Friday, November 30, 2012

Why India tries, and others cry

Will others learn from India’s logic of not ignoring newer markets?

Almost all economies across the globe are facing the negative tide caused by the recent financial crisis that first struck US, and in a rather harsh fashion. And just as unbelievable as this one sounds, all of them could have easily avoided such an ill aftermath. India on the other end is only facing some mild side effects of the mayhem that found its epicentre in US. So where is it that they all went wrong, unlike India? The answer is simple – greed!!! Surprised? Well, what better than a $13.7 trillion economy to have strong trade ties with? And for every other country, that meant partnering with the mighty United States of America and get blind to every other economy!

India’s export catalogue is highly diversified – dominated by products like handicrafts, textiles and leather, which undoubtedly suffered due their falling demand falling in global markets; however, the overseas sales of engineering goods, metals and petroleum products rose during the same period.


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

Loose cords, disunity at large

For the upcoming assembly elections, parties face a tough time

Politicians and party workers generally work together during election time. But that doesn’t seem to be the case for the upcoming assembly elections in MP, Chhattisgarh, Rajasthan and Delhi. While parties in Rajasthan are facing problems because of new faces in Chhattisgarh. Congressmen are encircling ex-CM and senior politician, Ajit Singh Jogi. Rate of formation of groups is at its peak in MP and Congress has lost hope in Delhi.

Both Congress and BJP are trying to bring in new faces in Rajasthan and are facing internal conflicts. While leaders from respective parties disagree that there is any kind of tussle within the parties, no one can deny that Congress is divided into blocs. State president close to 10 Janapath, has asked for removal of people above 70 years of age. Although, there has been no official acceptance, it shows cracks are appearing within the party. Jats want to see their person as the CM, yet BSP wants a Muslim to hold the seat. Conflicts again. Meanwhile in Delhi the situation is different. Congress is not too sure of their win this time. Why else would Sonia Gandhi not utter a word about Sheila Dixit winning the seat, which she had so fervently done five years back.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

Are Corporate Social Responsibility acts really the way corporates portray it?

Are Corporate Social Responsibility acts really the way corporates portray it? Not really! A. SANDEEP, EDITOR, B&E does a reality check...

No wonder that stinkingly fraudulent companies like Enron (biggest contributor to Bush’s campaign in 2000), WorldCom (CEO Ebbers got the maximum sentence in corporate history; 25 years... Enron’s Skilling missed the record; he got 24 years 4 months), Tyco (wiped off the most wealth ever) et al gregariously top the CSR contribution lists too.

Umpteen reports, like the definitive PricewaterhouseCoopers’ Sustainability Survey Report, have year after year vindicated that ‘providing contributions to society’ does not even find mention in the “Top Ten Reasons Companies Are Becoming More Socially Responsible”; or Stanford University’s Social Innovation Review that benchmarked the finding that CSR “is just a placebo” where investments are “particularly unlikely to pay off...”; or Michael Porter, the father of strategy, who blasted CSR as being just “a PR game.” And it’s not that intelligent social spokespersons were ever confused. Even Paul Gilding, Executive Director (formerly) of Greenpeace International, spoke up, “CSR, despite its emotional appeal, is and always was a bad idea. It’s intellectually weak, and doesn’t work anyway.” Oh yes, before I forget, with an operating income exceeding a mind-boggling 5.1 billion taka, and a net profit exceeding an eye popping 1 billion taka (a thunderous 20% profit margin), this year’s Nobel Peace Prize Winner, Dr. Muhammad Yunus, founder of Grameen Bank, isn’t too hell bent on CSR either, but on profits! Social development was, in reality, never the job of corporations, but of governments; to whom firms pay incredibly huge amounts of taxes. It is incredibly outrageous that governments can even think of forcing capitalist corporations to undertake CSR; a strategy that is clearly now being used to hide the government’s lamentable achievements – including the example of the absurd move in India to force private players to undertake the superficial ‘affirmative action’ by providing non-merit oriented quotas in employment.

CSR should never be forced, but should be a matter of personal democratic choice. With more than 400 million Indians living below the poverty line (UNDP statistics), successive Indian governments have magnificently embraced CSR in the only way they have ever known – by being ‘C’alumnious (abusive) ‘S’currilous (shameless) ‘R’apscallions (rogue scoundrels)! So the next time your CEO comes up with the hallowed CSR sermon, you could fulfil your social responsibility by taking him on a memorable date to show him the classic strategy documentary ‘The Corporation’, where the late Peter F. Drucker snaps, “If you find an executive who wants to take on social responsibilities, fire him... Fast!”


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

ARGENTINA: BOND BUYBACK

With bond buyback Argentina raises fears of another economic collapse

In fact, this is only a bit lower than the level (53%) immediately before the 2001 mayhem which had seen the economy shrivel by 15%, unemployment rate mount to 21% and poverty engulf 56% of Argentines. Moreover, the current estimate also does not include $23.5 billion in debt held by the holdouts (those who refused to accept the terms of the 2005 restructuring). If this is included, the ratio is surely over 60% of GDP.

So, while Moody’s has lowered its outlook on Argentina from ‘positive’ to ‘stable,’ S&P has cut its rating from B+ to B. Raison d’être, the risk premium on Argentine bond has soared to 670 bps. Accepted, the cost of servicing of debt has been low in Argentina, but even so, to service its debts, the government needs to find an extra $2.5 billion in 2009. Certainly Argentina’s forex reserves, which stand at $47.8 billion, provide a great cushion, but, then how long? Principal & interest payments are to climb from about $14.6 billion this year to $18.6 billion next year and $17.1 billion by 2010. Even the galloping inflation has further raised the spectre of economic crisis. While government data puts annual inflation at 9.1%, private estimates place it above 25% (S&P). In fact investors have already shown signs of nervousness. Result: A capital flight of $8 billion in 2008. Certainly after six years of rapid growth (8.3%), Argentina once again seems to be standing at the verge of another economic collapse! And if this time it takes a wrong course, nothing will save it. Not even a good rain at the Pampas!


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

Gas problems? Wait for worse...

Bio-terrorism adds to the global fear of organised terrorist attacks

Barring a few developed countries, almost all countries remain highly vulnerable to the new form of terrorist attack, bio-terrorism, defined as spreading and injecting virus, bacteria or other germs (called biological agents) in people to cause illness, even death. Such agents, which are abundantly available in nature, have been the most sophisticated and recent form of identified terror attacks.

But bio-terrorism is not new; biological agents were used much before World War I. Many German agents, including Dr Anton Dilger, had developed Anthrax and Smallpox to attack America as early as 1915-16. Even America began developing biological weapons in 1942 after then President Roosevelt financed its new developments. Later, realising legal viability and international codes of conduct – especially after North Korea accused Western powers of using deadly biological weapons in the Vietnam War – Nixon shut down most of these facilities in 70s. And finally, global efforts were taken in 1972 to prevent production, stock and sale of any biological weapons globally.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

Gay pride surfaces on the streets

Gay pride surfaces on the streets of India and around the world...

People in several countries have accepted gays as a part of their society and have given them the rights and respect due to any individual in the society. The Indian society is having problems in accepting homosexuals, bisexuals and transgenders, yet there are people who consider them to be a part of the society, and Himanshu, who works with an NGO that is fighting for gay rights, happens to be one. “I don’t think that anyone should have a problem with homosexuals, they are normal human beings. When the ancient Greeks did not differentiate between people based on their sexual orientation, then why should we fix ourselves to certain rules, which we have made for our own benefit?”

In the current scenario if someone dares to think beyond the set rules then he or she is not welcome to be a part of the community anymore. If a person’s son or daughter turns out to be gay then sadly many go ahead and disown them, throw them out of the house, or worse force them to mask their true selves and marry people of the opposite sex, thus ruining lives of not one but of two people!

Most gays abide by the norms of the society, silently hoping that some day they would be able to make their lives better, live the way they want to live, and be the person they want to be, and not what others want them to be.


Source : IIPM Editorial, 2012.

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ARGENTINA: INFLATION

Argentina’s government grows bizarre; inflation, as per them, rocks!

To make matters worse, the government has increased tax on soya bean exports from 35% to 45% and also is imposing tax on other farm products including wheat. This has led to widespread agitation and blocking of supply of agricultural products. This has created huge upward pressure on the food prices. But all is hunky dory as per the vivacious President Cristina Farnandez. The rise of inflation in May, according to the government, was just 0.56% over the previous month. INDEC, the government ‘statistician’ institute, hilariously claims that the major cause of inflation is the rise in education and health care costs.

When Cristina Farnandez de Kirchner (above) succeeded her husband as President, she promised to bring many changes. One couldn’t have imagined that the most fantastical change would be a statistical one. Argentina will continue to suffer till it takes long term measures to revive its economy. To say policy changes are imperative is almost akin to kid-speak. The first step is actually accepting the problem!


Source : IIPM Editorial, 2012.

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Tuesday, November 20, 2012

Baby, it’s the leg

Researches reach ridiculous depths

The world is still unable to come up with solutions for killer diseases, which are engulfing the world. But researchers in renowned universities globally seem to be on a roll squandering money in findings that border the ridiculous. Sample this: Odours produced by 131 different species of frogs when they are stressed [University of Adelaide]; number of photographs that should be taken to make sure that nobody in a group has his or her eyes closed [Australian Commonwealth Scientific & Research Organisation]; the ultrasonic velocity in cheddar cheese when affected by temperature [Universidad PolitÃocnica de Valencia & Universitat de les Illes Balears]. How can one miss the interesting finding of the famous Stockholm University which propounded that beautiful humans are more preferred by chickens!!! Wait, we’re not done yet.

A new research by Newcastle University shows that women prefer taller men for good one night stands, and shorter men for committed relationships.

How can findings like what’s so funny about humour be of any help to mankind especially when it is funded by not just one organisation but three at a stretch.


Source : IIPM Editorial, 2012.

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Monday, November 19, 2012

Dropping trust

Losing faith in Indian market

Investors are demanding stocks in India more than in any of the other largest markets of any developing countries across the world. Moreover, the price-to-earnings for the entire market fell by 33% as foreign investors turned net sellers.

However, investors are losing faith in Indian market, even after the Sensex leaped 13% from its March’08 figure, as most Indian corporations are producing lesser commodities compared to its counterpart BRIC. Even India’s GDP is growing slower compared to other BRIC countries.


Source : IIPM Editorial, 2012.

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Hang him again, he ain’t dead

It’s amazing how US continues to execute ‘criminals’, blind to the fact that many convictions could be wrong

It was the recent US Supreme Court judgement that kicked our peeve more than Saddam could have ever of Bush. The Court ruled that Kentucky’s three-drug method of execution by lethal injection does not violate any kind of constitutional amendments. Not that it would matter anymore, but we just thought of putting history in the right perspective. Going back in time, in 1879 (Wilkerson vs. Utah), in a judgement cited by the same Supreme Court (execution by firing), the criminal in question was documented to have suffered for 27 minutes, even in the presence of a doctor, before dying. Again, in 1890, in an electric chair execution, the criminal was breathing after the exercise.

People like Ray Krone, Jonathon Hoffman, Madison Hobley, Aaron Patterson, Stanley Howard, LeRoy Orange and many other unreported names spent numerous years in jail for crimes they didn’t commit (including being on death bench). What’s more, since 1973, more than 125 people (10 in 2003 alone) in the US have been freed from death penalty due to evidence of their convictions being faulty.

If one goes even by some tasteless financial logic, legislative audits show now that the estimated cost of a death penalty case is 70% (and in some cases 300%) more than the cost of a comparable non-death penalty case. Various studies show that the chance of a case being put on trial for death penalty is 84% higher in cases where the victim is white. 

Read more......

Source : IIPM Editorial, 2012.

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Wednesday, November 14, 2012

SPENCER’S RETAIL: EXPANSION PLAN

Spencer’s must sort out real estate, manpower & perception problems

But while Spencer’s differs in its approach to ensuring customer retention, they face significant challenges that can stymie their ambitious growth plans. Real estate is high on the list. Laments Samar, “In an sec area like Jor Bagh in New Delhi for instance, the real estate price (for a selected location) is Rs.500 per sq. ft. while my limit is Rs.55 per sq. ft.

There’s no way I can make money this way.” The only choice could be to select a location that’s priced lower, which would mean compromising on the approachability factor. As a percentage of revenues, real estate price is only about 2% in international scenario and 8-10% in India (at times it even goes upto 25%). The other critical point is quality manpower, where the company goes to great lengths to ensure it employs people with the right attitude and gives them multi-functional training. With the kind of audience they cater to, Spencer’s challenge for quality real estate and manpower becomes even more daunting, since both are critical aspects of the shopping experience.

And there is some problem with the feedback on their stores too, as Susil Dungarwal, retail & realty analyst, ficci, states, “Spencer’s merchandise mix, price, quality & service is not better than other retailers.” Surely, that perception has to be changed if they have to make their ambitious plans a reality. 


Source : IIPM Editorial, 2012.

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Friday, November 9, 2012

RESURGENCE: INDIA

While the West is both excited and paranoid about India’s potential, the average Indian is still not empowered as the polity continues to wither India’s intrinsic potential...

Don’t you see the way they are encouraging the formation of smaller countries like Kosovo? All the jobs are in any case shifting to your country and your neighbour? And now what is that is left to learn?’ Such replies are common and not unjustified either. But it also proves the sheer irony and vindicates the old adage which says that the grass is always greener on the other side of the river. So when young Indians going on a sabbatical, trying to escape from the Third World dust to learn from First World serenity but get greeted with such accolade, admiration and praise about the potential of India, after a long time the pride of being an Indian has its visible impact on the glowing faces, something which is even bigger than the impact created by India’s crushing of the Australian cricket team.

As a senior Indian official in France would put it that the perception about India in Western Europe can be distinctly divided between the phase before 1998 and the one after that. Before 1998, for the first 50 years India was more of an economically poor but culturally rich nation of philosophers who distinctly had a paradigm impact on modern Europe. India in those days was synonymous with mysticism, being a country known more for black magic, snake charmers and tigers than for its soft power and software. Yet 1998 and the assertion India made with its testing of five thermonuclear devices changed it all. Here was a country which through those tests was asking for its legitimate rights and venting out its frustration against a world which never paid heed to its concerns of terrorism and threats from China. It wasn’t just the nuclear test but the economic embargo in its aftermath imposed by the Americans and its stooges that made all the difference and that exposed the fundamental strength of an otherwise shy and a reclusive India. One has to remember the sheer impact of economic sanctions when imposed by Uncle Sam, something that crippled Iraq for a decade due to the oil embargo. It caused the death of thousands of children owing to lack of basic medicines and Iraq was doomed for ever. Yet when those same sanctions were imposed on India, the loss to American companies in terms of cancellation of governmental contracts was more than what a resilient India suffered. By then, seven years of liberalised economy had already solved the problem of forex reserve and to mitigate any eventual problem of the future, the government of India issued Resurgent Indian Bonds to be subscribed by the Non-Resident Indians. The bonds were over subscribed and ironically by the NRIs from USA being one of the largest contributors. Unlike Pakistan, India was not reduced to an Iraq by the crippling sanctions. On the contrary, US had to backtrack. Within a couple of years, the then American President came dancing to India.


Source : IIPM Editorial, 2012.

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Thursday, November 8, 2012

It focuses more on performance

Budget process governed by 3Es - economy, efficiency & effectiveness

One more form of budget, which has great significance is performance based budgeting. It is a unique and most advanced way of budgeting, in which the ultimate goal of policy makers becomes a set of performance factors – and developing strategies to achieve them. There are three pillars of this form of budgeting, which are often called 3E! Economy: focusing on cost of inputs with appropriate quality and quantity of financial, human resources. Efficiency: evaluating the relation between output and input. Effectiveness: what is the extent to which goals have been achieved. The speciality of performance budgeting is that it sets up targets to be achieved, comparing the country with the international arena using a few key performance indicators (KPIs) to relate performance with available resources; added to this is the performance scorecard approach, where KPIs are examined and the connections between causes and effects are established.


Source : IIPM Editorial, 2012.

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BUNDLING csr & profits

Helping communities is an inherent part of its business strategy; so is weeding out corruption. By naresh minocha

There are many companies, which look at the entire issue of corporate – social responsibility (CSR) as an effort, as something they have to do to either to cater to legal compulsions, or to add incrementally to corporate image and credibility. But most of these firms don’t believe in the concept. Then there are a few business families – like the Tatas – who have traditionally invested in philanthropy; for them, it is a part of business values that have been ingrained over decades.

Among the new wealth creators like Wipro’s Azim Premji, there’s a sense of trying to do something for the country, to change the world for the better. So, Premji spends huge sums on changing the face of primary education in India. And then there are the others in the technology world, who see CSR as a way to progress their businesses; if Indians don’t get wired, the software czars will continue to witness a talent crunch, which will hurt their global toplines and bottomlines.

Of course, there are some firms that are forced to implement CSR for internal reasons; ITC started e-Choupals because of this reason and, over time, made it a part of its FMCG strategy. But these are rare cases, when CSR becomes an inherent part of strategy; in such cases, there is no business without CSR, here philanthropy goes hand-in-hand with operational and financial objectives. And there’s no better example to illustrate this than the state-owned Gas Authority of India Ltd. (GAIL).

The position that the integrated energy major GAIL finds itself in is both enviable as well as challenging on both the business front and CSR. As a dominant operator of gas pipelines across the country, it has to accommodate the aspirations of various states and people to supply them with natural gas. Corporate giants, including Reliance Industries and global energy major Shell, are keen to transport natural gas through GAIL’s pipelines. So do the gas users; they want GAIL to haul imported or indigenous gas to their plants.

Such demands propel the company to hasten up its charter of networking the entire country with a gas grid to which are tagged optical cables for commercial use by telecom operators. It has risen to this challenge of laying new trunk pipelines, expanding existing ones, tapping all sources for supply of gas and sharing its expertise in city gas distribution through a slew of joint ventures at home and abroad.


Source : IIPM Editorial, 2012.

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Tuesday, November 6, 2012

TRANSFORMATION: ELECTION

World may not witness a major transformation in 2008

President Robert Mugabe remains irreplaceable since 1980s. And election in Pakistan is never 100% election. It always waits for resurrection. Whatever the outcome, Musharraf will remain the strongman backed by influential military. In other countries going to polls, there will be a minor leadership change in Egypt, Syria, North Korea, Turkmenistan, Zimbabwe, Belarus, Venezuela, Kazakhstan, Uzbekistan and Tajikistan.

In the era when democracy proves to be the only major recipe for success over other political ideologies and seems to be the only solution for human rights, equality, corruption, and tool for any other way of socio-economic upliftment, the year might not witness a major transformation from the prevailing status. Future of many countries remains in the hands of few individuals. Where the solution lies then? Perhaps, an alien can answer this than a conscientious person…


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist)
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The Re-Musketeers

Globally, there’s no concrete evidence on whether political parties got re-elected (or elected) on the back of governance issues; at the moment, it’s an open debate, says A. Sandeep

A utopian world would have been one in which globally, all governments got re-elected or elected only on the basis of their performance on various governance indicators. Such indicators, as defined by The World Bank, include accountability with respect to civil liberties, political stability, effectiveness of the government, corruption, and the rule of law. India’s former President, A.P J. Abdul Kalam agrees, and feels that “when a political leader performs in a state and realises economic prosperity of the state using development politics, he or she will definitely succeed in getting re-elected.” Utopian is what we mentioned, and many pockets of global politics, like social relationships, are a million miles away from this logic.

Good governance is supposed to directly reflect on a contry’s development, both economically and socially. Expectably, countries that have thrived on religious fundamentalism have seen only a ghost of a relation between a political party’s contribution to growth and development, and the chances of the party getting elected. Distinguished political analyst, George C. Edwards, Editor, Presidential Studies Quarterly, explains, “Religious faith is important as a qualification for office in many parts of the world and is the source of conflict in southern Asia, the Middle East, Northern Ireland and elsewhere too. Even social issues like abortion are directly connected with religion.”

The Palestine issue is one telling example, with many pockets in West Asia mirroring the situation. Aly Fayyad, the spokesperson for Hezbollah’s Political wing, thinks that “development is neither an election plank nor of primary concern in West Asia. To win an election solely based on the development plank is just impossible. Here, we’re more concerned about issues like terrorism, Arab Nationalism and relocation of refugees.” But don’t these nations fall short on various development indices? “No, it does not necessarily mean that we are an underdeveloped lot. Countries like Lebanon, Jordan, Turkey, Yemen and Iran can give most of the so-called developed countries of South and South East Asia a run for their money. We fare better than most of them even on UNDP’s Human Development Index scale.” So, in countries that are plagued with terrorism and instability, development can happen although it may not be on the main electoral agenda.


Source : IIPM Editorial, 2012.

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