Tuesday, July 24, 2012

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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Friday, July 20, 2012

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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Thursday, July 19, 2012

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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Wednesday, July 18, 2012

“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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Tuesday, July 17, 2012

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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