Tata Coffee, there aren't too many plantation and commodity companies which have succeeded in brands as well. Their core competence remains running plantations and producing commodities. Brands are complex matters which require a different set of skills.

As land is too expensive in India, Huq plans to acquire it in Uganda, Zambia, Ethiopia and Laos. Plantations there are available at prices which are 50 to 60% cheaper than in India. Many of these plantations are located near equator which is the best place to grow coffee. Huq wants 3000 tonnes of Arabica coffee to come from these overseas plantations - almost 25% of its annual coffee production.

Rural markets for Indian Cellphone handsets

The article 'Local Call' which appeared in Strategist section of Business Standard covers the marketing strategy of Indian handset brands which covered Micromax, Lava, Karbonn, Spice, and other local brands.

Here are some of the items mentioned in the article which is worth highlighting:

The Indian brands have quickly realized that only two things sell in India: Bollywood and cricket. All of them have quickly latched on to the mantra.

Vikas Jain of Micromax says "We purely talk about our product package and our positioning. Price happens to be the final delight that the customer gets."

SN Rai of Lava says "Our target audience has an annual income of Rs.36000, and is in the age bracket of 18 to 33. He loves Bollywood and adores Mahendra Singh Dhoni" - This is a very good example of customer profiling and you can see the right audience targetted in their advertisements.

Voice of Consumers

In Economic Times dated 19th July, there is a news item 'CEOs go incognito to learn home truths' which talks about Firms convinced that house visits offer precious marketing ideas and CEOs make such visits.
Those making personal visits to consumers include Nitin Paranjpe of Hindustan Unilever, Kishore Biyani of Future Group, Vinita Bali of Britannia, Zubair Ahmed of Glaxo Smithkline, Harsh Mariwala of Marico, Adi Godrej of Godrej Industries and Kyoshi Oike of Yakult.
On an average, each makes three to four such home visits a year. They are coming back with new and precious learnings.
Such visits ignited the ideas for Horlicks diversifying into instant noodles, Britannia launching smaller biscuit packs, Marico embarking on a scientific advertising campaign for its anti-hair loss products and more.

Kishore Biyani realized that there was a demand for furniture in red, maroon and orange.

Sanjeev Chadha of Pepsico got the idea of launching a healthy snack for the bottom of the pyramid customers.

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Consumers give very powerful ideas about untapped demands of the people. Staying close to customers help the companies to get the right direction for growth.

Selling Ideas

There is a saying - "Knowledge is power and Ideas rule the world". We need to boost the power of ideas by using our knowledge. For the ideas to be successful, we need to do lot of homework before presenting good ideas so that they get buy-ins from stakeholders and support from followers.

The article 'The Proposal' by Suzy Bashford published in Economic Times Brand Equity - dated 14-Jul-10 gives some pointers on how to sell ideas to top management.
The biggest challenge faced by marketing director today is likely to be selling ideas to their superiors than reaching consumers.
Marketers can achieve greater success with their boards if they approach the communication of their work and ideas as an agency would a pitch. Those who refine and improve their presentation until they have a story to tell will score a better strike-rate over time.
The key to selling ideas, is to know your audience and pitch the ideas in a way that is tailored to them. Think through to whom you are selling an idea and what questions or reactions they might have, and always come armed to answer or tackle these.

Selling ideas successfully involves encouraging the board to buy in to the concept at key stages, effectively letting them embrace the idea to the same extent as the marketing team and taking shared ownership for its success.

Similarly the corporate strategy needs to be communicated to everyone in the organization. Anand Mahindra from Mahindra & Mahindra had packaged the Mantras so that the message is communicated uniformly across the organization. (M&M's Management Mantras from The Harvard Business Review July-August 2008)

At M&M's annual conference for senior executives, Anand Mahindra focuses his companies on key priorities, which he calls Blue Chip Mantras. (The Sanskrit word "Mantra" means a prayer or, in this case, formula.) Below are the group's mantras for the past six years.

2002
Business leadership. Be number 1 or 2 in your industry

Innovation. One-fifth of revenues must come from products or services introduced in the past four years

Globalization. Bespoke metrics for each sector

Financial returns. Bespoke metrics for ROCE and FCF (free cash flow).

2003
Good to great. Move from good to great by insulating the company from volatility (zero trauma) and by achieving full potential (stretch goals).

2004
Customer focus. Become the most customer-centric corporation in your industry.

2005
Financial performance. In three years, double turnover and triple profits (3-2-3).

2006
Intensify customer centricity. Measure the customer as promoter (CAP) score, which is M&M's metric of customer loyalty.

2007
Innovation. Build a customer-centric innovation engine in each business.

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Channelizing the energies of the stakeholders/employees helps to create robust strategies for the organization.

Job Crafting

Top 3 questions for different schools of strategy is given below:
Classic Strategic Planning school :-
- What is your goal?
- What is your plan to reach the goal?
- Is your strategy flexible enough to act upon the emerging opportunities/risks?
The learning organization :-
- Is everyone in the team working together?
- Are there right people at right roles?
- How do we replicate successes?
Competitive Strategy :-
- Have we done analysis of the economic situation of the industry?
- Have we analyzed the position of competitors in the entire value chain?
- How do we increase our Sustainable Competitive Advantage?
In simple words,
- Identify what works well
- Identify what further value additions can be done easily
- Leverage on what works well
In the article 'Managing Yourself: Turn the job you have into the job you want' which was published in Harvard Business Review June 2010 Page 114 Amy Wrzesniewski suggests to use Job Crafting.

Job crafting can be a powerful tool for reengineering and reimaging your work life. It involves redefining your job to incorporate your motives, strengths and passions.This exercise prompts you to visualize the job, map its elements, and reorganize them to better suit you.In this way, you an put personal touches on how you see and do your job, and you'll gain a greater sense of control at work - which is especially critical at a time when you're probably working longer and harder and expecting to retire later.

This exercise involves assessing and then altering one or mor of the following core aspects of work: Tasks, relationships, perceptions.To win support for your job crafting, focus on creating value for others, building trust, and identifying people who will accommodate you.

- Murali

Anand Mahindra on Satyam Strategy

'Our M & As not done for ego or size'

Q: One way to look at Mahindra & Mahindra as a group over past many years, after you have taken over, you have taken risks and gone into new businesses, but you have also avoided areas that are hyper competitive. You have gone into niche areas, where you think you had capability, and you have built that from scratch, the SUV business for instance where you are at the top of the heap. What made you go and buy a company like Satyam, with all the history, the problems, controversies?

A: First of all, let me state outright that it's not an individual decision. Therefore, when you look at M&M, there are number of companies, it's not just one. So the question is what is the strategic need, strategic urgency for inorganic growth of a particular business - that will determine your risk profile. I know sometimes it becomes easier to look at the group in one single personality profile. If you are one monolithic company that may be easier, but we are a federation of companies. So I would say the test would be different for each business.
If you look at the automotive sector, we have inherently shied away from inorganic moves because it's a niche play so it doesn't need that. On the other hand, the tractor business, we are already the world's largest brand, largest single company by volume. So there you have an approach to be in markets where you play the volume game, that's why China. the two acquisitions in China, and I think we are now the fourth largest player there.
If you look at Systech, there was no company, no personality to take, it had to start from scratch and start inorganically. So for TechMahindra, the challenge in front of the board was what's next growth opportunity. We had taken a decision to focus on telecom sector for a while, then the board said if we want to continue for growth, time had come to look for inorganic opportunities. Then you see what are the inorganic opportunities, and then at a final stage, if there is a Mahindra group DNA, you take a very calibrated risk. On the face of it, it looked very daunting, but when we actually went in, and I had talked to Ramalinga Raju before this and had explored the opportunity of an alliance with Tech Mahindra before this. I renewed that offer to him when Maytas happened without knowing what the next chapter was going to be, and then when this happened, we are in the queue with other bidders. So we had already identified Satyam as an attractive inorganic opportunity, and therefore the next step was for us to say what seems daunting, how daunting it is. And that's where the process followed by the government played a key role in mitigating risk. If they had moved slower, the company would have been deteriorated, clients would have left, then you would have asked what to buy. If there is any common DNA for us, it's that we take calibrated risk. We are not about arrogance, none of our M & As would done out of ego or for the sake of size.

(Source: Interview with Anand Mahindra - Economic Times dtd 29-Jun-2010)

A fine distinction between organic growth and inorganic growth has been made by Anand Mahindra in the above answer. The vision envisaged by Anand Mahindra also explains the comeback of Satyam in a very short span of time. In the same interview he has mentioned that 'I think every calculation we made has worked out the way we had envisaged. So the journey from that point of view has been useful. If you ask me to give a score to the team, I would say they built trust faster than I thought, rebuilding trust if you will. That's not something I can take credit for, it's again the reason we bid for this company. When we went out to customers of Satyam before we bid, they told us it's a real company, you get real service'.

Managing Yourself

To do things well, you’ll need to cultivate a deep understanding of yourself – not only what your strengths and weaknesses are, but also how you learn, how you work with others, what your values are, and where you can make the greatest contribution.

First and foremost, concentrate on your strengths. Put yourself where your strengths can produce results.Second, work on improving your strengths. Analysis will rapidly show where you need to improve skills or acquire new ones. It will also show gaps in your knowledge – and those can usually be filled. Third, discover where your intellectual arrogance is causing disabling ignorance and overcome it.

It is equally essential to remedy your bad habits.One should waste as little effort as possible on improving areas of low competence.

Questions to ask yourself:
Am I a reader or a listener?
How do I learn?
Do I work well with people, or am I a loner?
Do I produce results as a Decision Maker or as an advisor?
Do I perform well under stress or do I need a highly structured and predictable environment?
Do I work best in a big organization or a small organization?
What are my values?
Where do I belong?
What should I contribute?

Excerpts from Peter Drucker's Managing Yourself

Consumer mindscape

In yesterday's Economic Times, Professor S.Ramesh Kumar, has written on Addressing consumer mindscape.
He mentions that brands over a period of time need to enlarge the band of consumers in categories that are low involvement in nature or bought without much deliberations.
In several categories of fast-moving brands, the mindscape of the consumer extends beyond the positioning of brands. Brands need to have a clear focus based on the consumption patterns of consumers.
We need to keep asking which unmet demand of the customer can be easily met by us, and what additional factor may give extra value to the customer.

C K Prahalad

The whole world was shocked when C K Prahalad passed away on April 16th.He created a history in becoming the first person to write a piece of article for Harvard Business Review from ICU.In his column in the HBR June 2010, he writes about "Why is it so hard to tackle the obvious"?"He talks about questioning the logic used by employees of successful companies. He tells that during corporate transformation forgetting curve is more important than the learning curve.

Aim of this blog

Hi all,
In this blog, I would like to share my ideas about vision, strategy, leadership, management annd personal development. I would like to keep it short (about 5 to 10 sentences). I am planning to post one new entry every week.
I want to keep it short and focus on questions which would help in triggering thought process which could lead to improved decisioins which executives make on day-to-day basis.
Please do write to me at muralidhara.kempasagara@gmail.com for your feedback on the snippets.
Thanks,
Murali