Business Administration

3G services in India

2010-11-19T08:59:00.000-08:00

First think of all….

Think

Think what will happen if the train you boarded its speed increases more than 10 times?

Will You be delighted reaching your destiny 10 times faster?

And if this happens to you daily and for everyone then???

I know everyone of us will jump up with excitement.

The very same experiences we are going to have soon, and it’s for all of us and yes a permanent change.

We will experience life much faster than ever.

Thanks to 3G services.

Yes, our worlds of connectivity will know no limits. It’s going to be the fastest ever.

You remember three years back, when you have to open your Yahoo email on your mobile phone; it took nearly a minute to load your inbox with GPRS Services.

Some excitement came in; when you moved to edge technologies which did the same in half time.

But what if your inbox loads in less than a second?

What if you can keep in touch with all of your social networks in less than seconds?

Delighted…

Yes with 3G (Third Generation) technologies this and many more (keep reading to know some of them) things will happen in our life.

Everything near you will move at a faster pace than ever,

Think you will be able to download a 700 MB movie in just 23 Seconds…

No No No am not kidding.

Am serious about this…

3G services are that fast.

A whole movie in just 23 seconds.

Just amazing to believe….!

So you need not to wait for your favorite movie to be downloaded in hours and then to see. It will be a matter of second’s fact.

More amazing is your favorite song of approx 5 MB will be downloaded in just 0.10 Second. Yes in less than a second your favorite song will burst in your ear to delight you.

You will be able to download whole musical album in a second.

Plus you can view television on your mobile phone..! Simply amazing..! Carry all your Entertainment, Cricket matches with you.

Plus Plus for Mobile Game players, Revolutionize your gaming experiences with real time 3D games and online games.

Thanks to 3G technology.

Let me unpack few more waaoowwsss for you.

What if you could see your fiancés face sitting miles away live?

What if you could see your wife’s face while sitting in your office live?

What if you could see your parents, family and everyone whom you take care of live?

YES, 3G Video calls are now possible in India, with the start up of 3G services.

Now you will not just hear your loved one’s voice but you can see them too….!

All you need is a 3G phone and a service provider offering 3G connectivity over it.

And Yes another waoow reason comes…

What if I say that this will cost you less then what you already pay????

Yes 3G video calls would cost you less then voice calls did cost you….

e.g BSNL charges 50 Paise per second for Voice calls and 30 Paise per second for Video calls.

Plus 3G services will cost you even lower than existing 2G services.

Yes, I knew you jumped from your chair in excitement…

But be Cool keep reading for more excitements…

3G services are more secure then 2G services.

This means you can now log in to online banking services not only faster but also safer.

You can now opt for banking services if you have still not taken because of security concerns

What else???

Ya, You might have heard that BSE (Bombay Stock Exchange) will introduce online trading services on mobile phone.

With 3G services on your phone you will be able to do trading live on your mobile phone.

This means you can keep up with market voices, you can even do online trading wherever you would be from your mobile phone.

With 3G services enabled you will get real time experiences and as I already said more secure platform too.

Oooppsss…! The other side…!

Beware…

3G video calling feature will make your life partner more powerful too… Yes with video calls you will no more be able to bluff that I am in office…!

Ooppss My boss can see me that I am not at customer end, but am enjoying at friend’s party.

A worry for all Girls

Ohhh No…! I have to take care of my looks when my boyfriend calls me.

But apart from these small troubles, 3G services will bring many waooww…! moments In life.

So be ready for it.

Are you 3G ready??

To get 3G services you need to have a 3G enabled phone, do check out that your phone have 3G services or not.

If your phone is not 3G ready then have a new 3G ready phone.

Yes, you got one more reason to buy a new phone.

I guess they will drop you an email and SMS on very instant they start 3G services

I have already done it.

After having 3G services on my mobile phone I will enable blogging through mobile phone, so that I can share any snap (pic) instantly with you people…!

So what are you waiting for?

Go get 3G ready?

Regards,

Navneet Singh Chauhan.

NEW PHASE OF INDIAN RETAIL

2010-10-24T09:56:00.000-07:00

Quick Facts about Indian Retail

Indian Retail Sector is One of India’s fastest growing sector.

Retail sector is India’s basic to growth after agriculture sector.
Indian Retail employee’s more than 7% of Nation’s workforce and stands 2^nd after agriculture.
Indian Retail Sector has the highest outlet density in the world with nearly 12 million outlets.

So you may guess how big Indian retail sector is and its economic importance in India.

Indian Retail sector has evolved slowly and steadily from its basics and still exists in various forms, right from very traditional to modern trends.

You can still have glimpse of the traditional retails even in cities and in rural India, while the new retail format is becoming popular in cities as well as in emerging rural India.

Many changes have come in Indian retail industry which transformed this industry.

The above picture shows how Indian retail sector have evolved.

The upper horizontal line signifies time frame, the lower horizontal line shows significant changes in the shopping behavior and the boxes in between shows the Phases of Indian Retail.

Prominent Sectors in Indian Retail

ü Food and Grocery

ü Clothing and Textiles

ü Consumer Durables

ü Footwear

ü Jewelry Retail

ü Books, Music and Gift retail

ü Fuel Retail/Petro Retail

Prominent Players in Indian Retail

ü Future Group – Big Bazaar, Pantaloon, eZone.

ü Reliance – Reliance Fresh

ü Tata – Croma Electronics Retail

ü Videocon- Next Electronics Retail

ü Mobile Phone Retail – Hotspot (Spice Retail)

ü Restaurants – McDonalds

ü RPG Group – Food World, Health and Glow.

ü Raheja’s – ShoppersStop

ü Cinema Chains – PVR, DT Cinema’s by DLF, CineMax, Reliance Big Entertainment

NEW PHASE of INDIAN RETAIL

Mall culture has come in to fashion in last 8-9 years and today people have really started shopping from these retail malls. Though most of us still prefer purchasing from local vendors because of their very competitive and many a times better offerings.

Prominent players of Indian retail sector have started introducing personal brands.

Future Group owned Pantaloon retail outlets, Big Bazaar, eZone have come up with its own personal brands.

In Electronic segment, Big Bazaar has launched “Koryo” brand nearly a year back in 2009.

Koryo range includes home appliances like television, mixer grinder and other similar home appliances.

Future Bazaar’s Pantaloon also has launched personal brands for its various segments in fashion clothing.

Big Bazaar has also launched new toothpaste few months back, with its brand personality “Sachin Tendulkar”, the toothpaste was named as “Sach”, and is promoted by Sachin Tendulkar’s image over the packaging. Though Big Bazaar by now has not done enough marketing and ad campaigns for this product. Many of you will be surprised to know any such products do exist. But these tooth paste’s can be found easily in Big Bazaar.

Tata Croma, One of the biggest players in Indian Electronics retail sector is all set to launch its own electronics brand in LCD television, washing machine and other electronic brands.

Videocon owned “next” electronic retail store is also set to introduce its own private labels.

Reliance Retail is also set to introduce its private label brands.

Mahindra, one of the biggest giant in automobile sector, has also jumped in retail sector, with its chain of retail outlets branded as “Mom and Me”. Targeting family with kids. Check out momandme.in.

Dhiraj and Son’s a local retail player has already introduced private label brands in commodity sector like food grains, and other small scale daily used home products.

Why Private Label:

Private Label has quite good chances to succeed and can really become a headache for the manufacturers, who have been selling there products from these retailers.

You can say Private Label is a backward integration done by retailers.

The main benefit includes, the removal of a phase of buying and selling between the manufacturer and retailers and hence profit to final consumer and the retailers.

These private labels will give significant competition and have high chances to succeed because of following reasons.

1. As these brands are developed by retailers themselves the cost to serve and deliver to customer’s decreases significantly hence increased profit margins. Currently these private brands are easily getting a profit margin between 15-22 percent.

2. Consumer does also get these private label products at a lower rate (nearly 10 %) when compared to existing brands. Hence chances of purchase increase because of price factor.

3. Retail stores are currently offering more warranty and easy services on their own private label brands.

4. Retailers have very high knowledge about consumer behavior when compared to manufacturers as they have been in constant touch with consumer since years. This knowledge will result in to very innovative and customized offerings for the customers.

5. Influence: Retailers have quite good amount of influencing power over consumers. Recommendation by ground sale person has good amount of influence on actual purchase. When these retailers will have their own product, it is quite natural that these ground salesmen will promote their own products moreover retailers will be offering good incentives to them for doing the same.

6. Retailers are no more just retailers, they are now a good marketer, they do advertisement, branding, they manage their retail outlets professionally, and do whatever a customer counts upon.

7. Big retailers have now started hiring talented and well qualified people.

Above factors clearly shows that there are quite good chances for private labels to succeed in future and the big threat to prominent players and manufacturers.

These private labels will change the face of Indian retail.

Only the time will give the accurate answers.

Best Regards,

Navneet Singh Chauhan.

Is your Website Growing older ? Is it giving you desired Revenue ?

2010-10-22T23:30:00.000-07:00

Years back, you took your business online with the latest and most cutting edge eCommerce technologies. Now, almost half a decade later, your website is still chugging along, but that once shiny layer of digital paint is now showing signs of age.

Does this story sound familiar?

Standards, styles, and best practices on the web change at lightning speed, and although your website may still be completely functional, you may be warding off potential customers and clients unknowingly. Here are 5 questions you need to ask yourself to see if your website needs a redesign, pronto.

Question 1: In terms of speed, how fast is your website? You’ve worked hard to get your visitors to show up at your website’s door – don’t put them to sleep with long load times. Numerous studies have been conducted and all of them have found the same result: Longer load times = less visitors = less business.

A study conducted by Akamai in 2006 found that if your website takes longer than four seconds to fully load, 33%, or one-third, of all visitors will abandon your site. Additionally, Amazon found that a 100ms increase in site load time would result in a 1% decrease in sales, while Google found that an increase of 500ms on load time would directly result in a drop in traffic and revenue by 20%.

Whatever numbers you go by, the one takeaway is that your website needs to load, fast. Try optimizing your website by compressing images for the web, aggregating and cleaning out your CSS, and removing old, unnecessary content to reduce HTTP requests. You can also try switching webhosts if loading issues persist.

Question 2: Does your website lack consistency? Although it may not seem like it, consistency in major elements on all pages of your site is a must. Elements like navigation, fonts and colors, URL format, and editorial style should show consistency throughout your website as it shows your professionalism and attention to detail when conducting business.

If your site is riddled with typos, mismatching font sizes, and non-loading images, not only will it impact the credibility of your website but can also negatively affect your search engine optimization strategy, which can result in lowered sales.

Sites like Yahoo!, eBay, and the BBC have hundreds if not thousands of pages online at any given time, yet almost all of those pages have a similar feel, design, and editorial style. Browse through, compare, and take notes, and see if your website maintains a solid level of consistency when compared to some major leaguers.

Question 3: Does your website scream sensory overload? Don’t try to throw text, imagery, links, icons, buttons, ads, or whatever else at your visitor right off the bat. Information overload will prevent you from surfacing the most important information on your website while delivering a load of clutter your visitor will have to sift through. You’ll be shocked to see how quickly a set of eyes can glaze over.

Matching the contents of your website up with the right information architecture will not only produce more efficient visitors but will also produce more efficient shoppers as well.

Question 4: Does your website look old-school? Technologies aren’t the only thing that evolve at a break-neck pace online – styles do too. Whatever style was hot back in ’05 probably isn’t what’s hot right now.:

Just like hairstyles, websites date. What was all the rage a couple of years ago is now seen as passé… Sometimes this is down to design trends - like the 3D buttons and interfaces that were so popular a few years back when graphics tools made it easy to create bevel and emboss styles. Other times it's because the web is maturing and web designers develop a better understanding of what visitors want. For instance, Flash intro pages were all the rage until web designers realised that users didn't like them and wanted to get straight to the content. Flash introductions are the beehive hairdo of the web design world: dated, impractical and utterly pointless.

Question 5: Does your website render perfectly? And by perfectly, I mean perfectly, in all browsers on all operating systems, and on all platforms with no text overlapping and no extra scroll bars anywhere, etc. You absolutely do not want to degrade your customer’s user experience based on their choice of browser, regardless of if it’s Internet Explorer on Windows, Firefox on Mac, or even Safari on iPhone.

Give your website a new look, get more customers than ever,

Get your website designed by highly qualified IT experts,

You may also contact me for the same at undersigned details.

As I work for one of the most professional and expertize IT web development company.

Best Regards,

Navneet Singh Chauhan

Call - +91-9722004004.

Write - navneet@set.co.in

Chat - Skype Name: setblueindia

Windows Live: projects@set.co.in

GTalk: navneet@set.co.in

Yahoo: setblueindia@yahoo.com

Source: Above mentioned article is an edited copy of original article published by elance.com

Taking business on web (Online Business)

2010-09-22T10:21:00.000-07:00

Hello Readers,

Many companies have proven record of taking their business on web and have made huge money online, for example India’s retail giant Future Group’s” Pantaloon.com. International players have already proved themselves like like.com, which has now become a Google invested company. Dell computers are probably one of the best examples of customization of features over web and quick and reliable delivery periods. But these successes don’t come in a day or even in a year you have to be consistent over the same.

But taking business on web for a small player is not that easy task, running a business on web needs many efforts, and investments.

Pre-requisites of Business on Web.

1. You must have a good and pleasing web-site.

2. Shopping cart facilities.

3. Quick delivery period i.e. strong supply chain management.

4. A secure website. Yes when it comes to payments it must be secure.

5. Good and consistent SEO (Search Engine Optimization)

You can start expecting the business to grow in real terms after fulfilling these things.

But sure shot success needs a consistent performance over years and years.

Few more important things to carry business on.

1. Make sure you get returning visitors. i.e a visitor who visits your website once visits again. He must get interest in your website and products and features though he may not necessarily buy.

2. Make sure customers purchase the products regularly from your website, not just one time customer.

3. Customer’s positive feedback and comments can drive the business; make sure you have a room for it.

4. Make purchase an experience not just a purchase.

5. Ensure your website have right branding and loyalty.

How to Make it..!

You must be thinking how can I do this?

Here are a few guidelines.

1. Make sure your website is up to date. Every time a customer visits he must find something new, especially new products.

2. You can have loyalty programs to make sure your customers remains loyal. Ex. Loyalty coupon generation for each purchase which can give up a discount over next purchase when entering the coupon code.

3. Have a customer panel where customers can write their blogs, testimonials and experiences.

4. You can have a 5 star rating/10 point scale on each product rated by customers.

5. Have a unique profile for everyone who signs in your web-site may not be the customers only.

6. Your site should also have social networking integrations. Ex. A customer can share/recommend/like your website or product or any web-page or his own comment over feedback panel over your website and can easily share with his/her friends over the social networking sites like Facebook, Yahoo Profiles, Myspace, Google Buzz, Twitter, Orkut etc. Similarly can bookmark over other bookmark websites, and can email the web-link to anyone.

7. Make sure your customer remembers your website link and your brand name. This can be done by proper exposure of your brand on your website (like logo, tag-line, product names etc.) and fulfilling your commitments over each purchase.

8. Have a proper feedback forum, insist your customer to file up a feedback forum once he receives his goods. This can help in controlling the things before it goes too wrong and also ensures you are going right.

9. You can also show statistics like Visitors per day, Total no. of visitors, time spent by each visitor on your site, Total products sold by now, Total no. of customers, and other relevant statistics. Stats really works dear, people become more credible to website and think I am at right place.

10. Provide online help and personal assistance on your website.

11. Have a panel where customers can leave their contact information. so that you can get back to them for shorting their queries.

Want to hear more from me? Post a comment here and I will definitely respond to you.

Best Regards,

Navneet Singh Chauhan.

The War of Titans – Google Vs. Microsoft.

2010-08-17T04:13:00.000-07:00

Google and Microsoft - the two biggest software companies of the world need no introduction for sure.

One, who uses a computer, uses Microsoft products for sure and one who comes on web cannot stay away from Google products for sure.

Microsoft and Google have entered in to each other’s field and hence an outbreak of war between the two giants.

Microsoft entered in to search, Google’s basic and legendry product and its main bread and butter. Microsoft is all set to give tough fight to Google in this segment. The second most used search engine after Google is Yahoo. Microsoft had tied up deals with Yahoo to bring a better search engine for end users, and hence a straight attack on Google. Google today stands for a generic term for search. Most of us suggest our mates, “Google it out”, means ‘search it out’. Google’s vast portfolio and more products adding in longer terms may dilute this term.

Microsoft also entered in Online advertising which is Google’s area of dominance. Google Adsense is known for providing relevant and effective ads. It has one of the biggest market share. Google Adsense offers quite detailed information of site traffic and ad hits and has high earning potential for its publishers and advertisers.

Google also entered in to Microsoft’s core product, Microsoft office with its product named Google Docs, though this was not head to head combat as Google created its niche by providing online document services but it can be used as an alternate for Microsoft office services for those who have good internet services after all Google is free.

Microsoft responded aggressively to Google by giving online facilities the very kind which Google offers for free and also it has integrated online document storage in office 2010. With office 2010 Microsoft has taken its office applications to cloud computing to answer Google.

Google entered in to Internet Browsing with its browser called Google Chrome, which became an instant hit after launch and is known for its speed. Google Chrome 5 is one of the fastest and stable editions. Internet Explorer a Microsoft internet browser which has its dominance by having highest share is facing competition with this new competitor apart from its earlier one Mozilla Firefox. Google chrome was developed under an open source project (Chromium) backed by Sun Microsystems and other open source programmers and organizations.

Google’s new project Google chrome Operating system is yet another war field between the two.

Chrome OS claims to be the fastest OS (boot time expected to be in between 7 to 10 seconds). But it is web-based as Google has its dominance on Web. In chrome OS every application will open in Google chrome web-browser. Google had applied logic that in today’s world we hardly use anything apart of web. We sit in office initiate outlook and web; and rarely access stored data. Moreover chromium OS will provide online storage facility to its users. It will have Google docs as its default Document viewer.

It is expected it will take one more year for Google to launch Chrome OS. Off course this operating system will be absolutely free to its users may it be business (most likely) or personal. Hence direct attack on Microsoft OS, which are available after paying license fees.

Both Google and Microsoft are now head on head collisions over mobile OS.

Android (A Google product) is one of the fastest growing mobile browser ranked 3 currently and is expected to reach at 2^nd position at the end of year 2010 or at beginning of year 2011. Microsoft is at top currently with its windows 7 mobile edition. But taking quarterly results, first quarter of 2010 shows Android has added more customers to its portfolio than windows mobile. The other major players include Apple and Nokia.

Android is an open source project and has fast portfolio of applications (more than 20,000 and many added daily) where as Microsoft windows 7 has no applications currently. But windows phone have good gaming platform though. More details are mentioned below.

The Future: It’s difficult to see who will win this battle but there are many people who have opinion that both Microsoft and Google will continue to have good hold on their basic products while eating up some portion of each other’s bread and butter in other segments.

Like Google to domain search market and Microsoft in Operating systems and office applications.

Google’s fan club believes Google will lead the way in every segment especially in mobile OS.

But as said by Gautam Buddha – “Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment”.

One who will make a sound edge on present will win the future.

Recommendations For Microsoft:

Microsoft is known for leveraging over its good old products (OS, Office). Leveraging is always good but i still think its lagging a bit in new innovations when compared to Google.

IE: Microsoft still does not provide direct online support for its IE (upto best of my info), it should add update tag as its in Google Chrome, When you click on about Google Chrome it checks for update.
Also it should make clear it passes acid test (http://acid3.acidtests.org/) as Google chrome does with 100/100. Mozilla at 94 and IE somewhere between 40 to 60. (all details are of latest available final versions (no beta versions) of browsers). IE 9 the upcoming Microsoft internet explorer have passed 95 tests in acid test out of 100 and CSS3 selectors test 578 out of 578 tests. Which in IE 6 was at 272 out of 574. Google Chrome and Mozilla firefox already have passed this test with full marks.

Windows Mobile: Microsoft needs to provide application support for Windows phone.. If possible can open up some part of its OS for open source development community (If feasible).

Computing OS: Microsoft is best on this part with windows 7 in picture, but keep innovating and watch out free-wares and Google chromium.

Bing: Focus on brand building, focus on customer retention and give something unique which Google does not offers. It's said to beat Google in search, one has to redefine the word 'search'.

>> Invest in Social corporate responsibility and Green missions like planting and recycling. This has positive effect on customers view about the corporate organization to a greater extent.

Recommendations to Google:

1. Leverage from existing projects. - Search. and keep investing and innovating.

2. Good going with Android, make sure it beats Microsoft, nokia and others for sure; and have a clear leadership. A win in Mobile OS may open up a win chance in computing OS.

3. Consumers have high expectation from Google OS, make sure to meet it.

4. Try to launch offline Google Docs, to combat Microsoft Office.

5. Make sure Google is Green..! Invest in Social corporate responsibility and making a better living environment.

Best Wishes to both Google and Microsoft.

Best Regards,

Navneet Singh Chauhan.

References: Comparison between android and windows mobile adapted from http://www.redmondpie.com/android-vs-windows-phone-7-series-9140453/
http://tools.css3.info/selectors-test/test.html
http://ie.microsoft.com/testdrive/

IndiaPay to take on VISA and Mastercard

2010-08-09T09:04:00.001-07:00

Do you know your every transaction done with your plastic cards (credit and debit cards) enables some amount of money to be transferred to service provider viz. Visa and Mastercard. Your every transaction makes bank to pay the money to Visa or Mastercard based on your card.

Out of every 10 transactions done in the world, 9 are done by these two companies Viz. Visa and Mastercard, which are American companies. That means a part of your earnings goes to these foreign firms who charge heavy rates to our banks.

But now there is an Indian firm heading to give tough competition to these firms, yes it is IndiaPay (Visit IndiaPay.com)

IndiaPay will come with its credit and debit cards just like Visa and Mastercard, and the best part it is an Indian firm and it will charge comparatively lower prices then what Mastercard and visa do. And it is strongly backed up by RBI (Reserve Bank of India).

Moreover, it has got support from nearly all banks like SBI, ICICI Bank, HDFC, Punjab National and other banks. It has also gained support from foreign bank like citi bank and HSBC.

Two years from hence the project is supposed to be completed and IndiaPay will jump in to the Payment processing space. This will surely establish our nation in this space too.

Personally, I will love to hold an IndiaPay credit and debit cards and will be a proud owner; I think the rest of nation will also like to welcome the new Indian emerging organization.

Best Regards,

Navneet Singh Chauhan

India- Bangladesh and the Economies.

2010-08-08T12:59:00.000-07:00

The two neighbors India and Bangladesh had experienced a mixed exposure of both healthy and unhealthy relationships since long. India had greatly contributed to Bangladesh’s freedom but many political influences and local influences contributed to distances between the same like Islamist-allied BNP (Bangladesh Nationalist Party) which was in power from 2001-2006 in Bangladesh had few stands against the economic ties between the two nations. Moreover infiltration from Bangladesh and naxalites movement also raised few flames in between.

But now it seems its going quite well.

Few new recent developments show how these two countries are going hand in hand.

India has given a big amount as loan to Bangladesh; this is the largest ever loan given by India to any foreign country. This agreement was signed between Exim bank of India and the economic relations department of Bangladesh in the presence of finance minister Pranab Mukherjee. According to this agreement India will give $1 billion credit to Bangladesh for 14 infrastructure projects, out of which most are in the field of communication sector.

This will bring development to Bangladesh especially in the field of communications and IT which will further strengthen the economy of Bangladesh.

The most recent development is the new upcoming agreement between the two countries which is near finalized. It is about free movement of people and goods between both the countries.

This will help Bangladesh a lot in transforming itself as a regional hub, it will boost up its economy. And on Indian front it will give better connectivity to its seven sister states which will help in transforming economies in these states. Yes this is a win-win game for sure as said by Dr. Dipu Moni, foreign Minister Bangladesh.

The Hurdles

Opening the doors between the two countries India and Bangladesh will give easy entry and exit to Terrorists and the associated people who are against peace and well being of both the nations. This can harm the relationships between the countries. Though both countries have committed to fight against such forces; big uncertainties lies how this unfettered movement of people and goods will be taking place in midst of such activities. Security will still continue to be an issue.

Many Bangladeshi’s in past have settled down in many parts of India as they flew from their own country for basic necessities and still many such infiltration occurs so this need to be taken care off.

Best Regards,

Navneet Singh Chauhan.

India best bet for investors in 2010, says Adi Godrej

2010-01-21T07:51:00.001-08:00

WASHINGTON: Indian billionaire Adi Godrej considers India "as the best emerging economy for investors" as he expects the "Indian stock market to

appreciate by about 20 percent within the next two years".
"India will be back to its earlier growth rate of 9 percent plus in 2010," said Godrej, one of the 10 of the world's wealthiest persons chosen by Forbes magazine to share his 'Billionaire Predictions 2010'.
"Solutions in global warming need to be technological," he told the US business magazine when asked if global warming was a fact or fiction and how much money should Indian government invest in emissions cuts.
"Tackling global warming in India could be both financially advantageous as well as add to sustainability," he said.
Godrej, 67, with a net worth of $3.3 billion, said: "The most alarming trend facing the global economy today is the negative to low growth rates in the developed world as well as some developing countries."
Asked when will the US central bank Federal Reserve step in to strengthen the US dollar, he said: "I don't think the Fed will be able to do much to strengthen the US Dollar. It will keep weakening."
Godrej also thinks "Gold is a buy" in 2010, but thinks stocks are "the best asset" to own in 2010.
Though he himself uses it rarely, Godrej believes "Twitter will do well" in 2010. And he expects "Brazil will win the football World Cup".

The Indian Economy in the Next Decade: Déjà Vu with a Difference

2010-01-21T07:38:00.001-08:00

In June 1991, the government of India pawned 67 tons of gold to the Bank of England and the Union Bank of Switzerland to shore up its dwindling foreign exchange reserves. The U.S. dollar was in great demand. By November 2009, after nearly two decades of reforms and globalization, the shoe had moved to the other foot: India bought 200 tons of gold from the International Monetary Fund (IMF). The country's reserves stood at $285 billion -- compared with $2 billion in 1991 -- and the demand for greenbacks had dimmed.

These signs point to an upbeat outlook for the Indian economy in 2010 which, in the view of some observers, seems as bright as the gold the country has recently acquired. The year could see more gold purchases; India needs to diversify its basket of foreign assets, 90% of which is still in dollars. But foreign exchange reserves -- once closely monitored -- are the least of the country's problems right now.

At the top of the agenda is inflation and its trade-off partner -- growth. "The evolving growth-inflation conditions will dictate the future course of action by the RBI [Reserve Bank of India]," Shyamala Gopinath, deputy governor of the RBI, said during a recent meeting in Bangalore. "The RBI has already started the first phase of exit in its October 2009 policy statement, though primarily in terms of signaling the stance rather than affecting liquidity conditions or interest rates." (See Will Rising Inflation Deflate India's Economic Recovery?)

Inflation will dictate the next steps of the government and the RBI. It has already reached worrisome proportions. After being in negative territory for part of 2009, wholesale price inflation jumped to 4.78% in November from 1.34% in October. Food inflation, which is more important because it affects the general population and influences voting behavior during elections, was 19% in December. "If the government starts addressing the food issue on the supply side immediately, inflation may continue to be at 4%," says Ashvin Parekh, a partner and national leader at global financial services firm Ernst & Young (E&Y). "But if oil prices go up, inflation could go up to 5% to 6%. Until about July, it is likely to be around 4% to 6%. After that, it will depend on the monsoon."

"Inflation will continue to be a serious issue," says Rajesh Chakrabarti, assistant professor of finance at the Hyderabad-based Indian School of Business (ISB). "The stimulus is doubtless fuelling it in part, and there is no way of rolling it back. So monetary measures will have to counteract it, but there is very little maneuvering room. Inflation is likely to stay at present levels or worse for much of next year."

High inflation means that the government may have to withdraw the stimulus package, introduced to counter the economic slowdown, sooner rather than later. A hint to that effect in the October 2009 RBI policy statement had the stock markets spooked, and the finance minister had to step in with the assurance that nothing would be done until March 2010. (The Union Budget is announced at the end of February.)

Another measure to control inflation is to curb liquidity. There have been fears that the RBI may raise interest rates. Here, again, the RBI has been forced to step in with some damage control. "If [an increase in rates] has to happen, it will happen only in the January 29 monetary policy announcement," RBI deputy governor K.C. Chakrabarty said during a recent meeting in Hyderabad.

"Interest rates are likely to go up 1.5% to 2% over the year," says Sunil Bhandare, advisor (government and economic policies), Tata Strategic Management Group (TSMG), a management consulting firm. "The increase will be on three considerations: inflation, the fiscal deficit and global interest rates, which are likely to increase in the next three to six months. In the first six months of calendar 2010, interest rates in India may go up by 0.5% to 1%, and thereafter by another 1% or so." Chakrabarti of ISB believes interest rates have to rise, "but the government and RBI may be nervous about killing a fragile recovery." The State Bank of India, meanwhile, says that it doesn't see any chance of rate hikes in the next six months. On the other hand, the public sector Union Bank of India has raised some deposit rates beginning January 1. It has introduced a 555-day maturity scheme at 6.75% against 6% earlier.

GDP Growth
Because of these imponderables, estimates of GDP growth vary widely. In the April-September quarter, GDP rose a surprising 7.9%. Prime Minister Manmohan Singh says he sees a return to the days of 9%-plus growth next year (2010-2011). The government's own estimate for 2009-2010 is 7% to 8%. Given current trends, it may end up on the high side of that range.

"I expect GDP growth to be around 7.5% in 2010," says Bhandare of TSMG. "There is still some degree of uncertainty about the global recovery -- production and private consumption have not picked up and unemployment is still high. A good global economic recovery will be an additional bonus for the Indian economy. If that happens, we could even see 8% GDP growth." Adds Chakrabarti of ISB: "It should pick up a bit, but is unlikely to be too much higher. I would say 7% to 8%, or more likely 7.5%." Madhabi Puri Buch, managing director and CEO of ICICI Securities, also sees a 9% figure as overarching. "Our economy is expected to grow at least 7.5% to 8% for many years," she says. Parekh of E&Y is among the optimists, noting that "8% to 9% seems possible." In contrast, the IMF has projected 6.4% growth in 2010.

Good news is unlikely to be heard on all fronts. "Exports will continue to lag," says Chakrabarti of ISB. "Exports to emerging market countries are likely to be slightly higher." Bhandare of TSMG says export growth could be around 10% to 12% but "nowhere near the 20% that we saw earlier." Exports have turned the corner, depending on how you look at it. In November, exports rose 18.2% to $13.2 billion after 13 months of decline. But this was on a lower base. For the first eight months of 2009-2010 (April-November), exports were down 22.3%.

The fiscal deficit is another problem area. Thanks to the stimulus package, the deficit was estimated at 6.8% of GDP for 2009-2010. According to the 2003 Fiscal Responsibility and Budget Management (FRBM) Act, the deficit was supposed to come down to 3% by 2008-2009 -- but it did not. Will the deficit surpass the extra latitude given in this crisis year? According to government figures, the deficit for April-November was $65.7 billion, or 76.4% of the full-year target. Says Chakrabarti of ISB: "The fiscal deficit, together with inflation, will be India's Achilles' Heel in 2010. The combined deficit ... will continue to be double digits."

"In 2010, governments will face the very difficult task of trying to restore fiscal discipline while also ensuring that withdrawals of stimulus measures do not kill off nascent economic recoveries," says the Economist Intelligence Unit (EIU). It estimates India's GDP growth at 6.5%, the ninth-fastest growing country. China, at 8.7%, is ahead, but others leading the pack are small economies like Qatar (24.5%).

Stock Market Rollercoaster
The most-watched indicator by foreign investors is the Bombay Stock Exchange sensitive index (Sensex). This year has been a rollercoaster ride: The Sensex ended the year at 17,464, up 114% from a low of 8,160 in March. Foreign institutional investors (FIIs) have poured in $17.5 billion during the year.

The Sensex value is one number nobody in the government will talk about on the grounds that it is speculation. "I don't expect the Sensex to go up very significantly from current levels. The stock market has recovered too fast in the current year, so the opportunity for further increase will be limited," says Bhandare of TSMG. Adds Chakrabarti of ISB: "Some appreciation is likely on the back of continued FII flows. The Sensex will be in the 18,000-21,000 range by the year-end."

Chakrabarti provides an overview: "Overall, in 2010 and beyond, the economy will continue to be strong on the domestic front. The driver of growth will continue to be internal consumption, the aspirations of a large middle class and the spread of the income base across different segments of the economy. We are now seeing the emergence of a much larger and far more powerful middle class with more buying power than ever before. The growth in the automobile sector, for instance, shows that the middle class has been sitting on a certain amount of surplus money which it is now ready to deploy. India is a very peculiar economy where the middle class has a long way to go in building a good quality of life in keeping with its aspirations. This, in itself, is a big driver of growth. The dampener to the economy, however, could come from the supply side. Food prices are a major concern. Within this, the issue is not just of poor monsoons and poor food supply, but also of food management."

Bhandare of TSMG offers his own perspective. "Three significant aspects stand out in the Indian economy at present: The economy has shown tremendous resilience, there is a lot of flexibility and there is a great deal of tolerance among the Indian people -- 20% food inflation should have normally led to great social discontent and people should have been out on the streets. Consumer confidence is still shaky, but the confidence levels of industry, foreign investors and domestic investors are very strong. All these factors will influence the performance of the economy in 2010. One has to make a few assumptions while looking at the outlook for 2010: There will not be a repeat of a bad monsoon; there will not be another oil shock, and commodity prices will be reasonable; there will be no major dip in the international economy; and the government will abide by the policy reforms that it is promising."

Souce": http://knowledge.wharton.upenn.edu/article.cfm?articleid=2409

Celebrity Advertising: What Is the ROI?

2010-01-21T07:35:00.001-08:00

Using famous people in advertising campaigns has many advantages for companies, including improved product recognition and an automatic association of the company’s brand with the values the celebrity represents. Historically, however, it has been difficult to calculate the return on investment (ROI) from using a famous face. Now, new research conducted by Ana Rumschisky, a marketing professor at the IE Business School in Madrid, has demonstrated that using celebrities in advertising has a measurable impact on the prices companies can charge for their products, among other variables. According to the study, consumers are prepared to spend up to 20% more on the same product as a result of who is representing it.

For her study, titled “The value of using famous personalities in advertising communications: A quantitative analysis of prices for a fashionable product,” Rumschisky chose to focus on a wristwatch made by a prestigious international brand. She created an advertising campaign with two representatives, one of whom was an anonymous model and the other a well-known personality. Half of the 513 Spanish college students between the ages of 18 and 25 selected for the study were shown the advertisement with the anonymous model while the other half were shown the celebrity version. The famous person chosen for the experimental campaign was Jesús Vázquez, a Spanish television host with a high degree of popularity among the country’s younger viewers.

Universia Knowledge@Wharton interviewed Rumschisky about her findings.

Universia Knowledge@Wharton: What are the benefits that a brand can reap when it comes to using a famous person in its advertising campaigns?

Ana Rumschisky: A famous personality can help focus and retain consumers’ attention on the advertising. Using a celebrity improves the reception of the [branding] message, helping it to overcome the “noise” in the communications process. A famous personality brings with him a meaning that contributes clarity to the message. This approach saves advertisers time when it comes to conveying that message to the consumer.

[For example,] some previous research has noted that non-famous models can offer [consumers] information about demographics, gender, age and social status but that those cues are relatively imprecise. Famous people can offer all of those cues with a special precision. More importantly, famous people offer a range of meanings about personality and lifestyle that anonymous models cannot convey to consumers.

Other researchers [in this area] believe that when consumers use products tied to famous personalities, they derive added value in terms of imaginative aspiration and entertainment. This can be enough to tilt the scale in favor of the brand rather than its competitors. The famous person becomes a model -- a “standard” guiding the consumer, who wants to be and look like that person.

Previous studies of this hypothesis showed that this model of aspiration takes place largely for famous people who consumers believe have achieved fame based on their own merits -- especially global sports personalities. Famous people whose fame consumers consider to be “borrowed” [i.e., offspring and spouses of famous people] provoke the contrary effect; that is to say, they produce a certain feeling of rejection.

UK@W: What aspects should advertisers keep in mind when choosing a famous person?

Rumschisky: The correct way to choose a famous person is going to depend, first of all, on whether there is a congruency between that person and the brand that you are advertising. This is essential for the strategy to work out.

On the other hand, it is absolutely essential to analyze the condition of the brand that you are going to advertise in order to achieve that congruency. The point of departure in any communications campaign for a brand is to have the maximum amount of information about that brand. The famous personality must always be a means rather than an end in itself; the brand must anchor itself conceptually in a solid way before a company can consider the use of a famous personality.

Credibility, trust and the [widespread] perception by consumers that the famous person is an “expert” are the key variables for selecting a celebrity representative. The famous personality must be attractive not only in physical terms but also in terms of his or her level of regard and familiarity [among targeted consumers]. It is essential for the famous person to awaken sympathy among the audience. If the famous person is disliked, the advertising message will lose effectiveness.

Fame, along with familiarity, lead to a more positive reception by consumers.

UK@W: In your research, you analyze the repercussions that choosing a known personality can have not only on product recognition but also on the price of the product that is advertised. What conclusions did you reach?

Rumschisky: The research shows that a famous person is capable of raising the price of the product that he or she advertises when it comes to products that college students consider to be attractive and appropriate as gifts.

For men, famous people have a direct impact [based on their fame alone] of 8% on the price of the product, as well as an indirect impact [based on their personal attributes] of 11%. So the total value that the famous person contributes, among young men, is to raise the price [these men are willing to pay] by more than 19%.

For women, the impact is not as great, but it is nevertheless significant: For watch prices, for example, the direct impact of the famous person is 5.4%. There is also an indirect impact of slightly more than 8%…. As a result, the total value that the famous person contributes among young women is to raise the price [that those women are willing to pay] by more than 13.4%.

The famous personality increases the price in an indirect way through a causal chain based on the observed qualities of the personality, and the qualities that the personality transmits to the product that he or she advertises. In a direct way, the famous person increases the price by the mere fact that he or she is someone famous.

The qualities conveyed by the product [itself] can also raise the price independently of the presence of a famous personality. In this case, the increase would correspond to the indirect component contributed by the famous person. We can verify that the presence of a famous person is going to guarantee and improve the perception of those qualities. Not all of these variables increase the price with the same intensity.

UK@W: Why is the impact of the famous person less on women than on men, when it comes to influencing price? (Of the total sample, 322 were women, and 191 were men.)

Rumschisky: In our first descriptive analysis of the data, we observed different behavioral patterns between the sexes. There is a greater diffusion of responses among the men. In fact, unlike the women, five of the men assigned no value when it came to [assessing the price of] watches. There was less diffusion in the responses of women in that regard, and their starting prices [when they viewed the advertisement without any famous personality in it] were already 22% higher than those of the men.

Our interpretation [of this finding] is that in the case of the product that we studied, which is associated with fashion and gift-giving, women have a higher level of information. So, the range of that valuation is lower and, in some ways, the famous person contributes less information about the product to women, and as a result, does less to increase its price [among women].

On the other hand, as our research moved forward, I decided to exclude [from our findings] the five responses from those males who assigned no value [at all] to the watch in the absence of a famous person. Clearly, those individuals who are unwilling to pay any price at all for a watch would have a hard time paying a higher price [for it] after a famous person starts advertising it…. If we had to guess, those responses revealed anapproach to valuing watches that was different from the logic of the general population, and so we eliminated them from our sample.

UK@W: What other variables, apart from the fact that the model you’ve chosen is – or is not – famous, should you take into account when choosing a person for different segments of the public?

Rumschisky: You have to take into account that our research is based on knowing the additional price that Spanish college students would be ready to pay for a product that has a clear emotional meaning for them -- in this case, a wristwatch.

One of the hypotheses of the [study] was that the price of a product tends to increase when young people consider it to be an appropriate product for giving as a gift, and when they consider it fashionable.

For both men and women, these two variables are among the most important when it comes to increasing the price of a product. Nevertheless, there are other variables that appear to be even more important in raising the price among both sexes.

Men believe that a product that is suitable as a gift is worth an additional price of 8.6%, and one that is fashionably attractive is worth an additional 7.6%. Nevertheless, when men identify themselves with the product or consider that the personality who advertises it is someone “modern,” there is a greater impact on price increases -- 14.6% and 11.1%, respectively.

Women raise their price by 4% when the product is suitable as a gift and by 6.2% when they think that the product makes them look stylish. The variable that has the most influence on women when it comes to increasing the price of the watch is whether they consider it to be “sexy”; that raises the price by 10.1%. There is less impact [on price] -- only 5.8% -- when women have confidence in the personality who advertises the product.

We can conclude that the qualities of the object and the characteristics of the [famous] personality have a quantitatively different sort of influence. Men and women are influenced by different characteristics and with a different intensity.

The research succeeded in isolating and evaluating the variables that have the most influence when it comes to increasing the price of a stylish product, whether or not it is advertised by a famous personality. If, indeed, a famous person [reinforces] those variables, there will always be an additional impact on price, compared with [using] an anonymous model who can communicate the same variables. As a result, the only difference in price between the [product promoted by the] famous person and the anonymous one would be derived from the pure fame of the celebrity.

UK@W: Can you use the model developed for your research for other types of products?

Rumschisky: I was able to quantify the additional price that a famous personality is capable of adding to a stylish product among Spanish college students. The advertisers of fashionable products for targeted segments similar to what we researched can quantify and evaluate the margins contributed by the famous person they’ve signed up for their advertising campaigns, and they can calculate the return on their investments.

The information that the research contributes about the differences in behavioral patterns among young men and women can also be used by advertisers, especially when it comes to strategies that enable them to differentiate between the segments they target, starting with the gender variable. The [data about] differences in the behavior of women when it comes to the prices of the products that we have investigated is rich, and would be important for an advertiser when it is time to plan his or her marketing mix, in which the price will have to take into account such findings.

Nevertheless, when it comes to continuing to investigate the effects of famous people on the prices of the products they advertise, it seems relevant to repeat the quantitative test [that we made] for other types of products, as well as for other target markets of different ages. It would be helpful to research products that are more functional, and target markets that have other characteristics. That way, we could compare the results so that we could wind up creating a general model for making predictions.

Compiled and adopted from

http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1803&language=english

2010: Good for Stocks, Bad for Bonds -- and Why Interest Rates Will Go Up

2010-01-21T07:32:00.001-08:00

U.S. stocks boomed in the last nine months of 2009, but remained well below earlier highs. Indeed, many people referred to the first 10 years of the 21st century as "the lost decade," because stocks returned virtually nothing while investors had been conditioned to expect 10% a year. Meanwhile, bonds and commodities experienced a stunning run. Have the rules of investing changed? What's ahead for 2010? Knowledge@Wharton talked with Wharton finance professor Jeremy Siegel, who sees some hazards, especially for bonds, but expects a good year for stocks.

Knowledge@Wharton: Stocks have had an incredible run in the last nine months, giving 2009 a pretty good gain. Is this what we can expect for the future? And what has caused this?

Jeremy Siegel: It shouldn't be a surprise. We dodged a very severe bullet when the financial crisis hit worldwide. It started out very much like the Great Depression in the early 1930s. But in contrast to the Great Depression, central banks around the world rallied to the cause, providing enough liquidity to prevent a collapse of the financial system. It was doubtful whether they would be able to do that earlier last year, which is why we saw the stock market down some 58% from its high. Now that we avoided [a repeat of the Great Depression] -- and I can say that with about 98% confidence -- the market has moved up substantially -- and justifiably -- from the abyss we were looking into.

Knowledge@Wharton: When you look at the indices -- for example, the S&P 500 -- and at data like price-to-earnings (PE) ratios, what are they telling you right now?

Siegel: We had a severe hit to earnings. Certainly, the financial sector was a major cause of that. Before the recession, in 2007, we had earnings on the S&P 500 that were in the $90-per-share range. That fell to around $30 a share at the bottom. Most of that was due to the financials, which had severe, multibillion dollar losses. Those minus signs cancelled out a lot of the profits in other sectors.

We are looking forward to much better earnings this year. Consensus forecasts are around $70 a share on the S&P 500. I think it might even be higher. Take, for example, a PE ratio of 15, which is the long-run average -- and we can talk about whether that's appropriate or not. Fifteen times 70 is 1,050. We're at 1,100, or a few points above that. So we are now in the range of an average valuation for this year's earnings.

Knowledge@Wharton: Is a 15 PE ratio still appropriate? Or have things changed?

Siegel: My research shows that when interest rates and inflation are as low as they are now, the average post-World War II PE ratio has been 18 to 20. One might say that as long as we don't get a sharp increase in interest rates, the fair valuation of the stock market is higher than what we see today. A second very important factor is that 2010 is just one year out from the most severe recession in the post-war period. It's nowhere near what I would even consider normal earnings. If we go back in history, we have usually matched, if not surpassed, the previous peak in earnings after four years or so. As I mentioned, in 2007 we had $92 a share. That won't be hit in 2010. It might not even be hit in 2011. But history tells us that by 2012, we should be in the $90 range or even above. So, if you apply normal ratios -- 15 or 16, let's say -- to $90 a share, you still end up considerably higher than we are today.

Knowledge@Wharton: If you add on top of that a ratio of 18, you would go even higher.

Siegel: That's true, if interest rates stay low. As I'm sure we're going to discuss later, I don't think they're going to stay as low as they are now, although I don't picture a severe ratcheting up of rates.

Knowledge@Wharton: Let's discuss it now. One thing many people have commented on is the great run that the bond market has had in recent years. A lot of that has been driven by the price gains caused by falling interest rates. What do you see happening with interest rates and bonds?

Siegel: That bull market ended in the first quarter of last year, when we got the long bond [rate] down to 2%, which was crazy but it was a depression hedge rate. In other words, people were saying, "I need this. I want my treasuries in case the world collapses." Now that the world has not collapsed and is recovering, we see the long bond moving toward 4%.

It was a good decade for the long bond, to say the least. But 2009 was a bad year for Treasury bonds. I don't see it being a good year in 2010 either, because the Fed will be forced to raise interest rates sooner rather than later. We will see bond rates move higher.

Knowledge@Wharton: Is this good news for people who are fixed-income investors or retired, or care about interest earnings?

Siegel: It is. We all know we're sitting on our money funds, and earning infinitesimally little income. We're not going to experience the double digits, or even high single digit interest rates, that we did in the 1970s. But we don't want that. That was associated with very high inflation. We're going to move toward normal interest rates, which is going to be very good for savers. For borrowers, it's going to be tougher.

Knowledge@Wharton: Higher yields are wonderful as long as you're not losing out to inflation. What is inflation going to do?

Siegel: Inflation is going to be under control this year and probably into 2011. However, we will have an upward tilt to inflation, which means the longer-run trends point to a 2%-to-4% range of inflation rather than zero to two, which unofficially is what most central banks and the Fed have targeted. So we're going to have low to moderate inflation, not double digit or even high single digit.

The scaremongers, who worry that the ton of money the Fed created to fight off the crisis is going to fuel the next [period of] inflation, are wrong. At the same time, we will have a slight upward tilt in our inflation rate from what we've had over previous years.

Knowledge@Wharton: But the 2%-to-4% range is standard over the long run, right?

Siegel: It's not. I remember when I was studying economics, we talked about what a victory it would be if we could get down to between 2% and 4%. We've been spoiled with very low rates. Most central banks use zero to two. They come closer to two.

We'll move closer to between 2% and 4%, particularly in the United States, given the large deficits that we have and the liquidity that was created. But just as Bernanke acted very responsibly in providing the liquidity necessary to prevent [a repeat of] the Great Depression, he is also an excellent enough economist to know that money is what fuels inflation. The Fed is really solely responsible for inflation. He will not let it go above five, and probably not even four. He will raise interest rates to whatever level is necessary if inflation starts running into the mid-single digits or higher.

Knowledge@Wharton: When we talk about inflation, we also often talk about commodities. There has been a pretty good run in some commodities, especially gold. What do you see happening there?

Siegel: The commodities cycle has followed the world economy. It had hit its low very close to the same time the stock market did. Everyone was looking at a very severe recession that could get worse and commodities -- except maybe gold -- are dependent on economic activity, particularly oil, which is the most important one. Now that the world markets have recovered, we see oil has recovered. I wish [the price per barrel] could have stayed down in the 60s. It has moved up to the 80s, partly because of the very cold weather we've been having in the northeast [in the U.S.]. It's boosting demand for fuel. I would love to see it in the $70-to-$80 per-barrel range.

I believe commodities are fully priced. Gold ... is priced for an inflationary scenario that is much worse than will be realized. Those who fear that all the paper money and liquidity that have been created will fuel hyperinflation have been moving into gold. Speculators have moved into gold. The trends are up. But gold is a risky investment now.... Gold is not going to be a good investment throughout 2010 and the longer term.

Knowledge@Wharton: Looking at the economy and the financial markets as a whole, what are the big dangers that could derail things?

Siegel: I worry about commodity prices getting out of hand. I would be disturbed if oil got to $100 [a barrel] or above. That would put a dent in our recovery, but not squelch it entirely. At this juncture, I don't fear over-regulation. Not that I like everything that's happening in Washington, but I don't see anything on that front that is really going to squelch the recovery.

Over the Christmas break, I was in China and Hong Kong, and Asia is very much back on the road to recovery. That [region], of course, has been the major driver of economic growth around the world over the last several years. So this recovery has a very sound basis. It is really a worldwide recovery in the economy. It will continue into this year.

Knowledge@Wharton: The China story is especially intriguing. It seems to have rebounded wonderfully. Of course, their system is very different from ours, and I'm wondering whether there are lessons that the West can draw from China.

Siegel: There are a lot of differences. One of the differences is they have over $1 trillion in the piggy bank and we don't have anything. China has such high savings ratios that it can start spending. We spend with deficits, and then worry about deficits and rising interest rates. China has a lot more flexibility. When it saw foreign demand dry up, it boosted domestic demand and infrastructure, which it is still building apace. It has the flexibility to move.

When you have the size deficits we have, you just don't have as much flexibility, because every dollar the government spends means a dollar of extra deficit and future taxes, which scares investors and consumers. China doesn't have that situation. As a result, it was able to withstand the world recession better than most other countries.

Knowledge@Wharton: In the U.S., the deficit is the elephant in the room. How important is it that we tackle the deficit, and how soon does that have to be done?

Siegel: Two-thirds of the deficit is caused by the recession. As the recession wanes, tax revenues will bounce back. Some spending will decline -- unemployment insurance, etc. We will move to a more manageable deficit as a result of the economic recovery. The big 800-pound elephant in the room is really Medicare and, to a lesser extent, Social Security, which aren't [addressed] at all in the long run. They amount to multitrillion dollar liabilities, which unfortunately I don't think Obama's health plan has really tackled. But the big multitrillion dollar liabilities were here in 2007, when we were at the top of the boom. They were here in 2005 and earlier.... The problem is that although we are able to run this size deficit in a recession, as the recession wanes, we can't run this size of deficit.

Such deficits will drive interest rates way too high, and the government will be forced to pull back. For the long run, unfortunately, we haven't solved our problems. But for the short run, this deficit isn't something that will derail the expansion, because we've had a tremendous decline in domestic credit creation. The increased savings by consumers has to go somewhere, and it's going into the government debt.

All this government deficit, which is over $1 trillion, is being very easily absorbed, because there's been no private credit creation. As the economy improves and there's more private credit creation ... the government deficit won't be able to be absorbed as easily. But as the economy improves, fortunately, the size of the deficit itself will go down, because tax revenues will rise. So the big 800-pound elephants in the long run are still there, but I do not believe this deficit is going to derail the economic recovery.

Knowledge@Wharton: Coming back to stocks, a lot of people have been calling the first 10 years of this century "the lost decade." I'm wondering if comparing prices today versus 10 years ago is fair. There's quite a big difference in PE ratios from 1999 to 2009. If we were to do a 10-year span starting a couple years later, it would be an easier comparison to make. What is the best way to gauge the long-term performance of the market? Should it be over 10-year, or longer, periods?

Siegel: Unfortunately, we hit the bubble peak in the first quarter of 2000. I'm going back 10 years ago to the technology and Internet boom. This decade got measured from the very top. The Dow Jones peaked in January 2000, the S&P in March 2000. And, by the way, the 1990s followed an extraordinary decade of the 1980s. The reason why the last 10 years have been bad is that we had two decades of extraordinary record returns. Usually a very good decade is followed by a less good decade, back and forth. We had never had two double-digit return decades as we did in the 1980s and 1990s.

The result was that the market simply got way too high. The last decade has offset the excesses reached in the 1990s. It shouldn't be viewed as a template for what's going to happen as we get into this new decade. We're back to normal. My analysis shows we're even slightly below normal [since] this decade has been so bad. [This decade was] slightly worse [for stocks] than the 1930s. When we look at the long run, we are much more confident that we're back into the normal range of equity returns. Long run [equity returns are] 6% to 7% per year after inflation. With this decade correcting the excesses of the 1990s, there's no reason why we can't be back in that zone of normal returns.

Knowledge@Wharton: When we look at the stock market, we tend to look at the S&P 500 and the Dow. But there are lots of other indices. I'm particularly interested in small company or mid-sized stocks and foreign stocks. Do you have any thoughts on the health of those?

Siegel: I've been a big fan of international, and I still am. I'm a big fan of emerging markets. You should be in international, emerging and U.S. stocks. The revenues and profits of much of the S&P 500 -- in excess of 40% now -- come from overseas. You've got to take a global view on equities. A broad index I like to look at is the Russell 3000, [for the 3,000 largest, most liquid stocks traded in the U.S.].

Small stocks have done very well in the last month. They had a very good December, and they have held out well. They often do very well early in recoveries. They should not be ignored. You've got to take a global, comprehensive approach to your stock investing.

Knowledge@Wharton: How much of an American investor's portfolio should be devoted to small and foreign stocks?

Siegel: My feeling is that you should have about 40% of your investment in foreign stocks. I wouldn't mind it split between the EFA [shares in countries in Europe, the Far East and Australasia] and emerging markets. One adviser asked me what I thought about him having his clients in one-third U.S., one-third EFA and one-third emerging markets. I said it's very aggressive, but I like it. Over half the world's equity capital is outside the United States. That fraction is growing. You have to take a global view.

Knowledge@Wharton: That 40% -- that's of the equity portion of a portfolio, not the entire portfolio, which also includes bonds?

Siegel: This is the equity portion. People ask me about what fraction [of a portfolio] stocks or bonds should be. I don't recommend that because it varies with each individual's financial circumstances. You can't generalize. It depends on your age, your other assets, what kind of income and pensions you're expecting.... You have to talk to your financial adviser about what [your allocation] should be. Let me just say that given the low interest rates and what I see for the recovery and earnings for stocks, stocks are going to be much more rewarding over the next few years than the fixed-income part of a portfolio.

Knowledge@Wharton: That takes us to our usual final question, asking for a bit of forecasting. What can we hope for in 2010 in the stock market, and are stocks still the best bet for the long run?

Siegel: We're going to have a good year. The main factor that stocks are going to deal with is that the Federal Reserve, in my opinion, is going to be forced to raise interest rates earlier than the consensus now expects. Many people are talking about no increase in 2010, all the way into 2011. I don't think that's going to happen. The recovery is going to be stronger than expected. The Fed is will have to act sooner. At first, this [will lead to a] kind of panic among stock investors. There will probably be a correction in the market.

But then, investors will say, "Just a minute. They're only raising interest rates because the economy's so good, and profits are better" -- and [stocks will] regain their footing. So it will be another positive year in stocks. I'm not saying it's going to be as good as the 22% or so that we had in 2009. But I see no reason why we can't have another 10% gain in equities.

Knowledge@Wharton: And bonds?

Siegel: I don't think bonds are going to have a good year. The risk premium has gone down a lot. I did like corporates, and risky corporates a little bit better. But those risk premiums have shrunk dramatically from where they were earlier last year. I don't think any long-term bond portfolio looks to get good returns in 2010.

Knowledge@Wharton: Stocks are still good to hold for the long term?

Siegel: Stocks are going to be the place to be, not only in the long run, but also over the next 12 months.

Compiled and adopted from

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2411

Thanks and Regards,

Navneet Singh Chauhan.

Wish You a very happy new year

2010-01-01T07:58:00.001-08:00

Hello Everyone,

I wish u all a very happy new year.. Enjoy the year 2010..

And make it one of the most memorable year of your life..

Good Luck for the year 2010.

Thanks and Regards,

Navneet Singh Chauhan.

China Vs. Brazil

2009-12-25T08:00:00.001-08:00

China's economic prowess is well documented. But as Louis Basenese explains, while China represents a compelling investment opportunity, it isn't necessarily the best one. He notes some striking differences between Brazil and China. And explains why he favors Brazil in a head-to-head battle with China.

Forget China... It's Time to Bank on the Brazilian Consumer

Louis Basenese
Small Cap and Special Situations Expert

Hundreds of millions of Chinese citizens are on a crash course with the middle class.

A study from The McKinsey Quarterly supports this well-documented phenomenon, which estimates that it will take two decades before the Chinese nouveau riche reaches its full spending potential.

In turn, they're convinced that decades worth of profits are up for grabs.

I'm not about to refute that claim here. But instead, I want to caution you: Don't be blinded by the euphoria over Chinese consumers and overlook an equally compelling opportunity in another emerging market.

Let's head down to Brazil and I'll explain why - along with the best way to profit, of course...

Sizing Up the Profits in Brazil

Okay, I get that the scale of the Chinese opportunity - a population of 1.31 billion people, compared to Brazil's 192 million citizens - dwarfs Brazil's. But that doesn't mean the profit potential is any less.

On the contrary, in fact... I'd actually say it's greater when it comes to tapping into a blossoming middle class. In this regard, Brazil boasts several notable advantages over China...

It's a democratic nation, not a communist one.
Its population is much younger - the median age is 28.3, compared to 33.6 in China.
Brazil is far less reliant on exports. Only 14% of Brazil's GDP comes from exports, compared to 35% from China.
It already possesses all the natural resources necessary (and then some) to support its booming economy. Meanwhile, China needs to go out and gobble up foreign assets to ensure it can keep feeding its economic machine with enough oil, gas, coal, iron ore, etc.

But most important of all is the cultural difference. The Chinese are notorious savers, yet Brazilians love to spend, spend, spend. And don't just take my word for it. As Illan Goldfajn, Chief Economist at Brazilian bank, Itaú, reveals, "If the world is looking for savers, Brazil is not much good... But if it's looking for consumers, then we might be able to help."

Conspicuous Consumption, South of the Equator

Like China, Brazil's economy is also expanding at a healthy clip. GDP growth this quarter is expected to check-in at a tidy annualized rate of 9%.

As a result, unemployment is falling and incomes are rising. And that's leading to an explosion in the middle-class.

Over the last four years alone, Brazil's middle class has swelled by 24%, lifting roughly 20 million people out of poverty, according to Brazil's Census Bureau.

Furthermore, PriceWaterhouseCoopers Consultancy expects this rapid increase to continue. So much so, in fact, that it will propel Brazil's largest city, São Paulo, from the forty-sixth spot on the world's wealthiest city list to fifth place in a little over a decade.

And I have no doubt all that newfound wealth will quickly be spent. Because it already is being spent! Consider this...

High-end jeweler Tiffany & Co. (NYSE: TIF) boasts more stores in São Paulo than anywhere else in the world.
Handbag maker, Louis Vitton earns some of its highest profits per square foot in Brazil.
And consumer credit use is up roughly 30% per year for the last three years.

And despite all this, Brazil's consumer-spending boom is still in its infancy. Thanks to a surging economy and stable inflation, we can expect more and more Brazilians to be able to afford their first mobile phones, cars, even homes in the years to come.

And if you want to know the hands-down, best way to profit from this trend, here it is...

How to Add Some Brazilian-Style Swing to Your Portfolio

Go with small caps.

I say that because the majority of the companies in Brazil's small-cap sector cater to domestic consumers (either directly or indirectly).

We're talking about businesses like...

Banks
Homebuilders
Department stores
Telecoms
Airlines

These industries are destined to profit the most - and in turn, witness the most appreciation in stock prices, as conspicuous consumption takes root south of the equator.

And for you naysayers and China lovers out there, the stats back up my claim that Brazil is a better place to profit right now. Brazilian stocks are up 128% this year, compared to a 62% rise for Chinese stocks, based on the MSCI/Barra indexes.

Momentum is squarely on our side. So don't fight it... embrace it!

Thanks and Regards,

Navneet Singh Chauhan.

Future of BPO…

2009-12-24T09:19:00.001-08:00

Rage Frameworks' Venkat Srinivasan: 'The BPO Market Is Not Sustainable in the Long Run'

Published: December 17, 2009 in India Knowledge@Wharton

"There is automation, and then there isautomation," says Venkat Srinivasan, co-founder and CEO of Rage Frameworks, a Massachusetts-based startup whose technology he claims will radically change the way companies manage business processes. Rather than investing in outsourcing or business process management tools, Srinivasan -- a New Delhi-raised serial entrepreneur -- says companies now need to move up the evolutionary scale and embrace automation that lets them segment and change the way they work with hyper speed and efficiency. But is business process automation -- or BPA -- simply adding to the alphabet soup of tech jargon?

The following is an edited transcript of Srinivasan's recent interview with India Knowledge@Wharton.

India Knowledge@Wharton: Could you explain the differences between business process automation (BPA), business process management (BPM) and business process outsourcing (BPO)? Because the acronyms are so similar, it's easy for people to confuse the three. And specifically, what is going on in the BPA market in which Rage Frameworks plays?

Venkat Srinivasan: We are constantly trying to do a better job of [explaining the differences] on our website and in our presentations. The way we define and practice BPA makes it a new category. There is no well-established BPA market. It is a market that we are, in some ways, creating. Having said that, let's parse those three items separately.

Business process outsourcing, or BPO ... is based on cost arbitrage, with players who are in low-cost locations around the world that shift the burden of work [from one location to another to take advantage of lower costs]. Everyone understands this is basic BPO. You are throwing bodies at a problem. About 10 years ago, that certainly was an attractive proposition for companies. Therefore, we have a large BPO market today, which is still growing at double-digit rates. At Rage Frameworks, our view is that the BPO market is not sustainable in the long run. That market has to evolve.

There are several factors that make cost arbitrage evaporate over time. First, the "pop" you get from cost arbitrage is one-off. Let's say you transfer a business process to India. You lower your costs by a third, but then that's it. The second factor is that costs in the low-cost locations will rise. It's the basic forces of demand and supply. There is now significant wage inflation in India. The "pop" you got in the first year is going to be whittled down, because you have 20% to 30% wage increases each year. (That is a good thing for people in India.)

If you play this out for five years, the cost differential isn't going to be as much as it was when you shifted the work overseas. It will probably never be equal. Otherwise, there would be no reason to go. But when you add up all the other issues that go with it, BPO becomes unsustainable in the long term. Companies currently relying on BPO will have to evolve to a different model.

India Knowledge@Wharton: Are you suggesting that business process automation is part of the evolution of BPO?

Srinivasan: That's right. It's where both BPO and BPM have to end up. The other issue with BPO is that you don't get to a better place with it. Most BPO companies today promise their clients that they will improve processes. However, throwing bodies at the problem gives you, at best, some basic technology solutions. All the BPO business models tend to be "body" driven; pricing is the number of bodies multiplied by the cost per body and there is very little incentive to improve processes.

India Knowledge@Wharton: In that traditional BPO model, no customer is going to get the scale they need.

Srinivasan: Yes, scale, as well as process improvement. Businesses are ultimately interested in improving their processes. As you scale up, different problems emerge. As new business trends and needs in the market arise, your business processes need to change. With BPO, a customer doesn't get any flexibility in execution. You get only lower cost with BPO. At Rage, we have large, global clients, and many of them are big BPO users. They are very frustrated. It is obvious that in moving the market toward BPA, these firms clearly recognize that shipping 700 jobs to Malaysia to lower costs isn't necessarily better in the long term.

India Knowledge@Wharton: Now let's look at business process management.

Srinivasan: The operative letter here is the M. BPM is largely a set of software providers, who have evolved from the days of Six Sigma and reengineering.... If you look at a typical large enterprise, there are a plethora of business process challenges. There is no systematic institutionalization of their processes. When things get to a head, somebody says, "Either call in Six Sigma-qualified consultants or get somebody to help us reengineer our process." ....Generally, the company has an intimate idea of what it does on a day-to-day basis, but there is no holistic view of the process. Without that view, you can't attempt to figure out how to do things differently. The consultants provide that value.

....A primitive form of BPM is a flow-chart tool. Today, BPM vendors are more sophisticated. They allow you to document, manage and measure processes. Then you take the processes and go to a technology-services company and say, "Here are our current processes and here are the processes we want. Can you help us implement [the change]?" The next generation of BPM vendors has moved into facilitating implementation. Several tools now generate code to implement business processes. That's where the big differentiation is between what they do and we do with BPA.

There are several issues with the current generation of BPM tools. You don't solve the age-old problem of time-to-market. By the time this technology is built for your new process, the process is outdated. It is of no use. It still takes a long time to implement.

India Knowledge@Wharton: Processes are constantly evolving.

Srinivasan: Exactly. It is never-ending. The entire essence of BPM is to increase agility. Some firms talk about their "agile" BPM methodology. While it is more agile than before, it still takes a long time, and because its implementation is still done in a conventional paradigm by generating code, that solution is often outdated. This generates frustration at large, global institutions.

Let's go on to the way we practice BPA. An acronym such as BPA doesn't do justice to what we do.... Let's think about how conventional software development life cycle (SDLC) works. You have an idea. You take the idea and expand it into a set of requirements. Then you design it and your development team codes it. You test it and you release it.

Technology development, over the years, has come a long way. However, the focus has been on tools to help achieve more consistency and faster throughput. Twenty years ago, technology execution was a big [issue], but the problems were reliability and consistency, as was coding and programming. We focused on whether you were a good programmer or a bad programmer. Today, countless firms are good at basic programming. Good programming is fast becoming a commodity. I don't want to trivialize the value of good programming or engineering, but there are lots of CMM Level 3+ firms out there. They do a great job of giving you consistency and reliability. That issue has been largely resolved.

The issues that have not been resolved is time-to-market and flexibility. When you go through SDLC, you take a company's business description and translate it into a machine-readable description. The translations don't add any additional value. The idea is still your idea, but to get it to work requires the translations, and they take time and are of no practical value. If you could implement your business idea without programming, why would you not do it?

Rage has created a technology platform where -- instead of a forward engineering-oriented lifecycle going from an idea to release in a clockwise cycle -- we have eliminated many steps by creating an abstract engine that understands the idea of software development.

India Knowledge@Wharton: Can you share an example?

Srinivasan: A 100-year-old global financial institution needs to roll out a new credit card. It knows exactly what it wants to do in terms of a process to evaluate an applicant and issue, reject or price a credit card properly. This is the business process. [But] with millions of applicants, [the process] not scalable without technology. The firm estimates that -- even with BPM tools -- it would take 18 months to roll out the new credit card.

India Knowledge@Wharton: And this is in a very experienced firm. No other firm would be able to do it faster?

Srinivasan: That's right. In this case, there is no physical product. The process is its product. It evaluates your risk and then calculates what level of risk it is willing to take and how to price the card. We did this for them in two weeks, not 18 months. This is not a hypothetical case. I can give you lots of examples like this, even within the same institution. It is endemic of all such institutions because conventional SDLC and BPM tools work at a low level of granularity and documentation alone is going to take two or three months.

Let's take the credit card case and drill deeper. Why were we able to do this in such a short span of time? Rage's framework has a series of abstract components. It is like Lego, but these Legos are highly "morphable."

Let me break this particular process into three steps. Step one is to gather information from internal and external sources about the credit card applicant, which could be around 10 sources. It is a big step with conventional technology, because it requires you connect to multiple sources. In step two, you normalize the data. You need to "flatten" the information to get a sense of what someone's profile looks like. You need to apply a series of rules on the data. Most companies won't blindly use the score from [credit-check company] Fair Isaac to assess risk. They'll also use rules of their own.

The third step is to determine the outcome. Rarely does the firm say "yes" or "no." A decision in this context is a continuum. There is "yes" and "no" on the two extremes and then a bunch of pricing decisions in the middle. For example, the system may add 200 basis points to the interest rate on an applicant's credit card depending on the risk.

The fourth step is issuing the cards. This is the easiest step, as the firm is well established. It can issue a million cards an hour. But the first three steps are very hard because they have to be done with legacy systems and have to integrate many external sources.

To accomplish step one, we use an abstract component at Rage called the Connector Factory. There is no programming required. Instead, we type the structure of the information from the first source, we go to the second source and do the same thing, and so on.

There are very important ideas in what we do at Rage and the acronyms might make people put us in the same bucket [as BPO and BPM]. That's our toughest challenge. We create mission-critical technology implementations without programming. In technology terms, we have created a very sophisticated abstract platform using a highly model-driven architecture. But more importantly, going back to SDLC, we leave your business processes as high-level models. From a layman's point of view, we are a live solution that can be modified at any time....

Your flow charts are still there. But if you are driving to work and you get a new idea, you can pull up the flow chart, modify it, save it and it's ready to go. It is live.

Rational Rose, a big product that IBM owns now, takes eight months to finish modeling because you have to go to a very low level of programming constructs. Rage does the modeling at a high level and reduces the logic to data. It's very abstract. BPA is the best acronym we could come up with.

India Knowledge@Wharton: Is what you are doing at Rage informed by one of your earlier companies, eCredit.com, a real-time credit services for e-business?

Srinivasan: This dates back to my doctoral thesis and work as a consultant. [With an interest] in and around time-to-market, I was primarily a finance guy with expert systems and artificial intelligence to support human decision-making. This is just one big evolution for me. I started out by asking: "How do I 'operationalize' flexible decision-making applications or use of technology in the credit decision-making context?"

India Knowledge@Wharton: In the credit-making context, with eCredit?

Srinivasan: That was the original idea, but one thing led to another and in those days I invented whatever I couldn't find. That was in the days before Windows. We didn't have graphic user interfaces. Then I ended up doing a lot of stuff on the Mac because that was the first graphic user interface available....

India Knowledge@Wharton: Why don't the big institutions automate all their business processes? Is there risk involved? It seems there is a cost advantage.

Srinivasan: Our guys were at a recent conference organized by a financial institution for its global supplier base. These people have more than 300 or 400 global vendors providing BPO services. The theme of the conference was automation. People very clearly have moved from BPO to BPM.

Our point at the conference was, "There is automation and then there is automation." There is automation that is going to become legacy the moment you finish. That is not the automation you want. You want automation that is going to be flexible and let you adapt to changes.

Rage is a tiny player. We are the new kid on the block. We are promoting flexible automation....

India Knowledge@Wharton: It sounds as if part of your challenge is to stimulate that market.

Srinivasan: Exactly.

India Knowledge@Wharton: Is there a BPA application for, say, financial regulators or people looking at health care costs or energy markets?

Srinivasan: Every business is a collection of business processes. It doesn't matter what field you are in. Our [job] is to look at every task and think about how to create an abstract component that can help somebody automate the task in an intelligent, flexible manner.

Most work models today are centered on individuals. Companies are interested in leveraging technology in an intelligent manner. Rage has knowledge-based components -- rules, decision trees, computational expressions, natural language processing, etc. The point is not about automation. Rather, from a business point of view. The point is about scalability....

Today, the general work model is centered on an individual. What do we do when we go from 15 to 100 individuals? We write a policy manual. We write procedures. Why can't we just automate it?.... Generally, you automate the stuff that is well understood and not going to change. The moment some aspect of your process has dynamic characteristics, you struggle. This is where conventional automation pigeon holes the business process and says, "We just can't scale if we try to accommodate the dynamic aspects. We are not going to automate it."

....As you grow, you should institutionalize processes so you're not relying on someone to remember what the process is. That way if an individual enters the process only if the individual is required to execute a task. But today, process memory is in the minds of an individual and not institutionalized anywhere. Rage is attempting to provide a framework for institutionalizing business processes.

India Knowledge@Wharton: How did Rage decide to incubate and spin off or nurture other companies? Your firm is very lean. How did it come up with the bandwidth to do the other stuff?

Srinivasan: I wanted to do this within eCredit. The idea was very simple. We felt that our technology was applicable in many areas.

India Knowledge@Wharton: So you built different verticals?

Srinivasan: Precisely. We launched individual subsidiaries because we thought it was a pragmatic way of scaling them when external financing was needed.

India Knowledge@Wharton: How critical is the proprietary nature of what Rage is offering? How important is intellectual property?

Srinivasan: It is important. We probably have a 24-month lead as a first mover. Having said that, we are continually trying to protect our IP rights by applying for patents.

India Knowledge@Wharton: I am curious about your stint with the consultants Bain as an "entrepreneur in residence." How did this happen?

Srinivasan: Bain was the seed investor in eCredit. I have had a long relationship with Bain. When I came out of eCredit, I wanted to do Rage. Bain was, at that time, starting up its venture funds again and offered me an opportunity to come in while I was still formulating Rage to help get the funds going. They already had the venture fund and a very good team ... but I helped with due diligence and investing in technology start-ups.

India Knowledge@Wharton: When did you decide to leave academia and get dirt under your fingernails? Did you wake up one day and say, "OK, that's enough" or had it been building for a while?

Srinivasan: It wasn't a sudden wake-up call. When I look back, it seems very premeditated, even though it wasn't. Fundamentally, I am a creator.

Even in the academic world, I spent a lot of time doing research. That was the outlet for my creativity. Then I got involved in consulting assignments with Fortune 500 firms. In these assignments, I realized that what these guys really need is a software product. I looked at all the "decisioning" variability in these groups and try to figure out how to institutionalize credit policy.

I began doing "skunkworks" projects [or quick projects developed by small groups of people] in [a] spare bedroom. I would show them to somebody and they would find it interesting. I kept iterating. Finally, I had something that could be used. Apple was the primary catalyst. In my sabbatical year, I decided that I was going to continue in my academic role and kill this project or I was going to give up academia and start a company. I had to do one thing or the other.

India Knowledge@Wharton: How have your roots played a part in that story?

Srinivasan: One is problem-solving. My path through my professional career -- and even through school -- was somewhat skewed toward problem-solving. I always had an opportunity to solve difficult problems. I used to work for Union Carbide in India, where there were lots of challenging problems. I was also determined to make things work. When I started eCredit, the credit managers of many companies didn't believe that our vision of creating a knowledge-based application would ever happen.

In India, we had to work with very little. I grew up in a middle-class family. In school, I used to play badminton -- I still do. We didn't have any courts, so we created our own court. We just invented what we didn't have. I'm sure there are hundreds of thousands of millions of stories like this. For me, at a minimum, it created a sense of confidence and determination.

[Then there's] repetition. My kids have gone through school in the U.S. and I see a lot of benefits in their education. They are growing up to be well rounded and wanting to learn. When I was growing up, we were never encouraged to ask "Why?" In fact, I was punished in class if I did. One benefit of that system, however, is that it instills high levels of concentration. All I did was repetition. I remember spending two hours after school every day solving math problems. That's it. That's all we did. We solved math and accounting problems and we were timed. Such repetition sharpens your focus and concentration. We had no alternative.

India Knowledge@Wharton: How have you been able to interact with the Indian diaspora in the Boston community?

Srinivasan: Two things have helped. One is the Indian diaspora and the other is Bain. Both groups have always encouraged me. I have known Bain for almost 20 years, back when it was a very small firm. In the Indian diaspora, I have lots of friends and I am on the board of TiE-Boston [a global non-profit promoting entreprenurship].... I'm very involved with TiE Boston, and we mentor young entrepreneurs [and] I'm involved with the American India Foundation. We support Indian [non-governmental organizations] on a large scale. AIF is more about giving back to India whereas TiE is more local.

Compiled and Adapted from

http://knowledge.wharton.upenn.edu/india/article.cfm;jsessionid=a830cf09b72442ad81c76a66141d26265f4a?articleid=4435

And brought to you by

Navneet Singh Chauhan.

VidyaGyan: A New Model for Improving Rural Education?

2009-12-24T09:15:00.001-08:00

Published: December 17, 2009 in India Knowledge@Wharton

On July 10, 2009, Bishwajit Banerjee stood outside the new VidyaGyan school in Bulandshahr in Uttar Pradesh (UP), some 60 kilometers from New Delhi. "I was extremely nervous," he recalls. Shain Khan, who also stood outside the school on that day, remembers feeling the same emotion. "I cried. I missed my mother. I decided to run away."

Both had reason to be anxious. Forty-four-year-old principal Banerjee and 11-year-old student Khan were taking part in a new experiment in education.

"VidyaGyan is a radical concept that aims to ... transform meritorious rural children from economically disadvantaged backgrounds, providing them free, world-class education, allowing them to transcend the disadvantages they face," says T.S.R. Subramanian, who is spearheading the project. A former cabinet secretary to the Union Government and chief secretary in UP, Subramanian says VidyaGyan is an idea whose time has come. "There are [Mahendra Singh] Dhonis everywhere," he says. (Dhoni is India's cricket captain; he comes from the backwater state Jharkhand.) "Children in rural areas have great potential; they will flower if given the chance."

VidyaGyan is an initiative of the Shiv Nadar Foundation -- set up by Shiv Nadar, founder of the U.S.$5 billion technology group HCL. The first school has just opened, taking in 200 students from the fifth grade who scored the highest on the UP state board examinations. From the sixth grade onwards, they will study at VidyaGyan, a residential institute where all expenses are paid. The students are from economically challenged backgrounds, and VidyaGyan aims to mold them into leaders.

"The quality of primary and secondary education in this country is abysmal," Subramanian says. "We have a few world-class institutes -- the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs), for instance -- in higher education. But there is no equivalent in the primary education space, except for a few private schools in urban areas."

Subramanian notes that community involvement in education is central to the project's mission. "Fist, education is too important to be left to the government. It must be a community effort. And corporates must be involved in this as part of the community. Second, we must bridge the urban-rural divide. We are unfortunately developing an urban society that is rich and a rural society that is poor. Third, this is a public-private program. We think this is the way to make progress in this area." Subramanian praises the UP government's role in this initiative: Among other things, it is responsible for the selection of the children.

Bridging the Divide

The project has been percolating for quite some time. "When I retired from the government eight years ago, I started the Indian Education Foundation to provide technology for rural schools," he says. "But we couldn't raise resources. There was a recession and we failed to find funds, even in the U.S. I was on the board of HCL. We were talking about a university -- which is [opening] up in June-July next year in collaboration with Carnegie Mellon -- and the VidyaGyan proposal came up naturally."

The Shiv Nadar Foundation's mission is to create a more equitable, meritocracy-based society and empower individuals to bridge the socio-economic divide. The foundation aims to achieve this primarily by setting up outstanding educational institutions that provide meritorious students from all walks of life the opportunity to receive a world-class education. VidyaGyan is part of a growing number of the foundation's projects, including the SSN College of Engineering, the SSN School of Management & Computer Applications and the SSN School of Advanced Software Engineering. ("SSN" stands for Shiv Nadar's late father Shri Sivasubramaniya Nadar.) Adding to this are initiatives like the VamaSundari Trust, which has already distributed US$6 million in scholarships.

"We have always believed in building institutions of excellence ... to last," says Nadar. "The school will not only provide these very deserving kids a global education; it will also build leadership and character. These children have risen above exceptionally challenging circumstances to top their districts. Twenty years hence, these kids will not just fill a job vacancy. They will go out and change the world."

"VidyaGyan [is] personally a very challenging and exciting project for me," says Roshni Nadar, Nadar's daughter who is a trustee of the Shiv Nadar Foundation and executive director and CEO of HCL. "The first school is off the ground and the next -- possibly at Varanasi -- will come up soon. After that, there is the Shiv Nadar University, which will be modeled after top-notch U.S. universities.... [VidyaGyan] is financed entirely by the Shiv Nadar Foundation, which has set aside substantial funds needed for a project of such quality and impact."

As for the funding required, Subramanian says, "The land cost US$3 million," he says. "The infrastructure costs another US$7 million." Not all the money has been spent as some facilities have yet to be built. "Our running costs are US$1,600 per child per year. It will be less -- US$1,200 to US$1,400 -- when we achieve economies of scale." This is just the beginning, he adds. "In two years, we will have four or five schools." The final plan is for a network of more than 50 schools.

Raising Eyebrows

The infrastructure costs have been raising some eyebrows in a country where rural schools often lack a blackboard and even a roof. But VidyaGyan is not cutting corners. The first school at Bulandshahr is spread over 20 acres -- 14 for the school itself and six for housing. The total facility area is 250,000 square feet. There will be 30 classrooms (10 are operational now), a hostel for 700 students, a language lab ("To teach our children to communicate in English is a major challenge," says principal Banerjee), a computer lab, a math lab, a library, an amphitheatre seating 800, an auditorium, an athletic track, a football field, a skating rink and indoor sports facilities. An eight-acre sports complex will be built next to the school campus. This will include a cricket ground and other outdoor sports facilities. "All this may be commonplace in urban schools," says Banerjee. "But for most of our students, this is very new."

Banerjee offers a report on students' progress so far. "Shain was not the only one with problems," he says. "She adjusted and is happy now. [One] boy from Badauin district just could not settle down and his parents took him back home. After a few days, he came back on his own... In the first month, we often got calls from anxious parents. Some of them visited the school. Now, all that has stopped. They have seen our facilities and what we provide."

Banerjee explains that the children -- 126 boys and 74 girls -- are housed in separate hostels with round-the-clock security. "We had asked the children to come with only two sets of clothes and the school is taking care of all their other needs -- books, stationery, uniforms, sports outfits, other clothes and items of daily use," he says.

But what will happen during the holidays when they return home? Will there be adjustment problems? "We don't know," Subramanian says. "But we realize the problem...."

There is another adjustment issue, though it will not come up for some time. What will happen when the students finish and start college? Higher education is expensive, and having a child at VidyaGyan is not going to change the economic status of his or her family. Subramanian says they will continue to mentor the children through their first year in college. And money problems are easier to solve than the tougher task of providing education, he adds.

VidyaGyan may have ambitious roll-out plans, but it has no intentions of spreading beyond UP. "We looked at UP and Tamil Nadu (TN)," says Subramanian. "Both [Nadar and I] were born in TN. But the need in UP was greater. At the moment, we are only in UP. We will take stock later; we don't want to bite off too much."

According to executive coach Gopal Shrikanth, the strategy makes sense. "VidyaGyan's decision to focus all their energies on transforming a single backward state such as UP, rather than spreading themselves thin across the country, is unique. This model should hopefully be an inspiration to other companies to 'adopt' other backward states."

'Islands of Excellence'

How has the establishment and the academic world responded to VidyaGyan? "I think it is a very good idea," says Dipankar Gupta, a recently retired professor from the School of Social Sciences, Jawaharlal Nehru University (JNU), New Delhi. "In fact, I had a thought along these lines but could not pursue it. If these schools are able to produce outstanding students who can get to Wharton, IIT, LSE [London School of Economics], IAS [Indian Administrative Services] and so on, that would be fantastic. In other words, the training should be world class, from science and language to deportment and confidence building."

According to Gupta, the impact would be cumulative. "If Nadar is able to produce top-class students from poor homes then, over a period of time, they will form a critical mass. This can be used to pressure the state to deliver quality education. I think the best thing that NGOs and philanthropists can do is to shame the state into delivering and not become alternate nodes of power and influence."

Is there a danger that a school like VidyaGyan could become elitist, producing misfits in their social milieu? "By and large, this is a noble cause that is for the good of Indian society," says Shrikanth. "However, similar social reengineering initiatives have mostly resulted only in the immediate families of such students benefiting, socially and economically. Beyond acting as an inspiration to their communities, the majority of such beneficiaries do not seem to devote their careers to working in or for their communities. Some beneficiaries do, however, go on to bestow endowments to community schools and hospitals, at a later stage in their lives."

That, itself, could be an adequate return, says Gupta. "The advantage of an elite brigade of professionals from poor homes is a very strong and persuasive demonstration of humanity and the democratic spirit. Meritocracy is the bedrock of true democracy. The school must produce children better than our best schools. They should know better math and English; they should be great swimmers and orators; they should have confidence oozing out of their pores. This will give those who are elitist by birth a kick in their pants."

In response to concerns over elitism, Subramanian asks: "Are the IITs and IIMs elitist?"

Dileep Ranjekar, chief executive officer of the Azim Premji Foundation, wonders whether VidyaGyan is really a solution. "Research tells us that only a negligible percentage of [these initiatives] deliver education that is envisaged by the National Policy for Education. A private school does not necessarily symbolize higher quality of education for children unless it is managed and run on certain accepted principles." Moreover, he notes, even if the school is good, the model may not be replicable "because of the high cost of establishing such facilities and the management bandwidth involved. These schools continue to remain as 'islands of excellence' -- assuming they are managed well -- rather than proving to be role models for the larger universe of schools.

"Our experience indicates that the best practices in one school are not transferred to other schools," Ranjekar adds. "In addition to such efforts, we need all influential people to exert pressure on the government to deliver high-quality education to all children in the country. Otherwise such schools can only add to the already existing inequity."

S. Ramesh Kumar, professor of marketing at the Indian Institute of Management Bangalore, feels that credit must be given where it is due. "At a time when ... there is a strong emphasis on corporate social responsibility, it is nice to see a reputed organization heralding a laudable social objective In India. Given the commitment reflected in the very concept, such an attempt will work and perhaps inspire other firms as well. With technology making rapid strides, such initiatives will certainly create a level playing field in a country where around 50% of the population is below 25 years of age."

The success of the concept will depend on the kind of education imparted at VidyaGyan. "A sense of idealism that they will cherish throughout their lives has to be deeply rooted in these students during their tenure at the school," says Shrikanth.

"Skeptics are bound to raise a number of questions," he adds. "Are the plans for 70-plus schools realistic [in] the current economic climate? Would it have been more prudent to plan for just one central school, given the typical academic challenges of recruiting and retaining qualified faculty? Is the planned infrastructure a sub-optimal utilization of limited resources? Is this model sustainable, given that the source of funding will depend on a single company year after year?"

While remaining confident, Subramanian is humble about the final deliverables. "We are not saying that we are an example," he says. "But we propose to do our bit to show the way."

Compiled and Adapted from

http://knowledge.wharton.upenn.edu/india/article.cfm;jsessionid=a830cf09b72442ad81c76a66141d26265f4a?articleid=4438

And brought to you by

Navneet Singh Chauhan.

Media: The way ahead..

2009-12-24T09:09:00.001-08:00

'Bigg' Prospects: Media Companies Tune In to India's Growing Entertainment Sector

Two hours away from busy Mumbai lies the sedentary Aamby Valley resort. This is where Viacom18, a joint venture between Viacom of the U.S. and India's Network18, has rigged up its sets for Bigg Boss (the licensed Indian version of the Big Brother franchise, originally launched in the Netherlands). The reality show is proving to be yet another milestone for Colors, the Hindi-language general entertainment channel (GEC) launched by Viacom18 last year. Through its unconventional programming choices, Colors has shaken deeply entrenched players in the CEG television category. For four successive weeks -- 41, 42, 43 and 44 (the numbering starts from the first week of the calendar year) -- the GEC has increased the gap between itself and its competitors -- Rupert Murdoch-owned Star Plus and Subhash Chandra's Zee TV.

"Our research told us that there was a fair amount of fatigue in the kind of shows that were running on GECs when we launched, and that viewers wanted something different and more relatable," says Rajesh Kamat, CEO of Colors. "This formed the basis of our content strategy. We opted for meaningful entertainment versus pure entertainment. We were disruptive in our scheduling to break existing viewer habits -- [showing] non-fiction during weekday prime time. And by paying more money to the distributors, we got ourselves placed right next to the most-viewed channel in the premium band in each market to ensure maximum walkthroughs and sampling."

Actor Amitabh Bachchan was in many ways responsible for delivering India's reality programming breakthrough for Star Plus eight years ago when he hostedKaun Banega Crorepati (the Indian version of Who Wants to Be a Millionaire). Now, Bachchan is back on the small screen as the host of Bigg Boss. Bachchan has been followed to the small screen by well-known Indian film actors such as Shahrukh Khan, Salman Khan and Akshay Kumar.

The hard-nosed reality format seems to be working across the GEC vector. While some programs are licensed shows indigenized for Indian audiences, others are pure-play original formats. "Entertainment doesn't only need to be diverting or superficial, or dumbed down to pander to the lowest common denominator," says Siddhartha Basu, promoter of production company Synergy Adlabs, who is responsible for many of India's hit reality shows including the hugely successful Kaun Banega Crorepati. "There should be a place for social realism in our general entertainment space, because that can genuinely connect with people's lives, their heads and hearts to a much greater extent. The ratings of both Aap ki Kachehri [a dispute-resolution program anchored by social activist and famous retired police officer Kiran Bedi] and Sach ka Saamna[Moment of Truth, which recently created a huge controversy in India for its risque content] demonstrate there's enough of an audience for such shows if they're done right."

The playing field has become crowded over the past couple of years, however, with the arrival of new challengers to Star Plus, which had dominated the Indian GEC space for close to eight years. In 2008, Viacom with Network18 launched Colors, Turner Broadcasting joined Indian production company Miditech to launch the Real channel, and NBC Universal joined NDTV to launch NDTV Imagine. Already, there has been some churn: Turner International, which inked a 50:50 joint venture with Alva Brothers Entertainment, owners of Miditech, wants to leave the JV. No new programming has been on air since July, and Real has stated that it wants to downsize operations. Similarly, NBC Universal has exited from NDTV Networks where it held 26%. In 2007, INX Media launched 9x, which was funded with the help of private equity players like Temasek and New Silk Route, but 9x ultimately folded due to ballooning costs and management issues.

That leaves Viacom, which remains invested in a healthy and viable business in India. Time Warner is reportedly negotiating with NDTV to pick up a majority stake in NDTV Imagine, though nothing has been announced yet. Meanwhile, Star and Sony Pictures Television have been in the India market for years: Star remains in constant battling distance with new entrant Colors, while Sony is attempting a comeback with new programming.

Also remaining steadfast is Subhash Chandra's Zee TV: For week 43, it displaced Star Plus from the number-two position with gross rating points (GRP) of 271 (compared to Star Plus's 229). Week 44 saw it slip back again, falling behind Star Plus, but only by a slim margin of nine points. One of Zee TV's strategies to revive its fortunes is launching new programs. More importantly, it has widened the ambit of its prime band, offering an array of shows from 7 p.m. to 11 p.m. (instead of 8 p.m. to 11 p.m.). In the first quarter of the new financial year (April to March 2009-10), Zee TV's GRP stood at 234, just marginally behind Colors' 258 and Star Plus's 255; in the same April-June period, it has emerged as the joint leader along with Colors in prime-time programming.

Foreign Players

Slowly, American studios and networks are grabbing larger swathes of Indian media and entertainment space. While it is still difficult to get a large toehold in the news business -- both print and television -- due to foreign direct investment (FDI) restrictions and caps, it has been relatively smooth sailing for Western players to establish a solid presence in the entertainment space. It has taken the Murdoch-owned Star Group many years to find traction in India -- partly the result of the Indian market dynamics and the fact that it had some misses along the way. Now, Murdoch-Star affiliate Fox-Star Studios is betting big on the Indian market as well. It has established what it believes is a one-stop shop for Bollywood producers and wants to put the building blocks in place to develop a viable and sustainable business, which might not necessarily be about scale and size.

"At the end of the day, India -- like China -- represents a business opportunity which needs to be captured on the ground," says Vijay Singh, CEO of Fox-Star. "We are trying to unlock these opportunities in India. News Corp. has been here forever, so it was natural for us to get here as well, being a part of the Group. While we distribute all the Hollywood films from Fox and marketedSlumdog Millionaire in India as a Bollywood film and succeeded with that, we also recently released our first production, Quick Gun Murugun." Fox-Star's next big bet is the Karan Johar-directed film My Name is Khan, which stars Shahrukh Khan and Kajol. It will be released in the U.S. by Searchlight and will have a mix of Hindi and English. Singh says he is working on four different projects as well -- "a mix of small- to medium-sized films."

Walt Disney has had a checkered history in India. Its first attempts to enter the market were a failure, resulting in a legal battle with Lalit Modi's Modi Enterprises. Eventually, it launched the Disney Channel and Toon Disney. Recently, it took a big leap of faith in the Indian market by buying Hungama TV from Ronnie Screwvala for US$30.5 million and then acquiring 59% in UTV Software Communications with an investment of US$170 million, allowing it access to one of the big production studios in Hindi cinema with hit films likeJodhaa Akbar and Race, and acclaimed, smaller budget films like A Wednesday.

One missing player is Bertlesmann AG, the third-largest entertainment conglomerate after Time Warner and Walt Disney. But all other key media companies -- from News Corp. to Time Warner, Walt Disney, Viacom, Sony Pictures Television, Liberty Media and Bloomberg, which recently entered into a content partnership with UTV -- have presence in the Indian market. Amit Khanna, chairman of the vertically integrated Reliance Big Entertainment, which recently formalized a 50:50 joint venture with Steven Spielberg's Dreamworks, notes that while many of these players have been in India for some time, "they are reinforcing their presence.... I think the realization that India is a growing market where everything has a low [cost] base has finally dawned on American studios and broadcasters. Entertainment spend is very low while penetration of DTH [direct-to-home satellite service], cable and other forms of access have a huge upside. This is the potential that is reinforcing the India story."

India vs. China

One driver of foreign interest is that India's media and entertainment industry is expected to grow to US$21 billion by 2014. Manjit Singh, CEO of Multi Screen Media (MSM), a joint venture between Sony Pictures Television and a group of Indian investors, notes that India "is an attractive market and one needs to have a sizeable presence in it -- more so because it is still under-explored. Star and Sony were ... the first to set up base here realizing that it was a market which had enormous upside."

Others note that while media companies recognized similar potential in China's entertainment sector, they have retreated from that market and have begun to focus instead on India. A recent report on the Indian broadcast industry inThe New York Times notes that "after many years of fervent lobbying and deal-making in China, American media companies have little to show for their efforts there and are increasingly shifting their attention instead to India. Media executives still believe that Chinese audiences are receptive to Western culture -- SpongeBob SquarePants is a big hit in China -- but many companies have been pulling back out of frustration over censorship, piracy, strict restrictions on foreign investment and the glacial pace of its bureaucracy."

According to Mohammad Mian, dean of the faculty of education studies at Jamia Millia Islamia University in New Delhi, there are other factors at play as well. "It is partially due to the disillusionment with China, but also due to the growing importance of India in the global scenario. Remember that we are an English-speaking nation. In my experience as an educator, the demand for English language [use] is only going up in India. We have a natural advantage in this regard. In fact, English should be made compulsory in India. When China realized that communicating in English was the biggest barrier to conducting trade and commerce, they, too, started making attempts to come up to speed, but we have a 250-year legacy advantage over them. That is why American broadcasters and studios find it easier to do business here."

In March, the Motion Picture Association of America opened an office in India for the first time, in Mumbai. A little over four years ago, Dan Glickman became the head of the association, and he has visited China several times. "The feeling was that there were greater opportunities then [in China] than there are now," he says. According to MSM's Singh, India is an extremely fertile market and its viewers are getting more discerning, showing deeper and wider segmentation. His channel is now focusing on small towns and segments of the strata in the metros as a way to capture greater market share.

Some companies are succeeding, while others are moths to the flame. Kamat notes that Viacom18 believed in Colors and resisted the temptation to short sell for a volume commitment in the initial months. Initially, the company did short-term deals until the brand achieved its potential. This helped it to get advertising rates commensurate to the GEC's performance. Now, less than a year and half after launch, Colors is doing a run rate of US$10 million per month, making it the fastest-growing channel. While Kamat may have succeeded on the back of big ticket reality shows -- Khatron Ke Khiladi (Fear Factor), India's Got Talent (India's version of Britain's Got Talent) and Bigg Boss (Big Brother) -- he is quick to clarify that India remains a soap opera-driven market. "Reality TV serves a dual objective of ratings and buzz for the channel. However, India is still a soap-driven market and will continue to be. The contribution of Reality to the programming basket is now up to about 20%, from 8% to 10% earlier. Soaps continue to be a staple diet and the Reality shows are the spicier offerings."

Compiled and Adapted from

http://knowledge.wharton.upenn.edu/india/article.cfm;jsessionid=a830cf09b72442ad81c76a66141d26265f4a?articleid=4436

World’s Best MBA College’s (TOP 100): surveyed by Economist.com

2009-11-13T08:12:00.001-08:00

1
IESE Business School - University of Navarra
Spain

2
IMD - International Institute for Management Development
Switzerland

3
California at Berkeley, University of - Haas School of Business
United States

4
Chicago, University of - Booth School of Business
United States

5
Harvard Business School
United States

6
Dartmouth College - Tuck School of Business
United States

7
Stanford Graduate School of Business
United States

8
London Business School
Britain

9
Pennsylvania, University of - Wharton School
United States

10
Vlerick Leuven Gent Management School
Belgium

11
Cambridge, University of - Judge Business School
Britain

12
York University - Schulich School of Business
Canada

13
New York University - Leonard N Stern School of Business
United States

14
HEC School of Management, Paris
France

15
Northwestern University - Kellogg School of Management
United States

16
IE Business School
Spain

17
Melbourne Business School - University of Melbourne
Australia

18
Cranfield School of Management
Britain

19
Massachusetts Institute of Technology - MIT Sloan School of Management
United States

20
Columbia Business School
United States

21
Henley Business School
Britain

22
Warwick Business School
Britain

23
INSEAD
France / Singapore

24
Virginia, University of - Darden Graduate School of Business Administration
United States

25
Michigan, University of - Stephen M. Ross School of Business
United States

26
Mannheim Business School
Germany

27
Yale School of Management
United States

28
Duke University - Fuqua School of Business
United States

29
ESADE Business School
Spain

30
Hong Kong University of Science and Technology - School of Business and Management
Hong Kong

31
Washington, University of--Foster School of Business
United States

32
Cornell University - Johnson Graduate School of Management
United States

33
Carnegie Mellon University - The Tepper School of Business
United States

34
Notre Dame, University of - Mendoza College of Business
United States

35
Ashridge
Britain

36
Southern California, University of - Marshall School of Business
United States

37
University College Dublin - Michael Smurfit Graduate School of Business
Ireland

38
Hong Kong, University of - Faculty of Business and Economics
Hong Kong

39
North Carolina at Chapel Hill, University of - Kenan-Flagler Business School
United States

40
Boston University
United States

41
Rotterdam School of Management, Erasmus University
Netherlands

42
International University of Monaco
Monaco

43
Rice University - Jesse H Jones Graduate School of Management
United States

44
Hult International Business School
United States

45
Ohio State University - Fisher College of Business
United States

46
Indiana University - Kelley School of Business
United States

47
Oxford, University of - Saïd Business School
Britain

48
Georgetown University - Robert Emmet McDonough School of Business
United States

49
Texas at Austin, University of - McCombs School of Business
United States

50
UCLA Anderson School of Management
United States

51
Maryland, University of - Robert H Smith School of Business
United States

52
Emory University - Goizueta Business School
United States

53
Durham Business School
Britain

54
Wisconsin School of Business
United States

55
Macquarie Graduate School of Management
Australia

56
California at Davis, University of
United States

57
Manchester Business School
Britain

58
Pennsylvania State University - Smeal College of Business
United States

59
Monash University
Australia

60
EMLYON
France

61
Iowa, University of - Henry B Tippie School of Management
United States

62
Minnesota, University of - Carlson School of Management
United States

63
University of Edinburgh Business School
Britain

64
Vanderbilt University - Owen Graduate School of Management
United States

65
Washington University in St Louis - Olin Business School
United States

66
Bath, University of - School of Management
Britain

67
Aston Business School
Britain

68
Imperial College Business School
Britain

69
Audencia Nantes School of Management
France

70
Pittsburgh, University of - Joseph M Katz Graduate School of Business
United States

71
Nanyang Business School - Nanyang Technological University
Singapore

72
Bocconi University - SDA Bocconi School of Management
Italy

73
South Carolina, University of - Moore School of Business
United States

74
EDHEC Business School
France

75
McGill University – Desautels Faculty of Management
Canada

76
City University - Cass Business School
Britain

77
Wake Forest University - Babcock Graduate School of Management
United States

78
Chinese University of Hong Kong
Hong Kong

79
Lancaster University Management School
Britain

80
Brandeis International Business School
United States

81
Grenoble Graduate School of Business
France

82
British Columbia, University of - Sauder School of Business
Canada

83
Birmingham, University of - Birmingham Business School
Britain

84
Thunderbird School of Global Management
United States

85
International University of Japan - Graduate School of International Management
Japan

86
Newcastle University Business School
Britain

87
Illinois at Urbana-Champaign, University of - College of Business
United States

88
Southern Methodist University - Cox School of Business
United States

89
National University of Singapore - The NUS Business School
Singapore

90
EADA
Spain

91
Strathclyde, University of - Business School
Britain

92
Georgia, University of - Terry College of Business
United States

93
Curtin University Graduate School of Business
Australia

94
TiasNimbas Business School
Netherlands

95
China Europe International Business School (CEIBS)
China

96
Leeds University Business School
Britain

97
EGADE-Tecnologico de Monterrey
Mexico

98
Nottingham University Business School
Britain

99
Indian Institute of Management - Ahmedabad
India

100
Florida, University of - Hough Graduate School of Business
United States

n/a
Case Western Reserve University - Weatherhead School of Management
United States

n/a
Wits Business School - University of the Witwatersand
South Africa

n/a
Bradford School of Management
Britain

n/a
HEC Montréal
Canada

n/a
Nyenrode Business Universiteit
Netherlands

n/a
Southampton, University of - School of Management
Britain

n/a
American University - Kogod School of Business
United States

n/a
Arizona, University of - Eller College of Management
United States

n/a
ENPC School of International Management
France

n/a
Asian Institute of Management

Philippines

The World in 2010: Wanted: green engineers

2009-11-13T08:05:00.001-08:00

The world needs more of them, notes Oliver Morton

Isambard's kingdom to come

Regardless of the outcome of the Copenhagen conference in December 2009, one of the most pressing anti-climate-change needs will be the ability to get things done in 2010 and beyond. The commitments already made by some large economies require an extremely large capacity to get new energy systems in place quickly. That includes making sure that there are the people around to design and build them.

The infrastructure needed to make a large dent in the world’s emissions is daunting. What is unusual is not the scale of investment, but that much of it has to be spent on new capabilities. With the use of coal worldwide expected to double by 2030, for example, carbon capture and storage (CCS) technologies will be crucial. The amount of pipelining, geological surveying and chemical engineering needed for this is not unprecedented compared with what already exists in the oil, gas and mining industries. But it is vastly larger than today’s CCS capacity, and the people needed cannot just be borrowed from the current fossil-fuel industry.

The nuclear industry is also bedevilled by labour-force issues, at all skill levels. For the past few decades very few Western countries have been producing nuclear engineers; if the nuclear industry is to expand again, over the next decade it will need thousands of engineers who are at present nowhere to be found. And if the supply of expert engineers is tight for builders and operators, it will be tight for regulators, too—regulators who will be sorely needed if a new generation of nuclear-power plants is to enjoy, and deserve, public confidence.

Renewables do not face these issues in quite so pressing a form; the solar and wind industries reap the benefits of the production line in ways that nuclear and carbon-capture technologies, with their large installations, do not. This is one of the reasons that governments like renewables: they provide jobs. Retrofitting homes for greater energy efficiency also offers this advantage on a large scale (which makes one wonder why it is not a higher priority). Even so the renewables sector will also be competing for designers and engineers.

To a large extent this is a market problem that markets can solve; if the demand is created, companies will find ways to get the work done. But there are some specific things that governments can do to help. One is to fund research with a strong emphasis on energy engineering and science. New breakthroughs, however welcome, are not the point here; though new technologies will be a boon in the 2030s and 2040s, the realities of large-scale change mean that, for the moment, energy transformation is a come-as-you-are party. But breakthroughs are not the only thing research produces. Nuclear engineers are scarce in part because there has been little ongoing research to captivate students.

Another smart policy will be to re-examine the extent to which governments subsidise high-tech jobs in other industries, notably defence, tying up talent. There are a lot of opportunities in green technology for laid-off missile designers. A third idea, for those who can afford it, is to reap the benefits of the educational successes of other countries by importing people from places where many aspire to become, and qualify as, engineers.

The people needed cannot just be borrowed from the fossil-fuel industry

Who wants to be an engineer?

And it would be nice to find ways to spread that aspiration more widely. In a number of countries (Britain is an example) engineering does not carry much cultural cachet. A pride in the engineered past—remember Isambard Brunel—is accompanied by apathy towards the engineering of the present. It is neither fruitful nor desirable for governments to meddle in broad cultural attitudes. But leaders of the environmental movement, and politicians who aspire to such leadership, might do well to encourage the young to apply their idealism to their choice of career path.

It’s all very well to recycle, pester your parents about fuel efficiency and aspire to holidays that need no flights. But the best thing a bright young person can do to help rid civilisation of fossil fuels is get an education in engineering.

Renault-Nissan CEO Carlos Ghosn: 'Now Is the Time for the Electric Car'

2009-11-13T07:01:00.001-08:00

The electric car is real. It's here. And before long -- when curbside charging stations become as ubiquitous as parking meters -- it won't seem all that complicated, either.

So says a man who has thrown his corporate reputation into the post-gasoline car: Carlos Ghosn, CEO of Renault and Nissan. In a wide-ranging Wharton Leadership Lecture that touched on everything from managing a multicultural conglomerate to pushing for targeted government regulation, Ghosn was at his most optimistic when discussing a future where zero-emissions vehicles are embraced -- not out of altruism towards Mother Earth or hostility towards the oil-rich Middle East, but because they are good business.

"The electric car appeared at the beginning of the century, then disappeared, appeared in the 1950s, then disappeared, appeared in the 1970s, then disappeared," Ghosn said. "But a lot of things have changed.... We are putting our chips and we are putting our investment and we are putting our efforts behind this belief that now is the time."

Why now? Ghosn says one critical element was technological progress. "The battery of today is capable of doing things that the battery of 10 years ago was not capable of," he said. Where the task of supplying enough energy for a car's wildly varying power needs was once impractical, it's available today at reasonable prices.

The second element is the price of oil. Noting that the cost of a barrel is $68 in the middle of a recession, Ghosn asked his audience whether anyone thought the price would go down. No hands went up. With the U.S., China, Brazil, Indonesia, Eastern Europe and Western Europe all growing, "imagine what the price of oil [will be] if we don't change the consumption," he said.

Also affecting costs, he predicted, would be a third factor: Regulations. During his lecture, he asked for another show of hands from people who believed environmental restrictions would become less stringent. Again, no hands went up. "The car industry is 14% of CO2 emissions," he said. "In the eyes of the public, the car industry is responsible for 50%. We have no choice."

The coming boom in car ownership in emerging economies will likely increase this perception. Ghosn predicts a spike from 700 million cars today to some 1.5 billion globally: "If you're going to let developing countries have as many cars as they want -- and they're going to have as many cars as they want one way or another -- there is no absolutely alternative but to go for zero emissions. And the only zero-emissions vehicle available today is electric.... So we decided to go for it. We decided not to wait for the next battery and the next car in five years. We decided now is the time."

Plugging In

Ghosn went into significant detail in describing how his firm can make electric cars a practical reality -- and a consumer favorite. "Driving an electric car is pure pleasure," he said. "I'm sure when the car is on the market in the U.S. and people start to drive it, it will totally change the image of an electric car." Starting next year, Nissan and Renault plan to offer a wide range of such vehicles, not just a single marquee product marketed to show off a driver's green inclinations. "We want the car to be affordable, which means, if you want to buy an electric car, it has to cost the same" as regular cars.

The logistics, on the other hand, will require a certain degree of investment from individuals, businesses and perhaps governments. Ghosn said car buyers with garages at home should be able to upgrade their electric outlets to facilitate an electric car's plug for around $500. In big cities, he predicted, electric companies will pay about $1,000 for devices resembling parking meters that can be arrayed along curbs to charge the vehicles. He predicted that price would fall as companies began mass-ordering the devices, and said firms would quickly recoup their expenses as customers pay to charge their batteries.

Both of those options, though, require a car to be charged overnight, like a mobile phone, for a charge that gets a car fewer miles than a tank of gas. Drivers in a hurry will have to go to a quick-charge station, which can fill up 80% of a battery in 30 minutes. The equipment isn't cheap: A quick-charge device, Ghosn said, costs $30,000 -- an investment that might make sense once there is a critical mass of electric-car drivers already on the road, but something that could seem expensive for service station owners in a market where electric cars remain rare. He called for governments to step in and spur the market via regulation. One idea: Make quick-charge facilities mandatory for anyone operating a gas station starting in 2012.

Ghosn indicated that he foresees epic battles over his ideas, commensurate with the major economic interests at play. "It's not possible unless government supports you. It's not because the technology is more expensive. It's because you can't compete against 68 million cars being produced in the whole system.... That's why we need support from the government, in order to make the ramp-up from 500,000 to one million cars. And then the system works by itself. Governments are all lined up. They are all agreeing to say, 'Okay, I want an electric car in my country. I'm going to put in the incentives that are necessary. I'm going to put in the infrastructure that is necessary, because we need to get out of dependence on oil. We need to get out from CO2 and global warming. And we need to get out from the risk of oil going to $150 and $200 a barrel.'"

Comic Book Hero

Ghosn's career makes him the ideal person to translate once-fantastic ideas into practical nitty-gritty. Born in Brazil, he moved to his parents' native Lebanon at age six. Educated there and in France, he went to work for Michelin and became chief operating officer of its South American division at age 30. By 34, he was running the firm's North American operations, where he led a merger with Uniroyal. He moved to Renault in 1996 in time for the French automaker's takeover of Nissan. In 2001, he became the first non-Japanese to run the firm, which was deeply in debt and had lost nearly $6 million the previous year. In 2002, it turned a profit. Ghosn's turnaround skills made him a celebrity in Japan, where his story was featured in a comic book.

Ghosn said he never planned a career as a turnaround specialist. Rather, he said, he chose the transportation industry because "I liked cars, I liked products and I liked to work with people." Were he in a position to hire someone to fix a distressed firm, he would focus on three more specific qualities: Someone who had previous experience with tough business challenges, someone who was rigorously factual and willing to question assumptions by using data, and someone who could connect with other people to enlist their help with difficult parts of the recovery effort, such as layoffs.

Ghosn described his firm's multinational character as a plus: In addition to its well-known French and Japanese components, it also owns or partners with automakers in Korea, Romania and Russia. "We are a hybrid of different cultures -- one French, one Japanese, one Russian. Every company is autonomous, but we develop synergies together.... We are a unique combination of different cultures, and it works. It's complicated, it goes against all the advice, but it works." In 2008, the company had more than $100 billion in global revenues.

Ghosn, 55, says a diverse firm like Renault Nissan, with 300,000 employees around the world and head offices in Paris and Tokyo, is a fairly good reflection of a business world where management culture has become as diverse as labor and market locations. "Six or seven years ago, the BRIC [Brazil, Russia, India and China] countries were a new frontier," he said. "Now they are at the heart of the system.... 'Multicultural' used to be American leaders, Japanese leaders and West European leaders. Not anymore." The current downturn, which has seen China, India and Brazil remain comparatively resilient, will only serve to strengthen this trend.

Ghosn sees major new possibilities for those countries, and other emerging economies, in his industry. His advice to nations dreaming of an auto sector: "You have to bring something to the table." Japan, he noted, started by introducing cheap cars that were bedeviled by quality problems. Once the quality problems were fixed, Japanese firms ruled the market. Korean automakers followed the same model, occupying the low-cost niche Japan had vacated, and then moving up as quality soared. He sees Chinese firms following suit. India's auto industry, on the other hand, appears not to be copying the pattern, focusing instead on "frugal engineering -- a habit that's lost elsewhere" -- for cars like Tata's low-budget Nano. The vehicle might come to dominate parts of Asia, Africa and Latin America, although Ghosn doubts it would clear Western safety hurdles.

The increasingly multinational nature of automakers and auto buyers stands in contrast to a strain of nationalist dialogue that has been especially prevalent as the U.S. ponders its reliance on gasoline.

In the case of the automobile industry's move away from oil, one factor that is frequently cited by American politicians is not high on Ghosn's list of motivations: national security. An audience member asked whether a transition to batteries would really help America's push for energy independence, since many battery ingredients come from China, a country that presents its own set of foreign-policy challenges for Washington. But Ghosn said the point wasn't to cut potentially competing governments out of the action: Instead, it was to liberate the market from the environmental risk and price uncertainty that are specific to oil.

In addition, he said, the oil and battery industries are both more diverse than the national security rhetoric would have people believe. Slash transportation's dependence on oil by 50% and there will still be a large market in heating, industrial products and countless other regions. And while the least expensive batteries and several key raw materials do come from China, the most sophisticated batteries are made in Japan and Korea.

The very unpredictability of his own path -- like the technological change his industry is now experiencing -- offers a fairly good lesson about managing a career, Ghosn said.

"A career, no matter what, you can't predict, you can't plan. You're going to be offered much more opportunity than you ever think could happen. The only thing to make sure of is that your mindset is open enough so that when the opportunity comes, even though it's completely bizarre or completely strange or in a place in the world that you never thought you would be, you're ready to take it," he said. "If somebody had told me six months ago that ... I would be sitting in [the Tokyo neighborhood of] Ginza managing one of the largest car manufacturers in Japan, I'd have said [he was] crazy. Not going to happen. If you don't maintain your open mindset, if you say, 'This is my plan and everything else is a distraction,' you're not going to go anywhere."

How consumers behave - TV, Net gain from slowdown

2009-11-10T01:49:00.000-08:00

Small was big and less was more during slowdown

Starcom MediaVest Group, the brand communications arm of Paris-based Publicis Groupe, which is one of the world s top marketing services company, recently released a study on how the recent economic downturn impacted consumers across Asia and the lessons to be learnt from consumer behaviour during challenging times.

The study, which measured consumers brand behaviour and media consump- tion habits, was supported by the group s real-time consumer intent behaviour tracking tool, IntenTrack. IntenTrack samples around 250 consumers across 35 product categories on a weekly basis and tracks consumers intent to research, purchase or recommend 400 brands in 32 countries.

Joanna von Felkerzam, head insights and captivation, at Starcom MediaVest Group, Asia, and also one of the authors of the study, was in Mumbai recently. She spoke with FE s Pritha Mitra Dasgupta about various aspects of the report. Edited excerpts:

Why was the research done and how is it going to benefit Starcom MediVest Group and its clients?

The slowdown had a big impact on countries outside Asia. It, however, impacted Asian consumers as well to a good extent. We wanted to know how the Asian consumers were faring at a time when the world was battling with the slowdown and to better understand their realities, behaviour and attitude. This in turn helps us anticipate and prepare ourselves as we move through the timeline of the slowdown to recovery. Our clients benefited from having a cross-market understanding of consumer realities and the underlying change in mindset and needs that have a direct impact on brand purchase decision-making.

Tell us about some of your key findings about the Indian market.

We saw that more time spent at home watching TV or surfing the internet on account of postponed or cancelled holidays and time spent viewing TV increased in the first half of 2009 as compared to 2008. In fact, more overseas holidays were cancelled. We had predicted earlier that low-cost airlines would make money and domestic getaways will be popular, especially, the pilgrimage getaways.

Secondly, virtual and offline socialising such as online socialising on Facebook, Twitter saw an approximately 500% growth in the number of registered users in 2009 compared against 2008.

Thirdly, we had said faith in government institutions such as banks will see a revival with a spate of fresh account openings or investments and there would be less faith in private banks. We still have to get some evidence from our banking clients on this.

There was a renewed faith in financial instruments such as bonds, gold and property as against mutual funds and equity; classical packs rather than exotic variants were sold more in the consumer products categories. Small local stores were back in favour than modern retail outlets but again we need some data from retail clients to support this. There was a pride in Indianness, which was evident at the Oscars this year because of the success of 'Slumdog Millionare'. This was more evident in the sports sector with the Indian cricket team doing well and we also captured the imagination in other sports such as billiards and boxing.

Small is better and less is more was evident in the redefined upgrades for cars. We predicted that small cars would be the focus and indeed, they were. Most auto companies just focused in that segment and it is this segment alone that has buoyed up the auto sales so far. So these are some of the basic assumptions and hypotheses, which we went in with in our slowdown study and as you can see some of them did turn out true.

Your study reveals that time spent watching TV increased by 30% but a number of media agencies in India talk about growth of ad avoidance on TV. Have you observed any change in that?

The difference between the programme rating and slot rating is usually the measure of how many people watch the porgramme and skip the ad breaks. Slot TRPs (television rating points) or the percentage of people watching a particular programme at a given point in time) have always been around 15-20% less than the programme rating, depending on the genre of programmes. Typically, on live cricket telecast, the drop in slot TRP will be much less than the drop in slot TRP in comparison with movies and general entertainment shows. This figure of a 15-20% drop has been consistent across the last two years, and has not really affected by the slowdown.

Many media pundits across the world said that traditional media's loss during the downturn will be online medium's gain. What is the trend on this front?

Investment, travel, automotive, high tech and consumer electronics are the key advertisers in the digital space. A similar trend is seen across Asia. Digital industry in India is expected to grow about 20% between 2009 and 2010. This is on a par with the trend estimated for China. Growth will be driven by search, social media and branded content, with mobile becoming ever more important in the overall digital offering with 3G/mobile internet growth.

In China, there will continue to be growth in online video space. Out-of-Home had a particularly bad year in India because of the slowdown. What was the trend in the other Asian markets? Do you foresee a recovery for this medium?

There continues to be a growth in OOH in China with the proliferation of the outdoor channels whether mobile TV in buses, or LCDs in buildings among others. We anticipate the growth in China to be 5% in line with the estimated 5% investment growth for total Asia.

Thanks and Regards,

Navneet Singh Chauhan.

Government's Role in Managing Risk -- Both Natural and Man-made

2009-11-10T01:14:00.000-08:00

What do the global financial crisis, Hurricane Katrina and the 9/11 terrorist attacks have in common? All are examples of how not to manage risk, according to America's top risk-management official, Homeland security secretary Michael Chertoff.

Risk management "lies at the core" of his department's mission, Chertoff said at a recent Wharton Leadership Lecture in which he addressed areas where regulation -- in moderation -- can reduce risk in the marketplace. Managing risk was the first objective he saw before him when he was sworn in almost four years ago, Chertoff said, and it remains "maybe the fundamental social problem that we face in the 21st century."

"Our mission is very broad -- it covers everything from preventing and reducing our vulnerability to terrorist attacks; to protecting and reducing the vulnerabilities of our infrastructure, including our cyber-infrastructure, and then mitigating the consequences of disasters by strengthening our preparedness and response."

Looking back at the 9/11 attacks and various natural disasters during his soon-to-conclude tenure, "or even the current financial crisis, it becomes very clear that we have not always handled risk properly," Chertoff acknowledged.

The 9/11 attacks were not, he said, "a total surprise." U.S. law enforcement and intelligence agencies had known for years about Osama bin Laden's intentions because he had been linked to the 1993 World Trade Center bombing and the suicide attack on the USS Cole. "We had report after report that talked about the need to strengthen our homeland security. And with all of that, we did not devote even a fraction of the investment we currently put into homeland security ... before September 11," Chertoff said. "So, you'd have to say we misjudged the risk."

Similarly, U.S. officials have long known that storms the magnitude of Hurricane Katrina could seriously harm a city, especially a large city below sea level. "It's clear that government at all levels simply failed to invest in maintaining critical infrastructure such as the levies," he said, "wreaking untold havoc" upon New Orleans.

The same can be said of the global credit seizure, he argued. The nation now faces financial woes that were to some degree or another "predicted over a period of years, going back into the 1990s.... We have not managed to address the risk in a way that prevented what was ... a [financial] disaster of the magnitude of a natural disaster and a terrorism disaster."

The official response to each of those was after-the-fact, he noted, and was costlier than would have been necessary had prevention or mitigation efforts been underway beforehand. "Managing risk is not about looking backward at something that's already happened, although that can be useful in terms of what we do going forward," he explained. "Managing risk is fundamentally looking ahead" to possible disasters and making cost-benefit analyses designed to prevent or reduce our vulnerability to them.

"That's not a particularly startling definition of risk management. And yet if you look at all of the events I've described ... you will see that our society has simply failed on a looking-forward basis to manage risk properly." Worse yet, he said, is that institutions of all kinds fail to learn from such mistakes. "We begin to decide that we are spending too much money trying to avert the risk, and we begin to degrade our preparation once again."

That pattern applies even to the U.S. reaction to the 9/11 attacks and Hurricane Katrina, he suggested. Because there have been no terror attacks on U.S. soil since 9/11, many officials at various levels of government say the need to be prepared for attacks, or to spend so much money to prevent them, has diminished. So, he urged a "disciplined, risk-managed approach" to learning the lessons of the last three major American catastrophes.

Chertoff was sworn in as the second Homeland Security secretary in February 2005, less than seven months before Katrina swept over the Gulf Coast. After that disaster, Chertoff acknowledged that he was slow to focus on the storm as it developed. Congressional investigations into the federal response to the deadly storm faulted Chertoff specifically for delays in activating the federal emergency plan that could have rushed aid more quickly. Previously, he was a partner in the law firm of Latham & Watkins, and he served as Special Counsel for the U.S. Senate Whitewater Committee from 1994 to 1996. He was also a federal prosecutor for more than 10 years, including service as U.S. Attorney for the District of New Jersey.

When to Regulate

Because of the current financial mess and the federal response to it, "people are beginning to wonder if changes [are needed in] the ... role of government in dealing with risk in the financial sector and perhaps across the board," Chertoff said. "Although it's getting less publicity, these very same questions are being asked with respect to natural disasters. For instance, what is the role of government in letting people rebuild" in places like Galveston and East Texas, flooded by the most recent hurricanes?

"I still believe, with all that we've experienced, that in a free society like our own, the default position, the starting point for risk management, is with the individual and with the private sector," he stated. "People routinely balance risk and reward. It is the essence of what freedom is.... The private economy is ... the fundamental engine of risk management, and by and large it works very well. We have a system that has figured out the right level of risk." But he added that "there really is no such thing as a truly free market. The market is always bounded by rules and regulations that are put in place by government. Even the most ardent capitalist, the most ardent free marketer, accepts as a fundamental premise that government does have a role to play in laying down certain rules of the road that make it possible for a free market to function."

He recommended that lawmakers, when considering the regulatory response to the financial crisis, should ask themselves what "the government could do and should do to allow risk management, at a social level and an individual level, to proceed in a much more informed, balanced and sensible way." He suggested that any regulations should address three factors: short-tem thinking, self-centered assessments of the value of risk, and conditions under which the value of risk is obscured.

"The free market and people who operate in it tend to favor and focus on [the] short-term," Chertoff said. They prefer benefits that are "immediately realized and immediately capitalized, at the expense of potentially higher long-term costs, especially when those long-term costs are uncertain." For example, he noted, when federal officials make flood maps to help hurricane-prone coastal regions try to direct development efforts to higher ground, "we start to see community pushback" from property owners who do not want to spend tens of thousands of dollars to elevate structures in threatened areas.

He said that if those property owners had to eventually pay the price for ignoring the maps -- instead of being bailed out with federal aid programs that are routinely provided to cover such losses -- they'd be less likely to ignore the flood maps' warnings. Because they encourage risky behavior, such aid programs establish a "moral hazard," a term that Chertoff noted has come up a lot in the debates over whether the U.S. government should invest in or provide loans to financial firms whose devaluation of risk helped create today's credit crisis. The post-hurricane federal aid provides "a clear message to people that they can continue to ignore the warning because even if they don't get the insurance -- for which they have now been disqualified because they didn't elevate the house -- they're going to get rescued anyway." This is an area where government action before the event can help reduce everyone's costs, he said, by making sure people have properly internalized their own risk management.

Another problem that can be addressed by the government "occurs when we may properly internalize our own costs, but we simply don't internalize the costs that we're putting on others." This is an old economic problem, classically illustrated by the upstream landowner who fouls the water used by downstream neighbors. "Increasingly, the failure of a business to internalize its own costs has collateral and cascading consequences for people in unrelated businesses." In the immediate aftermath of hurricanes, it's a "critical cornerstone of recovery [that] you've got to get the power up and running." Government must step in, he asserted, because the people who run the power plant can't get there because filling stations lack electricity to pump gasoline. Chertoff said he is working with federal energy authorities to devise a federal rule similar to one in Florida requiring gas stations to have emergency generators.

Chertoff also offered an example from the shipping industry. He said shippers do not want to incur the expense of gathering and providing to federal inspectors point-of-departure information about shipping containers. Such data, he asserted, speeds the inspection process, reducing the shippers' and the nation's exposure to the risk of a catastrophic terrorist attack. "Again and again we come up against this short-sighted mentality that does not look beyond people's own costs and balance sheets."

The third area for regulation, he argued, "is what I call 'validation.'" It eliminates "the ... costs that are imposed by risk when we don't really have confidence in what we are dealing with, or what we are seeing." The government, he suggests, can require producers to clearly state the risks associated with their product or service so that customers can know "what we are dealing with, and who." Toxic ingredients -- within toys from China or intricately constructed investment vehicles -- harm everyone and [undercut] the entirety of the food chain," he argued. "All of these systems of the marketplace depend on this trust," Chertoff said. "When this trust fails, we see very serious consequences."

Even where regulation is required, he said, moderation is important. "The case in these instances is for intelligent, strong and not overly coercive regulation. We don't want to go to the extreme of smothering initiative, but we also want to make sure that initiative is rewarded" when properly used to allocate and manage risk, Chertoff said. "Over-regulation ... is just as big a problem as under-regulation."

Thanks and Regards,

Navneet Singh Chauhan.

Planning for Crisis -- or Death

2009-11-10T01:09:00.000-08:00

Planning for Crisis -- or Death

Disaster can strike in a matter of seconds. On February 12, a fire turned the Windsor building, one of Madrid’s most famous skyscrapers, into ashes. At the very center of the capital’s financial district, the Windsor was home to the Deloitte consulting group and three departments of the Garrigues law office. Hundreds of documents, confidential memos and critical data files were reduced to ashes. This information was crucial for companies that were using these firms to prepare their annual reports. The origins of the fire remain unknown. Clearly, it would have been a catastrophe if the companies had not counted on contingency plans and back-up centers that allowed them to resume operations fairly easily, in a matter of hours.

Managers at Deloitte and Garrigues knew nothing beyond the dimensions of the fire, which could not be extinguished until Sunday morning. However, they began to put their recovery plans into effect right away. Although it was Sunday, they scheduled a flurry of meetings where crucial decisions were made. Their only objective was to get people back to work by Saturday. The Deloitte crisis team, which counted on 1,200 employees at the Windsor building, rapidly informed people that all their data had been stored in a back-up data center. That was crucial because Deloitte has been the largest auditor in

Spain

ever since it took over business from the old Andersen group. Deloitte manages two-thirds of the selective Ibex-35, and 40% of the overall market. At this time of the year, it was heavily involved in preparing annual reports.

Those Garrigues departments affected by the fire -- processing; industrial property; intellectual property and information technologies -- decided on Sunday morning to relocate their 133 employees in an IBM back-up center near the Barajas airport. Big Blue is Garrigues’ provider of emergency services, and the law firm had contracted for a back-up center that now allowed it to rapidly re-start its operations.

Contingency Plans

“The first thing you do when you build a skyscraper is analyze and evaluate risks,” explains Luis Solís, area director for operations management at the Instituto de Empresa business school. “You try to identify possible risks and what can cause them.” A report by IBM shows that fires are the most likely reason for a disruption of activities; they are the cause in 17.5% of all cases. Acts of terrorism and sabotage (including computer viruses) cause an additional 17.5% of disruptions. Other common sources of headaches for organizations include atmospheric disturbances (14%), earthquakes (10.5%), power outages (9.5%), software errors (8.8%), floods (7%), and hardware errors (5.3%).

“Some simple construction work can ruin all the systems in a company by accidentally breaking a wire,” notes Enrique Rollán, director of information technology outsourcing at EDS. Telefónica became a victim of this kind of error two years ago when a machine accidentally broke a wire, preventing it from providing telecom services. “These companies cannot allow themselves to stop providing services. They need alternative centers that guarantee they can continue operations in case of failure,” adds Rollán.

Solís stresses that every company must analyze its exposure to various kinds of risks and how serious the impact will be if a disaster strikes. “Companies must evaluate the probability of an event; high, medium or low, and then, how serious the impact will be -- high, medium, or low. That way, they can find out if they face risks of low probability and high impact (such as an earthquake) or risks of high probability but low impact (such as a cable cut by construction work).”

The attacks on New York’s Twin Towers on September 11, 2001, demonstrated that we can never entirely discount any possible risk. Before 9-11, the notion of two planes crashing into the Twin Towers seemed too far-fetched, even for fiction. But it happened. Low probability, great impact.

Being Prepared

Within minutes after the first plane crashed into the North Tower, managers at a few of the 430 companies directly affected were calling their service suppliers to prepare locations where they could restart their business activities. “That day, we relocated 4,000 employees from many companies, such as American Express, in an alternative center in a New York suburb,” recalls Rollán. Amex and Lehman Brothers were two of the earliest companies to start functioning from centers in New Jersey, because they had prepared for any disaster by drawing up contingency plans.

“Basically, this kind of plan defines how you are going to behave in the event of a disaster,” explains Solís. “The most important part is to eliminate all improvisation that can result from not foreseeing a situation.” In his opinion, panic is the worst enemy in any emergency. Nevertheless, that kind of emotional response is very human. “Very often, panic makes you take a very rapid response that is probably not the most appropriate one.”

The attacks of 9-11 demonstrated the capacity of many

U.S.

companies to respond even to the greatest disaster. But Solís believes this mindset is not so well established outside Anglo-Saxon culture. He recognizes, however, that the impact of the Twin Towers has raised awareness among managers responsible for disaster planning. Between 2002 and 2003, there was a 13% increase in disaster simulation trials. Since 9-11, they have grown by 33%.

According to Juan García Gay, a risk-management consultant at the Marsh consultancy, “Spanish companies are barely concerned about these subjects. What is worse, they are not prepared to face these kinds of risks. Clearly, having a business continuity plan is no guarantee that we are able to anticipate a specific event, but we can deal with and manage it successfully.”

Both Deloitte and Garrigues, the two firms most affected by the Windsor fire, say they used their contingency plans and did not lose any data. Garrigues, which occupied the seventh and eighth floor of the tower, also had its data center there. “Our last back-up had been made on December 16,” says a company spokesperson. However, the company has lost little or no data. “Our professionals always make a security copy. In addition, almost all of them work with a lap-top computer that they take with them,” he adds.

Antonio Garrigues Walker, president of the law office, recognized on February 16 that the firm had copies of almost all the material destroyed in the fire. He added that he was confident they could recover some data from the computers that were in Windsor. He said those machines “are alive.”

PrimaryCenter, AlternativeCenter

The goal of disaster centers is to guarantee that, if an unexpected event destroys a company’s data systems, the company can get up and running right away. Service providers offer two kinds of centers. “The first is a data center where they keep all the information,” explains Rollán. “The second, or alternative center, has back-up copies of all the data.”

These buildings are constructed with the highest level of security. They are located in areas where there is a low probability of natural disaster. Ordinarily, these sites are outside the central business center to avoid attracting attention from terrorists. “Normally, the second center is located in a different province from the first one,” adds Rollán. Depending on the contract with the service provider, the information is either copied automatically or is stored in discs that can later be brought to the disaster center for storage.

These kinds of buildings have the most advanced technology, including equipment and services from a range of vendors. Companies can also contract to relocate their personnel to the remote location, if necessary, as in the case of September 11 and, more recently, Windsor Tower. According to Rollán, the normal practice is to move between 10% and 20% of the staff for a period of one to three months.

According to Solís, “Generally speaking, banks and financial service companies are the most advanced at doing this. Their back-up systems may even be located in other countries because they depend so much on data.” According to IBM, banks and the financial service firms are affected in 26% of all disasters; more than any other sector. Risks are highest there because those sorts of firms cannot afford to shut down services. Other major victims are government agencies (19.1% of all cases), and communications firms (8.2%).

Double Victims

Whenever a disaster strikes, there are other victims beyond those companies that are directly affected. The entire business community nearby also suffers. The fall of the Twin Towers affected several buildings around the World Trade Center. In Madrid, three nearby office buildings (Bronce, Orense II and Orense IV), as well as the Cortes Inglés de Castellana [department store], were shut down after the fire. No one knows how long it will take for them to reopen. In addition, shops, restaurants, kiosks and all sorts of services near the Windsor have been forced to close temporarily.

According to Copyme,

Spain

’s general confederation of small and medium-size companies, every business within a radius of 500 meters is going to be affected by the Windsor fire for some six months. Some of those businesses will have to be shut down for good, and others will have to cut their staff. In addition, a barrage of lawsuits has already begun, and that will have a direct and negative impact on insurers. Both El Corte Inglés and Windsor had signed insurance policies with Allianz that, predictably, will force the insurance company to face a bombardment of claims.

Asón Inmobiliaria de Arriendos, the real estate firm that owns the Windsor building, has also filed a criminal indictment while awaiting clarification about what started the fire and who was responsible. For the time being, no one knows how the disaster began. However, the number of victims -- not all of whom were prepared -- continues to grow.

Netflix: One Eye on the Present and Another on the Future

2009-11-10T00:58:00.000-08:00

In a year when DVD sales are falling and studios are facing major shakeups in their executive ranks, Hollywood is beginning to look a lot like one of its own slasher films, the Los Angeles Times noted recently. Amid all the turmoil, however, there is at least one success story in the movie industry: Netflix.

Founded in 1997, Los Gatos, Calif.-based Netflix made a splash in the movie rental business by offering an online subscription model with a flat monthly fee for unlimited rentals and no late charges. Since then, despite a recession, fierce competition and the emergence of online video delivery, the company continues to thrive. According to experts at Wharton, Netflix is now in a race to transition to a business model focused on streaming content online, while continuing to exploit its current model based on physical DVD distribution via the U.S. Postal Service. "You would think that Netflix would be entrenched in its old model and fighting off digital distribution, but it is embracing the future," says Wharton marketing professor Peter Fader.

While many companies see the need to develop new business models as older, more profitable ones erode, not all of them deftly manage the transition. For years, Netflix has been mailing DVDs to subscribers in its recognizable red envelopes, but in 2008 it introduced a "Watch Instantly" service that allows consumers to stream movies on their home computers. Since then, the company has forged a bevy of partnerships to embed its Watch Instantly service in television sets, game consoles such as the Xbox, Blu-ray DVD players and set-top boxes. In its latest move, on October 26, the company announced a partnership with Sony to deliver its streaming service via Sony's PlayStation 3 game console, nine million of which have sold since it was first introduced in 2006.

Netflix had 11.1 million subscribers through the third quarter ended September 30, up from 8.67 million for the same period a year earlier. The company predicts it will have 12 million to 12.3 million subscribers by the end of the year. For the nine months ended September 30, Netflix reported net income of $84.9 million on revenues of $1.22 billion, up from earnings of $60.3 million on revenues of $1 billion for the same period a year ago. According to Fader, Netflix's low-priced subscription model -- it offers plans that range between $4.99 and $16.99 a month -- has helped to keep its churn rate low (4.4% for the third quarter).

On an earnings conference call October 22, Netflix co-founder and CEO Reed Hastings said the company's goals were simple: Grow revenue, subscribers and earnings while expanding into streaming content. "Of the 115 million estimated households in America, 9.6% now subscribe to Netflix," said Hastings. "In the greater San Francisco Bay Area, which we believe is a leading indicator of Internet behavior elsewhere in America, 21.2% of households now subscribe to Netflix, up 13% from one year ago."

Hastings added that the company expects disc shipments through the mail and its 58 distribution centers "to grow for several more years as video stores close and our subscriber base expands." For instance, Netflix rival Blockbuster, the largest movie rental chain in the U.S., plans to close 40% of its stores over the next two years as it focuses on launching kiosks and its own digital rental service. In a regulatory filing, Blockbuster said that 18% of its stores are unprofitable.

'Netflix Killers'

However, Netflix faces intense competition from companies ranging from Apple with its iTunes service, which rents movies online, to Blockbuster and an upstart called Redbox, a division of Bellevue, Wash.-based Coinstar, which rents DVDs through kiosks primarily at supermarkets and convenience stores. The Redbox plan is simple: It charges $1 a day for a rental. Each kiosk holds between 70 and 200 titles, which are updated weekly. To keep up with growing demand, the company has nearly doubled its outlets during the past year to a total of 17,900 across the U.S. It expects to add another 8,500 this year. According to Video Business, revenues from video kiosks like Redbox will reach $1 billion by 2011.

Like its DVD rental business, Netflix's video streaming model is under fire from powerful rivals. The most significant among these is YouTube, now part of Google's mighty empire, which streams films for free off its Movies channel and competes directly with Netflix's "Watch Instantly" service. To get a sense of the popularity of YouTube's movie service, consider this: In late October, a documentary titled "Home" about climate change had been viewed more than 3.4 million times and more than 13,000 people had commented on it. Another challenger is Hulu, launched in March 2007 by News Corp. and NBC Universal, whom Disney joined as an investor this year. The company is an online video service that provides TV shows and movies from more than 190 content providers.

But it's not as though competition is anything new for Netflix. So-called "Netflix killers" have surfaced repeatedly in the last decade. A significant threat loomed in 2002, when Walmart began an online rental service. However, the retail giant abandoned the project in 2005 after failing to gain traction with consumers. In addition, Walmart launched a movie download business and had to pull the plug on it in 2007 following a dispute over infrastructure with Hewlett-Packard. Now, the company has a cross-promotional deal with Netflix. In 2004, Blockbuster also started an online rental service, but it hasn't been able to stop Netflix's momentum. (Blockbuster does not offer separate sales figures for its online rental division.)

Wharton experts say that Netflix has proven its doubters wrong repeatedly, but it is unclear how the balancing act between the company's old and new business models will play out. "Netflix has won round one with physical distribution of DVDs, but that advantage won't [necessarily] persist" once the game switches to digital distribution, says Wharton management professor David Hsu.

For now, though, movie rental sales figures are playing to Netflix's advantage, Hastings noted during his call. DVD rentals have held up well as consumers opt for cheaper forms of entertainment. According to research firm Digital Entertainment Group, third quarter consumer sales of DVDstotaled $4 billion, down 3.2 % from a year ago, but digital distribution (including on-demand video rentals and other forms of electronic delivery) was up 18% in the third quarter to $420 million. Meanwhile, media measurement firm Rentrak reported that movie rentals were up 9.9% for the quarter.

According to Wharton experts, particular strategies have helped Netflix maintain its lead. These include:

Keeping one eye on the road and one eye on the turn ahead. "Any company that doesn't keep its eye on where things are going and only focuses on the here-and-now risks having its market disappear," says Kendall Whitehouse, director of new media at Wharton. "Netflix is positioned nicely for when the digital transition comes. It can exploit the current model [distributing physical discs] now and hedge against future technology changes with its Watch Instantly service."
Employing a subscription model. "One way to define Netflix is by the technologies it uses, but another way to define it is by its business model. Netflix took the per-item rental model and turned it into a subscription model. The 'aha' moment was really charging a subscription for a physical product," says Dan Levinthal, a Wharton management professor.
Moving quickly to stay ahead. "Some obvious lessons that can be learned from Netflix are: Target a niche and stay flexible," says Wharton marketing professor Jehoshua (Josh) Eliashberg. "Netflix should be commended for moving fast to seize opportunities and technological trends."

India's gold purchase - Adornment and investment

2009-11-08T23:40:00.000-08:00

IF YOU count bangles, necklaces, anklets and other pieces of jewellery, India is the largest repository of gold in the world, according to the World Gold Council. Many Indians see gold as an investment as well as an adornment. India’s post office sells 24-carat gold coins, as small as 0.5 grams, to savers wary of fiat currencies or mutual funds. The latest big investor in the metal is the Reserve Bank of India (RBI). On November 3rd the central bank said it had bought 200 tonnes of gold from the IMF, a purchase that would have cost about $6.7 billion. The news pushed the price past $1,090 an ounce for the first time.

The IMF’s gold holdings are less decorative than India’s, but also impressive: the third-biggest official stash in the world. Its sale to the RBI is part of a plan to offload 403.3 tonnes, or an eighth of its total. The proceeds will create an endowment to cover the fund’s operating expenses and help expand its lending. It is doing its best not to rock the market by selling first to central banks, in keeping with their agreement in August to sell no more than 2,000 tonnes over five years. But the gold market is now interested in how much central banks might buy, not how much they might sell.
The central banks of China, Mexico, the Philippines and Russia have all added to their gold reserves in the past year. The RBI is merely catching up. Its stockpile fell to just 3.5% of its total foreign-exchange reserves (of $281 billion) in September. This purchase will restore it to almost 6%. Every central bank with a large holding of American debt is worried about capital losses if the dollar continues to weaken. Gold offers reassurance. Anyone who wants to try “quantitative easing” in the gold market has to dig a mine.

Thanks and Regards,
Navneet Singh Chauhan.

Introduction

2009-11-07T12:07:00.000-08:00

Hi there,

Here, you will get all updates from the world of Business, Stocks, and Marketing and Promotions.
All that effects or may effect the world of business.

Thanks and Regards,
Navneet Singh Chauhan.