MEDIA INDUSTRY Media, the fourth estate, when entwined with the entertainment component represents an effective facet

of consumers in India. Technology has played a key role in influencing the entertainment industry, by redefining its products, cost structure and distribution. The Indian Media and Entertainment (M&E) industry stood at US$ 12.9 billion in 2009 registering a 1.4 per cent growth over last year, according to a joint report by KPMG and an industry chamber. Over the next five years, the industry is projected to grow at a compound annual growth rate (CAGR) of 13 per cent to reach the size of US$ 24.04 billion by 2014, the report stated. Additionally, the gaming segment is expected to be the fastest growing sector in the M&E industry. The sector showed a 22 per cent growth in 2009 and is expected to grow at a CAGR of 32 per cent to reach US$ 705.2 million by 2014, while the animation segment is expected to record a CAGR of 18.7 per cent in the next five years as per the joint report. Television According to the figures released by an industry chamber in March 2010, the Broadcast and Television (TV) sector comprised over 43 per cent of the overall M&E sector wherein the total size of the television sector accounted for US$ 5.7 billion. The broadcast sector is on a strong growth path and the outlook for advertisement expenditure is on a rise for the television sector.A report by research firm Media Partners Asia (MPA) stated that India is poised to become the world's largest direct-to-home (DTH) satellite pay TV market with 36.1 million subscribers by 2012, overtaking the US. Furthermore, in its report titled 'Asia Pacific Pay-TV and Broadband Markets 2010', MPA said India's DTH subscriber base will increase from 17 million in 2009 to 45 million by 2014 and 58 million by 2020. Anil Dhirubhai Ambani Group's company, Reliance MediaWorks (RMW) has signed a memorandum of understanding (MoU) with IMAGICA Corp of Japan for film processing services. Under this alliance, RMW, on behalf of IMAGICA, would provide film restoration, image processing and enhancement and high definition (HD) conversion services to the Japanese clients. IMAGICA Corp would work with RMW's Los Angeles-based subsidiary Lowry Digital, which has handled projects for leading studios like Walt Disney, Paramount Pictures, MGM and 20th Century Fox. RMW would be doing the processing job for IMAGICA either in India or in California in the US.

Music The music industry is a vast entity and over the years it has witnessed change significantly. The potential of the Indian music industry can be better understood from its size estimated at around US$ 182.9 million in 2010, up from US$ 160.9 million in 2008, portraying a growth of 14 per cent during the reporting period. It is expected to grow at a CAGR of 16 per cent over 2010-14 to reach US$ 379.1 million. Radio Radio is considered a mass medium. It ideally suits the Indian environment - leveraging its twin advantages of wide coverage and cost effectiveness. Currently, the sector generates annual revenues worth US$ 49.5 million and is growing at around 20 percent annually, according to the joint report by KPMG and an industry chamber. To exploit the true potential of this sector, frequency modulation (FM) radio needs to step up its penetration to at least 300 stations in 100 cities, which would further attract an investment of US$ 899,160 per radio station frequency, the total additional investment required has been estimated at US$ 247.3 million, according to industry sources.Radio is expected to grow at a CAGR of 16 per cent over 2010-14 and reach to a size of US$ 361.4 million by 2014.Globally, radio is enjoying a revival, based on the support of the youth, with players like Radio Mirchi emerging out as one of the clear leaders with over 41.2 million listeners, as per the recently published Indian Readership Survey (IRS) quarter 1 (Q1), 2010. VedantiNET, the Broadband and application service provider of Guwahati promoted by SM Computer Consultants Pvt Ltd, has launched the service of first Internet Radio of Assam, Radio Assam', in the city Advertising A report by consultancy firm KPMG stated that the US$ 5.2 billion advertising industry is set to grow at a compounded annual growth rate (CAGR) of 14 per cent in 2010, in comparison to the last year. KPMG observed that online advertising will grow about 30 per cent per annum, establishing itself as the fastest growing advertising medium. While elaborating further it stated that the growth in regional advertising is partly driven by new sectors such as

education, hospitality, jewellery and real estate which often have local brands and therefore prefer to advertise through local channels. Emphasising on the Internet advertising industry, KPMG said the US$ 185 million industry would encourage both multinational companies and local brands to focus on their marketing strategies. Cinema Films Division has been motivating the broadest spectrum of the Indian public with a view to enlisting their active participation in nation building activities. According to the joint report by KPMG and an industry chamber, the film industry contracted 14 per cent growth in 2009 wherein the industry is projected to grow at a CAGR of 9 per cent to touch an estimated amount of US$ 3.02 billion over the next five years. Growth drivers for the sector would include expansion of factors like an increase in the number of multiplex screens, digital screens facilitating wider releases, higher cable and satellite revenues, improving collections from the overseas markets and supplementary revenue streams like DTH, digital downloads, etc, which are expected to emerge in future. Reliance MediaWorks Ltd has signed a deal with UFO Moviez to establish a gateway for digital film releases on Indian screens. The pact will enable the firm to combine UFO Moviez' digitisation technology with its programming expertise and digital cinema experience as stated by Reliance Mediaworks. Print/Publishing The print media industry is projected to grow at a CAGR of 9 per cent and targets to reach around US$ 5.93 billion by 2014, according to the joint report by KPMG and an industry chamber. Jagran Prakashan of Jagran Group, which publishes one of India's largest read language dailies, stated that it will acquire all the publications of Mid-Day Multimedia in a stock deal valued nearly at US$ 40 million.

Foreign investment, including foreign direct investments (FDI) and investment by nonresident Indians (NRIs)/person of Indian origin (PIO)/foreign institutional investor (FII), up to 26 per cent, is permitted for publishing of newspapers and periodicals dealing with news and current affairs under the Government route. FDI policy for publication of Indian editions of foreign magazines dealing with news and current affairs is:
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Foreign investment, including FDI and investment by NRIs/PIOs/FII, up to 26 per cent, is permitted under the Government route.

'Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news.

Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information and Broadcasting (I&B) on Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals 100per cent FDI is permitted under the Government route.

Theatre Mexico-based multiplex operator Cinepolis plans to set up 40 screens over the next 12 months in India, which could entail an investment of US$ 28 million. Milan Saini, Head and Managing Director, Cinepolis India Country stated that "India is a huge opportunity for us as the market is under-penetrated. We plan to set up 40 screens over the next 12 months across seven properties in cities like Mumbai, Bangalore, Chennai and Hyderabad." Digital Media The digital technologies and their innovative applications have changed the entertainment sector considerably, especially the content production and its quality. Internet has also emerged as the latest revenue stream and has become one of the fastest growing advertising medium and has made a significant impression on the entertainment industry.

Officials in the Information and Broadcasting Ministry have planned a roadmap for making broadcasting operations completely digital. The Telecom Regulatory Authority of India (TRAI) has suggested a three-stage process for digitisation, wherein tier one cities would be covered by 2013, tier two cities by 2014 and tier three cities by 2017. They further stated that the digital transmission helps in enhancing the audio and picture quality. Madison Media bagged the media buying account of US carmaker General Motors (GM), estimated at more than US$ 22.1 million. GM, the third biggest ad spender among auto companies in the country after Maruti Suzuki and Hyundai Motor, has given the account to Madison for a period of three years. Government Initiatives The Government has initiated the following measures:
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The government has allotted US$ 50.13 million in the current Five-Year Plan (20072012) for various development projects for the film industry. The funds will be utilized to set up a centre for excellence in animation, gaming and visual effects

To offer better audio quality and sharper picture to millions of its viewers, public broadcaster Doordharshan plans to go completely digital by 2017

According to the Consolidated Foreign Direct Investment (FDI) Policy document released by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, foreign investment, including foreign direct investments (FDI) and investment by non-resident Indians (NRIs)/person of Indian origin (PIO)/foreign institutional investor (FII), up to 26 per cent, is permitted for publishing of newspapers and periodicals dealing with news and current affairs under the Government route. The Consolidated FDI Policy document brings forth the following guidelines for the M&E industry:
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Terrestrial Broadcasting FM (FM Radio): Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 20 per cent equity for FM

Radio's Broadcasting Services with prior approval of the Government subject to such terms and conditions as specified from time to time by Ministry of Information and Broadcasting for grant of permission for setting up of FM radio stations
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Cable Network: Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 49 per cent for cable networks under Government route subject to Cable Television Network Rules, 1994 and other conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)

Directto-Home: Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 49 per cent for Direct to Home under Government route. Within the limit of 49 per cent, FDI will not exceed 20 per cent. This will be subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)

The total direct and indirect foreign investment including portfolio and foreign direct investment in Headend-In-The-Sky (HITS) Broadcasting Service shall not exceed 74 per cent. FDI upto 49 per cent would be on automatic route and beyond that under government route. This will be subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)

FDI policy in the Up-linking of TV Channels is as under:

o

Foreign investment of FDI and FII up to 49 per cent would be permitted under the Government route for setting up Up-linking HUB/ Teleports;

FDI up to 100 per cent would be allowed under the Government route for Up linking a Non-News & Current Affairs TV Channel;

Foreign investment of FDI and FII up to 26 per cent would be permitted under the Government route for Up-linking a News & Current Affairs TV Channel subject to the condition that 48 the portfolio investment from FII/ NRI shall not be "persons acting in concert" with FDI investors, as defined in the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997

Going Global Reliance Big Entertainment, owned by Anil Ambani, has bought half of UK's games and publishing company, Codemasters. The investment is expected to open up the fast-growing

Indian market for Codemasters, in order to assist Reliance tap the potential of games which is vividly catching the fantasy of the growing local interest. Rod Cousens, CEO of Codemasters stated that the deal will help the company realise the full potential of their game coding and online excellence across various platforms, especially in the world's fastest-growing markets. Exchange rate used: 1 USD = 45.37 INR (as on March 2010) 1 USD = 44.49 INR (as on May 2010) MARKET SIZE Definition The number of buyers and sellers in a particular market. This is especially important for companies that wish to launch a new product or service, since small markets are less likely to be able to support a high volume of goods. Large markets could bring in more competition. Business Planning: How to Size an Emerging Market In developing their business plans, companies of all sizes face the challenge of determining the size of their markets. To begin, companies must present the size of their "relevant market" in their plans. The relevant market equals the company's sales if it were to capture 100% of its specific niche of the market. Conversely, stating that you were competing in the $1 trillion U.S. healthcare market, for example, is a telltale sign of a poorly reasoned business plan, as there is no company that could reap $1 trillion in healthcare sales. Defining and communicating a credible relevant market size is far more powerful than presenting generic industry figures. The challenge that many firms face is their inability to size their relevant markets, particularly if they are competing in new or rapidly evolving markets. On one hand, the fact that the markets are new or evolving is the reason why there may be a large opportunity to establish them and become the market leader. Conversely, investors, shareholders and senior management are often skeptical to invest resources because, since the markets do not yet exist, the markets may be too

small, or not really exist at all. In developing over 200 business plans for emerging ventures, venture capital firms, SMEs and Fortune 500 spinouts, Growthink has encountered the challenge of sizing emerging markets numerous times and has developed a proprietary methodology to solve the problem. To begin, it is critical to understand why traditional market sizing methodologies are illequipped to size emerging markets. To illustrate, if a research firm were to use traditional methods to size a mature market such as the coffee market in the United States, it would consider demographic trends (e.g., aging baby boomers), psychographic trends (e.g., increased health consciousness), past sales trends and consumption rates, price movements, competitor brand shares and new product development, and channels/retailers among others. However, conducting such an analysis for emerging markets presents a challenge as several of these factors (e.g., past sales, demographics of the customer when there are no current customers) don't exist because the markets are presently untapped. The methodology required to size these new markets requires two approaches. Each approach will yield a different approximation of the potential market size, and often the figures will work together to provide a solid foundation for the market's potential. Growthink calls the first approach "peeling back the onion." In this approach, we start with the generic market (e.g., the coffee market) that that company is trying to penetrate, and remove pieces of that market that it will not target. For instance, if the company created an ultra high-speed coffee maker that retailed for $600, it would initially reduce the market size by factors such as retail channels (e.g., mass marketers would not carry the product), demographic factors (lower income customers would not purchase the product), etc. By peeling back the generic market, you eventually will be left with only the relevant portion of it. The second methodology requires assessing the market from several angles to approximate the potential market share, answering questions including:
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Competitors: who is competing for the customer that you will be serving; what is in their product pipeline; once you release a product/service, how long will it take them to

enter

the

market,

who

else

may

enter

the

market,

etc.

Customers: what are the demographics and psychographics of the customers you will be targeting; what products are they currently using to fulfill a similar need (substitute products); how are they currently purchasing these products; what is their degree of loyalty to current providers, etc.

Market factors: what other factors exist that will influence the market size - government regulations; market consolidation in related markets, price changes for raw materials, etc.

Case Studies: what other markets have experience similar transformations and what were the customer adoption rates in those markets, etc.

While these methodologies are often more painstaking than traditional market techniques, they can be the difference in determining whether your company has the next iPod or the next Edsel. COMPETITIVE ANALYSIS Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context through which to identify opportunities and threats. Competitor profiling coalesces all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment. Given that competitor analysis is an essential component of corporate strategy, it is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives. As a result, traditional environmental scanning places many firms at risk of dangerous competitive blindspots due to a lack of robust competitor analysis. Competitor array

One common and useful technique is constructing a competitor array. The steps include:
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Define your industry - scope and nature of the industry Determine who your competitors are Determine who your customers are and what benefits they expect Determine what the key success factors are in your industry Rank the key success factors by giving each one a weighting - The sum of all the weightings must add up to one.

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Rate each competitor on each of the key success factors Multiply each cell in the matrix by the factor weighting.

This can best be displayed on a two dimensional matrix - competitors along the top and key success factors down the side. An example of a competitor array follows Key Industry Success Factors Competitor Competitor Competitor Competitor Weighting 6 4 3 7 20 #1 rating #1 weighted #2 rating #2 weighted 2.4 1.2 .6 .7 4.9 3 5 3 4 15 1.2 1.5 .6 .4 3.7

1 - Extensive distribution .4 2 - Customer focus 3 - Economies of scale 4 - Product innovation Totals .3 .2 .1 1.0

In this example competitor #1 is rated higher than competitor #2 on product innovation ability (7 out of 10, compared to 4 out of 10) and distribution networks (6 out of 10), but competitor #2 is rated higher on customer focus (5 out of 10). Overall, competitor #1 is rated slightly higher than competitor #2 (20 out of 40 compared to 15 out of 40). When the success factors are weighted according to their importance, competitor #1 gets a far better rating (4.9 compared to 3.7). Two additional columns can be added. In one column you can rate your own company on each of the key success factors (try to be objective and honest). In another column you can list

benchmarks. They are the ideal standards of comparisons on each of the factors. They reflect the workings of a company using all the industry's best practices. Competitor profiling The strategic rationale of competitor profiling is powerfully simple. Superior knowledge of rivals offers a legitimate source of competitive advantage. The raw material of competitive advantage consists of offering superior customer value in the firms chosen market. The definitive characteristic of customer value is the adjective, superior. Customer value is defined relative to rival offerings making competitor knowledge an intrinsic component of corporate strategy. Profiling facilitates this strategic objective in three important ways. First, profiling can reveal strategic weaknesses in rivals that the firm may exploit. Second, the proactive stance of competitor profiling will allow the firm to anticipate the strategic response of their rivals to the firms planned strategies, the strategies of other competing firms, and changes in the environment. Third, this proactive knowledge will give the firms strategic agility. Offensive strategy can be implemented more quickly in order to exploit opportunities and capitalize on strengths. Similarly, defensive strategy can be employed more deftly in order to counter the threat of rival firms from exploiting the firms own weaknesses Clearly, those firms practicing systematic and advanced competitor profiling have a significant advantage. As such, a comprehensive profiling capability is rapidly becoming a core competence required for successful competition. An appropriate analogy is to consider this advantage as akin to having a good idea of the next move that your opponent in a chess match will make. By staying one move ahead, checkmate is one step closer. Indeed, as in chess, a good offense is the best defense in the game of business as well. A common technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor's background, finances, products, markets, facilities, personnel, and strategies. This involves:
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Background
o o

location of offices, plants, and online presences history - key personalities, dates, events, and trends

o y

ownership, corporate governance, and organizational structure

Financials
o o o

P-E ratios, dividend policy, and profitability various financial ratios, liquidity, and cash flow Profit growth profile; method of growth (organic or acquisitive)

Products.
o o o o o o

products offered, depth and breadth of product line, and product portfolio balance new products developed, new product success rate, and R&D strengths brands, strength of brand portfolio, brand loyalty and brand awareness patents and licenses quality control conformance reverse engineering

Marketing
o o

segments served, market shares, customer base, growth rate, and customer loyalty promotional mix, promotional budgets, advertising themes, ad agency used, sales force success rate, online promotional strategy

distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage

o y

pricing, discounts, and allowances

Facilities
o

plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment

o y

location, shipping logistics, and product mix by plant

Personnel
o o o

number of employees, key employees, and skill sets strength of management, and management style compensation, benefits, and employee morale & retention rates

Corporate and marketing strategies

o o

objectives, mission statement, growth plans, acquisitions, and divestitures marketing strategies

Media scanning Scanning competitor's ads can reveal much about what that competitor believes about marketing and their target market. Changes in a competitor's advertising message can reveal new product offerings, new production processes, a new branding strategy, a new positioning strategy, a new segmentation strategy, line extensions and contractions, problems with previous positions, insights from recent marketing or product research, a new strategic direction, a new source of sustainable competitive advantage, or value migrations within the industry. It might also indicate a new pricing strategy such as penetration, price discrimination, price skimming, product bundling, joint product pricing, discounts, or loss leaders. It may also indicate a new promotion strategy such as push, pull, balanced, short term sales generation, long term image creation, informational, comparative, affective, reminder, new creative objectives, new unique selling proposition, new creative concepts, appeals, tone, and themes, or a new advertising agency. It might also indicate a new distribution strategy, new distribution partners, more extensive distribution, more intensive distribution, a change in geographical focus, or exclusive distribution. Little of this intelligence is definitive: additional information is needed before conclusions should be drawn. A competitor's media strategy reveals budget allocation, segmentation and targeting strategy, and selectivity and focus. From a tactical perspective, it can also be used to help a manager implement his own media plan. By knowing the competitor's media buy, media selection, frequency, reach, continuity, schedules, and flights, the manager can arrange his own media plan so that they do not coincide. Other sources of corporate intelligence include trade shows, patent filings, mutual customers, annual reports, and trade associations. Some firms hire competitor intelligence professionals to obtain this information. The Society of Competitive Intelligence Professionals maintains a listing of individuals who provide these services. New competitors In addition to analyzing current competitors, it is necessary to estimate future competitive threats. The most common sources of new competitors are as follows:

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Companies competing in a related product/market Companies using related technologies Companies already targeting your prime market segment but with unrelated products Companies from other geographical areas and with similar products New start-up companies organized by former employees and/or managers of existing companies

The entrance of new competitors is likely when:

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There are high profit margins in the industry There is unmet demand (insufficient supply) in the industry There are no major barriers to entry There is future growth potential Competitive rivalry is not intense Gaining a competitive advantage over existing firms is feasible

Competitive analysis (online algorithm) Competitive analysis is a method invented for analyzing online algorithms, in which the performance of an online algorithm (which must satisfy an unpredictable sequence of requests, completing each request without being able to see the future) is compared to the performance of an optimal offline algorithm that can view the sequence of requests in advance. An algorithm is competitive if its competitive ratiothe ratio between its performance and the offline algorithm's performanceis bounded. Unlike traditional worst-case analysis, where the performance of an algorithm is measured only for "hard" inputs, competitive analysis requires that an algorithm perform well both on hard and easy inputs, where "hard" and "easy" are defined by the performance of the optimal offline algorithm. For many algorithms, performance is dependent on not only the size of the inputs, but also their values. One such example is the quicksort algorithm, which sorts an array of elements. Such data dependent algorithms are analysed for average case and worst case data. Competitive analysis is a way of doing worst case analysis for on-line and randomized algorithms, which are typically data dependent.

In competitive analysis, one imagines an "adversary" that deliberately chooses difficult data, to maximize the ratio of the cost of the algorithm being studied and some optimal algorithm. Adversaries range in power from the oblivious adversary, which has no knowledge of the random choices made by the algorithm pitted against it, to the adaptive adversary that has full knowledge of how an algorithm works and its internal state at any point during its execution. Note that this distinction is only meaningful for randomized algorithms. For a deterministic algorithm, either adversary can simply compute what state that algorithm must have at any time in the future, and choose difficult data accordingly. For example, the quicksort algorithm chooses one element, called the "pivot" that is, on average, not too far from the center value of the data being sorted, and then separates the data into two piles, one of which contains all elements with value less than the value of the pivot, and the other containing the rest of the elements. If quicksort chooses the pivot in some deterministic fashion (for instance, always choosing the first element in the list), then it is easy for an adversary to arrange the data beforehand so that quicksort will perform in worst case time. If, however, quicksort chooses some random element to be the pivot, then an adversary without knowledge of what random numbers are coming up cannot arrange the data to guarantee worst case execution time for quicksort. The classic on-line problem first analysed with competitive analysis (Sleator & Tarjan 1985) is the List Update problem: Given a list of items and a sequence of requests for the various items, minimize the cost of accessing the list where the elements closer to the front of the list cost less to access. (Typically, the cost of accessing an item is equal to its position in the list.) After an access, the list may be rearranged. Most rearrangements have a cost. The Move-ToFront algorithm simply moves the requested item to the front after the access, at no cost. The Transpose algorithm swaps the accessed item with the item immediately before it, also at no cost. Classical methods of analysis showed that Transpose is optimal in certain contexts. In practice, Move-To-Front performed much better. Competitive analysis was used to show that an adversary can make Transpose perform arbitrarily badly compared to an optimal algorithm, whereas Move-To-Front can never be made to incur more than twice the cost of an optimal algorithm.

DEMOGRAPHIC ISSUES Demographics or demographic data are the characteristics of a human population as used in government, marketing or opinion research, or the demographic profiles used in such research. Note the distinction from the term "demography" (see below.) Commonly used demographics include sex, race, age, income, disabilities, mobility (in terms of travel time to work or number of vehicles available), educational attainment, home ownership, employment status, and even location. Distributions of values within a demographic variable, and across households, are both of interest, as well as trends over time. Demographics are frequently used in economic and marketing research. It is important to distinguish between demographics and psychographics. Demographic trends describe the changes in demographics in a population over time. For example, the average age of a population may increase over time. It may decrease as well. Certain restrictions may be set in place changing those numbers. For instance in China with the one child policy. [clarification needed][citation needed] The term demographics as a noun is often used erroneously in place of demography, the study of human population, its structure and change. Although there is no absolute delineation, demography focuses on population structure, processes and dynamics, whereas demographics is most often used in the fields of media studies, advertising, marketing, and polling, and should not be used interchangeably with the term "demography" or (more broadly) "population studies". Demographic profiles in marketing Marketers typically combine several variables to define a demographic profile. A demographic profile (often shortened to "a demographic") provides enough information about the typical member of this group to create a mental picture of this hypothetical aggregate. For example, a marketer might speak of the single, female, middle-class, age 18 to 24, college educated demographic. Marketing researchers typically have two objectives in this regard: first to determine what segments or subgroups exist in the overall population; and secondly to create a clear and

complete picture of the characteristics of a typical member of each of these segments. Once these profiles are constructed, they can be used to develop a marketing strategy and marketing plan. The five types of demographics in marketing are age, gender, income level, race and ethnicity. Generational cohorts A generational cohort has been defined as "the group of individuals (within some population definition) who experience the same event within the same time interval".The notion of a group of people bound together by the sharing of the experience of common historical events developed in the early 1920s. Today the concept has found its way into popular culture through well known phrases like "baby boomer" and "Generation X". The United Kingdom has a series of four national birth cohort studies, the first three spaced apart by 12 years: the 1946 National Survey of Health and Development, the 1958 National Child Development Study, the 1970 British Cohort Study, and the Millennium Cohort Study, begun much more recently in 2000. These have followed the lives of samples of people (typically beginning with around 17,000 in each study) for many years, and are still continuing. As the samples have been drawn in a nationally representative way, inferences can be drawn from these studies about the differences between four distinct generations of British people in terms of their health, education, attitudes, childbearing and employment patterns. The last three are run by the Centre for Longitudinal Studies Criticisms and qualifications of demographic profiling Demographic profiling is essentially an exercise in making generalizations about groups of people. As with all such generalizations many individuals within these groups will not conform to the profile - demographic information is aggregate and probabilistic information about groups, not about specific individuals. Critics of demographic profiling argue that such broad-brush generalizations can only offer such limited insight and that their practical usefulness is debatable. However, if the conclusions drawn are statistically valid and reproducible, these criticisms are not as well founded. Most demographic information is also culturally based. The generational cohort information above, for example, applies primarily to North America (and to

a lesser extent to Western Europe) and it may be unfruitful to generalize conclusions more widely as different nations face different situations and potential challenges. ECONOMIC ISSUES The economic problem, sometimes called the fundamental economic problem, is one of the fundamental economic theories in the operation of any economy. It asserts that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. Economics revolves around methods and possibilities of solving the economic problem. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants. Overview The economic problem is most simply explained by the question "how do we satisfy unlimited wants with limited resources?" The premise of the economic problem model is that human wants are constant and infinite due to constantly changing demands (often closely related to changing demographics) of the population. However, resources in the world to satisfy human wants are always limited to the amount of natural or human resources available. The economic problem, and methods to curb it, revolve around the idea of choice in prioritizing which wants can be fulfilled. Concepts in the economic problem Wants While the basic needs of human survival are important in the function of the economy, human wants are the driving force which stimulates demand for goods and services. In order to curb the economic problem, economists must classify the nature and different wants of consumers, as well as prioritize wants and organize production to satisfy as many wants as possible. One assumption often made in economics (and the methods which attempt to solve the economic problem) is that humans are greedy, and thus the market must produce as much as

possible to satisfy them. These wants are often classified into individual wants, which depend on the individual's preferences and purchasing power parity, and collective wants, those of entire groups of people. Things such as food and clothing can be classified as either wants or needs, depending on what type and how often a good is asked for. Wants are effective desires for a particular product, or something which can only be obtained by working for it. Choice The economic problem fundamentally revolves around the idea of choice, which ultimately must answer the problem. Due to the limited resources available, businesses must determine what to produce first to satisfy demand. Consumers are considered the biggest influences of this choice, and the goods which they want must also fit within their budgets and purchasing power parity. Different economic models place choice in different hands. Socialism asserts that at least some economic choices are best made for the greatest good of society if they are made at the societal level for everyone, e.g. via a government agency.
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The idea of communism argues that most or all major economic choices should be made through central planning by the government. Only by constructing a cohesive plan that takes the good of everyone into account, so the idea states, can the best allocation of resources be achieved. (Also see Marxism.)

Capitalism argues for a laissez-faire approach, wherein the role of the government is to protect the property rights of individuals and companies so that they can have the confidence to undertake the economic activity (and risks) that will create the most value.

In a free-market economy, which exists without the constraints of government wage and price controls, proponents of market capitalism argue that resources are automatically allocated toward the things that society collectively values the most.
o

If a good or service is overvalued (i.e., the price is too high), the surplus will force providers of the good or service to lower their prices or to re-allocate their capacity to produce something more worthwhile.

If the supply of a good or service is inadequate, rising prices increase the value and so cause more production capacity to be directed toward the item. Adam

Smith's The Wealth of Nations has been an extremely influential book for this school of thought. Industry Trends Industry trends are examined to make predictions. The study includes trends related to consumer behaviour, employment, technological advancements, new product development, competition, government norms and other factors that impact the industry. Sources of Industry Trends Here are some major sources of information for identifying industry trends: Standard & Poor's Industry Surveys: These cover over 50 industries including biotechnology and telecommunications. The study comprises of fundamental analysis examining the prospects of each industry, with a comparative analysis of company data. Information on major trends, key players and financials is accompanied by an update on the recent developments in the industry and a forecast on the impact of government legislations on the industry. Business & Company Resource Center: This source, provided by the Gale Group, is helpful in identifying industry trends through an analysis of company profiles. Information on a companys products, share prices and consumer marketing is provided.
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Faulkner's Advisory for IT Studies: This collection of reports covers technological aspects, such as IT infrastructure, data networking and enterprise systems. Also, FAITS links to business news sources such as The New York Times and Nando Net.

How to Spot and Measure Industry Trends The Five Forces model put forward by Michael Porter is a useful tool for spotting industry trends. The assessment of an industrys structure is done by analyzing the following forces:
y y y

Bargaining power of buyers Bargaining power of sellers Threat of substitutes

y y

Threat of new entrants Rivalry among competitors

Greater market share and a higher ability to influence the selling price indicate the trend of consolidation. Profits rise and costs decline. The expansion of the areas of operation, product line, customer base and technical capabilities encourages companies to consolidate. An example of this trend in the electronics industry is that of the acquisition of Compaq by Hewlett Packard. From banking to software, and from automotive to telecom, almost every industry has undergone consolidation in recent times. The measurement of industry trends can be done by studying the profile of an industry. By locating a pattern of movement of certain companies within an industry, trends can be measured. This research can also include a study of statistical data on business and financial ratios. LAW OR LEGAL ISSUES Business Opportunities in India - Tax and Legal Issues While looking at the prospect of doing business in India it would be prudent to see what options are available to a Non Indian company to invest in India. Since 1991 India has undergone a sea of change in its outlook toward foreign investment and global collaboration. Add to that the phenomenon called Internet and you really have an explosive combination. It's no wonder that software and Internet services have really led India's outward push. Outsource2india has been providing high-quality and technology-driven services to a wide range of global customers since the year 1999. Outsource to O2I and get access to proficient, professional and cost-effective services. Outsource2india provides a range of competent services which include call center services, data entry services, engineering services, financial services, creative services, web analytics services, healthcare services, photo editing services, software development, Research and Analysis services and a host of other additional services.

While most of the policies are not specific to any industry, there are special provisions that relate only to the IT industry. Once you have decided to invest in India, the next question is naturally, how do I set up operations? There are primarily 2 ways to get your work done. 1. Having your own setup 2. Outsource the work to a local company 1. Having your own setup Many foreign investors prefer to have their own setup in India. This gives them better control over management of the organization. It is also the best guarantee that the company's processes are being followed. Furthermore this may in some cases tend to be preferable, especially if the volume of work is large or the work is sensitive in nature. However there are also disadvantages in this approach. One is regarding flexibility. Often these branches or subsidiaries are bound by the policies of the parent company and this may make it unwieldy when it comes to Indian legal and cultural framework. Secondly, management of a remote setup is always more difficult, especially if the work involved is intermittent and small in volume. Basically there are four types of direct foreign investment businesses in India: a. Branch Office b. 100% Subsidiary c. Joint Venture Companies d. Acquiring Existing Indian companies a. Branch office: It's really simple to set up a branch office in India. You are allowed to open a branch office if you are engaged in manufacturing or trading for the following activities:
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To represent your company in various matters in India e.g., acting as buying/selling agents in India, etc.

To conduct research work in which the parent company is engaged provided the results of the research work are made available to the Indian companies

y y

To undertake export and import trading activities To promote the possible technical and financial collaborations between the Indian companies and overseas companies

Under this setup, you will not be allowed to do any sales in India for any of your products or services. However if you are only looking at doing your software development or IT enabled services, then this is the easiest option. For this you need to fill up Form FNC -12 to the address given below: The Controller Exchange Control Department Reserve Bank of India, Foreign Investment Division Central Office, Central Office Building, 11th Floor Bombay - 400 023. Any Chartered accountant in India will be able to source you this form. Outsource to outsource2india and leverage the advantages of offshore outsourcing. b. Wholly Owned Companies (100% Subsidiary) If you would like to hand over control to the local management or would like to sell your products in India then look at this option. For the software industry, the Government of India allows up to 100% ownership by the Foreign Investor. Also, if you were to set up your office in an Export Processing Zone (EPZ), Software Technology Park (STP) or Electronic Hardware Technology Park (EHTP), then you will automatically be given permission for 100% ownership. The catch though is that you will have to export at least 75% of the final output out of India. Many of India's States have at least one of these Parks. Automatic approvals are given by the Secretariat for Industrial Approval for setting up 100% Export Oriented Units ("EOU"). These zones are designed to provide internationally competitive infrastructure facilities and duty-free and low cost environment. Various monetary and non-monetary incentives are granted which include import duty exemption, complete tax holiday, decentralized "single window clearance," etc.

Establishing units in EPZ or STPs have the following advantages:

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Duty Free imports Tax free income Readymade infrastructure Housing and living facilities (in some cases)

For setting up units under 100% Export Oriented Unit Scheme you must submit an application to: The Secretariat for the Industrial Approvals (SIA) Department of Industrial Development, Udyog Bhawan, New Delhi - 110 001 For setting up units in EPZs, you can apply to the Development Commissioner of the concerned Export Processing Zone in 10 copies along with a crossed Demand Draft of Rs 2500/= (approx $60) drawn in favor of The Pay & Accounts Officer, Department of Industrial Development, Ministry of Industry, and payable at the State Bank of India, Nirman Bhawan Branch, New Delhi. c. Joint Venture Companies: This is a common form of investment, because it allows the Foreign Investor and the Indian partner to do what each does best - the foreign partner brings in technology, systems and products and the Indian partner takes care of Human resources, marketing and legal and tax issues. This is a special favorite for foreign companies just moving into India, since it gives you the distribution channel to get sales moving quickly. However over the long term you may prefer to move to a 100% subsidiary, to establish greater control. This is commonly done by means of stock buyouts or fresh investments. Both Wholly owned Companies and Joint ventures may be registered as Private Limited Liability (Pvt. Ltd.) or Public Limited Liability (Public Ltd.).

Currently the government allows 51% shareholding by foreign companies in all but a small list of companies (these companies are essential to India's national security). d. Acquisition of existing Indian Companies You have also the option of acquiring a company already existing in India. Such acquisition could take place through the issue of fresh capital and /or transfer of shares of an existing Indian company to the foreign investor with the effect of transferring control. Shares of an Indian company could be acquired from another foreign investor, subject to RBI approval. This will give you the advantage of a readymade setup. The Foreign Exchange Regulations Act (FERA) makes it necessary that Reserve Bank of India (India's Federal Reserve Bank) permission be taken prior to acquisition of shares in an Indian company by a foreign investor. Similar permission is required in case of transfer of shares from you to a person resident in India. Either the transferor or the transferee can apply for permission.. However be careful with this one. If the company is listed on the stock exchange, then you cannot hold more that 5% of the total paid up capital and all Foreign investors and Non Resident Indians (in case there's more than one) cannot own in total more than 24% of the capital. Outsource to outsource2india and give your organization a competitive advantage. Corporate Tax and other Incentives: The corporate income tax effective rate for domestic companies is 35% while the profits of branches in India of foreign companies are taxed at 45%. Companies incorporated in India (any setup other than a branch) even with 100% foreign ownership, are considered domestic companies under the Indian laws. However, the New Export-Import Policy of 1992 provides substantial tax incentives for investments in Export. Major exporters are allowed to operate bank accounts abroad to facilitate trade. Companies that sell in the Indian market as well as international markets may deduct export earnings from their tax liabilities. Exporters and other foreign exchange earners have been permitted to retain 25% of their foreign exchange earnings in foreign currency. For 100% Export

Oriented Units and units in Export Processing Zones, Electronic Hardware Technology Parks, retention up to 50% is allowed. Other incentives include:
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Tax holiday for a period of 5 continuous years in the first 8 years from the year of commencement of production

y y y y y

Exemption from taxes on exports earnings even after the period of tax holiday Exemption from central and state taxes on production and sale Permission to install machinery on lease Freedom to borrow self-liquidating foreign currency loans at the prime rate of interest Inter-unit transfers of finished goods among exporting units

2. Outsourcing your work to India The other option is to completely outsource your work to Indian companies. This has it's own advantages. For example
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For intermittent jobs, it may make better sense to pay only when you have work Also if the volume of work were small, it would always be difficult to achieve economy of scale

Outsourcing ensures that while you may not be the best in a certain area, you are giving the work to someone who's really good at it. That leaves you to focus on what you do best

Many Indian companies do a lot of business with International customers, so they would often be able to bring in expertise and advice from their earlier work

Lastly but definitely not least, you have no legal hurdles to overcome when you outsource

Due to these benefits many Companies prefer to get their work outsourced, leaving you to do the things that directly impact your success.

What ever you decide, you can be assured that our international team would be happy to work with you in making your business succeed Legal Issues in Offshore Outsourcing to India With the rise in outsourcing and with more and more global organizations outsourcing business processes and IT services to India, there has been a number of legal issues in outsourcing. Companies outsourcing to India have to face some complex legal issues with outsourcing. If your organization is outsourcing to India, make sure that your organization is aware of the intellectual property protection and the data privacy and protection in India. Before outsourcing to India, also make sure that your organization knows about compliance with applicable Indian laws, enforcing contractual/legal rights in India and dispute resolution procedures. There are several legal issues in offshore outsourcing and dealing with them effectively can help the organization who wishes to outsource and the outsourcing service provider, to face the legal issues of outsourcing. The following are some tips on efficiently dealing with the legal issues of offshore outsourcing. 1. Taxation Offshore outsourcing is often influenced by several international and local issues. The taxation policy of India also has a big effect on the offshore outsourcing decision. Before outsourcing, find out about the tax implications that you have to deal with. This is an important legal aspect to deal with, because different countries have different tax laws. You can meet your outsourcing provider in India and decide about which tax provision would be appropriate in the legal contract. 2. Legal Systems that are Heterogeneous When you outsource to India or any other country, you will discover that the rules of governance are different in different countries. In outsourcing, you and your outsourcing provider have to make sure to include two different legal systems. This heterogeneity in the legal

system is an important legal issue with outsourcing that companies have to deal with. This problem exists, because there is no legal system which can be used globally. Different countries even have different intellectual property laws. Since there are no standard legal rules and regulations to follow, it is best to meet your outsourcing provider and make sure that you adhere to both the legal systems. This will help you to sort out any legal issues of outsourcing. 3. The Influence of Local Laws Some countries have strict data protection and privacy laws, which might be a hindrance in outsourcing. In such cases, the outsourcing provider and the customer would be legally bound and share equal legal responsibilities. This might increase the liability of the customer and in some cases can become a legal issue in outsourcing. Outsourcing service providers also have to protect their business from civil penalties. Conduct some research on the country that you want to outsource to and if the local laws of that country are a hindrance, find another outsourcing service provider. The influence of local laws is another major legal issue in outsourcing. 4. Dispute Settlement Dispute settlement is yet another legal issue with outsourcing. If a customer from U.S wants to sue an outsourcing provider in China, there would be plenty of disputes. The Chinese outsourcing provider would not want to go to the U.S and the U.S customer would not want to come to China. There is also the legal issue of where the case will be filed, as the case has to be fought in the country where the case is filed. These two countries would also have two different legal systems. When making a settlement contract with your outsourcing provider, ensure that you mention the system of dispute settlement. Clarifying the legal aspects in outsourcing and dealing with the problem of dispute settlement can avoid future problems. Legal Issues in Outsourcing to India 1. Effective Changes in Indian Laws India is the most idea place to outsource to. When you outsource to India, you need not face many legal issues in offshore outsourcing. There are many global organizations which have

been outsourcing to India and these organizations have not faced any hindrance with the legal issues of outsourcing to India. Indian laws are always going through amendments and they are often changed to effectively meet the requirements of today and to be in unison with the latest international laws. India complies to the agreement on trade related intellectual property right. India also accepted the world trade organization agreement even when outsourcing was just starting. The Indian government has brought about many effective changes in patents, copyrights, designs, trademarks to meet the requirements of today. Such effective changes have transformed Indias intellectual property laws. 2. The Proper Law of Contract in India When a legal contract has to be made between two countries, the legal regime of any single country becomes insufficient to deal with the situation. Outsourcing brings about two legal systems into the picture and this is where the private international law comes into place. Before you sign a legal contract with your outsourcing provider, make sure that you decide about which law would govern the legal contract. In India, the outsourcing service providers ensure that the Proper Law of contract is applied, before a legal contract is signed. 3. Choice of Law is endorsed by Indian courts The courts in India have always endorsed the choice of proper law. If you have expressed the choice of law in the legal contract, you can be sure that it will be supported in the Indian courts. 4. Freedom of choice to choose any law When you outsource to India, you can choose the law that would govern the legal aspects of the contract. You can also decide which court would conduct the jurisdiction. The sections 13, 15 and 44A of the Indian Civil Procedure Code and Section 41 of the Indian Evidence Act, govern the conclusiveness and enforcement of foreign judgments made in India. Guidelines to help you deal with the legal issues in offshore outsourcing to India

If you choose arbitration as the means of dispute resolution, ensure that the place of arbitration and other important aspects are well defined in the legal contract

If you choose the Indian law and if you want Indian judgment to be used in your country, then make sure that your country has a similar law as the Section 44A of the Indian Civil Procedure Code.

In case, you sign the legal contract in a country, which is different from the country whose law you have chosen, make certain that the formal requirements of that place of contract are fulfilled.

Make sure that the country whose law you choose supports the proper law for enforcement.

Ensure that there is a choice of law which governs the legal contract.

Business Ecosystem The concept first appeared in Harvard Business Review in May/June 1993, and won the McKinsey Award for article of the year. Moore wrote: An economic community supported by a foundation of interacting organizations and individualsthe organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organizations also include suppliers, lead producers, competitors, and other stakeholders. Over time, they co-evolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments and to find mutually supportive roles The ecosystem concept is widely used by Cisco Systems Inc throughout the world. The company leverages partners for all business functions except developing core products and business strategy. Partners support sales, marketing, manufacturing, technical support and new installations. Cisco adopted the motto 'do what you do best and leave the rest for others to do'. Before the 2002 technology crash the company grew to be the highest-valued and most-admired

company in the world. This scalable business model allowed them to rapidly adapt and expand based on customer demand without slow, capital-intensive investments. Its 'locally global' approach became the industry's most respected business model in the 1990s. While competitors (e.g. Lucent, Nortel and 3Com) crashed using traditional vertical models, Cisco was able to maintain stability and expand its market share. Moore used several ecological metaphors, suggesting that the firm is embedded in a (business) environment, that it needs to coevolve with other companies, and that the particular niche a business occupies is challenged by newly arriving species. This meant that companies need to become proactive in developing mutually beneficial ("symbiotic") relationships with customers, suppliers, and even competitors. Using ecological metaphors to describe business structure and operations rather than the physical/biological environment is increasingly common, especially within the field of information technology (IT). For example, J. Bradford DeLong, a professor of economics at the University of California, Berkeley, has written that "business ecosystems" describe the pattern of launching new technologies that has emerged from Silicon Valley. He defines business ecology as a more productive set of processes for developing and commercializing new technologies that is characterized by the rapid prototyping, short product-development cycles, early test marketing, options-based compensation, venture funding, early corporate

independence. DeLong also has expressed that the new way is likely to endure because it's a better business ecology than the legendarily lugubrious model refined at Xerox Parca more productive set of processes for rapidly developing and commercializing new technologies. Mangrove Software, The Montague Institute, Kenneth L. Kraemer, director of the University of California, Irvines Center for Research on Information Technology and Organizationsand Stephen Abram, Vice President of Micromedia, Ltd., Tom Gruber, co-founder and CTO of Intraspect Software, Vinod K. Dar, Managing Director of Dar & Company, have all advocated this approach. Industries

For example, Gruber explains, over a century ago, Ford Motors did well using methods of mass production, an assembly line, and insourcing. However, Ford began to outsource its production [w]hen the ecology evolved. Gruber (n.d.) has stated that such evolution in the ecology of the business world is punctuated now and then by radical changes in the environment and that globalization and the Internet are the equivalents of large-scale climate change. Globalization is eliminating the traditional advantages of the large corporation: access to capital, access to markets, and economies of scale. The application service provider (ASP) industry is moving toward relationship networks and focusing on core competencies. According to the gospel of Cisco Systems, companies inclined to exist together within an ecosystem facilitate the imminence of Internet-based application delivery. Books also use natural systems metaphors without discussing the interfaces between human business and biological ecosystems. Another work defines business ecology as a new field for sustainable organizational management and design, one that is based on the principle that organizations, as living organisms, are most successful when their development and behavior are aligned with their core purpose and values what we call social DNA. The need for companies to attend to ecological health is indicated by the following: Business ecology is based on the elegant structure and principles of natural systems. It recognizes that to develop healthy business ecosystems, leaders and their organizations must see themselves, and their environments, through an ecological lens. Biological ecosystems Environmentalists sometimes use "business ecosystems" as a way to talk about environmental issues as they relate to business rather than as a metaphor to describe the increasing complexity of relationships among companies. According to Townsend, business ecology is the study of the reciprocal relationship between business and organisms and their environments. The goal of this "business ecology" is sustainability through the complete

ecological synchronization and integration of a business with the sites that it inhabits, uses, and affects. The Cooperative Bank, established in the United Kingdom in 1872, launched its National Centre for Business Ecology in 1995. This Centre promotes itself as a low cost, high quality environmental advisory service to small and medium sized UK businesses. The bank reports that in keeping with its Ecological Mission Statement, it will not invest in businesses that focus on fossil fuel extraction, the manufacture of harmful chemicals, or the non-sustainable use of natural resources.Yet, exactly what business ecology means to the bank and how it differs from current approaches to greening business are unclear. Kinetix advertises that it provides sustainable business solutions to companies by working with them on strategy, design, and project management. Located beneath its name on the companys web site are the words business ecology, which the company defines as the effective use of material, social and financial resources the key to sustainability.[20] The company cites pollution, climate change, the need for corporate transparency, and the 2001 economic downturn as creating a market opportunity that is being met by firms involved in renewable energy, working toward creating zero waste, attending to product life cycles, and using the triple bottom line in their accounting practices. In its online brochure, the company has explained that it offers resource audits, workshops for organizational change, environmental management systems, and other services.