Perspectives

Facebook IPO

2012-02-06T15:33:00.003+05:30

Few Intresting details out from the recent IPO filing for Facebook

Usage:

Facebook now has 845 million active monthly users, up 39 percent over the 608 million users recorded at the end of 2010.
Users generated an average of 2.7 billion "Likes" and "Comments" per day for the period from October through December last year.
250 million photos are uploaded to the site every day.
More than half of Facebook's users -- 425 million -- now access the site using a mobile device, up from 350 million in 2011.

Revenue:

Facebook generated $3.711 billion in revenue in 2011, up from $1.868 billion in 2010 and $764 million in 2009.
Advertising generates approximately 85 percent of Facebook's total revenue ($3.154 billion in 2011).
Twelve percent of Facebook's total revenue in 2011 came from Zynga. Under an agreement with the social gaming firm that won't expire until May of 2015, Facebook retains 30 percent of the face value of user purchases in Zynga's games on the Facebook Platform.
Facebook's 2011 net income was $1 billion -- more than triple the $229 million it recorded in 2009 and up 34 percent from $606 million in 2010.

Expenses:

Facebook spent $427 million in 2011 on marketing and sales.
A total of $388 million was spent on research and development.
The company spent $280 million on general and administrative expenses.
While company co-founder, chairman and CEO Mark Zuckerberg's 2013 annual salary will be $1, he received a base salary of $500,000 last year.
Company COO Sheryl Sandberg's base salary in 2011 was $300,000, as was CFO David Ebersman's base pay. Mike Schroepfer, vice president of engineering earned $275,000 and Theodore Ullyot, vice president, general counsel and secretary, also earned $275,000.
Facebook paid between $600,000 and $800,000 last year for a security system at Zuckerberg's personal residence, as well as security personnel assigned to him and personal and professional use of chartered aircraft.

Acquisitions:

Facebook spent $68 million in 2011 acquiring other businesses.

Ownership:

Zuckerberg owns 28.4 percent of the company's common stock (533.8 million Class B shares). James Breyer, a partner at venture capital firm Accel Partners, owns 11.4 percent of the company's shares; Co-founder Dustin Moskovitz owns 7.6 percent; and venture capitalist Peter Thiel owns 2.5 percent.
A number of investors -- including Moskovitz, Sean Parker (played by Justin Timberlake in The Social Network), The Founders Fund, Silicon Valley Community Foundation and others -- have given Zuckerberg "irrevocable proxy" over their shares. That means Zuckerberg controls 1.07 billion Class B shares, along with an additional 42 million Class A shares, giving him control of more than 57 percent of the company's stock.
In both 2004 and 2005, Mark Zuckerberg's father, a dentist in New York, provided the company with working capital. In return, he was given the option to purchase 2 million Class B shares of stock in the company. In 2009, three years after Dr. Zuckerberg declined and the options were no longer valid, Facebook's board of directors gave the same amount of options to Glate, LLC., a company owned by the elder Zuckerberg, in consideration of his initial financial assistance.

Jerry Yang : Another Steve Jobs in the making?

2012-01-19T00:51:00.000+05:30

Yahoo co-founder Jerry Yang has announced that he would be leaving the Internet company he founded with his dorm friend David Filo. Yahoo has hired former PayPal executive Scott Thompson as its new CEO. For Yahoo it would be the 4 CEO’s in the span of 5 years and this speaks volumes of the condition in which the company currently is.

The departure of Mr. Yang from the company he founded reminds me of my favorite business leader Late. Mr. Steve Jobs. Jobs was also removed from the company he founded, but he utilized his time outside Apple and when he came back for his second innings he made Apple world’s best technology company.

I think the similarities are many, Yang is a billionaire, young (43 is young, SRK can still romance with college girls, remember!) and above all has the ability to build up a company using ideas, I sincerely hope that the world gets to see his second innings either at Yahoo or elsewhere!

New Year, New Beginning

2012-01-11T01:57:00.000+05:30

It has been a while since I posted on my blog, call it a new year's resolution that I have decided that I would take out time going forward to be regular on my blog. I realized that this is the only creative thing I have done in the recent past and hence should continue the habit.

In-App Advertisements : The new Big Thing

2011-07-18T17:20:00.002+05:30

Mobile marketers are turning more attention toward in-app advertising. Currently the in-app ads account for around 5% of mobile ad spending, and that number is only expected to rise over the next few years. Currently the Ad spend is around $87 M which is pegged to grow up to $894M by 2015.

Personally I don't like the advertisements in the apps I use, but one of the reasons in-app ads are taking off is their effectiveness, the majority of the user are able to recall ads at a higher rate than the ads they see while browsing the mobile web.

Well like it or not this is here to stay and to grow.

Cognizant looks to buy Genpact

2010-09-15T13:49:00.000+05:30

CTS is eyeing buyout of Genpact... Read the complete story here

Indian Rupee gets its symbol

2010-07-16T11:12:00.001+05:30

The Indian Rupee now will have a symbol like the Dollar ($) or the Euro (€) or the Pound (£). The Cabinet today finalized the design for the Rupee. The symbol, with a blend of the Devanagri ‘Ra’ and Roman ‘R’, was approved by the Union Cabinet to distinguish the Indian currency from the rest, such as the rupee or the rupiah of Pakistan, Nepal, Sri Lanka and Indonesia.
The symbol would be included in Unicode Standard and major scripts of the world so as to ensure that it is easily displayed and printed in the electronic and print media. Unicode is an international standard that allows text data to be interchanged globally without conflict.
The symbol is designed by Bombay IIT post-graduate D. Udaya Kumar. Mr. Kumar's winning entry was chosen from 3,000 designs received for the currency symbol competition. He will get an award of Rs. 2.5 lakh from the Finance Ministry.

BP Set to Test New Fix For Leaking Well

2010-07-14T11:31:00.001+05:30

The latest update on the BP oil spill, picked it from the Wall street Journal. Click here to read the complete article

Central Statistical Organization releases GDP Growth Rate

2010-05-31T16:43:00.002+05:30

The Indian economy grew by 8.6 per cent during the quarter ended March 31 while the gross domestic product for entire 2009-10 rose at a rate of 7.4 per cent, according to official data released on Monday. The economy registered a 6.1 per cent growth in the first quarter, 7.9 per cent in the second quarter, but dropped to a modest 6 per cent in the third quarter, as per data released by the Central Statistical Organization (CSO) here.

The growth rate was mainly on account of higher performance in mining and quarrying, which grew by 14 per cent and manufacturing by 16.3 per cent. Among other high growth sectors during the quarter were hotels and transport services, which grew by 12.4 per cent, while financial services including insurance, grew by 7.9 per cent.
Economy grew an expected 8.6 per cent in the March quarter from a year earlier, driven by robust manufacturing sector on the back of government and consumer spending.
The manufacturing sector grew 16.3 per cent in January-March from a year earlier, while farm output rose an annual 0.7 per cent, government data showed on Monday. For the full year to March, the economy expanded 7.4 per cent, above a government forecast of 7.2 per cent. This has been the fastest growth in the last six months in the quarter through March 2010
Manufacturing output grew 16.3 per cent on year in the quarter as consumers bought more cars and other goods, while farm output grew an annual 0.7 per cent helped by a good winter harvest.The government expects the economy to grow 8.5 per cent in the current fiscal year that started on April 1 on the prospects of a better farm output and a global recovery.The farm sector, which forms nearly 17 per cent of the economy but is dependent on monsoon rains, is expected to do well in 2011 as the weather office has predicted a normal monsoon for the country.

Too Much Exposure causes Fatigue...

2010-03-27T14:05:00.003+05:30

IPL 3 is on and it has swept the entire country in cricket fever .. or has it ? Well I am a ardent follower of cricket but I think that too much of cricket is somehow decreasing my interest in watching the game on television. I call this overexposure, I think the same logic can be applied to the shows like American Idol , Indian Idol and the string of other reality shows..... after a period of time nobody cares !!!

Owing to the same reasons companies keep changing their advertisements and try to come up with innovative campaigns .. Vodafone's Zoozoo is a perfect example. The first time they were introduced they were a rage .. but now their uniqueness is gone and they are like any other ads.

The take from this as I see, keep innovating and avoid overexposure ..this will ensure that the customers are not getting used to or being apathetic

On the field or in the boardroom, the vision for winning is the same

2010-02-15T17:07:00.002+05:30

A nice read from the WSJ
Source : WSJ.com - BY CATHERINE BOLGAR

Chelsea pays €21 million ($31 million) for midfielder Yuri Zhirkov from CSKA Moscow. Manchester City shells out €29 million to get forward Emmanuel Adebaor from Arsenal. Aston Villa pays €14 million to lure midfielder Stewart Downing from Middlesbrough.
You could buy a company for that kind of money.
Actually, acquisitions in football aren’t so different from acquisitions in business. You want to make a move to realize your strategic vision. You are looking for an addition that will complement your portfolio. You are willing to pay the price for the right target. Acquiring talent can mean exactly what it does in football — getting that special person on your team. But it also can be taken in a larger sense, where the talent is in the form of a company or another investment.
“Business professionals can learn from sport at the highest level,” says Hans Westerbeek, professor of sports management at La Trobe University in Melbourne and co-author of “Business Leadership and Lessons from Sport.” He adds that “there’s the focus, the determination, the overriding desire to obtain the 0.001% advantage over your competitor, because the competition is so fierce.”
So what are the rules of the talent-search game?
1. Focus
“First is the focus, the sheer desire to win, and everything else comes second in support of that,” says Dr. Westerbeek. “Wanting to win in a business sense is to be the market leader, to create the highest returns on investment and highest profit margins.” The coach and executive must consider how any acquisition will aid the No. 1 goal of winning.
Everybody wants to win — and nobody likes, or intends, to lose. What separates the winners from everybody else is a strategic vision, a roadmap of how to succeed. The ability to come up with such a vision is also what separates leaders from managers. Managers may be very competent and get things done efficiently. But leaders can bring their teams/corporations to ever-greater achievements.
Leaders have a vision for the game or business that is so innovative or creative that no one else can touch it or believe that such level of performance is possible, says Dr. Westerbeek. “That’s because the others don’t understand what is required in terms of system change to achieve such goals. A leader, a great coach, can change a team from mediocre to one that plays in a style and at a level nobody thought possible.”

2. Resources
Namely money. When Real Madrid paid €45 million to bring David Beckham from Manchester United in 2003, the figure was scandalously huge. At the end of his four-year contract, Real Madrid estimated Beckham-related merchandising profits at €560 million during the same period. The team has used the megamoney strategy to snap up other high-profile players — dubbed “galacticos” — including, last June, Kaka, for €65 million, and Cristiano Ronaldo, for a record €96 million.
“To get the best, you need that kind of money floating around,” Dr. Westerbeek says. To win big in gambling, you need either long odds or big bets. Real Madrid bet big, and so far the returns have been pouring in.
But money isn’t enough. Superstars don’t go to losing teams. For them to attain new heights of success, they need to join the right environment, with the right supporting cast, the right coaches to bring out excellence. “The analogy is true in business,” Dr. Westerbeek says. “If you’re the best in your business, you’re very unlikely to move just for the money.” While that rule might not apply to a corporate acquisition, in which shareholder value is the ultimate deciding factor, it is certainly valid for the top echelons of business talent — the company seeking a new chief executive, for example.

3. Team spirit
In the business world, it’s called a corporate culture. Team spirit is an extension of the strategic vision — when all the members understand and are committed to that vision.
The legendary manager Sir Alex Ferguson is renowned for his team-building skills, says Rory Miller, program director for the MBA in football industries at the University of Liverpool Management School in the U.K. Sir Alex has made Manchester United one of the top teams in the English Premier League since its founding in 1992, with 11 championships. A man who cultivated players into some of the sport’s biggest names, he also manages to direct some understandably big egos.
“The best teams stand out because they are teams, because the individual members have been so truly integrated that the team functions with a single spirit,” writes Sir Alex in his autobiography, “Managing My Life.” “There is a constant flow of mutual support among the players, enabling them to feed off strengths and compensate for weaknesses.”
Newcomers must be prepared to adapt to the existing culture, says Dr. Miller. “There are plenty of examples of high-value international transfers that have failed.”
In the business world, the lesson is not just for the chief executive officer brought in from outside, but for any corporate acquisition. A company may have an ingrained culture, but if it’s bought by a bigger firm or even a near-equal rival, its members will suffer if they don’t learn to adapt to the new reality.

4. Don’t get starstruck
A dream team isn’t necessarily a winning team. Between 2004 and 2006, Real Madrid went through a three-year dry spell despite big spending on galacticos, notes Chris Brady, dean of BPP Business School in London and author of “The 90-Minute Manager: Lessons From the Sharp End of Management.” The stars brought in plenty of merchandising revenue, but no silverware, he says. “From the money side, it was good, but from the football side it wasn’t.”
Eventually, a new manager, Fabio Capello, replaced some of the stars with team-oriented players. “Once they started winning, they had both revenue streams — the merchandising as well as the ticket sales,” Dr. Brady says. “Individual performance isn’t what you’re paying for. You want individuals to enhance the team performance.”
Likewise, a business risks overpaying for a high-profile acquisition that ends up not contributing to the bottom line. For talent-driven industries, such as investment banking, the analogy is even sharper. Dr. Brady has seen companies hire top salesmen, only to see the individual’s results soar while overall sales slump. One role of the star, he notes, should be to mentor the younger players.

5. Talent assessment
The flip side of spending on stars is to discover them before they shine. That can mean scouting, especially in not-so-obvious places. “The catchment area, where you have to look for talent, is much wider than it used to be,” says Andy Adcroft, senior lecturer in corporate strategy at the University of Surrey School of Management in Guildford, U.K. “The benefit is teams have much wider access to resources. Scouts used to drive around to watch local teams. Now they fly around the world.”
Teams also nurture new talent from the very beginning, with academies and youth leagues. Finding talent can mean finding the right person who is in the wrong environment, says Dr. Brady of BPP. “You need managers who can spot talented individuals who may not be doing that well in the organization they are in, but you know that in our culture they’ll blossom. You get high value at a lower price.”
The business equivalent of good scouting would be looking for investment opportunities everywhere, including new industries and emerging countries that may not have previously been on the radar screen. For nurturing, it can mean working with innovation clusters around universities to help start-ups that can eventually provide a crop of acquisition targets. And for finding the diamond in the rough, managers can look at business lines that other companies want to dispose of, which their business could turn profitable.

6. Long horizon
Over the history of the Barclays Premier League, two teams have been able to sustain success: Manchester United and Arsenal. They also have the longest-serving managers, Sir Alex Ferguson and Arsene Wenger, respectively, who have been given the time and space to build their clubs over the long term, says Dr. Adcroft of the University of Surrey. Both took over when their teams were somewhat troubled and have evolved from their early firefighter roles into the very souls of their teams.
“If you look at clubs that have spent a lot on player acquisitions and have not been successful, like Newcastle, there’s lots of turnover in management,” he says. “Without that manager, in essence a CEO, you have players bought and sold at an alarming rate. It’s hard to sustain any kind of success on the pitch with that.”
Even Sir Alex and Mr. Wenger have had difficult moments when their futures have been called into doubt. What sets them apart, Dr. Adcroft says, is the long view. They have a solid structure in place and are able to take advantage of it. They can envision from events that are just happening what the results will be, and they can turn things to their favor.
Companies face short-term shareholder demands for quarterly results; teams face fans’ demands for victories at each game. The urge is to make fast decisions, adapt quickly. But there’s a difference between being nimble and being haphazard. The business lesson, he says, is that any company that is changing its business, its vision or its strategy is going to find itself unmoored. The winners, he says, always have a plan.

Have Breakfast… or…Be Breakfast!"

2010-02-11T17:59:00.001+05:30

A very good read from WSJ on competition and product life cycle. Click here to read the article.

Cadbury ain't English Anymore

2010-01-26T09:34:00.003+05:30

After months of fierce resistance, Cadbury's accepted the 11.5 billion pound ($19.5 billion) takeover from Kraft Foods Inc. The two companies when merged together will form the world largest confectionery company. A Kraft-Cadbury combination will create a portfolio with more than 40 confectionary brands, each with annual sales in excess of $100 million.

President O-bow-ma

2009-11-18T18:14:00.007+05:30

Surfing through the multiple websites I was quite intrigued by the comments and emotions people have poured in after seeing President Obama bowed to greet Japan's Emperor Akihito over the weekend.

There were various comments some , like "Obama's world apology tours", "I wish are first black president had been a rapper at least he’d have some attitude…" , "Obama wasn't bowing - he thought he saw a one yen coin on the floor and bent over to pick it up, because it's worth more than the U.S. dollar now "

Now as to why make such a fuss about a simple greeting, yes it was not done in a proper way "Obama stuck out his hand for a shake. Which was fine. He then proceeded to simultaneously bow. Which was not. And take his eyes off the person he's greeting. Which was not. And then the worst, the over-enthusiastic president of the United States bowed way down at a 45-degree angle", but why there is so much discussion ?

The simple answer which i can think of is, that President Obama is a "BRAND". Yes Obama is a brand, perhaps a brand which all the americans associate to, in their mind President Obama represent America and in turn Americans .

But "bowing" is not an american value, this is not what we associate Americans with.

In Consumer Behaviour terms , when customers see the brand which they use representing the values they do not have/ preffer / ask for there is a dissonance and that perhaps that explains all the analysis and the nasty comments :)

Low Consumer Demand the Biggest Threat to Growth : McKinsey

2009-11-18T16:24:00.006+05:30

McKinsey recently released its global survey results on Economic Conditions for Nov 2009. The key highlights of this reports are

1) Lower consumer demand is perceived to be the biggest threat to growth of the country.

2) Majority of the respondent of this survey had responded that the economic scenario is much better than that of the last month.

3) The respondents of the Asian countries were more optimistic than their European counterparts

Read the full report here

High Involvement product purchased based on Mobile phone advertisements : Since When ??

2009-11-14T22:06:00.004+05:30

Traditionally products involving high involvements are generally purchased after due diligence, but today I read this article on ET ( Most Indians buy cars based on mobile phone advertisements ) and was not entirely convinced by the title of the article.

I recently purchased a car and I do not remember relying on advertisements on my mobile phone or relying on any telle-caller's advice to select a car. The investment was made after multiple website visits, feature comparisons across brands across companies. Which was then followed by the test drive and finally the choice was made. Therefore I am skeptical of the fact that mobile phone advertisement actually contributed to the 30% of sales.

I am not trying to lower down the value of the Mobile phones/ Handheld devices in the field of marketing, In fact I am a firm believer that the next revolution in the science of marketing will come from these handheld devices. The ability to personalize and deliver the product/ services message exactly to the intended audience in a way that he can understand and relate to, really excites me, but will it affect 30% of the sales only time can tell

Banking on Loyality to sail through Tough Times ?

2009-09-29T20:16:00.004+05:30

I was going through the articles in the economic times and what caught my attention was this article "Price of loyalty: Is it the end of loyalty cards?" . The article talks how the current market scenario has affected the marketing strategies of the companies.

After reading this article I was really wondering whether there will be the concept of loyality in this tough times, or with the minimal effect we the marketiers have the chance of moving the customers to our brands.

What excited me the most on this thought is that if we are able to find the correct value proposition then the customers will move to a different brand, and Price can only be one of the factors and not the ONLY factor. We have to ensure that we identify all the touch-points of our customer's and make the experience a memorable one ( Read Value adding to them ) , if we are able to deliver it then our job is well done ....

LMN Vs Nimbooz : Where one wins over the Other

2009-07-15T00:09:00.004+05:30

LMN a product and Nimbooz by Pepsico company have been catering to the same segment of the market ...but quite obviously one wins over the other ....any guesses who is the winner ?

Quite surprisingly the answer is not Nimbooz by Pepsi but LMN by Parle agro and this brings one important point which we learnt in the B-classes, SCM or Supply chain Management is the key if we have to win the customer mind and hearts.

Let us look more closely .. Nimbooz was launched at least 2 months ahead than Nimbooz but if we look around today LMN is more ubiquitous than Nimbooz , so where did Pepsico go wrong ? simply Nimbooz focussed more on the advertisement blitz than creating a robust platform where it can be made available to the people .. honestly I have not been able to find Nimbooz in any shop in Chennai.

The other question is whether the shopkeeper are ready to accept it and shelf it in their shops ...

Keeping all these in minds one thing is for sure... Parle was able to take its drink to the masses because it was able to create a better SCM solution than Pepsico ...

Pic of the Day

2009-03-05T15:40:00.001+05:30

Ref: Economist.com

Tata to Launch Nano On March 23

2009-02-26T15:24:00.004+05:30

MUMBAI -- Tata Motors Ltd. has set March 23 as the launch date for its 100,000 rupees ($2005) minicar, about three months behind initial schedule after the auto maker had to relocate its factory late last year.
For all the people who are waiting to book their cars will have to wait a little longer as the bookings for the Nano -- the world's cheapest passenger car -- will begin in the second week of April. The company confirmed that the Booking process and other details will be announced at the time of launch.
Tata Motors had originally planned to launch the Nano in the fourth quarter of 2008. But, it had to relocate its factory in the eastern state of West Bengal in October, but west bengal's loss became Gujrats gain.

You Tube Vs Hulu : Hulu Who?

2009-02-07T11:02:00.003+05:30

The excitement as well as the confusion in the world of online video content sharing started in 2006, when a young website, YouTube, shot out of nowhere to become that year’s “next big thing”. Within months, YouTube sold itself to Google, the world’s largest internet firm. YouTube had risen so fast by making it easy to watch and share videos in any web browser, and by making it almost as easy to upload home-made videos to its site. Such “user-generated content” seemed to be the future.
In one sense this turned out to be correct. YouTube went on to dominate web video as measured by the number of videos that users watch (5600 m in Dec 2008 ).
Its social and even political importance is hard to overstate. From “Obama Girl” videos and tutorials about tying shoelaces or folding origami to Yoga and aerobics instruction, YouTube has changed lives. But there was a catch. Advertisers, by and large, will not touch user-generated content with a barge pole. Its quality is variable, to say the least; its content occasionally off-putting. No brand wants to be near it. And much of it is illegal—pirated from large media companies and uploaded by fans. Media giants, led by Viacom, were suing. So there was a threat of costs and no promise of revenues. YouTube is undoubtedly a phenomenon, but it is not a business.
So others showed up hoping to fill that gap, but the question was, did a need exists where a website could host user-generated content as well as professional videos. Does this website need to aggregate the content of many media companies or to be an outlet for just one?, question on consumers online behavior was also imminent, Would people prefer to download films or television shows to their computers, then transfer them to their iPods, as Apple was betting? Or would they prefer “streaming” a video just once? or would they insist on watching videos inside their web browsers? Would they pay to watch, or would advertising provide the revenues?
Almost every permutation has been tried. From Amazon to Apple, from Netflix to Joost, from ABC to CBS’s TV.com, companies old and young started serving videos over the internet.
Into this mess a with a new idea of “video sharing obtained from professional partners”, Hulu was born .
Today, even though advertising is destined for a depression, Hulu appears to have clarified much of the confusion. It is not clear how much revenue or profit Hulu is making, but it seems to be successful by any measure. Although Hulu is still far behind YouTube, in the number of hits, users have been flocking to it, watching 216m videos in December. Just as importantly, Hulu’s inventory for advertisers appears to be sold out. So Hulu is in the rare position of being able to increase inventory (through new content and more views) and make money from it. Hulu now has more than 100 advertisers, including big brands such as McDonald’s, Bank of America and Best Buy.
Hulu is not a “me too” brand, it does not copy YouTube in a sense that Hulu has only professional content, and not the contents uploaded by users, this is the fact that it has earned brownie points with the advertisers. Hulu currently offers content from more than 110 partners.
Hulu’s has achieved monetary success by supporting streamed video with advertising, rather than charging for downloads, Hulu’s ads are few and short, with a subtle countdown timer that makes them even more bearable. In some cases viewers can even choose which ad to watch, so it is more likely to be relevant to their interests.
It is too early to declare Hulu the winner, But for the moment it appears that YouTube proved that people would watch videos online—whereas Hulu is proving that advertisers will foot the bill.
Ref: The Economist

What is the difference between a recession and a depression?

2009-02-03T17:36:00.000+05:30

THE word “depression” is popping up more often than at any time in the past 60 years, but what exactly does it mean? The popular rule of thumb for a recession is two consecutive quarters of falling GDP.
A search on the internet suggests two principal criteria for distinguishing a depression from a recession: a decline in real GDP that exceeds 10%, or one that lasts more than three years; for example America’s Great Depression qualifies on both counts, with GDP falling by around 30% between 1929 and 1933. Output also fell by 13% during 1937 and 1938. The Great Depression was America’s deepest economic slump (excluding those related to wars), but at 43 months it was not the longest: that dubious honour goes to the one in 1873-79, which lasted 65 months.
Japan’s “lost decade” in the 1990s was not a depression, according to these criteria, because the largest peak-to-trough decline in real GDP was only 3.4%, over the two years to March 1999. Since the second world war, only one developed economy has suffered a drop in GDP of more than 10%: Finland’s contracted by 11% during the three years to 1993, mainly thanks to the collapse of the Soviet Union, then its biggest trading partner.
Emerging economies, however, have been much more depression-prone there have been no fewer than 13 instances in the past 30 years of a decline in real GDP of more than 10%. Argentina and Poland were afflicted twice. Indonesia, Malaysia and Thailand all suffered double-digit drops in output during the Asian crisis of 1997-98, and Russia’s GDP shrank by a shocking 45% between 1990 and 1998.

Before the 1930s all economic downturns were commonly called depressions. The term “recession” was coined later to avoid stirring up nasty memories. Even before the Great Depression, downturns were typically much deeper and longer than they are today .One reason why recessions have become milder is higher government spending. In recessions governments, unlike firms, do not slash spending and jobs, so they help to stabilize the economy; and income taxes automatically fall and unemployment benefits rise, helping to support incomes. Another reason is that in the late 19th and early 20th centuries, when countries were on the gold standard, the money supply usually shrank during recessions, exacerbating the downturn. Waves of bank failures also often made things worse.
But a recent analysis by Saul Eslake, chief economist at ANZ bank, concludes that the difference between a recession and a depression is more than simply one of size or duration. The cause of the downturn also matters. A standard recession usually follows a period of tight monetary policy, but a depression is the result of a bursting asset and credit bubble, a contraction in credit, and a decline in the general price level. In the Great Depression average prices in America fell by one-quarter, and nominal GDP ended up shrinking by almost half. America’s worst recessions before the second world war were all associated with financial panics and falling prices: in both 1893-94 and 1907-08 real GDP declined by almost 10%; in 1919-21, it fell by 13%.
The economic slumps that followed the collapse of the Soviet Union and those during the Asian crisis were not really depressions, argues Mr Eslake, because inflation increased sharply. On the other hand, Japan’s experience in the late 1990s, when nominal GDP shrank for several years, may qualify. A depression, suggests Mr Eslake, does not have to be “Great” in the 1930s sense. On his definition, depressions, like recessions, can be mild or severe.
Another important implication of this distinction between a recession and a depression is that they call for different policy responses. A recession triggered by tight monetary policy can be cured by lower interest rates, but fiscal policy tends to be less effective because of the lags involved. By contrast, in a depression caused by falling asset prices, a credit crunch and deflation, conventional monetary policy is much less potent than fiscal policy.

Ref: The Economist

whoppersacrifice @ Linkedin : Perfect example of Technology in Marketing

2009-01-26T20:45:00.003+05:30

Recently Burger King launched an application on Facebook, where users can sacrifice their friends for a "Whopper Burger".

The application works like this, The users were given an option of winning a burger if they sacrifice their 10 friends using the "whopper sacrifice widget"; sacrifice here means that they will be deleted from the persons friend list.

Normally when a person delete another person from his or her friend list it is not announced, this application by Burger King, gave the user an option of sending the deleted person a message that he has been scarified for a burger, and this was termed as "Whopper Sacrifice".

This application seemed to be a great hit with over 233906, people 'scarified' their friends for a burger.

Now facebook went back to Burger King to modify its widget and Burger King eventually took off its widget from the Facebook platform, but what is most important here is the clever mix of Technology and Buzz that Burger King was able to generate using this widget.

I have always believed that the technology gives the marketier the added edge to sell and market their product, and this small widget is the perfect example, the company would have only spent little amount to develop this widget but the publicity it has gained is far more than any other conventional marketing tools.

Perhaps this is what is "thinking out of the box"

How Would Walt Disney Market in 2009?

2009-01-14T12:30:00.002+05:30

A nice read, thought of sharing with all;

Walt Disney, the man, was equal parts technological genius and ancient story teller. He drew upon stories that reverberated with our humanity and told them in sizzling new ways that shaped memorable experiences. Simultaneously he knew how to leverage every powerful method of engaging the consumer and he swarmed them with multiple modes of his message always reinforcing the central stories. For example, Snow White was a movie, a ride, a doll, a book, a dress, a television show, a cartoon, and a set of experiences which all were touchstones to the magic of it all.
As companies try to get their voice "out" in the overcrowded, fragmented, 24x7, blog-filled, multi-dialog, Mad Money Cramer kind of world of 2009, executives need to think carefully about their core stories to customers, employees, and investors—and to use all relevant media to orchestrate the message across the global information network.
In that spirit, I'd like to outline what I think are the core principles that we can all learn from Disney:
1. Know the story is king. Humans like to read about humans and whether you are selling CAT scanners, or auto insurance, every message must have a story that resonates with the human condition at its core. Almost all great stories have ancient roots.
2. Utilize the newest technology to tell that ancient story in a new way. For example, if your firm serves businesses but does not have a marketing message that can be consumed over a BlackBerry then you're behind; if you serve consumers and don't have applications in the Apple App Store, you're out of touch.
3. Coordinate the message across the media. When you leave Disneyland you stroll down a Main Street populated with dolls, and shirts, and hats, and media that all are linked to the wonderful experiences you just had. In today's fragmented world, executives must reinforce key messages by having multiple, consistent, coordinated touch points for the same idea.
4. Have the courage to innovate. Walt Disney initially funded both Disneyland and Disneyworld out of his own pocket, and then sold them back to the corporation because they did not want to take the first risks. Be braver.
5. Ride your uniqueness. Disney received enormous press coverage and accolades because he was doing new things. For example, if you have a direct sales force, what new stories have you given them so they can market themselves on Facebook or LinkedIn or over the BlackBerry? How have you helped them tell a great story about your firm and its services? If you do it, they will talk about it and the media will report on it.
6. Stay on message. With Disney, you only had to see the Castle to conjure up the entire set of thoughts and dreams.
Provided by Harvard Business—Where Leaders Get Their Edge by John Sviokla

How would the Maytas acquisition have helped Satyam

2009-01-07T18:31:00.004+05:30

A week before when Satyam's Raju announced that Satyam's intented to buy Maytas , the idea was booed by all and sulty, but looking at the mess now it would had been really benefitial if the deal had gone through.

How would the Maytas acquisition have helped? Satyam would have paid at least Rs 5000 crore to acquire the two companies from the promoters (the Raju family). The money was non-existent. So, it would have pretended to pay the money and ended up with the assets (the two Maytas companies). The promoters may have never got paid but that would have served them right. And everyone would have been alright: Satyam would have had assets, real assets on its books instead of non-existent cash; the Raju family would have continued to manage Satyam, but would have been poorer by quite a bit; and investors would have still had their money invested in a halfway decent company.

But again at the end of the day, it all comes to Ethics and in this case the promoters were trying to do unethical thing so that the mess they had created could be covered

$100bn too early or too less ?

2009-01-02T19:20:00.002+05:30

1 year ago Royal Bank of Scotland (RBS) paid $100bn for buying out ABN Amro Bank.
For this amount it could now buy:
Citibank $22.5bn
Morgan Stanley $10.5bn
Goldman Sachs $21bn
Merrill Lynch $12.3bn
Deutsche Bank $13bn
Barclays $12.7bn
And still have
$8bn change......with which they could have picked up GM, Ford, Chrysler and the Honda