Showing posts with label US. Show all posts
Showing posts with label US. Show all posts

Wednesday, January 16, 2013

The Blue Bull goes on the rampage in the fields of Uttar Pradesh

As the Blue Bull goes on the rampage in the fields of Uttar Pradesh, the state government wants a return to the days of bounty hunting

The current law on hunting in India states that anyone can kill a Nilgai if – a) He or she has a valid licensed gun b) Has the requisite permission from the government, and c) Hands over the carcass to the forest department. However, indiscriminate hunting of the as-of-now healthy numbers of Nilgai seems like a bad idea. In the absence of a proper machinery to monitor their numbers, such a move is likely to drastically bring their numbers.

A similar story is unfolding 13,554 kms away in the US state of Idaho. The mostly mountainous state is home to the Gray Wolf, where hunting the animal is set to begin. Hunters are bracing for a field day with loaded guns to go after the once-endangered animal and it is believed that the move could leave the state with as many as 220 wolves dead. Ironically, Idaho’s state motto is Esto Perpetua, which in Latin translates as “Let it be forever”.

Coming back to the Nilgai ‘menace’, Belinda Wright, a well known conservationist says, “Sympathy towards the farmers is understandable, for the loss of crops is a loss to their livelihood. If hunting of one species is allowed, it could open up the possibility of hunting other species in the future. It’s best not to touch hunting laws at this point. Instead, other options should be considered to address the issues of the farmers.

Perhaps it is one of those situations where it is difficult to make a choice in favour of either man or beast, but certainly there is need, now more than ever, to look for a more meaningful alternative like the one being worked out where castrating the male bull could at least curtail the problem… for in allowing hunting we are only curing the symptoms and not the disease...


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)

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Wednesday, December 12, 2012

Crunched to death!

The financial crisis brought the world to its feet!

The foundation stone of the current financial crisis was definitely laid during the prior boom period, which lasted between 1996 to early 2005. Financial institutions like Fannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns, Merrill Lynch et al, were enthusiastic enough to run after the lucrative sub-prime market and create an artificial buying power for borrowers. Giving no importance to financial due diligence, the lenders were quick to introduce new, riskier products with insufficient asset value as collateral. As a matter of fact, the total amount of mortgage-backed security issued tripled to $7.3 trillion and the securitised share of sub-prime mortgages increased from 54% to 75%; all thanks to the booming ‘credit derivative market’ which made risk transfer easy. The low interest rate further encouraged Americans to opt for housing loans or mortgages. But when home prices in the US began to decline in 2006-07, mortgage delinquencies rose and securities backed by sub-prime mortgages (which were widely-held by financial institutions), lost most of their value. Later on, when this housing bubble busted, three out of the five largest investment banks (once the cynosures of Wall Street) of US, failed, triggering instability in the global financial system. This resulted in a decline of capital for many banks, thus creating a credit crunch.


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Monday, December 03, 2012

ECONOMIC CRISIS: CEOS

US CEOs face uncertain times, & it's not just their companies that worry them

Tumultuous economic conditions in US and across the globe (including Japan, Italy & Germany) have forced leaders to face tough questions on their companies. More alarmingly, there are questions that also relate to themselves that need answers today. Do they really deserve to be the chieftains of the drivers of world economy? And most importantly, do they deserve humongous compensations for ruining, oops, running their companies?

There is another hammer coming their way after Sarbanes Oxley. The $700 billion federal bailout recently passed by the US Senate put light on executive pays various company heads were receiving. And responding to the protests and angst of investors and tax payers, Treasury Secretary Henry Paulson was forced to attach the Emergency Economic Stabilization Act 2008, to the bailout plan, which puts limits on the compensations that company heads have been getting for all this while. And now the top-honchos better watch out, for if they don’t perform, their compensations can definitely fall down. Add to this the backing and support from President-elect Barack Obama on the ‘Say-on-pay’ bill; top American corporate leaders have all the reasons to get jittery.

Let''s take the case of Citigroup. Vikram Pandit recently exploded by announcing a lay-off of 52,000 employees. Did Pandit have no other option in hand while dealing with the issue? Bart Narter, Senior VP, Banking Group, Celent told B&E, “Citi, faced with growing losses and declining confidence in the future of the bank, had few choices: take money from the government, shrink, cut dividends, cut heads, et al; their answer was all of the above.” Narter goes on to add, “(At the back of the economic downturn), compensation will go down at the top level and everywhere else too. It will be more closely tied to performance. Also stock options in a down market have little value.” Pundit, who currently draws a compensation of $250,000 along with other long term compensation of $323,813 (Business Week), is now facing the wrath of stake holders (see related story on Page 36). The question being asked is, "What is the point in getting such a hefty package if you cannot lead a company ably?"

Another perfect example of a leader who brought his company to the docks is Jerry Yang of Yahoo! (ironically also one of the founders). After cruelly crumbling the hopes of the company by failing to seal a deal with both Google and Microsoft, Yang, ''fazed'' by criticism, decided to step down. And during his reign at the online major, he drew a total compensation of $688,242 (Forbes). Such is the condition of Yahoo! that now that the Yang has quit the company, the board at Yahoo! will again go back to Microsoft, who will now lay its own terms and conditions.


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

For More IIPM Info, Visit below mentioned IIPM articles.


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Thursday, August 09, 2012

Global home

Migration will remain debated

The relevance of borders is gradually fading away globally; be it the Mexicans entering US or the Bangladeshis entering India. However, they are not to blame entirely; considering the current world scenario. World population has grown from 1.6 billion in 1900 to an astounding 6.7 billion today. The population is growing at a rate of 1.14% which means there are 75 million more mouths to feed every year and 203,800 every day. Moreover, there are more wars or conflicts today than ever before. Conflict causes one of every 10 Colombians to live abroad. El Salvador is another nation suffering from the same predicament. About a third Salvadorans live outside the country. Millions of others are migrating illegally to US, Europe, Australia or Canada for opportunities.

Interestingly, while migration is on a decline worldwide, the trend will remain prominent and a challenge to policy makers for the diverse issues associated with it. For example, restrictive policies of developed countries are encouraging illegal immigration. There are an estimated 800,000 illegal immigrants in Malaysia. Around 200,000 illegal immigrants enter Russia every year, which is home to over 10-12 million illegal immigrants. About 22 million Iraqis have fled the country since 2003; mostly to Syria and Jordan. Another 12–20 million illegal immigrants currently live in the US. As much as 20 million foreigners are living in India; especially from Bangladesh, Nepal and other neighbours. Horrifyingly, illegal migration also encourages human trafficking and smuggling.

Meanwhile, countries will also do everything possible to incentivise their people abroad; so that these people may contribute through investments. On the other hand, hate crimes; like the ones we see in Australia against Indians, could rise further. 



 
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Wednesday, August 08, 2012

"We Need Hunters, not Farmers"

LIVE AND EXCLUSIV: NFOSYS TOP BRASS TALK TO b&e ON LIFE AFTER DEATH AND ON THE ROAD AHEAD. deputy editor Virat Bahri GIVES THE INSIDER ON THE STRATEGIC LESSONS FROM INFOSYS!

“Our growth has significantly come down – from 35% to 7% to much lesser. It is a failure in some sense, since the opportunities are there, we have customer relationships, so I do feel we could have done better.” We’ve met S. Gopalakrishnan (Kris, for everybody), CEO and MD of Infosys, previously too, but perhaps this is the first time we sense his dejection that things could have turned out better for Infosys.

Factually, it’s not as if things are that bad. For starters, they’ve been rated India’s 7th most profitable company in the 2009 B&E Power 100 listings. The five year CAGR for revenues, till the month ending June 2009, was 32%. At the same time, the five year net income CAGR stood at 34%. Market capitalisation was screaming at $21.08 billion in July ‘09. Now it’s screaming better. The number of clients contributing to business has grown from 141 in 2004 to 330 this year. Since Kris took over, the revenue per client has regularly increased, Infosys has gone into newer services, entered newer markets, hired more people, consolidated existing clients, won a few awards, and a lot more.

But Kris comes from a world, where Infosys – under Murthy – was used to growing at rates close to, and sometimes beyond, 100%. Even Nilekani sailed around the 50% figure for long. Compare that to the fact that Kris ended last year with 29.5% growth. “In good times, high repeat business is a very good strategy; in bad times, bad!” says Kris on a Monday afternoon to us, “We need a lot more hunters (who get newer businesses) than farmers (who maintain current businesses).”

The first quarter of FY 2010 hasn’t been too kind. Infosys’ revenues actually fell by 2.9% quarter on quarter, in rupee terms. For the same quarter, as per Angel Broking, “Infosys’ IT Services Business was largely flat in US dollar terms on a sequential basis, while on a yoy basis, a fall of 2.8% was witnessed.” Further, onsite volumes declined 2.1% qoq (0.6% decline yoy) and offshore volumes slipped by 0.6% qoq (but grew by 9% yoy).

The top management at Infosys has been preparing double time for the economic slowdown since the 15/9/2008 debacle. “I predicted the collapse of Bear Sterns six months before it actually occurred,” says Chief Financial Officer, S. Balakrishnan (Bala, for friends). And once Lehman collapsed, the world – as Kris tells – changed for Infosys. And not because Lehman was a big client for Infosys (rather it was a bigger one for Wipro & TCS), but because the American financial industry – including companies like AIG – formed (and still do) an incredibly large part of Infosys’ earnings (more than 60%). Things were changing too fast at that time, and Infosys decided to change faster. And the hero, creditably, in the bloodied times, was not marketing, but finance, whose six strategies are the reasons Infosys today remains the most profitable IT corporation in India...

Strategy #1: Forget the long term; at least when it comes to your money!

Driven in a warlike fashion by CFO Balakrishnan, Infosys rewrote process orientation and risk control like never before. Realising that the war would be played on cost rather than price, Bala opened up a new battlefront, “I realised volaltility of foreign exchange was going to be the key issue as 98% of our revenues is in foreign currency; 62% from North America.” The dual reporting mechanism in both dollar and rupee terms made handling finances a supremely complicated Pythagorean conundrum for Bala and his team. Bala had already implemented the long term hedging route much earlier for Infosys.

Strangely, that was what was turning out to be the biggest headache for Infosys, which decided to shut down long term hedges & convert all exposures to a maximum of two quarters. This saved Infy from getting massacred.


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Wednesday, August 01, 2012

Stratagem-INTERNATIONAL : BIG OIL: SPLITTING-UP OPERATIONS

The world’s largest publicly-listed oil majors did achieve operational efficiencies by riding the M&A wave that began post the Asian Crisis. But times have changed and with their merged state being questioned today, some are mulling over a new strategy to split upstream and downstream operations. Is this a wise move? 

Then there is the pessimistic long-term forecast for US refining, with falling demand and rising foreign supply. Will this help efficiencies? Surely not. Political and geographical risks are issues too, and in this regard, its recent inorganic growth plan that increased its overseas reach does not help. This is also evident in its $4.5 billion impairment charge for expropriation of its Venezuelan assets. Also, COP’s joint-ownership of assets will not make the split easy, as Allen Good, Senior Analyst at Morningstar, while speaking to B&E from Chicago says, “The ownership of refining and chemical assets through joint ventures may complicate any planned spin-off.” In short, how effective and simple the COP split will be, only time will tell. For now though, it appears a rough ride ahead.

With dynamics of the oil and gas industry evolving everyday – with refining operations becoming less and less profitable, nations become more protective of their natural resources, partnerships with national oil companies and politically unstable countries which threaten production growth, increased geopolitical risks, increased production costs and lowered outlook for the US and European refining markets that limits future downstream profitability in the longer term – the integrated model remains the single, most-resilient form to stick to for both ExxonMobil and ConocoPhillips alike. And instead of announcing a split, the better model would be to divest gross NPAs, while reducing capacity in an integrated format. At the end of the day, even big oil CEOs owe it to their shareholders. Forget historical data, it’s the science of modern day stock markets which works – whether it be Tillerson (Exxon) or Mulva (COP), if the markets react negatively, it’s a wrong move. That is the basic rule for CEOs of public companies. Merge, acquire, split or sell-out – don’t lose sight of the ticker.


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Saturday, July 28, 2012

Tiananmen Mminus The Bloodshed?

Was the Tiananmen Square incident more of a Western Media Propaganda to damage China’s image? Was the uprising in fact dismantled peacefully without a drop of blood being shed? Did US diplomatic officials already know of this new truism? If WikiLeaks is to be believed... yes!

There are two views of Tiananmen Square. One is the western view, which says that on June 4, 1989, in Tiananmen Square, anywhere between 240-2600 protestors were brutally killed to suppress any uprising; and the other view, which says that in 1989, in Tiananmen Square, no bloodshed occurred and the entire uprising was crushed peacefully. The entire propaganda with respect to the bloody massacre is said to be more of a western media gimmick to dent China’s image in global forums, according to the latter view.

The US diplomatic cables obtained by WikiLeaks (released a week back) indicate that on June 4, 1989, the Chinese People Liberation Army (PLA) “did not massacre demonstrators inside Tiananmen Square.” The cables also cite an eyewitness, a Chilean diplomat, who saw the military entering the square but did not see any mass firing of weapons. The crowd was apparently forced to dismantle using anti-protest weapons like truncheons and wooden clubs. After several requests made by leaders including Liu Xiaobo – Nobel Peace Prize winner, 2010 – students peacefully left the square.

The cables also mention the name of James Miles, who was in Beijing then as the BBC correspondent. James confessed in 2009 that he misinterpreted the entire saga and “there was no massacre at Tiananmen Square.” Another cable declares how the protest was supported by “the leader of China’s trade unions” and further mentions, “An anonymous caller who phoned Congen Shenyang on the morning of May 21 said that the party had convened a CCPCC meeting and that the Chairman of the All China Federation of Labour Unions Ni Zhifu condemned the decision to impose martial law.” Against the popular belief false perspectives created by the western media, a cable quotes a few diplomats who describe a “joyous mood among the protestors after the first introduction of martial law in Beijing failed to halt the pro-democracy movement.”

Beyond WikiLeaks, there are several sites, micro-sites and news items that point towards the same fact. In an archive (titled “A National Security Archive Electronic Briefing Book”) in George Washington University (gwu.edu), the US embassy declared that “...the troop’s lack of weapons in their earlier assault indicates that orders not to use force had still been in effect [during the Tiananmen Square protests]” Another document in the same website (dated June 3, 1989) reads, “Police today fired tear gas on crowds gathered at the walled compound of Zhongnanhai, near Tiananmen Square, according to press reports.”


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Friday, July 27, 2012

“Our Bfsi Clients are now Focussing Less on Costs’’

Kris Gopalakrishnan, CEO & MD, Infosys, talks to Virat Bahri on The Company’s results and The Management Changes

B&E: What is your outlook for the coming year in terms of topline and customer wins? What are the trends in client spending in the coming quarters?
Kris Gopalakrishnan (KG): We expect the next fiscal to be a normal year for the industry. We have given a guidance of 18-20% growth for the next fiscal. The previous quarter was good for Infosys with respect to large and transformational deals. Infosys closed four transformational deals and six large deals in the previous quarter. After the big recession in the US, clients have started to fine-tune their spending based on what is happening in the macroeconomic environment more quickly than in the past. This is what had impacted Infosys in the last quarter. Today, we have much more clarity on what they are going to spend on but whether they will actually spend that money is a concern. If clients face further challenges in the economic environment, they may fine tune their spending more.

B&E: Infosys, as a company, has been known as a founder-run corporation since inception. How will the entry of K V Kamath as Chairman help the company to achieve its strategic objectives?
KG: The recent developments in management ensure a seamless transition from founders to the next generation of leaders. This will prepare the company for the future as well. K. V. Kamath is experienced and is an expert in corporate governance. His role is to chair the board and oversee governance.

B&E: We have hardly seen a trend of cross-industry CEOs & Chairmans in India so far while there are many global examples like Alan Mulally, Dan Akerson, Jeff Kindler et al. According to you, how does it help to rope in an executive in the top management from a different industry?
KG: Every successful corporation needs to transform itself periodically to remain relevant to its stakeholders. The recent change in Infosys’ leadership team is a planned effort by the Nominations Committee to ensure smooth transitions within the company.


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Saturday, July 21, 2012

The new age Commercial Plane was not Airbus

The Worst start to building The new age Commercial Plane was not Airbus’. It was Boeing’s. Its biggest project – The Dreamliner 787 – has turned a Nightmare. There are other problems too. What went Wrong with Boeing? & can CEO Jim McNerney play Captain America?

What caused Boeing’s health to deteriorate? McNerney has forever been known as a game-changer – a CEO whose radical change ways revived a corporation like 3M (it was under him that the company slimmed down, returned to profit-making and even dropped its old name – Minnesota Mining and Manufacturing). He tried the same at Boeing. To ensure that bottomlines improve, he adopted the outsourcing model. The idea was that instead of working with the traditionally accepted manufacturing practices, Boeing would work with engineers and labourers outside the company. It first started with the 787 program in 2005 and was then replicated on the 747s & 777s families. That meant trouble. A typical 787 (& 777) has 70% of its parts manufactured in Japan, Korea, Sweden, Canada, Italy, Australia, France, Germany and 15 other locations in US, that Boeing workers in Seattle put together. The entire exercise was destined to end up as a fragmented engineering act and a complex set of 50 confused suppliers, with minimum check on quality and overstretched supply-chain. McNerney took the big risk, Boeing took the beating. While its reputation & revenues did fall, the associated R&D costs have not only hurt bottomlines in the past year by up to $4.1 billion, but also threaten to erode the same in the years to come, as Robert Spingarn, analyst at Credit Suisse tells B&E, “Many bullish analysts and investors have been relying on declining 787 and 747-8 R&D to allow for meaningful earnings growth. But, even as these development programs inch closer to completion, the prospect of new R&D for a refreshed or new 777 and a clean-sheet 737 may offset any benefit. Either way, upside could be an issue if R&D cannot be tamed and if Boeing’s Defense business weakens beyond expectations.”

So what can Boeing do to expedite the process and ensure that cost control (outsourcing) and timeliness go hand in hand in future? Airbus, which contracts 52% of its aircraft body-making, is the answer. It assembles parts (in France & Germany) manufactured in 12 locations in the four nation cluster – Britain, France, Germany and Spain. And if cost reduction be the prime condition, Airbus’ assembly line for the smaller A320s in China is quite an example. The solution to convert Boeing’s global outsourcing mess into a strategic geographic advantage lies in creating regional assembly hubs. Like Airbus, it could begin with an assembly station in China for the new planes, to cater to the demand in the Asian region (like the $10 billion order from Air China & HNA Group for 5 747-8s, 6 777s & 32 787s received in March 2011). And considering that Boeing has to fast increase delivery pace in order to cater to a fresh demand, the newer assembly stations will only reduce its order-delivery lag. The question now is not whether it can cultivate a conservative approach to outsourcing or not. Rather, it is how Boeing can learn fast and act. Airbus, despite a more calculated approach saw its jumbo A380 suffer a couple of initial delays, resulting in $24.8 billion in added costs & lost orders between 2006 & 2009. Boeing has already lost many times more. Question is – will the hole in its pocket get bigger?

Fire on board, to software integration issues, to discovery of weak points in the composite metal used, to an in-flight engine shutdown, the Dreamliner has been more of a ‘nightmare’liner for Boeing. Though experts are of the opinion that this is not the end of the road for Boeing, and that revenues will continue flowing despite the fires and engine malfunctions of the 787s & 747s. The hefty order-log already recorded and expectations of huge demand from Asia and replacement orders in US & Europe will help its cause, as New York-based Alexandria Carroll of Goldman Sachs tells B&E, “For the near term, 787 & 747 challenges have the potential to create further volatility. However, we expect very strong new aircraft order demand, strong global air traffic, and the company’s supply restraint through the last cycle to all be larger positive drivers of the stock than challenges, which are a negative. The associated R&D tailwind catalyst are likely to be realised over the next few quarters.” Adds S&P’s Tortoriello, “Emerging economies in Asia and the Middle East will continue to improve, which should sustain demand for narrow-body aircraft, supporting Boeing’s total backlog of about 3,400 aircraft as of December 2010. In addition, US airlines continue to take deliveries to improve fuel efficiency of aging fleets. Further, the third-quarter 2011 delivery of the 787 should act as a catalyst for the stock, with about 850 aircraft recently on order.” While Goldman Sachs estimates revenues for Boeing in FY2011 to to touch $67.97 billion (a y-o-y rise of 5.69%), the figure as per Credit Suisse stands at $69.76 billion (rise of 8.48%).

Having said thus, McNerney has to realise that the storm will only gather over the coming quarters, faster and stronger than it did in the three years gone by. It’s more than half of his company’s revenues at stake (assuming that the Pentagon will continue to patronise Boeing’s Defense business as EU does to EADS-Airbus), and the clock for him is running backwards. He’s done nothing to make investors smile (Boeing’s Mcap has fallen by $2.13 billion since he took over in June 2005) and McNerney might be out before Boeing even gets out of this rut. In short, he has little time to prove that an intergalactic outsourcing strategy can work. If it hasn’t in seven years, it perhaps never will. Many airlines have bet their future on Boeing, and this equation can turn turbid sooner than expected, irrespective of how many dollars and elbow grease the new projects have called for. And it is already showing signs of that.


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