pratibimb

Volume - 1, Issue - 1 December, 2010

A Student’s Initiative

Pratibimb

2

We are glad to bring out the first edition of Pratibimb, the student magazine of T. A. Pai Man-

agement Institute. Pratibimb endeavors to bring out the creativity & intellect at TAPMI, one of

the premier institutions of the country. It aims at providing an interface between the academic

and business worlds. With time, the Pratibimb team wishes to spread its realms beyond the

TAPMI boundaries.

In today’s competitive & demanding world, only theoretical knowledge is not enough to stay

ahead of the competition. One must know how to apply theoretical knowledge in analyzing dif-

ficult business situations. And for that, management students are required not only to be aware

of, but also to understand new happenings in business environment.

Pratibimb provides the students, a platform to showcase their cognizance and creativity on vari-

ous issues pertaining to different streams and specializations in management like Finance, Mar-

keting, Operations, HR, and Systems. Pratibimb undertakes to provide a holistic view to Man-

agement, from the perspectives of the various specializations that TAPMI offers, in order to

help the students form an all-rounded opinion and to help in the overall development of the

individual. It provides the right path towards the development of good leaders by embarking on

its vision of providing a mouthpiece for the intellectual expression of the individual and by inte-

grating the various disciplines of management, hence providing a conglomeration of articles

from the different walks of management. With the expert inputs from the industry, it builds a

platform that brings the academia & industry to share their view on the most challenging prob-

lems faced by the business today.

It gives me immense pleasure to congratulate the team members for the effort they have put

in, in bringing out this edition of Pratibimb and would like to extend my heartfelt wishes to the

team for their future endeavors. I hope the team scales newer peaks of excellence in their en-

deavor.

Saji Gopinath

DIRECTOR’S

ME

SS

AG

E

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―The journey of a thousand miles begins with

one step.‖ - Lao Tzu

Here is the first step of the journey that we are

going to make. The idea of this magazine

sprung in our mind from the comparative

analysis done by MIRC which showed that

TAPMI did not have a magazine which pro-

vided a platform for students to showcase their

talent to the world outside and enable them to

engage with students and organizations outside

TAPMI‘s fraternity.

With these objectives clear in our mind, we set

for a journey to create something new which

would bring a change. And this change is fi-

nally here: Pratibimb.

TAPMI is well known for its academic rigor

and the learning curve that it provides to its

students. A platform to show the myriad of

talents that exists amongst students was miss-

ing. We hope ‗Pratibimb‘ would provide a

standing ground for students to not just com-

pete amongst their peers but also to show their

skills, talent and knowledge to the world out-

side which includes the vast Alumni base of

TAPMI and organizations in the corporate

world.

In this issue we started sourcing articles from

corporate leaders and we are happy to have ar-

ticles from Ed Cohen who tells us how to

manage in tough times from his experience of

being a Chief Learning Officer at Satyam

Computers when it faced the toughest time in

its history.

Another article from the Assistant Vice-

President of Mahindra Satyam throws open a

debatable insight into the need for an ‗Email

day‘ (similar to Earth Hour) which would help

us get rid of mails in our inbox that don‘t

really matter and that just ends up clogging

byte space.

There are many more articles which we are sure

will grab your attention and are aimed to in-

crease your learning. A game for finance geeks

has also been included in this issue. Games on

other streams would be featured in upcoming

issues.

At the end, I would like to congratulate all the

members of Team Pratibimb and members of

the Functional Committees at TAPMI who

were behind the success of this issue. I would

also like to thank to our Director Dr. Saji

Gopinath for his inspiration and Prof. Ajith

Kumar and Prof. Sankalpa Bhattacharjee for

their continued and valuable guidance. I hope

this journey that we are treading on would be

endless with regular issues to provide insights

on various topics that interest us.

I invite your feedback and suggestions to make

forthcoming issues even better and interesting.

Enjoy Reading!!!

Rahul Garg

Editor’s Corner

Chief-Editor Rahul Garg

Editor Rohit Kumar

Creative Designer Anupam Chaplot

Sulagn Patanaik

Members Hima Sachdeva

Khushal Puri

Preetha D.

Varun Sunil

5

AMBUSH YOUR WAY THROUGH

Ankur Gajjaria | TAPMI

Building up to the start of the FIFA World

Cup 2010, Nike (30.2%) had more than

double the share of buzz (references to Nike

in online English language messages related to

the World Cup) than its closest competitor

and rival Adidas (14.4%). Carlsberg (3.9%)

had created almost four times the buzz related

to the World Cup than that of its competitor

Budweiser. Moreover, Nike and Carlsberg

were able to achieve these heights even though

they were competing against the Official part-

ners of the World Cup. So how did they

achieve this amazing feat? All this was possible

only due to the unique marketing strategy fol-

lowed by these two companies – Ambush

Marketing.

Ambush Marketing

So what is Ambush Marketing? Ambush Mar-

keting represents efforts by non-sponsors to

attach themselves to a desirable property or

event. When effectively performed, ambush

marketing can confuse the customer and

makes them mistakenly associate the non-

sponsor with the event/property, thereby di-

minishing the benefits of sponsorship for the

official sponsor of the event.

Who does Ambush Marketing?

Usually Ambush Marketing is done by the

competitor of the official sponsor of the

event. It was referred to as ―Parasite Market-

ing‖ by John Bennett of VISA, referring to

the ambush efforts of American Express Com-

pany. Nike did it to Converse in 1984 Olym-

pic Games, so did Qantas to Ansett Australia

in the 2000 Summer Olympics and Wendy‘s

implemented the same to the McDonald‘s in

the 1994 Olympic Games. Like a parasite,

Marketing Mania Pratibimb | Dec. 2010

6

Ambush Marketing also associates itself with

an unwilling host and takes nourishment from

it. It has been described as clever, innovative,

upstaging, unethical, devious, deceptive and

cunning by various experts. But there is one

thing common to all the Ambush Marketing

efforts that have been mentioned above and

many others – It works!

Why is it done?

There are 3 main reasons due to which com-

panies resort to ambush marketing:

Rising cost of sponsorships

Adidas spends more than $125 million every

year for sponsoring the FIFA Global deals and

the top six teams in world football and these

costs are increasing every year. So all the

brands that are not associated with the official

event try to jump onto the bandwagon by us-

ing other means to associate themselves with

the event (Nike used a ―Write the Future‖

viral campaign using football stars like Didier

Drogba, Wayne Rooney, Ronaldinho etc. be-

fore the FIFA World Cup 2010) by either

sponsoring the telecast of the event (Kodak

did this in the Los Angeles Olympics when

Fuji Film was the main sponsor) or another

sub broadcast of the event like the highlights

or the replays.

Consumers are not offended by products that

ambush during an event

A study on New Zealand students has found

that consumers do not get offended by am-

bush marketing being resorted to by brands

that already have a strong association with the

main theme of the event, like Nike‘s strong

association with football and ―Mars Believe

Campaign‖ for the 2006 World Cup. On the

other hand when brands that do not have any

relation to the central theme of the event try

to associate themselves indirectly with it; they

can lead to negative reactions by the consum-

ers because such brands are perceived like hav-

ing jumped onto the bandwagon without giv-

ing it much prior thought.

Changing attitudes within the industry

Companies have realized that it is almost im-

possible to stop competitors that have strong

associations with the central theme of an event


7

from publicizing their relation to the theme

and it has now become a game where the ‗Tit

for Tat‘ strategy has to be adopted. A state-

ment by an Adidas executive on the efforts of

Nike to ambush the World Cup Soccer event

in New Zealand summarized the current sce-

nario in this highly competitive market, ―They

ambush us; we ambush them‖.

Conclusion

Ambush Marketing is here to stay unless

properly defined laws governing the references

that a competitor / non sponsor can refer to

an event are brought into the playing field. All

the brands will try to associate themselves

with the event in some way or other in order

to gain some mind space of the consumer. It is

similar to the type of associations that Adidas

and Nike did to relate themselves with the

winner of the FIFA World Cup 2010; Adidas

said that the Jules Rimet trophy was won by a

team that was wearing its official jersey while

Nike said that the final winning goal of the

World Cup was scored by a Nike shoe worn

by Andreas Iniesta. The good thing in this

playing field is that there is ample scope for

all the competitors for fighting it out to win

one battle or the other.

References:-

1. Janet Hoek and Philip Gendall, ―Ambush

Marketing: More than just a commercial

irritant‖, Entertainment Law

2. Joe Thomas, ―Avoiding a Red Card‖,

Marketing Magazine 28 April 2010

3. ―Do brands risk alienating fans by pro-

moting events they don‘t support‖, 9

June 2010 Marketing Magazine

4. Matt Townsend and Holger Elfes,

―Adidas‘ Big Money defense Against

Nike‖, 13 May 2010 Business Week


8

REVIEW OF THE BASEL II SYSTEM IN LIGHT OF

THE GLOBAL FINANCIAL CRISIS

Girish Shetty | TAPMI

The recent financial crisis has brought to light

the fragility of the financial system. Part of

the blame for the crisis is directed at the Basel

II system which was projected as a modern-

ized version of the original 1989 Basel regula-

tions, which demanded banks to keep a mini-

mum of 8% of certain assets in capital. The

critique of the Basel II system lies in certain

features that were introduced as an improve-

ment to the original Basel system; but ended

up making the banking system more vulner-

able.

One of the features of the new Basel II system

is the two-tier risk management system which

is based on the size and sophistication of the

bank being regulated. Although aimed at mak-

ing the banking system more stringent, it has

provided freedom for big banks to leverage

themselves more than the small banks. As the

recent global financial crisis has proved that

market worries regarding large banks have es-

calated, it shows that large institutions should

in principle face more stringent capital re-

quirements than the smaller ones.

Another new feature of the Basel II system is

the principle of ―self-regulation‖ by which

large banks with sophisticated risk manage-

ment systems can monitor and control their

own risk. An Internal Credit rating system is

used by banks to rate the counterparties of the

Bank. The issue with such an Internal Rating

system is that Banks have a bias or would

think twice before downgrading the credit rat-

ing of a counterparty with which they have

had a long working relationship. Banks would

have a tendency to overlook a below average

financial performance because the risk of los-

ing an esteemed counterparty by lowering the

credit rating and subsequently lowering the

amount of exposure of the bank with the

counterparty is too high. Many banks have an

Internal rating system which comprises of

qualitative and quantitative factors. Al-

though quantitative factors hardly leave

any room for maneuvering, the major bone

of contention is how the counterparty is

rated based on the qualitative factors.

Here, the rating is dependent on the per-

spective of the person responsible for rat-

ing the counterparty. Although such rat-

ings undergo a large amount of supervi-

sion through the various hierarchy levels,

it would ultimately reflect the rating that

the bank wants the counterparty to have

based on the relationship that it wants to

maintain with the counterparty.

Also, capital requirements of the Basel ac-

Finance Frenzy Pratibimb | Dec. 2010

9

cords are cyclical in the sense that it tends to

increase in a downturn when losses reported

by a company are common occurrence. This

acts as a handicap to the companies in terms

of lending which in turn impacts the liquidity

in the financial markets and thus acts as a trig-

ger point towards a financial downturn.

The Global financial crisis has exposed the

inherent deficiencies in the Basel accord but

the true extent of the contribution of the sup-

posedly flawed Basel II regulations towards

the global financial crisis cannot be estab-

lished because the implementation of Basel II

has not been done in a uniform manner across

all markets. The process of implementation in

the United States was slow and was intended

to complete only around 2010. In Europe,

due to the onset of the Global financial crisis,

the application of the Basel II regulations was

limited as many financial institutions deferred

the application of the framework to 2008.

In response to this, the Basel committee has

revolved around implementing steps that

would focus on strengthening the resilience of

the Banking Sector and also work towards an

International framework for liquidity risk

measurement and global standards for moni-

toring counterparty credit risk. It is also im-

portant that the Central Banks work together

towards these improvements in a cohesive

manner so that global framework regarding

regulations can be established that can prevent

such a crisis in the future.

Finance Frenzy

Inviting Articles “If there's something you want to read, but it hasn't been written yet, then you must write it.” -Anonymous Typewriters have replaced pen and computers have replaced typewriter, but the power of words still sustains because it is not dependent on the technology but the acumen of person who write them. Here we invite all the best brain from various b-schools to come and showcase their knowledge and acumen. The articles can be on any field of business from Marketing, Finance, Operations, HR to Systems. You can send us articles on:

Recent developments or trends in any of these fields. Articles covering latest trends, innovative practices, strategies etc. in the global perspective. Apart from above, creative works in relation to any of the fields will be equally appreciated.

The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file should be MS Word doc/docx. The last date of receiving all entries is 10th January, 2011. Please send your entries marked as <ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to: [email protected]

Pratibimb | Dec. 2010

10

EMAIL DAY

Madhusudan Rao | AVP, Mahindra Satyam

On the day of 27th March, observed through-

out the world as Earth Hour, I feel there is a

necessity for all professionals to observe an

eMail Day. Why?

All those who have an email must have defi-

nitely noticed spam in their email. This is usu-

ally mails from individuals who want to try

and inject harm (in any way possible) to you

or your email-account.

But, what I am trying to highlight here are the

mails sent by those whom we work with in

our organizations. Those who might be re-

porting to us or those whom we need to work

with for a common purpose.

What I have noticed and I am sure this will be

your experience also – mails keep coming at a

fast pace (the higher you are in the organiza-

tion and the larger team you lead, the more

mails you receive) - in the eight hours (or

more) that you spend in the office, you will

spend almost 60% reading & responding to

mails. I am sure most of these emails are in

fact not required to be resolved by you, if the

person responsible for the task explained in

the mail has done his job properly.

Agreed that there cannot be a perfect environ-

ment – people differ and their performances

vary. But, what is required is the simple execu-

tion of one‘s responsibility. If each individual

takes it upon himself to ensure that he carries

out his role (especially the tasks in his con-

trol) to the best possible extent, the number

of emails that officers at higher levels receive

will automatically decrease.

In fact, this article talks about including Email

Audits in one‘s appraisal. Wonderful idea!!!

This is a must for all office-going people. As

the number of emails and the storage require-

ments increase, the number of administrators

to maintain the systems should also increase.

If we do not control our usage, I am sure in

the next 1-2 years we will be soon conducting

an eMail Day the very way we are doing the

Earth Hour today.

Systems Corner Pratibimb | Dec. 2010

10

11

RASHMI BANSAL

Author of ‗Stay Hungry Stay Foolish‘

1. Share with us some unforgettable mo-

ments in your journey right from being a

graduate from IIM A to the youth icon as

well as bestselling author.

Every moment in the journey of life is to be

cherished. But, some which stand out in my

memory:

6th Aug 1989: My first article was published

in 'The Indian Post ' newspaper

6th Dec 1992: I decide not to take placement

after attending the ERI (Exploring Roles &

Identity) course at IIMA

15th Aug 1995: First edition of JAM maga-

zine is launched at Malhar, St Xavier's college

festival

19th Aug 1999: My daughter Nivedita is

born

2nd July 2009: 100,000th copy of Stay Hun-

gry Stay Foolish sold

2. Writing books requires lot of patience and

many lows and highs comes during the jour-

ney. This can be termed equivalent to a high

position in the organization. What are your

experiences and how can one overcome these?

Passion and perseverance are the two most

important qualities - whatever you do in life.

Success is not instant - whether you are in

management or a creative field you have to

grow as an individual, as a professional, to

achieve something in life.

3. Your first book was based on MBA's but

this time Non-MBA's, although both focus

on entrepreneurship. Is there any specific rea-

son? Is MBA over

hyped or recession

has made the glow

to fade away?

MBA is a stepping

stone and not an

end in itself.

T h a t ' s w h a t

bschoolers should always remember. What is

your goal after MBA? What is your motiva-

tion, beyond money? What is your contribu-

tion to society? Only if you answer these ques-

tions will you have a satisfying and out-

standing career.

4. Can entrepreneurship be taught in MBA

colleges?

Definitely students can be exposed and en-

couraged to the idea. If not immediately after

passing out, this will induce some to take up

entrepreneurship a few years down the line.

5. How easy/difficult it is to follow the likes

of Kalyan Varma (who quit Yahoo to pursue

his interest in wildlife

and photography and

discovered a love for

nature and conserva-

tion), to quit a dream

job and follow your

heart?

If you truly believe in

something, you find a

way to do it. You will

not get sidetracked when

others call you foolish

Interview Pratibimb | Dec. 2010

12

because the call within you is so strong and

clear.

6. An entrepreneur working as manager, is

he/she a mismatch? Shall he/she think of

his/her own venture and not focus on the ex-

isting position?

Everyone cannot be an entrepreneur in the

sense of starting their own business. But each

of us can treat the job we do with a sense of

complete responsibility and ownership. That

will create its own magic.

Interview

Beat the Market To invest or not to invest, this is the question that always haunts investors. The stock markets are

too volatile and it‘s not easy to predict the movement of stocks. To reduce the risk and to increase

the accuracy of their decisions investors look forward to stock analysts.

Here in ‗Beat the market‘ we give you an opportunity to prove your mettle in stock market analysis.

You have to pick any 2 listed companies from BSE and analyze their stock movements till 7th of

January, 2011. On the basis of fundamental and technical analysis you need to give us your share

price estimate of these two stocks as on 21st January, 2011.

Prize: Rs. 1000 /-

Rules:

You can pick any stocks but the stocks should be from different industry

You need to send the details about the stock you pick and your analysis in a PDF file

You need to send us file by 23:59 PM, 10th January, 2011

You may analyze in a team of not more than 2 members

The file should not be more than 5 pages long including cover page, the cover page should

contain the team name, team members name, Institute name, contact number

Format of file name should be BTM_<TEAM_NAME>_<INSTITUTE_NAME>

Mail the file at [email protected]

For any further queries, please contact Hima Sachdeva at +91-9741127602


13

LEADING THROUGH LEARNING IN CRISIS

Priscilla Nelson and Ed Cohen | Adapted from their new book,

RIDING THE TIGER: Leading Through Learning in Crisis, pub-

lished by ASTD Press, May 2010

Priscilla Nelson is President and CEO of

Nelson Cohen Global Consulting (http://

nelsoncohen.com). While at Satyam she

was Global Director of People Leadership.

Ed Cohen is Executive Vice President of

Nelson Cohen Global Consulting (http://

nelsoncohen.com). While at Satyam he was

Chief Learning Officer.

The canvas we were painting was a collabora-

tive effort, a true partnership. We were part-

ners in developing world class leader. Our

inter-and intra team diversity made us

stronger, with team members from Nigeria,

Germany, Greece, Columbia, Sweden, the US

and of course India. We all learned from the

contributions from one another and blended

our diversity of thought, diversity of culture

and diversity of ethnic origin, to find the

strengths of each which contributed to the

whole. We knew we were part of something

really big. The vision for learning as a strate-

gic differentiator was clear. Possibility and

probability filled our canvas. The path was

unobstructed…or so we believed. It was hard

work; we put in long days and even some eve-

nings and weekends. We‘d had measured sig-

nificant business impact and had won numer-

ous international recognitions. We created

best practices and next practices that were be-

ing proliferated to diverse industries all over

the world, and were the masterminds of a new

model to build global leaders faster. The

American Society for Training and Develop-

ment ranked us number one in their annual

2007 BEST Award list of companies. We

were the first organization outside of the

United States to receive this honor; and we

had journal articles, numerous interviews, and

keynote presentations and requests to add to

our beautiful canvas of success.

Then, without warning our canvass was taken

from us. Our dreams were shattered in an in-

stant. We watched as our Taj Mahal of learn-

ing began to crumble. On January 7, 2009,

Ramalinga Raju, the Founder and Chairman

of Satyam Computer Services disclosed the

actions that would cause our company‘s fall

from grace. Those of us who were sharehold-

ers saw our investments disappear like a tsu-

nami into a pool of financial destruction. We

all looked on in disbelief as the news emerged.

Up to that moment, we were all immersed in

planning and delivery of learning.

There we were, close to 50 of us huddled in

this small conference room, watching the tele-

vision, shocked beyond belief. The screen

displayed a photo of Ramalinga Raju on the

right and a graph depicted the falling stock

price on the left. The value of our stock

plummeted in less than five seconds, drained

like an hour glass with the grains of sands

pushing to the bottom. The reporter began

reading the letter.

―It is with deep regret, and tremendous bur-

den that I am carrying on my conscience, that

HR Buzz Pratibimb | Dec. 2010

13

http://nelsoncohen.com




14

I would like to bring the following facts to

your notice.‖ We watched in disbelief as the

news emerged. The letter indicated that for

the most recent quarter ending September

2008, the bank balances had been overstated

by close to USD $81M and that there was

more than $265M in liabilities not accounted

for.

How could this be true? Just last week there

had been an article in the paper indicating that

we had an excess of $1.6 B in cash. The re-

porter continued, ―The gap in the balance

sheet has arisen purely on account of inflated

profits over a period of last several years.

What started as a marginal gap between actual

operating profit and the one reflected in the

books of accounts continued to grow over the

years.‖ We later found out this deception has

been going on since 2001 and that it added

up to more than $2.5B. What would happen

to everything we had created, our Taj Mahal

of Learning?

―Every attempt made to eliminate the gap

failed. As the promoters held a small percent-

age of equity, the concern was that poor per-

formance would result in take-over, thereby

exposing the gap. It was like riding a tiger,

not knowing how to get off without being

eaten.‖

―Under the circumstances, I am tendering my

resignation as the chairman of Satyam and

shall continue in this position only till such

time the current board is expanded. I am now

prepared to subject myself to the laws of land

and face consequences thereof.‖

Yet, around the world, Satyam employees

were not prepared to subject themselves to the

consequences. Tainted, disgraced, beleaguered,

scam hit, scandalized, fraudulent, crisis ridden

were the adjectives used to refer to the once

iconic brand of ―India is IT‖. Putting the

scale and impact of Satyam‘s downfall in

proper perspective was The Economist‘s cover

story ―India‘s Enron‖; Business Week Maga-

zine featured Raju on the cover with the head-

line ―From Icon to I Con‖.

As an Indian-headquartered organization, Sat-

yam was entrenched in a hierarchical, largely

patriarchal culture. Servant attitude was the

norm. Decisions were made by the most sen-

ior leaders or those with perceived authority

due to longevity or seniority with the organi-

zation. Since 2005, a sea-change had oc-

curred, or so we thought, from this patriarchal

to a consensus oriented leadership culture.

That is until communication from our foun-

der, Ramalinga Raju, diminished in the

months prior to the fateful confession. Em-

ployees were lost without direction and only a

few leaders had the courage to step forward.

During a corporate crisis, it‘s critical that lead-

ers rapidly and proactively convert emotions

into actions. Everything speeds up—change

while constant is even more prevalent. Emo-

tions, processes, demands, measures, increase

as more is expected from everyone. Everyone

juggles the daily needs of the business, cares

for the wounded, and concurrently help to

pick up the shattered pieces. Leaders must

concurrently take care of themselves and eve-

ryone else. This takes time, patience, empa-

thy, and willingness to shift priorities. Lead-

ers need to lead ―out loud‖, be transparent,

maintain their integrity and be approachable.

After Ramalinga Raju‘s confession, the entire

situation was surreal. We instantly went from

hero to zero. So began the journey towards a

new strategy for leaders that included behav-

iors, competencies and expectations to control

the damage and rebuild that which could be


15

rebuilt. Leaders went on auto-pilot when it

came to business management. However, these

same leaders were unsure of how to handle the

people and relationship issues. They went to

work assessing the situation, implementing

customer retention and shoring up the busi-

ness. Their focus on the people and relation-

ship dimensions of the situation was far less.

It was not due to lack of desire. It was more

about the lack of comfort that comes from

having to communicate, empathize, and sup-

port people throughout a difficult time. The

approach that works best in this situation is

leading through learning. It is simple and

powerful. Leverage learning to assist leaders

with the complicated people and relationship

dimensions of the business. Start by develop-

ing a set of leadership guidelines. Here is an

overview of eight of the guidelines we devel-

oped to communicate, teach, and coach lead-

ers as they weathered the storm.

We will NEVER get back to normal.

Normal? What‘s normal? The organization

you knew prior to these turbulent times will

never return. Can‘t imagine why anyone would

even want to return to ―that normal.‖ Life for

all of us will never be the same. Yet, there is a

new road ahead, even though we are yet to

find it; it will be there.

Find ways to take care of each other.

Look for ways to take care of each other. First

and foremost, express your feelings. Allow

other to express their feelings without judg-

ment. Words like hurt, cheated, shock, disbe-

lief, sad, anxious, ―how did this happen‖, and

―am I going to lose my job‖ will be spoken.

Let them flow. People need to verbalize their

thoughts and feelings to work through them.

Now is the time to come together in commu-

nity. Bring everyone together and have them

talk about where they were when the news

first came out. Go out to lunch with your col-

leagues, take a walk together, gather in a con-

ference room to share stories—togetherness is

healing.

React, pause, and then, respond.

The typical reaction to crisis is fight or flight.

Each of us must face our own inner and exter-

nal turmoil. Each of us must decide how to

respond to what has happened. No matter

your ultimate response, it will be the right one

as long as it stems from integrity, an open

heart, and seeking to understand. No one has

the right to judge anyone‘s choices.

Even when you don‘t believe there is

much to say, there is much to say.

Hold daily updates. Even when there wasn‘t

much news to report, people still have ques-

tions. They feel connected by being able to

have regular access to their most senior lead-

ers. Even when people are repeating your

words to each other and to you, keep commu-

nicating. This consistent and continuous mes-

saging will prevent the rumor mill from being

able to have any fuel.

Now is not the time for Hide ‗N Seek.

BE VISIBLE. Now is not the time to hide

away at home or in your office. Open your

doors, get up from your desk, walk and talk

with people. Let them know you care. About a

week ago, one of my colleagues sent me this

quote authored by benami (i.e. I tried to find

out who wrote it and couldn‘t). "They don't

care how much you know until they know

how much you care." Listen, empathize, share

your advice, provide words of comfort or just

be there. Yes, you may be injured; we all are.

As leaders we must be there to inform, com-


16

fort and provide strength for others.

Leaders are human too.

During turbulent times we all go through a

lot. We are hurt, damaged, worried and that‘s

just the tip of the emotional iceberg. Some-

times, you may not be at your best. On a re-

cent day, no matter what anyone did, it did

not please me and I let them know. You will

have good moments and bad moments. Re-

member, leaders are human too. If you express

anger or act out as a result of your own tur-

moil, soon as you realize it, apologize and

move on. Do not beat yourself up or see your-

self as less than.

Spend time with children.

Does it seem out of place advising leaders to

spend time with children during a crisis? Not

really when you think about it. Children do

not carry the same burdens as adults on their

shoulders, they live more for today, for now,

for the moment and especially younger chil-

dren are constantly playing. They may sense

your sadness or your turmoil and if you allow

yourself, you will soon be running around

with them. The time will pass and you will

have a much needed mental break. Try it, this

one works!

Take care of your emotional, physical

and spiritual well being.

Your health - emotional, physical and spiri-

tual - is very important now. Don‘t put any of

them on hold. You will feel like ignoring your

own needs, but don‘t. Calm your mind at

night and get a good night‘s sleep. If you need

to talk to someone, seek a counselor or a

coach. Start or continue an exercise routine.

Be more mindful of your diet. And, look for

the comfort that comes from following your

own spiritual path. Continuously remind

yourself and your people of this simple yet

profound message, told to us by Howard

R i c h m o n d M . D .

(www.howardrichmondmd.com), ―Don‘t let

the news of today undo the successes of yes-

terday or tomorrow.‖

Following these guidelines, using them in

coaching conversations and integrating them

into learning messages is one way to have im-

pact that is long remembered when the com-

pany finally emerges from the darkness.


16

17

The performance of any Government can be

tested by the efficiency of its judicial system.

The Indian judicial system is known for its

impartiality, independence and justice-

oriented approach. The first duty of any court

is to do justice, but in the process to perform

it in the most democratic fashion. Today new

frontiers are challenging its capabilities and its

way of functioning. India currently is facing

shortage of ―Judicial Officers‖ to handle the

number of cases that have been filed and have

accumulated over time. The seriousness of

this situation should be realized and the Gov-

ernment should pro-actively use Information

Technology (IT) to make eJudiciary an inte-

gral part of its judicial system.

eJudiciary can be defined as a judiciary system

that uses internet and electronic documenta-

tion from the time the case is registered till it

is disposed off with judgment and can be used

again for future reference. An ideal eJudiciary

system for any country at a given point of

time should be compatible with the socio-

economic factors of that country at that point

of time.

The increasing backlog of cases is a threat to

our judicial system; official figures revealed

from the Home Ministry‘s Department of

Justice states that the Allahabad High Court

had around 1.09 million pending cases and

the Supreme Court of India had a total of

39,780 civil and criminal pending cases at the

end of 2007. In the Indian context, this is a

clear violation of ―Right to Speedy Trial‖ as

conferred by Article 21 of the Constitution of

India. The Supreme Court has realized this

and an e-

committee has

been formulated.

This committee

has initiated

steps for the

computerization

process of the Supreme Court and other

courts. However, we should not limit the ad-

vantages of IT by mere computerization, but

capitalize on the other benefits of IT in a

phased manner as per the feasibility and main-

tain user friendliness for judges and advocates

who would be the main users of this system.

In order to have an effective eJudiciary Sys-

tem, the following steps might help:

Initially, proper training regarding the use of

IT should be imparted to judges and advo-

cates before capitalizing on the benefits. Their

reluctance to accept this change can be de-

creased if the long-term perspective is taken

into consideration.

With the help of interconnectivity, the data

can flow to a central computer from where

"Certified Copies" of the concerned docu-

ments are made available. Further, cause lists,

names of the judges, court numbers, name of

the advocates etc. should be available on the

internet and the information should be up-

dated regularly. This step could reduce the

personal interface of citizens and business

with public service providers, cutting delay,

bureaucratic red tape, corruption and harass-

ment besides increasing the speed of response

The information to the general public can be

POTENTIAL OF e-JUDICIARY IN INDIA Mayank Saxena


18

made available through information kiosks in

an unbiased manner so that the underprivi-

leged sections of the society can access infor-

mation as and when required.

Beyond this, the presence of crucial witness

through video conferencing can be used on a

wider scale; it has already been started in some

regions.

The medium of the Internet

can be used for filing of cases,

bail applications, serving of

notices etc. This will enhance

transparency and accountabil-

ity by making information

available to citizens through

websites, reduce information

monopoly, simplify processes

and empower citizens to put

pressure on public officials to

deliver performance

The paper records of the pro-

ceedings are difficult to track,

store, manage, produce and

reproduce on desired occa-

sions; in some cases, these

could be destroyed due to

natural calamities and their

reconstruction might not be

possible. Under such a cir-

cumstance, the court has no

other option but to acquit the

accused. An electronic record

is not only durable but can be

easily tracked, stored, man-

aged, produced and repro-

duced as well.

The Indian Government has realized the ad-

vantages of eJudiciary and taken some vital

steps towards it. Presently, the Supreme Court

has undertaken "e-courts" efforts in three

phases as a mission mode project under the

National e-Governance Plan (NeGAP) to link

about 15,000 courts from the District Court

to the Supreme Court through a Wide Area

Network. A plan to provide required infra-

structure and concentrate on capacity-

building, judicial process from filing to execu-

tion, and finally making the information avail-

able online between the courts, prosecuting

and investigating agencies, prisons, land-

records and registration offices is also under-

way, leading accelerated disposal of civil and

criminal cases. Our former President, A.P.J.

Abdul Kalam, had suggested the creation of e-

Systems Corner

Photo By: Michael Lehman


19

judiciary by establishing "Judicial e-

Governance Grid" from the district courts to

the Apex Court in order to cover the whole

judicial system in the country. There are some

provisions in the IT Act, 2000 which are in-

evitable for the smooth functioning of the jus-

tice system like legal recognition of e-records,

legal recognition of digital signatures and re-

tention of e-records. There are some High

Courts whose websites display the daily cause

list, the judgment delivered and information

that is useful to the citizens.

There are some crucial challenges, which the

Government needs to resolve in order to have

a proper eJudiciary in place. The biggest chal-

lenge is the lack of ―E-readiness‖ on the part

of senior judges and advocates who are com-

fortable with the traditional mode of impart-

ing justice. The implementation of IT shall

bring along challenges related to security of

data and infrastructure, which shall be re-

solved with time as the system matures. Ini-

tially, the Government might be reluctant to

invest in the system but if it considers the re-

turn on investment with a long term horizon

introducing IT will be lucrative for the pre-

sent judicial system.

The impact of an effective eJudiciary can also

be seen in developed countries like Singapore,

which is currently well known for its eGov-

ernance model and long regarded as one of the

world‘s least corrupt countries. The e-Courts

System of Singapore has incorporated cutting

edge technology to provide for the most con-

ducive and effective courtroom environment.

It has seen the implementation of leading

technologies like Digital Transcription System

(DTS), Electronic Queue Management Sys-

tem (EQMS) and Electronic Signage System

(ESS) to improve the efficiency of cases in the

new Supreme Court building. The Supreme

Court uses its web portal to improve accessi-

bility to justice by providing more informa-

tion on court procedures and judgments as

well as services in a user-friendly manner. Be-

sides eJudiciary, there are about 1,600 Gov-

ernment services readily available over the

internet in Singapore. This plays a key role in

developing Singapore‘s knowledge-based

economy and at the same time provides effec-

tive services that engage citizens and enhance

Government transparency

The system of eJudiciary exists in India; it

however needs to be updated and upgraded to

meet current challenges and technological

needs. The Government needs to test various

standards and policies over a period of time to

make them compatible with Indian socio-

economic realities. India and its populace

(both rural and urban) would need to acclima-

tize themselves to a digital environment; the

future is moving towards a completely online

environment. The standards set by foreign

countries, particularly developed nations, must

not be followed blindly rather they must be

made compatible with the Indian environment

before the application can take place. eJudici-

ary is not just the computerization of stand-

alone back office operations: it is a means to

fundamentally change how the Government

operates and dispenses justice and implies a

new set of responsibilities for the governmen-

tal machinery.

Mayank Saxena, after completing his Engineering

from NIT, MBA from Symbiosis, Pune, Course

in Bremen University, Germany and gaining pro-

fessional experience as Industry Analyst in Multi-

National Consultancy, he is currently mentoring

students at Under-Graduate and Graduate Levels.


20

INTERACTIVE BRANDING Paritosh Kashyap | TAPMI

The term ―Marketing‖ might have been

coined during the dawn of the 20th century

but the idea has been prevalent since thou-

sands of years. Similarly, customers are also

not a recent phenomenon; they would have

been active since the first transaction was

made. In the past century, the realm of mar-

keting underwent constant evolution as a dis-

cipline. In the

initial days,

marketing was

a push con-

cept, where

there was a

constant ten-

dency on the

parts of the

firms to push

their prod-

ucts/services

to the custom-

ers. In 1953,

with ―Neil

Borden‖ coin-

ing the term ―Marketing Mix‖, (4 Ps of mar-

keting that is: Product, Price, People & Pro-

motion) marketing took a leap as a discipline.

In the 60s, Theodore Levitt came up with the

theory of ―Marketing Myopia‖ that for the

first time attempted to consider seriously the

Customer Factor in marketing. In the coming

years, the significance of customers in the for-

mulation of marketing strategy by individual

firms kept on increasing and 4Ps of marketing

got transformed to the 4Cs (Consumer, Cost,

Convenience, Communication). In the 21st

century, as computers and the internet tech-

nology penetrated individual households, cou-

pled with a plethora of popular Websites, So-

cial networking sites, E-portals, Online com-

munities etc., the realm of marketing is under-

going a new paradigm shift. Now the cus-

tomer is not only the central focus of the mar-

keting strategy, but is also the most active

player of the branding exercise conducted by

individual firms.

I n t e r a c t i v e

Branding

American Mar-

keting Associa-

tion(AMA) de-

fines a brand as a

"name, term,

sign, symbol or

design, or a com-

bination of them

intended to iden-

tify the goods

and services of

one seller or

group of sellers and to differentiate them

from those of other sellers‖. In reality, brand

is much beyond that. Brand resides within the

hearts and minds of customers, clients, and

prospects. It is the sum total of their experi-

ences and perceptions, some of which you can

influence, and others you cannot. These days

with the help of Websites, E-manuals, E-

brochures, Multimedia presentations, Click-

able add banners etc., the interactivity between

the customers and the firm has increased

many fold. While the customer gets a better

brand experience, the firm understands the


21

behavior, interests and tastes of the customer

in a better way. These interactive tools can

also provide a good insight into the cus-

tomer‘s geographic location as well as demo-

graphic profiles.

The new age customer

The new age customer is very different from

his/her previous counterparts. He is much

more intelligent, confident and has much

more understanding of various kinds of prod-

ucts & brands. A stereotypical new age cus-

tomer1, assumed to be exposed to n number of

media channels, is much more tech savvy and

internet friendly way. It can be assumed that

the new age customer has a high sense of indi-

viduality and in this age of consumerism, buy-

ing for him/her is a very involving and fun

driven process. There are around 1.96 Billion

internet users2 across the world. 90% of the

internet users know at least one social media

and every social media user is connected to

195 friends on an average. There are 133 mil-

lion blogs enlisted in the blog directory

―Techorati‖. These facts explain the power

and influence of the new age consumers. The

probability that a new age consumer is also an

author of a blog, which he uses to reflect his

view points, is very high. He might also be a

thought leader in the social media sphere he

influences. He could be a critic who uses these

media platforms to criticize a product he

doesn‘t like, or could be a brand ambassador

who uses these media platforms to promote a

brand he follows. The strengths and skills that

have been acquired by the new age customers

cannot be discounted by marketers. These

customers need to be involved actively in the

branding processes.

Crisis in Mass Marketing

Given below are some of the statistics that

describe the crisis in mass marketing:-

Only 18% of TV advertisements create

positive ROI

Average return on every one dollar spent

on advertising using mass media was just 54

cents

TV advertising cost has increased by

256% in the past one decade

90% of people who can skip TV ads do

skip it

65% of people believe that they are con-

stantly bombarded by TV ads

Only 14% of people trust TV advertise-

ments

56% of people avoid buying products

from company who they think are advertising

too much

Advantages of Interactive branding

With the help of better music, videos,

texts and pictures it engages the customers

more effectively.

With the help of Web 2.0 platform there

can be a direct communication between the

firm and its customers. Customers can com-

municate their requirements, expectations, re-

sponses and of course, their judgment to

firms.

Web 2.0 platforms provide effective plat-

forms for the customers & consumers all

around the world to come together and col-

laborate.

Clicks on web pages can be traced back to


22

get insights about the profile, location, choices

and behavior of customers.

With the help of tools like ―Google Analytics‖

large amount of data collected over a period of

time can be analyzed and processed to derive

consumer behavior pattern.

These tools help in figuring out the degree of

involvement of individual customers. Data like

time spent on web pages, comments posted, and

the no. of revisits made, give a very clear-cut un-

derstanding of an individual customer‘s involve-

ment with a brand. This can help firms in pro-

filing their customers.

In comparison to regular mass media such as

news papers, magazines, and television commer-

cials, these web based applications and platforms

are much more economical.

In the time of economic downturns, when the

regular advertisement budget gets cut down, In-

teractive branding can provide an economical

and effective alternative.

Social Media

Social media websites like Facebook, Orkut,

BlogSpot, LinkedIn etc. play a very important

role in Interactive branding. Social media are

cost effective, have a wide range and better reach

and can boost immediate sales by engaging the

customers. Social media provide platforms for

like-minded people to interact with each other

irrespective of the geographical boundaries. One

of the biggest advantages of social media is that

they help in communicating the right message to

the right audience. Given here is a table that de-

scribes the influence of some of the most popu-

lar social media websites, with the help of latest

statistics.

Implementation of Interactive branding

Interactive branding is a relatively new concept

and there is a dearth of strategic models to im-

plement it. One of the models that explain it is

the ―COCHA‖ model.

Concept: Any online material needs to have an

appropriate concept - a concept that communi-

cates the brand essence and tells the brand story

well.


23

Content: It should have a very engaging content

with a right mix of text, images, videos, music,

software etc. that can help Fig 2: The figure de-

picts the 5 Cs of Cocha model users interact

with it.

Channel: Rather than being a monologue me-

dium (click ads), it should facilitate communica-

tion between the website and the users. This can

be implemented with the help of social media,

chat gadgets, e-mail etc.

Context: Should target the right customer at the

right time and right place. Should fit their inter-

est and use their language.

Consumer: It should facilitate firms to extend

and tighten the communication link with the

target consumer base. Consumer bases can be

defined with the help of profiles, communities,

tastes, needs, motivations etc.

Conclusion

The new century heralds a paradigm shift in

branding. In the current economic crisis, where

advertising budgets are getting cut down drasti-

cally and mass media channels are losing their

effectiveness day by day, firms need innovative

ways to promote their brand. Innovative ways to

engage and capture target customers in cost ef-

fective ways are required. Interactive Branding

provides one of the ways to achieve this. It helps

the new age customer to interact directly and

collectively with the firms. The new age custom-

ers, who are equipped with the best of media

tools and gadgets and have much more knowl-

edge in contrast to their previous counterparts,

just don‘t want to have a passive role. They want

active involvement in the brand building process.

This further signifies the importance of

―Interactive Branding‖. Having said this, it does

not mean that regular mass media channels are

not important, they are surely going to exist but

the time has come where firms need to have a

right mix of regular branding tools as well as

innovative tools like ―Interactive branding‖

References:-

1. World Internet Usage And Population Sta-

tistics, Internetworldstats.com, June 2010,

http://www.internetworldstats .com/

stats.htm

2. InSites Consulting, 13 Mind-Blowing Facts

On Social Media 2010, Omgzam.com, Janu-

ary 2010, http://omgzam.com/13-mind-

blowing-facts-on-social-media-2010/

3. Phillip Winn, State of the Blogosphere

2009 : Introduction, Technorati.com, Au-

gust 2009, http://technorati.com/

blogging/article/state-of-the-blogosphere-

introduction/


http://www.internetworldstats.com/stats.htm

http://www.internetworldstats.com/stats.htm

http://omgzam.com/13-mind-blowing-facts-on-social-media-2010/

http://omgzam.com/13-mind-blowing-facts-on-social-media-2010/

http://technorati.com/blogging/article/state-of-the-blogosphere-introduction/



24

JUST IN TIME TRAINING SYSTEMS

J.Krishnan | TAPMI

Introduction

It is often said that a leader is only as good as

his followers. Thus, it becomes important that

the team you lead is good enough and capable

of rising to the challenges posed by the fast

paced and dynamic environment

today. It is for the same reason,

that training, learning and

development assumes

great importance today

for every organization.

We all understand that

training is the

essence of adding

value to the human

resources in a firm.

However, the ROI

on traditional

training systems

have always

remained

suspect. More

often than not, the

managers wonder whether

companies are getting

true value for the money

and they suspect whether

any actual knowledge transfer

is taking place via CD and

classroom training sessions. However,

as managers, it becomes critical to

see to it that such huge investments made

must have the desired payoff. How do we en-

sure the effectiveness such that these become a

strategic investment more than a routine ex-

pense?

It will be useful to examine the traditional

model in order to arrive at answers to such

questions.

The traditional model usually delivers stan-

dard content, in a passive environment. Often,

it happens in the form of a

lecture where students get

involved in discussions albeit

in a passive mode. The lecture

is also designed with a

one size fits all

approach, since the

content of the lecture

remains the same

for every student.

This model is effi-

cient for teachers

but the effective-

ness and utility of

such knowledge

transfer methods

remain suspect as

more often than not,

the employees rely only

in experience and less

on the learnings to be

applied when the situations

arise. Research shows that

70% of the information learnt

on training courses is forgott-

en by the time the need arises.

JUST IN TIME TRAINING

Just In Time Training (JITT) is a new man-

agement education paradigm that changes the

traditional approach. This model attempts to

move from being a lecturer focused system

Operations Bonanza Pratibimb | Dec. 2010

25

that works efficiently for the teacher to a stu-

dent driven system that works effectively for

students, making them participate actively.

The new model focuses on learning. It pro-

vides a person with the information they need

for doing their job just when it is required,

thus shortens the time between learning and

application. Often in the form of e-learning,

this training can be

delivered to the user‘s

place of work, meaning

training can be

delivered when and

where it is required.

Companies can make use of

technology to create just-in-time

learning and decision support

systems that harness and

disseminate the knowledge of the

organization and help

employees work well and

help managers take

better decisions while

learning. This model

achieves its goals by

moving from standardized to

customized content, and from passive lecture

models to active and applied learning. Instead

of putting managers and employees into the

constraints of educational programs, the new

model focuses on designing education tailored

to the needs of students.

Let‘s see how it works in practice. Suppose a

manager going through a decision support

system incorporating an educational compo-

nent and is asked a question about "inflation‖.

If the manager doesn‘t fully understand the

concept, he can check a learning module that

explains the concept before returning to the

problem. Hence the education happens just in

time as and when the application demands the

knowledge.

For a work place to shift from a traditional

model to the JITT, it will require a shift in

the learning paradigm and culture along the

following dimensions:-

1. Shift to Customized Educational Content:

Where traditional programs offer

standardizeid content

the new program must

offer customized

knowledge based on

the individual‘s back-

ground, interests and

learning styles.

2. From Passive to Active Learning:

The classroom model of education,

and even some CD-ROM and online

programs are based on

a broadcast model in which

knowledge from the

presenter is

communicated

to the student. The

new model is active,

where the students

have to apply the knowledge on real problems

based on the situation and context.

3. From Fixed to Fluid Time and Place: Tra-

ditional learning is delivered in a specific loca-

tion at a specific time while the new technol-

ogy allows students to learn anytime, anyplace

and as and when convenient for them.

Institutions need to change their pedagogy

models to deliver this .

JITT as the Panacea

However, this doesn‘t mean that the tradi-

tional model should be completely done away

with. JITT is not a panacea and comes with

its own drawbacks such as the following:-


25

26

JITT is usually web based and it usually

makes too much training available when

time available is limited. This is partially

true if the training is not specifically tar-

geted to the requirement.

The place of work is not always the best

place to learn, with the possibility of dis-

tractions being much greater. Taking a

user away for a training course can often

remove the distractions and engender a

better mental state for learning.

There could also be an issue with people‘s

learning styles. If the users want to learn

through practice (without the knowledge),

this can reinforce their desire to complete

the task. In this case, the use of simulated

task practice may encourage the user to

look for the information before attempt-

ing the task.

Combining localized, face-to-face interactions

which are a part of the traditional model

along with the more customizable and port-

able components that comes with the JITT

systems can make the learning systems much

more powerful than when each are taken in-

dividually. One needs to understand that

learning becomes the means to an end, which

is to assure that the organization can consis-

tently provide value by adapting to and driv-

ing change in the turbid and dynamic environ-

ment.

REFERENCES

1.‖ JIT Education: Learning in the Global

Information Age‖- Knowledge@Wharton

(2000)

2.‖Just in Time Training‖ :Larry Brown

(2009)

3.‖Inspectable user models for JIT workplace

training‖:Jason A Collins &Jim Greer(1997)

4.‖Point of Use Information‖:J. Woodford

(2004)


27

CLOUD COMPUTING

Rahul Garg | TAPMI

Introduction

Did you upload your photos on any social

networking site, this week, to share it with

your friends? Where, do you think, these pho-

tos get stored? Do you use Windows Live

SkyDrive to store your files? Where do you

think are all those mails that you sent to or

received from your friends?

There are many such instances where the stor-

age is on virtual machines and you can access

the stored content anytime without storing it

on your computer. Similar is the concept of

‗Cloud Computing‘, an emerging technology.

Cloud Computing can be defined as a net-

work driven utility, to provide applications

over the internet or, for hardware and soft-

ware support from large datacenters.

Cloud Computing has the potential to revolu-

tionize the IT industry. The services offered

over the internet are also referred to as SaaS

(Software as a Service), hence, cloud comput-

ing is confined to datacenter hardware and

software. Developing a datacenter is a capital

intensive process. Through cloud computing,

you do not have to own the whole datacenter,

though you can use the services and capacity

as and when needed, hence, saving a lot of

capital that is required for building such data-

centers.

Broadly, clouds have been classified into 3

types: public, private and hybrid clouds. Pub-

lic cloud is one in which a service provider

builds resources and makes them available to

the general public. It may be free of cost or

offered on a pay-as-you-use basis. Private

cloud is made available only to specific or-

ganizations. It is maintained by the vendor or

the organization itself. Hybrid cloud is main-

tained by both the internal as well as external

service providers.

Who should go for Cloud Computing?

Small companies having limited capital can

use Cloud Computing to have their data-

centers on a rental basis. Amazon charges

$0.15 to $0.18 per GB-month of data stored

on Amazon EBS snapshots. Data transfer in

Amazon EC2 is free as of now while moving

data out over internet costs $0.08 to $0.15

per GB.

Any company which is not willing to risk

blocking large capital in hardware, that may

become obsolete later, can opt for Cloud

Computing, to reduce the risk.

Companies which face variable demand of

hardware and software can use Cloud Com-


28

puting to fulfill peak demands.

What is the advantage for Cloud Com-

puting providers?

Economies of Scale: The cost of operating a

very large datacenter can come down to 20%

of the cost of operating a medium size data-

center, per unit capacity. This is possible be-

cause of low power costs, low network band-

width and less fixed costs per machine.

Existing Investment: Large companies which

already have huge datacenters can use them for

providing support to other companies also.

Most of Amazon‘s web services were initially

developed for its own use.

Increasing Customer Base: Not only does

cloud computing help the companies using it,

it can also help providers in increasing their

customer base and may result in additional

business as well.

Site Advantage: Cloud computing datacenters

are purposely located at locations which have

the advantages of low costs of electricity, la-

bor, plant and property costs etc. Clients lo-

cated in metro cities have to pay exorbitant

amounts to run their own datacenters, which

cloud providers take advantage of and make

their datacenters available at lower prices.

Advantages of Cloud Computing for

the users

Risk Mitigation: Though the overall cost of

cloud computing may be higher than the cost

of setting up your own datacenter over the

useful life of the datacenter, there are other

intangible advantages which make cloud com-

puting an invaluable proposition. Real de-

mand has huge crests and troughs. During the

peak demands which exceed your datacenter

capacity, the cost of losing a customer does

not only include the lost profit but also the

repeat orders from the lost customers, loss of

reputation in the market, etc. To mitigate this

risk, cloud computing provides an advantage

of adding extra capacity at very low costs and

in nearly negligible time.

Thwart of DoS Attacks: One more way of

network unavailability could be through De-

nial of Service (DoS) attacks, a contrived ef-

fort of a person or a group to prevent an

internet site or service from functioning. Bo-

gus network bots are produced to overload

the server and make the website unavailable.

Through cloud computing, the instances to be

handled can be increased by adding the servers

and thwarting the effect of DoS. Adding to

this, such an attack is likely to cost higher to

the attacker than the victim.

Cost Advantage: Through usage based pricing

model, the capital required at any point is very

low and hence the capital can be invested in

other useful activities.

After making a few modifications in the equa-

tion given by Berkeley, we deduced that a user

should go for cloud computing when,

UserHoursCloud X (Revenue – CostCloud) ≥

UserHoursDatacenter X (revenue – Variable Cost

per hour – Fixed Costdatacenter/Utilization)

Flexibility: The hours you use the technology

may vary on a day to day basis and you just

need to pay for the hours used. In case of set-

ting up an individual datacenter, the capacity

should be enough to serve the customers dur-

ing peak hours. Thus on average days, the

datacenters are 5 - 20% utilized. Planning for

the peak usage requires lock-in of more capi-

tal. Animoto, a web application which con-

verts photos, video clips and music into amaz-


29

ing and unique videos, made the service avail-

able via Facebook. The Cloud Computing

services provided by Amazon Web Services

made Animoto to scale from 50 servers to

3500 servers owing to 750000 sign-ups in

just three days within one month of the

launch. During peak hours, almost 25,000

people tried Animoto. You can imagine how

difficult it would have been if Animoto had to

handle all the users from its own datacenter.

Challenges

Data Transfer: One of the greatest challenges

of cloud computing is in transferring data.

Data transfer is free until November 1, 2010,

but it would cost $0.10 per GB later.

The table below gives the charges of transfer-

ring data out of EC2 server in Asia-Pacific.

Thus, the charge of transferring data from EC2 server varies between $120 and $190 which will be further increased by $100 for transferring into EC2. This problem looks worse when we consider the time taken for transferring data. Through easy calculations, we can show that for transferring 1 TB of data with a 20 Mbit/sec internet connection, it would take nearly 4.5 days. When the data to be transferred increases and when we are expecting quick outcomes of that data, cloud computing looks like an unviable option. One way to overcome this problem could be by transferring data to the server location using hard discs, through shipping, courier etc.

Security Issues: Usually people think that cloud computer offerings are publicly expos-

ing the data to more risk. Owing to this belief, companies do not share the sensitive data over

the cloud server. But cloud computing center can be as secure as an in-house datacenter. You may also store encrypted data on cloud.

Non-Availability: Any system is liable to fail and cloud computing providers are not an ex-ception to this. Amazon EC2 offers up to 99.95% reliability. However, if your own datacenter fails, the recovery or the risk could not be passed to others. In case of cloud com-puting, the risk could be passed to other net-work providers. A possible way to avoid this could be the use of multiple network provid-ers.

Hence, the advantages and a few challenges of the emerging technology of Cloud-computing have been put forth. How this technology is used in future, remains to be seen.

References:-

1. Michael Armbrust, Armando Fox, Rean Griffith, Anthony D. Joseph, Randy H. Katz, Andrew Konwinski, Gunho Lee, David A. Patterson, Ariel Rabkin, Ion Stoica, Matei Zaharia, Above the Clouds: A Berkeley View of Cloud , UC Berkeley Reliable Adaptive Distributed Systems Laboratory, February 10, 2009

2. Jason, Amazon.com CEO Jeff Bezos on Animoto, animoto.com, April 21, 2008, http://animoto.com/blog/company/amazon-com-ceo-jeff-bezos-on-animoto/

3. Amazon Elastic Compute Cloud ( A m a z o n E C 2 ) h t t p : / /aws.amazon.com/ec2/

First 1 GB per Month $0.00 per GB

Up to 10 TB per Month $0.19 per GB

Next 40 TB per Month $0.15 per GB

Next 100 TB per Month $0.13 per GB

Over 150 TB per Month $0.12 per GB


30

PAIR TRADING

Sulagn Patanaik | TAPMI

―Markets can remain irrational longer

than you can remain solvent‖

-John Maynard Keynes.

Scary isn‘t it? How often did

you curse yourself for investing

in a stock which plummeted

into the abyss?

How often you question the

integrity of ‗Efficient Market

Hypothesis‘? You are not alone.

Every investor dreams of having

a portfolio which will always

be on the greener side no matter

which way the Sensex or Nifty moves. Is it

feasible to have such a portfolio? Welcome to

Pair Trading!

Pair Trading

Pair trading is a non directional, relative-value

investment strategy that seeks to identify two

companies with similar characteristics whose

equity securities are currently trading at a

price relationship that is outside their histori-

cal trading range. This investment strategy

entails buying the undervalued security while

shorting the overvalued security, thereby

maintaining market neutrality.

Market Neutrality

In Market Neutrality the

portfolio return is the

net return from the

short and long positions.

This is what every investor

looks out for. Whether the

market is bullish or bearish I should get

profit.

In a market-neutral strategy, the return on the

portfolio is the sum of returns on the securi-

ties that are held long and those that are held

short. Net performance for the overall portfo-

lio will be close to zero because for every

move up or down in the long portfolio, there

will be an offsetting move in the opposite di-

rection for the short portfolio. But in a man-

aged market-neutral portfolio long portfolio

gives us higher returns in a bullish market and

short outperforms long in a bearish market.

This creates a consistently positive return re-

gardless of market conditions. We can achieve

market neutrality by either making equal

amount of investments in both the long and

short shares, called Share Neutrality. The

other way is making the portfolio beta neutral.

Now the big question coming to your mind

would be HOW to select stocks which will

make your portfolio market neutral and you

can do pair trading . The first step involves

selecting the right pair.

Selecting the Pair

The success of a pair trading strategy depends

on the choice of pairs. Pairs can be formed

among securities, currencies, bonds, etc whose

historical prices are correlated. For stocks,

pairs can be shares of two companies in same

(or related) sector. In case of foreign exchange

it can be currencies of countries having good

bilateral trade relations.

Before selecting a pair I would suggest that


30

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you should select a sector first.

Being a software engineer my instincts made

me select the IT sector .After that you

identify stocks which have very

high degree of correlation.

For this you need to find the

correlation coefficient between

all the possible pairs that can

be formed in that sector. Pairs

having a correlation

coefficient of more than 0.95

are good candidates.

A test for Co-integration can be

then carried on the potential pairs.

―If two or more series are themselves

non-stationary, but a linear

combination of them is stationary,

then the series are said to be co-integrated‖

The term co-integration was coined by Engle

and Granger. Let yt, and xt be two non sta-

tionary time series. If for a certain value g, the

series yt – γxt is stationary, then the two series

are said to be cointegrated. Some real-life ex-

amples of co-integration in economicsare con-

sumption and income, short-term and long-

term rates, the M2 money supply and GDP.

Yt -Yt-1 = -α (Yt-1 - γXt-1) + Vt is the co-

integrated series with α as the co-integration

co-efficient.

Co-integration can be tested using much avail-

able software. I used Gretl to perform the test.

Now once we have two stocks which are co-

integrated we are ready for the fun.

Trading Strategy

One of the most popu-

lar strategies, which

Wall Street veteran‘s

use, is trading on Ratio. I

collected historical data from NSE for the last

2 years on my selected pair. Then I applied

the following steps on the data:

Ratio of price of two shares forming the

selected pair was calculated

over last twenty four months

Average of ratio over last twenty four

months was calculated

Standard deviation of the above series was

calculated

Upper bound is calculated using the fol-

lowing formula:

UB = Mean + SD

Similarly lower bound is calculated as fol-

lows:

LB = Mean - SD

Trading Signal

Since we know that both the stocks are co-

integrated, their ratio should be mean revert-

ing. In simple terms if I notice that the price

ratio is at a point which is quite far from the

historical mean I expect it to revert back to

mean.

Once the mean, upper bound and lower

bound are calculated we track for trading sig-

nal to enter into transaction. Entry signal is

triggered when the current ratio of price

crosses either the upper bound or lower

bound from inside the band. A trade signal to

exit is triggered when the ratio crosses back

from outside the band towards the mean of

the band and crosses the mean.

The above graph shows the historical ratio

(Oracle/Polaris) over last 2 years. When the

ratio crosses the upper bound then I short the


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numerator i.e. Oracle and Long Polaris. This

is because the ratio will revert to mean as the

two stocks are co-integrated. Hence, Oracle

Price will come down and Polaris will move

up. If ratio crosses the lower bound then we

Long Oracle and Short Polaris. In each case,

we exit trade when the ratio crosses mean.

I entered trade on 12th May 2010 when the ratio was less than the lower bound. On 25th May 2010 the ratio increased to 12.31 and I had a profit of 5.87%. The same day, ratio crossed the mean of 5.72 which was the signal

to exit from the trade. The below graph shows the Nifty movement in same period

In spite of the Market fluctuation I could make a profit of 6 % in 12 days. Thanks to Pair Trading!

But pair trading brings with itself its own

risks. Extensive data mining should be done to

select the right pair. But still the forces of

―Greed and Fear‖ will play its role. One ad-

vice to all the investors ―You don't have to be

absolutely right on a trade in order to make

DATE ORACLE POLARIS RATIO RETURNS RETURN %

12-may 2024 185.7 10.8993

14-May 2125 181.55 11.70476 729.1 3.65

17-May 2123 178.1 11.92027 905.4 4.53

18-may 2100 175.55 11.9624 928.1 4.64

19-May 2055.5 172 11.95058 897.3 4.49

20-May 2074.3 171.55 12.09152 1015.6 5.08

21-May 2050.45 172.45 11.89011 847.75 4.24

24-may 2081.65 172.55 12.06404 998.35 4.99

25-may 2052.95 166.65 12.31893 1173.45 5.87

26-May 2075.65 174.1 11.92217 884.65 4.42


33

money in the stock market. You only have to

be more right than wrong.‖

Image Courtesy: Jenny Downing


34

Contact Us: [email protected]

Visit: www.tapmi.edu.in/html/pratibimb.html

Team Pratibimb TAPMI, Manipal

http://www.tapmi.edu.in/html/pratibimb.pdf

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