Wednesday, 28 October 2009

An ode to Pan Am

The words "appalling" and "airlines" are synonymous in the language (allegedly English) spoken in the US of A. It wasn't that way some time ago. Pan Am was synonymous with "wonderful", as long as it flew. It was THE airline in the US. Unfortunately it went bankrupt in 1991. But the brand is still powerful amongst a certain generation (not comprising readers of this blog !). Those with a taste for nostalgia, which prompted this post, click here .

No amount of vitriol can be considered excessive when it comes to US airlines. All of them are uniformly awful. Extreme masochism can be the only excuse for condemning somebody to a flight on an American airline. The worst airports in the world are all in the US. From the moment you enter to check in, to the time you get out at your destination, it is pure torture. Inside the US, you have no choice but to reconcile to extreme pain, but it beats me as to why anybody flies long haul in an US airline when other options exist. To read an eminent American's surprise that airlines can actually be pleasant elsewhere in the world, click here .

Pan Am wasn't like that. It could compete with the best in the world.  If you were to go the US, you chose Pan Am. Unfortunately 270 people chose Pan Am on that fateful flight in 1988 which was bombed over Lockerbie - a blow from which the airline itself never recovered. Its decline had started much earlier with the oil price shocks and increasing competition, but that terrorist act was a body blow. It shut shop in 1991, ending a glorious chapter in US aviation. Only to unleash the monsters that inhabit the US skies now.

I have no idea who owns the brand rights to Pan Am, but certainly to an older generation, it represents civilised flying. How about an entrepreneur reinventing the airline and launching a decent flying option in the US.  Standards have fallen so low there, that there surely must be a segment which is willing to pay higher prices to travel in a humane manner. Now, that's a thought. Any takers ? Maybe the thoughtful train can morph into a thoughtful plane ?

PS - I have just got down from a plane. One of the finest airlines in the world, in one of the finest airports in the world. I am thanking my stars,  that its a million miles away from the country where "terrorists" rule the sky.

Sunday, 25 October 2009

One people divided into warring nations

Moreh is a border town between Burma and India in the state of Manipur. If you go there, you'll hear a strange language spoken - Tamil. When Indians were kicked out of Burma some 50 years ago, many Tamils who had settled there began the long walk back home. Some came all the way back. Many decided to just cross the border and stay there. Hence the Tamil in Moreh.

At the other end , the famed Grand Trunk Road once stretched all the way to Lahore. And you could go from there to the Khyber Pass. Undivided India stretched all the way from Burma to Afghanistan.

Today we are a divided race. Split into half a dozen countries which don't see eye to eye with each other. What a tragedy.

One of my most memorable trips was the one I made to Pakistan about four years ago. Its not easy for Indians to go to Pakistan, as its not easy for Pakistanis to come to India.  When the opportunity came for me to go there, I grabbed it with both hands.  I could go only to Karachi - visas are city specific.  But it was such a lovely trip.

Karachi is the Bombay of Pakistan. And it looks and feels exactly like Bombay. After all, we are one race.  Everything that is good and bad about an Indian city, applies equally to Pakistan. The average guy on the street is wonderfully warm and welcoming. There was only welcome for me as an Indian; not once was there even a hint of anything else. We speak the same language - separated only by a different script. We eat the same food - the same roti, dal, sabzi. We watch the same movies and do a jig to the same songs. We love the same stars - Amitabh, Shahrukh, Aishwarya, et all.  We are as crazy about the same funny game. Except when India plays Pakistan, we usually cheer for each other.

Many common misconceptions of Pakistan that Indians have is just plain wrong. Pakistan in not rabidly religious - its as religious or unreligious as India is. Middle class Pakistani women in Karachi are as free, dress as smartly and are as liberated as Indian women. We share the same hopes, aspirations, joys of life. Just as I yearned to travel to Pakistan, my colleagues there yearned to travel to India. How wonderful it would be if I could go to Lahore, to Peshawar and someday even to the Khyber pass.  To my Pakistani colleagues, it was the yearning to travel to Bombay, to Kanyakumari and gaze out into the three seas ......

Alas, this is unlikely to be much more than a dream in our lifetimes. We have fought three wars.  We have been separated for more than a generation.  Both of us have enormous misperceptions of each other. Hatred has been stoked. Mistrust is rife. We are one people who have become enemies.

We can help in a small way. Until the internet came, we had little opportunity for contact and understanding . But now, social networks abound. It should be easy to reach out. And yet it rarely happens. I bet that none of our blogs has a single Pakistani or Bangladeshi or Burmese follower. And I bet few of their blogs have an Indian follower.

On the ground, we'll probably be divided for sometime to come. Maybe a longtime to come. But in the blogosphere, we can become the one undivided race we truly are.  Worth making our small contribution.   Mufti saab, follow my blog; and if you write one; I'll be your first follower.

For my Indian friends, I'll leave you with a song from across the border, which you have surely heard and enjoyed.

Friday, 23 October 2009

Obil Boil

Oil on the boil again, screams the headlines in India’s Economic Times. Or as our wonderful little friend Chotu might say, Obil Boil. I am certain that his words were prescient and not just a child’s lisp of mama’s olive oil.

Crude oil prices have touched $80 a barrel. The US dollar has continued to weaken and since oil prices are globally stated in US dollars, they are bound to rise further. I argued that the world must get ready for expensive energy for the foreseeable future here, but governments have lost a golden opportunity, when oil prices were low consequent to the recession, to prepare their citizens for the coming times when oil prices will be in 3 digits.

This has profound implications for the whole world. Firstly inflation will inexorably rise. The risk of inflation in the near term is the highest, with two huge factors contributing to it – the price of oil and the stimulus money that governments have spent. When oil prices rose last time to the peak of $147 , we had riots as it has a direct impact on the cost of food. The impact on poorer countries was disproportionate. Secondly the world will see a massive transfer of wealth from everywhere to OPEC – primarily the Middle East. Such a transfer of wealth is without parallel in history, with profound geopolitical fallouts.Churchill’s famous words may have to be rephrased to “never in the field of human history have so many paid so much to so few”.

Even now, it isn’t too late for governments to act. They must slowly abolish all subsidies on petroleum and then keep increasing the price of petroleum products in small doses so that people are slowly taken to the high oil price world, instead of a cataclysmic jump. They must not reduce prices when crude oil weakens occasionally – instead they should build up a fund to cushion against periods of extreme rise.

One of the possible fallouts of a sustained high oil price world might be that the world will start to go more local than go more global. Products may start to be produced nearer where they are consumed. Jetsetting around the world may start to become rarer. Brits having strawberries in December may become a thing of the past. Perhaps in the world of the future, a Chotu saying Obil Boil, may become common place and not raise an aaawww anymore. Now, that is not a nice thought.

Wednesday, 21 October 2009

What was he thinking ?

You normally associate business leaders with high intellect, sound judgment, and in general, greater ability than many of us, mere mortals. Then I read this front page report in today's Guardian in the UK.

I had promised to myself that I'd stop writing about either bankers or Goldman Sachs after my last two posts on the subject. But what can you do when somebody makes a speech like that. And where does he chose to make these remarks ? In St Paul's cathedral, no less.

If you know of any greater act of appalling judgement, please let me know.

Monday, 19 October 2009

When shareholders’ and company’s interests don’t coincide

What happens when the interests of the shareholders do not coincide with what’s good for the company ? Ordinarily there should not be any conflict – the company should have no interests of its own other than the interests of its shareholders. In the capitalist model, the interests of management or the employees – doesn’t matter; they operate solely to safeguard and promote the interest of the shareholders. But once in a while a situation crops up where its not so clear cut. That’s the position with Carrefour today.

Carrefour is the second largest retailer in the world after Walmart. It is the most international of the retail chains – Walmart for all its successes in the US has not really shone outside. Tesco, another giant retailer is a relative newcomer to the international arena. Carrefour has been the truly successful international retailer – it came to Brazil in 1975 and to China in 1995.

In the peak of the boom, a little while ago, a couple of investors, including some famous names, bought a 13% stake in Carrefour at around Є 50 a share. With the recession, Carrefour’s shares are now at Є 30 a share. They don’t like this , of course, but there’s nothing to suggest that any of this is due to Carrefours’ performance. On the contrary the company is doing OK. Its share price has just been a victim of the global circumstances.

So what do these shareholders want to do ? They want Carrefour to sell off its Latin American and Asian businesses and then pay them a special dividend. They then want Carrefour to withdraw into becoming a European (mainly French) retailer.

Here’s the conflict with the company’s interests. Clearly the strength of Carrefour is its international leadership. In its home markets in Europe, it is plagued by low growth (in France) and poor profitability (most other countries). If it withdraws from Asia and Latin America, then it doesn’t have a real future. In any case, who would want to withdraw from China, if you already have a strong presence there.

There’s an argument to say that however rosy the future may be, if you get a full price for the business, you should sell. In this case, its far from clear how Carrefour would get its full value. The more obvious buyer is Walmart, but its highly unlikely that the Chinese are going to allow this on anti trust grounds. Who’s going to pay the full price ? And is it OK for a bunch of shareholders with an extremely short term motive to cut losses and run, and perhaps harm the company’s future ?

So, is the shareholder always right ? I am not so sure. Perhaps the question should be posed differently. Is it OK for the shareholder to have a sub optimal short term motive, when an alternate long term view is demonstrably superior ? And who should be the judge of this ?

Sunday, 18 October 2009

A treatise on buyer behaviour based on observational experience, with particular emphasis on matters sartorial

Frivolousness on a Sunday is unbecoming of a serious business writer and therefore the idea of a light post is hereby being discontinued. Instead this is a learned treatise on buyer behaviour.

The mere sight of an Indian lady getting ready to embark on a shopping expedition to buy a sari for Diwali, or a wedding, is sufficient to strike terror of the sort Osama bin Laden can never hope to achieve. Now, the unfortunate member of the male species who happened to have said “I do” in a fit of madness a long time ago, and who has to pay for it (pun intended), deserves our deepest sympathies. For he has to accompany the lady on this misadventure that is closely akin to walking with bare feet, and no clothes, in the depths of the Afghanistan winter to meet the aforementioned Osama to tell him on his face that he is a dandy.

The destination for this expedition is usually T Nagar. There are equivalent locations in every Indian city, but let us stick to Chennai, for some of the most fearsome shoppers reside here. T Nagar, is usually a nice place, except that at such a time, some 64 million other members of female species have the same idea as our lady. With the poor male in tow, looking suitably terrified, our lady descends on one of the torture halls that dot this locality.

She pushes and elbows her way to the front of the jostling throng, and gets ready for the three hour ritual that is about to unfold. Being not athletically inclined, and being of er, rather generous proportions, she finds an empty stool and perches herself on it. The stool resigns itself to its fate. She then announces across the counter that she has come to buy a special sari and can they show her their best wares.

The drama is about to start. The sales girl throws open some 20 saris. Our lady hasn’t moved a muscle. More she says. Another 20 more come out. Still no movement. Until the 50th sari has been flung open, it is considered poor manners to even lift a finger. Once a small mountain has formed in front of her, our lady will start to slowly stir. The cloth is felt. The bottommost in the pile is retrieved and opened out. After about half an hour of humming and hawing, 14 specimens are retrieved for further analysis.

Now comes stage 2 of the process. Each of the 14 specimens is to be opened out by the saleslady and flung over herself so that our lady can judge on how it would look on a human body. Not that the sales girl is any match for our lady's beauty and grace, but still …. The saleslady is expected to now extol the virtues of each sari and comment loudly on how our lady would look stunningly beautiful in each of them. After another half an hour, the shortlist is now down to 3.

Then comes the most scary stage of the process. The terrified male standing on the side has already acquired a terminal case of deep vein thrombosis. The lady now turns to this quivering gentleman to ask him for his opinion. Oh God ! His real thought is that all 3 look unbelievably ugly and garish. And holy cow – each of them costs more than he makes in a month. But he will be instantly decapacitated if he even hints of any such thinking. So he diplomatically tries to suggest that all three look quite good. He is now given a severe tongue lashing on how useless he is and that he cannot even give a simple opinion. Reeling from this assault, he whispers tentatively that the red one seems to be just that little better. Another furious volley results – is he that tasteless and brainless to suggest that the worst of the lot looks a little better. Where has he left his brains ? Serves her right for asking for the judgment of an imbecile. She turns away and promptly pares the shortlist down to 2, excluding the red one.

The next half an hour is pure agony. If you ever want to witness the ultimate throes of indecision, this is the moment. First one is selected. Then the other. They are both opened out, draped on at least 4 women. They are looked at standing, sitting, with one eye, from 45 degrees, felt, touched, caressed ….. God in heaven. Here’s a decision to be made that affects the future of the human race. Please help !

Then a miracle happens. Our lady spies somebody at the far end of the shop looking at another specimen. She jumps out of the starting blocks faster than Usain Bolt. Displaying unknown athletic talent she rushes across and snatches this specimen and announces that this is what she’ll buy. Never mind that hapennings of the last three hours.

Our man can now hardly move. This specimen now costs twice what he earns in a month. With the resigned air reminiscent of an animal being taken to the abattoir, he takes out his card.

There is a post script to this story. Upon reaching home, the lady now thinks this wasn’t a good choice and that they will all return to the shop the next day to exchange it for the red one.

I now challenge my good friend Adesh, who writes a great blog on customer service to use these unique customer insights and develop his theory of consumer behaviour.

Acknowledgement – The inspiration for this post comes from a wonderful and brilliant friend, Priya, who posted on this theme here. Of course, she doesn’t do any of the things listed above !

Friday, 16 October 2009

A Letter

Mr Lloyd C. Blankfein
Chairman and Chief Executive Officer
Goldman Sachs Group Inc.

Dear Mr Blankfein,

Congratulations on the stupendous third quarter results of Goldman Sachs, you announced yesterday. To achieve some of the best ever results in the firm’s long and distinguished history, just one year after its worst crisis, is a remarkable achievement indeed.

We are writing this letter to make a humble suggestion for your consideration.

As we all know, the financial crisis over the last two years has affected millions of people worldwide. We think you would agree that the financial services industry, and therefore Goldman Sachs, had some part to play in this. The United States government had to step in to provide assistance and guarantees to you last year to tide over the crisis.

I would suggest that some humility and just a hint of remorse, might serve the bank well. Arousing public anger, however fair or unfair the anger may be, is not in the bank’s best interests. We suggest that you consider donating the last quarter’s profit of $ 3bn, that the bank made, to a fund that can help those who lost their jobs in the recession or were directly affected. This will not make a significant financial impact on your bank, considering that its just one quarter’s profits. It can however make a significant impact on the lives of many people who have been devastated over the last two years. It would be an extremely graceful gesture of a large hearted organisation – its an opportunity for your bank to demonstrate that it has both those qualities. You may want to consider convincing your shareholders that such a move is their own long term interests.

It is unlikely that your bank will become the most loved organization as a result of the act, but it might prevent it from becoming the most hated.

With best regards

Bloggers Anonymous.

Thursday, 15 October 2009

Something is not right with this world

Last year, virtually the entire financial sector in the world went belly up. 12 months on, Goldman Sachs reports a quarterly profit in excess of $3bn. Yes 3 BILLION DOLLARS. In one quarter. Profit

Goldmans is the one bank everybody loves to hate. But even by their standards, this is something. The last two quarters have seen the highest quarterly profits in their 140 year history.

Now, the economics I have been taught in college was that there is a positive correlation between risk and reward. If they have made such profits, they must have taken wild risks. Just a year after coming within an inch of annihilation, only a complete lunatic would take such risks so as to make this mind boggling profit.

Or else, the economics I was taught is wrong. In the post meltdown world, there is easy money to be taken. Without taking undue risks. So the reward for bringing the world so close to an abyss, is to be able to make unbelievable money by just being around and counting the cash; and the rest of the economy, including the taxpayer, be damned.

Oh yeah, they will say they are just so damned good that they have “earned” this money. Maybe, but still …They are not the only ones printing the money. Some others are too; JP Morgan made a tad more than even Goldmans.

Either way, something is not right in this world.

Wednesday, 14 October 2009


Business Leaders who can see far far ahead are an extreme rarity. Usually a business leader’s definition of long term is the next quarter. Occasionally, there comes a business leader who plans for the next couple of years. Rare is the leader who sees decades ahead.

Two such examples are the subject of this post. The surprising thing is that their names are completely unknown – I don’t think there are more than half a dozen people who’ll even recognize their names. After all, business has short memories and business history is virtually an unknown science. As a demonstration of this, can any of you recall who was Jack Welch’s predecessor at GE – he was a titan in his own right; honoured with the title of the Businessman of the Decade; but who remembers him now.

Back to these two men. One was the Chairman of this famous company in India , a subsidiary of a global company headquartered in the UK. He was chairman only for three years or so until ill health forced him to return back to the UK. The other was his boss, the head of the global business outside of Europe. Their names were Steve Turner and Andrew Knox.

Consider the environment. Late fifties. India had just attained independence. Just shaken off the colonial yoke. There were only a few multinationals in the country. This company was by far the largest of them. As was the norm, everywhere in the world at that time, managers from the parent country would be sent to run subsidiaries across the world. It would be rare to find a brown skin, or a black skin in a senior position in Asia or Africa.

But this company was different. These two wise men, wise beyond their years, and absolutely without parallel in any other company, decided that Indian business was not to be run by foreigners. They decided that Indian managers would now be entrusted to run the company. For those times, this was a positively majestic step.

Steve Turner, in his short tenure, and Andrew Knox, did many far seeing things. But one of their greatest contributions was that they groomed and decided to hand over the chairmanship of the company to an illustrious Indian. The company never looked back. Generations of outstanding Indian business leaders have graced this company . And the company went on to become a star, outdistancing its competition combined until the turn of this century. All because a few very wise men foresaw that to succeed in business in India, you have to let Indians run it. They called it "isation”. Indianisation. And then replicated it in every other country in the world.

The reason I muse about this, is that here we are in the twenty first century. In China, I still see expats running many of the foreign companies here. Many senior posts are occupied by expats from Europe and North America. They talk of the same issues – lack of senior management talent, trust, etc etc. And then I marvel at how wise they were in this company in the 1950s. They were “men of substance”; men, truly way ahead of their times.

Monday, 12 October 2009

Should businesses tweet, or twit ?

What does a business do with social media ? While a trillion words have been written on this subject, not much light has been shone, I submit. Businesses are still struggling with what to do. Take the example of Twitter.

I will straightaway confess that I am not a fan of Twitter. I don’t tweet (the more appropriate phrase should be “twit”, but because of the unfortunate connotations of that word, we’ll let it pass). But I dodged my Net Nanny ( no surprises, its blocked here) to look at what business leaders and businesses are doing here.

Here are some actual tweets (admittedly I was selective about what I picked)

Richard Branson (Virgin)

* Looking forward to the cricket today; Come on England
* I do love Monaco this time of the year. The Prince is such a gracious host to the world of sport

Jack Welch (needs no intro)

* Kennedy celebration of life was impressive
* Beckett has had a brutal scary week – 8 home runs

Mark Zuckerberg (Facebook – I thought he should know a thing or two about social media)

* So many interesting people are following me. I think I’ll follow some of you guys as well.
* Playing with TweetDeck. Its pretty neat.

Evan Williams (CEO Twitter ; the man himself)

* There’s a crapload of people in my backyard.
* Normally I love Mondays

I gave up. Do I have to read this inanity ? Maybe I should go to company tweets ; that might be a better representation of what businesses are doing with Twitter.


* If you’re interested in hearing a rebroadcast of our 3Q earnings call, click here.
* Hope everyone is enjoying their Friday


* GSK US Blog post. The Bloggers are coming. The Bloggers are coming.
* Yay. Great news. Spotted random people in Phila sneezing into their elbows or sleeves today. Message must be getting out there

Google (well over a million followers)

*“Sex, Conference Calls, outdated FCC rules” & our take on Google Voice
* Gmail team’s good advice on how to create secure passwords at …….

Reasonable conclusion – Businesses don’t have a clue as to what to do with Twitter.

Sunday, 11 October 2009

A pajama by any other name is still a pajama

The mysteries of fashion were never intended to feature on this blog – it having some pretense to address the weighty matters of the business world. But completely flattering comments went to my head and I converted the Sunday post into a somewhat irreverent one on less weighty matters. Matters sartorial crept in here because of numerous girlie tags that addressed the famous question – what are you wearing , in all earnestness.

Last week was a tough one and the good doctor has prescribed a large dose of humour and a solid rant as a remedy. But it must take a seriously unbalanced mind to tease the female of the species , as I am about to do. But what the heck; I need a rant; so here goes.

Of all the dresses in the world that the fair(er) sex are obsessed with, the hijaab is surely the most awful one. The second most awful contraption has to be the salwaar kameez, especially in an office.

Now, Indian women have two real options for formal dressing – the wonderful sari, which must rank amongst the very top in the most graceful, elegant, suave outfits in the world. Or the western trouser or skirt and the jacket. Both look lovely and are very professional . But, what does our Rajalakshmi do ? Wear that horrible salwar kameez to work.

A shapeless and more unglamorous outfit is hard to find. A baggy pajama that is still a baggy pajama even if anointed with the name of salwar. And another equally shapeless kameez, whose fashion variances are connected to where they extend upto; from the waist to the knee. And the worst of all – the dupatta which flaps around, gives you a swat in the face when you trail the wearer, and is left around in meeting rooms.

To add insult to injury this is usually worn in colours like deep red, bright yellow or fluorescent green. Many a first time visitor to an Indian office has gently sidled upto me to enquire whether it is normal to see such colours in an office setting. After two washes, the deep red has faded and then – UGH !

Oh yes, I have heard the arguments. It’s the most practical dress in the world . Try wearing a sari and commuting to work. And a western dress is often not appropriate for ladies of, ahem, ample proportions. Fantastic. So these are arguments for wearing what should be a nightdress to an office ?? And anglicising its name to a "suit" doesn't make it any more acceptable.

Right. Now that I have said it, I am quivering in fright. Whatever possessed me to take such grievous risks with my life. Can I be any match for an irate wearer of the dreaded dress. Bash on the head ? Maybe. Constriction of the trachea with the dupatta ? Would be poetic justice. Either way I am ducking for cover. I shall remain strictly in bed; head under the blanket for the next twenty four hours. HELP !

Friday, 9 October 2009

OMG, where has "outsourcing" gone ?

Outsourcing is a big and growing industry, in which India, and now China have major stakes. What started off as IT outsourcing quickly spread to a number of traditional areas – call centres, finance, HR, etc and then to exotic areas – children’s homework, tutions and the like.

I have a passing acquaintance with this industry but I had not even dreamt of the possibility of surrogate child bearing as an industry. I read this report completely gob smacked with a mouth wide open.

It’s a longish report, but for those not intending to read the whole article, the “industry” goes like this – if a couple cannot have a child because the lady is unable to conceive for whatever reason , there are a number of options open to them. They can get a donor egg or use the lady’s own egg, The sperm can be from a donor or from the husband. A surrogate is hired and the in vitro fertilized egg is implanted in the womb of the surrogate who bears the child. There is, obviously, a cash consideration for the surrogate. Apparently this “industry” is now moving offshore. And no prizes for guessing which is the leading offshore destination, by far. India. Ok its still very tiny, but it has started.

I am in a whirl. This is one of those devilishly difficult issues. Who is to say what is right or wrong ? There are all sorts of ethical and moral dimensions to this. Complicated by the fact that this will be seen very differently in different cultures. And if you put off shoring into this, with its big religious and cultural differences, it becomes mind bogglingly complicated. And then you add the possibility of exploitation of an economically poor Indian woman, it just becomes impossible to take any stand at all.

Is it right to allow individual freedom of choice in this ? Or is it right for society to draw a line on what is OK and what is not OK ?

I understand the topic of surrogates is also live amongst serials on Indian TV. I am told Jogula in Kannada and Arasi in Tamil, have this as a theme. Of course, I have no access to any of them, as I am required by the laws of the country I live in to only watch the Chinese premier being received by the North Korean president.

For what it is worth, I will state my point of view. I believe using a surrogate is morally wrong. And off shoring of surrogates is doubly wrong. This should not become an outsourcing business.

Thursday, 8 October 2009

Zero Finance scheme ? My foot !

This is festival season in India. Traditionally the season when Indian families tend to buy stuff that they neither need nor can afford ! The new two wheeler. Or maybe even the car. The new fridge – all the goodies in life that adorn showrooms the Ponnuswamy family passes by daily.

But , much as they might like to have it, they don’t have the money to pay for it. Cue to the wonderful world of financial innovation. Apparently the flavour of the season is what is called “zero finance scheme” ( with the obvious grammatical fallacy that if there is zero finance, there is no finance - why is it that these days I spot too many of them ??)

Sir – we have a zero finance scheme. No interest at all sir. Whatever is the cost of the goodie; you can pay in 24 easy installments. And see sir, no interest – total of your installments is the same as the cost price. Please sign here sir.

Now one of the blindingly obvious things that the human mind finds extremely difficult to grasp is that there is no free lunch. If something is too good to be true, it is usually too good to be true. Zero interest ?? The financial world is not exactly known for altruism.

Apparently the way it works is that zero finance schemes are available only at the full MRP. If you pay cash down, you get the usual discount that the manufacturer and the trade passes on in any consumer durables transaction. Voila – here’s the free lunch catch.

Madam – you don’t need that new flat screen TV. Even if you do, don’t believe this zero finance nonsense. You are usually pretty sharp when it comes to day to day grocery buying. Why are you so gullible when a smooth talking guy, wearing a tie, tries to palm off stuff like this. Just do the math madam. You can get it 15% cheaper with all those discounts, when you pay cash down. Did you notice that 2% processing fee for this magical zero finance scheme. If you now pay the full MRP in 24 monthly installments you are in effect paying 18% interest. Now do you really want that TV ??

Wednesday, 7 October 2009

Recession and the family business

The recession has been brutal for many businesses, but perhaps none more so than small family run businesses. In the land of entrepreneurship, the United States, about 90% of all businesses are actually family owned and run; mostly small businesses with less than 20 employees. The mom and pop store, the restaurant round the corner, the self employed consultant. They have been the massively affected as this article lays out.

This blog is not meant to be chronicler of the world’s woes, If the last couple of posts have left you thinking that way, its not meant to be for long. But its just that we, as the fortunate few who have jobs intact and can continue to take care of our families, perhaps ought to reflect more on what the less fortunate are going through.

What family businesses have faced is a sudden steep fall in demand, complete drying up of credit and no robustness to weather such a storm. Any well run company will find it difficult to handle this, as is very evident these days. But traditional family businesses are even more vulnerable - often difficult to change, don’t see the storm coming early enough and when the gale force winds are buffeting, don’t have the strength to keep standing. Like a mighty oak tree, they fall.

Its when they get into trouble that families discover that there is a double whammy. Closure of a family business is invariably concomitant with personal bankruptcy. For the fine print in any loan document has it that every personal asset of the borrower can be repossessed. This report captures this frightening phenomenon of double bankruptcies. Sure, the bloke should have read the fine print before he took on the loan. But honestly, who really does. Do we do it on the multitude of legal stuff we sign – if we did, we would never have a credit card for the blah blah in a credit card agreement is absolutely scandalous.

It’s a tough world out there. But when a family business, which has perhaps been in existence for two generations, falls, it’s a sad and poignant moment, Especially as the article says, for the family, its loyal customers and its even more loyal employees. I have to echo athivas’s comment on an earlier post – perhaps emotion has no place in the business world of today. Sadly , that seems to be true.

PS – If you were a tad surprised at this blog sporting a new look, its all thanks to the wonderful Srivats. Sri berated me for a blog that looked like a cross between an owl and a donkey. When I protested that it was because blogger is blocked where I live and I can’t change any layouts, he very kindly offered to do it for me. Where in the world can you find blogger friends like this. So he created a swank, funky look which I sheepishly argued wasn’t age appropriate for me. In exasperation Sri toned it down to the look that you see now. Thank you Sri – you are truly sensational.

Tuesday, 6 October 2009

When what happens at work becomes a life and death affair

France Telecom’s deputy CEO resigned yesterday after considerable criticism of the company over its handling of a spate of suicides by its employees.

There has been a worrying number of suicides by employees in France Telecom. More than 20 of them over the last 18 months. While suicides are often triggered by a complex set of issues, work related stress seems to have been a major cause of them.

Its an incredibly sad story , but a reflection of the modern day work environment. France Telecom has been brutally restructuring. Some 20,000 people have lost their jobs in the last three years. Sudden staff transfers from one place to another seems to have been regular. The management culture also does not seem to have been supportive.

Painful decisions involving the staff have become inevitable in modern day business. In the sanitized environment of the boardroom, the decision appears logical. Tough choices have to be made. The staff affected become a faceless mass and often just a number. But, on the ground, each and every individual affected is a human being. With a warm heart beating. These decisions made thousands of miles away and which the individual affected can barely understand the logic of, have enormous impacts on the lives of people and their families. Unfortunately, for a few, like what has happened in France Telecom, it ends in a suicide.

There is a huge need for support for people being affected by the turmoils in the business world. Companies have an obligation to help their people by arranging for support. Tough decisions are probably unavoidable, but the least a company can do is to offer support, help and advice – not the standard rubbish companies do to fulfill the minimum statutory obligations. Sending a termination notice by email, must be made an offence punishable by imprisonment. Support and help groups are probably needed manifold to be able to stand by pained souls in their hour of need. If we are to call ourselves a civilized society, that is.

Imagine this scene at a meeting in one of France Telecom’s offices last month. In a management meeting, in full view of his colleagues, a man in his 50s stabbed himself. Fortunately he was immediately rushed to hospital and survived. But what must be driving a normal man to do something like this ?

Managers of the world, think about this. Next time painful decisions are made affecting people, remember this incident. Your hard decision may be inevitable, but can you do it in the softest manner possible. Or do you want to have blood on your hands ?

Monday, 5 October 2009

I cannot predict the future accurately !

The United States is well known for the excesses of its lawyers. Citizens of other nations, while marveling at the upholding of the law in the US, are left scratching their heads in bewilderment at the famous McDonald’s case or the Washington DC laundry case. Cases like this have resulted in some labeling gems such as “Contents Hot” on a cup of coffee or “Remove the baby before folding the pram”. This post covers such an impact on the glamorous world of accounting.

When lawsuits against companies began mounting in the late eighties and early nineties, companies started to become extremely careful in disclosing any information at all, other than the statutory minimum, for fear of being sued. Best to say nothing ; say your name ( presumably safe) and say nothing more. The powers that be, in the US, realized that disclosure of more information , especially plans and strategies would be good for investors . In order to encourage companies to do so, some protection against being sued had to be given. The Private Securities Litigation Reform Act was thus passed in 1995.

This Act offered protection from being sued for companies making “forward looking statements”. The framers of the Act were oblivious to grammar - statements can neither look forward nor backward, not possessing any eyes, but we shall pass lightly over. If they had left it at that, we would have had some very interesting company announcements on the following lines – this is a forward looking statement ; my name is Ramesh. This is a forward looking statement; I may or may not post on my blog tomorrow. This is a forward looking statement. The blog may or may not be up tomorrow …..

So they very kindly stated that you do not have to preface every statement with a declaration that it is a forward looking statement and instead statements that contain words like “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” , “will”, etc may be deemed to be forward looking and that the company cannot get sued if such statements ultimately don’t turn out to be right. So if you say we expect to grow our market share and one year later it has fallen, you cannot be sued for having made a false statement.

This has hence resulted in the famous disclaimer that now precedes every company’s accounts, every earnings call, every filing, every anything. Its called by various names – simply disclaimer, or safe harbor statement, or whatever. It says that the company may be making some statements about the future, can’t guarantee that they will come true, and isn’t endowed with godlike powers to predict the future accurately. Of course, not in those words, but to that effect. If you are seriously interested in exactly what is said in wonderful legal language, click here for an example.

This is one of those useless statements nobody reads or pays the slightest attention to. As if anybody needs to be told that you can’t predict the future. But the absence of this statement would be fatal for a company, as some lawyer will then sue the pants off it. So they dutifully make it – page 1 of any filing, slide 1 of any presentation, first words (after Good Morning) of any speech.

What a waste.

Disclaimer – This post may contain certain forward looking statements, blah blah ..

Sunday, 4 October 2009

Men of the world arise; burn the tie !

Women normally beat men by a mile when it comes to sartorial extravagances. Witness the one standard question in each of the one million girlie tags that float around in the blogosphere and that are thrust upon unsuspecting men ! What are you wearing ? God ! Especially as the answer getting a little too close to the truth might be a lungi and a banian.

And yet, if there is one fashion accessory that has been completely appropriated by the men , leaving women totally vanquished, it is the blasted necktie. The contraption, officially translated in Hindi as kanta langot.

This abomination has unfortunately become standard business wear. I have no clue why. Don’t men realise how ridiculous a strip of cloth hanging from the neck, and attempting to constrict the life of out them, looks. Especially, in a hot country like India, where what you really need is the circulatory powers of the aforementioned lungi. And yet they willingly submit themselves to the torture of a necktie day in and day out.

It is supposed to be a fashion statement. Bah ! Ugly old men with a fat paunch and who wouldn’t be caught dead wearing anything more controversial that a white shirt, can be seen sporting this monstrosity in fluorescent pink. Especially since the dimensions of their protruberance preclude this fashion accessory from reaching the standard length of the belt buckle. What are they thinking ? And what about the Romeo who loosens his tie and lets it hang loose. Now, even a well knotted tie is, at best, silly. A loose tie ? Eeks !

There are some serious hazards involving the tie that merits a case for a complete ban. Like getting caught between the lift doors and subjecting the wearer to extreme asphyxiation. Or more likely finding its way into the cup of tea in front of you, or even more colourfully, into the sambhar at the lunch table. Of course it comes handy for a Project Manager (like the specimen who is currently casting a shadow over my good friend le embrouille blogueur) when subjecting subordinates to interference with their respiration by compression of the trachea. And its a positive health hazard - the dirtiest piece in a man's attire, since its never washed. So much so that British hospitals have forbade their doctors from wearing one. Its sole utility is that it comes handy when polishing your glasses. But that doesn't make it a redeeming quality.

I am not, normally, a fan of the Islamic Republic of Iran. But on one matter they are dead right. They have rightfully termed the necktie as a decadent symbol of Western oppression. And banned it. So you can wear a three piece suit; but no tie. You’ll be sent to jail as an imperialist if you dared to sport one. I am thinking of moving to Tehran, when I’m done with China !

Friday, 2 October 2009

Is there nobility in business ?

Are some sectors of business activity more "noble” than others ? Pure capitalism is completely agnostic in the softer emotions. But humans are not “pure”. They have emotions. So it is , but natural, that they rank some spheres of activity as more noble than others. Show me a human being who’ll say that being a real estate agent is better than being a teacher.

It is rare, but sometimes you come across something you read that perfectly matches with what you have been thinking at the back of your mind, but never expressed. For me, The genuine nobility of manufacturing by Luke Johnson was a light turning on moment. Here’s an excerpt from the article that perfectly captures a nagging doubt I’ve been having

“In almost any country, dealing in property, shares or companies will likely lead to riches far faster than running factories to produce the goods we all need. I would love an economist to explain to me the flaw in our system that leads to this far from ideal outcome.

Most intelligent entrepreneurs and executives desire to invest their work with meaning. They like the idea of improving the world while earning a living. And many of us who mostly shuffle paper secretly admire those in the Hard Industries, who manufacture things, in spite of all the obstacles”

Without manufacturing, there will be no economic activity. Most of the service industry is anyway targetted to service manufacturing. And yet society today has completely devalued manufacturing, to the point that its almost a dirty word.

I’ll stop. Luke Johnson has raised the issue far better than I ever can. I would love to hear what you think. Is it one of those fanciful, romantic, but impractical thoughts that tends to come with old age ? Or is it something you, young people of the world, relate to, too ?

Thursday, 1 October 2009

Mush and business

Will they , or won’t they ? Get married that is. The very public match making process between K and C is as riveting as any soap on TV.

Readers of this blog would know that I’ve taken a fancy to mush in my old age. Especially since A Journey called Life and The Thoughtful Train have suggested that I better wear black than pink. This is another mushy post to prove that “macho men” can also mush !

K and C had gone out on a date about three weeks ago. K tried to hold C’s hand, but C pulled it back ; you see C is a “decent” girl and doesn’t hold hands on the first date. K , being an American, then wrote a long flowery love letter and then published it for the world to read. K said he was prepared to marry C and if C agreed and would pay C’s parents $16 bn as dowry. C was angered by the public announcement after just the first date. C promptly said NO and that she was prepared to die a spinster and would not marry K, especially with such a piddly dowry.

Despite C’s brave words that she wanted to remain alone, she knows that sooner or later she has to marry. And she’s very scared that if she left it too late, she’ll grow old and nobody will want to marry her. She especially has an eye for H or N. But both have problems. N is already married and C is not sure N will divorce his current wife to marry C (this is called in business parlance as anti trust problems). H is very pretty and rather feminine ; C knows that if they get married C can bully H. But the problem is that H doesn’t have much money to pay as dowry. And H’s parents are rather old fashioned.

K is playing a waiting game. He feels C has no other option but to marry him. C is scared that her parents will cut a deal with K and take the money. But there is a slight problem. K has not shown the money. He only says he will pay if C agrees. And K is keeping quiet, letting all the gossip do all the work for him.

C is furious. This is preventing her from doing her normal stuff – like going to the movies, eyeing other men, etc. Everywhere she goes, people are staring. She’s therefore gone to the village elders (called the British Takeover Panel) and asked them to instruct C to show the money or piss off. This the elders did yesterday – they told K that he has to show the money before Nov 9th.

Now C’s parents know that if K shows the announced $16bn, everybody will laugh at him. And K will lose so much face that no other girl will marry him. So they are hoping that he will bring much more dowry.

C is on the horns of a dilemma. She knows K will bring more money. And if she has to marry him in the end, she doesn’t want to get him really mad. So a week ago, she gave a sly wink and said that sometimes K can be cute (called in business parlance as "I can see the strategic fit"). C’s parents threw a fit. They gave C a bollocking for daring to appear like an indecent girl.

Now everybody is waiting for K to formally propose marriage. Will he go down on bended knees and pop the question. Or will he hire an aircraft and unfurl a banner in the sky announcing his undying love. And, more importantly, is he prepared to bring that posh house he has as dowry ?

Don’t miss the next episode, coming in two weeks time.

Follow by Email

Blog Archive

Featured from the archives