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8/3/2019 Domination January 2012
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8/3/2019 Domination January 2012
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-Regards
TeamDominati
on
Editorial
Dear Readers,
With a new year, we bring
forth a brand new edition of'Domination' for you. Amidst
global economic instability and
chaos, we talk of opportunities
and openings for growth. Look-
ing forward to the light at the
end of the tunnel, we hope you
find it worth the read.
The article 'Is Dollar's Reign as
World's Main Reserve Currency
Near an End?? debates on
whether the currency is seeing
the last days of its supremacy
or if it is still holding fort. It
goes on to discuss the various
alternatives the world has
against dollar and the different
aspects of it.
In the current scenario of infla-
tion and high interest rates, '
Amid inflation and high interest
rates, does the Indian economy
hold good prospects in the next
one year?' sheds light on pre-
vailing conditions and major
developments in the Indian
economy. Further analysis of
various factors presents a mac-
roscopic picture of the econ-
omy for the year 2012 mainly
on three domains: growth, in-flation and twin deficit.
'Employer Branding' talks
about the need of and lessons
learnt from employer branding
exercises undertaken by vari-
ous well-known brands. It
stresses the core principles forcreating a compelling em-
ployee value proposition.
'IT Risk Management: Signifi-
cance in an economic down-
turn' describes the three disci-
plines of IT risk management
and their implications for risk
management value in an in-
creasingly digitised and inter-
connected world.
'Is Poland ready to embrace the
Single Currency?' delivers an
analysis of the costs and bene-
fits, for Poland, of adopting
Euro as its own currency.
Furnished with knowledge and
strengthened by hope, wel-
come the New Year with open
arms and a smile on your face.
Hoping that the zest of the new
year will bring happiness, good
fortune and good health to allour readers , its Team Domina-
tion wishing everyone happy
Reading.
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Contents
Newsletter Team :-
Aditi Joshi
Anuj Mody
Anurag Agrawal
Chetna Yadav
Jubin Mohapatra
Manav Kaushik
Mukesh Rathi
Pawan Upadhyay
Prateek Tomar
Rajneesh Kumar
Saumya Verma
Sayantan
Shibi Singh
Shruti Goel
Design Team :-
Anurag Agrawal
Saumya Verma
Roorkee - 247 667, IndiaTel: +91-1332-285014, 285617Fax: +91-1332-285565Email: [email protected]: www.iitr.ac.in/departments/DM/Pages/Index.html
For private circulation only
DEPARTMENT OF MANAGEMENT STUDIESINDIAN INSTITUTE OF TECHNOLOGYROORKEE
0412
07
23
19
Employer Branding: Need Of
The Hour
Is Poland Ready To Accept Single Currency
Is Dollars reign Near An End?
Interest, Inflation and India
Qutopia
Drawing Values From IT Risk
Management
15
DoMS da Evince
21
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Perspective
The package of functional,economic, and psychological
benefits provided by employ-
ment, and identified with the
employing company, Ambler
& Barrow.
Relatively new as a topic, em-
ployer branding is already mak-
ing inroads into the main-
stream marketing lexicon.
Whilst Kotler has defined mar-
keting managing as the art and
science of getting, keeping and
growing customers, Brett
Minchington (author of Em-
ployer brand leadership-Aglobal perspective) defines em-
ployer branding as the art andscience of attracting, engaging
and retaining talent. It aims at
creating compelling and differ-
ent employee value proposi-
tions and is concerned with po-
sitioning the employer brand in
potential labor market. For
this, it requires embracing the
principles and practices associ-
ated with external brand man-
agement and marketing com-
munication internally.
Businesses are now recognizing
that engaged employees are
more productive, lead togreater levels of customer loy-
alty and are more likely to en-courage and contribute to or-
ganizational success. But it
must be kept in mind that poor
planning and implementation
of employer branding strate-
gies can do more damage than
good. The role of employer
brand is important but highly
complex in its management.
According to Bergstrom et al, it
is built on three core processes:
effective brand communication
to the employees, recognition
of its relevance and worth,
aligning the jobs with thebrand essence.
Employer Branding- Need of the hour
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Employer Branding - Need of the hour
Alternately, one can define six
principles that stand at its core,
namely, insight, focus, differen-
tiation, benefit, consistency
and continuity.
The well known brand Philips,
after implementing the em-
ployer brand development pro-
gram, shared the following five
lessons learnt:
People build your business Traditional recruitment no
longer works
Be clear about your promise
Make it easy to do the right
things right
Think big, act small, fail fast
At Pepsi, the following have
been recognized as conduits of
talent sustainability:
Globally consistent yet lo-
cally customized brand
Effective and consistent in-
formation communication
Engaging and motivating
employees
Making the most of socialmedia through blogs, idea
network portals, etc
According to the Coca Cola
Company, the ability to make a
difference increases the fun as
well as the learning quotient of
people. They came up with
some reasons that necessitate
the role of a strong employer
brand;
Motivated associates are
critical to commercial suc-
cess
High turnover has a nega-
tive impact on results
High engagement increasescorporate reputation
Employee opinions drive
behaviors that impact re-
sults.
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Employer Branding - Need of the hour
This is further illustrated
through a survey undertaken
by the same.
The following strategies can be
undertaken to further the em-
ployer brand building initiative:
Active employee involve-
ment.
Identify the needs of em-
ployees and design program
as per the requirements.
Clearly defined policy and
procedures.
Aligning the employee and
the employer goals and vi-
sion.
Good work environment.
Compensation and benefits.
Scope of career develop-
ment.
Sound reward and recogni-
tion system.
Communication systems.
These strategies go a long way
in attracting talented work-
force, building an emotional
bond with the employees, re-
ducing attrition while enhanc-
ing performance and promot-
ing overall organizational suc-
cess.
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Article By - Aditi [email protected]
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Perspective
The US dollar has become the
most sought after currency in
the world as all the major inter-
national trade from coal to
crude and Gold to Grains takes
place using it. After the World
War II in 1944, the US Dollar
got the status of the World
Currency, the Reserve Currency
or call it a Reserve currency,
replacing United Kingdoms
Pound Sterling and maintains
its position till date. A global
currency is one in which all key
commodities such as oil, gold,
steel and so on are priced; they
are the primary currencies
against which all others are
compared; and they are the
currencies that most national
governments and central banks
hold as part of their national
reserves. By implication, they
are therefore seen as the cur-
rencies of greatest stability and
the ones that keep the worlds
trade systems flowing. How-
ever since last 67 years, US Dol-
lar has seen major fluctuations
in its value, experiencing a
peak in 2000-2001 with a con-
stant devaluation and long
term decline since then.
Before analyzing whether Dol-
lars reign as a global currency
has come to an end, we need
to identify the facts that led
Dollar serve as worlds main
reserve currency for decades.
Next, we would analyze
whether those factors still pre-
vail, followed by analyzing the
alternatives available and fi-
nally the negative impacts of
replacing dollar on the global
economy.
How the US Dollar achieved
the coveted status
When the World war II was
still raging, 730 delegates
from 44 Allied nations gath-
ered in Bretton Woods,
New Hampshire, United
States, signed the Bretton
Is Dollar's Reign Near An End??
-Ticking Clock Begins...
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World Reserve Currency
Woods Agreements in July
1944. The significant features
of the Bretton Woods system
included an obligation for each
country to adopt a monetary
policy that maintained the ex-
change rate by tying its cur-
rency to the U.S. dollar, estab-
lishing the dollar peg with gold.
The US Economist, Henry Dex-
ter, thus negotiated in BrettonWoods Agreement, resulting in
the US Dollar emerging as the
global reserve currency.
After the end of World War
II, of estimated total gold
reserves of $40 billion, US
held about $26 billion gold
reserves which accounts to
approximately 60% share.
Also, the dollar was fixed to
Gold at a price of $35 per
ounce of Gold in order to
bolster confidence in the
system. The nations further
agreed to buy and sell USDollar to keep their curren-
cies within 1% of the fixed
rate. This additionally en-
couraged foreign govern-
ments and central banks to
exchange dollars for gold.
Another impact of the
World War II, was US
emerging as the biggest im-
porter of goods and services
to maintain its economy by
a trade deficit, thus helping
foreign governments keep
US Dollar in their exchange
through trade surplus and
prevent their currency from
appreciating.
The US Dollar is also the
currency with the most pur-
chasing power and also theonly currency backed with
the power of Gold. Also af-
ter the World War II, all the
major European Countries
were highly in debt and
thus exchanged large
amounts of Gold with US
Dollar, thus contributing to
the supremacy of dollars
power. Thus the US Dollar
strongly appreciated in
value in the global economy
and had strong reasons to
lead the world as the Global
Currency.Do the Conditions prevail in
the Present Economy
Unlike the past, the present
scenario shares a different
story. Here we need to analyze
the fact that whether the fac-
tors that enforced US Dollar as
the Global currency, still pre-
vails.
The Bretton Woods System
which gave the status of
Global currency to the US
Dollar does not officially ex-
ist today because on August
15, 1971, President Richard
Nixon unilaterally termi-
nated the convertibility of
Dollar to Gold, which was a
significant reason of its
dominance. This action isreferred to as Nixon Shock.
The US debt has almost
doubled from 2002 to 2011
from $5.9 trillion to $14 tril-
lion due to the subprime
crisis and recession, leading
the federal debt to about
75% of United States Gross
Domestic Product, thus re-
quiring more flexible fiscal
policy.
The US has not remained a
promising customer any-
more and is already at the
verge of insolvency. The in-flation rate has hit a 3-year
high of 3.9% in September.
Unemployment is also held
at nearly double its pre-
recession level, keeping in-
comes under pressure.
The Dollars Golden Era
seems to come to an end.
Today only a handful of oil-
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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producing nations in the Mid-
dle East hold a combined $2.1
Trillion in Dollars, which are
solely a product of selling oil in
exchange for Dollars. China
with other BRIC countries has
formed a secret coalition to
end the pricing of oil in dollars
by 2018. Also the Government
of Iran has already declared
that all of its future transac-tions of reserves would be held
in non-Dollar denominated as-
sets.
Changes in technology are
also undermining the dol-
lars monopoly. Earlier trad-
ers may face difficulty in
comparing prices of com-
modities in different curren-
cies, but today nearly every-
one carries handheld de-
vices which can be used to
compare prices in different
currencies in real time.
Alternatives against DollarAfter analyzing the position of
US Dollar in the present sce-
nario, we need to evaluate the
alternatives available against
Dollar as the Global or Reserve
Currency.
Other Foreign Currency
Chinas Renminbi:
China is moving rapidly to in-
ternationalize the Yuan, also
known as the Renminbi. Sev-
enty thousand Chinese compa-
nies are now doing their cross-
border settlements in Yuan.
Although the Renminbi option
seems quite possible, it is pres-
ently not the right answer. The
rise of Chinas economic power
creates a case for the Renminbirevaluation to make it a global
reserve currency but there are
several fundamental barriers to
this. The controls exerted by
the Chinese government on the
Renminbi, for export advan-
tage, makes it devalued against
the worlds other currencies,
especially against dollar by
50%. Although the Chinese
government has started to re-
lax the pegging to the dollar in
June 2010, the variation being
allowed is only marginal.
Euro:French President Nicolas
Sarkozy before boarding a
plane to meet President
George W. Bush proclaimed,
Europe wants it. Europe de-
mands it. Europe will get it."
The "it" here is global financial
reform. Evidently Sarkozy did
not have to wait for too long if
Euro crisis had not disrupted
the whole European Union. The
Euro has the maximum power
of eroding Dollars dominance
because it represents a larger
size economy and has the pros-
pect of more countries adopt-
ing the euro as their national
currency. Talking about the
power of Euro, in December
2006, it surpassed the dollar inthe combined value of cash in
circulation. The easiest way to
introduce Euro as the global
currency is by legalizing all oil
trades in Euro, thus forcing all
countries to keep Euro as their
key reserve currency.
But replacing Dollar with Ren-
minbi or Euro is not a complete
solution because it will only de-
fer the problem for a few dec-
ades. After some time the
world economy would be at
the same position as it is right
now as the economy would bethen again under the control of
a single countrys currency and
hence dependent on its finan-
cial situation.
Special Drawing Rights
On 26 March 2009, a UN panel
of expert economists called for
a new global currency reserve
scheme to replace the current
World Reserve Currency
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US dollar-based system called
Special Drawings Rights. The
IMF said Special Drawing
Rights, or SDRs, could contrib-
ute to global stability, eco-
nomic strength and global eq-
uity. SDRs represent potential
claims on the currencies of IMF
members and can be used to
convert into whatever currency
a borrower requires at ex-change rates based on a
weighted basket of interna-
tional currencies with a weight
of 44% for the dollar, 34% for
the euro, and 11% each for the
yen and pound sterling. So, for
example if India wants to use
its SDRs, it will typically ask the
IMF for dollars in exchange.
The IMF will debit Indias SDR
account, credit Americas SDR
account, ask the US for the cor-
responding dollars, and hand
these to India. The goal of SDR
is to have a reserve asset forcentral banks that better re-
flects the global economy since
the dollar is vulnerable to
swings in the domestic econ-
omy and changes in U.S. policy.
Thus the risk of depending on
just a single currency would get
distributed in four different
currencies.
Basket of Commodities
Another possibility is a cur-
rency unit based on a basket of
commodities. After all, raw ma-
terials are the one thing that
every country absolutely has to
have access to. And every form
of money is a proxy for real
stuff in one way or another.
Hence, a unit that was one part
gold, one part oil, one part ironore, and one part rice, would
look like something that was
going to hold its value for a
long period of time.
New World Currency
John Maynard Keynes at the
UNs Bretton Woods confer-
ence in 1944, put forward the
idea of a hypothetical single
global currency or supercur-
rency, which till date, seems
logical enough and can be
thought of. It will be adminis-
tered by a global central bank
and will be used for all transac-tions around the world, regard-
less of the nationality of the
entities (individuals, corpora-
tions, governments, or other
organizations) involved in the
transaction. Supporters often
point to the euro as an exam-
ple of a supranational currency
successfully implemented by a
union of nations with disparate
languages, cultures, and econo-
mies.
Negative impact of replacing
Dollar
A sudden dollar collapse would
create global economic turmoil
because investors would then
rush to other currencies, such
as the euro, or other assets,
such as gold or other commodi-ties. Demand for Treasuries
would plummet, driving up in-
terest rates. Import prices
would skyrocket, thus causing
inflation. Thus inflation and
high interest rates would fur-
ther suppress business growth.
The natural consequence of
these economic situations
would be high rate of unem-
ployment, further leading to
the economy back to recession
or worsening to depression.
Also the alternative replacing
Dollar should be in a positionto absorb all Dollar reserves
from the economy. If the dollar
reserves are not in a position to
do so, the countries would rush
to US or concerned monetary
authorities. If the concerned
authority is not in a position to
do so, an economic disturbance
is sure to occur.
World Reserve Currency
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Conclusion
United States is the largest do-
mestic economy in the world.
Its GDP is estimated to be
around $14.2 trillion in 2009.
American labor market has also
attracted immigrants from all
over the world and has one of
the worlds highest immigra-
tion rates. It has worlds largest
and most influential financialmarket. High stability and low
level of corruption are the key
factors in the US political Sys-
tem. The US economic policies
are highly flexible in nature, the
biggest example being during
recession where in spite of be-
ing a capitalist economy, it
shifted to socialist economy by
giving bailout packages and na-
tionalizing the private entities.
Thus we see that inspite of
some the negative implications,
US Dollar still holds more than
60% of the foreign reserves of
central banks and govern-ments. The Organization of Pe-
troleum Exporting Countries
sets the price of oil in dollars.
Thus, U.S. dollar is involved in
close to 90% of all foreign ex-
change transactions, compared
with less than 40% for the euro
and 16% for the Japanese yen.
Fortunately, it's highly unlikely
that the dollar will collapse in
the next two decades because
any of the developed countries
who have the power to make
that happen - China, Europe
and other foreign dollar-
holders - don't want it to occur.It's not in their best interest.
The US consumer occupies the
major market share of the de-
veloped economies, so why
bankrupt your best customer?
World Reserve Currency
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Article By - Ruchi Gupta
11 | DOMINATION, JANUARY 2012
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Perspective
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Is Poland ready to embrace Single Currency ?
When joining the European Un-ion in 2004, Poland, along with
the other new member states
also agreed to join the euro
zone meaning that it will adopt
the euro as its own currency.
Unlike the United Kingdom,
Sweden and Denmark before it,
Poland does not have the op-
tion to opt out of the euro
zone. As a result, the only
question that remains valid, is
not whether Poland will adopt
the euro, but when.
The mission statement of the
Eurosystem says that the Euro-pean Central Bank (ECB) and
the national central banks
(NCBs) jointly contribute toachieving:
Price Stability.
Financial stability and Finan-
cial integration.
To be able to join the Eurosys-
tem, a country should be able
to fulfil the Convergence Crite-
rion mentioned in the Maas-
tricht Treaty which requires a
country to have:
A maximum of 1.0% infla-
tion rate.
A maximum of 3.0% annual
government deficit to GDP.
A maximum of 60% grossgovernment debt to GDP.
A minimum of 2 years ofmembership in ERM II.
A maximum of 6.0% long
term interest rates.
To decide whether the Euro is
good news for Poland or not,
its costs and benefits need to
be analysed.
1. COSTS
Loss of monetary policy inde-
pendence
A floating exchange rate re-
gime, such as the one currently
in place in Poland, gives the
central bank considerable
autonomy in setting its interestrates. Giving this up and adopt-
ing the monetary union policy,
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there is increased risk of eco-
nomic fluctuations which may
lead to an inefficient allocation
of resources having a negative
impact on economic growth.
Labour market adjustment
mechanism
After joining the euro area, real
wage adjustment or free move-
ment of labour, will become
the only mechanism, apartfrom fiscal policy, that can miti-
gate the negative effects of
idiosyncratic disturbances.
Convergence of business cy-
cles
The cost of abandoning
autonomous monetary policy is
based on the extent to which
the business cycles of the coun-
try in question and the rest of
monetary union are synchro-
nised. If business cycles are
convergent, asymmetric shocks
are relatively less frequent.
2. BENEFITSElimination of transaction
costs
The elimination of transaction
costs incurred by enterprises
and households in relation to
the zloty/euro exchange rate is
among the most obvious bene-
fits of the single currency.
These costs may be divided
into two groups. The first group
comprises financial costs like
the fees accompanying foreign
exchange operations and costs
of hedging against exchange
rate risk. The second one in-
cludes administrative costs in-
curred by companies as a result
of committing resources to ac-
tivities related to foreign ex-
change operations. The moreopen an economy is towards
other currency union members,
the greater are the benefits
from the elimination of trans-
action costs.
Elimination of exchange rate
risk and decline in interest
rates
Exchange rate risk hinders the
economic growth. It increases
the cost of capital and makes
investment planning and opti-
mum use of available resources
more difficult. Elimination of
exchange rate risk improvesbusiness conditions, triggering
adjustment processes in trade
and foreign and domestic in-
vestment.
Impact of the euro on invest-
ment
Removal of exchange rate un-
certainty and, consequently,
the elimination of the currency
risk premium lead to a fall in
interest rates. Therefore, the
cost of capital falls, which in
turn implies a higher level of
domestic investment.
Trade expansion
Joining the euro zone with its
consequent elimination of bi-
lateral exchange rate risk con-
siderably changes business
conditions for economic agentsparticipating in international
trade. Growth of foreign trade
benefits the economy via in-
creasing specialisation and a
growing scale of production.
Integration of the financial
market
Elimination of foreign exchange
fluctuations and the coordina-
tion of monetary policy within
the euro zone have been the
main driving forces behind the
financial integration in Europe.
Entry to the monetary union
will therefore enable Poland todeepen the benefits reaped
from the participation in the EU
financial market.
CONCLUSION
Macroeconomic policy pursued
in Poland in the period preced-
ing the euro area accession
should be oriented towards
mitigating the risks stemming
Poland And single Currency
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from the conflict between sta-
bilising the exchange rate and
maintaining low inflation. Dur-
ing ERM II participation, Poland
should pursue a tight fiscal pol-
icy combined with a moder-
ately tight monetary policy.
Whereas there is no doubt that
relinquishing independent in-
terest rate policy involves a loss
of an effective instrument for
smoothing output fluctuations,
the effectiveness of the floating
exchange rate as an economic
stabiliser in an open economy
is substantially limited. The
cost of giving up autonomous
monetary policy in Poland will
most likely be smaller than the
degree of Polands compliance
with traditional criteria of opti-
mum currency area would im-
ply.
Poland And single Currency
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Article By - Garima Lakhanpal
14 | DOMINATION, JANUARY 2012
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Perspective
The ongoing economic down-
turn has resulted in a lot of
problems for IT organizations.
The role of IT risk management
now is more important than
ever. Organizations find them-
selves asking how to get more
value from their risk manage-
ment activities as organizations
struggle to squeeze the most
value from all monies invested.
This includes using risk man-
agement insights to improve
the way IT and business proc-
esses are managed.
Technology risk managers need
to take into consideration gen-
eral risk management guidance
to the specialized domain of IT.
Both approaches provide some
help, but neither can generate
the holistic view of IT risk as
business risk that is becoming
more important in an increas-
ingly digitized and intercon-
nected world.
This article describes the three
disciplines of IT risk manage-
ment, their implications for risk
management value. Companies
that achieve maturity on the
disciplines not only manage risk
better, but also can use IT risk
management to improve IT
management and business out-
comes. Their risk management
investments pay new value in
four ways: fewer incidents,
more efficient IT processes,
better alignment with the busi-
ness and higher agility.
Three Disciplines of IT Risk
Management:
In many organizations, the sole
objective of IT risk manage-
Drawing Values From IT Risk Management
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Drawing Values From IT Risk Management
ment is to ensure that the com-
pany does not experience any
bad incidents because of IT,
whether from hacker attack or
from project overruns. How-
ever, the focus is often onpro-
tection, not improvement, on
spending, not value. A recent
Massachussetts Institute of
Technology (MIT) research
study found that three IT riskmanagement disciplines work
together to address risks to
four key enterprise
objectives: avail-
ability, access, ac-
curacy and agility.
Companies that get
higher value from
IT risk manage-
ment investments
are mature in all
three disciplines:
An IT foundation that is well
managed and only as complex
as necessary. A risk governance process to
understand what risks the en-
terprise faces and to decide
what to do about them.
A risk-aware culture where
people have appropriate
awareness of risks and are
comfortable talking about
them.
These three disciplines work
together to ensure that an or-
ganization understands the IT
risks it faces, makes good deci-
sions about them and starts to
reduce risk over time.
Mature risk governance is nec-
essary but not sufficient. It
raises attention to risk, in-
creases stakeholder involve-
ment and provides informationfor decision making. However,
actual improvement comes
from driving change in the IT
foundation and risk-aware cul-
ture. Firms with a more matureculture or foundation report
statistically fewer incidents
than other firms, but the bene-
fits go farther. They also report
statistically significantly higher
efficiency, IT-business align-
ment and agility.
The IT foundation is the
set of infrastructure, applica-
tions, supporting technology
and IT people who enable busi-
ness processes to run. Firms
with a mature IT foundation
have a well-managed infra-
structure, a well-defined busi-
ness continuity plan, and a
solid understanding of the links
between technology and busi-
ness process. But, they go be-
yond this. They also have en-terprise architecture in place
and are working to ensure that
the IT foundation is
no more complex
than necessary.
Inconsistent soft-
ware updates
cause it to fail of-
ten, make it diffi-
cult to recover,
and make it more
difficult to change.
An immature IT foundation
eats up maintenance resources
and restricts agility.One firm experienced the same
virus at three offices, six
months apart, because IT staff
in the affected sites did not in-
form other sites of the vulner-
ability. At another firm, IT staff
routinely missed a set of serv-
ers when installing patches.
Key to keeping the IT founda-
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foundation well maintained are
well-designed and well main-
tained controls and operational
management processes.
The risk-aware culture is the
third discipline. It is a culture
where people recognize the
risks inherent in their activities,
can openly discuss their risks,
and are willing to work to-
gether to resolve risks or inci-dents. Having a mature risk-
aware culture makes a firm
both safer and more agile. Peo-
ple know how to avoid overly
risky behaviors and resolve
conditions that introduce un-
necessary risk. When people
understand which risks are
worth taking and understand
which conditions and behav-
iours introduce unwanted risk,
the firm can take on more risk
in pursuit of return.
A mature risk-aware cul-
ture does not happen acciden-
tally. It must be consciously
built and reinforced by the
companys leaders. Companies
with a mature risk-aware cul-
ture have employees who un-
derstand risk and controls rele-
vant to their jobs, who can talk
openly about risk without fear
of reprisal, who include risk intheir business conversations,
and who are encouraged
through frequent reminders
and top leadership reinforce-
ment. Companies that are ma-
ture in all three disciplines
risk governance process, IT
foundation and risk-aware cul-
ture have statistically signifi-
cantly fewer incidents, higher
IT efficiency, better alignment
and higher business agility. But
maturity means more than just
doing the basics. It is more
than identifying risks, protect-
ing existing assets and increas-
ing awareness of threats. Com-
panies with mature risk man-
agement capability use risk
governance to reduce complex-
ity in the foundation. They go
beyond awareness to build a
culture in which safe discussion
of risk (from availabilitythrough agility) is the norm.
These companies not only pre-
vent risk, but also can take new
risks safely. They not only re-
duce incidents, but also im-
prove efficiency. Then, the
companys investments in risk
management pay off not only
in better risk management, but
also in better IT management
and results.
Drawing Values From IT Risk Management
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Chlorophyll
Poem By - Manav Kaushik
Thunderstruck was I, when I first saw you
starstruck, with that beautiful smile
... the cupids arrow somehow got through
& I was mesmerized all the while....
When you look straight into my eyes, I sublime
I am speechless, frozen with chills at the same time
captivated, with those perfect imperfections that you possess
I find myself lost in those beautiful eyes, I must confess.....
your thoughts are like an incurable illness and they cloud my mind
I lose my sense of conscience, girl your gestures drives me blind
I try to close my eyes but in that dark its you all that I seeI want 2 close my mind but in that emptiness, its only these words that come to me...
Burning in this insatiable flame, I m waiting for the answers that are due
It may seem foolish though, but my feelings for you will always remain true
& now that I m drowning in my dreams, and I m falling 4 you
Baby I m worthless, worthless as a friend to you...
Worthless
Its wise to learn, its GOD like to create
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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18 | DOMINATION, JANUARY 2012
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Qutopia
1. According to his sisters eulogy, what were Steve Jobs last words?
2. Which previously free service is Google to start charging heavy users for?
3. What attraction has Disney won the rights to build at its Theme Parks?
4. Struggling retailer HMV has announced to diversify into which new segment?
1. Which iconic sports venue is to be renamed the Sports Direct Arena?
s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? Qutopia A Utopia of the
st Biz Quiz Tidbits to wreck your brains! Rush in your answers to [email protected] anur
[email protected] 30th January, 2012. The winner will have their names published in the next issue.
so, person getting the highest score in the current quarter (Jan-July 2012) will get a gift voucher. Answers ine next issue ofDoMination.
Section A(1 Point for each correct answer)
Section B(2 Point for each correct answer)
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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19 | DOMINATION, JANUARY 2012
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Qutopia
2. Identify this logo.
3. Identify this business tycoon.
1. Connect the images to a business tycoon.
Section C(3 Point for each correct answer)
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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DoMS-da-Evince
Lekshmi Sreedharan is 2011 batch pass out of DoMS, IIT Ro-
orkee. She is currently working as Competitive Intelligence
(CI) Analyst in Market Intelligence section of the Global Mar-
keting Center at IBM Bangalore.
1.What are your roles and re-
sponsibilities with IBM?
I work as a Competitive Intelli-
gence (CI) Analyst in Market
Intelligence section of the
Global Marketing Center at
IBM Bangalore. As a CI analyst I
asses the IBM's competitive
landscape, assess competitive
behavior and initiatives, deter-mine possible successes and
impact on IBM, and make rec-
ommendations for strategy,
marketing and products/
offerings.
2.How was your experience
working with Accenture Tech-
nology Solutions and how it is
different from IBM?
At Accenture I was in to a com-
pletely technical role in SAP BI
domain ( In simple words-
Software Engineer!!!!),while
here in IBM I am working as a
marketing person. Companywise also Accenture, as such
was strict in its timings
whereas at IBM, flexibility is a
key takeaway! The work cul-
ture is very smooth here with
no strict timings and we also
have the option of "Work from
Home" which can be taken on a
regular basis.
3. What has been the most
challenging role in your career
so far?
Every day here at IBM offers a
new challenge. At Accenture
my job was more of a repeti-
tive one. Once you are done
with the trainings, there are
very less surprises coming your
way as we are very familiar
with the domain we are work-
ing. But my present job is a
highly challenging one as they
expect us to know everything
about every company in the
world which is at competition
with IBM. Just for an example,when we present to a higher
up, an arbitrary question may
pop up, like, "What is the cur-
rent situation at Brazil and why
are our competitors winning
more deals than us?" or, " Why
is a certain competitor growing
at 23% in France and us only at
18 odd %?" . Clearly, we have
to be prepared to tackle anyquestion at any given time!
4. How has DoMS, IIT Roorkee
contributed to your success?
Well DoMS had a major role in
this. Even the small facts given
by our faculty turn out to be
huge help here in the corpo-
rate world. The various experi-
ences our faculty shared with
us really worked miracles for
me in many situations here..
And it is because of DoMS, that
I am here at IBM now. And I
also got my Life Partner at
DoMS.
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DoMS-da-Evince
5. Any message for the read-
ers, especially the current
batches of DoMS?
Be attentive in classes. Try not
to miss any classNever take
any subject light by thinking
that this will be never be useful
in my life. Trust me , if u listen
and are regular in the classes, it
will for sure make your life eas-
ier in the corporate world. And
above all be confident and sin-
cere!!!
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE22 | DOMINATION, JANUARY 2012
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Regardez Ieconomie
Inflation is the biggest problem
faced by the Indian economy
since past two years as it re-
mains stubbornly high. Several
measures taken by RBI
(Reserve Bank of India), which
included increasing of reserve
rates 13 times or 375 basis
points in 18 months, have not
yet shown any favorable re-
sults. Instead they have started
hampering the industrial
growth, investments and pri-
vate consumption of the econ-
omy.Through this whitepaper, I
have tried to understand and
answer Amid inflation and
high interest rates, does the
Indian economy hold good
prospects in the next one
year.
First of all, I have presented the
current scenario of Indian
economy which includes the
overview of major develop-
ments of economy in the cur-
rent year, a view on inflation,
GDP, foreign reserves and RBI
monetary measure.
Next I did a step by step analy-
sis of various monetary andmacroeconomic developments
and gave an outlook for the
same. The different areas I
studied and analyzed included
output, aggregate demand, ex-
ternal sector, liquidity, inflation
and financial markets. Finally, I
have presented a macroscopic
picture of the Indian economy
for the next year by giving an
outlook mainly on three do-
mains: growth, inflation and
twin deficit.
Indian Economy: Current Sce-
nario
On one hand, the Indian econ-
omy rebounded back to growthafter the global crisis of 2009-
10 and on the other hand, it is
nterest, Inflation and India: Can They Survive Together
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Interest, Inflation and India
facing several macroscopic
problems starting from infla-
tion, falling rupee value, in-
creasing fiscal deficit. Though
the GDP has improved to 8.5
per cent but still it is much be-
low the expected GDP of 9 per
cent and experts feel that it
might even remain 8.25 per
cent if the current conditions
prevail.The problem began with infla-
tion which remained stub-
bornly high i.e. 9.6 per cent for
the last 10 months even after
aggressive interest rate hikes
(13 times or 375 basis points
since March 2010) by RBI to
control the liquidity. These
measures were not able to con-
trol inflation but they did slow
down the growth of Indian
economy and affected the in-
dustrial expansion plans. After
economic growth fell to 6.9 per
cent, industrial production has
contracted 5.1 per cent in Oc-
tober.
To add to the woes of RBI, the
Indian rupee fell drastically i.e.
15 per cent against dollar fol-lowing the downgrading of the
US economy by Standard and
Poor which triggered greater
uncertainty and turmoil in the
global economy. This lead the
import of crude oil to be more
expensive which in turn has in-
creased the current account
deficit and fiscal deficit of the
country, which is expected to
exceed 4.6 per cent of gross
domestic product target.
Also, the Indian exports grew
10.8 per cent in October to
$19.9 billion while the imports
grew 21.7 per cent because of
increase in prices of crude oil
and other commodities to
$39.5 billion, leaving a trade
deficit of $19.6 billion- highestever in past four years. Indias
foreign exchange reserves have
grown significantly. The re-
serves stood at US$ 304.8 bil-
lion as on March 31, 2011.We
will now look step by step at
various monetary and macro-
economic developments in In-
dian economy.
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Interest, Inflation and India
Indian Economy: Develop-
ments and Outlook Output
During the third quarter of
2011, the global economic
growth slowed down leading to
waning of business and con-
sumer confidence. As a result,
the economic growth of India
decelerated to 7.7 per cent.
The sectorial growth rate of
GDP is shown in Table 1.1,which shows growth in agricul-
ture sector but deceleration in
growth of industrial andpro
services sector. It is evident
that slackening of industrial
growth was in mining and
quarrying and manufacturing
sectors while, there was a
sharp deceleration in growth of
construction sector in case of
services. Since, construction
sector is important for its large
employment potential, this can
pose a serious issue. It can be
concluded that this slow downhas been a result of high inter-
est rate hikes by RBI, which
have made the industries to
delay their expansion plans.
Aggregate Demand
There have been signs of de-
crease in aggregate demand
which can be credited to the
significant tightening of mone-
tary policy by the Central Bank
since March, 2010. However,
several non-monetary factors
such as hindrances to execu-
tion and environment of global
uncertainty have also adversely
impacted the investment.
Overall the Private final con-
sumption expenditure (PFCE),
which is the main component
of aggregate demand, declineddrastically mainly due to tam-
pering of demand in interest
rate sensitive sectors, particu-
larly the consumer durable
goods sectors such as passen-
ger cars, resulting again from
pressure of inflation and tight
monetary policies. Also, the fis-
cal deficit and the revenue defi-
cit of the economy are increas-
ing. The main reasons behind
this are a sharp decrease in tax
revenues, increased expendi-
ture on subsidies and the fal-
ling value of rupee, which is in-creasing government expendi-
ture on crude oil imports and
oil subsidies.
In brief, we can conclude that
with investment declining and
with consumption responding
less than intended to monetary
policy, there is a need to chan-
nelize the government as well
as private spending towards
investment to sustain potential
output growth.
The External Sector
Though the exports this year
have increased above the ex-
pectations, the import expendi-
ture has also increased sub-
stantially due to increase in im-
port of crude oil, gold, elec-
tronics and machinery, thusleading to overall increase in
CAD (Current Account Deficit).
Also, owing to current global
slowdown, the growth momen-
tum of exports does not seem
to be sustained. Also, due to
euro crisis, the inflow of FII has
reduced though FDI has in-
creased to somewhat balance
it. The policy of government to
allow 51 percent FDI in multi-
brand retail may help further
but it has been put on hold for
now. Going forward, capital
flows into India will depend onthe economic and financial
conditions in the US and the
euro area, and whether the
growth and interest rates are
able to remove the general risk
perception among foreign in-
vestors. It is, therefore, impor-
tant to encourage FDI inflows
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Interest, Inflation and India
depth of global uncertainty will
shape the developments in the
financial markets. The global
markets will primarily track the
international policy actions to
address the problem of euro
area sovereign debt crisis and
slowdown in advanced econo-
mies.
Macroscopic View: The Com-
plete picture for 2012Growth Outlook
The growth seems to follow a
downward trend owing to in-
crease in global uncertainties
and sticky inflation pressures.
The IMFs baseline projections
suggest that there is a decel-
eration in the growth of global
economy and it will grow only a
medium pace. Recovery is
unlikely even in advanced
economies.
The estimates of GDP as 9 per
cent at the beginning of cur-
rent year have touched a lowof 7 per cent. Indicators sug-
gest that growth moderation
has continued into Q2 of 2011-
12. Growth is also likely to stay
weak in the second half of 2011
-12, especially if the global
downturn continues.
Persistent inflationary pres-
sures, rising input costs, rise in
cost of capital due to monetary
tightening and slow project
execution are some other fac-
tors that are hampering the
growth.
Though the prospects of agri-
culture sector look encourag-
ing, industrial sector growth is
likely to decelerate due to
slowdown in investment. In ad-
dition to the impact of mone-tary tightening, other factors
affecting business sentiments
are:
a) With signs of global and do-
mestic economy slowing down,
firms are reluctant to expand
capacities.
b) The impact of perceived
governance issues have lin-
gered.
c) Business confidence has
weakened due to correction in
equity prices.
The growth of the services sec-
tor will be driven by the unfold-ing of the global and domestic
economic situation, but is
largely expected to keep its
momentum.
Monetary and Fiscal policies
need to be formulated with
great caution because further
raising the rates could greatly
hamper the industrial growth.
Inflation Outlook
Inflation is still likely to remain
one of the major problems of
the central bank. It is expected
to remain high throughout the
year and medium i.e. 7 percent
only towards the end of the
year.
With global growth environ-
ment deteriorating, global
commodity prices, includingcrude oil, have weakened but
the benefits of the recent fall in
global commodity prices have
been largely offset by the ru-
pee depreciation. If global oil
prices stay at current level, fur-
ther increase in prices of ad-
ministered oil products will be-
come necessary to contain sub-
sidies. Fertilizer and electricity
prices will also require an up-
ward revision in view of sharp
rise in input costs.
The monetary policy has
brought down the demand sideinflation to certain extent but it
still needs to play an important
role to bring down the supply
side inflation so as to sustain
growth of the economy. In face
of nominal rigidities and price
stickiness, there are dangers of
accepting elevated inflation
level as the new normal.
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
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Interest, Inflation and India
Outlook on Twin Deficit
If the global crisis deepens and
domestic economy slows down
beyond what is currently antici-
pated, the fiscal slippage could
turn out to be an issue of con-
cern.
Prospects for external Sector
for 2011-12 look uncertain due
to global uncertainties arising
from the financial turmoil thatfollowed the sovereign rating
downgrade of the US, slowing
pace of global recovery and the
sovereign debt problems in the
Euro area.
The robust performance of In-
dian exports also looks in dan-
gers due to growth slowdown
of advanced economies but it
can be partly mitigated by di-
versification of exports in terms
of composition and as well asdestinations.
Finally the impact of capital
flows is more difficult to gauge.
Capital flows could surge or di-
minish, depending upon the
degree of risk aversion along
with several other factors but if
the global crisis worsens, then
capital flows are most likely to
decrease as foreign investors
will sell their equities to cover
risks elsewhere.
DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
Perspective| Chlorophyll | Qutopia | DoMS-da-Evince | Regardez Ieconomie
Article By - Ambika Garg
29 | DOMINATION, JANUARY 2012
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DEPARTMENTOF MANAGEMENT STUDIES, IIT ROORKEE
ROORKEE - 247667, INDIA
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