Tuesday, November 18, 2008

Satire: How to rule the stock mkts !!!

a bit old but really gud!
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10.
The villagers seeing that there were many monkeys around, went out to the forest and started catching them
The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs50."
The villagers squeezed up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!!!
Welcome to the "Stock" Market!!!!!

Warren Buffet: Berkshire Hathaway Shareholders meeting at Omaha 2008

Hello Friends
I just got this article forwarded through my friends. I found it really good and would like to share it.
I had the good fortune to attend the 2008- Berkshire Hathaway Shareholders meeting at Omaha, Nebraska a few weeks back.
It was a wonderful experience listening to and learning from the Master Investor- Warren Buffett himself and all I can say is that he stands alone as the reigning deity of financial world's Mt Olympus!
The degree of humility and composure he exhibited, although he is the richest and most well respected human is stunning!
I tried to take some notes and would like to share with you some of the best questions and answers which came across during the conversation between we mortals and God.
Having read about him, observed him and worshipped him for a few years now, I think it is reasonable to believe that this guy is exactly what he seems: a plain-speaking, tee totaling man of uncrackable integrity who works really, really hard and sticks to his investing and management principles through boom and bust which makes him a freak of nature since he is above normal human tendencies. He is like a comet streaking through the heavens every 75 years or so.
The questions the shareholders threw at him for 7 continuous hours ranged from finances, life, religion, career, politics, sports and several other streams. And he answered everything with a Zen like calm and confidence.
Even if you are least bothered about investments and finances, I insist, Pl read on.
What does it take to become a successful investor? Brilliance or Smartness?
Neither, Success in investing doesn't correlate with I.Q. Once you have ordinary intelligence, what you need is the temperament to control the urges that gets other people into trouble in investing.
When do you deicide to invest in a firm?
The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they're on the operating table. (Mr. Buffett bought Coke when it had its biggest fiasco after launching New Coke; he bought American Express when it went through a loss making phase in the early 60's)
What do you look for in people when they come to sell their firms to you?
I don't look for the usual credentials such as an MBA, a pedigree (Harvard, Wharton), or cash reserves or market cap of their firm. What I look for is just a passion in their eyes; I think that's the key. A person who is hungry will always do well. I prefer it when people even after selling stay on and work for the firm; they are people who can't wait to get off their bed to get to work. Passion is everything; there is no replacement for innate interest.
Mr. Buffett, you told us that Berkshire Hathaway has $ 45 Billion in cash. Why aren't you investing?
Up until a few years back I had more ideas than money. Now I have more money than ideas.
When do you plan to retire?
I love my job; I love it so much that I tap dance to work. Mrs. B, the founder of Nebraska Furniture Mark worked until she was 104, she died within 6 months of her retirement, that's a lesson to all my managers, don't retire! I personally am going to work 6-7 years after I die, probably that's what they mean when they say- "Thinking out of the Box"!!
Why do stock market crashes happen?
Because of human nature for greed and insecurity. The 1970s were unbelievable. The world wasn't going to end, but businesses were being given away. Human nature has not changed. People will always behave in a manic-depressive way over time. They will offer great values to you."
What are the things that are taught wrong in Business school and the corporate world?
I like such open ended questions, I think Business schools should refrain from teaching their wards about profit making and profit making alone, it gives a sense of 1 dimensional outlook to the young students that loss is a curse. In reality, in the corporate world, failure and loss making are inevitable. The capital market without loss is like Christianity without hell. I think they should teach the student on how to buy a business, how to value a business? Not just on how to determine the price of a business. Because price is what you pay, value is what you get.
Do you still hate Technology stocks?
With Coke I can come up with a very rational figure for the cash it will generate in the future. But with the top 10 Internet companies, how much cash will they produce over the next 25 years? If you say you don't know, then you don't know what it is worth and you are speculating, not investing. All I know is that I don't know, and if I don't know, I don't invest."
How to think about Investing?
The first investment primer was written by Aesop in 600 B.C. He said, 'A bird in the hand is worth two in the bush.' Aesop forgot to say when you get the two in the bush and what interest rates are; investing is simply figuring out your cash outlay (the bird in the hand) and comparing it to how many birds are in the bush and when you get them."
How do you feel after donating $ 40 Billion to the Bill and Melinda Gates foundation? You are a hero to us!
I feel nothing. I haven't sacrificed anything in life. I have had a good life. I donated after I turned 75. I think I admire those people who sacrifice their time, share their food and home, as the people to be emulated not me. Besides, what is money before a man's life?
What do you think are the pitfalls in donation?
I have never donated a dime to churches or other such organizations; I need to believe in something before I end up doing that. I have been observing the Bill & Melinda Gates foundation for years now and I am confident they will do a fantastic job of making use of the money. I am a big believer in Outsourcing, others believed in me as an Investor and gave their hard earned money to invest. I believe in Bill Gates, he is a better donor than me.
Why do you work from Omaha and not Wall Street, New York?
Wall Street is the only place where people alight from Rolls Royce to get advised by people who use the Public transportation system.
You seem to be so well read, tell us how it all started.
My father was a stock broker, so we had all these financial books in our library. He introduced me to those classics and I got into them. I am lucky that my father was not a fan of Playboy! Reading is the best habit you can get. Well, you can learn from teachers too, and have mentors but there are so many constraints attached- they will talk fast, talk slow, they might talk like a pro or they might be terrible communicators. Books are a different animal altogether, I love reading! The beauty about reading and learning is that the more you learn the more you want to learn.
People who join Berkshire Hathaway seldom leave. How do you get along well with all your executives?
I try to get quality people. I always say - Hire someone in your organization who is better than you are. If you do that, you build a company of giants. If you get people worse than yourself, you build a company of dwarfs. And do not try to do everything yourself. Delegate the jobs and look out of the window. The results will come. That's how you build institutions. It happens only when you empower others, believe in others. Iam an investor, Iam very secured at that, I have no clue how to make Coca-Cola or how to dole out credit cards (Mr. Buffett owns 8% of Coca-Cola and 13 % of American Express). I understand the wisdom of the aphorism that you cannot please all the people all the time. Of Course, you will always find qualities that you don't like in people around you, but if you observe carefully the love of the work unites you both. There is no point in being obsessive about a bad quality in a person, whom you otherwise respect.
I am a small time businessman from Dallas, Texas, what do I need to do to hit big time?
Be patient, Achieving your financial goals and dreams will not happen overnight. As much as we would all really love to accomplish our goals in a few years, this is an ongoing process. Defining your financial goals is not a one-time task; you need to keep adding new plans at different stages in your life. We all admire the skills of Olympic ice skaters, pro golfers, and concert pianists. But do we remember that they didn't acquire their skills overnight? They had to practice hours on end for years to achieve their dreams. The key to success is to continue learning throughout your life with a voracious appetite.
I think it is marvelous that you have had a golden run with investing, how did you do that?
My rule is to be fearful when others are greedy, and be greedy when others are fearful. Besides, I call investing the greatest job in the world because you never have to swing. You stand at the plate; the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it. Stay dispassionate and be patient. You're dealing with a lot of silly people in the marketplace; it's like a great big casino and everyone else is boozing. If you can stick with drinking Coke, you should be OK. First the crowd is boozy on optimism and buying every new issue in sight. The next moment it is boozy on pessimism, buying gold bars and predicting another Great Depression, most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
Mr. Buffett you have seen so many crashes and recessions, your take on facing recessions and stock market crashes?
If past history was all there was to the game, the richest people would be librarians. Every scenario is different. But always remember, Tough times do not last. Tough people do.
What is the 1 biggest advice you would impart to a young investor like me?
Think for a moment that you are given a car and told this is the only car you would get for the rest of your life. Then you would make sure that you car is taken care of well, it is oiled and detailed every now and then. You would make sure that it never gets rusted, and you would garage it. Think of yourself as that car. You just get 1 body, 1 mind and 1 soul. Take care of it well. Invest in yourself that would be my advice.
You personally know many of the Financial executives who are engineers of the current turmoil in the financial world, surprisingly even after record losses, those executives receive astronomical salaries and bonuses and arrogantly declare that they deserve it, why dint you advice them from making such decisions and what's your view on their justification for their pay?
I like sharing my ideas but don't like imposing my ideas on anybody. It doesn't make sense and is a waste of time. If somebody has decided that they know everything that is there to know, nobody can help them. The best way to learn and succeed is to know that we know nothing. There is an entire universe out there and still some of us think we can know everything. In the world of investing a few people after making some money tend to imagine they are invincible and great. This is the worst thing that could happen to any investor, because it surely means that the investor will end up taking unnecessary risks and end up losing everything – arrogance, ego and overconfidence are very lethal. Personally I don't feel too comfortable with too much extravagance, because I always think like an investor. My thought process doesn't see a lot of value in a fancy car or a designer suit. Thinking like an investor always is very important to bring in a sense of discipline and focus. Before reading balance sheets and investing you need to make sure your outlook and mindset is that of an investor. Never let ego, arrogance and over-confidence control you - not just as an investor but also as a human being. You will never have internal peace if you are unable to look at everybody around you with love, compassion and understanding. Irrespective of who the person is, he or she can teach you something you don't know. I have learnt so much from people all around me and I wouldn't have been able to learn all these wonderful things if I had not spoken to them with a smile. To quote Sir Isaac Newton- If I have seen farther than others, it is because I have stood on the shoulders of giants.

It was a 7 hour conversation and I could just capture some of the best questions and answers. As 37,000+ dazed, amazed and grateful shareholders trooped out of the stadium after the meeting, I found myself recalling one of my favorite quotes-
"A man has to learn that he cannot command things, but that he can command himself; that he cannot coerce the wills of others, but that he can mold and master his own will: and things serve him who serves truth; people seek guidance of him who is master of himself".

Tuesday, November 4, 2008

Satire: How to get Bankrupt?

Funny but true:
Once there was a little island country. The land of this country was thetiny island itself. The total money in circulation was 2 dollars as therewere only two pieces of 1 dollar coins circulating around.
1) There were 3 citizens living on this island country. A owned the land.B and C each owned 1 dollar.
2) B decided to purchase the land from A for 1 dollar. So, now A and C own1 dollar each while B owned a piece of land that is worth 1 dollar.
* The net asset of the country now = 3 dollars.
3) Now C thought that since there is only one piece of land in the country,and land is non producible asset, its value must definitely go up. So, heborrowed 1 dollar from A, and together with his own 1 dollar, he bought theland from B for 2 dollars.
*A has a loan to C of 1 dollar, so his net asset is 1 dollar.* B sold his land and got 2 dollars, so his net asset is 2 dollars.* C owned the piece of land worth 2 dollars but with his 1 dollar debt toA, his net residual asset is 1 dollar.* Thus, the net asset of the country = 4 dollars.
4) A saw that the land he once owned has risen in value. He regrettedhaving sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2dollars from B and acquired the land back from C for 3 dollars. The paymentis by 2 dollars cash (which he borrowed) and cancellation of the 1 dollarloan to C. As a result, A now owned a piece of land that is worth 3dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.* C now has the 2 coins. His net asset is also 2 dollars.* The net asset of the country = 5 dollars. A bubble is building up.
(5) B saw that the value of land kept rising. He also wanted to own theland. So he bought the land from A for 4 dollars. The payment is byborrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
* As a result, A has got his debt cleared and he got the 2 coins. His netasset is 2 dollars.* B owned a piece of land that is worth 4 dollars, but since he has a debtof 2 dollars with C, his net Asset is 2 dollars.* C loaned 2 dollars to B, so his net asset is 2 dollars.
* The net asset of the country = 6 dollars; even though, the country hasonly one piece of land and 2 Dollars in circulation.
(6) Everybody has made money and everybody felt happy and prosperous.
(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey,what if the land price stop going up, how could B repay my loan. There isonly 2 dollars in circulation, and, I think after all the land that B ownsis worth at most only 1 dollar, and no more."
(8) A also thought the same way.
(9) Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.* B owed C 2 dollars and the land he owned which he thought worth 4 dollarsis now 1 dollar. So his net asset is only 1 dollar.* C has a loan of 2 dollars to B. But it is a bad debt. Although his netasset is still 2 dollars, his Heart is palpitating.* The net asset of the country = 3 dollars again.
(10) So, who has stolen the 3 dollars from the country ? Of course, beforethe bubble burst B thought his land was worth 4 dollars. Actually, rightbefore the collapse, the net asset of the country was 6 dollars on paper.B's net asset is still 2 dollars, his heart is palpitating.
(11) B had no choice but to declare bankruptcy. C as to relinquish his 2dollars bad debt to B, but in return he acquired the land which is worth 1dollar now.
* A owns the 2 coins, his net asset is 2 dollars.* B is bankrupt, his net asset is 0 dollar. ( he lost everything )* C got no choice but end up with a land worth only 1 dollar
* The net asset of the country = 3 dollars !!!?

Friday, October 3, 2008

Petro Euro Vs Petro Dollar- Good Eye Opener

Hello Friends

I haven't written this article myself, but came across it via forwarded mails.

But neverthless, I have checked the validity of the facts stated in the article.

It is indeed an eye opener.


Petro-Euro Vs Petro-Dollar - Good Eye opener
Why the Dollar Bubble is about to Burst? IRAN HAS REALLY DONE IT...more deadlier than the nuclear..
The Voice (issue 264 -) ran an article beginning, ' Iran has really gone and done it now. No, they haven't sent their first nuclear sub in to the Persian Gulf . They are about to launch something much more deadly -- next week the Iran Bourse will open to trade oil, not n dollars but in Euros' This apparently insignificant event has consequences far greater for the US people, indeed all for us all, than is imaginable.
Currently almost all oil buying and selling is in US-dollars through exchanges in London and New York . It is not accidental they are both US-owned..
The Wall Street crash in 1929 sparked off global depression and World War II. During that war the US supplied provisions and munitions to all its allies, refusing currency and demanding gold payments in exchange.
By 1945, 80% of the world's gold was sitting in US vaults. The dollar became the one undisputed global reserve currency -- it was treated world-wide as `safer than gold'. The Bretton Woods agreement was established.
The US took full advantage over the next decades and printed dollars like there was no tomorrow. The US exported many mountains of dollars, paying for ever-increasing amounts of commodities, tax cuts for the rich, many wars abroad, mercenaries, spies and politicians the world over. You see, this did not affect inflation at home! The US got it all for free! Well, maybe for a forest or two.
Over subsequent decades the world's vaults bulged at the seams and more and more vaults were built, just for US dollars. Each year, the US spends many more dollars abroad that at home. Analysts pretty much agree that outside the US , of the savings, or reserves, of all other countries, in gold and all currencies -- that a massive 66% of this total wealth is in US dollars!
In 1971 several countries simultaneously tried to sell a small portion of their dollars to the US for gold. Krassimir Petrov, (Ph. D. in Economics at Ohio University ) recently wrote, 'The US Government defaulted on its payment on August 15, 1971 . While popular spin told the story of `severing the link between the dollar and gold', in reality the denial to pay back in gold was an act of bankruptcy by the US Government.' The 1945 Breton Woods agreement was unilaterally smashed.
The dollar and US economy were on a precipice resembling Germany in 1929. The US now had to find a way for the rest of the world to believe and have faith in the paper dollar. The solution was in oil, in the petrodollar. The US viciously bullied first Saudi Arabia and then OPEC to sell oil for dollars only -- it worked, the dollar was saved. Now countries had to keep dollars to buy much needed oil. And the US could buy oil all over the world, free of charge. What a Houdini for the US ! Oil replaced gold as the new foundation to stop the paper dollar sinking.
Since 1971, the US printed even more mountains of dollars to spend abroad. The trade deficit grew and grew. The US sucked-in much of the world's products for next to nothing. More vaults were built.
Expert, Cóilínn Nunan, wrote in 2003, 'The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars.' Dr Bulent Gukay of Keele University recently wrote, 'This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar `artificially' high. This enables the US to carry out printing dollars at the price of next to nothing to fund increased military spending and consumer spending on imports. There is no theoretical limit to the amount of dollars that can be printed. As long as the US has no serious challengers, and the other states have confidence in the US dollar, the system functions.'
Until recently, the US-dollar has been safe. However, since 1990 Western Europe has been busy growing, swallowing up central and Eastern Europe . French and German bosses were jealous of the US ability to buy goods and people the world over for nothing. They wanted a slice of the free cake too. Further, they now had the power and established the euro in late 1999 against massive US-inspired opposition across Europe , especially from Britain - paid for in dollars of course. But the euro succeeded.
Only months after the euro-launch, Saddam's Iraq announced it was switching from selling oil in dollars only, to euros only -- breaking the OPEC agreement.. Iran , Russia , Venezuela , Libya , all began talking openly of switching too -- were the floodgates about to be opened?
Then aero planes flew into the twin-towers in September 2001. Was this another Houdini chance to save the US (petro) dollar and the biggest financial/economic crash in history? War preparations began in the US But first war-fever had to be created -- and truth was the first casualty. Other oil producing countries watched-on. In 2000 Iraq began selling oil in euros. In 2002, Iraq changed all their petro-dollars in their vaults into euros. A few months later, the US began their invasion of Iraq .
The whole world was watching: very few aware that the US was engaging in the first oil currency, or petro-dollar war. After the invasion of Iraq in March 2003, remember, the US secured oil areas first. Their first sales in August were, of course, in dollars, again. The only government building in Baghdad not bombed was the Oil Ministry! It does not matter how many people are murdered -- for the US , the petro-dollar must be saved as the only way to buy and sell oil - otherwise the US economy will crash, and much more besides.
In early 2003, Hugo Chavez, President of Venezuela talked openly of selling half of its oil in euros (the other half is bought by the US ). On 12 April 2003, the US-supported business leaders and some generals in Venezuela kidnapped Chavez and attempted a coup. The masses rose against this and the Army followed suit. The coup failed. This was bad for the US .
In November 2000 the euro/dollar was at $0.82 dollars, its lowest ever, and still diving, but when Iraq started selling oil in euros, the euro dive was halted. In April 2002 senior OPEC reps talked about trading in euros and the euro shot up. In June 2003 the US occupiers of Iraq switched trading back to dollars and the euro fell against the dollar again. In August 2003 Iran starts to sell oil in euros to some European countries and the euro rises sharply.. In the winter of 2003-4 Russian and OPEC politicians talked seriously of switching oil/gas sales to the euro and the euro rose. In February 2004 OPEC met and made no decision to turn to the euro -- and yes, the euro fell against the dollar. In June 2004 Iran announced it would build an oil bourse to rival London and New York , and again, the euro rose. The euro stands at $1.27 and has been climbing of late.
But matters this month became far, far worse for the US dollar. On 5th May Iran registered its own Oil Bourse, the IOB. Not only are they now selling oil in euros from abroad -- they have established an actual Oil Bourse, a global trading centre for all countries to buy and sell their oil!
In Chavez's recent visit to London ; he talked openly about supporting the Iranian Oil Bourse, and selling oil in euros. When asked in London about the new arms embargo imposed by the US against Venezuela , Chavez prophetically dismissed the US as 'a paper tiger'.
Currently, almost all the world's oil is sold on either the NYMEX, New York Mercantile Exchange, or the IPE, London's International Petroleum Exchange. Both are owned by US citizens and both sell and buy only in US dollars. The success of the Iran Oil Bourse makes sense to Europe , which buys 70% of Iran 's oil. It makes sense for Russia , which sells 66% of its oil to Europe . But worse for the US , China and India have already stated they are very interested in the new Iranian Oil Bourse.
If there is a tactical-nuclear strike on - deja-vu - `weapons of mass destruction' in Iran , who would bet against a certain Oil Exchange and more, being bombed too?
And worse for Bush. It makes sense for Europe , China , India and Japan-- as well as all the other countries mentioned above -- to buy and sell oil in Euro's. They will certainly have to stock-up on euros now, and they will sell dollars to do so. The euro is far more stable than the debt-ridden dollar. The IMF has recently highlighted US economic difficulties and the trade deficit strangling the US-- there is no way out.
The problem for so many countries now is how to get rid of their vaults full of dollars, before it crashes? And the US has bullied so many countries for so many decades around the world, that many will see a chance to kick the bully back. The US cannot accept even 5% of the world's dollars -- it would crash the US economy dragging much of the world with it, especially Britain .
To survive, as the Scottish Socialist Voice article stated, 'the US , needs to generate a trade surplus to get out of this one. Problem is it can't.' This is spot on. To do that they must force US workers into near slavery, to get paid less than Chinese or Indian workers. We all know that this will not happen.
What will happen in the US ? Chaos for sure. Maybe a workers revolution, but looking at the situation as it is now, it is more likely to be a re-run of Germany post-1929, and some form of extreme-right mass movement will emerge...
Does Europe and China/Asia have the economic independence and strength to stop the whole world's economies collapsing with the US ? Their vaults are full to the brim with dollars.
The US has to find a way to pay for its dollar-imperialist exploitation of the world since 1945.. Somehow, eventually, it has to account for every dollar in every vault in the world.
Bombing Iran could backfire tremendously. It would bring Iran openly into the war in Iraq , behind the Shiite majority. The US cannot cope even now with the much smaller Iraqi insurgency. Perhaps the US will feed into the Sunni v Shiite conflict and turn it into a wider Middle-East civil-war. However, this is so dangerous for global oil supplies. Further, they know that this would be temporary, as some country somewhere else, will establish a euro-oil-exchange, perhaps in Brussels .
There is one `solution' -- scrap the dollar and print a whole new currency for the US . This will destroy 66% of the rest of the world's savings/reserves in one swoop. Imagine the implications? Such are the desperate things now swimming around heads in the White House, Wall Street and Pentagon.
Another is to do as Germany did, just before invading Poland in 1938. The Nazis filmed a mock Polish Army attack on Germany , to win hearts and minds at home. But again, this is a finger in the dam. So, how is the US going to escape this time? The only global arena of total superiority left is military. Who knows what horrors lie ahead. A new world war is one tool by which the US could discipline its `allies' into keeping the dollar in their vaults.
The task of socialists today is to explain to as many as possible, especially our class, that the coming crisis belongs purely to capitalism and (dollar) imperialism. Not people of other cultures, not Islam, not the axis of evil or their so-called WMDs. Their system alone is to blame.
The new Iranian Oil Bourse, the IOB, is situated in a new building on the free-trade-zone island of Kish , in the Persian Gulf . It's computers and software are all set to go. The IOB was supposed to be up and running last March, but many pressures forced a postponement. Where the pressure came from is obvious. It was internationally registered on 5th May and supposed to open mid-May, but its opening was put off, some saying the oil-mafia was involved, along with much international pressure. ............................ In 2007 Crude was trades around 60 usd. Everyone know dollar was getting weaker and weaker day by day. Than US with the help of their two NYMEX & IPE exchange started rising the price of crude by Future trading on crude( called speculation). Today crude is around 140 usd. It means whole world who were paying 60 usd, now paying 140 usd, means demand of dollar increase to 230% and dollar start again rising. Even OPEC recently that in hike og crude, 60% contribution is due to speculation (Future market). Moral of story is USA has & will go to destroy any nation to keep its monopoly of dollar in world

Wednesday, September 3, 2008

L'Oreal Paris Menexpert

L'Oreal is a brand that is extremely popular among females. Anyone who thinks of beauty thinks of L'Oreal. But it is relatively unknown among men. If it is known at all, it is for high quality beauty care for women. So, L'Oreal has an image that is strongly feminine.
But L'Oreal wants to change that image now. With the rising of the Metrosexual Man, L'Oreal has come up with an exclusive range of men's grooming products. These products are mainly skin care and shaving products, under the brand name 'L'Oreal Paris Menexpert'
There have been similar other attempts by personal care giants trying to woo the man with products that were popular among females. Eg. HLL's Fair & Lovely Vs Fair & Lovely Menz Active, Fair and Handsome, etc.
The current stigma associated with beauty for men and also the rift between the sexes does not let men touch anything that is remotely feminine. India is definitely one of the more masculine cultures where males would like to keep an arm's length from products associated to females. No one will publicly admit using a product or get caught anywhere around it. Yet, products are flying off the shelves really fast.
With such a strong feminine image attached with L'Oreal, how would you as a brand manager deal with the task of making a success out of Menexpert and thus come close to Men too? What role can women play to help you out?
(This case study is provided by FMCG Marketers http://www.fmcgmarketers.com/ and is created by Mr. C.Seshagiri )If you want our panel of marketing experts and Mr. C.Seshagiri to analyse your solutions then send your solutions to aggarwal.prabal@gmail.com

Friday, August 8, 2008

Contents of a Business Plan

Executive Summary
Vision, mission, objectives
Current state of business
Products and services
Strategy and sources of sustainable competitive advantage
Customer acceptance
Summary financial forecasts
Money required, timing and deal on offer

Basic business information
Contact Information
Document control
Proffesional advisers
Legal structure and corporate data

Current Business situation
Definition of current business and its markets
Corporate history, major events and past financial performance
Current business and market position
Core competencies
Current business organisation and outline business infrastructure

Strategic analysis
Political, economic, social and technical anlysis and impacts
Key differentiators and unique selling points
VRIO analysis
Core competencies
Confirguration of resources
Value add analysis
Value chain analysis
Value system
Resource audit
Operations resources
Human Resources
Organisational resources
Financial resources
Industry life cycle
Industry structure
Competitor analysis
SWOT analysis

Strategic Plan
Vision, mission and objectives
Sources of sustainable competitive advantage
Competitive position
Marketing positioning
Brand Strategy
Portfolio strategy
Business design

Marketing Plan
Market segments, size and growth
Description of customers and customers needs
Target market segments
Product positioning and value proposition
Marketing mix
Description of products and services
Pricing and discounting
Advertising and promotional plans
Channel and distribution strategy
Guarantees and warranties
After sales service and customer care
Comparison with competition
Performance and economics
Marketing forecasts

Physical location
Make or buy considerations
The production process
Facilities, equipment and machinery
Scalability of operations
Engineering and design support
Quality control plans
Staffing recruitments
Sources of supply of key materials

Research and Development

Management and Organisation
Organisation chart
Top Management
Management's ability to deliver the plan
Corporate governance and shareholder control
Labour Relations
Office space and amenities
Employee and related costs

Forecasts and financial Data
Summary of performance ratio
Sales forecast
Assumptions underpinning financial forecasts
Profit and loss account
Balance sheet
Cash flow statement
Evaluation criteria and valuation
Discounted cash flow
Break even
Sensitivity analysis

Summary of operations prior to financing
Current shareholders loans oustanding
Funds required and timing
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How to find the impact of Advertisement?

Hello friends
Recently, I was reading Marketing Management by Philip Kotler. One topic struck my mind. How to measure the impact of the advertisement?
Just think. With billions in budget, the marketing and advertisement guys do their best to have powerful and memorable ads. But the point, is does it give any results? If yes, then how much?
I am sure, this is the question that bugs every marketing and advertising professional.
So, I asked the following question on one forum.
Hello Friends

When we design the marketing campaign, we focus on three factors i.e. Reach, Frequency and Impact. Now reach, can be obtained through the media agencies like the readership of the newspapers, and the categories of the readership. Frequency, can also be calculated via various quantitative techniques, like you can tail the target customer, and find out the frequency of exposure, he gets to the particular type of media. But, I am unable to understand, how to find the impact Can anybody help me to understand this?


Dear Prabal, I would like to talk about what I understand of the issues that you've raised. When we design a marketing campaign, we do not focus on reach, frequency and impact alone. A marketing campaign adheres to the marketing plan (sample attached). Hence these three factors are only a part of the whole (marketing) plan. Reach, frequency and impact come under the domain of ADVERTISING and/or MEDIA CAMPAIGN. Although roles overlap, reach and frequency are taken care of by media planning agencies. Impact is measured by the media planners, ad agency and even the client. To measure the impact, the media vehicle details (like reach, frequency) are collated from media agencies (say TAM) by the ad agency and the company. The ad agency may or may not do a "Communication Research" in which they do a market survey to "test" and analyze the response of the target audience. The ad agency may do primary research to gauge the public opinion and a secondary research to gauge the response of the critics. Then they arrive at the "impact" of the ad campaign on the brand - whether the ads have succeeded to position the brand in the mind of the customers as intended. The company may or may not do a litmus test on its brand equity to measure the "impact" of the ad campaign on its brand. But as many marketers, and definitely the sales managers, will say - The "real impact" is measured by the ACTUAL SALES as all this effort is directed at only one goal - making the balance sheet look good!


If it moves people to do something (hopefully purchase something in most cases or at least be remembered correctly in terms of brand and message) it has had an impact. If it doesn't, it hasn't. Simple eh? Many things are unless people are getting paid to unnecessarily complicate them.
Messages from Peter Palmer (1):


Agree to Peters views. Impact will be positive as well negative, neutral one will not be considered good from placement as well campaign point of view. To me impact can be as simple as getting numbers/data for Has campaign succedded in reaching potential audience/targets/buyers with appropriate message, with acceptable cost. Has potential audience/targets/buyers started finding more about product/service Has potential audience/targets/buyers started enquiring about product/service at sell points Have they started buying it finally, how much, how frequently, hows feedback so far? Are they buying it again and again and helping brand building through loyalty as well value add to customer. With above data one can check how much your service/product is eating into competition business etc.. Hope this helps. regds- Vijay
Messages from Vijay Kurhade (1):


Impact is the ability to create sales - so measure sales. Or if the advertising is not directly focused on sales, then its increase in something like brand strength or consideration - this can be obtained from market research. Other possibilities for estimates of impact include enquiries, returned coupons, visits to a website.
Messages from Saul Dobney (1):


Impact have to call out the shock in the customer and to encourage him to the purchase product( I say that purchase without the reflection so example the small child ask for next ice cream) not so much the frequency because this can bore but to calculate the cost of attainment to the customer - for the best on the 1000 persons. Effective reach of advertisement good tools for this for example GRP(Gross Rating Points) or TRP( Target Rating Points). I like better to use GRP. I think that impact is the pressure on the customer something in the kind of buy this if you are not you be wrongful - you will fall down about 1 level in social hierarchy, everyone of use wants to boast this stay in our nature. Nobody does want to be beyond of the sociable cream
Messages from Lukasz Urbaniak (3):


You can do some research to measure the effect of your campaign - some metrics such as brand awareness, image, etc. With media you should get a post-buy analysis The best proof is your sales though ;)
Messages from Mirek mirpo POLYNIAK (1):


Prabal, This a very good question. However, what you are describing is not a marketing campaign, but an advertising/ media campaign which is a part of a marketing campaign. A marketing campaign can have two prime targets: - creating brand awareness By which we use mostly mass media (that what you where describing). - creating sales By which we use mostly direct marketing to reach our goals The campaign itself can be focussed on one or the other or both targets. I will leave direct marketing for another discussion and will focus on the term ‘brand awareness’. Within ‘brand awareness’ you again have different possibilities of setting targets, for example: - creating top of mind awareness - creating a certain Public Image - etc. Know we come to your question: “How the measure the impact of advertisement? “ To measure the impact of advertisement directly is very difficult. Their always creative ways to measure a certain part of your advertisement campaign off course, but most often the results are not reliable. A better way is to link the ‘impact’ to the target you have set for the campaign, think of creating top of mind awareness. Before you start your campaign you have data regarding the current situation; simple example is that from a 1000 persons 200 think of your name first during a survey. Know you can measure the impact by holding the exact same survey again after your campaign and compare the results with the previous survey. The impact of your advertising campaign is measured on the comparing of the two survey’s and their results.
Messages from Sebastiaan van Aard (3):


Hi Prabal, I think conversion/ sales would be tangible impact. You could also measure brand awareness, advertisement recal etc pre and post advertisement for impact evaluation.
Messages from Yogesh Bisht (2):


Prabal, When you say 'impact' I'm not sure whether you are referring to sales impact or communication impact. But, reach and frequency are surrogate measures for what a marketer really cares about, sales. If a communication metric is necessary you should look towards awareness because you can make better correlations to sales this way.
Messages from David Adelman (1):


Prabal, It is quite an interesting question, however, the answers are pretty basic. Reach and Frequency are measurements of the depth of your advertisement reaching your target audience, frequency is the number of times your target is exposed to the ad. Impact is the results which moves the consumer to take action. This is measured by sales, visits to the web, tracking, pre and post focus groups, etc. However, remember, that if we all knew the answers all of the time regarding this question, we probably would not be discussing it now :). Fran


Sales of course is a the most direct metric, however that can be constrained by factors like distrbution and pricing. To understand the AD IMPACT ie whether the ad motivated the consumer to consider purchasing the brand the following simple metrics would give you a good idea. - ad awareness - how many people recall seeing the ad - message recall- what do they remember from the ad - Impact on purchase intent and brand image- difference in purchase /trial intent and brand image ratings amongst those aware of ad vs those not aware These metrics can be obtained via primary research.
Messages from Asit Gupta (1):


Prabal- Impact can be defined from a media point-of-view, such as R/F. Media impact is more or less measured by setting some level of effective communications level... e.g. reach at the 3+ frequency level and effective GRP's (a/k/a ERP's). However, a more salient measurement is whether your ad resonates with your audience and does the messaging communicates to them. This can be determined via focus groups, copy testing, etc. Hopefully, this will translate to increased sales and/or increased awareness of your product or service.
Messages from Stan Weinstein (1):


When we traverse Marketing through to Sales and are looking at the success of any campaign - 'impact' is best measured by looking at your order book....It's simple from that perspective Ensure you define specific milestones at various stages along the campaign timeline as this will allow you to trend the success or failure of the campaign. The metrics you create will vary according to the nature and reach of the campaign.
Messages from Sam Thiara (1):

Book Section: Joker in the Pack

By Ritesh Sharma & Neeraj Pahlajani

This is the book, I saw in my friends hand few months back, during the placement season of my college.I came to know that it’s the story about IIM life, and wanted to read immediately. But, as time was scarce couldn’t pick it.

Few weeks ago, I was out shopping, and saw it in one of the windows of the book shop, and immediately bought it.

The story is indeed about the life in B-Schools in general and IIM’s in specific. While reading it was remniscent of my life in general and my B-School life in specific. The dilemma, whether to do MBA or not? Which B School to choose? How to convert the interview call?

Then it further walked me down the lane of ragging, summers, Business Plan Competitions, Co-curricular activities, Placement fight, and of course academics.
To make the story spicy, it had a estranged love story, lot of funny incidents. And the best part was the insertion of ‘hindi’ dialogues.

I would recommend it to any B-School aspirant, student and alumunus.

Friday, August 1, 2008

Easy Cabs: Business Model

Recently I got a chance to come in one prepaid air conditioned taxi ( courtesy my new job ) from airport to my home. The drive was of about an hour.

The moment I entered it, the driver asked me, which newspaper I would like to read. I was surprised, and chose one business paper. Then he asked me, whether I would like to have mineral water, I was even more surprised, and accepted one bottle. Then he asked me, which music I would like to listen, I chose pop music. Then, he asked me if I smoke, and which brand, I courtly gave him my brand, and he offered me cigeratte. Then he told me that, if I need to charge my mobile phone, I told him, he wont be having its charger, to which he replied, that he has five type of chargers. I was simply amazed at this treatment.

( Some of this was cooked up to make the story spicy, but my astonishment was not )

By this time, I was intrigued by the five star treatment. So, I started inquiring him about the business model of the taxi system.

The major highlights :

The taxi was owned by the company, but will be transferred to the driver after 4 years.
There was a call center throughout the National Capital Region ( Delhi and around), with a single no.
The customer calls the call center
The call center, flashes the message to all the taxis in 10 km range of the customer location.
The driver who bids first, gets the order.
The taxi has to reach the customer in 15 mins.
All this is done via GPS (Global Positioning System) installed in each taxi.
The driver is a qualified driver, from a reputed driving institute.
The driver is supposed to pay the company, Rs 750 a day
Rest all the expenses including fuel is born by the driver
Apart from Rs. 750 a day, all the earnings go to the driver
But for this, drivers need to pay Rs 25000/- as deposit, and two guaranters.

What does the company gets?

Presently this company is having around 500-1000 taxis. Just imagine that the company is earning Rs 750x 750 ( average of 500- 1000 taxis)= Rs 562500 a day just for operating a call center. This amounts to be Rs 205312500 ( 205 millions) an year.

What does the driver gets?

Apart from getting the taxi after four years, each driver earns Rs 1500 a day after deducting expenses. In other words Rs 45000 per month. This is rare for even qualified professionals in India.

What does customer gets?

Five star service at reasonable rate.

Isn’t it the cool business model??

Monday, March 17, 2008

Food business

Speaking of eating joints, when we were at this place, I actually felt that this was a good business. Any ways margins are way high in the restaurant business, add some novelty like a Rajwadu style village setting or a maachan and people will pay the premium.
My friend pointed out that it wasn't a very easy business to do however. His reasoning was, that you need to be present all the time else you wouldn't know where your ingredients disappeared. Cooking isn't exactly an activity where you measure with a weighing scale how much atta you used in a paratha (though I know of pizza places which do that, weight the dough, weigh the cheese etc, atleast Dominos does). How do you track a few Kgs of atta going here and there, vegetables disappearing. Unless you source the food items yourself, you might get hit on the prices (assuming you have people who are not exactly honest working for you) Or how do you track spoilage ?
Today I was sitting at this food joint waiting for my order, when I overheard the conversation that the manager of the joint was having with his employee. The place had apparently made a loss of some 35-40k and he was trying to check the accounts. Finally it came down to staff eating food for free. The employee showed the register where the staff makes entry when they eat. The manager scans it and says, "this itself will account for more than half of your loss" (actually said in Hindi, but will post translated versions here)
Then he starts looking at individual items and names of the staff and suddenly exclaims "where is my name in this, even I had eaten, why is my name not here"
The employee showed him his name saying "Ya it is there, see here" to which the manager replies "Double omlett against my name, I don't even eat eggs, get me a pen let me scratch this out, I am a pundit, eggs against my name doesn't look good" simultaneously scratching out his name. Then he goes on to scan the rest of the ledger
"Omlett so many times ? I don't remember having eaten here so many times, what is the date here, 24th and 29th, that time I had still not started eating eggs, I am a pundit" scratch- scratch
And he goes on... Finally exasperated he says "Listen, I am your manager, you don't put my name here, I will make life tough for you" while laughing.
Saying this he says, "see this is the reason for the loss, from tomorrow onwards staff won't eat at this outlet, if they eat they will have to pay. I will talk to the boss and get this system in place" and then tossing aside the register, he asks the guy whats there in the kitchen, "get me dinner, I have to eat here else who will do your accounts for you. Understand else I will stop coming here and you can show your accounts to the big boss himself. Now is there paratha? rice? get me some dal along with it" And off he ate happily.
Its true, with motivated employees like these, it is definitely a difficult business to do :)

Money Money everywhere

Ever since I took the LEM course with professor Handa, I am always on a look out for some business / venture which might interest me. The more I observe the more convinced I am there there is money to be made everywhere. You don't necessarily need a splendid idea that no one had thought of before. Find what people want and give it to them and they will pay. Let me give you a few examples

1. The chai and maska bun seller at gujarat university road.

One evening while on a stroll we went to this fellow. He sells just 2 things. Tea and maska bun. ( Ok he sells coffee as well, but thats besides the point) Now lets do a simple estimation based on what we observed in the 15 mins we were there. The charges are Rs 10 for a maska bun. A plain bun costs Rs 2.50, even assuming he justs puts 10 buns from a 100gm butter pack which costs Rs 15, butter costs Rs 1.50 thus total raw material cost = Rs 4. So assuming he is an entrepreneur and so he doesn't charge himself for his labour. Thus he gets a contribution of Rs 6 for each maska bun he sells. In the 15 mins we were there he sold atleast 25-30 buns ( yeah he is famous ) So lets assume he sells say a meger of 150 buns in a day ( though I think he sells much more, lets be conservative) So he makes Rs 900 a day. He has two helpers. Now labour who does work for civil and construction is paid between Rs 40-Rs 60 a day. Lets assume he pays these helpers Rs 100 a day. Even then he makes Rs 700 a day and in a month he makes
Rs 21,000 and all of it tax-free !!! Surprised ???
Where are all the software engineers ?? We think we make money :P

2. Visa-counselling service

When we were to go to Germany on student exchange, we were going to stay for 4 months and hence we couldn't go on a schangen visa, we had to apply for a long term student visa / residence permit. Now we had guidance from our seniors who told us to apply for a 90 day student visa and then convert it to a residence permit after reaching Germany. Thats what we did. Now some other friends of ours from another management institute decided it was probably better to go to a visa agency. The agency asked them their duration of stay and based on that asked them to directly apply for a residence permit. Nothing wrong so far, however the problem is that the consulate asked them to show as financial proof, a DD drawn on a German bank to the effect of EUR 7000 ( our total 3 month expense was less than EUR 3000) and so none of them ended up going on exchange. EUR 7000 is a lot of money to show even if you will not use all of it. All this when they paid the visa agency probably a 1000 bucks.
This got me thinking. This is actually a good business. All you need to do is, go to the websites of all the consulates and download forms, requirements for the different visa types etc. Now-a-days almost all consulate websites are self sufficient. Once you have this dossier ready, you are in business. Any time someone comes, find the safest option, photocopy the relevant info from the dossier, hand it to them and take you fees. NO visa agency will give guarantee and no one will expect them to either.

There are so many other seemingly "unglamorous" businesses which nevertheless make money !!

Reflections on the past two years at IIMA

Sometime back, a freind had asked me how we (IIMA people) solve a case. What is it that we do differently when we solve a case and when I thought about it, my honest answer was nothing different. We still do the same things, we look at the data, we analyse it, and give our recommendations.
So what is different about an MBA from IIMA?
Now that I have spent 2 years here and am on the verge of graduation, I was stumped by this question and spent some time reflecting on the two years here and how it has changed me. Well in my opinion, the biggest value add that I received from the two years here was more personal than academic. (yes all the assignments and cases and discussions did help me think in a more structured manner)
The rigorous first year is the key I'ed say. When I came here, I had no idea that I was capable of working so hard. Sleep at 2 am and be ready for class at 9am day after day. Nightouts, read 100-200 pages daily. Be prepared with the basics and the class starts assuming you know the basics. Plus couple this with being part of campus activities. When I look back, though the second year has made me a bit lazy, but if it really came to it, I can do it again and it won't scare me.
The two years here have really seen me stretch myself to the limits, and I am much more confident of my abilities than I was before I came here. Learning to manage your time well, so that you can also make time for some other things you like and not get caught up finishing your academic work, increased stress resistance and even higher failure tolerance. Outside of IIMA each one of us was probably amongst the top in our respective colleges, once you come here, you realise that there are others far better than you. First there is denial, then you taste failure, then you decide that its time to work harder and you improve on your past performance. It its things like these that have been the most value add to me, not the thousands of cases we did, yes they did matter, they did help in broadening our outlook, but in my opinion I value the personal growth more.

Friday, March 7, 2008

Command and Control, Why Not?

“Command and Control,” Why Not!

There is a school of thought that suggests that we should continue with the authoritarian, Command and Control model of leadership for no reason other than there is no alternative.

How can we control an organisations production or service if we are not allowed to specify the parameters within which it works?
After all, we have to tell people what to do or they would never do anything, would they?

We are aware of the flaws inherent in this system of management, strikes, low moral, destructive behaviour, but in the absence of any other way to manage we persevere, flogging this same old dead horse.

But there is a model for non authoritarian leadership, and although the model predates the book it is thoroughly explained in Douglas McGregors work "The Human Side of Enterprise."
Written in 1962.In this book Douglas defines the authoritarian Command and Control model as Theory X management and the non authoritarian model as Theory Y.

In the Theory X model management assume that the workforce are lazy and ignorant, the job of the Theory X manager is therefore to make it so difficult for the workforce not to work that they are forced to do what the manager wants.
The Theory Y manager on the other hand believes that his workforce is intelligent, articulate and imaginative, and above all that they want to do a good job.
The job of the Theory Y manager, instead of telling his workforce what to do, is to create the environment in which they can do their best.

The only way that this can be achieved is by knowing what the workforce actually need in order to do their best, and the only way a manager can do that is to listen to what they want.

Ooops, that is going to be a problem, how can we really listen to what our employees want when we have hundreds or possibly thousands of workers who all need to be heard.

But that is the clue, listening is not a "need" (As defined in Maslows Hierarchy of needs) for the manager.

The manager cannot see any benefit to him or herself that would come from listening to the workforce.
“They have not been to college, I have, why should I listen to them?”
So managers never make much of an effort to listen because they do not feel the need to.

Being heard however is a "need" for the workforce. Being heard gives the workforce the respect that they "need".
It allows them to become engaged and take pride in what they do.
If listening is not a "need" for managers then we have to look for another way for the workforce to be heard, something mechanistic that will not fail because management don't need to do it and therefore will not support it.
Such a system is built and is maintained by the workforce.
It is simple and repeatable; it satisfies their need to be heard without having to rely on management who don’t see why they should listen.It produces practical process improvements whose value can be measured and it makes the workforce feel good about what they do.
Over time management see the measured performance improvements that result from the workforce being heard and then even they start to support the system by asking how they can help.

That last sentence is very important.

In the Nineteen Fifties, Nye Bevan suggested that management for the fledgling National Health Service in the UK should have an “Inverted Pyramid” structure.
He suggested that instead of management being at the top, supported by the rest of the pyramid, the Pyramid should be inverted with management at the bottom supporting the rest of the workforce in their delivery of care to their patients.
This was such a powerful image that few disagreed and the “Inverted Pyramid” model of management became one of the staples of the MBA syllabus.Unfortunately few have ever been able to bring the academic model to life and our management structure remains solidly pyramidal, (Managers at the top and everyone else underneath), despite the consensus with Bevan that it should be the other way up.
Using the workforce maintained system to allow their voices to be heard initially appears to exclude management, this is deliberate and avoids the damage that can be caused by management who lack the “need” to listen and therefore do not.
When the workforce however are being heard and the consequent performance improvement is evident, managers return to the workforce operated system and ask how they can help to support it because they too want to be a part of the improvement.
From being top down driven traditional “Command and Control” managers they have become, in a very short time, Inverted Pyramid Managers who instead of telling the workforce what to do, are asking what they can do to help.

They have developed a “need” to listen to their workforce.

That is a big deal.

Peter A Hunter
Author “Breaking the Mould”

Thursday, January 31, 2008

Tourism Development in India


“Tourism is one of the fastest growing sectors of economic activity” (WTO, 2005). The number of international arrivals shows increasing trend from mere 25 million in 1950 to an estimated 846 million in 2006, corresponding to an average annual growth of 5.4 % (WTO, 2005).

“India is a fascinating country for tourists, with a variegated and rich cultural heritage, religious centres, natural spots, adventure sports, captivating fairs and festivals” (Batra and Kaur, 1996). The major aim of the paper is to highlight the development problems country is facing and would suggest a few strategic recommendations to avoid these hindrances in near future.

Historical, Political and Economic Background

India achieved freedom on 15th August 1947 from British rule. Politically speaking, India is the biggest complete democracy in the world and runs similar system of the parliament having Lok Sabha and Rajya Sabha. Main political parties include Congress party, Bhartiya Janta party and Communist Party of India-Marxist (U.S. Department of State, 2007). The centre politics is run by the ‘Prime Minister’ who is the head of the ruling party. Economically speaking, India is considered to be one of the fastest growing economies after China in the world with the biggest consumer market (Srinivasan, 2006). India is also known as one of the largest manufacturer of the software products and exporting goods. Agriculture has always played a pivotal role in the economic development.

Problem Identification

Although, India is growing politically and economically at a fast pace but there are lots of problems which affect tourism development such as:

1) Terrorism: According to Sahni A, 2001 Lashkar-e-toiba, Jaish-e-mohammad and Hiz-bul-mujahiddeen are three major Islamic terrorist groups, headquartered in Pakistan but have intruded in India.
2) Lack of education and medical treatment (the situation is more sever in rural areas).
3) Increasing environmental problems (pollutants emitted by vehicles and industrial waste).
4) Poverty and hunger (see appendix 1).
5) Unequal distribution of income within the earning society.

People who have responsibilities in Indian tourism industry believe that the major problems faced by them are specifically discussed as:
1) Lack of infrastructure (which includes inadequate air capacity and poor transportation which makes accessibility to tourist destinations difficult).
2) Unavailability of cheaper land.
3) Insufficient trained people in catering (lack of training institutes where expertise is born)
4) Touting and harassment incidents leading to poor visitor experiences (see appendix 2)
5) Un-hygienic conditions and poor maintenance of historical monuments and tourists’ destinations.
6) Natural disasters and changing weather conditions across the globe (see appendix 3).

Despite of these problems, tourism has been playing an important role in the economic and overall development of India. India has an average annual growth of 2.7 % in international arrivals and 5.8 % increase in international tourism receipts.

Tourism Policies

Since India achieves independence, the Five Years Plans (see appendix 4) are catering for India’s growth in different sectors including Tourism. During the 2nd and 3rd five-year-plans, Indian Tourism Development Corporation (ITDC) and Tourism Finance Corporation established by the government of India add another feather to tourism industry in 1966. Upon realizing the importance in the 6th plan (1980), the Central government of India formulated the “National Policy on Tourism” in 1982. Six years later, “National Committee on Tourism” was established to comprehensively develop a steady but fast pace growth in tourism. Altogether 21 National Council for Hotel Management (NCHM) and 14 Food and Craft Institutes (FCI) came up to provide special training in hotel and catering seekers (Sinha, 2000).

The success of tourism objectives and policies can be judged by increasing facts and figures of Indian tourism industry. Foreign exchange earning has gone up by 81% within 5 years since 2000. According to Sinha (2000), domestic tourism has gone up from $64 million in 1990 to $167 million in 1998. Domestic tourism is on the rise with 390 million showing 13% growth in number of trips in 2005.


The recommendations part would highlight responsibilities shared by Indian government and private owners of hotels and tourists spots to promote Indian tourism industry. Some important concerns in the coming future are discussed as follows:
1) Providing better infrastructure in air seating capacity, cheaper accommodation and proper transportation.
2) Promoting heritage tourism by highlighting heritage hotels and historical monuments, developing beaches, water and ice sports, wild life sanctuaries, etc. to promote adventure tourism.
3) Medical tourism is concerned with attracting tourists from those countries where medical treatment is very expensive or of poor quality. India’s attempt to attract foreign tourists with medical needs started in late 2002, for the treatment in India is cheaper and of good quality compared to other developing and developed countries. (Goswami and Chinai, 2007).

Tourism department of India has started taking actions on the above mentioned areas but there is still a need to promote specific areas.

1) Education Tourism attracts students from other countries. Although, there has been a positive response from the neighbouring countries (Pakistan, China, Nepal and Malaysia) but a lot can be done to fascinate students from developed countries (Europe, UK, USA) within certain specified courses where India has edge over them.
2) Social Tourism can be defined as “the relationships and phenomena in the field of tourism resulting from participation in travel by economically weak or otherwise disadvantaged elements of society” (Hall, 2005). In India, it is basically concerned with socialists from other developed countries visiting and helping poor people to have a better standard of living and more meaningful fun-filled life.

Hence, the tourism board needs to bring the above mentioned agendas under there consideration while formulating tourism policies.


Indian tourism has been facing the problem of not getting the effective number of foreign tourists despite extensive marketing efforts. The term ‘India’ is not sending the correct signals to travel enthusiasts across the globe. In spite of upward trend in tourist’s arrivals following the ‘Incredible India’ campaign (Ministry of Tourism, 2006) still India is not preferred as destination image by large number of tourists all over the world. As per the tourism plans discussed above, India is trying to change their general socio-economic tourism to macro-economic levels. Firstly, India few decades ago had a general idea about tourism, which was established further with formation of specialised organizations and later financial institutes supporting tourism. The tourism management is becoming more systematic now. The government needs to make policies comprising of medical, education social tourism and merge with private companies to work towards the common endeavor of achieving tourism development in India.


Ayers, R (2000) Tourism as part to development in small states: reflections on Cyprus, International Journal of Social Economic, Vol. 27, No. 2, pp.114-133.

Batra, G.S. and Kaur, N. (1996) New vistas in reducing the conflicts between tourism and the environment: an environmental audit approach, Managerial Auditing Journal, Vol. 11, No. 4, pp. 3-10.

Chinai, R and Goswami, R (2007) Medical visas mark growth of Indian medical tourism, URL: http://www.scielosp.org/scielo.php?pid=S0042-96862007000300004 and script=sci_arttext. [Accessed on 20th October, 2007]

Euromonitor International, (2007) URL: http://www.euromonitor.com/travel-and-tourism-in-india [Accessed on 12th October, 2007]

Hall, C.M. (2005). Governance and state intervention, Tourism: rethinking the social science of mobility, Pearson Education, pp. 152.

Ministry of Tourism (2006) Incredible India Campaign, URL: http://www.incredibleindia.org [Accessed on 23rd October, 2007].

Sahni, A (2001) Major terrorist groups operating in India, URL: http://www.satp.org/satporgtp/ajaisahni/Pink161101.htm [Accessed on 20th October, 2007]

Sinha, A. (2000) Tourism development in India, URL: http://www.pib.nic.in/feature/feyr2000/fmay2000/f080520001.html [Accessed on 12th October, 2007]

Srinivasan, T. N. (2006) China, India and World Economy, Stanford Centre for International Development, Stanford University, Working paper No. 286

U.S. Department of State (2007) Background Note: India, Bureau of South and Central Asian Affairs, URL: http://www.state.gov/r/pa/ei/bgn/3454.htm [Accessed on 21st October, 2007]


1) India has got indexes of 25.73% in 1997 and 25.73% in 2003, which is ranked 96, and is currently ranked 94th, according to the global hunger index 2007.

2) On 12th July 2007, a British couple was mobbed by three youths of Kolkata and was annoyed by the non serious attitude of the police officials. They registered the complaint only after being threatened of going to the higher authorities (Headlines india.com, 2007).

3) Natural disasters: Firstly, when Gujarat was affected by earthquake in January 2001, 13,800 people were killed and 167,000 were injured. Thousands of houses, schools, markets and administrative buildings crumbled (World Bank, 2007). Secondly, all the countries located around the Bay of Bengal were hit by tsunami waves on 26th December 2004 and the states which were severely affected by tsunami in India were Tamil Nadu, Kerala, Andhra Pradesh, Pondicherry and Andaman and Nicober islands. The total population affected due to tsunami was 3,415,000 (Mohanty, 2004).

4) The process of planned economic development started with the launch of first Five year plan in April 1951.The main aims of planning in India are growth, mordernisation, self-reliance and social justice (Surry, 2006). Since 1951, India has completed tenth five year plan (2002-2007) and eleventh five year plan is underway.

Monday, January 14, 2008

Shahrukh Khan and Cricket-The Branding Perspective

Shahrukh Khan and Cricket-The Branding Perspective

Two brands in the market that carry a personality that is dominating, enlightening and controversial. Let us see what is different between the two. The former lives a reel life and the latter lives a real life. We must remember that there are no retakes on the cricket field. They have to face real people and play their part.

The commonality between two is the hype. A testimony of the same is the huge number of products endorsed by them. Now what is interesting is the relationship between the two. Where do we see them together? And who is it benefiting the most form the brand image.


We see them together on television advertisements, TV shows. The most recent show we saw was on Star TV called Chak De Yaara! Where Shahrukh was there entertaining the cricketers and here we saw the cricketers having a great time with the filmstar.

Who benefits the most?

I would say it is the media and advertising agencies.These brands prevail in the market making their presence felt all the time and creating resonating relationships with the customers.

The Impact

A Shahrukh Khan in Chak De India makes hockey a popular sport which had become extinct and a cricketer in an advertisement makes the product popular. But it is important to realize both can have serious and negative influences on the public. Both need to be responsible in any of heir activities as people idolize them.

Please post in your comments on the same topic….

Sunday, January 13, 2008

Executive Search Consultants

Ever wondered why the CEO of this channel is now a part of another one! Ever thought gosh! This chap was Director marketing in this firm till yesterday and today he is promoting another firm.But who routes these people form one company to another.What is the channel they use? Who are the people they consult? This is where the role of an executive search consultant comes.These are niche HR consultancies which hire people for senior management level posts only.The lowest profile people they place are Director,Marketing,etc.But the job is highly confidential keeping the database of candidates extremely secure.

How do these function?

Most of these are family setups running branches across the country with each branch having approximately 20-25 people.What? That is it?Well yes that is true.But then where is the challenge.

High Profile People!

Here is a chance to interact with the top notch people of various companies and getting to learn a lot from them

Getting Across

The people are high profile and getting through them is not an easy task.Making an entry into his office is a challenge in itself

Cracking the deal

Convincing the person to switch his job to another company is a task in itself.That person is happy with his job and you have ot provide him with geat incentives to let him leave his current job and join another company


A lot of research goes into the industry and the company and the candidate's profile.Then a suitable job match is found

How does it all happen?

A client of yours say Pepsi approached you taht they are looking for a Director,HR.The consultancy will start with doing a research on the industry and company and the candidate's profile and then approach the suitable candidate with an offer.Various people will be shortlisted for the same and finally the most appropriate candidate is appointed by the client.

Nation Branding

Nike!Coca Cola!Google!Apple! Brands prevail in the market making their presence felt all the time and creating resonating relationships with customers.Brands can be products,places,services,etc.Nation branding is a niche subset of place branding.Globalization has led nations to become more integrated and competing with each other for tourists,business,foreign investments or merely for the attention of the media.100% pure New Zealand,Malaysia-Truly Asia,etc are remarkable examples of nations atempting to brand themeselves.However some nations need not explicitly brand themselves due to their popularity like America for power and money,Japan for technology,etc.

Why would a nation brand itself?

1. A nation could brand itself if it has been targeting the wrong audiences.For example targeting a segment with low spending power for tourism.

2. A nation could brand itself if wants to correct a wrongly built image.For instance.India is still known to the world as a land of culture but nothing beyond.It is important to make the people aware of the technological breakthroughs the country has gone through and also that India is the land of spirituality,youth and corporate leaders.

3. A nation could also want to correct a negatively developed image due to wars,etc

Simon Anholt describes the nation brand as the sum of the perceptions of a country and its
people across six dimensions of national assets, characteristics and competence.
Apart from the above mentioned factors some researchers have also identified agriculture as an important parameter to be use din the promotion of the nation.

Thursday, January 10, 2008

Elevator Pitch

Imagine bumping into the CEO or a VC who will fund your next project in an elevator. It takes 30 secs from the elevator to go from the floor you get in to the floor on which you get out. So are you prepared? Do you have your pitch pat down, so that you can if not convince but get the attention of the VC / CEO to your idea? During the managerial communication class we had a tutorial where each student had to make an elevator pitch on a particular situation which was revealed to you just 45 secs before you are due to present and this reminded me of a very smart thing. When I was returning from Amsterdam to Cologne a few months back, in the train, I met this “desi” guy who just came up to us and started talking about how he was a research student at univ X and as a part time he provided other services like courier, arrange for events etc for other desis That’s one interesting thing I observed while in Europe. In India you wouldn’t bother talking to a stranger but there, every brown skinned person is a desi (whether from sri lanka or India or Pakistan ) and you will smile at / greet other desis.. ok I digress…
So this person gives me his card, and on the back side of the card he has a list of the services he provides. This is smart I say. After a month if I were to look at his card, I might not remember where I met him, and who the heck does this card belong to but when I turn it around immediately the context is clear. I don’t remember where I read this or who told me but this was suggested as a very good method for entrepreuners looking for funding. Take your business card and on the back write a short description of your product, main features etc. So the next time you bump into a VC or someone important who can help you in your venture, you give them your card and later they have a way to remember you and your idea later. It didn’t strike me in the train but later when I was planning for my elevator pitch, the application of the idea was blaringly apparent. Nice idea I’ed say, though you would have to be prepared for the chance encounters… but that’s what entrepreneurship is all about isn’t it?

Private Telephone Exchange?? Huh?

Ya that’s my first reaction when I heard about it. I was just talking with my gym instructor about whether he goes to other gyms as well to teach, how much he is paid and how does he manage with the salary etc. It so happens that the job as a gym instructor is just a hobby that gets him some extra cash. He owns a printing business and a PRIVATE TELEPHONE EXCHANGE.
I don’t know about you guys, but my only memory of a telephone exchange is that of a dilapidated building, with pan chewing babus who think they are doing a big favor even if they let you stand in front of them and listen to you. But those were the days of the monopoly of state owned telephone companies. With the liberalization in the telecom industry and entry of private players this has changed. “So what exactly is this private telephone exchange? How does it work?” I asked him. So here is the model. I will apply for 7 or 8 telephone lines from a private telecom company, Relaince or Tata Indicom for example. Then I will install a “box” which will let me create 150-200 lines. Something like a PBX we have in offices, or some kind of a multiplexing device I guess. Then you give these lines to customers in a local area of say 1-2 km radius. You charge them rental and on a per call basis.
“Is it legal? Do the companies know about it? How do you make money?” I ask.
Well for starters the companies know about it. Each of the 150-200 users gets a proper and unique telephone number from the telecom company itself. Its cheaper for the users because the private exchange guy will charge them lesser rental and lesser call rates than charged by the teleco. “So whats in it for the telecom companies?” One it reduces their investment in terms of infrastructure and marketing since these are borne by the pvt. exchange fellow. It helps them quickly increase the subscriber base. They get a share of the revenue from the pvt exchange. Here is how it works, the teleco will charge rental and call charges to this guy for the 7-8 lines he uses. The teleco will give this guy a better rate say 90p per call as against 1.30p charged to a retail user. This guy will give a rate of Re 1.00 or 1.10 to the user, and half the rental of a normal telephone connection. Even so, contrast full rental of 8 lines vs half rental of 150 lines. The numbers are evident. Since he charges 10p or 20p less than the teleco, users wouldn’t mind going to him. He breaks even and then pays some percentage of profits over and above the breakeven to the teleco.
Sounds like a win-win for all right? So where’s the catch you ask. I did too. “What about the quality of the line?” He assures me that there is no drop in quality, and I would agree with him, cos at the end of the day, the box is just a router, which connects your line to one of the 7 lines. So you might face a problem of delay / line being busy when you call someone or when someone calls you. “Nobody uses the phone all the time, so we have an idea of how many lines we can branch out from a single line without effecting availability or quality” he tells me. Don’t know much about the details of the technology, nor can you be sure that there is no drop in quality, but in the Indian context, I’m sure that people would be willing to sacrifice a bit on the quality if the cost is low enough. Besides in voice communication, a minor loss of quality might not be easily perceptible compared to data where your page loads slower. Doesn’t this model remind you of when broadband first came, and cable modems cost in 5 digits. Your local cable operator would buy a cable modem between 5-10 users and you would get shared broadband.
Interesting isin’t it? The teleco gains cos it gets a higher customer base, quick penetration, share of revenue, lower infrastructure costs. The customer benefits because he pays less with almost the same quality, the exchange fellow benefits because he is able to utilize his infrastructure at high utilization rates, have his own business and earn a decent return on his investment. Sounds too good to be true, the zero sum mentality in me doesn’t let me leave it at a “win-win for all” so looking forward to your suggestion / comments on flaws, problems in this model.
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