KIT: The Indian bakery market in 2008

Strategic tools for the practising manager

The Indian bakery market is valued at Rs 3,295 crore and is expected to reach Rs 4,308 crore by 2012.

The market is split into the rural market, which is 22.5 per cent, and the urban market, which is 77.5 per cent, of the total market.

The bakery market can be segmented into cakes, pastries and unpackaged biscuits.

The cake market in India is valued at Rs 1,088 crore for 2008, and is growing at a CAGR of 10 per cent.

The pastries market in the country is valued at Rs 136 crore for 2008, and it is also growing at a CAGR of 10 per cent.

The unpackaged biscuits market is valued at Rs 2,071 crore for the current year, and is growing at a CAGR of 5 per cent.

NUGGETS
selections from management journals

What causes companies to fail spectacularly? A recent study of 750 of the biggest US business disasters of the past 25 years reveals that seven popular but risky strategies are often to blame. Drawing on that extensive research, the authors describe seven sirens that lure companies onto the rocks.

One is the synergy mirage — hoped-for but non-existent merger synergies. Group disability insurer Unum unwittingly pursued these when it acquired individual disability insurer Provident, assuming the units could cross-sell each other’s products. It turns out they had entirely different sales models and customers.

Pseudo-adjacencies also lead companies astray, as school bus operator Laidlaw learned when it spent billions on a move into ambulance services. The firm expected its logistics expertise to carry over but discovered ambulances were not a transportation business but a highly regulated health care business demanding skills it sorely lacked. Faulty financial engineering, stubbornly staying the course, bets on the wrong technology, and rushing to consolidate are all dangerous, too, as Conseco, Kodak, Motorola, and Ames can attest.

The best way to safeguard your company against them is to institute a formal strategy review by a devil’s advocate panel not involved in strategy development. Its members must be allowed to ask tough questions, say the authors, who offer guidelines to help panels focus on facts, test assumptions, and bring to light flaws in the strategy that could lead to costly blunders.

Seven Ways to Fail Big
By Paul B Carroll and Chunka Mui
Harvard Business Review
September 2008
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The production of high-tech goods has moved steadily from the US to Asia over the last decade. But soaring oil prices, a falling dollar, and rising wages are undermining some of the reasons manufacturers moved offshore.

For managers of global supply chains, the question now is whether or not to consider scaling back offshore production by returning operations to, or closer to, the US.

Although McKinsey analysis shows that for a number of high-tech products, costs have changed enough to undermine the benefits of Asian production significantly, the decision to rein back offshoring isn’t straightforward.

In rethinking their global supply chain, companies must carefully evaluate the importance of speed, the availability of skilled talent, the potential for further productivity gains in Asia, one-time transition costs, the local import and tax implications, and organisational interfaces.

Time to rethink offshoring?
By Ajay Goel, Nazgol Moussavi and Vats N Srivatsan
The McKinsey Quarterly
September 2008
Read this article at www.mckinseyquarterly.com

The global banking system is facing a severe liquidity crisis: in the first half of 2008, major financial institutions wrote off nearly $400 billion, causing banks around the world to initiate emergency measures.

Similar crises have occurred within recent memory: Think of S&Ls, the dot-com bust, and Enron. Risk is, quite simply, a fact of corporate life — but because risk-management research has increasingly emphasised mathematical modeling, managers may find it incomprehensible and thus shy away from powerful tools and markets for creating value.

The authors, all with McKinsey, describe the evolution of risk management since the 1970s, show how new markets have changed the landscape in both financial services and the energy sector, and explain what it takes to compete in the current environment.

The new arsenal of risk management
By Kevin Buehler, Andrew Freeman and Ron Hulme
Harvard Business Review
September 2008
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