Google & Motorola: Verticalisation or outsourcing?

By announcing the acquisition of Motorola for a whopping $12.5 billion Google appears to be trying to take a leaf out of Apple’s book by becoming more vertically integrated. But, unlike Apple, it lacks any background or experience in manufacturing and has not been able to build up the capabilities. Thus, the question remains: Will it succeed? michael j. mol, faculty of strategic management, warwick business school

We all know these are turbulent times, but they are also very confusing times. As I am writing this, Google has just announced it is getting into the business of producing cell phones (in Europe: mobile) through its proposed takeover of Motorola Mobility for $12.5 billion. Google previously did not want to be seen anywhere near manufactured goods. Western stock markets have long placed a premium on firms which increased their focus, but in India Tata and others have been pretty successful on the back of the conglomerate model. Google is apparently trying to follow in the footsteps of Apple, now just about the world’s most valuable firm, but HP wants to get out of its hardware business altogether. And in the oil industry, which has always been highly vertically integrated, it is now becoming fashionable to split off exploration businesses. It makes one wonder whether any of these strategies are worth following. So verticalisation or outsourcing: What is your best strategy?

My own research into outsourcing, and that of other colleagues around the globe, suggests several answers to this question that your firm should be aware of when taking decisions about what activities to integrate and what activities to outsource. First, what is a successful outsourcing strategy is highly dependent on the context in which you operate. In India and other emerging markets it makes sense to integrate some activities which would be outsourced because successful outsourcing requires a strongly developed supply market. Where that market is still emerging, outsourcing simply may not be an option.

Second, there can be major changes in technology that facilitate outsourcing. Just witness how improved communication technology, along with increased training levels in countries like India, has produced the business process outsourcing revolution of recent years. When such changes occur and turn products and processes into commodities, it makes sense to outsource more. And over the years outsourcing levels have increased as a consequence. But many firms suffer from what my colleague Masaaki Kotabe and I have framed ‘outsourcing inertia’. Outsourcing inertia occurs when firms do not adjust their outsourcing levels quickly enough when there are significant changes in technologies and other changes in their environment. Examples of outsourcing inertia are plentiful, just think about the decades of struggle the “Detroit Big Three” have gone through.

Our research shows that most managers adapt their outsourcing strategies only when there is some trigger present. This trigger can come from outsiders, like shareholders or consultants, or when managers obtain new knowledge through networking events. It can also come from positive examples. Sometimes the trigger comes from top management, which decides that large-scale outsourcing is the way forward. And there are some cases where individual managers go out and make the case for outsourcing, often going against the grain of the wider organisation. But on the whole, most changes in outsourcing strategy come about through some form of outside information or pressure and not because managers are consciously analysing in detail whether outsourcing is the appropriate strategy. In other words, there is a lot of ‘following the herd’ going on when it comes to outsourcing.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Iran’s WMD hype; Iraq redux?

Be it through murders, Kidnapping, Virus attacks or sanctions, a careful and well coordinated stealth Programme is on to Jeopardise years of nuclear capability building by Iran. Is the US, along with its allies, drawing itself into another long drawn misdirected war? Is the hype being built about Iran’s supposed nuke ambitions even real?

The importance of nuclear scientists can hardly be undermined by a country harbouring nuclear ambitions. Iran is one of those nations that acquire centre stage. The country has not only built several nuclear reactors but has also, since the last few decades, set up a number of nuclear research centres and universities. The government also encouraged its youth to take up courses in science & technology and consequently created a huge array of nuclear physicists and scientists. Of course, sanctions from the US also came in tow. But if recent revelations are looked at, a slew of covert attempts are being made to jeopardise Iran’s nuclear programme.

The recent murder of Darioush Rezaeinejad, on July 23, 2011 in Tehran has raised concerns about the security of nuclear scientists and physicists in Iran and how it also affects the country’s nuclear ambitions. If one goes by reports, many such incidents have taken place in the past as well. In January 2007, Iranian nuclear scientist Ardeshir Hosseinpour was found dead under mysterious circumstances. A private American intelligence firm Stratfor claimed that Mossad was behind the ‘radioactive poisoning’ execution. In another incident, Massoud Ali-Mohammadi, quantum physicist working as a professor at Tehran University, was killed in Tehran in January 2010. Similarly, Majid Shahriyari, working at Iran’s Atomic Energy Commission, a prominent figure in Iran’s nuclear program and a specialist in neutron transport, was murdered (in a car bomb attack) on November 2010. On the same day, another scientist Fereydoon Abbasi (currently head of Iran’s Atomic Energy Organisation), escaped death by a whisker. Besides the above, a number of important physicists have also been kidnapped in the last three years. In one example, in June 2009, Shahram Amiri – an Iranian nuclear expert of radioactive isotopes at Malek-Ashtar University of Technology (MUT) and also working with Iran’s Atomic Energy Organisation – was kidnapped from Saudi Arabia and was reportedly extradited to US; the scientist strangely resurfaced in July 2010.

Concurrently, there have been a series of attacks on the computers in Iran’s nuclear facilities, including one major hit by a malware named Stuxnet (supposedly developed by Israel with the help of America’s intelligence). Stuxnet destroyed almost 20% of Iran’s centrifuge systems in their nuclear facility. Early 2011 saw another such attack, which has apparently pushed back Iran’s nuclear progress by two years. A WikiLeaks cable commenting on Stuxnet revealed that US was “advised to perform ‘covert sabotage’ of Iran’s nuclear facilities, including computer hacking” by an influential German think tank. In fact, it is alleged that George Bush approved $300 million for this joint covert project before leaving office in 2009. Condoleezza Rice, Volker Perthes (Director of the Institute for Security & International Affairs & an expert on Iran) and Philip Murphy (US ambassador to Germany) were all involved in this project, as revealed by WikiLeaks.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Scrutiny-TIANANMEN SQUARE MASSACRE: A MYTHICAL EVENT?

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!

A book written by Madrid’s then ambassador to Beijing, Eugenio Bregolat, talks about the myth of the massacre and states, “Spain’s TVE channel had a television crew in the square at the time, and if there had been a massacre, they would have been the first to see it and record it.” Even a Reuters Correspondent Graham Earnshaw wrote in his memoir that the students left peacefully. However, a week after the incident on June 12, 1989, NYT sensationalised the issue by quoting usage of machine guns and tankers.

Another documentary named The Gate of Heavenly Peace by Long Bow Group, Inc. contains video evidences of actual incidents and fortifies the WikiLeaks’ cables. Similarly, books like Black Hands of Beijing: Lives of Defiance in China’s Democracy Movement, Columbia Journalism Review (The Myth of Tiananmen & the Price of a Passive Press) and many more talk about how there was no bloodshed. These documents point out how no exit points were blocked during the incident, no detentions were done and the Chinese army was only asked to clear the area.

Most of such reports were either never picked up by mainstream (and Western) media, or were ruthlessly buried after being tagged as a “conspiracy.” In spite of Chinese officials and government agencies challenging the facts and perspectives crafted by BBC, CNN and likes, not much heed was paid and the entire incident was marked as one of the biggest human rights abuses in history. This is not an isolated case. As per a report published by Chinadaily.com titled, Lhasa riot reports show media bias in West, authored by Ye Jun in March, 2008, many western media like CNN and BBC published fabricated reports about Lhasa (Tibet) riots and went to the extent of misinterpreting a photo of a Red Cross ambulance to deceive readers.

Such fabrication of truth and deliberate tweaking of facts has deluded an entire generation and spread venom in Sino-US relations. Besides, it has painted a negative perception of the Chinese government globally. Also, with its largely inhibited media back home, even mighty China finds itself hard pressed to fight this propaganda war. From that perspective, the US has indeed chosen its attack strategy well. But with WikiLeaks bringing out the truth so prominently, it could now be Uncle Sam’s turn to face really grilling questions.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

“We’re Good at Cost Optimisation & Growth’’

Akhilesh Joshi, COO, HZL, talks to Virat Bahri on The Company’s Expansions & The Market for zinc, Lead & Silver

B&E: What have been the highlights of this year’s performance for Hindustan Zinc Ltd. (HZL)? How have the expansions undertaken over the year helped the company?
AJ: We ended the year with the highest ever PAT of Rs.49 billion. We commissioned our 210,000 state-of-the-art zinc smelter and 160 MW thermal power plant at Dariba in Rajasthan. Our metal production capacity today stands at about one million tonnes and we are proud to position Hindustan Zinc as the world’s largest integrated producer of zinc. Out thermal power production capacity has also increased to 475 MW. The year saw a record production in zinc-lead mined metal and refined zinc and silver. We also expanded in our mining capacities to 9.75 million tonnes, with Rampura Agucha, which is the world largest zinc producing mine, producing about 6.15 million tonne ore per annum. We are quite keen to close the year with 500 tonnes of silver production and be counted amongst the top global silver producers. HZL governs more than 80% of the growing zinc market in India. The prices are all LME governed and what we are good at is maintaining the momentum in terms of cost optimization and volume growth.

B&E: To what extent has operational efficiency and speed contributed to your positive results?
What are your plans with respect to expansion in exploration in India and overseas?
AJ: If you see our growth plan since Sterlite Industries took over HZL in 2002, we have grown five fold in our production levels. We successfully executed three phases of expansions, which include setting up smelting complexes at Chanderiya and Dariba, mine expansions at Rampura Agucha and Sindesar Khurd and setting up power plants to be power independent at all locations. We have also carried out de-bottlenecking at our smelters located at Chanderiya, Debari and Vizag to increase production volumes. Hindustan Zinc has always had a strong focus on exploration. We believe that we must replace every tonne of ore mined with equal reserves and resources. Today, we are proud to have 313 million tonnes of reserves and resources. As for our overseas expansions, Vedanta group has recently acquired Anglo Zinc assets at Ireland, South Africa and Namibia. The production capacities of these mines are about 400,000 tonnes. We are quite open and keep looking for good assets.

B&E: How do you view the respective potentials of silver, zinc and lead in the Indian market?
AJ: Our silver segment is poised to almost treble from current levels driven by volume ramp up at Sindesar Khurd Mine and improvement in recovery at our other mines & smelters. We are aiming to exit FY 2012 with 500 tonnes of silver production capacity, at which we should be amongst one of the leading silver producers globally. As for zinc, we recently expanded through commissioning of 210,000 tonnes capacity zinc smelter at Dariba which has increased our zinc production capacity to about 880,000 tonnes. We are quite bullish on the lead demand in future, considering the growth of the consumption markets and segments. The growth in recycle market facilitates the balance in demand/supply of lead, as the demand for lead can’t be matched entirely by the limited primary deposits around the world. HZL current lead production capacity is 85,000 tonnes and this year we are commissioning another 100,000 tonnes capacity lead plant at Dariba to take the capacity to 185,000 tonnes. This should suffice a large deficit in the market. But in the current scenario, the deficit has lead to domination of secondary or recycle market.

B&E: What are the price trends that you are seeing in these commodities? Is there any risk of a downturn in the business cycle for any of these commodities, according to you?
AJ: A slight fluctuation in LME prices is a common phenomenon but overall LME is strong. Developed economies have seen stupendous growth in the last few years and we expect the momentum to continue. European nations too have recovered and are showing tremendous potential for growth. Seeing the past and present trend, developing economies like China and India have always been leading the growth and all these factors are expected to generate a strong demand for the metal. With increase in demand, zinc surplus is also expected to come down significantly.

B&E: Input prices have affected commodity businesses globally. To what extent are they affecting your financial performance?
AJ: There is always a challenge to address issue of input prices and they do have their negative impact on the COP. So far we have been partly able to address this issue effectively through our operational efficiency.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Blood Billionaires

Privatization of Natural Resources is an Anti-People Policy and would do far more Harm than Good to India

Privatisation of natural resources in India is an old debate. But it has become more relevant these days as the government is considering privatisation an imperative for resource exploration and mobilisation. But a critical analysis exemplifies the ineffectiveness of such privatisation in fulfilling policy objectives.

As an extremely diverse and unique country, India is blessed with a bounty of natural resources. With around 267 billion tonnes of coal and around 13010 million tones of iron reserves, it has its distinct position. As per the US Geological Survey (USGS), the value of India’s mineral output in the 2007-08 was $25.3 billion, (3% of GDP). State-run corporations controlled 83% of the total mining output. But with economic growth and industrial growth, demand for resources is rising exponentially. In 2006, India produced 648,000 barrels per day (bbl/d) of crude oil. However, the estimated demand that year was around 2.63 million bbl/d.

In November 2008, the High Court of Karnataka gave a verdict to stop transferring four lakes to private parties for development and maintenance as they were charging high prices and appropriating supernormal profits. In Gujarat, the state government acquired 1,777 acres of land for public purposes to construct the famous Sardar Sarovar Dam. Shockingly, 1400 acres of land, which belonged to adivasis, remained unused. The state promised to return back the unused land but the land is being used by the Sardar Sarovar Narmada Nigam Limited to build nature parks, gardens, woodlands, nature trails, and an eco-museum to attract tourists.

The Supreme Court has often taken a justifiable stand over the privatisation issue. It took a strong position in the RNRL vs RIL case where it asserted, “The State as a trustee is under a legal duty to protect natural resources. These resources meant for public use cannot be converted into private ownership.” Environment Minister Jairam Ramesh has also created some notable precedents in cases like Posco and Vedanta, which sent a signal to companies that they cannot have a free run.

The Ministry of Petroleum and Natural Gas imposed the New Exploration License Policy (NELP) in 2000 to encourage foreign and private players to take a stake in exploration domestically. But only a handful have joined including Reliance, Vedanta, Tata, Essar, et al. On another end, superlative profit opportunities in coal mining have encouraged the mafia and illegal mining, which together have destroyed the sector. Karnataka is losing Rs.150 billion annually due to illegal mining. Similarly, privatization of water and electricity distribution sans auctions and transparency has created monopoly players.

Globally, countries are increasingly nationalizing natural resources. Bolivia has been growing at 3-6% after such nationalisation. Russia nationalised its Yukos Oil Company. In Latin America, Venezuela increased taxes on foreign oil producers and made them sign new contracts under a well documented nationalization drive. Nigeria, Kazakhstan and China are also giving more priority to state-owned players in natural resource exploration. Yes, some examples are extreme.

But privatization of basic services and resources should not become a common policy initiative in developing countries. In nations like US and UK, private organisations dominate natural resources successfully.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Rupee EPS Guidance is a Concern

Besides The Upheaval at The Top, it has been a Defining year for Infosys, which saw some Welcome Growth in Revenue Terms. However, Rupee EPS Guidance is a Concern 

Going forward, while the company continues to seek opportunities in other emerging markets, the key is going to remain the US, since that is where it still gets around 65% of its revenues. As far as the US market is concerned, Forrester Research concludes in its report that the market for Information & Communication Technologies or ICT (which includes both products & services & involves both government & corporate spending) will grow by around 8% to touch $805 billion in 2011. Of this, IT outsourcing is expected to account for around $104 billion. Though slower than the growth of 8.9% in 2010, it is bullish from the standpoint of the larger base. Consumer spending, which is two thirds of the US GDP, has risen by 4% in Q4, 2010 and unemployment rate has fallen to below 9%, according to Forrester. If these trends continue, the economy should be on a strong growth path.

Besides the protectionist pressures that Indian firms like Infosys faced, there is one more important point to take care of – the fact that location centric advantages are becoming less relevant, thanks to multiple sourcing opportunities being explored by clients. So far, Indian software companies have been able to weather the storm and even gain market share. Dean Blackmore, senior research analyst at Gartner, comments, “In a market that grew 3.1% in 2010, India-based vendors collectively grew by 18.9% (in context of the global IT outsourcing market), increasing their market share from 4.8% in 2009 to 5.5% in 2010.” Yet, caution is advised.

Now the greatest criticism of Infosys has been more towards its conservative nature, particularly towards inorganic growth. Cash is indeed one area, where the company has been far more defensive, with its policy of keeping enough cash reserves for one year of employee salaries at all times. But when it comes to succession planning, Infosys has done a major shift in terms of getting K. V. Kamath in as the Chairman of the company. While promoting S. D. Shibulal to the CEO chair was anticipated, Kamath’s elevation is a first for the company that has traditionally been known to reserve higher positions for its own people. In a past interview to B&E, Kris remarked, “We very rarely select people in direct leadership positions from outside. I also believe that if a company wants a CEO from outside the company, that means the company is not doing well.” While the issue may not be with performance at the moment, recent developments indicate that the company wants to inject some new thinking into its DNA, particularly the kind that took ICICI Bank to new heights. Besides, it does silence quite a few voices that consistently point out how the company is still very founder driven.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management 

Stratagem -CARLOS GHOSN: INDIA JOURNEY

After burning his hands with The Failure of Logan, Carlos Ghosn is again Grappling with Issues related to his ultra low-cost Car Project with Bajaj Auto. While The Automotive veteran has been able to turn around The Fading Fortune of Renault-Nissan globally, his India Journey has been full of hurdles so far.

Even with his formidable reputation for being a turnaround artist and as the man who is seen to have lent a Midas touch to Renault & Nissan globally, India has proved to be a tough nut to crack for this veteran. Nissan also faced problems in its JV with Ashok Leyland in the past over plans for developing a small car. Dheeraj Hinduja, Chairman, Ashok Leyland confirmed in October 2010 that the JV talks with Nissan on the small-car project has been shelved. Currently, Nissan only has a JV with Ashok Leyland for LCVs.

But despite all the confusion over its respective JVs, Renault’s plans to establish its solo presence in India remains intact. The company will be launching Renault Fluence sedan and its Koleos crossover by mid-2011 in India and is currently in the process to expand its dealership network. There is little clarity on whether these cars will be manufactured in its plant in Chennai or will come as completely built-up units (CBUs). The company has said that it will launch five models in the next four years. Renault has a total capacity of four lakh units per annum at its plant at Oragadam, near Chennai, which it operates jointly with Nissan. Going forward, Renault is likely to bring products like Clio, Sandero and Twingo in the next few years. In fact, even if it finally decided not to partner with Bajaj, the auto major has plans to launch a small car in the Indian market that will establish its presence in the volume-pulling A2 segment. While the results of Ghosn’s solo ride in India are yet to be seen but going by the plan layout, it is the biggest opportunity for the company to create its space in the already crowded Indian automobile market.

Automobile majors such as Maruti Suzuki, Ford and others have successfully made in-roads in the Indian market by taking the JV route. Agrees Yezdi Nagporewalla, Head-Automotive, KPMG, “In the automotive market, joint ventures can be crafted as a successful medium for entering India.” But Ghosn has not been able to replicate a similar magic so far. The accolades and milestones that Renault-Nissan has accomplished till now, under the leadership of Ghosn, are truly impressive. But there is no evidence till date that Ghosn understands even one P of the marketing mix for the Indian consumer – from pricing to packaging to promotion to even placement. The Indian consumer, they say, is a vicarious infidel – where even the top end consumer would jump at a price discount than indulge in profligate luxury. Will Ghosn understand that? Does he want to?

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Women have broken a lot of Gender Barriers in Society, But The Glass ceiling is not Exactly in that List Yet

Unleashing The Next Wave of Economic Growth
Entrepreneurship has re-engineered the genetic make-up of many economies. It is now time to tap the potential of women entrepreneurship and unleash this potent force to spur economic growth.

This morning, students in my entrepreneurship class at UCBerkeley’s Business School presented their ideas for a smorgasbord of new ventures, ranging from fresh search engines on the web and better ways for small businesses to buy insurance, to innovative platforms for tourism in China or finding parking spaces in big cities. Half of these aspiring entrepreneurs were women.

At the same time, microfinanced loans were being made and repaid by small-scale entrepreneurs in villages and cities across India, Africa, Latin America and Asia. Most of these loans supported women building businesses for their own livelihood and families’ well-being.

Between these two vignettes – one played out in Silicon Valley and the others unfolding in different time- and economic zones – lies a basic truth: entrepreneurship is a dynamic force for igniting human ingenuity and a powerful engine for driving growth and opportunity up and down the world’s economic pyramid. Entrepreneurs create jobs, stimulate technological innovation and create new value for their customers, investors and themselves. They bring a willingness to take risks, an ability to see tomorrow’s opportunities where others see only today’s reality, and often a healthy disrespect for the status quo that can lead to disruptions in markets, economies and even societies.

Most people see the face of entrepreneurship as men like Steve Jobs, Richard Branson, Bill Gates, Dr. K. Anji Reddy or N. R. Narayana Murthy – innovators whose vision and tenacity have sparked the creation of global enterprises worth hundreds of billions of dollars. And in fact, most entrepreneurial ventures are started by, owned by and managed by men throughout the world. In the US, only 30% of businesses are women-owned, about the same percentage as in Europe; a sizable gender gap in entrepreneurship also prevails across Asia, Latin America and Africa.

But the real story of women and entrepreneurship is not told in these statistics. Many ventures started and owned by women exist off the scoreboards of formal economies. They may operate in informal markets, or represent smaller-scale enterprises, or play out in ventures officially owned by men either for reasons of tradition or legislation or both. Regardless, women entrepreneurs are vital contributors to the economic well-being of their families, communities and nations. Their businesses do what most business do: generate jobs, sell products and services and create value.

If entrepreneurship is “the pursuit of opportunities beyond the resources under one’s control”, then it is a field ripe for the talents of women, precisely because they have relatively fewer resources under their control in many parts of the world today. Entrepreneurs have to be resourceful before they have resources; and that is both a challenge and opportunity for women entrepreneurs today. In some countries, they must contend with hostile laws that artificially restrict their freedom to pursue their aspirations in creating new businesses to serve real customer needs. They must either confront or work around family and spousal attitudes that often range from ambivalent to resistant. And in most societies, they must do that while fulfilling entrenched notions of their roles in society as mothers and wives.

But in the midst of those realities lie profound opportunities. We can see the evidence all around us. It is not only the “poster women” entrepreneurs like Oprah Winfrey or Estée Lauder that command our respect for creating enormous enterprises through their creative genius and demonstrable leadership. One needs to look no further than down the street or in the next village to find immediate examples of ventures inspired and operated by women applying their own time and talent to new and existing businesses, albeit perhaps at a smaller scale with less fanfare.

Entrepreneurship is not the exclusive province of high-tech, high profile and large-scale ventures or their creators. In fact, most of the economic value and jobs created by entrepreneurs are generated in small-scale, low-tech and mostly unknown businesses across the world. These are the enterprises that represent the lifeblood of most economies globally.

As the gender gap shrinks across the landscape of higher education in many countries, the pipeline of talented women aspiring to make their mark as creators of vibrant new businesses will inevitably expand. The combination of ambition and education will accelerate the impatience which often fuels venture creation by entrepreneurs frustrated by the pace of change or lack of imagination in more traditional pursuits.

And here is the catch. If women entrepreneurs are every bit as talented and dedicated as their male counterparts, the world can unleash their power in transforming markets, opening societies and expanding horizons not just for their benefit, but for all of us. And this, I think, will take creativity and courage in several key areas. First, girls need to see women as entrepreneurs. They need to understand that people like them can tread the path of entrepreneurship and do it successfully, without sacrificing their identity in the process. Schools in every community need to better showcase the rich tapestry of women entrepreneurs by inviting them into classrooms to share their experiences and challenges; and developing practical curricula that focuses on what it takes to start a venture of their own.

Second, women entrepreneurs need to develop mutually supportive networks with each other. This is not to exclude engagement with their male counterparts, but rather to encourage exchange of best practices and peer-to-peer support with others who have personally experienced the unique configuration of issues faced by women starting and growing businesses. In fact, a recent Global Entrepreneurship Monitor report suggested that “being employed and having a social network that includes other entrepreneurs are stronger predictors of women’s entrepreneurship than educational attainment or household income.”

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

One Step Forward, Two Steps Back

The Nation that has Proven Oil reserves of 79 billion barrels Representing 6% of The World total and 45% of non-OPEC Reserves needs to do Away from its over Dependence on The ‘Black Gold’ if it really wants to become a Viable Player on The Global Arena.

The Russian economy has finally returned from the brink of a collapse. After falling 11% on a year-ago basis in Q2 2009, Russia’s real GDP rebounded, growing 2.7% y-o-y in Q3 2010. While this is a step back from the 5.2% growth in Q2 2010, it was the third straight y-o-y increase for an economy that was struggling to come out of its worst recession since the fall of the Soviet Union in 1992. A major rebound in the trade surplus (at $9.6 billion in Q3 2010) on the back of rising oil prices (oil accounts for nearly 20% of Russia’s GDP, over 66% of its exports and 50% of its government revenues), following a dramatic 75% plunge in the surplus during H1 2008, has been a key driver in the recovery. Sounds impressive! But, a small walk down the memory lane and one can easily question the sustainability of this so-called remarkable rebound, once again led by the ‘Black Gold’.

For starters, during the commodity boom prior to the global slowdown, triple-digit oil prices (at $147 per barrel on July 4, 2008) were a boon for Russia. In fact, in July 2008, at the height of the oil boom, the total value of country’s oil exports was up 77% from the same period during 2007. Since the government receives 90% of all earnings of oil exports when the oil price exceeds $25 per barrel (for a field with oil depletion below 80%), the country’s coffers were brimming. But then, not to forget, it was this over-dependence on oil that has brought Russia’s economy nearly to the ground, not once but twice.

First in 1998, when the devastating Ruble Crisis hit its shores on August 17, 1998 (a massive decline in world commodity prices had triggered financial crisis across countries that were heavily dependent on the export of raw materials and Russia was among the worst hit). Second, more recently in 2008 (a part of the World Economic Crisis that started in 2008), when the price of Russia’s benchmark Urals crude fell 77% in the second half of 2008, which not only caused an 11% peak-to-tough decline in Russian GDP, but also saw the economy witnessing a capital exodus. What’s more? Net capital outflows from the country reached an alarming level of $130 billion & $50 billion in 2008 & 2009 respectively (this together amounts to about 13% of Russia’s GDP). Even Russian share markets nose-dived and a whopping $1 trillion had wiped off from them by 2008-end. All this led to a sharp fall in ruble’s (Russia’s currency) value (ruble’s value fell 35% against dollar between August 2008 & January 2009). In order to stem the ruble’s plunge, the policy-makers had to buy up rubles using country’s forex reserves. In fact, from July 2008-January 2009, Russia’s forex reserves fell by $210 billion (from $596 to $386 billion) thereby dragging the world’s largest country (by area) into a severe recession.
 

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

“The Equivalent of two Valdez Spills is Gushing into The Gulf, Per Week!”

John Hocevar, Oceans Campaign Director, Greenpeace USA, talks to B&E’s Steven Philip Warner about The Damage done and The Consequences thereof of the Most Recent BP Oil Spill Holocaust

B&E: The most recent BP oil leak disaster in the Gulf of Mexico is estimated to lead to great ecological disbalances. What are you estimates of the damage?
John Hocevar (JH): The impacts of the BP Horizon disaster on the Gulf of Mexico ecosystem and coastal communities are going to be felt for decades. It was terrible seeing oiled birds, dolphins swimming through oily water, and tens of thousands of dead hermit crabs. Of perhaps even greater concern is the impact on habitat, which will have long-lasting effects. Mangroves and grasses that have been covered in oil will die, and many low lying islands will wash away completely once the vegetation that holds them together disappears. Some of the islands which will be lost include some of the most important bird rookeries in the Gulf. Unfortunately, this is just the beginning. No one seems to know for sure how much oil has been spilled, but the estimates keep increasing. Some scientists are now saying that the equivalent of two Valdez spills is gushing into the Gulf right now, per week. So far, most of the oil has remained below the surface, offshore, and out of sight – and so have the impacts to marine life.

B&E: The Obama administration is acting first hand to take charge of this situation that already looks beyond control. It has been estimated by Credit Suisse that the cost of the clean up act can touch upto $49 billion in the four years to follow. Even BP is taking huge steps to accelerate its clean up acts. How far do you think will the mission be successful?
JH: The effort to clean up or mitigate the impacts of this disaster is considerable, but has already proven insufficient to protect sensitive areas. The oil has entered the wetlands, where it will be impossible to clean. Even under the best of circumstances, at most 15-20% of the oil can be recovered. In this case, I would be surprised if they could recover more than 5%. The harsh truth is that the only way to avoid disasters like this is to prevent offshore drilling from happening in the first place.

B&E: So you think BP is the culprit in the spotlight or is it Tony Hayward who is the criminal in the crowd? Or are we to condemn the whole concept of deepwater drilling?
JH: It is not a question of BP or Tony Hayward being a particularly bad apple, or even of deepwater drilling being much more dangerous than shallow drilling. Many big oil companies have had major accidents in the past under various circumstances, and more recent blowouts have occurred in shallow water than deep. Part of the problem with assessing what the spill is doing to Gulf species has been a lack of transparency by those doing the assessing. BP has hired contractors to test dead animals, but what we’ve seen from them so far has been a bit dubious. When contractors tell the media that the number of dead dolphins is no cause for alarm, or that there is no link to the spill, it doesn’t exactly instill confidence.

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

it is time for us to look at other partners that could actually help India’s growth story

Contrary to the belief that BRIC would overtake the economic might of the West, the lack of progress of the bloc due to China’s hegemony and pessimism calls for a rethink of policies, especially for India. Perhaps, it is time for us to look at other partners that could actually help India’s growth story.

Even the ministers for Commerce, Finance and Foreign Affairs for India have all recognised the issues of trade imbalances as a major area of concern. However, the stand of the government in terms of strategic and territorial disputes, has not been particularly assertive in the past. The government needs to look into the aspects of the economic implications that India can face due to major trade imbalances as it is hurting the Indian industry in a big way. The rethinking should begin soon if it has not begun yet. In diplomacy, there is a concept of tit-for-tat strategy. Agreed that many would not call this correct in terms of the nature and character of India when it comes to international relations. However, the need arises based on the fact that China has been poking its nose in many domestic issues of India, be it in relation to Dalai Llama or with respect to human rights issues, or the Kashmir issue where China has maintained a very dubious stand with respect to the Indo-Pak dispute. Even when it comes to the issue of the expansion of the United Nations Security Council (UNSC) and India’s entry into it as a permanent member, the stand of China has been very mischievous. Certainly, the dragon’s pessimism over India has existed for long and this attitude dampens the chances of the fruitification of any important alliance between India and China, or any group or a bloc for that matter.

Ideally, BRIC has huge potential to emerge as a powerful bloc that can counter other powerful forces, provided it projects itself as a united group and internal issues within the bloc are handled in a proper manner. Of late, even the Indian leadership seems to have become a little pessimistic about the whole idea. Says international affairs expert Suvrokamal Dutta, “If the Chinese leadership does not mend its ways, it could well be in for complete isolation in the international world. Today, China has problems with almost every other country in the world. It has huge economic and strategic issues with the US. Then there are strategic issues with Russia, Japan, ASEAN and the European Union. These nations are important both in terms of international politics and trade.”

It is utterly unfortunate that the disputes between India and China have gained primacy whenever we get down to discuss the importance and feasibility of BRIC as a powerful antidote to the dominating West. So where is the solution? Perhaps India should start looking at options for partners that can act as an antidote to BRIC itself. Dutta too reminds of a concept of the formation of a quadrilateral that was first proposed by former Prime minister of Japan Abe Shinzo in 2006. This quadrilateral or ‘a concept of wider Asia’ as Dutta calls it, would include India, Japan, US, ASEAN, and countries of the Asia-pacific like Australia and New Zealand. “The beginning of the emergence of this formation was first seen with the Malabar joint naval exercise in the Arabian Sea, which in subsequent years also witnessed the participation of Australia, New Zealand, Singapore, Sri Lanka, Malaysia, Thailand, Japan and South Korea. This, I believe, was a kind of a warning to China not to try and flex its muscles,” says Dutta adding that, “this naval exercise is what started emerging as a formation that came to be known as the quadrilateral.”

The building up of this quadrilateral bloc as a major antidote to BRIC can prove extremely beneficial for India. “The formation of new bloc would empower India to counter Chinese problems in BRIC through its, say, in the quadrilateral. Similarly, in case of a problem with the US, India can use BRIC to counter the quadrilateral,” says Dutta. In fact, there is an official confirmation now that the foreign ministers of Germany, Japan, Brazil, South Africa and India have already started meeting on the sidelines of the UN General Assembly in relation to the issues related to the UNSC and other common issues.

In a way, India has already started looking for alternatives to China for more sustainable and advantageous relations. The advantage here is that Germany, Japan or South Africa have no major issues with the US. Also, these nations do not have a problem with Russia as well. India enjoys good relations with both the US and Russia in the existing scenario. So, the contours with the US and Russia, the two major powerful nations, could prove very handy and positive for India as it would enable it to do business with both these countries without any major hiccups. This would also facilitate its connectivity with both the developed and emerging economies. This again could also be a major shifting power bloc through which India will stand to gain politically, strategically and economically. 

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting