Economics Essay Example | Topics and Well Written Essays - 1500 words - 3

Financial aspects - Essay Example The monetary extension which happened because of World War 11 prompted the finish of that time of withdrawal. As certain pieces of the world are recouping from what has been portrayed by numerous individuals as the Great Recession, the discussion is on regarding whether the world experienced a downturn or a downturn. To be sure there are a few likenesses with the Great Depression of the 1930’s however the official specialists have not portrayed it in that capacity. This paper characterizes downturn and discouragement and clarifies the contrasts between them. It likewise takes a gander at similitudes and additionally contrasts paving the way to the Great Recession which was activated by the instability in the securities exchange and a credit mash in 2007, and those of the Great Depression which kept going from 1929 to 1933 and reached out into the 1940’s. Definitions The Business Cycle Dating Committee (BCDC) at the National Bureau of Economic Research (NBER) characteriz es a downturn as when business action is at its pinnacle and consequently begins falling until it arrives at its least level (â€Å"bottom out†) â€a trough (Recession n.d.). A downturn ordinarily goes on for a year and is a piece of a normal business cycle which includes withdrawals (downturn) and extensions. In any case, there are others which have gone on for as long as two years. A model is the Japan’s financial log jam in Japan in the 1990’s which went on for a long time to March 1999 can be considered as a downturn since the biggest top to trough decrease in GDP during that period was 3.4%. A downturn then again speaks to a lull in monetary action where GDP falls by over 10% (Recession n.d.). It is portrayed by rising joblessness, a continued long haul downturn in the economy and ordinarily keep going for over three years. The incredible misery which endured from 1929 to 1933 and which was drawn out well into the mid 1940’s with the â€Å"double- dip† is a prime case of a downturn. During this period genuine GDP fell by 30% which is over the 10% benchmark. Joblessness levels took off to at no other time seen levels and an enormous number of families and single people were losing there homes. A large number of business shut there entryways while others cut back. Contrasts between a downturn and a downturn The Economist (2009) cites Saul Eslake, the Chief Economist at ANZ Bank as saying that the distinction between a downturn and a downturn is something beyond size and span as noted in the definitions above. Eslake shows that the reason for the downturn is additionally of significance (qtd. in The Economist, 2009). Eslake proceeded to express that a downturn for the most part results from tight money related approaches while a downturn is the aftereffect of a â€Å"bursting resource credit bubble†, a sharp decrease in credit (withdrawal) and a fall in the general value level (The Economist 2009). Eslake further ex pressed that during the Great Depression costs fell by around 25% and ostensible GDP shrank by practically half. A downturn Eslake proposed doesn't need to be as extreme as in the 1930’s. They can either be mellow or serious. Furthermore, Eslake (qtd. in Economist 2009) shows that the financial downturns (droops) which followed closely following the breakdown of the Soviet Union and the ones which portrayed the Asian emergencies were not discouragement. The explanation Eslake states is that expansion expanded pointedly. Eslake likewise recommended that the downturn in the e

Wound vs. Injury

Wound versus Injury Wound versus Injury Wound versus Injury By Maeve Maddox A peruser questions the media’s utilization of injury and twisted as though they were tradable: I had consistently felt that to wound portrays the intentional curse of a physical issue, while the injury itself could be the aftereffect of an accident.â If this is as yet the case, would you be able to address the disarray. In current utilization, the thing wound [WOOND] alludes to any injury that tears the substance. The action word to wound [WOOND], in any case, holds its most punctual significance: â€Å"to incur a purposeful injury that tears the flesh.† For instance, a cop who is shot or cut by a culprit has been injured. A fire fighter who experiences slashes being struck by falling trash has been harmed. Both the official and the fireman have wounds on their bodies, yet just the official was injured. In like manner, warriors are injured by side of the road bombs, however development laborers are harmed in mishaps. The thing that matters is that the injuries endured by the troopers are the aftereffect of malevolent purpose, while the development laborers got their injuries as the consequence of mishap. Notwithstanding their strict implications, both thing and action word have gained non-literal employments. For instance, an affront might be said to wound the beneficiary. I am extremely grieved in the event that I injured your emotions this evening; it was completely accidental, I guarantee you. Narcissism normally begins with a huge enthusiastic injury or a progression of them coming full circle in a significant injury of detachment/attachment.â The action word twisted, archived in English from 760, originates before the thing twisted by around 150 years. The soonest documentation of the thing injury is from 1382. In the fifteenth century, injury was utilized both as a thing and as an action word, however before the finish of the seventeenth century, the action word structure harm had gotten built up. The most punctual importance of the thing injury is â€Å"hurt or misfortune caused to or continued by an individual or thing.† Synonyms for this kind of injury are mischief, impairment, and harm. The action word that created from injury implied, â€Å"to do bad form or wrong to a person.† Only later did the possibility of real damage become as firmly connected with the words injury and harm as it is currently. The word wound conveys an enthusiastic undertone that injury and harm need. A bogus report may harm a person’s profession, however twisted a person’s sentiments. Harm is pretty much genuinely impartial, however twisted proposes compelling feelings of misery or anguish. The accompanying words are possibilities for depicting twisted in the feeling of a break in the substance: injury cut cut cut tear cut touch scratch scraped spot wound wound The accompanying words are possibilities for twisted with regards to enthusiastic injury: affront blow slight offense attack hurt harm torment trouble sadness anguish torment Need to improve your English shortly a day? Get a membership and begin accepting our composing tips and activities every day! Continue learning! Peruse the Misused Words classification, check our well known posts, or pick a related post below:Addressing A Letter to Two People15 Great Word GamesPlurals of Proper Names

Deviance And The Factors That Influence Deviant Conduct

â€Å"Deviance is a wide-running term utilized by sociologists to allude to conduct that shifts, here and there, from a social norm† (C. Livesey). In light of this definition, we can obviously draw out that abnormality would mean a conduct that comes as rule-breaking.Deviance is the perceived infringement of social standards (geocites. com). Aberrance in this manner includes defying of norms that are perhaps criminal, social, formal and casual guidelines that have just been set up in a specific territory or in a given situation.Thus, abnormality is resolved and estimated against set up gauges. Such norms are along these lines the perspective for the assessment of direct or conduct. At the point when it acclimates, at that point it essentially implies it isn't degenerate. Something else, such is considered deviant.For model, the utilized of mixed beverages isn't commonly disallowed by law and along these lines by the premise of law isn't freak. As a social standard, a few socia l orders, particularly those that are severe to strict standards, drinking liquor is unwanted and is deviant.As a social standard, wearing of ill-advised clothing in specific events is freak yet under the law, such conduct isn't at all degenerate in light of the fact that there no law or decide that administers such lead. Along these lines, we can say that abnormality is subject to the built up standards and laws in a specific culture. Abnormality incorporates a wide scope of different demonstrations of individuality, from varieties in hairdos to murder.TYPES OF DEVIANCESocietal Deviance incorporates those lead or practices that don't fit in with the classifications or principles that are commonly acknowledged by a certain society.For model, to show grimy finger to your instructor is socially unsatisfactory, and in this manner is socially degenerate. The appointed authority of one’s lead is along these lines the individuals all in all and they put together their judgment with respect to what are the built up social standards that they used to live with. Situational Deviance, when contrasted with cultural aberrance is said to be increasingly confined, that is, deciding if a demonstration in degenerate or not relies upon a solitary circumstance. For instance, in instances of cops and warriors on field or in a fight circumstance are confronted with situational deviance.These individuals need, by request of obligation, to execute their adversaries. Executing is by strict and criminal standards not permitted, and in this manner freak. Criminal Deviance is by basic definition an abnormality from juridically settled standards. At the point when we state, juridical, it has something to do with laws and legality.Any act that goes astray or doesn't fit in with and damages set up laws are criminally freak. For instance, to be indiscreet isn't criminally degenerate yet indiscretion that lead to incurring physical injury to other people or that of homicide is crimin ally freak since it damages set up laws.Psycho-obsessive Deviance infers a moving from ordinariness (S. Di Nuovo). Strange methods of conduct are not violations but rather require endorses as necessary mental medicines. Introverted character issue which incorporates powerlessness to fit in with legitimate or social guidelines, deceptive conduct, being incautious and forceful and untrustworthiness are degenerate leads that are viewed as psycho-obsessive. Note that these freak practices don't really criminally degenerate however these degenerate behaviors may prompt criminal direct, for example, being imprudent may prompt battling then to murder.Primary Deviance identifying with movement that is at first characterized as degenerate (Edwin Lamert) Secondary Deviance relates to an individual who acknowledges the mark of freak. Optional abnormality as indicated by Erving Goffman starts when an individual gets a shame. Shame, as indicated by Goffman, is an intensely contrary name that pro foundly changes an individual's self-idea and social identity.FACTORS THAT INFLUENCE DEVIANT BEHAVIORS BIOLOGICAL FACTORSGenetics has discovered that there is some way or another an organic factor that impacts an individual’s degenerate behavior.The association between a particular example of chromosomes has been demonstrated to be identified with freak conduct; be that as it may, there are as yet insufficient investigations that will demonstrate that this announcement is valid. Be that as it may, there are scatters in kids that straightforwardly impact a degenerate behavior.Attention Deficit Hyperactivity Disorder is a solid pointer for future direct issue. Vaxa. com has given a clinical meaning of ADHD as a â€Å"family of related constant neurobiological issue that meddle with a person's ability to control movement level and adds to impulsivity, negligence and distractibility.† It is explicitly a brokenness of the Central Nervous System (CNS), most explicitly the Re ticular Activating System, which brings about troubles of keeping up consideration and fixation, learning and memory, just as including a failure to process and sort out approaching data or improvement from both a person's internal (emotional) and external (objective) worlds.This issue along these lines results to the child’s misconduct, for example, being hyperactive and indiscreet, which are practices that are far not quite the same as how he is assume to act and separated based on what is viewed as typical, and in this way considered deviant.Another issue called Oppositional Defiant Disorder restoratively characterized as â€Å"a example of negativistic (distrust), uncooperative, insubordinate, rebellious, and unfriendly conduct toward power calculates that proceeds for at least 6 months† (axa. com). Degenerate practices displayed by people with this issue incorporate headstrong defiance, opposing directions and solicitations and contending with adults.PSYCHOLOGICAL FACTORSPsychological clarifications of aberrance focus on singular variations from the norm including character. Be that as it may, ensuing examinations discovered defects on the mental connection of freak behavior.Geocites. com identified three fundamental reasons why mental variables ought to be disregarded. In the first place, most genuine wrongdoing is submitted by individuals who are mentally ordinary. Second, multifaceted contrasts in what is regarded typical and strange will in general be overlooked. What's more, third, the way that individuals with comparable mental characteristics are not similarly as liable to be marked freak isn't considered.SOCIAL FACTORSAs has been expressed before, abnormality doesn't really be criminal aberrance in light of the fact that there are built up social standards that measure an individual’s conduct as degenerate or non-deviant.It is along these lines however reasonable for presume that both congruity and abnormality are characterize d by society. The level of abnormality is dictated by the general public as per socially acknowledged practices existing in a specific culture. The general public hence by one way or another directs how an individual ought to behave.For model, in a strict network, smoking and drinking liquor are freak goes about as these legitimately restricted by, in model, the Christian religion. So a person who blends with the Christian people group will attempt to act in similarity with the current norm.On the other hand, networks which view smoking and liquor drinking as a pointer of societal position, likewise with the elites, consider these practices as non-degenerate, and hence are typical actions.CIVIL DISOBEDIENCE AND CRIMINAL DEVIANCECivil defiance is a type of dissent wherein protestors purposely damage a law (P. Suber). Initially, the primary motivation behind common defiance is to speak to people in general about specific issues through fights or open exhibitions. On most events, gives that drives common noncompliance concerns political and moral issues.For model, laws that legitimize willful extermination and capital punishment have realized numerous fights and open showings. In such cases, members generally abuse traffic rules and trespassing.Their infringement along these lines are secured by common laws. Then again, criminal abnormality is secured by criminal laws. Murder and the utilization of disallowed drugs are criminal infringement and in this way are criminal abnormality. Albeit both aberrance and infringement are culpable, they are recognized with regards to what laws spread such deviance.Deviant practices are estimated and characterized by built up rules in a specific network, regardless of whether they be formal or casual guidelines. These practices are affected by organic, mental and social variables to certain degrees.Deviance doesn't really disregards legitimately or juridically settled principles prompting the end that criminal abnormality is cha racteristically conduct aberrance yet not every degenerate conduct are criminal abnormality. Common insubordination and criminal aberrance are recognized by the laws that oversee such infringement.

Chronicle of a Death Foretold and Dry September - Literature Essay Samples

Gabriel Garcia Marquez’s Chronicle of a Death Foretold and William Faulkner’s Dry September are very similar to each other structurally and thematically, despite being separated by fifty years and a regional and linguistic barrier. They both use nonlinear story-telling to unravel tales of a wrongful murder. However, beyond this surface similarity, further analyses of the stories show that there are striking similarities between their characters that reveal a harsh reality of their societies. Both Chronicle of a Death Foretold and Dry September have â€Å"villains†, represented by Angela Vicario and Minnie Cooper, respectively, whose words of accusations influenced by societal pressures led to brutal measures to be taken against the named men. In addition, they both have â€Å"heroes†, represented by Clotilde Armenta and Henry Hawkshaw, whose cowardice to confront the societal pressure prevented both from truly being heroic in averting the tragedy that woul d ensue in their respected tales. Overall, the narratives illustrate how powerful the status quo can be in a society, not only because it justifies brutal action in order for it to be maintained but also because its pressure allows for the brutal action to be supported by those who may not explicitly have ill will. In Chronicle of a Death Foretold, a pure woman is lauded in the small, fictional town where Angela Vicario grows up. Furthermore, Angela was raised by Purisima del Carmen, who held an exceptionally high standard of purity for her. Angela knew how important this standard was in her family and in her community, so she knew that there would be severe consequences to her and anyone involved if it were to come out that she had gone against this standard by losing her virginity before marriage. This may explain why when she was questioned by her brothers on who the other man was, she â€Å"nailed it to the wall with her well-aimed dart† by falsely naming Santiago Nasar (Marquez, 47). She anticipated that her brothers would be expected to avenge her honor by going after whoever her scapegoat was, and by giving them Santiago she gave them a person whose womanizing history not only made him all the more believable, but also removed her from blame by making Santiago out to be a perpetra tor. Santiago was an easy pawn she used to directly protect her honor within the family, and indirectly protect her family’s honor in the community Just as Santiago was a pawn for Angela to protect her status, Will Mayes was a pawn for Minnie Cooper in Dry September. The society Minnie lives in is also unfair to women, scorning those who are of a certain age and still not settled down – those like Minnie. The unfairness toward women is especially shown in how Minnie is â€Å"relegated into adultery by the public† when she begins dating a widowed banker (Faulkner, 4). Minnie, who held the town in the palm of her hand in her prime younger years, may then be attempting to reclaim her relevancy by starting a rumor that something happened between her and Will Mayes. Because Will Mayes is a black man, she knows that he is the perfect man to use in order to attach attention to her rumor and therefore attention to herself. Furthermore, her use of Will Mayes would stigmatize her less because her position as a white woman automatically turns her into the victim of the story. Both Minnie and Angela, then, use their knowledge of their society’s standards to their own advantage, even if it comes with deadly side effects. Clotilde Armenta and Henry Hawkshaw are both perhaps the most morally right people in their respected towns, which is why they might be considered heroes. In Chronicle of a Death Foretold, Clotilde is the proprietress of a local milk shop, and on the morning that Santiago is killed she alerts several people to warn the soon to be murder victim, including Father Amador and Cristo Bedoya. In addition to this, she attempts to get the twins drunk while they are in her shop so that they will be unable to carry out the gruesome deed. In Dry September, Hawkshaw is a local barber, and when news comes in about the cruel rumors about Will Mayes, he defends Will against the accusation, and chases after McLendon’s mob on their way to lynch the man. Both of the actions taken by these characters suggest that they do care about the well-being of the victim. However, in both books the â€Å"heroes† remove themselves just enough from the situation to prevent any heroism from actually be ing done. Clotilde never makes any direct attempts to interfere with the twins’ murder plans, even though she had ample opportunity to. For example, when they first come into her shop and see Santiago, she tells them â€Å"Leave him for later, if only out of respect for his grace the bishop (Marquez, 16). In this moment, she could have told them to not follow through with their plans. Instead, she only delayed them, and even entertained the notion of them killing Santiago. Her lack of appropriate action is an indicator of the fallibility of human nature. She is clearly well-intentioned and does not want to enable the twins to do any wrong, however the importance that the town places on upholding honor seems to somehow justify the actions enough to make it incredibly difficult to come outright against it. Hawkshaw faces a similar dilemma: the general consensus in his town seems to be that it is wrong for a black man to ever associate with a white woman, and if he were to ever do so he ought to be punished. So, while Hawkshaw was able to speak in favor of Will Mayes and get in the car with the lynch mob, he jumped out of the car right before the killing actually took place. If he were to stay involved in this very moment, he would permanently brand himself as a â€Å"nigger-lover† as McLendon suggests – a stigma that would take a great strength of will to hold (Faulkner, 6). Hawkshaw simply does not have this strength of will. His intentions are good, but all in all not enough to overcome the expectations that are bound up with his racist society.

A Very Old Man With Enormous Wings - 1713 Words

Life in Colombia, is hard. A vibrant and lush country that has unfortunately had to endure the horrors of living in a constant state of civil war. This harsh reality of their country being at war all the time has cultivated strength, perseverance and a belief system uniquely embedded within the Colombian people. You can find this in the famous story A Very Old Man with Enormous Wings written by Colombian legend Gabriel Garcia Marquez. Of course, it is truly no surprise that these traits are not only found in but absolutely bleed through the literature written by Colombian natives. The hardships of daily life and the deep belief in mysticism shapes their everyday. Politics and religion have tremendously shaped the behaviors of people living in Colombia; this duality is quite evident in A Very Old Man with Enormous Wings. Colombia, a nation surrounded by the Pacific and Caribbean oceans was first explored by the Spanish in 1499. Although, they reached the land in 1499, no permanent settlement was established until 1525 with the city of Santa Marta. The Spanish then colonized the country, implementing it’s enlightened absolutist monarch system; which was typical of the time as the ruling force for the newly colonized nation. When the monarchy fell into disarray starting in 1808 due to the abdications of Charles IV and his son Ferdinand VII, which was caused by none other then Napoleon Bonaparte; the instability of the situation lead to the America colony desiring its ownShow MoreRelatedA Very Old Man with Enormous Wings700 Words   |  3 PagesA Very Old Man with Enormous Wings The story of A Very Old Man with Enormous Wings is a tale in which a pitiful looking man with wings is found outside of the home of Pelayo and Elisenda. Pelayo sees the man while he is removing crabs from their home and throwing them into the sea. His wife, Elisenda, was caring for their ill, newborn child at the time. Pelayo was frightened and pulled his wife into the courtyard to observe the old man. They believed him to be a castaway, but sought the adviceRead MoreA Very Old Man With Enormous Wings971 Words   |  4 Pagesâ€Å"A Very Old Man with Enormous Wings† Humans have a temptation to be selfish, to try to step over others to better themselves taking advantage of their weaknesses to reach the top. In the story by Gabriel Garcia Marques â€Å"A Very Old Man with Enormous Wings† this is portray, by showing how cruel and imperfect society can be. In the beginning of the story the weather in Mocondo the town where the story takes place, is used as a symbol of corruption. In Mocondo is always dark and rainy, interpretingRead MoreA Very Old Man With Enormous Wings Essay1500 Words   |  6 PagesKnown Verses the Unknown The unknown is a very vague concept when it comes to literature. Depending on the text and who is reading it, it can be understood in different ways. In Marquez’s â€Å"A Very Old Man with Enormous Wings† the village determines the unknown based off what they already about angels. In â€Å"The Elephant in the Village of the Blind† the blind villagers try to figure out the elephant by using their senses other than eye sight, to agree on the unknown animal. In the beginning of both textsRead MoreA Very Old Man With Enormous Wings1129 Words   |  5 Pages The title of Gabriel Garcà ­a Mà ¡rquez’s short story â€Å"A Very Old Man with Enormous Wings† says it all about the character who will turn the life of Pelayo, a simple villager, upside down when he discovers the mystery man in his backyard. The story demonstrates the coexistence of cruelty and compassion within humans and the way they react towards what’s considered as different. The way Pelayo and his wife treated the angel throughout the whole story emphasizes some aspects of the themeRead MoreA Very Old Man With Enormous Wings918 Words   |  4 PagesSet in a small village, A Very Old Man with Enormous Wings combines an intriguing mix of reality and imagination. The story begins when an old man with wings enters the scene. The characters in the story are faced with the conflict of who and what the man actually is and what to do with him. The main characters Peleyo, the one who first encounters the man, and his wife Elisenda, end up housing him in their chicken coop. As the story unfolds, some abuse the man while others go to him in hopes ofRead MoreA Very Old Man With Enormous Wings2731 Words   |  11 Pages Gabriel Garcia Marquez is a man of many talents. His greatest talent is that in all of his short stories, he uses this imagery that swallows the reader whole and spits them out into the very reality of his written words. This makes the reader forget to question reality, but to soak the reality up instead. The short stories I have chosen, show how human behavior is impacted through a person’s perception through which their reality is created. Our perceptions can make our fears seem so realRead MoreA Very Old Man With Enormous Wings Analysis703 Words   |  3 Pagesconcept. Both good and evil can come to life in countless forms, specifically in literature. Good versus evil is one theme that is explicitly displayed throughout â€Å"A Very Old Man with Enormous Wings†. Throughout the story, the feelings of good and evil rebound numerous times. Through the setting, motifs, and the very old man with enormous wings, himself, the reader is clearly able to identify the fac t that evil has corrupted the town; not even an angel can save them from the vices of evil. The storyRead MoreEssay on A Very Old Man With Enormous Wings1458 Words   |  6 Pages This is very much true for the short story â€Å"A Very Old Man With Enormous Wings† by Gabriel Garcia Marquez. Within the story, a winged man falls from the sky with no meaning or purpose. The man is shrouded in mystery. Nameless and unable to communicate with the native villagers, he lives among them. His intentions are never truly known to either the reader or to the villagers. However, the biblical parallels throughout the story help us unravel the mysteries behind this strange old man. By analyzingRead MoreA Very Old Man With Enormous Wings Essay1193 Words   |  5 PagesGabriel Marquez Garcia’s short story, â€Å"A Very Old Man with Enormous Wings,† is a children’s story about a fallen angel and the tribulations and humiliations he endures to finally be able to repair his wings and fly back to the divine. It was published in 1955, and it is categorized in the â€Å"magical realism† for it takes place in a real world where magic is possible. For me the author made the angel to represent Jesus Christ, because it shows a humble man, devoid of power, naked luxuries that cameRead MoreEssay on A Very Old Man with Enormous Wings1188 Words   |  5 PagesA Very Old Man with Enormous Wings   Ã‚  Ã‚  Ã‚  Ã‚  The fictional tale entitled A Very Old Man with Enormous Wings is an intriguing story which is expressed very well in the title. The story is about just that, an old man with wings. The only aspect that the title fails to point out is that he is an angel. I find the story to be somewhat interesting; however, it isn’t exactly hard to put down.   Ã‚  Ã‚  Ã‚  Ã‚  The one thing about this story that stands out the most, is the author’s use of tone. This is the main aspect

What Is Digilocker ( Digital Locker System ) - 1213 Words

What is DigiLocker (Digital Locker System)? DigiLocker is an online storage facility supplied by the authorities of India to keep your vital documents. you may upload files like Voter id card, PAN card, BPL card, driving license, education certificate and so on., these documents vvill be related in your Aadhaar quantity and can be handled as authorized documents. So, you may not want to carry bodily documents while making use of for jobs or government certificates or instructional establishments etc. every now and then fake files get into movement inside the physical vvorld and reason a variety of harm for all involved. Given the vvay files are issued and accessed via DigiLocker, it could play an crucial role in minimizing fakes. this can ultimately make a contribution to bringing dovvn corruption. The loose e-signal facility in DigiLocker is another useful authentication feature of DigiLocker. Why DigiLocker? †¢maximum of our important files are popular in physical shape, which leads to high administrative overhead. †¢challenge to us in submitting more than one physical copies of the files. †¢ Hard tasks for the institutions / government. / organizations to verify the authenticity of the documents. Benefits objectives of Digital Locker system (DigiLocker) the subsequent factors will make you understand how the online digital garage gadget (DigiLocker) works. †¢ it will permit virtual empowerment of citizens through providing us vvith virtual Locker at the cloud. AsShow MoreRelatedSales Zero Target Imports Is A Striking Demonstration Of Purpose Essay1374 Words   |  6 Pagesconstructing †¢ country wide Centres – flexible Electronics, safety Forces †¢ R D in electronics there are numerous on-going programs vvhich vvill be first-class-tuned. existing structures are insufficient to handle this aim and want strengthening. call for digital goods is increasing vvith a Compound Annual Grovvth charge (CAGR) of 22% and is expected to the touch 400 Billion USD by 2020. Indian government is also taking numerous steps to promote manufacturing and investment in this quarter, vvhich places India

Castrol Case free essay sample

MANAGEMENT CASE describes a real-life situation faced, a decision or action taken by an individual manager or by an organization at the strategic, functional or operational levels Castrol India Limited: Managing in Challenging Times Manoj Anand Executive Summary ifficult times have their own merits. This is as much true for an individual as it is for an organization. These are the times when the entire organization gets an opportunity to display its resilience through its innovative skills and creative abilities. Naveen K Kshatriya, Chief Executive and Managing Director of Castrol India Limited (CIL), echoed similar thoughts while reflecting on his company in October 2002. After the liberalization of the Indian economy in 1991 and the opening up of the oil sector, CIL focused on volume growth and achieved a market share of 20 per cent. In the growth phase, cost efficiency and cost effectiveness of the operational aspects were ignored. In the late 1990s, due to increased competition and acquisition of CIL by British Petroleum, the focus shifted from high growth to efficient supply chain management. This brought about a sea change in the cost and performance management systems at CIL. It required a cultural change — from chasing production volume targets to developing competitiveness through total quality management, business process reengineering, activity-based cost management system, and change in mindset. The focus of performance contract changed from a few financial measures to a broad set of perspectives to achieve the company’s corporate mission. Kshatriya wondered which path the company should traverse that would take it to a sustainable, prosperous future. D Adversity has the effect of eliciting talents which in prosperous circumstances would have lain dormant. — Horace (65-68 BC) INDIAN LUBE INDUSTRY KEY WORDS Corporate Strategy Liberalization Performance Management Castrol India Indian Lube Industry The lubricant industry in general has three broad segments, namely, automobile, industrial, and marine. As per the global trends, the automobile segment dominates the industry, and, within the automobile industry, the diesel engine lubricants form the major part of the market. Lubricants function as friction inhibitors by forming a viscous layer between mechanical links of machines. This viscous layer reduces friction by ensuring that the mechanical links do not come in direct contact with each other. Thus, in the current era of mechanized economy, lubricants find extensive usage not only in terms of VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 103 103 reducing friction but also in providing extra durability to the machine. Lubricants are obtained as lower order distillates from the fractional distillation of crude petroleum. They are characterized by high wax content which provides the necessary viscosity. Since they are expected to function at extreme and varied conditions of temperature, they are provided with the required properties by adding various additives. Before the liberalization of the Indian economy, the public sector oil companies dominated the Indian lubricant industry with a market share of 90 per cent. The lubricants produced were simple blends based on low and medium level technologies. More sophisticated lubricants were imported and these accounted for a relatively small market share. The liberalization of the Indian economy in general and the oil sector in particular led to decanalization of base oil imports which used to be canalized through Table 1: Key Statistics: 1995-96 to 2000-01 Particulars Import quantity Import value Sales value Market size (value) Domestic consumption (value) Unit 000 Rs Rs Rs Rs tonne billion billion billion billion 1995-96 58 1. 30 48. 717 50. 017 50. 017 Indian Oil Corporation earlier. There has been substantial reduction in the level of import duties. Free pricing has been permitted and administered pricing regime has been abolished. Deregulation has encouraged all the major MNCs which include Shell, Mobil, Gulf Oil, BP, Exxon, and Caltex to set up their plants in India. The entry of MNCs has led to increased competition and substantial reduction in the market share of public sector oil companies. The total market size and production of the lubricant industry in India in the year 2000-01 were Rs 101. 034 billion (Table 1) and 13,898 thousand tonnes (Table 2) respectively. The lubricant industry witnessed a cumulative annual growth rate of 15 per cent during the period 1995-96 to 2000-01. The major players are Indian Oil Corporation, CIL, Hindustan Petroleum Corporation, Bharat Petroleum, Bharat Shell, and IBP Co. CIL has grown by 12 per cent on a cumulative annual basis. Indian Oil Corporation is the market leader with 1996-97 44 1. 19 52. 933 54. 123 54. 123 1997-98 650 3. 00 57. 448 60. 448 60. 448 1998-99 396 1. 48 64. 908 66. 388 66. 388 1999-00 407 2. 95 70. 231 73. 181 73. 181 2000-01 1602 2. 957 71. 464 101. 034 101. 034 Source: Centre for Monitoring Indian Economy, August 2002. Table 2: Company-wise Trend in Production: 1995-96 to 2000-01 Name of the Company Indian Oil Corporation Castrol India Hindustan Petroleum Corporation Bharat Petroleum Corporation Gulf Oil Bharat Shell Savita Chemicals IBP Co. Tide Water Oil Corporation Apar Industries Indo Mobil Indian Additives ELF Lubricants Tata BP Lubricants(erstwhile) Valvoline Commins Pennzoil-Quaker State India Chemoleums Universal Petrochemicals Raj Lubricants Sah Petroleum Total for the sample 73 companies Source: As cited in Table 1. Unit 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 tonne litre tonne tonne litre litre litre litre litre litre litre tonne litre litre litre litre litre litre litre litre litre tonne 1995-96 114 156,270 437 86 1996-97 122 173,002 443 84 27,540 37,760 42,020 1997-98 110 192,019 494. 4 86. 9 48,630 40,220 21,272 41,820 62,100 12. 6 18,360 3,815. 6 13,163 5,037. 8 8,370. 8 784,823. 2 760. 9 1998-99 112 208,690 465. 6 102. 7 51,383 39. 3 39,290 21,423 42,409. 7 69,671 14. 3 1999-00 121 218,541 537. 2 100. 4 60,273 41. 50,287 15,764 38,760. 2 78,304 16,229 15. 5 18,829 12,126 14,923 14,633. 2 12,638. 9 10,633. 9 10,892. 9 1,021,071 11,679. 2 2000-01 112 218,972 494. 4 96. 6 57,266 41. 4 59,508 11,266 29,457. 6 41,911 16,508 11. 3 17,021 14,156.. 6 12,786 11,480. 9 13,318. 6 11,421 800,215. 7 13,898 34,370 41,110 11 14,430 11 15,360 684,388 715. 3 640,556. 7 729. 1 7,250. 8 13,155 13,643 9,905. 9 10,394. 3 19,893 990,456. 3 11,436 104 104 CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES 18. 53 per cent (Table 3) and 24. 49 per cent share in the years 2000-01and 2001-02 respectively. CIL enjoyed a market share of 12. 03 per cent and 17. 48 per cent during these two years. The lubes of the public sector oil companies are sold through their own well-established petrol pumps network. These petrol pumps are not allowed to market the lubes of the MNCs which are marketed through autorepair shops, garages, and service stations. CIL has clearing and forwarding agents, distributors, and dealers in their distribution chain in case of retail lubricant market popularly known as ‘bazaar trade’ and clearing and forwarding agents only for institutional sales. CIL dominates the retail lubricant market and has access to over 70,000 retail outlets. However, the last two years have been difficult not just for CIL but for the lubricant industry as a whole. To quote from the ‘Analysis Report’ of CIL’s Annual Report (2001): The automotive lubricant industry is a derived demand industry primarily driven by the conditions in the automotive transportation and general industrial sectors. Both these sectors have experienced slowdown in the recent past. During the year 2001-02, the commercial vehicle sales declined by 4. 4 per cent, tractor sales declined by 10 per cent, and the passenger car segment grew only by 3. 6 per cent, well below the expectations. The decline in the new vehicle sales in the year 2001-02 indicates the difficulties confronting the automotive sector. The two-wheeler segment is the only segment that performed well with sales growth of 15 per cent. The other influences on the lube demand, namely, the overall GDP growth and industrial growth (2. 7%), have been lower than expected. The vehicular population structure in India is changing rapidly. The commercial vehicle parc consumes over 70 per cent of automotive lubricants popularly known as Diesel Engine Oils (DEOs). In recent years, there has been a shift to fuel-efficient, emission compliant engines with lower sump sizes. The new technology has led to lower top-up requirements. The two-wheeler segment is also shifting gears from two-stroke scooters to four-stroke motorcycles. The new fourstroke two-wheeler engine technology has also resulted in lower lubricant consumption. The impact of the above developments compounded by recent sluggish trends in the road transport industry resulted in the year 2001 being an extremely difficult one for the lubricant industry. The automotive lubricant market declined by about six per cent. The main impact was felt in the Diesel Engine Oil category, the major volume contributor, where per capita vehicular consumption decline has more than offset parc expansion. Although two-wheeler and car lubricants have grown, their current share of overall demand is modest. The ancillaries segment comprising gear oils, greases, brake fluids, and coolants contribute around 13 per cent to the lubricant industry volumes; their demand has been unfavourably impacted by similar factors. The industrial lubricant demand is reflective of the industrial production and the growth trend in the economy which has been going through successive decline in the last two years from a previous low of 5 per cent in 2000-01 to 2. 7 per cent in 2001-02. (Per cent) 1998-99 28. 75 15. 92 12. 69 7. 06 3. 92 2. 92 1. 84 2. 17 3. 05 1. 9 79. 96 97. 77 1999-00 26. 21 15. 96 10. 8 6. 83 3. 78 2. 7 2. 04 2. 2 2. 81 1. 76 74. 46 95. 97 2000-01 18. 53 12. 03 9. 23 5. 56 2. 54 2. 21 1. 83 1. 69 2. 4 1. 34 56. 47 70. 73 Table 3: Company-wise Trend in Market Share: 1995-96 to 2000-01 Name of the Company Indian Oil Corporation Castrol India Hindustan Petroleum Corporation Bharat Petroleum Corporation Gulf Oil Bharat Shell Savita Chemicals IBP Co. Tide Water Oil Corporation Apar Industries Total for the above companies Total for the sample 73 companies Source: As cited in Table 1. VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 1995-96 33. 04 13. 82 16. 7 7. 35 1996-97 32. 46 15. 89 15. 94 7. 59 2. 76 2. 24 1. 96 2. 98 81. 81 97. 80 1997-98 29. 44 15. 9 14. 83 7 4. 15 2. 12 1. 93 3. 05 1. 91 80. 33 95. 04 1. 95 3. 32 75. 75 97. 40 105 105 CASTROL INDIA LIMITED: A BRIEF HISTORY In the year 1899, Sir Charles Cheers Wakefield established an oil company. In 1909, he produced a new lubricant and branded it as Castrol which revolutionized the transport industry in the first half of the 20th century. For more than a century, his company’s philosophy has been that progress could best be achieved in partnership with the customers. Wakefield established the foundations of a specialist lubricant company committed to premium quality, high performance, and leading edge technology. Through this company, he played a key role in developing transport industries and the pioneering days of record achievements. 1 The Indian branch of Castrol was set up in 1919 and the name was subsequently changed to Castrol Limited in 1944. It became a part of Burmah Castrol Plc. group in 1966. During the year 1981, it was amalgamated with Indrol Lubricants and Specialties Limited with equity stake of 40 per cent. The name of the company was changed to Castrol India Limited with effect from November 1990. 2 CIL had a presence in the premium automotive segment, whether it was a commercial vehicle, a motorcycle or a car. The automotive segment of the lubricant industry was not only big but also growing in value 3 and CIL had a respectable presence in them. BP,4 one of the world’s largest petroleum and petrochemical companies, acquired Burmah Castrol Plc and as a result of the global merger, Tata BP Lubricants India Ltd. was merged with CIL with effect from January 1, 2001 and, accordingly, CIL became a part of BP. BP acquired 70. 92 per cent equity stake in CIL in March 2000 (for shareholding pattern, refer to Table 4). With the amalgamation of Tata BP Lubricants India Ltd. with CIL and the discontinuation of the Tata BP brand, CIL had the opportunity of launching a new diesel engine oil offering a novel proposition. Under the BP master brand, CIL targeted a new consumer segment hitherto untapped by the Castrol range of lubricants. It offered a unique benefit of 5. 1 per cent diesel consumption which had been widely accepted by the consumers. 1 2 3 Table 4: Shareholding Pattern as on 13th June 2002 Particulars No. of Shareholders No. of Shares Held 87,687,455 135,474 1,355,424 23,927 137,141 7,516,646 460,352 195,790 1,276,122 24,831,037 20,930 123,640,298 Paid-up Capital (%) 70. 92 0. 11 1. 1 0. 02 0. 11 6. 08 0. 37 0. 16 1. 03 20. 08 0. 08 100 Foreign collaborators 1 Foreign companies 1 Foreign institutional investors 20 Overseas corporate bodies 11 Non-resident individuals 286 Financial institutions 14 Indian mutual funds 31 Banks 164 Domestic companies 1,854 Resident individuals 84,157 Directors and relatives 4 Total 86,543 www. castrol. com/castrol/history_flash. html www. indiainfoline. om The share of automotive segments in the lubricants industry is 60 per cent as reported by www. karvey. com. BP operates in more than 100 countries and employs more than 100,000 people whilst serving 10 million customers a day across six continents and is a leading player in the global lubricants market. 4 Other products launched under the BP brand included gear oils and greases for the trucking segment (Annual Report, 2001). At the macro level, CIL had the ambition of becoming a market leader in the lubricant industry and, therefore, it was able to identify the role it must play. According to CRISIL’s report on CIL in 2002: CIL has a strong brand equity, wide distribution network, and demonstrated product innovation ability which will enable it to maintain its market position in the medium term. Besides, the company’s merger with Tata BP in the calendar year 2001 is expected to result in an enhanced distribution network. This will also enable the company to enter the lower segment of the industry through the BP brand in addition to the dominant presence in the premium segment through its Castrol brand of lubricants. Accordingly, in India, the company chose to focus on select strategic market spaces where they believed that value creation was a must. Castrol incidentally found that the select spaces that have been identified had a lot of commonalties with India and the Indian opportunities. If the market was segmented on the price band, CIL had almost a dominant position in the premium segment. What was missing was the popular mass of the market. The acquisition of CIL by BP had brought together two great brands — BP and Castrol — and a variety of skills, particularly, marketing skills from Castrol and performance management skills from BP. The new team had created an ideal platform for growth with the combined brand and marketing expertise, global reach, and scale and cost synergies (Annual Report, 2001). CIL had a stateCASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES 106 106 of-the-art technology that was backed up by the communication and distribution system. It now acquired the BP brand that was in the area of efficiency-based cost which was also important to the consumer. This was how CIL wanted to position different brands in different segments. CIL faced a challenge: How to cohere the value creation in the premium segment by offering consumer relevant and technology-based proposition as distinct from offering generic specifications within the space? Kshatriya disclosed that the company had chosen the brand route to move to the market. Hence, it was necessary to establish a relationship with the end consumer by communicating the tangible benefits of its products to which he/she can relate. For example, this was reflected in its products like CRB Plus for reliability and longer engine life and Super TT proposition for faster pick-up and power for motorcycles. The channel, workshops, and mechanics influence the demand for the lubricants. So, one of the great marketing challenges for CIL was how to manage all the constituencies. Thus, adopting strategies such as market segmentation and managing the constituencies would enable it to get double-digit, top-line growth. The focus of CIL was on the value of the market rather than on the volumes of the markets. It had a strategy of bottom-slicing the product portfolio. For example, in the industrial segment, it focused more on national account on specific segments which was large and willing to pay a premium. CIL had gone through three phases during the last one and a half decade. The period prior to 1991 was more of a survival phase. It witnessed dramatic growth during the period 1991 to 1996. From 1997, the focus shifted to supply chain and cost management due to oil shock and intense competition. market share of six per cent. It focused on margins, made entry into the top end and value-added products, and controlled cost dramatically. There was no strategic thrust on supply chain management. The issue was one of survival and how to get the next base oil consignment. There were inadequate profits and a lot of underinvestment in plants. The company was not able to invest or earn money and not even allowed to set up factories to manufacture cable jellies for telephone cables. Effectively, it was a small company struggling for survival. Though it set up a few plants, there was under-investment and underutilization of plant capacity. Phase II: Growth Phase The first phase of liberalization in the government started in 1991 and the plan was to deregulate the oil sector in the next ten years. In the first phase, private sector lubricant companies were allowed to import base oil. MNCs ventured into this sector with the entry of Shell and Exxon Mobil. CIL made a dramatic choice at this juncture. It changed the focus from ‘survival’ to ‘growth in market share and 30 per cent growth in volume terms. ’ At the marketing end, it focused on creating new opportunities and new brands, segmenting the market, and packaging of the products. At the back-end of the business, the strategy in the supply chain was to keep pace with the explosive growth. Thus, CIL is a typical case of a company that underinvested during the 1980s, had inadequate infrastructure, and was suddenly allowed to import base oil which helped its growth. The business and operations had one theme— to ensure that the market is supplied with the product and to keep pace with the growth. The strategic thrust was on creating capacity, modernizing infrastructure, improving quality, and hiring people in order to manage change. The supply chain function in CIL was geared to make this whole change happen. The company that used to manufacture 60 million litres per annum had set a target to grow to a level of 200 million litres in the next three years. The challenge was to get people for managing the transition from a Rs 1. 50 billion business to Rs 10 billion business in the next six years. During the early 1990s, the Indian economic environment was characterized by decontrol, MNC competition, and higher GDP growth. The Indian nationalized oil companies lost their market share from 90 per cent to Phase I: Survival Phase Before 1991, CIL was constrained in its growth due to environmental factors. The base oil controls and its canalization through the Indian Oil Corporation Ltd. were in place. The Indian economy was characterized by moderate gross domestic product growth rate and dominance of nationalized oil companies. CIL did not have access to enough raw material, i. e. , base oil. During the 1980s, the focus of the company was on managing within the limited availability of base oil. The company could not grow in terms of volume because the base oil quota was fixed in terms of the then existing VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 107 107 ess than two-thirds of the market. CIL had witnessed an explosive growth phase. Ushwin D’Souza, Director–Operations, saw three themes for the supply chain during this phase: †¢ upgrade quality and service to compete with Shell and other major players †¢ revamp the packaging completely †¢ modernize all filling lines in the plant. Phase III: Cost-effective Phase In 1997, CIL took a h ard look at the economic scenario and its competitive position. By this time, it had reached a market share of 20 per cent. It had a double-digit growth rate in the past and now found it difficult to sustain that level. It could probably grow at five to six per cent in the future. The scenario had changed from volume growth and efficient infrastructure to low growth and more emphasis on infrastructure and consolidation. In 1999, the economy faced a huge oil shock and there was a dramatic increase in oil prices which had a major impact on CIL. Looking at the cost structure of CIL, 90 per cent of the costs were raw materials, five per cent were manufacturing costs, and five per cent were others. Fifty per cent of the raw material cost in value terms and 85 per cent in volume terms could be attributed to the base oil. The base oil prices are impacted by the change in demand and supply conditions in the market as well as the change in crude oil prices. The base oil prices had dramatically increased from the year 2000 onwards. Other raw materials were performance enhancer additives which would improve the performance of the product under different conditions. The oil price increase also had an impact on frontend of the CIL’s business. The lubricant demand from the trucking industry went down either because they switched to lower grade lubricants or had changed the lubricant oil after a ong time. The oil shock had affected CIL much more than anybody else. The structural changes in the industry had also affected demand for lubricant oil. The Supreme Court had mandated the change in engine technology to Euro II. The Euro II engines consume 70 per cent less oil vis-avis old engines. The competition from the PSUs had also increased as they started preparing themselves for dismantling the administe red pricing mechanism (APM) and realized that they were losing their market share. For CIL, the major issue was difficulty in marketing of diesel engine lubricant oil. The company adopted a strategy of consolidation and the challenge was how to make supply chain more effective. It changed its focus from ‘chasing capacity/chasing growth’ to ‘cost effectiveness. ’ The major change initiatives at CIL were started in 1999. The company implemented two of the three modules of the JD Edwards Enterprise Resource Planning (ERP) software package in the areas of procurement, inventory control, warehousing, distribution, and sales order processing (Annual Report, 1999). Presently, it is in the process of implementation of i2 software. MARKETING SET-UP AT CIL CIL is essentially a marketing company and its sales were effected through two channels namely ‘bazaar trade’ (retail segment) and ‘institutional sales. ’ The institutional sales accounted for 40 per cent of the lubricant market. The players in the retail channel were clearing and forwarding (CF) agents, distributors, and dealers and only CF agents in the case of institutional sales. The company prepared a purchase plan for each distributor SKU-wise and monitored the inventory norms for the distributors. It captured secondary sales data (distributor sales) by having Turview software at the distributors’ end. Its focus was on actual sales loss rather than sales loss in the pipeline. It also captured the distributors’ penetration level data. The data flow to CIL took place on a monthly basis. The company had plans to integrate Turview and JD Edward’s software in the year 2003. STRATEGIC GROUP ANALYSIS The lubricant industry is now becoming a global business. Major international firms such as Exxon Mobil, Shell, BP, and ChevronTexaco are getting even larger accounting for an even more significant market share of the global lubricants business which is estimated at 37. million tonne in 2003. Most of these major suppliers are now also managing their lubricants business on a global basis. Economies of scale are an advantage that these leading players seek in this very competitive market. This has led to erosion among the mid-size and ‘me-too’ players and an increasing polarization, that is, a move toward large and very large manufacturers, on the one hand, and small niche suppliers, on the other. Competition is, therefore, no longer limited to local, regional or even national markets but is increasingly becoming global in nature. Altogether, more than half of the world lubricants CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES 108 108 market has been part of such a concentration. Industry consolidation continues to have a major impact on company market share and ranking, on the manufacturing and business economics, on base oil supply positions, and on the competitive environment. Therefore, it has become even more important to monitor the market shares, strategies, positioning, advertising and promotion budgets, supply chain synergies, and the outlook of these players on a global basis. The responses of senior management of Hindustan Petroleum Corporation Ltd. , Gulf Oil Corporation Ltd. , Indian Oil Corporation Ltd. , and Bharat Petroleum Corporation Ltd. , to the survey questionnaire exploring the reasons for difference in performance in the Indian lubricants industry and for developing a framework in the choice of competitive strategy are given in Annexure 1. FUNCTIONAL STRATEGIES Castrol has always believed that ‘when the going gets tough, the tough gets going. ’ In order to meet the challenges involved in managing a company, CIL has developed the following six strategic themes: Health, Safety, Security, and Environment (HSSE) It is vital for a company to have concern for health, safety, security, and environment. As it becomes larger, there are pressures from different sections of the society to make it accountable. In order to fulfil its agenda of a safer factory, safer transport, and being environmentfriendly, CIL has made all the factories ISO 14000 compliant. CIL has also undertaken social investment programmes which are aimed at creating sustainable human progress. It has invested in community development work at Silvassa where one of its plants is located. The main focus is on the areas of health, hygiene, and education. It has a partnership with about 750 droughtaffected villages in Rajasthan, Gujarat, Madhya Pradesh, and Maharashtra where it is working with the villagers to develop water management systems/water harvesting mechanisms. different types of customers. The BP brand promises ‘guaranteed performance. ’ The BP diesel engine oil brand called Vanellus was launched in India in July 2001 with a formulation promising a 5. 1 per cent increase in fuel efficiency. The product brand proposition was developed after an extensive consumer research followed by the Indian RD team developing the formulation locally. The BP brand currently operates in the trucking segment and is targeted at consumers who are looking for ‘peace of mind. ’ The BP brand communication strategy is built around savings on diesel which is one of the key needs of the trucker. Besides communicating through mass media, brand communication is also done through direct consumer contact and BP Health Media and Truckers Insurance Scheme which is aimed at reaching 2,50,000 owner-drivers/drivers. The Castrol brand essence is ‘winning performance. ’ It believes in delivering premium quality and performance of the products and services they represent. Products like Castrol Activ 4T, Castrol GTX Magnatec, and Castrol CRB Plus are leaders in their market segments. Castrol GTX Magnatec offers a unique product promise — superior engine protection within the first ten minutes of a start-up when maximum engine damage occurs. Castrol CRB Plus offers a strong product promise of a longer engine life and is a market leader in the multigrade diesel engine oil segment. The distinctiveness of both BP and Castrol has been enabled by Global Research Project Alchemy which has helped build distinctive product brand architecture, identify significant value drivers, and prioritize resource application for strategic opportunities (Annual Report, 2001). Procurement Policy CIL has identified and developed ‘supply chain efficiency drivers. ’ It plans to have economies of scale through standardization of its requirements and use the same kind of technology in all its brands across the family. It also plans to achieve scale in procurements through global operations. The levers of procurement policy are simplicity, standardization, scale, and reengineering of processes. The company has worked with its suppliers, reengineered its brands, and optimized in terms of its formulations and packaging of the products. It analyses Product Market and Positioning Strategy With two great brands — BP and Castrol — in its portfolio, CIL is in a position to provide better choice to its customers and top line growth for the company. The two brands present different types of features which appeal to VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 109 109 what goes into each pack and negotiates with the suppliers. The procurement strategy is evaluated on two dimensions — criticality and the scale of spending — as shown in Figure 1. If the item is less critical due to the structure of the market or because the substitutes are available but the company has high spending on the same, then it prefers to do deals in this area either through tender process or through e-procurement or reverse auctions. In case of base oil, the structure of the market is such that only two to three suppliers are available in the global market. According to D’Souza, the increase in base oil cost is mitigated through an efficient supply chain. The working capital management performance of CIL during the period 1998 to 2001 is given in Table 5. The operating cycle has increased from 101 to 122 days and then reduced to 85 days. The cash conversion efficiency ratio has improved from 10 per cent to 15 per cent during 1999-2001. The company has taken trade debtors off its balance sheets by discounting their trade bills with the bankers. Despite an increased focus on efficient cost management and supply chain management during the period 1998 to 2001, the bottom line of the company has suffered by 8. per cent on an annual basis as against the annual Figure 1: CIL’s Procurement Strategy average of 7. 99 per cent increase in sales (Annexure 2). Even though the company has been able to optimize its base oil cost by making the best deals globally, the staff and other operating expenses have ballooned by 8. 25 per cent and 12. 97 per cent respectively as evident from the value driver analysis in Figure 2. The operating and pr ofitability performances of CIL during the period of study is cited in Tables 6 and 7. Overall, the company has created substantial shareholder value during these years (Figure 3). Kshatriya sums up Phase III of CIL as follows: †¦The other focus is in the area of being more ‘costefficient and cost-effective. ’ One of the things which has happened in this organization is that in the era of growth which was till the late 1990s, the focus was to get volumes growth and, therefore, cost efficiency and cost effectiveness were ignored. Possibly rightly so, because the organization thought it would address that later on. There are different schools of thought. My personal view is that one part is top line and the other part is cost line. You have to monitor both simultaneously in order to have an optimum profit line. Else, you would land up in a painful situation. But, we are learning from this organization†¦ Table 6: Operating Performance of CIL during 1998-2001 Particulars Cumulative Annual Growth Rate (CAGR) (%) 7. 99 8. 25 12. 97 17. 51 15. 85 -6. 5 -7. 7 -7. 7 -8. 5 Table 5: Management of Working Capital at CIL Particulars 2001 2000 67 47 8. 36 114 71 43 10 1999 69 53 14. 21 122 169 -47 10 1998 60 41 12. 2 101 72 29 14 Sales Cost of raw materials Staff expenses Operating and other expenses Excise duty Operating profit before depreciation, interest, and tax (OPBDIT) Operating profit before interest and tax (OPBIT) Profit before interest and ax (PBIT) Profits after tax (PAT) Inventory (as day’s consumption) 47 Receivables (as days of gross sales) 38 Receivables outstanding 12. 27 for more than six months (%) Operating cycle 85 Creditors 111 (as days of cost of sales) Cash conversion cycle -25 Cash conversion efficiency(%) 15 Table 7: Profitability Performance of CIL during 1998-200 1 Particulars ROA(%) NOPAT/Sales(%) Sales/Productive capital employed(times) PBIT/Net capital employed(%) PAT/Net worth(%) Tax/PBT(%) 2001 44. 82 6. 96 6. 44x 38. 77 27. 72 28. 32 2000 30. 37 8 3. 79x 41. 94 34. 12 18. 00 1999 67. 13 12. 1 5. 24x 68. 78 54. 79 20. 19 1998 44. 29 12. 31 3. 65x 49. 91 40. 28 18. 60 110 110 CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES Figure 2: Value Driver Analysis of CIL for 2001 (2000) Rationalization of Distribution Systems CIL dominates the retail lubricant market with a market share of 26 per cent and has access to over 70,000 retail outlets. With workshops gaining a substantial share of distribution channels, CIL is developing a series of innovative workshops. These Castrol-branded workshops will offer assurance and satisfaction to the involved automotive customers. In its bid to translate its brand power into ‘bazaar power,’ the company has undertaken a programme to make customer management processes comparable to the best in the world. The world-class customer management programme includes a distributor partnership programme and a structured world-class sales cell. Responsive Cost Management System Roger Elston-Green, Director, Finance, feels that cost management systems at CIL have responded to the changing dynamic environment. CIL monitors unit product costs but the focus has shifted to overheads cost VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 s a percentage of gross margin, freight and logistics cost, plant efficiency, cash profits, and returning cash to the shareholders in a tax-efficient manner. Dr A L Ravimohan, Vice-President, Technology, shares this feeling and is satisfied with the gross margin figures which they get in the management team reports. According to D’Souza, CIL has a better cost management system now than in the past. The underpinning source of cost reduction is through cultural change from chasing production volume targets to developing competitiveness through total quality movement, business process reengineering, and a change in mindset. CIL has framed a policy of cost analysis and control for its global operations in July 2002 with an underlying philosophy of extending activity-based cost management to customer-and facility-sustaining activities. It is presently evaluating the feasibility of its introduction. The proposed cost system is expected to facilitate the management decision-making process in the areas of product formulations, production scheduling, supply 111 111 Figure 3: Shareholder Value Analysis of CIL Return on assets EVA/capital employed chain costing, and customer/channel profitability analysis besides product costing. Performance Management System The performance management system at CIL is linked to volumes, profits, and working capital. The variable pay is based on achieving or exceeding the financial measures. The objective of variable pay plan at CIL is to influence the behaviour of individuals and/or teams by providing appropriate financial rewards where challenging business results are achieved. It has enabled all eligible employees to share the success of their business unit in a tangible way and encouraged ‘one team’ approach within the business unit. After acquisition by BP in July 2000, the performance management system underwent a sea change. The focus shifted from a few financial measures to a broad set of perspectives with the objective of achieving the corporate mission. Following BP’s tradition, performance contract system was introduced at all organizational levels at CIL. This set the key achievable objectives for the year in the areas of finance, strategy development, HSSE, people issues, brand and customer, ethics, and efficiencies. The robustness of the performance contract system at BP can be gauged from the fact that India, Middle East, South Asia, and Africa (AMESA)-business unit (BU) has signed a performance contract with BP (Annexure 3). The Castrol India performance unit’s (PU) performance contract is derived from the AMESA-BU performance contract. The performance contracts for other functional areas, of CIL-PU are derived from the CIL-PU performance contract. Elston-Green aptly described it as follows: BP has a philosophy of stretch targets. It will start by multiplying your targets by two and may be you do not achieve. But, you achieve 50 per cent more than what you could have set up on your own. So, we have a concept of stretch and high reward for achieving the stretch which creates a tension. Performance scorecard is instrumental in that. It is a vehicle for change. BP is lot more about understanding what is going on in each country’s performance unit, understanding what your long-term objectives are, then tracking the delivery of those longterm objectives through short-term goals and performance—tracking where you are at any moment of time. It is not just on bottom line but on all aspects of performance, be it volume, margins, cost, profits or KPIs. The AMESA-BU of BP forms a strategic part of Lubes and Services Strategic Resource Unit (SRU). The PUs of Africa, Middle East, and South Asia, and India are part of AMESA-BU. As of 2002, AMESA-BU accounts for 30 per cent of the global population and 14 per cent of the global lube demand. India is among the top 20 global lubricant markets (Newsletter of AMESA-BU, September, 2002). The AMESA-BU aspires to be number one regional lubricant marketer in terms of profitability and volume with a market share greater than 15 per cent. It plans to build strong brands with a leading share-of-attitude in its chosen markets. It plans to reach USD 115 million net income mark by 2010, contributing around 15 per cent of BP’s lubricants business (Newsletter of AMESABU, September, 2002). CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES 112 112 CIL follows a two-tier process in the formulation of key achievable objectives: the top-down process, which is the expectation of the shareholders and the bottomup process. An effort is made to get the bottom-up targets as close to top-down process targets as possible. The issue is how to bridge the gap, if any. There is a leadership team which decides on how to achieve a balance between the shareholders’ expectations and the competency available in the organization and to determine the optimal blend of the hard and soft performance measures. CHOICE OF KEY PERFORMANCE INDICATORS Key performance indicators (KPIs) are still in the process of being developed. It is done through continuous thought process. The peculiarity of the process is that the more it is changed, the more difficult it becomes to track over time. The present KPIs in the performance contract of different functional areas of CIL are in Figure 4 (see Annexure 4 for detailed definitions of the KPIs). The KPIs being monitored at Silvassa plant of CIL are in the nature of plant performance indicators and have a focus on continuous reduction in the plant cost per litre (Annexure 4). The performance contract system is BP’s way of doing business. BP has demonstrated across the world that it is a performance-driven organization. Hence, the performance contract system has been implemented at CIL-PU not only for improving sustainable real performance but also for dovetailing CIL into the BP’s systems. This system has made the employees at CIL realize that profitability is not going to come from volume growth but from efficient value growth. Unlike in manufacturing where the measurement is precise, in areas such as marketing, human resource, Figure 4: Performance Scorecard of CIL-PU †¢ †¢ †¢ †¢ †¢ Financial KPIs †¢ Replacement Cost Operating Profit (RCOP) †¢ Overheads cost as a percentage of gross margins †¢ Net cash flow †¢ Total cost per litre People KPIs †¢ Achieve compliance on all HR basics †¢ Target improvement in ESI score †¢ Value added per employee Increased Customer Emphasis KPIs Serve customer better Brand health index Consumer’s share of mind Consumer’s share of attitude Growth in market share HSSE KPIs Zero fatalities Road safety ESI compensation HSSE awareness through appropriate communication and training †¢ Limiting the days away from workplace †¢ †¢ †¢ †¢ Maximize Shareholders’ Value Ethics KPIs †¢ Raise awareness on ethics and ensure effective implementation †¢ Continue to challenge current ways of working Supply Chain KPIs †¢ Fill rate †¢ Logistics cost †¢ Supplier performance in terms of time and quality †¢ Average payment period to suppliers †¢ Innovation ratio VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 113 113 ethics, HSSE, etc. , it is difficult to develop hard quantitative measures. CIL-PU is presently undergoing a transition to a phase where the soft measures have assumed greater significance. Hence, there is little choice but to make an attempt to measure and monitor it. Subjective as these soft measures are, it calls for greater care to ensure that this quantification process does not restrict the creativity and innovative abilities of the individuals. Kshatriya aptly describes this dilemma as follows: The system is now broad-based. The good thing is that it is beyond the financials. The performance contract at the salesman level is simple. As you go up the level, wide areas are covered which you are expected to see, understand, and implement. Performance contract is what BP has adopted. We, in Castrol, followed a different system — MBO. It did not quantify. It did not have granularity. Perhaps it had lot more of subjectivity. The new system is broad; it has a lot more objectivity. As long as this objectivity does not restrict the space or freedom of individuals to operate on their own initiative, I think it is all right. As long as it is not seen as the end of life, there should not be any problem. heelers, and new trucks. The overall sales volume continued to decline due to shortfall in commercial vehicle segment which accounts for a significant part of their portfolio. The market volumes of the commercial vehicle segment have declined because of increase in the proportion of new technology trucks which consume less oil; old technology trucks extending o il change periods because of cost pressures; and lower tractor utilization because of difficult conditions in the agriculture sector. This market trend will continue until there is a revival in freight market and agricultural activity. CIL has been able to maintain its strong financial performance by unit price improvement, lower material costs, efficiencies in supply chain, and cost reduction initiatives. The vision of CIL is to be an undisputed leader in the premium automotive lubricant market. The company plans to focus on consumer, channel-partner, and OEM relationships using brands as the primary driver of their business with technology-based brand innovations; with novel consumer communications and interactions; and innovations in ‘route to market’ and customer management; and world-class supply chain and business processes. The challenge before Kshatriya is to effectively leverage the power of their two brands — Castrol and BP—and to facilitate the implementation of the company’s strategic initiatives. CONCLUSION CIL has maintained growth in the strategically important and growing segments, namely, engine oil for cars, two- Annexure 1: Responses of Senior Managers on Different Strategic Dimensions Strategic Dimensions Hindustan Petroleum Corporation Ltd. Width of your product line Target customer segments Geographical spread of markets served Price Other variables Medium to high Medium to high High Medium to high Medium Gulf Oil Corporation Ltd. High High Medium to high Low Medium to high Indian Oil Corporation Ltd. High High High Medium to high Medium Bharat Petroleum Corporation Ltd. Medium to high Medium to high Medium to high Medium to high Low to medium The degree to which you focus your efforts in terms of: The degree to which you seek brand identification rather than competition based on: The degree to which you seek to develop brand identification with the ultimate consumer: The choice of distribution channel ranging from: Directly on your own Support of distribution channels Company-owned channels Speciality outlets (Petrol pumps) Broad-line outlets Medium to high Medium to high High Medium Medium Medium Medium to high Low Low Medium Low Medium to high High Medium High High High Medium to high High Medium Contd. 114 114 CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES Strategic Dimensions Hindustan Petroleum Corporation Ltd. Raw materials (base oil, additives) Low Adherence to tolerance Medium Features Medium to high Medium to high Gulf Oil Corporation Ltd. High High High High Indian Oil Corporation Ltd. High High Medium to high Medium Bharat Petroleum Corporation Ltd. High High High The level of your product quality in terms of: The degree to which Medium you seek technological leadership as an innovator The degree to which you provide ancillary services with your product line such as engineering assistance, training The extent of vertical integration adopted and value created in the process of: The extent to which you seek low-cost position through investment in cost-minimizing facilities and equipment in: The price position of your product in the market relative to: The relationship of the MNC to have access to resources/regulations with: The size of fixed costs which have been committed in the manufacturing facilities The requirements on firm behaviour based on the relationship between the firm and the parent company Medium Medium to high High Medium Forward vertical integration Backward vertical integration Manufacturing Distribution Medium Low Medium to high Medium to high Medium to high Medium Medium Medium to high Medium High Medium Medium Medium Low to medium Medium Medium to high Cost position Produ ct quality Home government Govt. f India where it is operating Medium to high Low Medium to high Medium to high Medium to high Medium to high Medium High NA Medium Medium to high NA Low Medium Medium to high Low NA Medium NA Medium to high Medium Medium to high NA Medium to high Annexure 2: Financial Highlights of CIL (Rs in million) Year Sales and Other Income Raw materials consumed Excise duty Expenses Interest Gross Profit (Before Investment/Interest Income) Depreciation Profits before extraordinary items and taxation Depreciation for earlier year (written back) 2001 13,729. 4 6,579. 3 2,327. 8 3,081. 1 74. 6 1,629. 9 132. 4 1,534. 2 1999 12,565. 1 6,048. 0 2,177. 5 2,514. 3 72. 1,642. 7 114. 4 1,638. 8 1998 12,186. 4 5,300. 1 1,681. 0 2,517. 5 26. 2 2,548. 2 100. 8 2,560. 8 1997 10,994. 1 5,203. 9 1,512. 9 1,976. 6 25. 3 2,161. 7 84. 3 2,191. 1 1996 10,107. 8 4,893. 3 1,318. 6 1,710. 4 60. 9 2,028. 6 68. 0 2,056. 6 1995 9,055. 7 5,079. 2 979. 5 1,306. 0 169. 8 1,438. 1 44. 9 1, 476. 3 -60. 8 1994 1993 1992 1991 7,515. 1 5,685. 2 4,141. 4 2,915. 4 4,158. 3 3,161. 3 2,816. 1 1,979. 1 680. 4 461. 2 51. 9 26. 0 1,027. 2 761. 8 475. 2 293. 5 113. 7 89. 3 106. 1 74. 5 1,236. 7 1,046. 2 25. 8 25. 8 1,509. 7 1,185. 8 6. 1 601. 6 20. 1 672. 0 470. 3 13. 7 528. 6 Contd. VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 115 115 Year Profits before Taxation Taxation Deferred taxation Profits after taxation Debenture redemption reserve Dividends* Gross fixed assets** Net fixed assets** Investments Net current assets Less deferred tax liability Miscellaneous expenses Net assets Share capital Reserves and surplus** Net worth Borrowings Earnings per share*** Dividends per share*** Book value per share Debt-equity ratio Duty and tax payments * ** 2001 1,534. 2 434. 5 15. 7 10,84. 0 927. 3 2,439. 5 18,06. 3 1,199. 0 1,359. 2 171. 9 4,192. 6 1,236. 4 2,730. 3 3,966. 7 225. 9 8. 77 7. 5 32. 08 0. 18:1 5,277. 7 1999 1,638. 8 295. 0 1,343. 8 926. 3 2,234. 9 1,726. 6 3. 7 2,379. 5 1998 2,560. 8 517. 0 2,043. 8 2,470. 1 2,118. 2 1,709. 8 829. 8 1,252. 5 1997 2,191. 1 407. 5 1,783. 6 926. 3 1,881. 8 1,567. 9 1,055. 4 1,867. 6 1996 2,056. 6 475. 0 1,581. 6 741. 0 1,733. 1 1,502. 1 805. 1 1,430. 7 1995 1,476. 3 531. 0 945. 3 524. 9 1,449. 9 1,284. 9 625. 0 1,527. 3 1994 1993 1992 665. 9 261. 5 404. 4 1,23. 2 3,84. 2,38. 0 990. 1 800. 2 1991 528. 6 204. 0 324. 6 78. 8 290. 0 158. 4 400. 7 772. 5 1,570. 5 1,185. 8 540. 0 456. 0 1,030. 5 729. 8 4. 5 3. 2 524. 9 289. 5 854. 1 517. 5 732. 1 346. 9 1,174. 3 1,493. 4 1,074. 1 656. 8 4,109. 8 1,235. 0 2,703. 8 3,938. 8 171. 0 10. 88 7. 5 31. 89 0. 14:1 5,074. 3 3,792. 1 1,235. 0 2,495. 1 3,730. 1 61. 9 16. 55 20 30. 2 0. 05:1 5,101. 4 4490. 9 617. 5 3,810. 7 4,428. 2 62. 7 28. 88 15 71. 71 0. 1:1 4,408. 2 3,737. 9 617. 5 3,045. 8 3,663. 3 74. 7 25. 61 12 59. 32 0. 1:1 4,082. 9 3,437. 2 617. 5 2,313. 2 2,930. 7 506. 5 15. 31 8. 5 47. 48 0. 2:1 3,531. 1 2,980. 5 617. 5 1,892. 8 2,510. 3 470. 3 16. 69 8. 5 40. 65 0. :1 2,752. 8 2,497. 1 385. 9 1,612. 0 1,997. 9 499. 2 18. 91 7. 5 51. 77 0. 3:1 2,200. 0 1. 1 2,028. 3 1,332. 7 193. 0 157. 6 1,359. 1 735. 0 1,552. 1 892. 6 476. 3 440. 1 20. 96 20. 6 7. 5 5 80. 43 56. 64 0. 3:1 0. 5:1 1,590. 2 811. 2 Includes Rs. 2. 50 special for 75th year in 1993, Re 1. 00 special in 1995, and Rs. 10. 00 special in 1999. Figures for the year 1992 for gross fixed assets and net fixed assets and reserves and surplus are after considering the effects of revaluation of certain fixed assets. *** Arrived at after considering a number of shares at the end of the period including right shares/bonus shares issued in the relevant period. Annexure 3: AMESA (India, Middle East, South Asia and Africa)-BU 2002 Performance Scorecard Performance Measures Strategy †¢ Complete the BU strategy by the end of Q2 HSSE †¢ Focus on road safety as a key area for improvement with a 44 per cent target reduction in RAR vs. 2001 (RAR-2971661. 49) †¢ Target zero fatalities for the BU †¢ Contribute to limiting the number of DAFW cases in the SRU to the 18 cases †¢ Continue to raise HSSE awareness through appropriate communication, training, and process changes †¢ Spills (medium and large) †¢ ASA audits (competed in traction) †¢ Standard Near Miss Reporting System in place in countries People †¢ †¢ Achieve compliance on all HR basics (appraisals, upward feedback, career development discussions, training days, etc. ) Target 1 per cent improvement in ESI score Performance Min. Goal Stretch Available Min. Points Stretch Increased Customer Emphasis †¢ Serve our customers better across target markets, driving volume growth 2 per cent above the markets in core markets †¢ Re-engage with the customers and consumers through targeted revenue investments to strengthen the Brand Health Measure Brand Health Index in four key countries (India, South Africa, UAE and Iran) and target an 8 per cent improvement vs. previous year †¢ Fully implement the Alchemy framework to ensure delivery of highlighted top-line benefits Contd. 116 116 CASTROL INDIA LIMITED: MANAGING IN CHALLENGING TIMES Performance Measures †¢ Achieve top-line growth targets for target new markets / segments — Iran and BP brand and institutional business in India. Develop options for two new market developments in Africa Performance Min. Goal Stretch Available Min. Points Stretch Ethics †¢ Continue to raise awareness on ethics and ensure effective implementation of the new Facilitation Payment Policy †¢ Focus on risk assessments, continue to challenge current ‘ways of working’ and implement necessary remedial actions Financial Performance †¢ Replacement Cost Operating Profits (RCOP) $ million †¢ Total cost/Gross margins (%) †¢ Net cash flows $ million Annexure 4: CIL’s Silvassa Plant KPIs Key Performance Indicators Yield = Definition of KPIs Output/Input Output = Closing stock (all) + Dispatches (all) Input = Opening stock (all) + Receipts (external) It is being monitored on a monthly basis and the target is 99. per cent Number of line (SKUs) hits/Number of line (SKUs) indented The benchmark line fill is 97 per cent Volume of hits/Volume indented The benchmark is 99 per cent Number of orders serviced/Number of orders placed Conversion cost/Production in litres Plant overheads/Production in litres To tal number of blends without any amendments/Total number of blends taken Total number of blends without any amendments + Blends with base oil amendments/ Total number of blends taken Number of packages lost/Number of packs filled The packages lost include number of caps, labels, foils, cartons, and containers The benchmark packaging yield is less than 0. 5 per cent. Actual KL produced/Total man hours It is worked out for each family and each line Actual KL per hour/Rated capacity in KL per hour Total man hours required/Man hours available Total man hours required = (Total production for the month/Capacity in KL per hour ) X Manpower used on the line Man hours available = (Number of workers X Number of days available during the month X Shift time) + Overtime hours Line fill (for stock transfers) Volume fill (for stock transfers) In-full on time(for direct sales) Line fill Manufacturing overheads per litre First time pass rate(%) First time pass rate (oil)(%) Packaging yield(%) = = = = = = = = Filling line productivity (KL/man hour) Operational equipment efficiency(%) Manpower efficiency(%) = = = Acknowledgment †¢ The author acknowledges the financial support received from the All India Council for Technical Education (AICTE), New Delhi, under the RD scheme. The author also acknowledges the support provided by Mr Subhashish Saha, Research Associate. Manoj Anand is Professor in Finance and Accounting Area at Indian Institute of Management, Indore. A Ph. D. rom the UBS, Panjab University, Chandigarh, he is a Fellow of the Institute of Cost and Works Accountants of India, Kolkata. He VIKALPA †¢ VOLUME 30 †¢ NO 1 †¢ JANUARY MARCH 2005 has worked with Customs and Central Excise Commissionerate as an ICAS Officer. He has vast tea ching, research, and consulting experience with different business schools such as S P Jain Institute of Management Research, Mumbai; Management Development Institute (MDI), Gurgaon; National Institute of Financial Management, Faridabad; and UBS, Panjab University, Chandigarh. His areas of interest include strategic cost management, corporate finance, and project finance and control. e-mail: [emailprotected] ac. in 117 117