Scrutiny-CAR THEFTS: PREVENTION

As of 2010, India was home to more than 40 million passenger vehicles, but has also experienced hundreds of thousands of cars getting stolen every year. Estimates show that on the whole, the stolen cars are worth more than Rs.10 billion. According to official estimates, only 10% of all stolen car are recoverable (recovery of high valued cars is next to impossible, as parts of the car are sold in the black market). Maharashtra, Delhi and Gujarat report the maximum car thefts.

Making GPS installation compulsory during manufacturing would solve the problem of recovery of cars to a large extent. GPS devices would enable the owner and search bodies to locate the movement of the car on a virtual network. Few owners voluntarily get a GPS device installed in their cars. In many countries, installation of immobilizing devices are compulsory during the manufacturing process itself. Since 1998, all cars in Germany are fitted with this device. Similarly, UK and Finland made it compulsory in 1998 while Australia and Canada made it compulsory in 2001 and 2007 respectively. Back home, companies like Maruti, Honda, Toyota, Hyundai and Ford are installing anti-theft devices in select models only.

A legislation making such anti-theft device installation compulsory – much like how insurance is compulsory – would enable security agencies to free up precious time they currently waste on recovering stolen cars. The cost of such devices – ranging around Rs.10,000 odd for GPS trackers – is too little when compared to the time, effort and investment saved.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Anjan Sen, Director, Strategy & Operations, Deloitte India

B&E: Sector wise breakup of M&A deals in India for Q1 2011 shows that healthcare accounted for 25% of the total deal value. What were the possible factors favouring this sector?
AS: One of the major factors behind this is the population (currently 1.2 billion). By 2030, India is expected to overtake China as the world’s most populous nation. As the middle class rises, opportunities in healthcare will also improve. Increased liberalization has allowed additional opportunities to emerge such as the private insurance market.

B&E: What are the various challenges with East-West alliances, and do India to India mergers make better sense?
AS: There are some normal cultural and regulatory challenges associated with all cross-continental M&A deals. Drivers for M&A remain the same, whether East-West or domestic – access to innovation and R&D capabilities, reducing cost structures and improving manufacturing capabilities, entering new markets and product/service categories. MNCs have turned to Indian pharma companies for a combination of these factors – MNC-India pharma partnerships work well due to synergies obtained by both parties from leveraging different strengths across the drug development life cycle from R&D and manufacturing (typically strong in India) through sales and distribution (typically strong in US/EU).

B&E: Will pharma companies continue to pursue acquisitions of innovative biotech products and companies in future? If yes, what would be your suggestions for such deals?
AS: India’s high skill resource pool and comparatively low costs make it an attractive base for pharma players looking to add biotech/vaccines to their portfolio. The biotech sector is expected to touch $10 billion by 2015, with revenues of $4 billion in 2010-11, and a 33% growth yoy. Although a relatively smaller sector currently, India’s biotech role will mature in the global market as the standard of living, knowledge base and the cost of doing business increase. One way of maintaining the cultural integrity of the acquired biotech firm is by allowing them to function as a separate company, while at the same time streamlining shared services to reduce operational costs.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Dr. Raj Aggarwal, University of Akron, Akron (Ohio)

A more even distribution of income and living standards is very important for continuing economic growth – for a number of reasons. First, a more even distribution can lead to a more stable rise of the consuming middle classes, a critical driver of demand and economic growth. Second, a more even distribution is important for maintaining the social contract and political stability, both of which undergirds our high rates of economic growth. Third, a more even distribution is important for better nutrition and education among the least advantaged and, thus, for the future development of Indian manpower and human capital, another very important base for economic growth.

Indeed, Indian growth needs to be balanced between a number of competing objectives, e.g., between incomes and living standards of urban and rural residents (recognizing that people in urban areas will always tend to earn more); between the output growths of agriculture and industry (growth in agricultural incomes is especially important for the two-thirds of Indians that live in rural areas); between domestic consumption and exports (we need to fund our imports and overseas investments); and between resource exploitation and responsible stewardship of resources keeping in mind environmental degradation and climate change (e.g., India must deal with growing air pollution and faces major shortages of potable water).

It is time to refocus on a very important part of our country and economy – the rural areas of India. Most Indians live there and rural entrepreneurship will reduce the unsustainable pressures on urbanization. India not like fast urbanizing China, it is more like America which is truly found in its small rural towns. While the focus in this essay has been on rural areas, similar approaches and programs can and should be developed for urban dwellers that are among the most disadvantaged.

India needs to recognize that opportunities to create production surpluses at the household, state, and national levels are very important in the continuation of our high rates of growth. More importantly, human capital is the most important resource for any nation and is too precious to waste in India. This short essay notes that frugal, perhaps, Gandhian living combined with the widespread availability of entrepreneurial opportunities can be the way to go forward.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

SBI in a Flux, Time to Regain Momentum

More than external factors, it’s internal inefficiency that is troubling SBI. To continue as the big gun, it now needs to go through a reality check.

When State Bank of India’s new Chairman Pratip Choudhary announced the bank’s fourth quarter performance for FY 2011, it came as a shocker to almost everyone. It was down by 99% to a paltry Rs.208.80 million from Rs.18.67 billion in the year ago period. This even made the bank’s share to plunge as much as 18% at the bourses as compared to its pre-result prices. But the fact was that it was only because the bank took a bold step to make an one time provision for its non-performing assets and sidelined as much as Rs.23.30 billion, which could have easily bolstered the banks bottomline for the quarter. Nevertheless, despite a 9.84% fall in the bank’s net profit for the year, SBI still stands tall as the 5th most profitable company in the country with its registered net profit of Rs.82.65 billion. But with the first quarter of the fiscal approaching an end the question remains, after the disastrous performance in Q4, is everything alright now with SBI? Is it on track to hold onto its position in the current fiscal?

The answer perhaps is, tough, if not impossible. And the reasons, well, some are external to the company and some are self created. Talking about the problems that’s not in control of SBI, the biggest is of course the current sluggish economic conditions including inflation and continuous rate hikes by the Reserve Bank of India. With the apex bank raising its policy rates by 25 basis point early this month marking the tenth hike since April 2010, credit growth in the current financial year looks to be in jeopardy, more for the fact that the banks have no other option than passing the burden on to the customers. And with SBI being forced to shut down its teaser scheme, which was instrumental in the bank’s 20.32% credit growth last year, it may find itself in deep water in terms of lending. The bank too have understood the very fact. Thus, to prepare its stakeholders, it has already slashed its credit growth forecast by around 300 basis points to 16-19% from 19-22% given earlier.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

“Google Plays Favourites and Demands Obedience”

Sascha Segan, Managing Editor (Mobility) & Lead Analyst, The PC Magazine

As the Managing Editor (Mobile) and Lead Analyst for PC Magazine (PCMag.com), New York-based Sascha Segan has spent close to two decades analysing and commenting on subjects in the Telecommunications industry. His commentaries has been aired on FOX News, CNN, CNBC and many radio stations across US, and his columns appear in dailies spread from San Antonio (Texas) to Edmonton (Alberta). Segan speaks to B&E about Google’s next mistake – the Chrome OS, and issues like fragmentation and low earnings associted with Google’s Android OS.

B&E: Straight up – the next big thing from Google in the world of mobility is the Chrome OS for notebooks, which is also Open Source. Isn’t Google wasting time & dollars? It could easy have coupled the project with the Android OS project. Also, by making it open and free to use & modify, is Google repeating the Android mistake?
Sascha Segan (SS): Chrome OS is a dead end. It mostly exists because Google wants an OS play on devices running x86 chipsets, i.e. Intel-based laptops, but nobody really knows what to do with it. Chrome OS is a stub. No consumer wants a crippled laptop that requires network access for most functions; that’s been tried and has failed many times. It might achieve a bit of success as a thin client solution in the enterprise, but I see its most likely future as being folded into Android as tablets take more and more of the former netbook market in the future.

B&E: Fragmentation is some headache for Android OS handset makers and app developers alike. How big is it an issue for Google, and do you see some recent effort from Google to stop it?
SS: Fragmentation is a major problem, as developers want to target a unified platform, and Google makes more money by having the latest versions of its services on devices. At the most recent Google I/O conference, Google announced an initiative to get OEMs and carriers together to reduce fragmentation. We’ll see what happens there.

B&E: There is not enough earnings from its app store – shouldn’t Google be bothered? What is the big problem with Google Android’s app world?
SS: None of the platform providers are really looking for direct revenue from their app stores; to a great extent, that revenue is gravy. Apple is looking for a platform lock-in effect that keeps people buying. Google is looking for eyeballs for its advertising, search and other cloud services. RIM is looking for customers for its BIS and BES servers. Microsoft makes its money from OEM device licenses. The disproportionate number of free apps in the Android Market doesn’t worry Google. The number of free apps only becomes a problem if it begins to drive users and developers away. That said, the Android Market needs better discoverability and search tools to help consumers find what they want. For instance, it’s not immediately obvious how to find apps designed for a specific device, or a list that only shows all the apps for tablets. Google is also in a continual battle against malware and copyright infringement on the Market.

B&E: Do you feel that a business model for a company like Google or even Apple can be framed around revenues from apps? For instance in 2010, Apple earned just ~2% of its revenues from its app store. Should Google be concerened about the outcomes of a bet like this?
SS: Google and Apple have opposing business models. Google’s is about volume; Apple’s is about margin. Both Apple and Google know that the real money isn’t in charging a percentage of initial app purchases. The problem is that if Android developers can’t make money, Android developers will leave, users will leave, and Google will lose its volume. So low earnings from apps is a concern because Google wants developers to find Android an attractive platform.

B&E: Many claim that Google love to control the OS platform completely with an iron hand. Once a critical volume of Android hits the market, do you think Google will put a price tag on its Android OS? And will vendors suffer?
SS: Android is already not an entirely open platform, and the OEMs are suffering. Google plays favorites and demands obedience, and gives certain partners early access to Android code. That has helped create the fragmentation problem which is plaguing Android today. It looks like Google will demand even more obedience from OEMs for early access to code. But I don’t see Google charging license fees for Android.

Read more....

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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

It is The Electronic Media that India must Thank for The Success of The Anna Movement. And yes, it sure was Democratic

A seventy-three year old unassuming man by the name of Kisan Bapat Baburao Hazare is again set to give sleepless nights to the Government of India. More popularly known as Anna Hazare, this isn’t his first endeavour to take the putrescent establishment head on. He earned his due recognition when he tirelessly fought to develop a model village in the district of Ahmednagar in Maharashtra. As it happens to most in our country, for all the good work, Dr. Hazare was also factitiously arrested in 1998 and was released on account of a huge public uproar. Incidentally, the Government of India also recognized his efforts by bestowing him with the Padma Bhushan. But amongst all his mini revolutions which have advantaged the smaller sections of society, this time Hazare is taking up such an issue which is probably the biggest malaise of our democracy and is a cause which affects every living Indian in some way or the other.

Our governments time and again have been most deleteriously corrupt and demonocratic! But in all these respects, the current reprobate government takes the cake! The biggest of scams have surfaced under this execrable leadership. And it’s not big simply because times have changed. Even if one accounts for inflation, these are gigantic scams, which only goes on to show that the people in power are knavishly corrupt and greedy like never before. Thus, 2010 can safely be called the year of unparalleled and historic corruption. The year of shame, in which media – especially the electronic media – had a field year and ended up making a lot of people from the civil society very vocal. Amongst them were some people with honest backgrounds and with a spotless record of serving this nation and having a great following in this country – people like Kiran Bedi, Arvind Kejriwal and the grand old man of India’s now famous India-against-corruption movement, Anna Hazare. They decided that enough was enough with the flagitious government’s lip service. It was time for the honest man to show his powers, and if necessary, arm-twist the government a little. They came out on the streets. And Anna took to fasting. Fasting to get a people’s bill introduced which will give people and their representatives the power to prosecute the quisling corrupt in the government and bureaucracy! On a normal day, a man fasting at Jantar Mantar wouldn’t bother many. But it was not a normal day. It was after a year of corruption being exposed one after the other – and a huge role in that too had been played by the much often criticized electronic media of India. Yes, with the need to sustain themselves in the 24x7 format, the media often shows eyeball grabbing programmes; but that does not mean they do not show real news when there is any. The Indian electronic media is full of people and TV hosts who want to see a real change in this country’s cankered economic and political system – and a majority of these media channels are in Hindi and other regional channels. For eyeballs as well as genuine frustration with corruption, the electronic media had seen to it over the entire year that every Indian was not just aware of the peccant corruption but had also seen stammering representatives of the current government unable to defend the very straightforward and scathing attack of the new age Indian TV – which is no more ruled by just one Prannoy Roy but by tens of mini Prannoy Roys who are exceptional in their own ways and often connect more with the common man and not just the elite.

In this day and time, when Anna took to fasting, a different breed of people – more awakened and angrier than ever before – came out in hundreds first and thousands soon after to support this man. The entire show was again covered very well by TV and propagated around the country. In contrast to Anna, my heart does go out for Irom Sharmila, the lady who has been fasting for ten long years without any success and with the government turning a blind eye to her existence. On any other day, Anna could have also spent a few years fasting with the government not budging a bit. Who after all cares if 4000 people come together and demonstrate? A good lathi charge, an arrest of the leaders including Anna and a few hours later, all could have been over. But in the new India, under the scathing eye and leadership of the electronic media more than Anna, all this was not possible. On the contrary, with every given hour, masses only increased. And the government – given its indictable track record in recent times in terms of corruption – had no other choice but to budge and accept Anna’s demands to avoid the possibility of a much larger scale uprising. At the end, it’s true that Anna led from the front and was ready to put his life at stake. It’s true that for every conscientious movement, you need a spotless leader with unblemished credibility. But the fact is that the real support of this leader did not come from the few men who went to Jantar Mantar.. It came from the much criticized newsrooms of India’s electronic media, which didn’t care about their party alliances but came out all supporting the movement. And anything that makes the elected representatives of India – the politicians – budge is democratic. Every time governments across the world have taken their people for a ride, a people’s movement has taken shape. And in modern days, it gets huge support by the online media in developed countries. But in India’s case, that being ridiculously insignificant, it was the electronic media showing the way all through. Every people’s movement that shakes up the government is most democratic because it shows the general feelings amongst the masses. Calling it undemocratic smacks of unfanciful jealousies, allegiance to status quo and ulterior motives. Masses can’t be brought out on the streets – that too without payment – with any frivolous reason. The fact is that the government is surely elected by the masses... But when the same masses see that it is taking the nation for a ride, people have the democratic right to protest and apply pressure. And anyone who leads that movement needn’t be an elected representative.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

When Can they Move On?

Founders are The Most Critical Pillars of a business. The Question in The Corporate world, though, is how long should they Continue as CEOs. And if they leave, should they Come Back? \

Howard Schultz isn’t exactly the founder of Starbucks, but one cannot deny that he was the one who reinvented America’s most loved coffee chain to what it is today. When he took back the CEO post from Jim Donald in 2008, his strongest, self proclaimed agenda was to bring back the ‘emotional attachment’ for Starbucks. Michael Dell would nod in agreement, since he came back as CEO in similar circumstances; when Dell was taking a beating from HP under Kevin Rollins.

Of all the people who are part of an organisation, the founder will always stand apart on the emotional front, even if he is no longer part of day to day operations of the business. The company, before it even began being formed on paper and on bank accounts, existed in his mind. He defined what it would (or would not) stand for. He formulated the values, the operating philosophy and did the first few rounds of strategic planning. It’s his baby before anyone else. Yet, when logic comes to play, one of the most debatable issues is on the longevity of founder CEOs. While many experts favour the opinion towards a professional executive, as it helps keeping business and emotions in the right place, a lot of experts believe that it is right for the company if its promoter remains as its CEO. Undeniably, both views have been proved right and wrong at different times, locations, situations and companies.

For instance, when Jerry Yang, Founder and ex-CEO, Yahoo! took over as the CEO again in 2007, his short stint of over a year gave a lot of heartache to the search engine giant. Yang not only led a hit to revenues by not being able to seal an advertising deal with Google, but also rejected the sale of the internet company to Microsoft for $47.5 billion (which was more than thrice Yahoo’s market value then). The months that followed saw Yang coming back to the post of Chief Yahoo! and Silicon Valley veteran Carol Bartz taking over the reins. The company is still trailing its counterparts, but the valuation of the share price has improved drastically since Bartz took over. The stock of Yahoo! was trading around $12 in January, 2009 when Bartz took over as CEO and the share price today stands close to $17, an improvement of 41.6%.

Similarly, ever since Bill Ford handed the control of Ford Motor Company to ex-Boeing executive Alan Mulally in 2006, he not only pulled the company out of its one of the biggest crisis ever, but also maintained its position as the second largest auto maker in the US. At the end of February 2011, Ford holds a 15.6% market share in US following GM, which still stands tall with 21.3%. In fact, Ford’s EPS growth rate over the past five years is much ahead of its peers at 14.04% against the sector’s EPS growth of 2.00% and S&P 500’s growth of 4.58%. “Alan Mulally has done an outstanding job of impacting the culture of Ford. He improved the leadership and most importantly, left key leaders in their roles for a longer period of time in order to allow them to make a significant impact,” comments Laurie A. Harbour, President, Harbour Results Inc. from Michigan. Mulally also proved critics wrong, that it will be a bad choice for the company to put a man from a different industry on top.

Ironically, attachment does go against the founder’s case at times. Google has seen its co-Founder Larry Page becoming CEO in January as Eric Schmidt moved on to ‘just’ being Executive Chairman of the company. Considering that the share price of Google has just moved up by 3% against the 12.6% growth filed by the S&P 500 over the past year, the shake-up at the top was much needed at the internet major. While analysts are convinced over Page’s ability as a leader and his efforts to streamline the R&D projects of the company, there are still doubts on whether he’ll be able to make Google a good investment as there are hardly any returns on its R&D activities till now. Undoubtedly, a change in leadership at Google has happened at a very apt time, but Page will have to ensure that he keeps an eye on the results on a quarter-to-quarter basis rather than just focussing on a ten-year horizon for Google. Remember, besides being one of the founders, he is also an engineer at heart!

In fact, if required, Page may even learn this skill from another iconic founder CEO and one of the biggest visionaries in business today – Steve Jobs. In his case, the company would constantly dread the thought of life without him. His continuous efforts to keep innovating and coming out with products that lead to consumer delight have made Apple what it is today. But Jobs may even have a learning session with Page on how to help build the company’s image among its audience.

Clearly, Apple suffers from over-dependence on the founder and it may not prove to be a very beneficial proposition going forward. It may be recalled here that as people queued up to get their hands on the new sensation in the technology circuit – iPhone in 2007, Apple hardly got a boost in its share price. However, as it has been seen time and again in the past, even a rumour of its founder Steve Jobs leaving the building can give its share price a sound hiding. “Apple has a very high dependence on Steve Jobs as far as innovation is concerned and whenever there is even a speculation, its repercussions can be seen on the share price,” says Alex Guana, analyst at JMP Securities from San Francisco. The stock lost over 10% in January 2009 after Jobs, suffering from cancer, went on a medical leave and the stock has lost over 1% in March this year on speculation of Jobs stepping down as CEO. As it seems, it will be better for Apple to push itself back a little from the name of Jobs much sooner than later.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Socking it to Whom?

Use of Sock Puppets Questions America’s Moral Value!

It is well known that Facebook and Twitter have been major tools in coordinating the civil society’s response in various uprisings across the world in recent times, the most recent one being Egypt. What would you then call a democracy that deliberately and unfairly attempts to manipulate public opinion to its advantage by controlling access to such sites; or by controlling the sites themselves? Not much of a democracy anymore, right?

The country in question is US, again! Apparently, the American military has now developed sock puppets that will not only manipulate social networking sites (through fake profiles) but will also zealously spread pro-American propaganda. This is quite similar to Chinese censorship of social networking. Ironically, while on one hand, the US criticises Chinese moves to manipulate media, on the other, it is following suit. These sock puppets will be able to influence and manipulate online discussions without being caught or suspected as fake profiles. These sock puppets can not only converse in English, but will also maintain profiles in Arabic, Farsi and Urdu and thus also manipulate & control conversations in these local languages. The program is supposed to make the US treasury lighter by $2.7 million. With sock puppets having capacity of talking in many middle-eastern languages, the intentions of Americans are quite evident and the targets can also easily be pointed out.

Of course, the official response is that this is a move only against supporters of al-Qaeda or perpetrators of other anti-US activities. The unofficial corollary is that from Wikipedia to Facebook, from Twitter to MySpace, from LinkedIn to Baidu, expect shameless eulogies of the American way of living in the next few months.

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

God Save The Queen!

British Policymakers find themselves stuck in a Predicament as they try to Tame Mounting inflation Amidst a Weakening Economy. Well, all they need to do is to Focus on Supply side Policies rather than looking at Demand Side Tactics to solve The Problem.

It was just three months ago when British policymakers were on cloud nine. After all, silencing several critics United Kingdom’s (UK) economy had performed above expectations (UK’s GDP grew 2.7% in Q3, 2010 following a 1.6% expansion in Q2, 2010) and was finally out of the devastating recessionary storm that had been thrashing it since Q4, 2008 (when its GDP first contracted by 2.1%).

Even as per the Office of National Statistics (UK), this was the best six-month growth rate (Q2 & Q3 combined) that UK’s economy had recorded since H1 2000. The outstanding performance was even more noteworthy given the uncertainty associated with the public finance and the emergency budget, which dominated the first half of 2010 and had the potential to damage economic activity.

Come Q1 2011, and UK’s economy has once again surprised the economists! However, this time the smile has vanished from the faces of British policymakers who are stuck in a predicament as they try to tame mounting inflation [which is at 3.7% at present and is likely to rise above 5% in the coming months, way above Bank of England’s (BoE) inflation target of 2%] amid a weakening economy [which unexpectedly contracted by 0.5% on a quarter-on-quarter basis in Q4, 2010].

In fact, rising inflation continues to worry British policymakers, who are still struggling to find a way out of this catch-22 situation. According to the minutes of the monetary policy meeting last held on January 12-13, 2010, six members voted in favour of holding interest rates, while three voted against. Of those three, two members voted to raise interest rates by 25 basis points, one more vote than in previous months.

No doubt, the most logical move for British policymakers to curb surging inflation under normal circumstances would have been to boost interest rates and go for monetary tightening. But then, considering the dismal numbers posted by the economy during Q4, 2010, doing so might send the economy back into recession. Agrees Melanie Bowler, the London based Economist at Moody’s Analytics, as she tells B&E, “With the risks weighted firmly to the downside, the chances of the UK economy slipping back into recession in 2011 are really high.”

In fact, a closer look at the numbers and one would surely agree to Bowler’s logic. While manufacturing capacity utilisation in UK has slipped to 79% in Q1 2011 (this is below the euro zone average of 80% and well below the 84.9% reported for Germany) from 79.3% Q4 2010, weakening recoveries in key trading partners in the euro zone will continue to drag on demand for British exports. Services, which account for around 67% of the GDP, also continue to put pressure on UK’s economy and shrank by 0.5% (q-o-q) in Q4, 2010.

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Higher FDI for Stronger Defence

Higher FDI in India’s Defence sector will not only bring Higher Revenue and State-of-The-Art Technology, It will also Pave way for Self-Sufficiency in The Crucial Sector of defence Production.

For a country such as ours which spends billions of dollars every year to import nearly 70% of its total military equipment, the government seems to be stuck with the country’s defence establishment still reluctant to lift the 26% cap on foreign direct investment (FDI) in the “sensitive” sector of defence production. Despite India being one of the biggest users of conventional defence equipment and the cumulative defence budget growing at the rate of over 13% annually since 2006-07, we continue to depend heavily on imports for all our major requirements, with domestic production limited to low technology items and some based on bought technology.

In a discussion paper floated last year seeking stakeholders’ views, the Department of Industrial Policy and Promotion (DIPP), under the Ministry of Commerce, had favoured 100 per cent FDI in defence in order to attract foreign technology. It further called for an urgent need to ‘enhance the deterrent and the operational capabilities of the armed forces’. The paper also stated that almost 50% of India’s defence equipment was suffering from obsolescence while merely 15% could be called state-of-the-art.

The government, however, now seems to be keen on allowing greater participation of the private sector and expert players in the defence sector to invite higher technology in the sector. With strong backing from both the Finance and Home ministries, the Ministry of Commerce and Industry is learnt to be preparing to move a Cabinet note on increasing the cap on FDI in the defence sector to 49%.

The case for a firm government stand on increasing the FDI cap is backed by the fact that it is of vital importance to the defence sector which is highly capital intensive and where technology requires frequent upgrading. FDI is not just a subject of getting funds, it also facilitates access to the latest technologies and provides for a long term commitment between the foreign and local enterprise. It creates a sort of a cycle where the foreign investment upgrades local technology which, in turn, attracts more FDI with higher technology.

Despite the presence of such alluring factors, the Union minister for Defence A K Antony has registered his firm disagreement with the said proposal on the ground that the Indian defence sector was not matured enough to absorb higher FDI. He did however mention at a conference last year that higher FDI in the long run could not be ruled out and said that the ministry could consider permitting it on a case-by-case basis. The reluctance of the defence establishment, sources say, is also based on the rather conventional belief that defence is a sensitive sector and that opening doors to foreign players could lead to security concerns.

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Mark Zuckerberg is Worried about a Decision

While The World debates over when Facebook will go Public and what its Worth would be, Mark Zuckerberg is Worried about a Decision he has to make – Sell-off his 24% Stake & Bid adieu to Facebook or alter The Very Business Model by Diversifying. What should He Choose? 

The opportunities? First comes “analytics”. Zuckerberg has to better realise the power of 500 million samples across 100+ countries. Facebook can serve research agencies and surveyors who are looking at demographic, psychological or other types of market researches. There is presently no clause that disallows “grouped data” to be furnished to third-parties. The situation is thus – Facebook has a mine it can monetise. Strangely, it is not doing so.

Facebook dreams of becoming the new-Google. But it isn’t doing what Google did on day #1 – it has no credible search business (except people), which is what primarily made Google worth $150 billion today, and forced Microsoft to risk a $47 billion bid for an outdated Yahoo! Search capability enhances the value of a web property and multiplies the revenue inflow manifold. How? Google crossed the $10 billion revenue mark when it was seven years old. Facebook is already six and hopes to cross the $1 billion mark only by 2010-end. Facebook is also missing out on the places where netizens spend most of their time – the Inbox. Facebook’s mailing system is outdated, looks rigid & clumpy and is almost impossible to organise. Mails give the most important dimensions to online networking. Most know this; some don’t. Does Zuckerberg?

Facebook can take a lesson or two from the $32 billion Tencent (the Facebook of China), which is listed on the Hong Kong Stock Exchange. Tencent has 100 million less users, but crossed the $1 billion topline 3 years back. In FY2009, Tencent recorded a topline of $1.8 billion, from only subscription fees and gaming. Facebook has to take inspiration from Tencent on how to squeeze the juice out of a social-networking site’s user count by using “loyalty” as bait. As per data furnished by Nielsen, an average user spent a little over 6hr 43 minutes on Facebook in April 2010 – the maximum amongst all websites. This is a strength that it has to play on to monetise the loyalty factor. [And the “It’s free, and always will be” punch-line on its homepage is precisely what we are not advising.]

In the recent months, Google has shown its intentions to get a grab on social networking, with purchases like Slide, Like.com, Ångströ, Metaweb and Jambool. These were after its in-house efforts bombed. If Google can do what Facebook is doing best, Zuckerberg too can return the favour. Diversify or sell-out when you’re worth billions is the option. He made the right choice four years back. Will he again? [As this story went to print, Google was working on building the next big social network to compete head-on with Facebook. It’s a ‘secret’ called “Google Me”.]

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting