CORPORATE ETHICS & GOVERNANCE

Dear Readers,
Its about Management Perspective,

Ethics, also known as moral philosophy, is a branch of philosophy which seeks to address questions about morality; that is, about concepts such as good and bad, right and wrong, justice, and virtue.


Business ethics, also known as corporate ethics, is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole.

Corporate Governance is about governing, directing, administering, and controlling the activities of company management board in business affairs, for the explicit purpose of safeguarding the confidence & interest of its stakeholders (i.e, shareholders, investors, creditors, government, employees, suppliers, customers and the society as whole) through commitment of values in making distinction between personal and corporate funds. It ensures sufficient accountability and transparency of company management strategic decisions, honestly verified and legally monitored. Company’s CG can influence its share price as well as the cost of raising capital. It actually strengthens the confidence of its investors about exercising their rights of corporate ownership and increasing value of their shares and therefore, wealth.

Relating Ethics and Governance: Key elements of good CG principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization. A corporation should be fair and transparent to its stakeholders in all its transactions. This has become imperative in today’s globalize business world where corporations need to access global pools of capital, need to attract and retain the best human capital from various parts of the world, need to partner with vendors on mega collaborations and need to live in harmony with the community. Unless a corporation embraces and demonstrates ethical conduct, it will not be able to succeed. Corporate Governance is the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed and how performance is optimized. Sound Corporate Governance is therefore critical to enhance and retain investors’ trust. Corporate governance is about ethical conduct in business. Ethics is concerned with the code of values and principles that enables a person to choose between right and wrong, and therefore, select from alternative courses of action.

Why Corporate Governance?
a) The liberalization and de-regulation world over gave greater freedom in management. This would imply greater responsibilities.
b) The players in the field are many. Competition brings in its wake weakness in standards of reporting and
accountability.
c) Market conditions are increasingly becoming complex in the light of global developments like WTO, removal of barriers/reduction in duties.
d) The failure of corporate due to lack of transparency and disclosures and instances of falsification of accounts / embezzlement and the effect of such undesirable practices in other companies.

               It is the increasing role of foreign institutional investors in emerging economies that has made the concept of corporate governance a relevant issue today. In fact, the expression was hardly in the public domain. In the increasingly close interaction of the economies of different countries lies the process of globalization. This involves the rapid migration of four elements across national borders. These are (i) Physical capital in terms of plant and machinery; (ii) Financial capital; (iii) Technology; and (iv) Labor.
             The increasing concern of the foreign investors is that the enterprise in which they invest should not only be effectively managed but should also observe the principles of corporate governance. In other words, the enterprises will not do anything illegal or unethical. This need for re-assurance is felt by the FIIs due to the fact that there have been cases of dramatic collapse of enterprises which were apparently doing well but which were not observing the principles of corporate governance.

              The Kumar Mangalam Committee made mandatory and non-mandatory recommendations. Based on the recommendations of this Committee, a new clause 49 was incorporated in the Stock Exchange Listing Agreements (“Listing Agreements”). The important aspects, in brief, are:
(i) Board of Directors are accountable to shareholders.
(ii) Board controls are laid down code of conduct and accountable to shareholders for creating, protecting and enhancing wealth and resources of the Company reporting promptly in transparent manner while not involving in day to day management.
(iii) Classification of non-executive directors into those who are independent and those who are not.
(iv) Independent directors not to have material or pecuniary relations with the Company/subsidiaries and if had, to disclose in Annual Report.
(v) Laying emphasis on calibre of non-executive directors especially independent directors.
(vi) Sufficient compensation package to attract talented non-executive directors.
(vii) Optimum combination of not less than 50% of non-executive directors and of which companies with non-executive Chairman to have at least one third of independent directors and under executive Chairman at least one half of independent directors.
(viii) Nominee directors to be treated on par with any other director,
(ix) Qualified independent Audit committee to be setup with minimum of three all being non-executive directors with one having financial and accounting knowledge.
(x) Corporate governance report to be part of Annual Report and disclosure on directors’ remuneration etc., to be included.

Naresh Chandra Committee recommendations relate to the Auditor-Company relationship and the role of Auditors. Report of the SEBI Committee on Corporate Governance recommended that the mandatory recommendations on matters of disclosure of contingent liabilities, CEO/CFO Certification, definition of Independent Director, independence of Audit Committee and independent director exemptions in the report of the Naresh Chandra Committee, relating to corporate governance, be implemented by SEBI.

Narayana Murthy Committee recommendations include role of Audit Committee, Related party transactions, Risk management, compensation to Non- Executive Directors, Whistle Blower Policy, Affairs of Subsidiary Companies, Analyst Reports and other non-mandatory recommendations.

10 Essential Governance Principles:
o Lay solid foundations for management and oversight - Recognize and publish the respective roles and
responsibilities of board and management.
o Structure the board to add value - Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.
o Promote ethical and responsible decision-making - Actively promote ethical and responsible decision-making.
o Safeguard integrity in financial reporting - Have a structure to independently verify and safeguard the integrity of the company’s financial reporting.
o Make timely and balanced disclosure - Promote timely and balanced disclosure of all material matters concerning the company.
o Respect the rights of shareholders - Respect the rights of shareholders and facilitate the effective exercise of those rights.
o Recognize and manage risk - Establish a sound system of risk oversight and management and internal control.
o Encourage enhanced performance - Fairly review and actively encourage enhanced board and management effectiveness.
o Remunerate fairly and responsibly - Ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.
o Recognize the legitimate interests of stakeholders - Recognize legal and other obligations to all legitimate stakeholders.
o Corporate Governance Rating be made mandatory for listed companies.

Ethics in managing an organization are vital for long term survival. It is defined as disciplined dealing with what is good and what is bad and what are moral duties and obligations. As far as business ethics are concerned, a minimum code of ethics has to be practiced in competition, public relations and social responsibilities. Corporate Governance encourages ethical standards and sound business practices.

Thanx for knowledge enhancement.
Raghvendra s/o Sandeep Singh
Jodhpur, Rajasthan

FRANCHISE - BE YOUR OWN BOSS

“Franchise Opportunities – Be your own Boss”

                      FRANCHISE: A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee. A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. Some examples of today's popular franchises are McDonald's, Nakshatra, Subway, Domino's Pizza, and the UPS Store. An individual who purchases and runs a franchise is called a "franchisee." The franchisee purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and the franchisee has to pay an ongoing franchise royalty fee, as well as an up-front, one-time security fee to the franchisor. Franchising has become one of the most popular ways of doing business in today's marketplace.

History: Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country. In 1955 Ray Kroc took over a small chain of food franchises and built it into today's most successful fast food franchise in the world, now known as McDonald's. McDonald's currently has the most franchise units worldwide of any franchise system. Today, franchising is helping thousands of individuals be their own boss and own and operate their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves. There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business, since a proven business formula is in place. The products, services, and business operations have already been established.

Advantages: Corporate image, brand name recognition, established market, set standards of operations & training, set instructed infrastructure, off course a better chance of success and immensely profitable venture.

Disadvantages: limited ownership, ongoing cost franchise fees & percentage of your franchise’s business revenue, additional charge such as cost of advertising, besides most well known franchises are too expensive.

Different types of Franchising: There are many different types of franchise ownership opportunities. You may choose to become a multi-unit franchise owner, an area developer or you may decide to buy an existing franchise. Each ownership opportunity has its own unique responsibilities. The following is a list of the many different ownership opportunities franchising offers. 1) Single Unit Franchise: It is the most likely place a brand new entrepreneur would begin, as the franchisee would be responsible only for running one unit, although he or she would extremely involved with all the daily operations of the business. 2) Multi-Unit Franchise: multiple units are sold at a reduced rate per unit by the franchisor. 3) Area Developer: area development is similar to multi-unit franchising; the only difference is that it typically involves greater number of outlets encompassing a larger geographic territory. 4) Master Franchise: allows people or corporations to purchase the rights to sub-franchise within a certain territory. A master franchisee helps the overall franchise company by recruiting franchisees to open units within a specific territory. One master franchise is for one state only. 5) Buying an Existing Franchise: many franchise owners decide to sell their franchises after they have opened.

Approach: One need not to surprise if the franchisor questions include detail information about the proposer and his spouse financial position, experience, background, and even aspirations, questions designed to help the franchisor determine whether or not the kind of person he or she feels will be able to run the business successfully and fit into the franchise model. The franchisor will continue to explore interest, commitment and suitability of the proposer. If the franchisor decides a suitable franchisee, he will be offered a franchise contract that lays out the obligations of both parties. Like any other contract, some aspects of it may be open to negotiation. And like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, get them written in. One must consult an advocate before signing the contract. Buying a franchise is like buying any other kind of business. An entrepreneur has an opportunity to startup from Rs.10, 000/- in education to Rs 01 crore in jewellery as an initial investment in India. Naming few companies extending franchise opportunities; Levi's, Cooper England, Belmonte, D'damas, Nakshatra, Kidzee, Eurokids, The Pizza, Amson, BodySpa, MovieMart, Silversand etc

Thanks for reading
Yours Raghvendra, Jodhpur, Rajasthan

RETAIL SCENARIO OF JODHPUR CITY

Dear Readers,

                          Jodhpur is known as Cultural Capital city of the Rajasthan. The paper attempts to focus general scenario of unorganized as well as organized retailing in Jodhpur city. Terms & conditions to maintain the franchisee or dealership for an entrepreneur includes: meeting company sales target, prime location, populated area, bank guarantee adhering Company rules & regulations and minimum space area. Minimum space area covered by any retailer in Jodhpur city is 25*40=1000 sq.ft. Initial investments to start a business type are affected by many factors likewise, time of investments, entrepreneur’s financial capability, location of the shop, branded or unbranded products sold, and expected profit margins earned in each business. Provision Stores and departmental stores do not remember their initial investment amount, may be because of age-old shop or are unwilling to disclose. Many retailers did not reply or responded properly, may be to conceal their trading amount or do not want to discuss in details with the surveyor. F/D in electronics possess more sales figure comparatively to the LRS. But Sales figure for apparels in LRS exceeds the apparels in F/D, due to diverse/ variety of stock with LRS. Handling Female customers seems to be major challenge for salesman as they are the key partners in bargaining. LRS are more interested in fixed salary basis because the hiring turnover is very high for salesmanship, only those employees are given incentives or bonus who has worked with them for more than a year. Warranties are entertained, goods are repaired at service centers, change of item is also accepted. Defective pieces are returned back to the company. Generally 4% is VAT and 12.5% is Service Tax applies as per Government rules. Cross-checking with receipts is a major practice almost at majority of retailers; it is a precautionary measure against accounting, shop goodwill, customer satisfaction as well as shop-lifting. Major promotions tools used by retailers are advertising in local newspapers, local television channels, painting shutters of the shops, occasional discounts (like 50% + 49%, flat 31% et), hoardings, off season sale, fairs & exhibitions etc. Franchisees have a very small budget for promotions and major expenditure is born by the concerned Companies. It is unfortunate to say that majority of the retailers spends negligible amount on social responsibility affairs like providing drinking water or donations etc. It is found that even if such expenditure is incurred, that is connected to the owner’s class of society.

Jodhpur has its significance worldwide as one of the most attractive tourism spot due to its magnificent architecture reflected in Umaid Bhawan Palace and Mehrangarh Fort.
Thanks for reading,
Yours Raghvendra
Jodhpur, Rajasthan

POWER OF BRANDING

'Power of Branding'

A brand is a seal of credibility, quality, endurance and reliability only after implementation of a rigorous positioning strategy. Positioning a product requires transformation of a generic product into a brand and then placing the same in the consumers’ perceptual frame. The concept of perceptual frame is often utilized when seeking to differentiate brands. Positioning is developing a sustainable image in a me-too market environment. In a cut-throat competition with increasing availability of a variety of branded products in its class, it becomes difficult to divert the revenue from the competitors’ pocket. Positioning is a mind game. It helps in understanding not only the existing needs of a consumer but also creates a tension in the consumers’ mind by attracting him towards the products again and again. Here tension means rendering logical as well as psychological drives to buy the product. It should correlate the brand attributes & benefits with the lifestyle, values, motives, and habits of a consumer in a very distinct manner than its competitors. Positioning exercises of the brand portray an unmemorable image about itself, in such a way that the brand is recognized as part of consumers’ daily life. The brand is no more unfamiliar for prospects and the degree of acceptability, with instant consciousness, is enhanced. A branded product expresses itself through various means & modes of communication in order to position itself in the consumers’ complex mind box. Positioning exercises also exhibits degree of confidence a corporate has in its own brand and such confidence is translated into consumers’ confidence through transparent communication. Reading daily newspaper, watching favourite TV serials, a reality show, a fashion event or a cricket match, travelling in a public transport, waiting at a hotel reception, visiting a cineplex, shopping at retail outlet etc. are all such points where a consumer is exposed to many portals of a branded soft drink, insurance, banking, telecommunications etc; in fact, all corporate are attempting to conquer long term perceptual memory of a consumer, actually assuming it to be short. It is reinforcing the memory of the prospects or the consumer again & again. The paper emphasizes mainly on benefit and differentiation strategies. Strongly linked to product feature positioning is benefit positioning, which is generally more effective than positioning which describes product features without their benefit to the consumer. Another parameter is differentiating or die. Differentiation is one of the key routes to competitive strategy that a marketing man plays. Differentiation helps the firm fight a non-price plank. Positioning of brands is possible by using consumers’ judgements of similarity or dissimilarity to calculate how close or different each brand is to every other brand.

Yours Raghvendra

Jodhpur, Rajasthan

GLOBAL MARKETING INNOVATIONS - AN INSIGHT

GLOBAL MARKETING INNOVATIONS - AN INSIGHT

                Every company acts as a child to gain attention and visibility among mass public by its unique tactic of crying (i.e, marketing), crying about its products or services distinctiveness and superiority. Crying by a specific company could be modified in several ways i.e, through application of its universal tools of 4Ps in case of Products and 7Ps in case of Services. Broadly, two opposite viewpoints for developing international marketing strategy are commonly expounded. One is localized strategy based on four differences across borders – 1) buyer behaviour characteristics, 2) socio-economic conditions, 3) marketing infrastructure, and 4) competitive environment. In contrast to the view, many practitioners recommend offering identical products at identical prices through identical distribution channels and supporting these identical products by identical sales and promotional programs throughout the world. Global marketers have developed a holistic approach to marketing communications in recent times known as Integrated Marketing Communications. The approach designs all aspects of marketing communications such as Advertising, Sales promos, PR and Direct marketing to work together as a unified force, rather than permitting each to function in isolation. Technically oriented innovations include online marketing such as e-commerce, web development, online advertising etc, but to quote a specific innovation recently used by Microsoft is mobile marketing with Microsoft Tag solutions. CG companies can use these tags to turn cell phones into “sell phones”. To unleash more marketing innovations in entertainment industry SET has pioneered innovations through associations that deliver widespread reach and consumer-connect while ensuring a brand fit with its programmes and characters. An innovative price mechanism of ‘pay-by-the-hour’ at Tenji restaurant in Mont Kiara has hit the hospitality industry in Japan and aims to serve customers well. Additionally, to stress on ethics and CSR in the world of marketing, an emerging doctrine states that the products we sell must be made under appropriate and acceptable working conditions whether they are made in our own factories or those of our suppliers and customers. Due to the impact of increase globalization and decreased trade barriers among countries this new dimension of ethical concern will grow and cannot be ignored by the global companies. The paper attempts to gain deep insights on key dimensions of innovative marketing adopted by the global companies.
Globalization is forcing companies to do things in new ways – BILL GATES
Yours Raghvendra
Jodhpur, Rajasthan

Whats your Raashee?

Namastey
Dear Cine Lovers

               If you believe in match-making based on horoscope then this 20 reel film could be a guide for bachelors; and you could get an idea of 12 type of girls available for you. Not all could have an opportunity to meet 12 girls of all 'raashees' in real life but the film certainly shows a good idea for an effort to organize a love cum arranged marriage that too on the basis of horoscope. Truly this is a world of options & choices.

Saari raashee ki ladkiyon se milne ke baad bhi love nahi hua to? - a doubt expressed by the maternal uncle of the lead hero is interesting. A well research based and directed film by Ashutosh Gowarikar is certainly a piece of tickling moments created by acting skills of confident Priyanka Chopra (playing 12 characters successfully) and handsome Herman Baweja (ultimately leaving the decision on his fate). Bachelors should watch the movie.

Thanking you, keep in touch.
Bye
Raghvendra, Jodhpur

DIL BOLE HADIPPA !

Namastey
Dear Cinema Lovers,
Rani is absolutely excellent in the movie matching with Shahid Kapoor.Emotions of VEERA's excitement make your nerves move faster.Anurag Singh - the director has justified VEERA's dream with very realistic climax.Promoting harmonial relations with Pakistan is something giving unwanted importance to the neighbour.If the plot would have been different with the same dream of VEERA, the film would have been a rock hit. Still, it leaves an entertaining impact on the audience and a worthy one.
Thanks
Raghvendra
Jodhpur