Wednesday, October 31, 2012

UNIONS: SOCIALIST NO MORE

The good and bad of trade unions

Thirdly, unions have been gradually diverting from their original objectives. With political support, they have been trying to take on countries at ransom. Unions like The Communication Workers Union, International Trade Union Confederation or World Federation of Trade Unions became too powerful, politically motivated, and subsequently, disastrous with their agendas. Unions no longer protected the interests of the poor rather worked towards the benefit of political parties.

Although in countries like Sweden, UK, Germany and Japan, a large portion of the labour is unionised safeguarding worker interests, in many other countries, unions are hated for their political affiliations. Until unions move away from this destructive mode, the time is not far when they’re finally made illegal!


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.
 
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
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
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
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Tuesday, October 30, 2012

Depressed? Your barber could help!

When one’s near and dear fail to understand the trauma one’s going through, could a hairdresser or a taxi driver help deal with the stress and get suicide off their mind?

In India, one person commits suicide every eight hours and half of them are in the age bracket of 20 to 45. The highest suicide rates in the world are in South India, where 50,000 cases are reported every year, with the total cases in India being 1,54,000! Bengaluru is India’s suicide capital where 35 in every 1,00,000 people commit suicide! These figures are increasing at an alarming rate and most of the people committing suicide are the breadwinners of the family.

One of the methods of preventing suicide is to simply listen to a depressed person. Dr. Vimal Kumar, a psychiatrist, says, “Most of these people express their desire to talk and we should not take it lightly. If you don’t have a solution, take the person to a professional or to someone on whom the person has some kind of confidence. Majority of patients who are about to commit suicide indicate a day or two before. The most common myth is that those who talk about suicide don’t commit suicide, which is really unfortunate.”

Belfast, in UK, witnessed 30 suicide cases in a period of six-weeks this summer. Now, from the hairdressers and taxi drivers to the Marks & Spencer staff, all are being trained to spot people who might be contemplating suicide and are being given basic counselling skills. This is done because it is believed that people, who might be thinking of taking their lives, are more comfortable talking to complete strangers rather than their families or friends.


Source : IIPM Editorial, 2012.

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Monday, October 29, 2012

Our ‘copy’right!

WTO finally pulls up errant China

China has had so many issues with patents that it could actually patent its expertise on restricting intellectual property and on giving nightmares to copyright owners! The dragon has lost yet another trade battle with the US in the World Trade Organisation in August 2009 – it’s third loss to the US since last year.

The gilded cage that China has created by restricting imports of DVDs, music, books, software is described by the panel as discriminatory and not in line with the policies of WTO. In 2007, 11.7 million Americans were employed in these copyright industries and foreign sales totalled $126 billion in 2007 – thus, the damage done to American businesses is significant. The international theft of all kinds of intellectual property has resulted in the loss of 750,000 American jobs. And because of its sheer size and lousy copyright laws, China has long been the focus of American and global concern.


Source : IIPM Editorial, 2012.

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Saturday, October 27, 2012

Why one bird in hand is better!

k. m. birla is at a crossroads – to combine or not to combine is the question. neha saraiya states the raison d’être behind the best possible option...

Imagine a young CEO, who happily acquires a 51% stake in L&T’s cement division (named as Ultratech) for a whopping Rs.22 billion and then soon after sends a letter to his board of management warning them about the bumpy road ahead... That is Kumara Mangalam Birla, a man who had apprehensions about the problems that the massive year-2004 acquisition would cause to the company in the long run. Even as many woke up with the hangover from that deal, there was another major announcement from Grasim Industries on June 11, 2009 – a further purchase of 11.5% stake in L&T Cement! Surprisingly, all went well and in fact much better than expected... That was five years back.

It’s 2009, and the 42 year-old Birla is faced with another question – should he combine his brainchild Grasim Cement with the foster child Ultratech? The move to merge the entities will definitely make the duo, the largest player in India’s cement industry, with an annual combined production capacity of 42 million tonnes, overtaking others in its ilk, which includes biggies like ACC, Gujrat Ambuja, et al. But what if structural issues actually creep into this process of consolidation? Before answering that, taking a look at the company’s performance during FY2008-09 becomes important. The company which has a host of businesses under its umbrella (including Viscose Staple Fabric – VSF, cement, chemicals, textiles, iron ore, et al) recorded a net profit of Rs.21.87 billion, with top line collections of Rs.18.04 billion.

So, while the bottom line fell by 5% as compared to the previous year, what makes Birla happy is the fact that revenues of his main cement business grew by a double-digit 13% y-o-y, touching 20 million tonnes in capacity. Of course, the infrastructure development thrust given by the Indian government helped, but the question stands – are the other eggs in his basket worrying Birla? Admits Adesh Gupta, Group Exec. President and CFO, Grasim Industries in an exclusive conversation with B&E, “Despite higher energy cost and the economic slowdown, cement business maintained its operating profit in FY’09.


Source : IIPM Editorial, 2012.

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Thursday, October 25, 2012

“We cater to a niche”

In an exclusive conversation with B&E, V. Vasantha Kumar, Senior VP and Head – Marketing & Communications, ABN AMRO Bank, India reveals how they made it…

B&E: Foreign banks still seems to be laggards in India? Why it is so?

VVK: There is a difference in the business models of banks like ABN AMRO and government owned banks in India. The target segment for a PSB or an Indian private bank consists mainly of the masses with the middle class forming a huge bulk of their customers, while foreign banks have a niche market to cater to. So the branding and communications we do is targeted at that particular audience only and the channels are decided accordingly.

B&E: What has ABN AMRO India done during the last six months as far as marketing initiatives are concerned and how has been the response?

VVK: Ever since the takeover of ABN AMRO globally by RBS last year, a rebranding effort has been launched to change the identity of the bank in India. But, the unique feature of this rebranding exercise has been that it has been a very slow (but steady) process so that our customers can accept the transition smoothly and get used to it without any confusion (whether it is some other bank). We have not changed the identity of the bank overnight like many companies do. We feel that our customers as well as our sales people should take up the process smoothly without any hiccups.


Source : IIPM Editorial, 2012.

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Tuesday, October 23, 2012

Too Big to Fail

Besides big banks, the US government must make special provisions for smaller regional banks to protect them from failure

The US banking system is marred by what you could probably term as the ‘dichotomy syndrome.’ On one hand, the government advocates the ‘Too big to fail’ phenomenon by helping large financial institutions by means of government bailouts; while, on the other hand, smaller regional banks continue to struggle. Regional banks have been hard hit as plummeting home values, devalued mortgage backed assets and rising unemployment rates led to an increasing number of consumers defaulting on their loans. While the reasons are varied, the fact is that bank failures appear to have become more of a norm rather than an exception in the US; and the rate at which the banks are failing vindicates the same statistically. In the year 2008, there were 25 such cases of bank failures, while this year has seen an alarming 52 failures till date (that amounts to an average of 7 bank failures per month). Regulators fear that bank failures could rise above ‘historical norms’ as a weakening economy puts pressure on badly underwritten loans, particularly in commercial real estate. RBC Capital Market has candidly stated in its report that as many as 1,000 US banks could fail in the next three to five years on losses related to commercial real estate loans. Further, according to Ross Waldrop, Sr. Banking Analyst, Division of Insurance and Research, Federal Deposit Insurance Corporation (FDIC), “the number of insured banks and thrifts on the FDIC “Problem List” has increased from 252 to 305 (the highest since 1993), and total assets of “problem” institutions rose from $159 billion to $220 billion.” An analysis of the deposit insurance fund (DIF), too, reveals some startling facts. The DIF has decreased by 24.7% primarily due to the $6.6 billion increase in loss provisions for actual and anticipated insured failures. As a matter of fact the DIF ratio, too, has come down to 0.27, thanks to $9.5 billion worth of bank failures in the very first quarter of 2009 at an estimated cost to the DIF of $2.2 billion. It is estimated that US bank failures through 2013 may cost $70 billion (for this year alone the total cost for failed banks has risen to $12.3 billion). As economic recovery is still far off, many more such entities will collapse in the coming months and perhaps beat the 1989 landmark (with 531 bank failures).

Source : IIPM Editorial, 2012.

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Monday, October 22, 2012

Long Lee Manor, Shamwari Game Reserve

If you are longing for an exotic experience amidst the wonders of nature and wildlife, don’t think twice and just land into the Shamwari Game Reserve at the Long Lee Manor, which offers a distinctive colonial experience. This exquisite Manor House offers its guests some enticing cuisine, refined comfort and unmatched hospitality. This ultimate African adventure stretches right up to the Garden Route meandering along the Bushman’s river.

The view: Right in the middle of flora and fauna, stretching up to the river and the ocean, unmatched scenic view and adventure all through is what rightly defines the Long Lee Manor. Archi type: The colonial style of this Manor House has been preserved ever since it was built in 1910. The interiors have been tastefully done and a lot of thought has been put in for guests’ comfort.

Bon appétit: Sumptuous meals can be savoured under the star-studded sky at the Palm Court or around the blazing fire in the barn. Around the corner: Long Lee Manor is situated at an hour’s distance from the main city of Port Elizabeth. Although it has a variety of facilities within the Shamwari Reserve, which easily extends up to 18,000 hectares. There are regular flights at short intervals, which keep shuttling between the city of Port Elizabeth and the reserve.


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face

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Saturday, October 20, 2012

GENESIS AND LEGACY: ARMED STRUGGLES

Most terrorist movements eventually wither away for they fail to replace an armed struggle with a political one

It is said that even though Irish Republican Army was no way in a position to defeat the British Army, yet the guerilla warfare it resorted to, made the British existence in Ireland inviable – not only politically, but also economically [a critical reason for the English to occupy territories even before World War II] – just as the Mujahideens did for Soviets in Afghanistan. Later on, the Provisional Irish Republican Army was formed in the 1960s for carrying on the protest against the two-Ireland policy and for ousting the British from Northern Ireland. But a war of attrition cannot be carried on without harming the common populace. Expectably falling prey to this paradigm, the subversive activities of IRA – which included bombings and assassinations – eventually made it lose much of the support it had in the Republic of Ireland and even in Northern Ireland. Eventually, after more than three decades of continuing a war of attrition against the British rule, in 2005, in the face of ever expanding domestic opposition, IRA finally agreed to lay down arms and carry on its struggle though democratic and political means; Sinn Féin became its widely accepted political front. If Sinn Féin [read its EU election campaign agenda and commitment to the ‘Peace Process’ to understand the gargantuan philosophical transformation] epitomised this intelligent change in IRA, the same gambit was chosen by the Maoists of Nepal, Fatah in Palestine and even say, Pervez Musharraf in Pakistan.

That said, the critical point to note is that the political ideological bent of an undermined group cannot [and we suspect, should not] start before a violent precession. That means that however much you might wish to peacefully get your own territory or claim your own rights, history has provided evidence that a purely non-violent struggle [one that has no genesis in violent uprisings] has almost always never succeeded. Nelson Mandela [and F.W. De Klerk] rode on the peace wave due to support of public that was sick and tired of the ongoing violence in South Africa. For those not in the know, Umkhonto we Sizwe [Spear of the Nation] was the name of the military wing of Mandela’s African National Congress.


Source : IIPM Editorial, 2012.

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Friday, October 19, 2012

IT BUBBLE: THE DOOM OF 2000

The IT bubble burst long back, and with it, did many fortunes...

The idea of these companies was to work towards monopolising the sector that they functioned in, with the help of network effects and rope-in as many subscribers as possible, rather than think about ways to earn revenues from the same. What added to their miseries were the increased spending in the technology that would enable Y2K switchover. The companies soon realised that all these investments were of no use for them. Whatever be the case, this bubble is recalled as the worst that the Silicon Valley has seen till date. It wiped off almost 50% of IT-based companies across the world... rough patch indeed! Some of the prominent names that were shaven off were: Webvan, Pets.com, Kozmo.com and Floorz.com. The online grocer Webvan was based on a good idea, but its main problem was that in the midst of all the euphoria, it felt that it could mushroom quickly but it died-out in just 18 months. Webvan had raised $375 million through an IPO, expanded to 8 US cities, and had ordered $1 billion to build high-tech warehouses. During its short life time, could boast of an Mcap of $1.2 billion, but then reality struck and all was gone. Another name that faced the music was America Online (AOL) that acquired Time Warner on January 11, 2000. This merger is said to be the beginning of the doom for this company (refer to story titled ‘Atleast, we spared their pants!’; page 48).

Though this crash is now a thing of the past, it has taught a valuable lesson to many investors – never forget to question the fundamentals of the business you are investing in... And if you still don’t believe us, ask those who were stripped to the bone during the crash that was!


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face

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Wednesday, October 17, 2012

Small package...

...but is the Tata Nano actually going to be a good thing for Tata Motors? The answer to that question is littered with ‘ifs’ and ‘buts’

How expensive (oops, cheap) is Tata Nano? Well, it’s as ‘expensive’ as a CD player fitted into the ultra luxurious Lexus. So, for a Lexus-owner, Tata Nano may just appear to be a toy, but for Ratan Tata and millions of Indians, Nano personifies their reveries – Ratan Tata’s dream to manufacture the world’s cheapest car, and the hope of millions of Indians who always aspired to own and drive a four-wheeler. Though the people’s car was launched on March 23, 2009, it is expected that bookings would commence only by the second week of April. If you thought that manufacturing the world’s cheapest car was the most daunting task, then think again, for achieving break-even looks even more daunting.

As if ominously, Tata Motors suffered a net loss of Rs.2.63 billion for the quarter ending December 2008 – a dreadful decline by 152%. The earning per share (EPS), too, went down to a negative Rs.5.51 per share for the quarter from a healthy Rs.12.95 yoy. Its arch rivals Maruti Suzuki and Hyundai Motors posted healthy numbers at a time when Tata Motors saw a fall of 19% in total sales for the month of February. Will Tata Nano indeed be their saving grace?

At the risk of being daring, the answer to the above question, with a short term perspective, is a big NO! Tata Motors has already invested over Rs.20 billion in the Nano project so far. Although the car would be rolled out in June 2009, it won’t be sooner than 2011 that the company can ‘hope’ to start making profits out of this car. Reason: Nano is a low cost, low-margin car and therefore the company will have to rely on huge volumes to pump in profitability. However, since the manufacturing plant in Gujarat is not ready at the moment, it would be difficult to manufacture more than 3,000-4,000 cars per month initially. “We estimate Tata Motors to sell 50,000 units and 1,50,000 units of Nano in FY’10 and FY’11, respectively. Assuming realisation of Rs.1,00,000 per unit, it will add just Rs.5 billion and Rs.150 billion to the company’s sales in FY ’10 (E) and FY ’11(E) respectively, which is not very significant considering the size of Tata Motors,” points out Vaishali Jajoo, Senior Research Analyst, Angel Broking. So despite the hype that Nano is generating, it would end up spilling more red ink on the balance sheet of Tata Motors in the short run. Trade pundits have predicted that Tata Motors will have to sell at least four to five million cars to break even and make profit. Considering Nano’s rate of production, Tata Motors will be able to reach this figure only by the sixth year of operation, i.e. FY’15. Even the Nano Europa, the European version of Nano, will not be launched before 2011.


Source : IIPM Editorial, 2012.

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Monday, October 15, 2012

NORTHERN IRELAND: CONFLICT

After the conflicts, the next one year will be deciding force for Ireland

The murderers are nonconformist republicans belonging to disparate offshoots from the old Provisional IRA. Ironically the actual target of the rebels appears to be their previous friends in arms, Martin McGuinness – currently joint first minister of Northern Ireland's devolved government – and Gerry Adams, Sinn Fein’s head.

Reacting on the incident, Richard English, an expert on Northern Ireland politics, said, “Next one year is crucial. If the threat from dissidents subdues, it will appear as if Sinn Fein took an acid test and came out unscathed. The fear of falling into abyss will melt forever.” What is now to be seen is whether the rebels can jointly carry on the impetus of the last few days. Triumph would see British soldiers back on the streets and sophisticated anti-terrorist manoeuvres by overt and covert sections of the armed forces – a prospect disliked by Catholics and Protestants alike.


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face


 
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Friday, October 12, 2012

PROFILE: KENNETH D. LEWIS, CHAIRMAN & CEO, BOFA

You can curse him a million times for emptying your pockets; you can praise him a billon for saving other companies... Call him a ‘hero’; call him the ‘Don Quixote’ who led The Bank of America!

Born in Meridian, Mississippi, Lewis has tried hands at many jobs since the age of 12, including the ones at steel mills and filling stations, and even direct-selling (of green cards). He earned a Bachelor’s degree (Finance) in 1969 from Georgia State University and holds an executive programme degree from Stanford. He split with his first wife in 1978 and two years later, his ‘present’ became his ex-boss’ ex-secretary, Donna. Today, they have two children & two grandchildren. He started his journey with BofA (then called North Carolina National Bank) in 1969 as an analyst. He steadily rose up the ranks and 30 years later, he became the COO. He won the crown of CEO in April 2001 (replacing Hugh McColl), and Chairman in 2005. Now that was quite an upward glide for Lewis; his corporate performace graph sadly, following the opposite direction. Imagine this: in 2003, BofA was the world’s 4th-most-profitable company. It slipped to 12th in 2007 and 23rd in 2008. What worst; its expected negative performance this year will see it being booted out of the profit-makers list!

And though his ‘trust-me’ act of purchasing up to 400,000 BofA shares as “an outstanding long-term investment”, is an effort on his part to infuse confidence in his company’s investors, one truth stands – he should have worked towards achieving ‘shareholder wealth maximisation’ and not ‘bailout package maximisation’. Lewis perhaps forgot that the bourses don’t reward well ‘brave CEOs, on the lookout for quick glory’ (yes, he should have left it to the government and Fed!). Perhaps, even he was left pondering over what to choose – shareholder wealth or the bravery award for financial rescue (and obviously, he made the wrong choice)!


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.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
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
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links IIPM : The B-School with a Human Face
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Thursday, October 11, 2012

North by west... to the killing fields

A billion dollar firm with a billion reasons to be called inglorious

The last one among the world’s largest defence contractors that deserves to be in our inglorious list is Northrop Grumman. It is more famous for its designing, system integrating, and manufacturing of defence electronics and many other military and commercial weapons. Among various kinds of military products that the company produces are aircraft, aircraft carriers, military vessels, missile satellite systems, electronic censors and information systems. Northrop is one more truant company witnessing growth in employment and sales revenue. During 2007, there were about 122,600 people employed in the firm globally; by the end of 2008, the figure reached 1,33,570 – an 8.9% increase in employment in 2008 during the current global economic mess. And one doesn’t need to wonder about the reasons. Similarly, its sales revenue has also gone up from $30.11 billion in 2006 to $32 billion in 2007 and finally to $33.9 billion in 2008. Northrop is one of the firms filing the highest number of patents – in 2007 alone, the company filed over 8,511 patents. Northrop acquired companies like Integic Corporation in 2005, Essex Corporation in 2007 and 3001 International in 2008.

Expectably, Northrop Grumman has equal contributions in war crimes. Although 90% of its products go to the US government, most of its weapons go to US aided undemocratic countries who are accused time and again of breaking international laws. Its sophisticated deadly weaponry also goes to countries like Korea, Taiwan, Bulgaria, Slovakia, Saudi Arabia and UAE apart from Australia, India, Japan, UK, US, NATO, Italy, Germany etc. An example to their reach is that Israel’s reserved A-4 attack aircraft, TA-4 training aircraft and even the AH-64 attack helicopter are made by Northrop Grumman.

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.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
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
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links IIPM : The B-School with a Human Face
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