Thursday, November 30, 2006
"Just As Good As Toyota" Is A Tough Sell
Having been a GM car user for over 3 years now, I concur that perception lags reality quite a bit in the auto industry. Consumers are paying premium for the "perceived" reliability/safety of Japanese vehicles. More particularly, if a consumer is looking at a shorter time frame say 3-5 years, there is no perceivable difference in the performance of GM's vehicles compared to Japanese offerings.
I have been a Saturn user for almost 3 years now and I feel so glad that I made that choice. Honestly, I think the Japanese offerings look very bland (except for Nissan to some extent and Mazda once in a while) and are expensive for the same features.
Amit misses a crucial point - What Gaurav suggests is something on the lines of Wikipedia. Open Source is often "misused" in a number of contexts, where the "source" really has no meaning. The spirit of users participating in developing knowledge is the part that is shared across these contexts - and this refers to work done by Dr. von Hippel and his students on user communities. There is really no "source" in Gaurav's idea. Open Source is a unique team used in the context of software products such as Linux that have been built by communities under the GPL - the actual source code or the code that makes up the software is available in public domain.
My post also hits at a lot of management "wannabes" who tend to use jargon too much. I have met many individuals during my MBA and phd days who have a propensity to use management jargon for the sake of using it, (or should I say misusing it). My sincere request to all these individuals is - to please spare us all mortals. The world can be a better place with simplicity.
Karim has been involved with the open source community for quite some time now. Although my framing of the open source co-ordination problem is more structural and abstracts the behavior of individual agents in the system, it is in tune with the spirit of open source. Karim along with Sonali Shah (now at UIUC), who is also a student of Dr. von Hippel at MIT have been an inspiration to me when I decided to pursue this domain as my dissertation topic.
Wednesday, November 29, 2006
Students pursue MBA education to get a great job, period. When she joined the program, we were under the impression that she would be able to interview for all the firms that would participate in the placement process.
After 4 years of toil, come placement time - over 60% of all the jobs are only for students with green cards or citizenship. I am complaining because the school never proactively mentioned that this even happens. If the school does not want to address this placement issue, I do not understand why they even encourage international students to consider their program.
Does the school think international students are coming into US just to go back to their home country? If going back to the home country was the original objective, a student would not spend close to 80,000 USD to get an MBA degree here in the US.
It is the same scenario with firms recruiting for jobs in Europe and elsewhere. They all want work authorization.
After talking to a number of international students it occurred to me that none of them know the reality of recruiting here in the US. A number of firms, as of today, are not willing to hire international students. From what I gathered at University of Michigan, the consulting firms and the I-banks are more likely to hire students who require visas, than other firms.
Information about the recruiting policies of firms should be made public proactively. The Ross school has not and neither do a number of other b-schools (look up business week rankings - complaints on schools such as Austin are listed for their inability place international students).
All I am saying is that, students should be made aware of what structural difficulties they might face when they try to get hired.
The story repeats in Penn State's placement process as well, and this is from the regular placement fair. My roommates recently attended the fair and almost all the firms wanted citizens or students with green cards.
I am not sure to what extent students coming from India or other countries are aware of such job related issues when they plan their education in the US.
At least, I want them to be aware of what they are up against, given my own experience.
Tuesday, November 28, 2006
WalMart enters India in tie-up with Bharti
I guess the time has come for the Indian retailing sector to brace up to the Walmart onslaught. I had earlier written on retailing and its possible effect on the kirana and grocery stores in India here.
As you might be already aware, Walmart is exceptionally good in managing inventory through its IT heavy logistics focus. Its stores are huge and allow it to achieve economies of scale even at the store level - an advantage that translates into micro-management of demand. Hence, Walmart's famed ability to respond to sudden demand shocks such as the one it experienced after 9/11 aftermath for American flags, for example. The real question then is whether Walmart will be able to rethink its inventory management strategy and adapt to the eccentricities of the Indian market.
Monday, November 27, 2006
Reliance is leading the retailing revolution by aggressivley opening up retail stores - smaller scaled markets (probably smaller than the old supermarkets like Panchavati and Trinethra in Hyderabad) and bigger hypermarkets (probably similar to Giant in hyderabad).
Does this mean that the lalitha parameshwaris or the mom and pop stores that were the lifeblood of retailing in India for many centuries (:)), would slowly die out. The predition is that they will. I do agree that a number of shoppers will shift to the new age grocery outlets, but that is contingent upon price sensitivities that have been built up over many decades. I would not be amazed to see the smaller outfits survive in such competition purely by their reach. No matter how many outlets reliance may open up in hyderabad, it is impossible to cater to the 6 million odd population of hyderabad and the smaller stores will survive in such a geographical scenario.
More importantly, the mom and pop stores are the best possible means of achieving mass customization. It never amazes me that the store guy near my neighborhood remembers me and my brand of toothpaste even after my long abscence from the local scene. Such individual level preference-memory is the holy grail even in mature retial markets such as the US, and retailers have not yet figured out an optimal method of suggesting the preferred shopping basket. Online retailing has created some avenues of solving this issue, but is still a long way to go from my kirana and grocery store's model in hyderabad.
I wish him all success in this market and I am sure he will adapt to an ecological niche and survive. You could imagine these outlets as being the incumbents in the market that are nimble and can solve some of the toughest challenges involved in implementing segmentation strategies for FMCG's in a retail market such as India.
INDIA's retail revolution is at last getting started. At the moment 97% of retail sales are made in more than 15m tiny mom-and-pop stores, mostly of less than 500 square feet (46 square metres). But now Reliance Industries, the country's largest business group, is to spend 250 billion rupees ($5.5 billion) on big new shops over five years, starting on November 3rd when it will open 11 convenience stores in the southern city of Hyderabad. And big foreign companies are moving in too. The government bans them from selling direct to individuals, but they have found a side door: starting wholesale and sourcing companies which supply a local retail partner. The first to do this, last month, was Australia's Woolworths, in league with Tata, India's second-largest firm. Tesco, from Britain, is expected to follow soon, and Wal-Mart and France's Carrefour are also thought to be searching for a way in.
Reliance rarely develops its new ventures quietly, so rumours and leaks about its plans have sparked a chain reaction. Foreign firms have realised that they need to get a toe-hold in India quickly, without waiting for the government to open up retailing to foreign direct investment ( FDI) properly. If they wait too long, they risk leaving the field clear for big Indian groups, such as Pantaloon Retail and Spencer's, which have been accelerating their expansion plans and securing scarce development sites.
For overseas companies looking for growth outside sluggish domestic markets, India's retail business is one of the most attractive. Consumer demand is booming as the government's steps to liberalise the economy have produced GDP growth of around 8-9% a year. Technopak, a Delhi-based retail consultancy, expects retail sales of $250-300 billion now to rise to nearly $430 billion by 2010. Modern retailers' share will rise from just 3% now to 16-18%, it says.
Retailing is one of the last big sectors of the Indian economy to open up to FDI. Previous attempts by foreign retailers to start businesses were blocked by successive governments. In the 1990s opposition from traders and local shopkeepers was enough to convince politicians. Later on the government was persuaded by the political left, and also by the Indian business lobby. The current government now has no hope of allowing FDI into general retailing by the end of this year. But side-door entries are permissible. "We need a model that doesn't replace existing retailers," says Kamal Nath, India's minister of commerce and industry.
Under the current policy, Western brands from Reebok and Cartier to Marks & Spencer have set up franchise stores with locals. The locals own and run the shops, and the foreigners run the sourcing and wholesale part. Starbucks, a coffee-shop chain, is expected to open soon as a similar franchise. Earlier this year the franchise policy was relaxed, so that foreign firms can now take 51% equity stakes in shops that sell just their own brand. But this has yet to catch on in practice. Broader wholesale businesses selling to registered retailers have also been allowed, though Metro of Germany is the only company to have used this route so far.
The newest model for foreigners getting into India is the Infiniti-Woolworths partnership. Infiniti Retail, a Tata group company, last month began opening "Croma" stores that sell electronics and household electrical goods sourced from a wholesale company in India fully owned by Woolworths. "I pay a cheque every Wednesday for the previous week's supplies," says Ajit Joshi, managing director of Infiniti, explaining the relationship. Bharti Enterprises has been discussing a similar deal with Tesco and most recently with Wal-Mart. "Government policy allows foreign equity in back-end wholesale and logistics and in real estate, so we'll do a joint venture with a foreign partner in those areas, and we will own the retail business 100% till the government allows FDI there, and then we'll do a joint venture there with our partner," says Sunil Mittal, Bharti's chairman. He will not confirm whether the retail partner will be Tesco or Wal-Mart, but says he hopes to sign a deal by the end of November.
Reliance intends to have 5,000 shops across India within five years. There will be 2,000-5,000-square-foot convenience-food stores of the sort now being opened in Hyderabad, and also bigger, 25,000-50,000-square-foot hypermarkets, starting with one in Ahmedabad at the end of the year. Pantaloon Retail, India's biggest and fastest-growing retailer, has 144 shops in 32 cities, and Kishore Biyani, its founder, plans to double the square footage of his empire by next June. Local businessmen have started smaller chains in the south.
India's millions of small stores, of course, are terrified of the onslaught from domestic and foreign retailers. Many Indians may stick to the small, personal shops they are used to. But the modern emporia will offer lower prices and, presumably, higher quality. "Shopkeepers are asking, 'is Reliance going to kill us?'" says Arvind Singhal, chairman of Technopak.
A few small shop-owning families in richer areas of the country are taking the easy way out. They are leasing their premises to big consumer brands such as Nike and Reebok, who will pay rents of more than 300,000 rupees a month, far more than the profits that most successful families can make with a traditional small vegetable, grocery or chemist's shop. A few are being more daring and are expanding their stores. Technopak is advising groups of small shopkeepers in various places on how to get together and gain at least some advantage of scale in purchasing and marketing.
"It will affect our whole market if one of the new stores comes here with lower prices, so we have to compete," says Harsh Narang, whose family has run the Shri Sant Lal grocery and general store in Hauz Khas, a prosperous middle-class market in Delhi, for 50 years. He recently doubled the size of his shop and is considering an offer from Hindustan Lever, Unilever's Indian subsidiary, to help modernise. But fruit and vegetable sellers who work from pavements will have far less chance of survival. Jageshwar Prasad, whose family owns a tiny 90-square foot vegetable shop and pavement stall in nearby Malviya Nagar, says, "It will affect us very much because they will take both the rich and the poor customers with lower prices."=============
It seems like the very natural power law as explained by Barabasi and Albert in their Science article on the dynamics of networks is operational here as well (Dr. Albert is on my dissertation committee). Their explanation provides the rationale behind the all-pervasive power law in naturally occurring networks. The blogosphere seems to be following this law predictably. Bloggers want to link their own posts to posts by popular bloggers, in the process adding little value and generating a lot of redundancy on the information network. It helps the diffusion process of the original ideas, irrespective of the quality or relevance of the original content. The network as a whole is subjected to such information flows that have only been spresd not because of the true quality of the post but because of the self-interest of the bloggers who link up to such posters. Over time, even if the quality of the original posters decays, the network as a whole continues to cluster around such posters, thereby leading to a self-fulfilling prophecy.
Sunday, November 26, 2006
Cinema served as a great medium to reach out to the largely illiterate Indian population in the pre-independence era. Movies that tackled sensitive issues dealing with complex social structures were used to inform and educate the masses in this era. I am not going to cite movies, but even regionally speaking, great movies were made in Tollywood that were real masterpieces. Movies served a great purpose beyond entertainment, as catalysts of social change. It is this cinema that has died a silent but sure death, and I have paid my tributes.
Cinema now is "item" numbers, cheap remakes of hollywood action flicks, cheap remakes of old movies, stupid teen romances.. and the list goes on without a meaning or purpose. A few silent efforts that mirror the original spirit of Cinema as lost in the media hysteria surrounding Ash or "Malaika and her thighs".
Satyajit Ray would be turning in his grave. However, I am happy for him that he does not have to see Indian Cinema die a painful death.