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Showing posts with the label Economics-mgmt

The political fallacy of choosing winners

These two headlines caught my attention in this morning's newspaper. Juxtaposed next to each other, both of them make the patriotic Indian in me jump with joy - these are the kinds of news headlines we longed for since adolescence. Albeit, while the adolescent me would have jumped with joy on reading these, the older mature me is circumspect, even borderline skeptical of the effect these will have on the Indian economy in general, and well being of Indians in specific. My skepticism follows from a series of policy news that has been emanating from the South Block off late. On 3rd August, Government of India (GOI) banned the import of laptops and other electronics used heavily in India's booming IT sector. Prior to that, as a post pandemic stimulus measure for Make In India, the Modi administration had announced several PLI Schemes ( Production Linked Incentive ) for various sectors. These schemes claim to incentivize setting up of industries in strategic sectors or expedite the

Taxation and the Principal-Agent problem

The principal-agent problem [PAP], in political science and economics, occurs when one person or entity (the "agent"), is able to make decisions and/or take actions on behalf of, or that impact, another person or entity: the "principal". This dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals, and is an example of moral hazard. One of the relatable cases of PAP is sales - the sales executive is likely to motivate you to buy those products where s/he earns more commissions, rather than those which are cheaper or beneficial for you. This problem occurs in any kind of a sale whether its a kitchen appliance or insurance product. Maybe you've already guessed where I am going with this - the PAP with taxes. The government is an agent which levies a charge (taxes) on its people - possibly the strangest of principal-agent relationships [in all other cases, the agent is usually pa

Budget 2019 - between the devil and the deep blue sea with a monster waiting!

If you have ever visited Jabalpur, you surely would have taken a boat ride across 'Bandar Kodini' at the Bhedaghat waterfalls. The boat ride initially takes you along the Narmada river at a leisurely pace, as you gape in wonder at the majestic white cliffs - a hundred feet tall on both sides - changing colour. They do not actually change colours, the cliffs comprise of many shades of marble and as the rays of the sun bounce off their surface, give an illusion of changing colours. And then as your boat ride comes to a close, the tranquil waters of the river gain a sense of urgency after a point and turn turbulent as they crash down the Dhuandhar falls. I don't know if the new Finance Minister Nirmala Sitharaman has ever visited Bhedaghat, but she might be able to relate this with the experience she is going to have with the Indian economy. The two giant cliffs she is rowing the boat between are Slowdown in Economy and Managing Inflation. With the NDA government having

When scale can destroy quality

I have written in past about how a services business is hard to scale. While one would lament at the non-scalable nature of the consulting business, at the same time these businesses can claim a very high premium in their services. Conversely, when a product or a service becomes 'commoditized' - it stops commanding a premium. The less 'scalable' something, the more valuable it becomes. If one could produce a million copies of Picaso's work, or every dining hall could have the Monalisa - the value of great artists or great works of art would diminish. Even if this example sounds extreme - it explains an important principle which can then explain certain other phenomena of the business world.  For example, take the culinary business - it is possible to standardise not just the process of making food but even the ingredients used in food, to build a super scalable restaurant business like McDonalds - yet the price point which a McDonalds can claim will nev

Why is it hard to scale a services business?

Jim Collins has been researching and writing about the Flywheel as a value of enterprises. For those who may not know, here his most famous illustration - the Amazon Flywheel. Lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. In another article , Jim writes - " those who drive companies into decline often abandon the big thing they already have, grasping instead for a new big thing, then another and another, falling into a doom loop of chronic inconsistency " While not written in the article above, but my experience says that 'Consulting / System Integrator Services' is plagued by this particular phenomenon. Consulting firms are forced to move from one "next big thi

Vishram: विश्राम (Arthvyavastha - Part V)

Continued from here: Viraam: विराम (Arthvyavastha - Part IV ). "Guruji!", Saakshaat called out to Kalpakji, his teacher (Guru) as they walked towards the Banyan tree in front of the Panchayat Bhavan, "You remember there used to be days when you would announce a test only to make us study the whole night, and then announce a cancellation the next day when everyone came ready for it?" Kalpakji smiled, he knew what Saakshaat was hinting at. "Yes, I do. But remember when the same exam was announced two weeks later, you all were better prepared for it! Do you agree Aanglesh?", Kalpakji had deliberately asked Aanglesh, noticing that he had been quiet all along after the meeting. "Yes Guruji, but you know - one thing that always made me study harder for every exam?" Kalpakji could not guess where this was going, he looked questioningly towards Saakshaat, but he too was clueless. Aanglesh replied on his own - "the fact that I knew I will be jud

Viraam: विराम (Arthvyavastha - Part IV)

Continued from here  (Vinimay: Arthvyavastha - Part III) When Saakshaat informed Aanglesh that his father Seth Pramanikji would also accompany Pramukhji, colour drained from Aanglesh's face. Aanglesh told Saakshaat that his father was a staunch disciple of Pramukhji and was as much in doubt of the tamrapatrak schemes as Pramukhji himself. This was a jolt to Saaskshaat, he had never expected that Pramanikji, a trader himself and whose son was the first and the largest beneficiary of the tamrapatrak vyvastha would be against the novel concept. He had expected Pramanikji's presence to bolster their position, but now on the contrary he felt even more vulnerable. Saakshaat and Aanglesh had spent the whole night preparing for meeting Pramukhji and Pramanikji. They talked to Anugam about any positives of tamrapatraks which he could identify to impress the village elders with. Anugam mentioned that the tamrapatrak scheme had benefited the society in two major ways - first that b

The Salesman vs. The Professional

Image Credits by Flickr user  urbaneapts I recently went to the showroom of ' Sleek ' - a modular kitchen furnishing company. I and my wife were discussing the various options for fitments to be bought when we came to the point of discussing the Chimney. Both me and my wife were sold out on buying a Chimney, but the salesperson asked us if we were non-vegetarian and whether our apartment had a window in front of the stove - the answer to the former being no and the latter being yes. To my surprise, the salesperson suggested we do not buy the Chimney because we will have little use for it. The salesperson knew she was reducing the ticket size of her sale by almost 10% and this was not a discount to make the sale, the discount was to come after this. The experience reminded me of how we work in consulting - there are times when we tell our clients that they are not ready for a particular initiative or a new software implementation, even though these initiatives would fetch

Work-Life Balance is more about one's own Ego than real work

Flickr photo by mohit_k For the past few days, I have been trying to analyze office situations - how people in authority (including myself at times) react, how subordinates react and how simple work situations often get complicated impacting personal lives of individuals. Of most interest is the matter of working on weekend. In the 24x7 corporate culture of today - weekends occupy a safe haven status. Infringement of time over weekends hence has most impact on the perception of work-life balance of people.* In my reading, work-life balance - especially that which requires people to work over weekends is more often a matter of personal egos than real importunity of work. Think of the many times you were forced to work on a weekend because you were tasked so much work on a Monday, with a targeted closure on a Friday, which you could not finish in 5 days time. And so, you had only two options (a) accept the blot of being 'incompetent' in front of your Boss (b) work over th

Management Is

Management  = Art + Science Management is the Science of converting business activities into measurable inputs and the art of converting management theories into mathematical equations (read: business models), in order to predict outputs of such activities with reasonable accuracy and reliability. Management is application of scientific methods to business situations. Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management is the process of dealing with or controlling things or people Management is finding a convoluted way of arriving at the same results which otherwise can be arrived by heuristic capabilities of experienced professionals. Management is the art of faffing so as to make 'hunches' look like scientifically derived results. Management is the art of (mis)leading the workforce into believing that there is a

The Remittance Economy

I have briefly described the concept of 'remittance economy' in a previous post . At its basic the concept of Remittance Economy means that remittances by workers abroad becoming a significant source of economic activity in the country; I am extending the definition to remittance money being spent creates growth in large cities, which in turn results in workers in large cities remitting money to their families smaller cities, towns and villages - thus creating a growth chain reaction. Consider this - Syam Sundar lives in San Francisco and remits money regularly to his family staying in Bangalore. Syam's family employs a maid, shops lavishly in the city's malls and employs a driver. The maid, the workers at the mall - from shop salesmen to cleaners all send money to their families in tier 2 cities, towns and villages in India. The family's driver Sreejeeth hails from a small nondescript town in Karnataka called Madhugiri. Sreejeeth sends money to his wife every mon

Enron - Smartest Guys in Town

One of the best documentaries I have ever seen which analyses the Enron debacle from the the inception of Enron to its rise, eminent fall and ultimate crash. It outlines the role played by different characters such as Jeff Skilling, Andy Fastow and Ken Lay but more importantly it brings to light how common employees were led into doing the most unethical actions while making them believe that their actions were completely legitimate. The documentary highlights how the actions of traders in Enron illustrates the inferences of Milgram Experiments , the only other live case study of them being the war crimes conducted by Nazi / German army officers during the WWII on Hitler's orders. The documentary raised a lot of questions in my mind ... Many times our actions look quite legitimate at the time when several contextual pieces of information are in our mind. For example, under a deregulated power rate policy in California, the actions of traders would have looked legitimate. As

Is there a simpler explanation to the rise of Chindia

Another report claiming that "dominance of China and India [would] return to the historic norm prior to the Industrial Revolution of the late 18th and 19th centuries" came through today. Its become so boring to read that India and China will re-emerge as dominant economies unless they goof up on their fiscal policies, urban development, educational growth, demographics .. the list is long! I find most news reports and analyses engaged either in extrapolating the economic trends of the past decade or speculating by generalizing trends from certain sectors like manufacturing (China) and software services (India). The point is - has anyone been able to spot the root cause behind the rise of China and India? And is there any theory which can justify why China and India will rise to become economic super powers - without putting riders to the claim. The reasons for rise of India and China have been different sectors, but the source of both their strengths is the same - cheap

Vinimay (Arthvyavastha - Part III)

Continued from here: Tamrapatrak Vyavastha (Arthvyavastha - Part II ) Anugam's tamrapatrak scheme received a phenomenal response - also because Anugam had offered his tamrapatraks at a discount to all the workmen whom he employed or bought his wares from. Saakshaat became the official scheme operator for Anugam also, and soon many more traders wanted to float their tamrapatraks. By the end of the year, two more traders had started tamrapatrak schemes, and many more were planning to launch in the next year. Saakshaat then started training more and more young pundits on managing tamrapatrak schemes - he realized that this would be a huge business and efficient and skilled handling of  tamrapatraks would make them even more popular. With more than one tamrapatrak schemes in the market, people often came to Saakshaat looking for advice on which scheme to put their money in. Some even wanted to surrender tamrapatraks from one trader  and buy someone else's in exchange. During

Tamrapatrak Vyavastha (Arthvyavastha - Part II)

Read Arthvyavastha (अर्थव्यवस्था)  Part I here. Saakshaat was the first 'tamrapatradhari' or shareholder of Aanglesh's trade - but many Saamanyas followed soon - it started with Aanglesh and Saakshaat's friends, then their acquaintances, some of whom were good friends of Aanglesh's father also. People saw Aanglesh's firm prospering, making more and more money with the growing number of tamrapatrakdhari's. Most of the community's elders saw this scheme as a devious one - it was helping people earn money from money, without actually requiring people to work to earn their bread. This included everyone including Aanglesh's father who was a devout disciple of Pramukhji. But the younger and middle aged Saamanyas loved the scheme, they put in every small bit of savings they could into Aanglesh's company. Aanglesh's was able to grow his trade beyond foodgrains using the money gathered from the sale of tamrapatraks. But as more people bought

Arthvyavastha (अर्थव्यवस्था)

In a sleepy town, in ancient India named Arthvyaap (अर्थ्व्याप) lived a community of people called the Samaanyas (सामान्य). Arthvyaap was a typical setting, an elder was considered the head of the community - Pramukh, a group of traders, an elite crowd of intellectual pundits, and other  workmen like farmers, cobblers, blacksmiths etc. One of the young pundits was an extremely sharp mind called Saakshaat (साक्षात) who had such a sharp mathematical brain that even though he was just 17, everyone from the Pramukh to the traders consulted him in matters relating to finance and numbers. Saakshaat was also good friends with his childhood buddy name Aanglesh(आंग्लेश) who was the son of a not so rich but well to do trader. Aanglesh's father managed a large trade of fruits and vegetables in the town market and to ensure an early start for Aanglesh had allowed Aanglesh to start a foodgrain store alongside his shop in the town. The economy of Arthvyaap worked quite homogeneous with ever

How to use the new Rupee Symbol in your documents

The new Rupee Symbol recently was released by the Reserve Bank of India and the Government of India. While the symbol may take upto two years to get included in the standard Unicode set of characters, many new fonts have already come up to help you use the symbol in documents. Already most publications have started using the symbol . So I am sure you too would like to use it in your documents too. Here's how to do that. Download the Rupee font from there: https://docs.google.com/leaf?id=0B-T0rtWq-0cxNTVhZDgyODEtZDRhYS00N2ZjLTkzOTktODNhZGQzOTBhMTQy&hl=en Install the font on your computer by pasting it in the 'Fonts' folder (Controls Panel -> Appearance and Personalization -> Fonts) For text documents made using MS Word or OpenOffice, just select the 'Rupee' font and type the `~ key (The ` character is mapped to the Rupee symbol). Using the symbol in Excel shall require a different approach. Install the font as explained above On the cells you want to ente