Wednesday, September 1, 2010

Strategy Digest Volume 4

From Indigo to Ibis

The man behind Indigo, Rahul Bhatia, has come up with a plan to start 200 mid-budget Ibis hotels targeting the young executives and the growing middle class. These hotels would be in the category between three- and four-star establishments, and would have a single night tariff of about Rs. 4500. They would be located in the business districts of Tier I and II cities (already in Gurgaon and Pune), rather than tourist locations and would act as a replacement for all the companies which previously had guest houses for their employees on tour. This is because the breakeven occupancy for them would be 67% annual occupancy, which is very difficult to achieve in tourist locations. Once the hotels are finished, plans of bundling and cross-selling the hotels and the airline are floating around.

Tatas vie for InterGen

Tata Power is in the race to acquire GMR’s 50 percent stake in the US-based InterGen. If this deal falls in place, it would increase the operational capacity of Tatas to 3000 Mw and hence take the company a step closer to achieve its target of reaching 25000 Mw by 2016-2017. It will also increase Tata’s international presence, as currently Tata Power is present in Saudi Arabia, Bangladesh, Kuwait, Algeria, Myanmar and Thailand and now they would spread across the InterGen locations in the UK, the Netherlands, Mexico, Philippines and Australia. Usually it costs aabout 3-4 crore per Mw in case of a thermal plant and a little less for a gas-based (80 per cent of InterGen’s assets) plant. In this situation, even though the bidding will be aggressive, Tata may end up buying at Rs. 1.5 crore per Mw, thus saving a lot of money as well as time (because it would be buying already operational plants). Since Tatas has the necessary money to acquire also, all in all, it would be a good deal, beneficial to both Tatas and GMR.

Infosys prepared for visa problems

There has been a clampdown on visas by the US and there is growing anti-sentiment against foreign workers there. In fact the US border security legislation is planning to double the visa application fee, and this will increase costs. Hence to cushion themselves against this possible future hit, Infosys has conducted some successful pilots of the “extreme offshoring” model with few of its clients. This model will lead to increased hiring at offshore locations like India and fewer jobs being created onsite, aloStratng with a spurt in profit margins for the firm.

Sony to go the Apple way

Sony is planning to launch a new music and video download service that will link a range of its devices, like Walkman music players, Vaio computers, Bravia TVs, Blu-ray players and Sony Ericsson mobile phones. The launch announcement will be made at the IFA technology show in Berlin on Wednesday, but the product will not be available until next year. This coincides with the scheduled media event by Apple on the same day in the United States, where Apple will either launch a revamped i-pod or its own TV project, Apple TV.


  1. I just read few days ago in business week that in coming days Outsourcing is going to be fade off as Companies will be using social Networking sites to do the outsourcing.
    I just wnna know how is this going to be possibel.

  2. We don't think outsourcing can be killed by social networking websites. The manual angle of outsourcing and the differences in labor costs in companies will always ensure that the industry remains. Its just that cloud computing will transform the way the industry works, to an extent.