IIPM Business School: Business and Economy

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Friday, May 10, 2013

How will the ‘Age of Big Data’ affect management?

Will access to Big Data further enable fact-based decision-making or analysis paralysis? Will analytics, as well as the supply of analytics-savvy managers, so badly lag ‘big data’ that it will only lead to confusion and misguided decisions? An exclusive HBS Working Knowledge article.

Ideas and trends converge from time to time in a way that suggests the possible shape of the future. Sometimes I think I can comprehend what they may mean. But other times I know I need help. This is one of those times.

Just two decades ago, we didn’t have Google and other information sources; storage constraints would not have permitted Google to provide everyday access to the ‘world’s information’. If we had had the information, we couldn’t have accessed it effectively anyway. Email systems were not widely available, let alone mobile devices with capacity to access the data. Now the capacity to store and access information through cloud computing is so great that we are entering a post-Google era in which new organisations like Factual (founded by a former Google employee) have set as their goal that of providing access to all of the world’s facts. Presumably this means data such as the location of every factory in the world, data that has not already been massaged and spun. Some facts have to be acquired and organised. Other facts are generated by so-called digital sensors operating worldwide in industrial equipment, autos, and the like. By linking the sensors, an ‘industrial Internet’ can be created. These trends appear to have ‘opportunity’ written all over them, particularly for those who are training now for jobs in data analytics. In addition to less wasteful marketing efforts (we should be able to know, for example, ‘which half’ of advertising is effective, thereby making an old marketing saw obsolete), they should produce more effective business strategies and inject added certainty into the appraisal of opportunities for new business startups. Furthermore, analytics (not the data) should be a source of continuing competitive advantage. In his new book, Charles Duhigg describes how the retailer Target uses data on consumption patterns to discern and address promotions to pregnant customers, perhaps even before they’ve announced their pregnancy to friends (and Target competitors). This is particularly important because pregnancy is one of those life events associated with significant shifts in consumption habits.

A problem is that the shortage of experts in data analytics (some call them ‘data whisperers’) is so acute that it may be years before a sufficient supply can be trained. The McKinsey Global Institute estimates that up to 190,000 are needed now in US, along with 1.5 million managers capable of using their work. The shortage appears to be growing along with the potential for competitive advantage associated with data analytics.

This all raises many questions. Will the age of big data eliminate most or all uncertainty from business decisions for those most able to make effective use of ‘all the facts in the world?’ Will it fuel the next ‘gold rush’ for talent in a quest for competitive advantage? Will analytics, as well as the supply of analytics-savvy managers, so badly lag ‘big data’ that it will only lead to confusion and misguided decisions? Or is this just the latest management fad? How, if at all, should this affect education for management? What do you think?

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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

ExecutiveMBA

Wednesday, May 8, 2013

Nothing wrong in wanting to get richer

There is nothing wrong in wanting to get richer. But there are many ways to get richer, and entrepreneurs must be able to choose the right one

I maintain that there is nothing wrong with a youngster who is aspiring to make a lot of money as long as it is via legal and ethical means. You cannot become a saint at 20 and you shouldn’t. What is important is for you to realise that by seeking respect from every stakeholder, you will actually become richer in wealth. That is the trick that we all have to follow. That is why, right in 1981 when we started the business, I said that we must seek resect from everyone – right from customers to investors to vendor partners to employees to government to the society at large. If we sought that kind of respect, we would not short change anyone. We would adopt the finest principles of corporate governance, be fair to our colleagues, not violate any law of the land, pay our taxes properly and create goodwill with the society. We went ahead with the thought process that if we follow these tenets, revenues, profits and market capitalisation will automatically come. We said that we will separate management from ownership of shareholding and also laid down a fundamental principle that none of our family members will take up a non-merit based role in the company. So there is nothing wrong with youngsters seeking a path to get richer; all I am saying is that there are multiple paths to get richer. And one of the paths that this company has found to be effective is to seek respect.

The people I chose to partner me in this venture were chosen because they had very similar value systems. They were part of my team at Patni. Since equity, fairness, respect, value systems, et al were paramount to my mind, I took an unprecedented decision of making them equal stakeholders in the business. I have not come across any entrepreneur who picked up people with 1-1.5 years experience and gave them 15% equity. I have not seen any other case in the history of global business. Why did I do it? I did it because I believed in equity, encouraging youngsters and having good values. Even at the national level, I do strongly believe that these values will make India a better place.

When we started Infosys in 1981, India was a very different place as compared to what it is today. First of all, there was huge friction to business in the 1980s. For example, it was very difficult to get a bank loan. When we wanted to import our first computer, we went to multinational banks seeking finance – Citibank, Bank of America… where my nephew and my friends worked. They said, “We don’t give money to you guys. We only give money to very rich people.” These were the MNC banks. The Indian banks were also sceptical. Finally, we got funded by the state financial institutions. Secondly, in those days, infrastructure was very poor. It would take us two-three years to get a telephone connection. Thirdly, there were no data communication facilities in those days. We used to sometimes fax the source code to US. Fourthly, travelling outside India required approvals from the RBI as we did not have current account convertibility. We couldn’t hire consultants from outside India in quality, brand building, et al. Those are all taken for granted today. Today, it is all about competing in the marketplace based on innovation and based on how market-worthy you really are. Therefore, there is a lot of difference between the 1980s and today, and for the better.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

ExecutiveMBA

Tuesday, May 7, 2013

Indira Gandhi earning the name of ‘Iron Lady’

Events that led to the surrender of the Pakistani forces in 1971, saw Indira Gandhi earning the name of ‘Iron Lady’. Her uncompromising attitude won India a war that even four decades later, is highlighted in history books as event that made India proud of its empathetic foreign policy and powerful armed forces

For India, the campaign was a fine example of what can be achieved with synergy. Major General (Retd) G. D. Bakshi, a combat veteran and an author, considers it to be one of the finest moments in the history of the Indian defence forces. “In military terms, the Indian forces achieved dominance in all the three domains of land, air and water during the 1971 war. It became an example of jointmanship. The Indian Air Force (IAF) achieved remarkable success when it achieved complete air superiority in the Eastern theatre of war in the first 48 hours. This enabled the advancing Indian Army columns to move without any fear of detection even under daylight,” he says. For the Army, the five division-strong Indian forces advanced from three directions and secured choke points well in the rear. The Navy had blocked the sea and while the war was being fought, it sunk the Pakistani Ghazi submarine and also destroyed the Karachi harbour. It was as a consequence of these events that on December 16, 1971, Lt. Gen. Aurora, accepted one of modern history’s greatest surrender at the Dhaka Race Course. The Indian Army liberated Bangladesh in 12 days. The speed of operations was a text book achievement. It surprised the defenders who were never allowed to regain their balance.

While on one end, in the East, India’s infantry units were marching into enemy territory with success, Pakistani forces had opened the Western theatre as well to compel India either to divert its forces or to slow down the assault in the Eastern sector. Performance of the Indian Army in the Western front was equally commendable. The infantry units credibly operated in the deserts. The way operations were handled at Longewala is a classic example of how to hold one’s nerve as a rifle company. The 23 Punjab Regiment, under Major K. S. Chandpuri, remained rock-steady in their defences. This was despite the enemy’s well-armoured attack. They detected and intercepted the movement of the 51st Infantry Brigade of Pakistan and foiled Pakistan’s attempt to break through at Longewala. By the time the enemy got back for a second shot, the IAF came to the Army’s rescue.

Pakistan had also planned a few audacious moves with its Air Force (PAF). It launched a pre-emptive strike on 10 Indian air bases at Srinagar, Jammu, Pathankot, Amritsar, Agra, Adampur, Jodhpur, Jaisalmer, Uttarlai and Sirsa in the early hours on December 3. The aerial strikes, however, not just failed to accomplish the objectives, but also gave India an excuse to declare a full-scale war against Pakistan the same day. Under Lt. Gen. Aurora, three corps of the Indian Army invaded East Pakistan, entered Dhaka and forced Pakistani forces to surrender on December 16, 1971. Pakistan’s Lt. Gen. Niazi signed the Instrument of Surrender. The battle saw 11,000 Pakistani soldiers being killed, while in comparison, India suffered less than one-third of casualties. Pakistan lost 220 tanks during the battle. India, again less than a-third at 69. By December 16, Pakistan had lost a sizeable territory on both the Eastern and Western fronts.

The birth of Bangladesh, however came at an enormous ‘social’ cost. Before the Pakistan army was overpowered by the Indian Army, up to 3 million Bengalis had lost their lives in a span of nine ‘mad’ months.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

ExecutiveMBA

Ever heard of a loss-making cartel?

Kingfisher is desperate for cash flow. Spicejet is aiming at market share. Jet desires to get back to its old profit-making habit. IndiGo wants to win through discounting. And Air India is simply paralysed. In such an unstable environment, will the formation of a cartel to control price satisfy the varied agendas of our aviators?

Economic crises breed dark ideologies. That is as true for Indian domestic carriers as it was in the case of global financial powerhouses that were forced to fall to their knees when times got tough.

Years of competent planning and incompetent execution caused havoc in the Indian domestic airline circuit. Bleeding financials, consolidations in the name of survival, illogical price wars and millions of rupees worth of checks defaulted are proof of this. And in the past few years there have been many-an-instance when the Competition Commission of India (CCI) was sent an alert that an enquiry into the activities of domestic airlines needed to be activated to check whether ethically, they are headed in the right direction. Both in 2010 and 2011, CCI gave a clean chit to airlines in India in this respect. But doubts still prevail.

Even today (in October and November this year), wisemen claim that in their attempt to turn over a new leaf, the carriers are involving themselves in an act of monopoly creation, setting floor prices, killing demand and working together behind closed doors to earn fat margins.

Such claims make it hard for onlookers to live peacefully. That the full-service carriers (FSCs) make it hard for no-frills (LCCs) to decide independently on entry price slabs isn’t amusing. There is some truth in their claims. In the past quarter (Q3, 2012), demand fell due to price hikes by airlines in the country (traffic stood at 12.61 million - a 11.16% dip y-o-y). This fall in demand, which experts claim is alarming, actually, isn’t. And the fact that demand hasn’t shrunk despite floor fares rising anywhere between 15-80% across various sectors y-o-y is good news for airline cartels operating in the country.

Various studies have attempted to arrive at a conclusive benchmark figure to explain price-demand elasticity (Ep) in the airline industry. As per a December 2007 report titled, ‘Estimating Air Travel Demand Elasticities’ by InterVISTAS, elasticities of air travel range between -1.24 to -2.34 (as concluded by Oum, Zhang, and Zhang). Another study by Oum and Yong of the Unversity of California, Berkeley, titled, ‘Concepts of Price Elasticities of Transport Demand and Recent Empirical Estimates’, puts this figure between -1.15 and -1.52. IATA adopted an econometric approach to bring out a more accurate estimation. The figure arrived at? -1.3 to -1.5 for the Intra-Asia market. At present, the busiest Delhi-Mumbai, Delhi-Bangalore, Delhi-Kolkata and Mumbai-Bangalore routes account for over 60% of domestic traffic. Air fares on these routes have increased by over 50% since December last! How should this translate into demand fall? Going by IATA’s calculated Ep of -1.3, price hikes on these four routes alone should have caused demand to fall by 65%. Assuming that prices across other hubs and spokes have remained the same since the start of 2012 (which obviously isn’t true, given that a one-month advance air ticket price on a hub-spoke route like Delhi-Guwahati has increased by 55% in the past year), the four busiest routes alone should have caused overall air demand to fall by about 40% (39% to be precise). That obviously hasn’t happened. For the first nine months of 2012, demand has fallen only by 0.99% y-o-y. Conclusion: economics fails to explain why the fall has been marginal. If the conspiracy theory is true, and airlines actually are functioning in a cartel and fixing prices, then it has benefitted them. Not a bad outcome for a loss-making sector! But as we said before, it’s a theory on paper. At least till the CCI proves someone guilty.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Can Us afford to go over the fiscal cliff?

With President Obama’s re-election, the countdown begins for lawmakers to address the 2013 fiscal cliff and the Treasury’s statutory debt limit. But unless the President and House Republicans agree to change the current law, these crises cannot be resolved.

It’s been just three weeks since US President Barack Obama won the re-election, but a doubt whether he can forge a productive second term in a divided political system has already started doing the rounds across political arenas. No doubt, the Presidency is settled, but little else is. Policy uncertainty has been one of the biggest obstacles to Uncle Sam’s economic growth over the past few years, and the outcome of the recent Presidential election is unlikely to change much. The scenario could become even worse as Washington’s fiscal debate intensifies. Reason: President Obama has two big decisions to make and that too by early 2013.

The first is what to do about the so-called fiscal cliff – the substantial tax increases and government spending cuts scheduled to hit next year under current law. The second is how to achieve fiscal sustainability; that is, what long-term tax and spending changes will make future budget deficits small enough so that the nation’s debt-to-GDP ratio (103% of US GDP) stabilises. What Obama decides today will determine how the US economy performs tomorrow.

The fiscal cliff describes what will happen if the Bush-era tax cuts, this year’s payroll-tax holiday, and the emergency unemployment insurance programme all expire on schedule, just as government spending drops according to the terms of last summer’s deal to raise the Treasury debt ceiling. Those would be on top of several temporary tax and spending adjustments that Congress normally extends each year, affecting the Alternative Minimum Tax (the so-called “AMT patch”) and Medicare’s reimbursement schedule for doctors (known as the “Medicare doc fix”). If policymakers do nothing before the end 2012, the resulting tax increases and spending cuts will total $715 billion in 2013, equal to about 4.3% of GDP.

Fiscal sustainability is attained when a country’s debt grows in tandem with its GDP. The Great Recession, by contrast, resulted in a near doubling of the US debt-to-GDP ratio over the past five years. If the fiscal policy remains unchanged, the debt load will continue to outpace growth, eventually triggering an economic crisis. Under reasonable economic assumptions, Obama needs to reduce the annual budget deficits by $3 trillion over the next decade to attain fiscal sustainability. This amount includes the $1 trillion in spending cuts agreed to as part of last summer’s increase in the Treasury debt ceiling, but not the $1 trillion in automatic spending cuts, known as sequestration, that also were part of that deal. If Obama makes these necessary changes, deficits by 2020 will equal no more than 3% of GDP. Given the expected pace of GDP growth, that will stabilise the debt-to-GDP ratio.

Going by this logic, the solution to Uncle Sam’s problem seems to be simple. Obama should decide to do nothing, stick to current law, and let the nation go over the fiscal cliff. This would solve the fiscal sustainability problem: Higher tax revenues and lower spending would make future budget deficits small enough to bring the debt-to-GDP ratio back on track. Sounds like a great plan, but only on paper. In reality, the cost of this option would be another recession in 2013. In fact, the Moody’s Analytics model of the US economy shows that going over the cliff would cut real GDP by 3.6%, below what it would be if current policies were extended next year. This outlook may be optimistic, but the risks are definitely greater on the downside. The US economy is pathetically fragile at the moment. While unemployment rate is still over 8%, the trend in the three months through October shows manufacturing down more than 3% year-on-year, the worst outcome of the recovery till date. In fact, there are several such scenarios which can nullify the initial positive effect on fiscal sustainability.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

BBA Institute

Sunday, May 5, 2013

The scope for resettlement and rehabilitation

Even after much delay over a controversial bill on land acquisitions, the same questions over the extent of required consent and the scope for resettlement and rehabilitation continue to obstruct the creation of a sound law

Even otherwise, it has been observed that the bill has been heavily diluted. “It is extremely unfortunate that putting aside every possible democratic precedent and institutions, progressive pronouncements of the Supreme Court, the UPA government is bringing a law to legitimise forcible acquisitions by the government for private and PPP projects in the name of development,” says Medha Patkar, leader of the National Alliance of People’s Movements (NAPM). NAPM’s opposition to the bill in its current form, is based on the fact that it fails to accommodate key recommendations of the Parliamentary Standing Committee comprising members from different political parties. The standing committee on land acquisitions has said that no acquisition should be allowed for private and PPP projects. “Small benefits like a house plot to those displaced are being taken away by increasing the time of residence from three years to five years prior to displacement,” said NAPM in September. It further pointed out that a separate legislation on urban evictions and displacement was the only way out.

Reportedly, Jairam had convinced Sonia that the new Bill has the best Resettlement & Rehabilitation (R&R) package as it covers families of all farmers, landless and livelihood losers who have resided in the area for five years or more with a house or one-time financial grant in lieu thereof plus annuity of Rs.2,000 per month per family for 20 years, adjustable to inflation, or employment. However, the UPA chairperson is said to have insisted that the broad contours of the bill drawn up by the National Advisory Council were in public interest and should not be rejected ‘because of lobbying by the vested interests’. Other dilutions in the bill from its earlier form include compensation of four times the land value and not six times as proposed earlier. Land size thresholds on private purchases have also been left to the discretion of states instead of the 100 acre in rural and 50 acre in urban areas decided earlier.

Rajagopal says that the biggest problem with the bill is that it refuses to see the sufferings of the people. “It is more progressive than the first one. But again, it is not a land redistribution bill, it is a land acquisition bill. That is my problem – without considering land redistribution as a major agenda, the government is acquiring land for industry,” he says.

Recently, a group of farmers, who met the rural development minister also sought stringent provisions for acquiring farm land. Disappointed with the watering down of the draft of the bill by the GoM, the farmers who had come together under the banner of Kissan Mahasangh, said that while initially, land owners had given up surplus land to the landless immediately after independence to help establish a social set up with equitable assets and opportunities, it was ironical that laws are being made to facilitate accumulation of thousands of acres of land by private companies and individuals. “Over 300 SEZs have come up on the fertile land of farmers who have not benefited from them in any way. As per the Ministry of Finance the nation has lost over Rs.1.63 trillion in revenues till 2010,” the delegation has claimed. That the delegation has also objected to the acquisition of land for private companies; creation of land pool of unutilised land and leaving the decision of the calculation compensation of land vague, was confirmed by Devinder Seharawat, the co- convener of the Kissan Mahasangh.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Friday, May 3, 2013

Letters to the editor

Eye opening efforts
The Indian economy has been facing stifled growth for quite some time now and flipping through the cover story of Business & Economy magazine was an eye opening experience for me in terms of the economic conditions of the country. Both the government and the Reserve Bank are trying hard to get the economy back on track and the issue decently suggested how India can be safeguarded against the lately turned up pool of scams and incompetent policies. The feature was greatly supported by data and trend analysis generated by the IIPM Think Tank. I seriously believe that the economy could benefit through further liberalisation of FDI, as was discussed. It was interesting to see that a magazine has also uniquely considered the educational qualifications of our finance ministry! Talking about the rest of the package, it was a great mix of stories and analysis across various sectors.

Bobby Malhotra
Chief Executive Max Trade

Constant evolution
I have seen a constant evolution in the content, presentation and section planning. The factor that makes the magazine different from the rest is its dynamic supplements. I would like to give a special mention to BFM, which keeps me updated with the latest happenings in the world of finance. There are always some great columns in the issue for avid readers like me. In the last issue, the story on the crisis in the power sector was very timely and comprehensive. Really, for the Indian growth story to continue and be sustainable, the next phase of reforms should be in the power sector. I expect you to raise more such critical issues in the future.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

ExecutiveMBA

Thursday, May 2, 2013

“Government is positive”

Rakesh Mehta Assistant Research Manager, Fullerton Securities & Wealth Advisors.

B&E: Much was expected from the EGoM. But with just 23% slash in the reserve price, what are your thoughts?
Rakesh Mehta (RM): Telcos were expecting drastic reduction in reserve price for the 1,800 MHz spectrum by around 80%. But in the EGoM, the price was reduced by around 20% to Rs. 140 billion for 5 MHz spectrum. I think the major reasoning was the flexibility given to the operator to pay the stated amount in 10 years and in instalments (operator needs to pay one third of the amount in the first year, followed by a two year moratorium and the balance over the next seven years). Moreover, the operators are free to offer any service on this spectrum (mobility service, data service et al), mortgaging of spectrum et al.

B&E: What are your expectations on the upcoming auction?
RM: The top five operators have seen a decline in revenue per minute over the last two years. Moreover, due to 3G auctions, balance sheets are too leveraged with very less option to raise additional loan at attractive costs. Telcos planning to participate need to work on the pricing and business model. There will be pressure from incumbent operators that they will overbid for the spectrum so that it is unviable for new operators. On the contrary, incumbent operators will have to be ready to pay higher charge for spectrum re-farming. The government is confident that the auction will be successful even at a reduced base price of Rs. 140 billion as some telcos have hinted that they will bid aggressively, taking the final price to Rs.200 billion.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

BBA Institute

Wednesday, May 1, 2013

“There is no problem in power generation in India!”

Dipak Dasgupta, Principal Economic Adviser - Ministry of Finance, in an interview with Sray Agarwal and Ganesh K Roy, on reforms for infrastructure and transport

How do you feel about the Indian Economy right now?
Dipak Dasgupta (DD): There is no doubt that the Indian economy has slowed down and the reason for this is a function of strategy failure and that the investors have lost their confidence. The last year scenario also has not been favorable; but this is not a new thing rather it’s the investment cycle which remains in every developing economy all around the world. That [investment cycle] is what drives the course of any economy. At the same time, the problems in Europe and US have hampered the growth of many countries and we are not alone. China too is going through this phase. The last time we had that cycle was in the year 2008. Export markets are growing very badly. We also need a logistics revolution so that growth can been accelerated. Despite having poor infrastructure, we have been able to grow at such a high rate; but now we need a major infrastructure revolution so that we can again reach to the erstwhile levels. Ours is a large landlocked country, which is much like a continent; so we need to connect all the corridors to achieve better growth. But we don’t have that kind of a system right now in our country. We have a young population which will help us to grow in the long run. We need more public private partnerships in India to make things better. There is a huge skills gap between public and private firms – which makes it imperative for the PPP model to flourish in India. We are in a marathon race and not in a 100 metres race; so we need long term plans which will enhance our economy.

Power failures, time overruns, cost overruns, are the indicators of structural flaws in the economy. How do you think India can overcome these hurdles?
DD: Power generation is growing at 8.8 % in India. In fact, contrary to the general perception, there are huge power plants coming up in India; this shows the level of development that we are going through. Yes, here we have a system where some states are producing huge amount of power and some are not and the demand is also not equal in each state. There is no problem at the production end; rather, we have a problem at the distribution end and in the channels. We have built a state of the art facility in the field of power generation so there is no problem at the generation part.

But the slowdown did not happen overnight. Do you think the government’s policy paralysis added on to this situation?
DD: We need to do things every day because doing things once in a year won’t do well for any economy. We need to bring in reforms every now and then so that the growth story is kept on going. In the government sector, incentives are less and performance parameter are also not standardized. Politicians respond to what the electorate wants. How to make the public sector work better is the challenge. A strong leadership is the need of the hour.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
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

Tuesday, April 30, 2013

Busting the India vs China myth!

Comparing India with China, and looking to grab a few brownie points here and there, is a popular obsession with Indians in the past few years. But after Visiting China several times in the past and looking at how the Chinese have developed their economy and built world class brands, the entire debate only appears an exercise in futility

My visit to the Middle Kingdom over a decade back convinced me that New Delhi would not evolve into a Beijing if we worked round the clock for 25 years. When I revisited the capital city last year, I could see the accomplishment of 25 additional years of progress in ten years!

The reality of the unending Chinese miracle hit me harder when I looked at how Guangzhou has developed in just over the past decade. It seems we won’t even reach that level if we work round the clock for another 50 years. When I see how China developed Guangzhou as its industrial hub and how India developed Bangalore at its IT hub (both commenced their ascent at around the same time in the early 1990s) it appears to be a tale of two attitudes, rather than cities. By sheer numbers, the PricewaterhouseCoopers’ Global City Ranking Index for 2010 shows Guangzhou ranked at 44 with a GDP of $143 billion, while Bangalore is ranked much lower at 84 with a GDP of $69 billion.

For over much of the past decade and counting, the ‘India vs China’ debate has persisted across several levels. Both western and Indian media (for their individual reasons) have been particularly boisterous and over-the-top with this comparison on several grounds; and have picked up every possible opportunity to take it up. This was visible, for instance, when US Secretary of State Hillary Clinton came over for a visit and commented on how India should aspire for a parallel role in the region, or when it was being predicted by some economic reports that India’s GDP growth rate would outpace China by 2013-15. From my perspective, all that this debate can realistically provide is a generous daily dose of rollicking entertainment! India may have merited a comparison with China a decade and a half back, but we have crossed that bridge long ago. You may call this assertion unpatriotic, and it is quite obviously unpopular with Indian readers; but this is the plain truth.

Coming back to the two cities I talked about, there are many more surprises in store when you look further into the intricacies of Guangzhou’s numbers. Around 2.5 million women are working in the city, and the employment rate for women has surged three-folds to 70.84% in a decade. Life expectancy for women has risen by 4.5 years to 81.33 years and 49% of graduates are women, who are actively playing their role in sectors like science, technology and education. At around $17.8 billion (2010 figures), the city’s FDI figures are over six times that of Karnataka at around $2 billion (2008-09 data, of which Bangalore would presumably have a major share). The visionary Chinese specifically chose a port city to take advantage of sea trade. Also, the government strategically divided the city into multiple special economic zones to further attract foreign investment. For instance, The Guangzhou Economic & Technological Development Zone caters to technological manufacturing and also serves chemical, electric machinery, food, electronic equipment, metal fabrication and beverage industries. The Guangzhou Nansha Export Processing Zone is meant for automobiles, biotechnology and heavy industries. Easy access has been provided to Shenzhen Port and Baiyun airport to ensure fast movement of goods. The four auto companies in Guangzhou, who are in JVs with 50 major global auto companies, were on target for producing 1000000 cars by 2011. Bangalore, meanwhile, has insensibly avoided division of the city into special manufacturing hubs. Some areas like Inner Ring Road (where we have offices of major multinationals like IBM, Microsoft, Dell and Yahoo!) have become clustered zones for specific industries, but not by design. Also, there are no specialised trade zones in Bangalore, so synergy is hard to achieve.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 27, 2013

Marx, Lenin, Mao, Castro... R.I.P.

It was touted as the grand idea that would secure the future of societies for generations to come.What went wrong?

Che Guevara, in his famous book, The Motorcycle Diaries, wrote, “I knew that when the great guiding spirit cleaves humanity into two antagonistic halves, I will be with the people.” Che surely would have been surprised by how difficult that so-called ‘communist’ choice has become in today’s world! In fact, communist regimes across the world often seem far more anti-communist in nature than the real anti-communists! Karl Marx, the father of communism, who proposed, “From each according to his abilities, to each according to his needs,” would have been loathe to see his ideology so ruthlessly destroyed.

Well, the communist ideology that strives for an equitable State seems pristine on the face of it. Sadly, historically, communists across the world have more or less used the guise of communism to in reality maintain dictatorial rule. Neither would have Karl Marx imagined this morbid metamorphosis of his ideology, nor would he have recommended the shocking usage of force to brutally suppress the so-called anti-communists (in reality, the anti-dictatorship proponents).

If communism in USSR came to be better known for the Stalinistic Great Purge and random executions, the same in Yugoslavia became utterly farcical with Tito adorning himself with the ‘President for Life’ title in 1963. Both these regimes got broken up purely because of this rabid need of the communists to retain power.

Factually, those are communists themselves who, due to their tyrannical and fanatical insecurities to retain power, have forced global masses to choose the less than perfect – and in reality, utterly incompetent, anti-social and unworkable – combination of democracy and capitalism.

Worse is the fact that in case communists had in reality worked for the masses, then they would have retained power even during democratic elections. Clearly, most communist regimes never actually worked towards the equitable quotient. But some did, and creditably.

The Cuban case is classic evidential material on this. One of the main reasons the Castro clan has been able to retain power almost non-violently has been because they’ve stuck to the cause. Cuba beats many Western nations on human life indicators, what to talk about third world countries. With an 18% of GDP investment in education, Cuba attempts to educate almost 100% of its children equitably. That is the reason Cubans in reality appreciate the socio-communist ideology. In one perspective, even the Chinese Communist Party has been true to the ideology – more poor have been lifted above the poverty line in China in the latter part of the last century than ever has been done in the history of mankind in any nation. Unfortunately, the more tyrannical it becomes, the more the Chinese Communist Party is digging its own grave and that of the nation.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Thursday, April 25, 2013

“They must establish consensus before a law is made”

N. A. Ansari, Whole time Director and Executive Director, JSPL Raigarh. talks about JSPL’s R&D and environment initiatives as well as policy issues

B&E: What have the most important outcomes of JSPL’s R&D initiatives so far?
N. A. Ansari (NAA): We use our in-house R&D facility as well as licensed technologies. We ensure that the combination of these two brings out quality products for us. For example, we have manufactured the world’s longest rail, which is 121 meters long and can be coupled to form 484 meters in all. But we are still waiting for the orders to come, because the most important consumer of this technology could only be Indian Railways. We have been trying to convince them for the last 4-5 years that our rail can be laid down quickly, is easy to maintain, lighter in weight, et al, but they have stuck to their MOUs, which they have signed with the other companies. Apart from this, we regularly do research to find out ways to improve our quality, reduce wastage, cut down coke consumption in the blast furnace, increase yield, et al.

B&E: What is your perspective on the logistics and transportation related issues that JSPL faces in particular?
NA: Infrastructure is really in a very bad shape. We receive our imported raw material at Paradip port in Orissa, from where it gets to our Raigarh plant by train. This is very time consuming as our ports are not in a position to handle the cargo quickly and efficiently. We have purchased a 60% stake in an SPV to develop Gopalpur port near Berhampur city in Orissa’s Ganjam district. This will help us immensely once our six million tonne steel plant in Angul starts production.

B&E: Policy issues like land acquisition, environmental clearance, et al are gaining a lot of ground these days. How can they be made more business friendly?
NA: I am not against any regulation. All I want to say is that there needs to be a practical approach to law making. Some of the laws regarding environment conservation are very good, but they are difficult to implement due to lack of technology or some other constraints. So, the attempt should be to establish a consensus before a law is made. Also, the mechanism to resolve the issues & attain clearances should not be so slow and time consuming. If you need to give a red signal to a project, say it in one go and then stick to it. Otherwise, let the work go on. By the time the final decision comes about a project, it may not remain feasible for the producer anymore. So, if we really want to see the sector booming, we need to address these issues on a high priority basis.

B&E: How are you meeting various environment-related norms?
NA: Through our R&D, We are able to manage our fly-ash emission in a very systematic manner, which has brought down the risk to the environment significantly. We are using a lot of our fly ash waste to manufacture bricks. This way, we are not just disposing our waste, but also creating value out of it. We have also planted over 3 million trees in and around our Raigarh plant. This is our way to use natural resources sustainably.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

How Volkswagen is leveraging its India plans to become the global #1!

Last September, Volkswagen edged past Toyota to become the second largest auto selling company in the world. It’s next target – grab the gold by 2018. It is already the largest in the #1 automarket, China. To further propel the company’s growth globally, Martin Winterkorn, the global CEO of VW Group, has set his eyes on the fastest growing automart amongst the BRIC nations. India. The work has begun. But Indian conditions won’t allow Winterkorn to have his way easily. And then of course, there is competition.

Digital media networks covering the Frankfurt Motorshow, a few months back, were abuzz about Martin Winterkorn, CEO, Volkswagen AG, visiting the Hyundai Motor Company pavilion. It was a pleasant surprise for the Korean giant as the CEO of the world’s second-largest automobile company started examining the new i30, which was meant to give serious competition to VW’s Golf. Winterkorn started by measuring the thickness of paint used on the lift-gate, then walked around the i30 grazing his knuckles across the hood-to-bumper shut lines to check for evenness. He then took a careful note of the interiors of the car. Hard to imagine what was going on in his mind, but his expressions indicated that he had some gaps in his thought-process which needed closing. Someone ought to give him answers. Winterkorn called for VW’s design head Klaus Bischoff, and demanded, “The lever for the steering wheel release makes no sound while moving. BMW can’t do it. We can’t do it. Why can they?” The chief wanted to know how Hyundai managed to make an adjustment mechanism to the steering that didn’t make any noise. Bischoff had no answer.

Winterkorn’s visit to the Hyundai camp clearly indicated the regard he held for the fifth-largest automaker in the world – a worthy opponent. The company wouldn’t want to give up its silver crown which it snatched from Toyota last September, not to even a respected, fast-growing automaker like Hyundai.

Volkswagen’s march-without-stumble in the global market has wowed onlookers. From being a lesser-known European brand to becoming the second-largest car-seller in the world (market share of 12.2% in terms of sales volume), the past four years – with increased focus on the BRIC markets – for the group have been least to say, career-defining! Five years back, new launches from VW were unheard of in most parts of the world. Today, every move of the company is discussed upon. Winterkorn knows that.

Two years back, VW’s claim of reaching an annual production mark of 10 million units by 2018 sounded like wishful thinking, Today, it appears that the milestone will be surpassed well before the set deadline. The automaker sold 8.16 million cars worldwide in 2011, a 14.3% increase y-o-y. Experts do claim that the company may fail to mirror its previous year’s performance in 2012. However, growing its annual sales by 1.84 million over a period of 9 years means growing sales at a CAGR of 2.29% starting FY2012. Selling 186,864 cars more every year – not difficult for VW. Not if we go by the work VW has been doing in the BRIC markets post-2009.

Winterkorn is serious about the BRICs. During the previous Christmas holidays, he summoned the bosses of the company’s operations in BRIC markets to the global headquarters at Wolfsburg, Germany. With its sight set on the #1 spot in the global automotive circuit by 2018, the CEO of the $162 billion-worth VW Group wanted to reiterate on and announce his gameplan of reaching the #1 position by digging gold in the BRIC nations. Needless to mention therefore, its performance in the bloc’s second largest (after China) and the fastest growing auto market – India – is crucial.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

Creating an impact that achieves goals of equity as well as economic growth

As a new field of investing, impact investing uniquely gives the best of two worlds to the investor – financial returns as well as social equity. Linda L. Darragh, Director of Entrepreneurship Programs & Clinical Associate Professor of Entrepreneurship and Nurkholisoh Aman (Research Assistant) of the Booth School of Business analyse the developments and stumbling blocks for impact investing in India

Impact investing is an emerging investment field that is gaining increasing popularity as people look for ways to grow sustainable businesses. The recent global financial crisis is often cited as an example of how the capitalist model has failed to generate equitable and sustainable economic growth. On the other hand, philantropic activities alone cannot provide long-term solutions to what are the world’s most pressing challenges such as poverty, renewable energy, and the lack of basic health care.

Impact investing occupies a unique position between the extremes of pure for-profit businesses and charity/grantmaking. Through the promise of getting the “best of the two worlds”, impact investing presents a new alternative in the world of investing. In a 2010 study, JP Morgan defined impact investment as “investment intended to create a positive impact beyond financial return.”

Generally, impact investments target the population at “the base of the pyramid” (BoP). They aim to improve the lives of the poor by providing products or services that are otherwise unavailable or unaffordable. Another point of view of impact investments places the focus on respecting the environmental impact of business activities.

At Chicago Booth, we recently conducted a study to understand the landscape of impact investment in six emerging economies. In India, we found that there is an increasing interest in investing in entrepreneurs who pursue both social and financial objectives. A few years ago, micro finance lenders represented the breadth of social entrepreneurs in India. Now, impact investors have significantly broadened their definition of social investing due to the emergence of potentially scalable ideas in other sectors.

Given the sheer size of the Indian population at the base of the pyramid, there are almost unlimited opportunities for impact investing. Additionally, India now faces big challenges to protect its fragile environment – air, water, forests, and bio-diversity – from the rising pressures created by economic success.

Interviews with impact investors and agencies that work with social ventures identified the sectors that are most popular amongst social entrepreneurs in India. These are:
A. Water & Sanitation – There is a huge need for companies that offer customers safe, affordable drinking water through community water systems. Approximately 170 million people in India currently lack access to safe, clean drinking water. Water-borne diseases are estimated to cost US$600 million annually in lost production & medical treatment.

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

An important question for leaders: How ethical can we be?

Prof. James l. Heskett, Baker Foundation Professor, Emeritus, at Harvard Business School, writes an hbs working knowledge paper on how managers like to think they act ethically, but at the end of the day, their ethical action is subjective.

Umpires and referees favour the home team. That’s the conclusion of research by Tobias J. Moskowitz and L. Jon Werthheim that appeared in their recent book, Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won. It was a biased judgment on the part of supposedly unbiased referees and umpires.

They hypothesise that the cause is a natural tendency to avoid excessive booing by the home team crowd, particularly in the later stages of a contest in which unbiased behavior is most necessary. Of course one could ask, “Are they cheating, especially when they are probably unaware of what they are doing?”

In a new book Blind Spots: Why We Fail to Do What’s Right and What to Do about It, authors Max H. Bazerman, a professor at Harvard Business School, and Ann E. Tenbrunsel, a professor of business ethics at the University of Notre Dame, argue that something they call bounded ethicality leads “even good people to engage in ethically questionable behavior that contradicts their own preferred ethics.”

We do it when it is easy to do, when it is hard to verify, when we have insufficient time or information. We may do it in ways that allow us to preserve our perception of ourselves as an ethical person. Doctors experience it when they make diagnoses and prescriptions biased by their special training while maintaining their belief that they are putting their patients first.

It helps explain why people systematically regard themselves as being much more ethical than they really are. And it supports a conclusion that, unless ways can be found to reduce bounded ethicality, most ethics-based “education” is missing a large part of the problem. In fact, one study found that ethicists who teach the subject are less likely to return library books associated with their research than the general public is to return books that it borrows.

Why should this matter to us? Employees tell us in one way or another that the single most important characteristic of their job is “a boss who’s fair,” who hires, promotes, and recognises the right people. Nearly all bosses think they’re fair, a much larger proportion than is perceived by their employees.

As antidotes to blind spots, Bazerman and Tenbrunsel argue that we can change ourselves, in part through awareness of the phenomenon itself, putting in place “precommitment devices” that seal you to a desired course of action – imagining your eulogy, or reviewing decisions with a friend. For organisations, greater transparency and fewer silos, among other things, can help (as opposed to such things as signing codes of conduct et al).

How do we address these problems? Do we just hire more ethical people? Or do we help people see how they act in ways that are inconsistent with their more reasoned ethical preferences? What can organisations do to increase the likelihood of employees acting ethically? And, what can society do to change the institutions that guide individual and organisational behavior? Or is the problem beyond us? After all, how ethical can we be?

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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