IIPM Management College: Business and Economy

Showing posts with label Business and Economy. Show all posts

Friday, May 10, 2013

B & E This Month

Dell: stake sell
Will going private revive the PC maker’s fortunes?

Round Rock, Texas-based Dell Inc., the third-largest PC maker globally, is discussing the possibility of a potential buyout with private equity firms. Top private equity firms such as TPG Capital and Silver Lake are reportedly discussing the deal with Michael Dell, the chief executive and founder of the company who owns about 15% stake in Dell. For several years now the computer maker has been losing value and market share and has been struggling to regain its position in the PC market. The personal computer business remains Dell’s bread and butter, bringing in 70% of revenues. But as tablets, smartphones and other mobile devices have eaten away at PC sales, shares of the firm have struggled. Over the last five years, Dell’s shares have fallen by 43%, sinking into the single digits by the end of 2012.

To revive growth and cope with competition Michael Dell, who retook the CEO position in 2007, has been considering taking the company private. Dell’s enterprise value of $19.1 billion is 4.4 times earnings before interest, taxes, depreciation and amortization for the last 12 months, according to Bloomberg. That’s a lower valuation than every computer-hardware maker larger than $1 billion, except Hewlett-Packard Co, which has a multiple of 3.5, the data show. But Dell’s net cash balance of $5.15 billion provides some downside buffer as it produces opportunity for a leveraged buyout under the right conditions.

The buyout, if and when it takes place, could actually be one of the largest deals in the technology space since 2007, when KKR & Co bought First Data Corp for more than $25 billion. A buyout can be good for a company even it means investors aren’t able to trade its stocks. Entering into private ownership could amount to more maneuverability for Dell as it tries to stay afloat in a terrain full of pitfalls for PC makers.

Rio Tinto: CEO EXIT

Bad bets force head honcho to quit

In the latest string of exits forced upon leaders of the world’s biggest mining companies, Tom Albanese, the CEO of the London-based minerals explorer Rio Tinto has been replaced by the company’s iron ore boss Sam Walsh. Albanese resigned over a $14bn writedown involving two of his most significant acquisitions, Mozambican coal mining and the Alcan aluminium group. The bulk of the writedown, between $10 billion and $11 billion, relates to aluminum assets acquired in 2007, while the remaining $3 billion is for Mozambique coal operations acquired only two years ago. Albanese has admitted ‘accountability’ for the loss of assets following the bad deals. Prices for metals and their ingredients have fallen sharply over the past several years with the sharp tempering of demand for mineral resources in China, Prices for coking coal have dropped 43% since 2011, when Rio Tinto made its Mozambique move. Aluminum prices have dropped 22% since 2007. At least 20 mining CEOs have stepped down in the past year under pressure from investors and boards, who blame the executives for costly mining projects that were conceived during the commodities boom.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Wednesday, May 8, 2013

INTERNATIONAL CORPORATION: GENERAL MOTORS

When GM went broke four years ago, not many gave it a chance to come back from rehab. Those Cassandras are now eating their words as the lumbering giant strikes back with a vengeance.

But despite making the most of the opportunities in the past year, the real test of GM’s ability will be to consolidate and expand its market share without diluting its profitability. Already, Toyota has come out with its sales forecast of 8.48 million units for the current year, Volkswagen is pulling out all the stops to top the industry league tables by 2018 and Ford is on track taking its One Ford strategy to the next phase that might give it a fair shot at becoming market leader. In other words, GM is up against the most competitive automobile market in its history and its ability to continue delivering stellar results is bound to come under increasing strain. “GM has to push harder to get ahead of the curve to compete head to head with other companies in all market segments globally,” says Laurie Harbour, President, Harbour Results, an industry analyst.

But after clawing its way to the top the hard way, GM is not likely to give ground either. The company made $8 billion in profits last year (a record high!). In fact, it is planning to raise its profit margins from 6% last year to 10% this year (on par with its best-in-class rivals such as Hyundai and BMW). It is expected that this move will help GM to post $10 billion in profits in the current year. However, one irritant is its share price, which even after such a bullish forecast, is still hovering around the $25 mark. For the investors to recover all their money, GM’s share price should reach $53 (which is still a distant dream for the company). Another nettlesome issue is GM’s European business, which continues to haemorrhage copius red ink. The carmaker took a hit of $580 million in losses in the first nine months of 2011, and fourth-quarter results, whose announcement was being awaited when this story went into print, were expected to come in even worse.

Despite the odds, GM will continue to be the market leader this year as well. Toyota’s 8.48 million units sales forecast for this year will just be good enough to make it second best. But although GM sales are growing globally, the company will need to focus beyond sales numbers to improving its overall financial health. To avoid any kind of financial let-down in future, GM needs to beef up its profitability and pump more growth in the markets it operates in. To its credit it has been making serious efforts to amplify its product range with fresh line-ups and models. Last year it turned out new small cars and mainstream SUVs. Now GM is focusing on strengthening its roster of higher-profit, luxury models for its Buick and Cadillac divisions.

With sales on a rebound and with new products to offer, GM can look forward to keeping its competitive metabolism cranked up.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Tuesday, May 7, 2013

Now, a super body to fast track projects!

Will the government’s plan to set up a National Investment Board to act as a single clearing window for large projects serve its purpose or will it be another bureaucratic exercise in futility?

An ambitious new plan by the Indian government to cut red tape and speed up decision-making on big ticket infrastructure projects has triggered apprehensions in certain quarters, and not without justification. First mooted by Finance Minister P. Chidambaram, the plan calls for setting up a National Investment Board (NIB) to fix chronic delays in implementing key infrastructure projects.

There are projects worth over Rs.7 trillion, in sectors such as roads, power, ports, airports, railways etc, which are currently stuck due to problems in getting approvals from different ministries. According to to the Centre for Monitoring the India Economy (CMIE), projects worth Rs.1.8 trillion were shelved during the April-August 2012 period alone, mainly because of problems related to land acquisition, environmental clearances and lack of fuel and mineral linkages.

To stimulate the economy and expedite mega projects worth Rs.10 billion and more, the government wants to set up the NIB, which would be headed by the Prime Minister. Once the NIB greenlights a project, no ministry will have the power to overrule its decision. The Finance Ministry expects that a decision on setting up the NIB will be taken soon.

Post-1991, there have been repeated calls from the industry to set up a body that simplifies the procedure for starting a project. For the last 10 years, there have been four models that have come up for deliberations. The first was a Fast-tracking Board under the Cabinet Secretary. The second was an infrastructure ministry; third, a Foreign Investment Promotion Board (FIPB)-like structure. And, the fourth a high-powered institution like the National Development Council (NDC) where even chief ministers could be involved with clearances and permissions. While all these models had their pros and cons, the government’s choice in setting up the NIB reflects a combination of a Fast-tracking Board and the FIPB.

Industry bodies have welcomed the idea. “It is possible to have such a mechanism as envisioned in the NIB without violating any existing Act or rule as the intention is to speed up the decision-making process and not bypass any law,” says FICCI President R.V. Kanoria, adding that many investments in infrastructure projects just remain on paper because investors ultimately get frustrated with the delays and abandon their plans.

But the NIB proposal is being strongly opposed by the Environment Minister Jayanti Natarajan. In a letter to the PM, Natarajan said she found the proposal ‘disturbing’ and in conflict with the goals of her ministry. “Often, hard decisions have to be taken to balance the imperatives of development with the crucial need to preserve the environment. In this context it would be utterly against the spirit of the Environment Protection Act to allow an investment board, or the finance ministry, to overrule or decide upon environmental concerns,” Natarajan observed. The Tribal Affairs ministry and various NGOs are also opposing the move to set up the NIB.

But the significance of a body like the NIB can be appreciated in the context of the tangled web of permissions required for a project. Sample this: There are over 65 clearances that are required for a thermal power project at the federal, state and local levels. There are 17 ministries at the central level that directly or indirectly look after infrastructure projects. With three more central institutions involved with clearances – Planning Commission, the finance ministry and the Prime Minister’s Office (PMO) – we have 20 clearance gateways in New Delhi. Then, there are 29 states. Each of them mirror many of these ministries as state-level departments. Some clearances are at the state capital level and some at the local levels. This is the maze that the NIB will have to negotiate.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Pneumonia wins in India

The government needs to urgently take steps towards mass prevention and cure

November 12 is marked as World Pneumonia Day. But this year, the World Pneumonia Day brought some horrifying numbers in tow. The third annual International Vaccine Access Center’s (IVAC) Pneumonia Progress Report 2012 reveals that nearly 1,088 children under 5 years of age die every day in India, an increase by 6.7% from 2008.

In a developing country like India, young children under the age of 5 are often victims of pneumonia owing to malnutrition, unhygienic surroundings, overcrowding and pollution. Lack of awareness and education among the poor often leads to delays in treatment, with fatal consequences. Recent estimates from the United Nations Children’s Fund (UNICEF) show that pneumonia continues to be the number one killer of children not only for India but also across the globe – causing 18% of all child deaths – which means an estimated 1.3 million child deaths in 2011 alone.

WHO has recommended the inclusion of the pneumococcal conjugate vaccine in countries that have an infant mortality rate of more than 50 per 1,000 live births. Shockingly, India has not included the pneumococcal vaccine in its immunisation programme simply because it is expensive (Rs.3,800 per dose!). That is unfortunate, since the newest generation of pneumonia vaccines would have successfully protected our children from 23 common strains of the disease.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Sunday, May 5, 2013

Policy uncertainty and the slow recovery

Policy uncertainty in the aftermath of economic crisis’ tends to slow recovery and suppress consumer spending

Financial turmoil, the Great Recession of 2007 to 2009, and the weak recovery that followed ushered in a period of heightened uncertainty in the United States. Even a year after the recession ended, Federal Reserve chairman Ben Bernanke described the economic outlook as “unusually uncertain.”

Many analysts claim that uncertainty about economic policies and their consequences has been an important factor slowing recovery. Uncertainty about taxes and the effects of policy on interest rates, prices, health costs, and other economic variables can lead households to defer consumer spending, and companies to cut back on capital investments, new product development, hiring, and worker training. Because new projects are expensive to reverse and because workers are costly to hire and fire, companies have an incentive to wait for greater political stability and policy certainty before proceeding with new business undertakings. If too many companies adopt a cautious stance in response to policy uncertainties, economic recovery may not take hold.

The price of policy uncertainty indeed could be high, according to a recent study titled, Measuring Economic Policy Uncertainty undertaken by me and Stanford University professor Nicholas Bloom. We developed a new index of policy-related economic uncertainty. The index reaches historically high levels after the Lehman Brothers bankruptcy and again over the past year in reaction to the eurozone crisis and the US debt ceiling impasse. We estimate that an increase in policy uncertainty of the size experienced from 2006 to 2011 leads to a fall in real Gross Domestic Product of 3.2%, a sharp drop in business investment spending of 16%, and a loss of about 2.3 million jobs.

The financial crisis and recession presented new and difficult challenges for policy makers. We believe that unusual policy challenges created by extraordinary economic disturbances were the main sources of elevated policy uncertainty in 2008 and 2009. The most threatening aspects of the financial crisis were contained by the middle of 2009, causing our policy uncertainty index to fall substantially in the latter part of 2009.

The index rises again in 2010 and 2011, however, reaching even higher levels than it did at the peak of the financial crisis. High levels of policy uncertainty in the past two years partly reflect deliberate policy choices and political gridlock. A clear example is the debt-ceiling dispute in the summer of 2011 between Democrats and Republicans, which created a real threat of a partial government shutdown. Congress eventually raised the debt ceiling, but agreement came at the last minute and with huge market volatility. Much of the high levels of policy uncertainty in 2011 were caused by policy decisions and policy maker conflicts over how to proceed.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

ExecutiveMBA

Friday, May 3, 2013

Reservation hits a dead end... again!

The fracas over quota in promotions underscores a perennial reality – politicians hardly understand reservation in its true sense; and misuse it towards their political ends

Over the years, the issue of quota in government jobs and educational institutions (meant to bring marginalised sections to the mainstream) has only become more contentious and politically polarising with every passing day.

Contrary to its original idea, reservation has catered more to caste-based politics and politicians; helping secure their vote banks. For years together, politicians have used reservation as a bait to invoke emotions pertaining to communal or caste-based divisions & translate them into votes.

The government’s latest proposal seeks to implement reservations in promotion for Scheduled Caste (SC) and Scheduled Tribes (ST) in government jobs with retrospective effect from June 1995. The bitter political battle over the Constitution Bill, 2012 (One Hundred Seventeenth Amendment), which provides for reservation to SCs/STs in job promotions, also saw a deeply divided Parliament. Cornered from all sides over the ‘Coalgate’ issue, the Congress had shown great intent to get the bill passed in Parliament. “We do want to pass the Bill. We also issued a whip to our members. We will try for the passage of the Bill again tomorrow. We are listing it again,” said Parliamentary Affairs minister Pawan Kumar Bansal on September 5. The government’s hurry to push the Bill through in the monsoon session was also demonstrated when the Department of Personnel & Training prepared a note on September 3 for the cabinet meeting scheduled for the next day, and the Bill was introduced the day after. However, some interesting revelations cast a shadow of doubt on the party’s earnestness. Sources close to the development reveal that on September 21, the government referred the quota promotion bill to a parliamentary standing committee. This move, sources say, gives the Congress an opportunity to extend the ambit of the proposed move to include Other Backward Classes (OBCs) among the beneficiaries of the quota in promotions. There are two interesting points to note. First, OBCs comprise of the SP’s core vote bank and second, the decision to refer the bill to a standing committee came just hours after SP chief Mulayam Singh Yadav pledged his support to the UPA government in order to keep ‘communal forces’ out of power!

Ironically, Mulayam’s SP had led the opposition to the Bill when it was introduced in Rajya Sabha. Just after Minister of State for Social Welfare V Narayansamy introduced the Bill, Naresh Aggarwal from the SP and Avtar Singh Karampuri from the BSP almost came to blows as they pushed each other. Mulayam had gone to great lengths to describe the bill as ‘unconstitutional’, and even vowed to continue opposition to it. “Juniors will become seniors. Is it some kind of a joke? Running the government has become a joke,” Mulayam said, adding that the move would create chaos in administration. Going by the current developments, one can only wonder what his next stand would be.

“There was indeed a cynical design behind the hastiness with which the UPA government introduced the Constitution Amendment Bill... The Congress sought to position itself as the champion of the rights of SCs and STs; apart from putting the BJP in the dock in a context where the principal opposition party was bent upon disrupting Parliament over the coal block allocation,” says political observer V. Krishna Ananth.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Thursday, May 2, 2013

China’s trial of the century

Bo Xilai and Gu Kailai affair may only be a prologue, because the only clear truth to emerge from it is that the Party leadership is fractured

The trial, conviction, and suspended death sentence of Gu Kailai, the wife of purged Chinese leader Bo Xilai, has called into question not only China’s legal system, but the very unity of the Communist Party leadership.

Let us begin with the many questions raised at the trial. For starters, Gu claimed that she killed the British businessman Neil Heywood only to protect her son. But, given Gu’s power as Bo’s wife, she could have had someone like Heywood jailed or expelled from China at the snap of her fingers. No need for cyanide. Still, she not only admitted her guilt, but seemed to embrace it as a sort of historical necessity. “In order to uphold the sanctity of the law,” she told the court, “I am willing to accept and calmly face whatever judgment I am given, and I also expect a fair and just judgment.” Not since Stalin’s show trials of the 1930’s has a defendant so effusively praised a judge who seemed bound to condemn her at a trial where no witness or evidence against her was presented. The bitter irony of Gu’s high-speed trial is that she was a true believer in China’s legal system.

Indeed, Gu was an avatar of the Maoist form of legality that China has maintained long after Mao’s death. Having failed the entrance examination to Peking University, Gu was nonetheless granted an exception and admitted to read law soon after the Communist Party restored the law departments. Prior to that, she sold pork in a Beijing market, where she earned the nicknamed, “Yi dao zhun,” meaning that she could hack off a desired slice of meat with one blow.

Gu was one of the first lawyers to receive her license. But, with the Tiananmen Square incident of 1989, the authorities clamped down on the profession’s autonomy. The Party reasserted control over every aspect of justice through a core department: the Communist Party Central Committee’s Political and Legal Affairs Committee (PLAC). This totalitarian organ has no known address, yet it manages China’s police, prosecutors, courts, and justice ministry, and appoints their leadership. All lawyers fall under its remit. Most important, all local PLAC secretaries simultaneously lead the local public-security bureau. Small wonder, then, that the artist Ai Weiwei could be detained in secret, Liu Xiaobo could be sentenced to 11 years in prison for starting a petition, and Li Wangya could “commit suicide” while in custody. But even this monolithic system of control is porous. Had Wang Lijun, the former Chongqing police commissioner and close ally of Bo Xilai, not feared for his life and fled to the United States’ consulate in Chengdu, Gu would still be helping Bo to rule the city.

Wang is no saint. Before he became Bo’s police commissioner, he was the director of the Field Psychology Research Center, where the condemned were executed and their live organs removed. Wang’s paper, “A Study of Organ and Receptor Transplantation after Execution by Injection,” earned him the Guanghua Innovation Contribution Award. In the paper, he credits “our achievements” to the “thousands of transplantations.” Given his familiarity with the brutality of the Chinese system, Wang no doubt understood that, after falling out with Gu and Bo, the US consulate might be the only place he could find safety. After all, when it came to the public-security organs, the courts, and the prison system, Gu always had the final say. She acted as her husband’s adviser for cracking down on crime and corruption, and was responsible for sending two people – including the PLAC secretary in Wushan County – to prison.

In fact, a few days after killing Heywood, Gu donned a major general’s uniform (which could have belonged to her father, General Gu Jingsheng), convened police officers in Chongqing, and falsely claimed that she had received a secret order from the Ministry of Public Security to protect Wang’s personal safety. The uniform, perhaps, was intended to intimidate the Chongqing police.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, May 1, 2013

“We had predicted it in 2005, but no one took it seriously”

Arun Maira, Member-Planning Commission, reveals to IIPM Think Tank’s Sray Agarwal and Ganesh Roy about why the need of the hour is to have a faster decision making procedure

B&E: The Indian economy is going through a slowdown. What’s the way forward for the economy now?
Arun Maira (AM): What is happening in the Indian economy is just a phase of an economic cycle and it is not going to be the situation forever. In the present scenario, the investors are shying away from coming to India but there is a dire need to understand that this slowdown is temporary. One of the main reasons for this picture is lack of power in decision making. Hence, the need of the hour is the ability to have a faster decision making module. The trust of our people in the government is shaky right now. It’s not only the case with India but in US too that people currently are low on confidence in the government and there too it is very difficult to bring reforms, whether health care or industrial. Both these nations are on the same page and the transformation seems difficult; but since the US has much larger economy they do not get much affected by investors. We at the Planning Commission perform tasks which do not change with these economic cycles – rather, we do a combined and collective research taking views from common people, environmentalists, people from civil society and many more and try to find out what could be the best possible outcome for any situation; and then we proceed from there. We had predicted long back in 2005 that the Indian economy will grow at around 8% to 9% growth rate; but none of the institutions took our prediction seriously; yet eventually we were right!

What policy reforms should we take to tackle the current issues?
AM: This is a fundamental thing and this has happened over the last 2 years and this has not happened overnight. We have predicted that if policy making and decision making are faster, we can achieve a growth rate of over 9% and we have done that. But again, we also have said that things if not done properly will equally affect the economy, as is the case that you see now. I agree with the fact that the economy is not in a good position; but if things like policy making can be done immediately, we can recover from this economic slowdown very fast.

The growth in the economy has made many persons rich but what about the lower strata of the society? They are deprived of the benefits of liberalization so the ultimate challenge for us is to bring these people into the main strata of the society. The political lock-jam which has happened is also one of the reasons for this condition currently.

The institutional and economic reforms if not implemented will make the scenario even worse than what it is prevailing right now. I am not talking about reforms like FDI in retail or the banking reforms but the way in which jobs are created in the country. It is a major issue of concern for us. For example, the main problem with the Naxal affected areas is that the things which were promised to them were never fulfilled; so to get those promised things, they take the help of arms! This is one example of a main policy failure which we have in our system as of right now.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Monday, April 29, 2013

National

RBI: interest rate cuts
Apex bank leaves India Inc. disappointed
Seems that the stalled growth engine of India Inc. will have to wait for some time more before it gets some further rev ups. In its latest review of monetary policy, the RBI decided to keep benchmark interest rates and cash reserve ratios unchanged, leaving many market participants and analysts crestfallen as they were hoping for further cut in policy rates. On the contrary, the central bank warned that reducing key policy rates at this juncture could accelerate inflation rather than spur growth. This stand of RBI is in divergence with its earlier stated policy of bringing down the interest rate if core inflation is below 5% (core inflation was hovering around 4.9% at the time of the announcement.) Currently, repo rate (the rate at which RBI lends funds to other banks) and cash reserve ratio are at 8% and 4.75% respectively. However, RBI has increased the limit of export credit refinance from 15% of outstanding export credit of banks to 50%, which will potentially release an additional liquidity of over Rs.300 billion, equivalent to about 50 basis points reduction in the CRR. But RBI’s stance is going to baffle foreign investors no end. After a span of two years, even China has now started to reduce its interest rates in an attempt to boost the economy. Brazil, another member of the BRICS club, has also been cutting its key policy rates for quite some time. Even a recent report of rating agency Moody’s has said that India could turn out to be the weakest amongst all BRICS countries.

Oil: high diesel demand
Private refiners make hay
Due to the huge difference in the prices of diesel and petrol, the demand for diesel in the country has shot up. So much so that demand outstrips supply by a wide margin. Demand for diesel has skyrocketed and exceeds supply because of petrol prices, which is 70% costlier than diesel. As a result, PSU oil refiners have been forced to buy diesel from Reliance Industries Ltd and Essar Oil. State run oil firms like Hindustan Petroleum, Indian Oil and Bharat Petroleum are buying nearly 15 million tonnes of diesel per year from the two private refiners. Essar Oil operates 1,391 operational outlets, including 249 under construction. Reliance has about 700 operating outlets. The private refiners are able to charge diesel at international prices from the PSU refiners leading to huge windfall gains for the former. On the contrary, state firms are suffering a revenue loss of Rs.10.20 per litre of diesel they sell in the retail market. IOC, India’s biggest oil refiner with a capacity to process 66 MT crude oil, annually bought about 42% diesel from other domestic refiners in the first two months of the current financial year. The company produced 4,485.4 thousand metric tonne diesel in first two months of the current financial year against a sale of 6,371.2 TMT in the same period. According to oil ministry’s data keeper, Petroleum Planning and Analysis Cell, while petroleum consumption recorded monthly growth at 0.2% in April (lowest in the last one-and-half years), about 47% of total consumption in that month was of diesel. “This is one strong indicator of dieselisation of the economy due to price distortion among competing fuels,” PPAC said in its latest report. Diesel rates in the country are frozen since June 2011. It is sold at Rs.41.29 a litre in Delhi while petrol costs Rs.70.24 a litre in the metro.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 27, 2013

Meet the enemy of the internet – Facebook!

We all know Facebook as the dorm room idea that popped out of no where and changed the world. And recently bombed at the bourses. But then, there’s also the counter argument...

Before I explain how, let me first give you a quick background about why Facebook is in a position to threaten the internet.
The story behind the network
Till about the rise of online media as a means to access news, print, radio and television were the only options. But soon, Google came along and mainstream media was no longer the only gatekeeper of news, It was a great way to express oneself and anyone was free to post anything anywhere on the internet, My blog is an example of the same. Most of the online content was relevantly available through search giant Google. With the rise of social networks, the concept of sharing came into prominence. Twitter and Facebook bring news straight into our News Feeds and we do not have to go anywhere else searching for news.

If it is not shared on Facebook it does not exist! While Twitter still remains a niche network with a small percentage of active users who make all the noise, the dominance of Facebook has been so overwhelming that almost everyone we directly know is a member there, and quite active too. Apart from this, we have celebrities and brands who keep long for us to ‘LIKE’ their pages on Facebook at the expense of their own official websites. Facebook pages are far more attractive to them because that is where all the people are. In due course of time Facebook has become not just another website but the Internet for many

This places Facebook in a position of great power. As such, we expect Facebook to act with maturity as people depend on it to bring them the news. Instead, it is slowly turning out to be a very smart villain and with the IPO money, things can get really bad. Therefore, the focus of this piece is on Facebook, on how it treats ‘The Internet’ as its arch enemy, and why we should be concerned about it. When I say ‘The Internet’ I mean the internet that exists outside the walls of Facebook.

But isn’t it nice to use Facebook to access content from all across the web, shared by our friends and pages that we like, all in one News Feed? Why should we be bothered about the rest of the internet? Here’s why. Facebook hides more stuff than it shows! At any given time, the News Feed shows only a small percentage of all content that is shared by our friends and Pages that we like. If we try and change the settings to show Most Recent posts, we might find few more updates, but still, a huge percentage of updates are hidden from us. That also means, whenever we post status updates, they reach only a small percentage of our friends. Facebook itself has said that the reach is around 12% to 16% of total friends. Beat that, more than 84% of our friends don’t even see what we are sharing or talking about even when we are online at the same time! Isn’t this a violation of our fundamental right to speech? Shouldn’t we be deciding whose updates we need to see in our news feeds and shouldn’t our voice be heard by our friends?

Facebook says that it does it to control noise in the News Feed. Too many updates can inundate the users feed, so Facebook devised an ultra sophisticated mechanism that reads our minds (It always asks “What’s on your mind”, so that it knows) and shows us what it thinks is appropriate and relevant to us.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Thursday, April 25, 2013

Intel inside, arm outside!

When Intel Chief Paul Otellini announced that his company had secured the commitment of Lenovo and Motorola Mobility to put ‘Intel Inside’, it was considered as a significant development in the computing world. But the launch of Intel’s first processor in Lava’s XOLO X900 instead was a bit of a dampener. B&E looks into Intel’s strategy and attempts to dig out the chip maker’s odds of succeeding in the smartphone segment

The funny thing about most great corporations is the fact that they are great only for a limited period of time. The greatness stays around for one generation and might even extend to two generations. But the moment they begin taking market forces and technological change for granted – they lose their cutting edge and eventually their greatness. This is the very reason why Microsoft – a company once referred to as the 1000 pound gorilla of the computing industry – doesn’t quite ring that loud a bell today.

The time when powerful – and cash rich – companies could afford to ignore external forces is long over. So when the Santa Clara based semiconductor giant Intel announced that Lenovo and Motorola will have ‘Intel Inside’ their smartphones at the Consumer Electronics Show in January this year, the news made headlines but was hardly surprising. It was about time that Intel made a move into the smartphone market, dominated by chips using designs from ARM of Cambridge.

Consider a few statistics. According to data complied by research firm IDC, 491 million (almost half a billion) smartphones were activated in 2011 – a 61.3% increase over 2010. Samsung, Apple, Nokia, RIM and HTC shipped 94 million, 93.2 million, 77.3 million, 51.1 million and 43.5 million units respectively. The remaining 132.3 million smartphones were sold by players like Sony, LG, et al. How many of these carried an Intel processor? Not even one! Although Intel remains the undisputed supplier to PC manufacturers globally, this market grew by a mere 1.8% last year.

Under these circumstances, the chip major’s interest in smartphones was palpable. And then came the big dampener in the form of Lava’s XOLO X900 powered by an Intel Atom Z2460. At a time when investors and analysts were expecting an Intel equipped Motorola or Lenovo handset, Intel chose to debut in the smartphone category with a lesser known Indian brand. The Intel powered Lava smartphone is impressive no doubt. Even if the processor is not a dual core or a quad core, Intel’s 1.6 GHz CPU with Hyper Threading allows for an exceptional multitasking experience while promising a battery life comparable to competing smartphones. But here’s the catch. It’s priced at Rs.22,000. No matter how well packaged the smartphone is, Indian consumers will hesitate to invest that kind of money when they have an option to go for a Samsung, HTC or Nokia smartphone. The association with Lava therefore appears to be nothing more than a pilot test for the Atom Z2460. That the stock market did not react to the development (Intel’s share price in fact fell by a few percentage points) indicates that investors did not see this launch as a major breakthrough for the chip major.

So, despite extensive expertise in developing processors, why is Intel having such a hard time replicating it’s PC success with smartphones? The answer lies in the architecture. While you have an entire motherboard on a PC which can accommodate everything from Graphic Processing Units (GPUs) to peripherals, all these have to be put on to a single chip (SoC – System-on-a-Chip) in a smartphone. The technology to make this integration possible has been developed by ARM Holdings – a British multinational with revenues of roughly $772 million – which licences it to ecosystem partners like Qualcomm, NVIDIA, Samsung and Texas Instruments.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

“True entrepreneurs don’t start rich”

Stephan Gary Wozniak, Co-founder of Apple Inc., in an exclusive interview with B&E talks about the notable traits of successful entrepreneurs, and how he rates the late Steve Jobs as an entrepreneur-leader

B&E: How do you define “entrepreneurship”, since you were key to creating Apple as a company, and what prime qualities should an entrepreneur possess?
Steve Wozniak (SW): I don’t have a good definition of entrepreneur. I’d go with the popular opinion. It’s usually a young person but could be an older person who is young at heart. It’s a person who wants to start a company and get going on his or her life toward making a lot of money.

B&E: How critical is passion as a success factor for an entrepreneur to succeed?
SW: Some entrepreneurs are motivated by passion to do a particular thing. Others just want any opportunity to have a business of their own. They all want to, at least partly, escape from working for others on this project. Usually entrepreneurship involves creation and engineering. Bright engineers get ideas and become entrepreneurs to bring them to fruit. Often an engineer or scientist creates some sort of working model in their home or garage first.

B&E: And what do you have to say about young graduates who make a mark in the world of entrepreneurship?
SW: These days many graduate from college with entrepreneurship training and they look for ideas or come up with ideas with little or no understanding of what it will take or if it’s possible. They assume that once they get funding for an idea on paper they can find engineering as a resource anywhere in the world. This is the business graduate. The best is when both disciplines, engineering (science) and business, are in the same person.

B&E: How would you rate the late Steve Jobs as an entrepreneur and what were his top qualities (and weakness, if at all) as an entrepreneur and a leader?
SW: Steve was one of the greatest. He didn’t do the engineering but he understood it better than pure business types. He always recognised the importance of it and hired the greatest engineers. I was his key in the early days but he did not make a mistake. In later times it was clear that he understood the importance of all the departments of a large company and insisted on hiring some of the best people in the world in every one of these departments.

B&E: So you say that for Steve Jobs, being around engineers helped him emerge as a successful CEO-leader?
SW: When Steve was young he had a huge spirit to form a company as a way to bring his great ideas to the world. He thought fast and had ideas about everything and he was very outgoing about it. He was around a lot of engineers and knew when gold had struck, with the Apple II.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 22, 2013

B&E Annual CEO Report 2012-13 results*

Why CEOs do what they do

Methodology

In 2011, NYSE Euronext commissioned the NYSE Euronext CEO Report, the seventh annual CEO survey. The survey ascertained expectations of respondents on various business and economic conditions. 317 NYSE CEOs, 119 emerging CEOs of US non-public companies, 205 MBA students were covered in the research report.

Based on the NYSE Euronext CEO Report, the Indian Council for Market Research (ICMR) with research support from the IIPM Think Tank conducted a nation-wide survey amongst CEOs and top managers for both listed and unlisted/emerging companies from India Inc., apart from MBA students. Responses were taken via face to face/telephonic/e-mail interactions, and the survey generated 100 responses from CEOs/top management executives of Indian-listed companies, 100 CEOs/top management executives of unlisted companies and 300 Indian MBA students.

With exclusive permission from NYSE-Euronext and IIPM Think Tank-ICMR, Business & Economy presents the B&E Annual CEO Survey 2012-13, comparing business and economic sentiments of CEOs/top management and MBA students in the US and India.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

When push comes to shove

Sales figures for november saw HMSI stage a quiet coup in the domestic two-wheeler market as TVS Motor was edged out of its number three perch. Can it claw its way back?

Appearances can be deceptive. They may conceal more than what they reveal. At first blush, the Chennai-based $2.2-billion TVS Motor Company’s 7.79% growth for the month of November 2011, in which it sold 1,50,406 two-wheelers, appears to be a fairly good showing, all the more so considering the macroeconomic challenges and the overall poor market sentiment in the Indian market. However, one only needs to look a bit deeper to arrive at a fuller picture. During the festive month of November, the two-wheeler industry grew by 25.27% and its (TVS) arch rivals like Hero MotoCorp and Honda Motorcycle & Scooters India (HMSI) managed to beat the industry trend by registering top-line growth of 27.28% and 59.04% respectively. For TVS, worse was yet to come. The month also saw it ceding its No. 3 slot in the two-wheeler market to HMSI, whose November sales logged 189,970 units.

Sure, the figures are for just the month of November. For the two contenders, the scales of fortune could tip either’s way and there could well be many a slip betwixt the cup and lip in the months ahead. For the past few years and till as late as November 2011, TVS was the third-largest two-wheeler manufacturer with a market share of 14.5%. The company sold 1,282,117 units as compared to the 1,228,987 units sold by HMSI during the April-November period. But the latest coup by HMSI has set tongues wagging. Will TVS be able to claw back the lost ground in the Indian two-wheeler market going ahead?

An e-mail sent to TVS Motor Company for its comments on this story did not elicit any response. But it is worth mentioning here that in October 2009, Business & Economy did a story discussing the fight for the #3 slot in the Indian two-wheeler industry between TVS and HMSI. As far back as two years ago, the magazine made a prediction that has come to be almost prophetic in hindsight. The story in question strongly made a case for TVS to pull up its socks or suffer the fate of watching HMSI vroom ahead. That fate has now come to haunt TVS. Considering the pace that HMSI has picked up of late, TVS will need to pull off a visceral performance and push sales aggressively to come back into the game with its honour intact.

Venu Srinivasan, the Chairman and Managing Director of TVS Motor Company, is not new to facing challenges. In fact, he has a reputation for thriving when the going gets tough. As a student of business management at Purdue University in the US, he spent a summer hawking the Good Book Bible in North Carolina. Despite being the grandson of the founder of the group (T.V. Sundaram Iyengar), Srinivasan started his career with the group as a grunt mechanic and put in a lot of elbow grease before moving up the ladder and becoming the CEO of Sundaram-Clayton (a TVS Group company) in 1979. And it was not before the mid-1980s that he rose to the top and was calling the shots at the two-wheeler manufacturer.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

“Egypt has undergone a sea change after the revolution”

Adel el Masry, Director of Egypt Tourism Authority, is upbeat on his country’s tourism prospects, which had taken a hit following the political uprising in the country. In an exclusive interaction with b&e’s Dipshikha Das, Masry talks about how Egypt’s tourism is back on its feet and what his country is doing to promote tourism

B&E: The political turmoil caused by the Arab Spring, the subsequent fall of the Hosni Mubarak regime and the current fragile state of affairs in Egypt have taken a heavy toll on tourism in the country. What are you doing to help it bounce back?
Adel Masry (AM): Tourism to Egypt is returning to stability after a long movement for political democracy. Egypt is receiving immense support from several nations who are helping improve the situation by lifting travel advisories against Egypt. The Egypt Tourism office in India is aggressively taking part in all important trade fairs and travel expos for giving maximum exposure to and showcasing the country’s tourism industry to the entire South-east Asia market.

B&E: In the Egypt tourism’s scheme of things, where does India fit in?
AM: Tourism is an important driver of our economy and the annual growth in this sector has risen to around 30%. Last year we received 16 million tourists, and earned around $11,000 million. Currently tourism contributes approximately 11.8% to Egypt’s GDP. In 2009, we had 87,000 Indian tourists and, in 2010, it stood at 1,14,000, up 36% against the previous year. We are expecting at least a 35% increase by the end of this year.

B&E: After the turmoil that your country has been through, how difficult do you think it would be to lure foreign tourists to Egypt?
AM: It’s true that we suffered a huge loss in terms of tourist flows from Asia and elsewhere in the wake of the people’s movement that Egypt faced. However, we have been taking steps to lure the Indian tourists back. We have doubled our tourism promotion budget in India from a half million dollars to $1million in the current year. We are aggressively targeting Indian tourists in cities like Mumbai, Delhi, Ahmedabad, Bangalore, Kolkata, Chennai and Jaipur. But it’s not just the big cities but also the tier II cities we are looking at now. We have adopted an experimental marketing approach by organising tours for our travel partners to witness the destination in the aftermath of the political unrest and see for themselves that Egypt is now once again as safe and secure for tourists as it has always been in the past. Also, we have increased the limit on baggage allowance for tourists travelling through Egypt Air as well as increased the frequency of our flights to five days in a week from Mumbai to Cairo and vice versa. Post the movement in Egypt, the “Tahrir Square in Cairo” has generated a lot of interest for people to see and visit the place since it was the epicentre of all activities during the movement. We had recently organised FAM trips for the Indian media to witness and see how Egypt has undergone a change after the democratic movement. Also, to raise our profile in India, we have participated at important tourism events like SATTE in Delhi, TTF & OTM in Mumbai, and the recently held PATA travel mart in Delhi.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles