Friday, November 30, 2012

LEADERSHIP: HOWARD STRINGER

Sony will have to be more realistic in its short term strategy in the wake of new challenges

These results leave Stringer with a tough job ahead. Stringer, an alumnus of University of Oxford, joined Sony Corp. as its member of the board in 1999 and went on to become the first non-Japanese to lead the company, after heading Sony’s US operations for six years.

It was under his leadership that Sony achieved a record profit of 369.43 billion yen ($3.73 billion) for the year ending March 2008. But could he not foresee what lay ahead of the company?

Rob Enderle of Enderle Group states, “These problems are historic and Stringer, while making some progress, has been too little too late. Sony needs a massive restructuring and, so far, no one appears to have the authority or will to do that.” Is it the same Stringer, who made rival divisions of Sony work together?

Furthermore, stock price of Sony has fallen by 56.9% since January 1, 2008 to $23.29 on November 10. Low consumer spending & the economic crisis further complicate the challenge. Sony would now have to focus more on its non-premium offerings and lower prices on its premium products. Lay offs are also not ruled out. Desperate times call for desperate measures, ''like.no.other''!


Source : IIPM Editorial, 2012.

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Agony of the second spot

Yahoo!'s only worthwhile option now seems to be AOL

The saga of the top three search engine providers has a script quite similar to a typical love triangle. First, Microsoft made public a hostile bid of $31 per share to acquire Yahoo!, which was later raised to $33 per share earlier this year; but Yahoo!’s board declined the offer. Then Yahoo! rushed for a tie up with Google; but has itself become the scorned suitor now; with Google citing regulatory issues (parents in the love triangle analogy!). Google was looking at placing ads on Yahoo!’s search queries, which would have brought as much as 80% of the search advertising market into Google's control. But Google opted to move out citing that it would’ve resulted in protracted legal battle and damaged its relationships with partners. In addition, the search engine giant also blamed regulator and advertiser concerns after the Justice Department’s interference.

Rob Enderle, Prinicipal Analyst, Enderle Group says, “The impact of the deal plug out will probably be harder on Yahoo! than on Google which is why Google pulled the plug. It leaves Yahoo! looking like they were unable to execute another strategy and Google remains dominant in the space.”


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

Realise India’s economic potential

Reforms can help realise India’s economic potential, provided there are ‘real’ reforms!

The reforms that Dr. Manmohan Singh launched in 1991 have done much to simplify the maze of regulations and licensing that stifled entrepreneurship, but the job is only half done. India rates only around the 50th percentile of the 2007 World Bank rankings on the dimensions of government effectiveness, regulatory quality, rule of law, and control of corruption. In the bank’s latest survey of business environment, almost 60% of those questioned rated corruption as a major or moderate obstacle; the corresponding number for the functioning of the judiciary was about 30% and that for taxes and regulation, 40%. India ranks only 48th among 131 countries on the World Economic Forum’s competitiveness index. This is not good enough for a would-be economic superpower. Business is a mixture of competition and cooperation. Everyone knows and extols the social benefits of competition. In contrast, cooperation is usually identified with cartelization and social harm.

But there are dimensions of cooperation that benefit not only the business community but society as a whole. Improvements in the institutional infrastructure of property right protection and contract enforcement, and improvements in most physical infrastructure, are cases in point. Take corruption, which is rated the most serious obstacle. When firms compete to win lucrative public contracts or licenses using corruption, some win and others lose. But even the winners have to give up some or even much of their profits to pay the bribes. To be sure, each will retain a temptation to cheat and gain an advantage at the expense of others through bribery. What is needed is a system whereby the others can deter the cheater with a credible threat of punishment. Suppose the community has a norm that no one should engage in bribery to win a favorable contract or license. If a member violates this norm, the community stipulates that no others will have any dealings with him. The cheat is going to need some things – material inputs, trade credit, and so on – from the others. If the others ostracise him, he will be unable to fulfill the contract and so won’t profit from his bribery. Of course he can try to induce some of the others to violate the ban by offering them shares in his profits. But that will dilute his profit. More importantly, community also stipulates that anyone who engages in dealings with a cheat is himself labeled a cheater and ostracised. If the business community, with some support from the government, establishes the needed infrastructure, and if the government pursues Rodrik’s other criteria, then India’s great economic potential can be fully realised...


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

Why we do what we do

In other words, the reasons for our super-obsession with criticising India!

The arguments were intense. Half of our editorial team was arguing for running a purely national Scrutiny section, as opposed to covering international stories too. And half was arguing against the premise, debating that we should cover even international stories. The only problem was, they were the same halves! In other words [if you’re not thoroughly confused already], while one half was arguing for and against the same issue, the other half was thoroughly disinterested in having to do anything with it! Well, we were tickled breathless – we kid you not, it’s the same case with India. While one half of us Indians are busy inanely arguing for and against issues without understanding what stand to take, the other (illiterate?) 600 million odd half is busier organising the daily meal, finding out a place to defecate, ensuring that the girl child & lady of the house don’t get raped, and of course, ensuring death doesn’t become a family issue this week.

India, as a noted foreign economist put it, is a stale mistress few would like to wed, and sadly, fewer to bed. Change today, in India, is a word privy more to private corporations than to government bureaucracy. Many of those who are opposed to change often swear by the Constitution to rationalise their opposition, without realising that even the Constitution has been amended a smashing number of 93 times – vindicating the fact that what was of relevance in the past needs to change its dimension for the future. The context in which we mention this is that India is galore with organisations that in some sense are past their prime, but can play stunning change agents to bridge the ever increasing rural urban divide. For example, while the Indian government is gearing up to open up the banking sector to foreign companies, what it doesn’t realise is that many of India’s homegrown problems [like the fact that more than 50% Indians don’t have access to banking] can be solved by homegrown solutions like converting, say, the India Post into a separate bank, thereby at one go creating nearly 130,000 bank branches for rural India!


Source : IIPM Editorial, 2012.

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Sunday, November 25, 2012

“The AMP target is achievable”

Dillip Chenoy, Director General, SIAM

B&E: On the Automotive Mission Plan.
DC: As far as the AMP is concerned, it is well on track and I think the 10% (as part of the GDP) mark is achievable. Earlier the government thought that the AMP was a bit conservative. Soon the Ministry of Heavy industries will start to initiate the plan and things will move in a positive direction.

B&E: Causes for general market volatility in the Indian auto market.
DC: Increased operating costs, interests rates and a depressed market is putting pressure on the industry as people are postponing their purchases. If the interests rates are reduced, it is beneficial for the consumers. When sales increase it is good because there is volume in the market.

B&E: On the resurrection of the two-wheeler industry after a continuous bad phase.
DC: The two-wheeler industry has gone through some tough times in the last few years, therefore it has now taken a couple of initiatives and plans like launching new products and schemes which have brought back the sales numbers.

B&E: On the July 2008 sales.
DC: There are three factors discussed this month, first growth of passenger vehicles has been lower then expected. Secondly, the two-wheeler industry has grown well, and thirdly commercial vehicles and three-wheeler sales have improved this month as compared to the last couple of months.


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

Low on sugar, lower on spice!

It’ll be tough to turn around SpiceJet without a radical reorganisation

For quite some time, the Indian aviation market was pouring over with news flashing from all across about SpiceJet looking for a stake sale, ever since the hostile winds in the sector have taken their toll. With esteemed players like Anil Dhirubhai Ambani Group, Kingfisher Airlines and even Jet Airways competing to gain control, speculations abounded on who will finally relish the spicy taste of this airline company. Finally, investing firm WL Ross & Co. LLC gets to be the “lucky” one. The company has recently invested some $80 million in SpiceJet and will own close to 15% stake. But will SpiceJet be able to decisively clear the air pocket with this investment?

The industry challenges remain the same as before the deal, namely the convergence of a high cost environment and slowing demand. However, the deal will provide some cash flow relief and additional time for the carrier to develop an effective strategy to navigate the difficult industry conditions,” comments Binit Somaia of Centre for Aviation.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

INFRASTRUCTURE DEVELOPMENT: DAM REHABILITATION

Governments rarely consider rehabilitation while drafting dam projects

The problem is that such rehabilitation moves are completely subject to political deviancies, wherein one government might be appreciative of the same – to earn brownie points – but another government, from another political camp, might be totally against the implementation of the same. Sadly, even celebrities lose no time in jumping on the media bandwagon to cry hoarse about their support (or lack of it) to the ‘movement’.

Can’t an Indian government just face up to the current reality and do something about such problems in relocation and resettlement. For crying shame, a formal Rehabilitation & Resettlement Bill was passed finally only in the year 2007, a full sixty years after Independence. We suspect it’ll take another sixty before they put the Bill into action... 


Source : IIPM Editorial, 2012.

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