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Business, Entertainment, Finance, Public Issues

BP Oil Spill: Why even $20 billion isn’t enough?

BP has made a blunder. No doubt about that! So we shall not even discuss it here. Is only BP responsible? We shall also not discuss it here. Now that BP has agreed to pay $20 billion in payments to the US Government, the main question which people are asking is …. whether $20 billion are enough? Here are some arguments why they are probably not!

  • Tourism Industry in the Gulf of Mexico: According to CNN, tourism is about 46% of the Gulf economy i.e. over $100 billion! Has the spill destroyed the tourism industry? Yes, No, Maybe? If ‘maybe’ then till what extent and how much will the loss be? The state governments are saying that the beaches are not closed but will this save the tourism industry? With photographs of wildlife soaked in crude all over the internet, will anyone realistically go to the gulf for tourism? State tourism departments are saying that they are getting cancellations as far as 3 months out. Cancellation rates are being said to be around 50%. If we do back of the envelope calculations and assume 6 months of tourism disruption and 50%  cancellations then it give us $25 billion of tourism revenue lost!
  • Unemployment: In a state with 12% unemployement (according to CNN) the after effects of the spill will likely cause more layoffs. With a major overhaul of oil & gas industry and decline in tourism industry, unemployment will spike. This can have major impact on the society near the gulf and can cause various problems. Ofcourse Government will have to take care of the situation but the costs will be very high.
  • Real Estate Decline: A natural follow-up of this has to be another shake-up in the real estate valuations around the gulf. Just when US is recovering from 2008 recession, this is not something that anyone will look forward to.
  • Clean-Up Costs: Exxon Valdrez spill occurred in 1989 near Alaska and it was an oil tanker leak! According to Exxon they spent over $2 billion in clean up costs. Looking at the scale of current oil spill plus adjusting for inflation, this will amount to atleast $5-8 billion.
  • Wildlife Loss: One of the biggest losses caused by this oil spill is loss of wildlife and natural environment. This loss is invaluable and just can’t be measured. The loss of fishes, birds, vegetation and ecological balance cannot be brought back by money! If we can just learn a lesson from this tragedy of not taking nature for granted then it would be a small step towards redemption.
  • Oil & Gas Loss: The spill will probably cause stoppage of drilling in deep sea water! This is a good step for all of us in the long term, however in short term it probably means supply shortage and higher oil prices. Because of  negligence of one company, some poor soul will have to pay extra for travel!

Ofcourse too many issues and very little explanation. Hope you enjoyed the video though.

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Business, Human Resources, IIM, Marketing, Web

MBA Salary Survey 2010 from IIMJobs.Com

We recently received a submission from Mr Tarun Matta, founder of IIMJobs.com. They have conducted a survey from May 16th to May 31st 2010 with over 5600 MBA graduates sharing salary data anonymously. They offered for us to include this survey results on our site and we agreed to do so. So in case you are interested then please download the file here.

IIMJobs.com is an interesting site. It attempts to cater to MBA graduates seeking jobs, which is ofcourse a very big segment! I checked the site first time around an year ago and it was like a blogspot blog with job postings. Now ofcourse the site has changed a lot and has a good listing and page layout. If they are able to source good openings and provide good job referrals then definitely they can fill the segment of job openings website.

India definitely needs a good job website. Ofcourse naukri.com and other sites have come up but are they really able to fill the gap? Are they able to fulfill the needs of job searchers? Are they able to provide executive search capabilities or are they just listings of jobs? I feel they are probably not able to do it, but I might be wrong. Any comments please do share.

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Business, Entertainment, Strategy, Web

Facebook Quizzes and Self Discovery

Everyday when you login on facebook, there is one thing hard to miss, Facebook Quizzes. Quizzes like “Which bollywood character are you like?” to “Where will you end up in 20 years?” to “Whats your horoscope?

I think most of these quizzes can be divided into 2 categories –

Firstly – Quizzes which tell you something about the future. Quizzes like “Where will you end up in 20 years?” to “Whats your horoscope?” to “Who will be your perfect match?” …. the list is actually infinite. The excitement of knowing the future has always been an attraction to all of us. Through these quizzes we pass time and hope to know a future possibility. The most important question we do not think is that if we know the future then will we really be able to live it? Will knowing the future not change the future? and ofcourse who makes these quizzes! Do these quizzes even make sense?

Secondly – Quizzes which tell you something about yourself! Quizzes like “Which bollywood character do you look like?” or “Whats your personality type?” or “What kind of a friend are you?” … so many quizzes. Again people give these quizzes as a way to pass their time but are they really finding out anything? To be honest, NO!

So please stop giving these quizzes friends .. and stop crowding the facebook updates page!

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Finance, Planning, Politics, Public Issues, Strategy

Lessons from Greece for India

By now almost everyone will know the entire Greece story and if you don’t then please do read some economic news on the world. The effect of the controversy on one country (Greece), one region (European Union), one currency (Euro) and million of people is unbelievable. Not really unbelievable … because this has happened to countries before but everytime the nuances are different. The important thing is to get a few lessons from the entire debacle specially for India!greece

  • Taxation System: I read last week that Greece has over 11 million residents but only only a few thousand claim to have an income above 100,000 euros. Is it really possible? Nevertheless if residents can get away without paying taxes then they will. For now India also has a taxation system full of loopholes, where anyone with a big company has to pay taxes but small/big business don’t and black money is prevalent. Government needs taxes and without taxes budget deficit cannot be reduced.
  • Importance of Currency: One of the main issues facing Greece is the issue of currency! Greece comes under European Union and has Euros as its currency. If Greece had an independent currency then it could have taken a hit on its currency, exports become cheaper, imports become expensive, the life in the country changes but it would not be as complex as it is.
  • Market will not always be rational: A lot of people ask that why has the focus on Greece come now? Why didn’t it come last year? The budget deficit was still very large last year. All the existing problems have existed for many years. Thus why now? Its because markets are not always rational and we all should be used to it. The bandwagon effect is most prominent in financial markets and when a run begins it is very .. very .. very difficult to fight it even for nations.
  • Don’t spend more than you earn: This is very difficult to maintain specially for Governments but if you continuously do it for years then what can you do.

This is definitely not an exhaustive list. Would be great to hear your views as well!

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Strategy, Web

1 Year of Strat.In-g

Yesterday I realized that Strat.In is now 1 year old! I came to realize this because of my domain name provider and hosting provider reminded me to pay up or they will shut us down. So as I paid the bills I realized the ride of Strat.In and how it has  managed to done over this year.

The year has been like a roller-coaster with many ups and downs. Well no one wants to remember bad times so here are some of the most viewed posts!

  1. Road ahead for Maruti Suzuki
  2. Disruptive Innovation in the Indian Telecom Industry by Tata DoCoMo
  3. Comparing EPL and IPL
  4. The biggest deal in global steel industry – Arcelor Mittal
  5. Hollywood – One industry to rule them all
  6. Customer retention strategy at Airtel
  7. Telecom – Airtel vs Reliance Communications
  8. Why are the Ramayana and Mahabharata so different (and make good case studies)
  9. Eradication of urban slums in India: A pipe dream?
  10. 3 Idiots – The publicity campaign

We started with a big team, we had lots of additions and then we had a lot of departures and now we have not been writing too much. Our strategy has not been perfect but we will try to make some amends.

But its not all bad! We have had 269 posts over this year, 1802 comments, and 761 tags. We have had a good number of pageviews and a lot of success on our facebook  pages and feedburner stats. Going forward we hope to continue this. Anything you particularly liked / disliked then please do let us know.

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Reflections

Avoiding Reality!

I heard a brilliant quote from Ayn Rand a few days ago “You can avoid reality, but you cannot avoid the consequences of avoiding reality.” The quote can be applied to so many dimensions of the current world and I will try and explore some of them here.

As an individual we all avoid facing the reality at some point or the other, as we do not like or understand the reality. A simple example is in the movie “Wake Up Sid!” where the actor is avoiding the reality that he has to grow up / work hard / achieve something in his life. Later when the actor faces the consequences (i.e. is kicked out of his house and so on) then he realizes as he can no longer avoid the reality. A more common example is avoidance of the reality that luck exists, and sometimes no matter how hard you try, things just don’t go your way.

Next, lets consider as countries (this was the original connotation of the person who said this statement as well). Greece is probably just the starting of the consequences of reality which many countries have been avoiding. The reality that you cannot spend more than you earn! Budget deficits have been a reality but they have been ignored in the past, but now they no longer can be. Even India as a country is ignoring many realities, one of them is that ‘our politicians are not leaders and can cause a lot of problem in the nation’. The average citizen of India is too busy earning livelihood and is avoiding this reality. I hope we never have to see the consequences of this but something tells me we might.

To think of it even as humans we are avoiding many realities. One of them being that we are not abusing this planet, and the frequent earth quakes, tsunamis, and tornadoes are probably just a consequence of it. We are avoiding how many natural resources are we using like the global oil reserves, the pollution we are causing, our ever increasing world population, and many many other realities. Maybe one day we will face the consequences and at that moment we won’t be able to avoid them.

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Business, IIM, Marketing, Planning, Strategy

What exactly is a brand?

Every year a lot of people graduate from business schools and join marketing! Throughout business school a word taught in all marketing courses is ‘Brand‘. To be brutally honest one of the main reasons to go to a business school is The Brand! but lets try and have a better look at the origination of brands and its current use.

While discussing with friends we tried to analyze how the first brand came into being. Probably it all starts with one small shop which is excellent in whatever product it sells. Next the shop becomes really popular amongst its consumers, followed very quickly by other shops trying to copy the original shop, and the original shop naming itself and giving its product to distinguish itself from others. Well in some way or other most brands have come about this way, and I think Nike and Starbucks are such examples (not sure!!! though) So I guess that is the first major use of a brand “to distinguish the original from other copies” but this is mainly from the producers point of view.

From the consumers point of view what is the one of the most important viewpoint for a brand? It is ofcourse Reliability! When I go and buy Bata in India, what I am actually buying is reliability of the brand, when you buy Colgate you are again buying reliability, when you buy lee jeans then you buy reliability. Reliability of quality and consistency which is really important to a consumer like myself.

But there is presence of another factor of Brands, which is increasingly becoming the most important one, Exclusivity. Everyone wants to be unique and project themselves as influential and brands are being used to do so. Buying Tag Huer is not just for the quality of the watch but probably because the exclusive club it belongs to, driving a Lamborghini or Porsche is not just because of the quality of the car but because of the exclusivity, the esteem it brings.

So going ahead towards what is a brand is probably much bigger topic than what can cover one blog post! Here I am just trying to explain the difference between buying a brand because of its quality or its exclusivity. We are all slowly moving towards exclusivity, which can partially be also called a shallow world! Anyways just a thought!

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Business, Entertainment, Entrepreneurship, IIM, Planning

3 Idiots – All is well! Really?

3-Idiots-2009 3 Idiots is an amazing movie! It hits the right chords in comedy, philosophy, romance and everything else that any bollywood movie can touch. Till now everyone whom I have asked has given only positive feedback about it. Amir Khan has given an amazing performance and the movie has done very well at the box office as well. The message of the movie is also very clear, follow your heart when picking your profession, and not necessarily the safe professions like Engineering / Medicine in India. A very good concept indeed.

After the movie I was discussing with some friends the whole concept shown in the movie, ‘Beti ko doctor and bete ko engineer banao’ (Make a girl Doctor and a boy an Engineer) has been the slogan for India since quite some time. We all laugh at it, mock it, and sometimes also complain about it, but do we ever try to recognize the reasons behind it? Lets try to remember the public issues movies were questioning during the 1990s. Wasn’t it being jobless in spite of being educated? Wasn’t finding a job being a graduate a very difficult task at one point of time (and probably stil is a bit difficult). This is the reason why probably our parents, and their parents started the mantra of ‘girl doctor, boy engineer’. To think of it this mantra has been working moderately in our generation with a lot of middle class boys / girls from my school being engineers / doctors and doing very well (this is not saying that others are not doing well!).

Another reason which can be quite obvious is that Indians are relatively risk averse people. We have one of the highest savings rate in the world, we have one of the most populated middle class in the world, we also have probably the highest poverty in the world! Thus the desire of parents to give their children a safe, secure working profession rather than dreaming something big and then not making it. Which brings us to the next big question, why is it bad to dream something big and then not making it (in India)? I have put in India in brackets because the movie and the article are concerning something specific to India. The reason why this is considered bad in India is because the basic living standard in India still has not come up yet. In other developed countries even if you do a smallish job (be a salesman / store operator / cab driver ) you can still afford a decent house, a nice car, visit the movie theater, give good gifts to your children, buy an iPod blah blah. In India if you are in one of these jobs then you can’t really do all these things! and this is where the fundamental problem comes in, that people are too afraid to dream and fail. Although movies like 3 Idiots will show that following your heart is the best way to go forward, I still reckon it is a bit too early to say that. What if Farhan in 3 Idiots goes for the photography internship and then finds out that photography was not his passion but just timepass (leisure!) and when he has to do it 24 hr then he hates it! What will he do then? Probably come back and try to get a job in India. What if it is an year like 2009 where recession is at its peak and he is unable to get a job. Now he has been out of job for 2 years and no work experience. What then?? It is this fear which prevails in the mind of Farhan’s father in the movie and in Raju’s mind as well. Yes being without fear is very important, but doing whatever you feel like doing still seems a bit overstretched. Would love to hear your feedback on this, so if you are reading this then please do leave a comment.

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Business, Finance, Public Issues, Strategy

The worst company in this world is ….. Governments

Well we all keep cribbing about the Government, and ofcourse this has been going on and will go on for many many years. But since the past one year the world has been looking at all companies in a different light, we are seeing companies restructure, de-leverage themselves (remove their debt), and a lot of strategic rethinking. The Governments across the world have done a lot in terms of financial stimulus, bailouts and many more things.

The important question however is that have we ever tried to evaluate the performance of a Government like a company? A company has a balance sheet and so does a Government. A company has earnings from its products, a Government should collect money from taxes. A company issues debt for extra funding, and so does the Government. A company can sometimes run into losses, but a Government almost invariably runs into losses. But why?? Shouldn’t a Government be able to match its assets and liabilities on its balance sheet? why does this fail?

deficitI know many people will say that the Government spends money on aspects such as building schools, hospitals, city infrastructure, roads and the entire civic life. It also maintains an army, defense systems, foreign policy, embassies and the country’s entity. It also maintains many many other aspects and all these require money! And I completely agree with all this but what I don’t understand is that why aren’t taxes sufficient to cover all these expenses? and if they are not then doesn’t it show inefficiency on the part of the Government?

I believe the Government failure is highlighted by a couple of aspects. Firstly the Governments have not been able to create an efficient taxing system. Indian Government is not able to tax the people correctly and a lot of people don’t pay taxes. Governments around the world have various problems and are basically unable to tax people correctly (If they are taxing them correctly then I applaud them on this aspect). The second aspect is spending! I would assume that in the beginning there was just income tax and corporate tax. Slowly someone must have introduced VAT (Value Added Tax) to ensure Government gets money at every step. Next was council tax, road tax, commercial car tax, and so many taxes that the count has become unbelievable. I believe it will be a very good exercise for all of us to just calculate for 1 year the amount of money we pay in various taxes! The third aspect of Government failure is where they are initially not in deficits and then turn into deficits and unable to come out of it.

The world around us is questioning a lot of aspects today and I would request all of us to also question the Government monopoly across the worlds as well. The deficits and therefore the leveraging that the Governments are running is unsustainable. When a company defaults its only the shareholders who are wiped out, but unfortunately when our Governments will default then it is our currency which will face the brunt.

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Business

Strat.In initiative: Startup September – Call for articles!

startupIt is said that the toughest business to run  in the world is that of your own. However, the world’s biggest firms were once upon a time Startups too, started by aspiring entrepreneurs in the start of their career. Some of the current startups in India will surely become great successes in their fields. Strat. In plans to present its readers a novel perspective about Startups in September of 2009 with a novel initiative – Startup September! We invite reader articles for the same.

The objective: Writing articles about Startups or concepts about entrepreneurship itself. Articles that speak of your own experiences are also welcome.

Who can write: Anyone! Also, if entrepreneurs want their startups to get featured with us, you can drop a mail to us as well. Email address is mentioned later in the post.

What to write: We have some broad guidelines about what to write: If you are writing about a startup, the article should contain:

  • Description about the business of the startup
  • Thoughts about WHY this idea from the entrepreneur or author
  • Pointers about how the startup is carving a niche for itself
  • Link to the website of the startup

Apart from this, its upto the article writer how he/she wants to fashion the article. It can be a descriptive article, an interview, a video – its totally upto the author.

Excited? Yes, we surely are! Team Strat. In wants to hear about Startups from its readers. Write to us at contribute AT strat.in with Subject line “Startup September” . Kindly mention your name and information about yourself as well.

Deadline: The series would run all through September. But the deadline for articles is September 25, 2009 23:59:59 . However, note that the earlier you submit, the more visibility will the article get on the website!

Finally, why would a Startup like to get featured on strat.in of all places? Strat. In, within a short span of time, has generated considerable buzz among the IIM community and its read by around 40k readers from different fields in the industry. We, at strat.in believe that the ensuing discussion after the article is posted would be invaluable to entrepreneurs themselves from many perspectives. And, most importantly, it would create a buzz about your startup among people whose opinions matter – your future customers!

So, readers and entrpreneurs, lets make this initiative a success! Write about your startups, your experiences and send them to us at contribute AT strat.in

Cheers,

Team Strat.in!

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