Strategic tools for the practising manager

KIT

THIS WEEK: The Indian art jewellery market

The total size of the art jewellery market in India is estimated Rs 570 crore for the top 15 cities, and Rs 266 crore for Delhi, Mumbai, Ahmedabad, Pune and Ludhiana.

The total volume of this category is estimated at 1.9 million pieces and the market is growing at 13.5 per cent a year.

American diamond and kundan jewellery contribute the maximum share of both the value and volume market (73 per cent) followed by pearl setting (13 per cent) and high-end imitation jewellery (11 per cent).

American diamonds and kundan together contribute nearly 60 per cent of the SEC A2 market, as against 54 per cent of the SEC A1 market.

The demand for art jewellery is the highest among the 26 to 30 years age bracket (39 per cent) and particularly among married women (74 per cent).

NUGGETS
Selections from management journals

As Indian consumers are figuring out how to extract value from organised retailing "" beyond lower prices "" retailers are grappling with myriad issues around warehouse locations, store designs, supply chain management and building customer loyalty.

According to panel participants at a recent Harvard Business School conference, large retailers hoping to succeed in the rapidly evolving Indian market will need to adopt a "micro-segment" approach tailored to consumers' habits and local market constraints before modern retail models can take hold.

Thumbnail opening a big box: Organised retail confronts the challenges of local markets
India Knowledge@Wharton, March 21-April 3
Read this article at http://knowledge.wharton.upenn.edu/india/

Leading companies in sectors such as power utilities, telecommunications, financial services and transportation have been growing rapidly outside their traditional geographic bases. These businesses characteristically need to protect their local value while simultaneously exploiting cross-border synergies and increasing scale.

The multilocal focus poses an awkward organisational challenge. To succeed, executives must understand the size and nature of the cross-border and local value at stake, raise awareness of cross-border opportunities, overcome motivational barriers, and sharpen cross-border execution skills.

They should also choose carefully among a range of organisational options from outright centralisation to full localisation and counter the ensuing complexity by defining key roles carefully, clustering activities in regional groups, and selectively introducing a common culture.

The multilocal challenge: Managing cross-border functions
By Giancarlo Ghislanzoni, Risto Penttinen and David Turnbull
The McKinsey Quarterly, March 2008
Read this article at www.mckinseyquarterly.com

When a market or an industry goes into hypergrowth "" that steep part of the S-curve where market share is usually determined "" established companies may be at a disadvantage. Often they labour under organisational legacies that hamper their ability to respond to lightning-quick opportunities to increase their share.

Alexander Izosimov, the CEO of VimpelCom, rode the hypergrowth wave in Russia's cell phone market and came out ahead. He offers five rules to help other companies survive a similar ride.

Sell first and ask questions later. This is the time to capture as many new customers as possible "" while making sure that you can actually deliver the promised products and services. Your business model doesn't have to be perfect at the outset, though; you can refine it as you go along.

Don't try too hard to innovate. Of course you must understand the technological trends in your business, but your focus should be on the systems critical to your growing customer base, not on the strategic implications of future killer apps.

Organise like McDonald's. Standardised organisational structures, technologies and business processes allow people to hit the ground running in new markets.

Push decisions out to the front line. You simply can't afford decision paralysis during hypergrowth. Ceding operational decisions to those who have to deliver the performance saves time, triggers entrepreneurial behaviour, and may even raise the quality of job candidates.

Foster a can-do culture. Action-oriented companies "" where people move on quickly from solutions that aren't working, communicate freely, and don't fear failure "" will do best during hypergrowth. To foster such a culture, reward people for their successes.

Managing hypergrowth
By Alexander V Izosimov
Harvard Business Review, April 2008
Read this article at www.hbr.com