January 2016 Edition of BEACON, A Monthly Newsletter by SIMCON. Inside this issue: About Us Our Team INDUSTRY ANALYSIS : Real Estate Industry Topic of the month: Turmoil in Oil Industry Case Study Analysis: Cadbury Oreo Concept of the month: Bitcoin

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Contents
ABOUT US
OUR TEAM
INDUSTRY ANALYSIS
TOPIC OF THE MONTH
CASE STUDY ANALYSIS
CONCEPT OF THE MONTH:
BITCOIN

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OUR PRESENCE
ABOUT US
VISION
The SIMCON - SIMSREE consulting club is an
initiative started in 2012 for those students in
pursuit of excellence in management consulting
and strategic management. Aimed at creating
awareness among the students about consultancy
as a discipline, the club strives to maintain strong
relations with top consultancy firms and provide
platform to craft highly skilled & competent
consultants from SIMSREE. The club is a resource
for information about consulting and a place for
students to obtain real-world consulting experience.
SIMCON provides an avenue of interaction among
faculty, students and alumni through competitions,
live projects, guest lectures, and conclaves. For
this purpose the club has also been publishing its
monthlynewsletter– BEACON (BE A CONSULTANT)
and maintains a FACEBOOK PAGE where latest
news and development in the consulting industry
are posted.
MISSION
To create awareness amongst the students
about consulting industry & its latest trends.
To maintain strong relations with top
consultancy firms.
To provide platform to craft highly skilled &
competent consultants from SIMSREE.
To provide exposure to students via
competitions, live projects, guest lectures &
conclaves.
Contributions invited:
To make this feature a successful effort, we seek continued involvement and contribution from our readers, that is YOU. We
invite articles, research papers, and trivia on themes related to consulting. Be it industry news, consulting trends, a joke, a
cartoon or feedback, we are eager to hear from you. So go ahead, do your research, pen down your thoughts and mail your
entries to simcon.simsree@gmail.com.
Best Regards,
SIMCON - SIMSREE CONSULTING CLUB

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OUR TEAM
SANANDANDESHPANDE
NIKHILRAO
AMEYAMAHABAL
CHITRAWANI
deepesh jethwani
prathamesh indani
Sushil Gurav

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OUR TEAM
ARPIT agrawal
ASHAYDHURI
HUZEFABODABHAIWALA
KARANCHOPRA
NAMANCHANDAK
praCHIKORE
SARANGKULKARNI
YOGESHMOHATA

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REAL ESTATE
INDUSTRY ANALYSIS

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Industry Overview
Real Estate sector is one of the acknowledged sectors
in the world. Real Estate sector is the 2nd largest
employer in India after Agriculture sector. Real Estate
sector is expected to grow at 30% over the period of
next 10 years.
In the year 2014, overseas funds accounted for more
than 50% for all investment activities in India and this
figure was around 26% in the year 2013. So, Indian real
estate market has become one of the most preferred
destinations in Asia Pacific region. It is also expected
that there will be more number of NRI (Non-Resident
Indian) investments in both short term and long
term. Most favored property investment destination
is expected to be Bengaluru followed by Ahmedabad,
Pune, Chennai, Goa, Delhi and Dehradun.
Real Estate sector mainly comprises of 4 sub-sectors
and these sectors are Housing, Retail, Hospitality and
Commercial. The growth of real estate sector is also
complemented by growth of some other factors like
corporate environment and demand for office space as
well as urban and semi-urban accommodations. The
construction industry ranks 3rd among the 14 major
sectors in terms direct, indirect and induced effects in
all sectors of economy.
Segments
Market Size
Real Estate sector in India is expected to touch $180
billion by the year 2020. From the financial year
2008 to 2020 this market is expected to grow at the
Compounded Annual Growth Rate of 11.2%. Much
needed infrastructure for India’s growing needs is
being provided by the growing sub-sectors like Retail,
Hospitality and Commercial real estate.
During the first nine months of 2015, Private Equity
funds have invested $2.4 billion in real estate sector
across 53 transactions compared to $1.3 billion across
57 transactions in the same period last year. Deal
sizes have also increased in the year 2015. Residential
projects both luxurious & affordable have attracted
substantial amount of capital. Private Equity and
Non-Banking Finance Companies are increasingly
investing in real estate sector in order to hedge risk
and undertake bigger transactions.
India’s office space absorption stood at 35 million
square feet during 2015, which is second highest
figure in India’s history after 2011 and it was driven
by corporates implementing their growth plans. India
had the strongest activity in office leasing space in Asia
and accounted for half of Asia’s total office leasing in
third quarter of 2015, with Delhi being the most active
market.
Mumbai is considered to be the best city in India for
commercial real estate investment, with returns 12-
19% likely in next 5 years followed by Bangaluru and
Delhi-National Capital Region. Delhi-NCR was also
the biggest office market in India with 110 million
square feet, out of which 88 million square feet were
occupied. Sectors like IT & ITeS, Retail, Consulting
and E-Commerce have registered high demand for
office space in recent times. Delhi’s Central Business
District (CBD) of Connaught Place has been ranked
as the sixth most expensive prime office market in the
world with occupancy costs at $160 per square foot
per annum.
Major Domestic Players
1. DLF Limited
DLF is a leading real estate developer in India
since 1946. DLF has been instrumental in
putting Gurgaon on the urban landscape of
India. DLF has over 220 million square feet of
existing development projects and 574 million
square feet of planned projects. DLF has so
far developed 22 urban colonies and an entire
integrated 3000 acre township called DLF City.
Others
Government
Education
Transport
Trade
Manufacturing
Real Estate
Agriculture
11%
53%
9%
14%
Sector wise Employment
5%
2%
2%
4%

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2. UNITECH
Established in 1972, UNITECH is India’s
leading real estate developer. It is the first
developer to have been certified ISO 9001:2000
in North India. UNITECH offers diversified
projects across residential, commercial IT
parks, retail, hotels, amusement parks and
SEZs segments. UNITECH was the first real
estate company to be a part of the National
Stock Exchange’s NIFTY 50 index.
3. Ansal API
Established in 1967 as a family business, Ansal
API today is clearly amongst the real estate
leaders of India. Ansal API till date developed
and delivered more than 190 million square
feet. The company currently has a land reserve
of about 9335 acres.
Project Spectrum: Integrated townships,
Condominiums, Group Housing Malls,
Shopping Complex, Hotels, SEZs, IT parks and
Utility services.
Porters Five Forces
• Threat of new entrants- Low
Initial investment in setting up a real estate company
is very high since the raw material costs have to be
arranged by the developer in the earlier stage i.e. there
is no advance payment from the customer. New players
in this sector find it difficult to win projects since
the real estate sector projects also consider the track
record of the developer. Economic downturn across
the globe and increase in the number of real estate
construction and development companies has reduced
the profitability of the business. Cost reduction plans
in terms of real estate for office space are being carried
out by many companies. So this is kind of a dampener
for new companies as well as existing companies. The
new players in this sector are expected to be affected
the most.
On account of the above points, there is weak/low
threat of new entrants.
• Bargaining power of buyers- Moderate
The products (i.e. real estate space) are standardized.
Switching costs are very high. People look for
developers with good track record i.e. brand identity.
The bargaining power of buyers was low. But because
of poor economic condition of 2013 and 2014, the
property rates were unaffordable to the people of the
country. RBI has disallowed the 80:20 ponzi scheme
being run by real estate developers. Also the property
rates were too high and sellers were not ready to bring
down the prices. So the real estate sector became
cash crunched.This resulted in builders trying to woo
buyers with discounts and offers.
The bargaining power of buyers which was low
earlier, later on it increased and now can be termed as
moderate.
• Bargaining power of suppliers- Low
There is lower switching cost in changing suppliers
for raw material (cement, bricks, paint, etc.). There is
negligible threat of forward integration by suppliers.
There are a large number of suppliers of raw materials
for the real estate sector. The bargaining power of
suppliers is low in this case.
• Threat of substitutes- No threat
There is no substitute for real estate sector from
the point of view of real estate construction and
development. So the threat of substitutes for real estate
sector is seemingly nil.
• Intensity of rivalry- High
Rivalry is strong because of the large number of
real estate firms operating in India and around 40
companies are listed on BSE in Construction and
Contracting- Real estate. The product (i.e real estate
space) cannot be differentiated. There is minimal
profitability considering the status of current economy
and so only companies with high cash reserves would
survive. The intensity of rivalry is, therefore, high.
Government Initiatives
The Government of India along with the governments
of the respective states has taken several initiatives
to encourage the development in the sector. The
Smart City Project, where there is a plan to build
100 smart cities, is a prime opportunity for the real
estate companies. Below are some of the other major
Government Initiatives:
• The Government of Rajasthan became the
first state to initiate private investments in
affordable housing by signing four Memoranda
of Understanding (MoUs) with private players
for an investment of Rs 5,400 crore (US$ 810
million).
• The Ministry of Housing and Urban Poverty
Alleviation (HUPA) has commissioned a study
by Indian Institute of Technology, Kanpur

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on testing of new construction technologies,
with the objective of promoting new housing
technologies in the country.
• India’s Prime Minister Mr NarendraModi
approved the launch of Housing for All by
2022. Under the Sardar Patel Urban Housing
Mission, 30 million houses will be built in
India by 2022, mostly for the economically
weaker sections and low-income groups,
through public-private-partnership (PPP) and
interest subsidy.
• The Government of India has relaxed the
norms to allow Foreign Direct Investment
(FDI) in the construction development sector.
This move should boost affordable housing
projects and smart cities across the country.
• The Securities and Exchange Board of India
(SEBI) has notified final regulations that will
govern real estate investment trusts (REITs)
and infrastructure investment trusts (InvITs).
This move will enable easier access to funds
for cash-strapped developers and create a new
investment avenue for institutions and high
net worth individuals, and eventually ordinary
investors.
• The Government of Maharashtra announced a
series of measures to bring transparency and
increase the ease of doing business in the real
estate sector.
• The State Government of Kerala has decided to
maketheprocessofsecuringpermitsfromlocal
bodies for construction of houses smoother, as
it plans to make the process online with the
launch of software called 'Sanketham'. This will
ensure a more standardized procedure, more
transparency, and less corruption and bribery.
Road Ahead
Respondingtoanincreasinglywell-informedconsumer
base and, bearing in mind the aspect of globalization,
Indian real estate developers have shifted gears and
acceptedfreshchallenges.Themostmarkedchangehas
been the shift from family owned businesses to that of
professionally managed ones. Real estate developers,
in meeting the growing need for managing multiple
projects across cities, are also investing in centralized
processes to source material and organize manpower
and hiring qualified professionals in areas like project
management, architecture and engineering.
The growing flow of FDI into Indian real estate is
encouraging increased transparency. Developers,
in order to attract funding, have revamped their
accounting and management systems to meet due
diligence standards.
India’s real estate market is expected to reach US$
180 billion by 2020 from US$ 93.8 billion in 2014.
Emergence of nuclear families, rapid urbanization
and rising household income are likely to remain the
key drivers for growth in all spheres of real estate,
including residential, commercial and retail.
Real estate is currently the fourth-largest sector in the
country in terms of Foreign Direct Investment (FDI)
inflows. Total FDI in the construction development
sector during April 2000–May 2015 stood at around
US$ 24.07 billion.
The Government of India has been supportive to the
real estate sector. In August 2015, the Union Cabinet
approved 100 Smart City Projects in India. The
Government has also raised FDI limits for townships
and settlements development projects to 100 per
cent. Real estate projects within the Special Economic
Zone (SEZ) are also permitted 100 per cent FDI. In
Union Budget 2015-16, the government allocated
US$ 3.72 billion for housing and urban development.
The government has also released draft guidelines for
investments by Real Estate Investment Trusts (REITs)
in non-residential segment.

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Global Outlook
In many ways, the commercial real estate (CRE)
industry is on more solid footing. The U.S. economy
continuestoprogressandinvestorsaregenerallyseeing
robust performance across most property types and
markets. Availability of financing through traditional
and nontraditional channels is likely to continue to
drive domestic and international investor interest in
U.S. CRE. Together, these should further strengthen
transactions and pricing across primary, secondary,
and tertiary markets. However, concerns — some
new, some old — are keeping industry executives
on their toes. Whether it’s the pressure coming from
nontraditional competitors, the evolving threat of
cybercrime, the imperative to be sustainable, or the
rising cost of regulatory compliance, CRE executives
have ever evolving challenges.
Based on the premise of “on demand,” technology
advancements, consumption and lifestyle patterns,
and societal factors are driving the rapid growth of the
collaborative economy. Companies such as Uber and
Lyft are leveraging technology to offer on-demand taxi
services, reducing the need for car ownership. This
trend can be equally applied to CRE, as collaborative
space usage is gaining prominence in places where
one lives, works, and plays.
The growth of the collaborative economy will have far
reaching implications for traditional CRE players. The
collaborative economy is coming to real estate sector
sooner than expected. There will be higher demand for
dynamically configurable spaces. Leasing approaches
and lease administration will undergo significant
transformation.
References
IBEF, KPMG, EY-Trends

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TURMOIL IN OIL INDUSTRY
TOPIC OF THE MONTH

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Inthefirsthalfoftwentiethcentury,oilhadimportance
because of its need for military. Anyone who had
control over oil had ruling power. During World War
I and World War II it played an important role. Also, it
was important for industrial growth in U.S. and other
powerful nations. It was used for energy consumption.
As this all has wide impact on every nation, oil price
has importance in the international market.
Difference between Brent crude oil and WTI crude
oil
Brent crude oil and West Texas intermediate are 2
major benchmarks in world market. The oil explored
in Central U.S., Northern Region of Europe and Asia
–Pacific region is ‘Sweet’ oil i.e. content of sulfur is less
that 50%. If the content of sulfur is less, then it is easier
for refiners to refine it. Though Brent and WTI both
are sweet and lighter oil types, WTI is a bit sweeter
than Brent oil and it makes WTI costlier than Brent.
But, if a supply glut is there at Oklahoma, Texas then
prices of WTI tumbles down. Still, currently around
two thirds of world oil trade happens with Brent crude
as benchmark.
1930’s oil glut
Discovery of new oil field in Oklahoma, Texas caused
abundance of oil in 1930’s. In late 20’s and early 30’s
world was in fear of low oil supply which in turn led to
discovery of new oil fields. This caused overproduction
of oil which was stockpiled and this led to excess supply
of oil and gasoline at refineries. This led to price fall.
Also, this further exacerbated the deflation.
To curb the tumbling oil prices, authorities tried to
shut oil wells in oil producing states. But, it was not
much successful.
1980’s oil glut
There were 3 factors responsible for 1980’s oil glut:
increase in oil prices in 1979, excess production and
decline in demand due to recession. Excess production
took place due to the rise in prices of oil. All 3 factors
are intertwined with each other. In 1982, supply was
more than the demand of oil. This led to the price
war and in turn around 67% fall in oil prices. To curb
the fall in oil prices, Saudi reduced the production of
oil. But due to this, Saudi and other OPEC countries
lost the market share. This resulted in the gain of
market share by U.S. and non-OPEC countries.
Also, after learning from 1973 oil crisis and 1979 oil
shock, European countries focused more on stable,
alternative oil supplies from non-OPEC countries.
This crisis ended with loss of market share by OPEC
nations and reduced their importance.
Current Turmoil In The Oil Industry
Price of a barrel of oil has fallen more than 70% since
June 2014.The oil industry, with its history of booms
and busts, is in its darkest phase since the 1990s.
Oil production in the US has nearly doubled over the
last few years because of the Shale boom. This lead to
a substantial decline in oil imports in the US. Saudi,
Nigerian and Algerian oil that once was sold in the
United States was suddenly competing for Asian
markets, and the producers were forced to drop prices.
Canadian and Iraqi oil production and exports are
rising year after year. Even the Russians, with all their
economic problems, manage to keep pumping.
The consequent increase of oil in the market due to the
rise in oil production in the US has lead to the supply
outpacing the demand by quite some margin. The
OPEC and Non OPEC members are trying to hold on
to their positions and not cutting productions in a bid
to run their competitors out of business. But this has
put a lot of economic strain on all the oil producing
countries as prices have dropped substantially and
they cannot carry on like this for a very long time.
Many of the US shale producers until now could carry
on producing oil because of contracts signed at higher
prices. But these contracts are getting over this year
and many producers will have to shut down operations
simply because they will become unprofitable.
Meanwhile, projects capable of producing more than a
half million barrels a day of oil were cancelled, delayed
or shelved by OPEC countries alone last year, and this
year promises more of the same.
Also there are signs that production is falling because
of the drop in exploration investments. A international
consulting firm, identified 68 large oil and natural
gas projects worldwide, with a combined value of
$380 billion, that have been put on hold around the
world since prices started coming down, halting the
production of 2.9 million barrels a day.
But still the drop in production is not happening
swiftly enough, especially with output from
deep waters off the Gulf of Mexico and Canada
continuing to build as new projects come online.
On the demand side, the economy of Europe is weak.
China unexpectedly is going through a slowdown of its
own and its oil consumption isn’t increasing the way it
was expected to increase. Other emerging economies
are also stable and there is not any extra demand for
oil.
A Major factor in the sharp price drops is due to
the continuing unwillingness of OPEC to intervene
to stabilize markets that are widely oversupplied.

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Venezuela, Ecuador and Algeria have been pressing
the cartel to cut production to shore up prices,
but Saudi Arabia, the United Arab Emirates and
other gulf allies are refusing to do so. At the same
time, Iraq is actually pumping more, and Iran
is expected to become a major exporter again.
Saudis fear that if they cut production and prices go
up, they will lose market share to their competitors
(mainly US). The IMF estimates $300 billion decline
in the revenues of Saudi Arabia and its Persian Gulf
allies this year.
Oil prices are unlikely to increase anytime soon as this
game of brinkmanship continues. Oil production is
notdecliningfastenoughintheUSandothercountries
but that could begin to change this year. There are
signs that suggest relative parity between demand and
supply along with the prices could be achieved by the
end of 2016. Demand for fuel is recovering in some
countries, and that could help crude prices recover in
the next year or two. But there is now little or no spare
production capacity to give the market a cushion in
case of any crisis in a crucial oil-producing country.
Oil Price Forecast For 2020 And 2040
The average price of a barrel of Brent crude oil will rise
to $79/bbl by 2020(without considering Inflation).
Shale oil production is going to slow down after 2021
there by contributing to a decline in total U.S. oil
production through 2040.
According to Annual Energy Outlook (EIA), after
2020, world demand will start driving oil prices to
the equivalent of $141.28/barrel in 2040. By then, the
cheap sources of oil will have been exhausted, making
it more expensive to extract oil.
This all depends on what happens with U.S. shale oil
production, how OPEC responds to it, and how fast
the global economy grows. Also EIA is uncertain about
its own forecast. What will happen to the oil prices in
the long term is anybody’s guess.
References
Peak Oil Barrel, Use-conomy, NY times

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MTV
BRAND ANALYSIS
CADBURY OREO
CASE STUDY ANALYSIS

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Introduction To Case
For most of its 100-year existence, Oreo was
consistently America's best loved cookie, but today
it is a global brand. Faced with stagnation in the
domestic market, Kraft Foods moved it into emerging
markets where it made some mistakes, learned from
them changed its strategy and ultimately triumphed
in winning over customers. This case illustrates
a complete re-evaluation of the product, pricing,
packaging, communication and distribution strategy
of an existing Oreo brand in an international market. It
can also be used to explore the global versus local mix
that is needed for success in an international market,
and to illustrate the strategies necessary to succeed in
emerging markets like India and China.
Background And Company Profile
The "Oreo Biscuit" was first developed and produced
by the National Biscuit Company (today known as
Nabisco) in 1912 at its Chelsea, Manhattan factory in
the current-day Chelsea Market complex, located on
Ninth Avenue between 15th and 16th Streets. Today,
this same location of Ninth Avenue is known as "Oreo
Way." The name Oreo was first trademarked on March
14, 1912. It was launched that time as an imitation
of the Hydrox cookie manufactured by Sunshine
Company, introduced in 1908.
On March 6, 2012, the famous cookie brand, Oreo,
celebrated its 100th birthday. From humble beginnings
in a Nabisco bakery in New York City, Oreo has
grown to become the bestselling cookie brand of the
21st century generating $1.5 billion in global annual
revenues. Currently owned by Kraft Foods Inc., Oreo
is one of the company's dozen billion dollar brands.
Until the mid-1990s, Oreo largely focused on
the US market - as reflected in one of its popular
advertising slogans from the 1980s, "America's Best
Loved Cookie". But the dominant position in the
US limited growth opportunities and spurred Kraft
to turn to international markets. With China and
India representing possibly the jewels in the crown
of international target markets due to their sheer size,
Oreo was launched in China in 1996.
Problem Faced In Entering Emerging Markets
Oreos haven’t always been popular outside the
U.S. Kraft struggled for years in China after being
launched in China, for instance, and considered
exiting Chinese market several times. The cookie
was spectacularly underperforming once said Sanjay
Khosla, Kraft’s president of developing markets. One
problem: Kraft offered Chinese consumers the same
type of Oreos that it sold in the U.S. Kraft believed
that what was good for the U.S. was good for the
world.
After surveys showed that Chinese consumers found
Oreos too sweet, Kraft put Andrade to work coming
up with a new formula to better suit local tastes. In
India, Kraft encountered the opposite problem: The
American-style cookie was too bitter, Indians told
researchers.
Adjusting for local preferences isn’t a matter of just
removing one ingredient said Andrade. It’s about
making sure you balance the flavors. You almost have
to reconstruct the product.
Strategy For Turnaround In China
Oreo had been an iconic product in US having been
in the country for over 100 years. Kraft expected the
brand to achieve similar success in China after its
launch in 1996. But this was not the case as a result
of which, Kraft had to rethink about adapting the
product according to the needs of the Chinese.
The cookie when launches in China did OK but
wasn’t a hit. The company even considered pulling
out the brand out of China, but before doing so that
they thought of conducting a research about why the
Chinese consumers did not like Oreo. Kraft concluded
from the research that Chinese found the cookie a
little bit too sweet and a little bit too bitter and this is
where the turnaround strategy of Kraft was focused.
The multi-pronged approach adopted by Oreo in
China can be summarized as follows:
• Kraft’s Chinese division asked its headquarters
to change the ingredients of Oreo so as to make
it biscuits suitable for local tastes. Accordingly,
20 prototypes were developed and were tested
on Chinese consumers and the formula which
was most preferred was selected.
• KraftalsoobservedthattheChineseconsumers
were value conscious and considered the Oreo
packets to be expensive. As a result of which
the size of the packets was reduced so as to
suit the buying habits of consumers. Moreover,
very small packets were also introduced so as
to give the consumers a first taste of the cookie.
• The introduction of smaller packs required

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adjustments in manufacturing plant. Similarly,
marketing campaigns also had to be adjusted
accordingly.
• Initially, the distribution was through grocery
stores and hypermarkets. But later the
convenience stores were used to enhance the
distribution network. In Shanghai, Carrefour
even offered Oreos by weight so as to give
customers more control over the quantity that
they buy.
• Recognizing the wafers were very popular
amongst the Chinese, the team introduced
chocolate covered wafer sticks. Convincing
the senior management was a tough task, but
eventually the product turned out to be big
hit and was subsequently launched in other
markets.
• Americans have tradition of pairing milk with
cookies. Kraft began a grassroots marketing
campaign so as to educate the Chinese
consumers about this habit.
Strategy Used In India
The learning from Chinese markets were used by Kraft
when they entered Indian markets. Initially Oreo was
available in India only in imported form. As a result
of this, it was priced at Rs 50 for a pack of 14. Due to
prohibitive price coupled with lack of awareness, the
sales were very low. At this point of time, global CEO
Irene Rosenfeld decided to adopt localization strategy
similar to the one used in China. This was helped
partly by the acquisition of Cadbury in 2009.
As opposed to the Chinese, Indians love biscuits. India
is world’s largest market for biscuits. But the market is
dominated by low-cost glucose biscuits, and premium
cream biscuits only occupy a small share. As a result,
in order to capture the Indian market, competitive
pricing and strong distribution were important
components.
Oreo developed a strategy to take on the existing
market leaders which included Britannia, ITC and
Parle. Internally, they referred to this strategy as TLD
(Take Leaders Down). Its focus was to target the 10
million households which consumed 70 per cent
of the cream biscuits. It entered the Indian market
as Cadbury Oreos as Cadbury had a better brand
recognition among the Indian consumers when
compared to Kraft. It has targeted the small towns and
Kirana stores along with modern stores in big cities.
As a result of this strategy its market share has grown
from one per cent after its debut to 30 per cent.
Conclusion
Today, Oreo has become a global brand. It has presence
in more than 100 countries. China is currently its
No.2 market. This would have been highly impossible
had there been no clear strategy from Kraft about
approaching the Chinese markets. Manufacturing,
marketing, distribution and packaging were properly
aligned as per the market requirements. The decision
to reformulate the Oreos according to the Chinese
taste was a significant decision.
This case is a classic example of the dilemma which
is faced by multinational corporations when entering
foreign markets. The firms should be able to adjust to
the local tastes. Oreo achieved success by integrating
its global brand with local preferences.
References
Business today, ET, Canadian Business, WSJ, Forbes

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BITCOIN
CONCEPT OF THE MONTH

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Introduction
Bitcoin was introduced in year 2009 by developer Sa-
toshi Nakamoto as open source software; it is a peer-
to-peer payment system. The digital currency used in
the system is also called bitcoin and it is also referred
as an electronic money, virtual currency, or cryp-
to-currency. The bitcoin is a decentralized currency as
it is not controlled by a single entity/authority, like a
central bank. Economists generally agree that bitcoin
does not meet the definition of money. Bitcoins are
generated as a reward for payment processing work in
which users who offer their computing power record
and verify payments into a public ledger called mining,
individuals do this activity in exchange for transaction
fees and newly minted bitcoins. Apart from mining,
bitcoins can be obtained in exchange for products,
other currencies, and services. Users can send, receive
and buy bitcoins electronically for a nominal fee using
wallet software on a mobile device, personal computer
or a web application.
Working Of Bitcoin
A new user can get started with Bitcoin without un-
derstanding the technical details. Once user have
installed a Bitcoin wallet on his computer or mobile
phone, it will generate first Bitcoin address and user
can create more whenever he need one. He can dis-
close his addresses to his friends so that they can pay
him or vice versa. In fact, this is pretty similar to how
email works, except that Bitcoin addresses should only
be used once.
The entire Bitcoin network relies on the block chain,
which is a shared public ledger. All confirmed transac-
tions are recorded in the block chain. This way, Bitcoin
wallets can calculate their spendable balance and new
transactions can be done by using bitcoins that are ac-
tually available with the spender. The chronological
order and the integrity of the block chain are enforced
with cryptography.
What Is The Value Of A Bitcoin?
Bitcoins are like diamonds or gold i.e. it doesn’t intrin-
sic value. As more people want to buy Bitcoins, sellers
can charge more. It’s a free market and as wild as one
can imagine.
If 21 million Bitcoins are in circulation and current
price is $500, then total market value is ~$10 Billion.
Bitcoin Value – 1 Year History
Advantages & Disadvantages Of Bitcoin
Advantages
• Payment freedom - It is possible to receive and
send any amount of money instantly at any-
time, anywhere in the world. No bank holidays,
no imposed limits, no borders. Bitcoin allows
its users to have full control on their money.
• Very low fees - Bitcoin payments are currently
processed with either extremely small fees or
no fees.
• Security and control - Bitcoin users are in full
control of their transactions; it is impossible
for merchants to force unnoticed or unwant-
ed charges which can happen with most of the
other payment methods. Bitcoin transactions
can be done without personal information tied
to the transaction. This offers very strong pro-
tection against identity theft. Bitcoin users can
also protect their money with encryption and
backup.

19. VOLUME 04BEACON
JAN 2016
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ISSUE 01
Bitcoin Value – 1 Year History
• Transparent and neutral - All information
regarding the Bitcoin money supply is easily
available on the block chain for anybody to
verify and use in real-time. No individual or
organization can manipulate or control the
Bitcoin protocol because it is cryptographical-
ly secure.
Disadvantages
• Degree of acceptance - Many people are still
not aware of Bitcoin. Every day, more busi-
nesses accept bitcoins because they want the
advantages of doing so, but the list still remains
small and needs to grow in order to benefit
from network effects.
• Volatility - The number of businesses using
Bitcoin and the total value of bitcoins in circu-
lation and are currently very small compared
to what they could be. Therefore, relatively
small trades, events, or business activities can
significantly affect the price. This volatility will
decrease with time as Bitcoin markets and the
technology matures.
• Ongoing development - Bitcoin software is still
in beta stage with many incomplete features
which is in active development. New features,
services, and tools and are being developed to
make Bitcoin more secure and accessible to the
masses.
References
Bitcoin, Raszl, Reddit