Achieving cost-efficiency

A section titled ‘Cost management way to profit' in A. Nag's The 100 Minute Marketing Manager , second edition ( www.macmillanpublishersindia.com ) discusses the case of HUL, which markets more than a hundred brands through a million outlets. HUL's competitiveness is put into practice by setting cost targets after deciding the selling price of a product based on market conditions, the author describes.

He notes that HUL's state-of-the-art MRD (marketing research division) is one of the core management competencies of the company. “The MRD tracks the off-takes of company's products from one million outlets to analyse and fix various marketing cost parameters – fixed as well as variable. HUL's cost management policy is flexible enough to allow risk-taking, venturing into new markets, and incurring developmental costs.”

In Nag's view, media planning is a vital source of HUL's marketing cost-efficiency, because of the parameters considered, including cost per gross rating point, impact of the spot, and cost escalation. Useful starter material.

Role of the Public Accounts Committee

Though the Public Accounts Committee (PAC) is quite often referred to as a post-mortem committee, it has a significant role, feel Hoshiar Singh and Pankaj Singh in Indian Administration ( www.pearsoned.co.in ). The committee's job of scrutinising accounts is a continuous process and it enjoys the prerogative of looking at the present as well as the future, they reason.

Urging that the very fact there is someone who will scrutinise what has been done is a great check on the slackness, or negligence of the executive, the authors argue that the examination, when properly carried out, leads to general efficiency of the administration, and also serves as a guide for both future estimates and policies.

The authors also remind that the committee has kept the executive accountable to Parliament, thereby lending an additional dimension to the nation's fiscal policies and programmes. One learns that the committee has been able to bring to light certain cases where Parliamentary authority on the administration of tax laws had been diluted by the Executive fiat, and other cases of the Government not carrying out the intentions of Parliament as expressed in laws.

Appalled that the PAC has been reduced to being a toothless watchdog, the authors aver that the fault lies at the door of the government. They fret that the politician in power and the acquiescent bureaucrat have together developed a vested interest for secrecy, shying away from accountability to Parliament and the people. Recommended study.

Financial success and happiness

The concept of success in China is holistic, says Ted Sun in Inside the Chinese Business Mind: A tactical guide for managers ( www.landmarkonthenet.com ). “It does not only involve one's salary or career; it includes many other aspects such as physical health, relationships and professional achievements,” he adds.

The author reports the findings of a study in China that found no distinct measure for success; rather, there was relatively even balance between tangible factors and intrinsic emotions. “Overall, financial success had the lowest level of importance at 4.02 (out of 6), happiness and career satisfaction had higher levels of importance at 4.53 and 4.46 respectively.”

While financial success demonstrates a very critical level of achievement, happiness appears to be untouched, Sun observes. He distinguishes this from the American dataset, where the levels of achievement in happiness and financial success are both at the thirtieth percentile. “In contrast, the Chinese may see worse levels (9.97 per cent) in achievement in financial success, but still feel happy at 36.55 per cent.” Paradoxically, however, Shanghai had the highest level of financial success at 33.69 per cent but the lowest level of happiness at 7.69 per cent. This ability to detach happiness from finance marks a significant difference in the approach to business for the Chinese people, Sun reasons.Instructive read.

Disaster insurance

One of the essays in India Development Report 2011 edited by D. M. Nachane ( www.oup.com ) looks at the financing of disaster management. “Rightful claims of compensations from negligent party responsible for causing a manmade accident face the severe hurdle of tedious litigations. Disasters bring many claimants together who may sustain the harrowing judicial process,” frets author Nirmal Sengupta, citing the Bhopal gas leak (1984) and the Uphaar cinema hall fire (Delhi, 1997).

He traces how the Ninth Finance Commission (1989-95), coinciding with the International Decade for Natural Disaster Reduction, introduced a Calamity Relief Fund (CRF), which has become the major source of finance for meeting relief expenses. Between 2000 and 2005, an average of Rs 2,200 crore was distributed from CRF each year, one learns.

Of interest in the essay is the section on insurance. A reassuring data point cited by the author is that in the 2006 floods which affected many industries in Gujarat and Andhra Pradesh, about 12 per cent of total losses were insured. “In many developed countries, private insurers are reluctant to cover disasters. The situation in India seems to be better.”

Reminding that disaster insurance is desirable but not an easy-to-implement proposition, the author gives examples of how the insurance market in India has begun to feel the pinch. For instance, after the Mumbai floods in 2005, General Insurance Corporation alone had settled claims worth Rs 650 crore; and insurance claims amounting to Rs 1,800 crore were the consequence of the 2006 floods that hit several large industries at Vadodara, Hazira, and Bhadrachalam, as the essay notes.

Valuable compilation.

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