Industrial infection

MNCs are hailed as national treasures but their devil-may-care attitude results in tragedies, making them global shame

globalisation is inevitable as we reside in ‘global village’. And the entities which benefit the most, perhaps, out of this phenomenon are modern day centres of affluence & influence – MNCs. As they profit and in the process, enhance employment and production, goes unnoticed is that their drive to profit, which leaves the rest in pain, is their lack of concern and efforts towards safe working of their industrial units, across the globe. While a McKinsey report has exemplified that cumulative market value of top 10 Fortune 500 companies is equal to combined GDP of India & Brazil or total forex reserve of six leading Gulf oil exporting countries in 2006, but their irresponsible, greedy & biased business policies and activities without considering people, environment & legal aspects, have brought apocalypse in form of fatal industrial accidents, environmental hazards, affecting millions in myriad other ways.

Start with Bhopal gas tragedy in 1984; which is the most horrifying industrial catastrophe in history, claiming between 3,000 and 20,000 lives, leaving thousands with serious diseases and injuries. The reaction of Dow Chemical, the global giant providing innovative chemical, plastic and agricultural products and services and responsible for this industrial catastrophe, publicly disowns its accountability. Moreover, it tried to console affected families with mere $300-$500. And when nearly 200 women protested against Dow for its meagre liability and for not really taking any proactive mechanisms to clean up the area stacked with dangerous toxic waste which spreads many gas related diseases in the small town Bhopal, it has sued them for raising voice against the company using it’s political, monetary & muscle power.

When an explosion and fire ruined a fireworks factory belonging to Bright Sparkles Sdn. Bhd. at Sungai Buloh, Malaysia in 1991, causing 22 deaths & injuring 103, Bright Sparkles remained lukewarm in helping victims and their families and compensating the environmental damages it has caused. What can be more traumatic and horrifying industrial accident than the phosgene, the lethal gas leak at Thailand petrochemical company Thai Polycarbonate Co. which has killed one and injured over hundreds. Shockingly, inspite of innumerable calls from many environmental activists of the locality to stop gas leakage which many had already identified, the accident could have been prevented; the company was reluctant to improve its pipelines.

And the fiery explosion with unstoppable fire and smoke at one of the largest oil refineries of British Petroleum in Texas City in 2005 is another example of shameless irresponsibility of global MNCs. Well, it was not the first such accident; BP has a record of fatal accidents, for last few decades. Moreover, it is the eighth largest polluter in the US, releasing over 5.1 million tonnes of pollutants with many harmful toxic gases like carcinogens causing serious health ill-effects to 30,000 people living within three mile radius. But while FBI investigation and imposition of new laws and fines continues, BP’s capability gradually sharpens to refuse or strive to escape from it. Nigeria witnessed the perfect misery out of corporate social irresponsibility. Companies like Shell, Exxonmobil & Chevron are reaping off nation’s oil industry but continue showing through negligence in improving environment, human life and the locality which have been affected by gas leakage and flares in their plants or refineries.

For MNCs, the planet has been served to be their playing-field but they have to follow rules of the game. Their profits cannot plunder people. How long will international community put up with their myopic vision and operations? The deemed-be-national-treasures actually prove to be global shame in neglecting their duties.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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The deal wouldn’t ‘Burn’ away

Even without Nicholas the deal will see through, but it may dilute the process a bit While the Indian Left is hell-bent on seeing the Indo-US nuclear deal die its natural death – the rightist forces led by some religious groups in the US are launching a campaign against the deal on the grounds that it goes against the US non-proliferation goals & strengthens India’s strategic options. In addition, the recent resignation of US’ Under Secretary for Political Affairs Nicholas Burns, the Chief Architect of the 123 agreement sent shivers down the Indian strategic community. However, the fears were short-lived – Nicholas will continue as the Special Envoy on the nuclear deal till at least the end of the Bush Administration.

The ongoing safeguards negotiations between the India administration & the IAEA are reported to be moving in a positive direction. The IAEA is considering India’s concerns regarding ‘disruption in fuel supplies & also ‘non-intrusive inspections’ – leaving its defence nuclear reactors outside the purview of inspections. However, it is difficult to say that any kind of agreement with the IAEA will be acceptable to the Indian Left, especially because their opposition is to the Indo-US nuclear deal & not really against the de-nuclearisation of India.

Taking Prakash Karat’s statement on January 21 into account, it seems that the deal is unlikely. But, Commodore C. Uday Bhaskar, former Director, IDSA, adds, “Even if Indian Communists oppose the deal and pull down the government, then the next Congress or BJP government will have to face India’s nuclear reality of shortage of fuel and nuclear isolation and will carry though the deal.” On the success of the deal, post-Burns, Ajay Lele, Research Fellow, Institute of Defence Studies and Analysis, (IDSA) India, said, “Nicholas Burns, before resigning has said that they have done as much as they could and won’t be making any more concessions. The fructification of deal will depend on how Congress is able to manoeuvre Indian Communists.”

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
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The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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FUTURE: AMERICAN AUTOMOBILE INDUSTRY

Sky’s the limit
Wish a Jaguar or a Land Rover could fly...
Has anybody ever wondered why Ford, world’s third largest automobile manufacturer and seventh largest in Fortune list finds it difficult to manage such niche and high-end brands like Jaguar and Land Rover? Well, the answer lies not with the dynamics of automobile industry but something else. For long, world has witnessed the exponential consumerism of the US. And now its becoming ambitious too. Consider this: Forecast International states in its report, ‘The Market for General Aviation/Utility Aircraft 2007-2016’ that ‘makers of general aviation and utility aircraft will turn out nearly 27,140 aircrafts worth approximately $22.55 billion during the period 2007-2016.’ It further states that ‘of the total number of aircrafts produced, 22,477 piston aircrafts will account for the vast majority of units produced (82.8% of the total).

Turboprop aircraft manufacturers will turn out aircrafts in lower numbers, for total production of 4,660 units (17.2% of the total). Turboprop value of production is projected to amount to $13.7 billion or 60% of the total, while the value of production of piston aircraft will amount to $9 billion or 40% of the total, due to the much higher unit prices of turboprop aircraft.’ Moreover, Very Light Jets (VLJ) are changing the dynamics of the private jet industry. Companies such as Cessna with its Citation Mustang VLJ, Eclipse Aviation’s Eclipse 500 are revitalising the fractional ownership industry. Reports state that more than 3,000 VLJs are already on order. A report by Charles M. Schulz – Sonoma County Airport, states, ‘The FAA/Transportation Research Board Business Aviation Panel has suggested that the market for VLJs could add an additional 4,950 of these aircrafts to the general aviation fleet by 2017. Other forecasts project from 7,400 to 10,900 new business jets entering the market between 2006 and 2014.’ Furthermore, it states that Federal Aviation Administration expects another 14,000 light sport aircrafts to be added to the General Aviation fleet by 2017 and that ‘the growth of the active general aviation aircraft fleet is forecast to increase by an annual average rate of 1.4% through to 2017, growing from an estimated 214,591 aircrafts in 2005 to 252,775 in 2017.’


So what does all this have to do with the inability of Ford to manage Jaguar and Land Rover brand? Well, no prize for guessing that these are not utility cars but essentially status enhancers. Yet on any given day, even a single engine piston aircraft like Cessna 172, or a twin engine turboprop like Cessna 421C is more of a status enhancer than a Jaguar or Land Rover, simply because they can fly. Already the VLJs are being termed as SUVs of the sky. Americans now buy personal aircrafts, the way Indians buy cars now. A Very Light Jet costs a shade more than a two million dollar while one can get a second hand piston aircraft at the price of a high-end Jaguar. Expecting this craze to go northward, Honda and Toyota have started working on making private jets. In contrast, in emerging economies like India and China, the craze for high-end cars is just growing due to increased affluence, just as the demand for Rs.1 lakh car would explode. Here, Ford prefers the Tatas exactly for the same reason for which Fiat finds it more feasible to sell its cars through Tatas as dynamics of these markets are far more different than the US and Europe. Ford bettered what Fiat did first. But don’t get surprised if Tatas bid for Fiat in a few years’ time.That’s the future of automobile makers in the US and Europe. Realisisng this, Ford has already started the exit game.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
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IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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Global car for global consumers

Now, the world’s cheapest car moves into the third gear. With access to high-end diesel technology, and several options to locate its ‘cheap car’ factory (or assembly units), the Tatas seem to have got their back-end in place. Simultaneously, they had to look at the front-end; after all, Tata Motors wanted to sell the Rs.1 lakh car in as many markets as possible. It was meant to be a global car for global consumers. It is in this context that the Jaguar-Land Rover deal will immediately help it to tap the European market.

The Jaguar-Land Rover buyout becomes critical as the Tatas have failed to make a mark in foreign markets in the past. Prominent signage on the Team Jordan’s Formula 1 car preceded Tata’s exports of Indica to the UK; the car was marketed under the City Rover brand name. Even though the car did not do too well, it did give Tata Motors a foothold in Europe. Today, the company has agreements in various European nations to assemble the Tata Safari SUV, among other products. Sponsoring Narain Kartekeyan, India’s first F1 driver, was also a step to establish the Tata brand in Europe.

As you have probably realised, the Rs.1 lakh car has moved into fourth gear, and you are cruising at 60 kms an hour. But just drive along, as the puzzle is still not complete. The last few pieces have to still fall into place. Only then will you be able to figure out the real design behind the several decisions taken by Ratan Tata to turn his ‘small car’ dream into reality.

Despite being loss-making (see box), Jaguar and Land Rover are perceived as exclusive and high-end European brands. Even if Tata Motors gives full management autonomy to the acquired businesses, and sells their products the same way as Japan’s Toyota does with Lexus (without lending its name to reduce any form of brand dilution), it will still earn brownie points. The two European brands will help establish Brand Tata, at least in Europe. They will additionally help the Indian car maker to combat any moves by China to manufacture its own version of the world’s cheapest car.

“Tata Motors has a better image then the Chinese as it has a history of manufacturing, and has already acquired brands like Tetley and Corus,” says Autocar India’s Ashish Masih. It’s time to move into fifth gear. Tata Motors now has the technology, low-cost manufacturing options, access to developed markets, and a globally-recognised brand name. It is all set to launch the Rs.1 lakh car, which will be unveiled at the Auto Expo. Every cog in the design-manufacturing-marketing-branding wheel is in place.

So, while the world’s cheapest car is breaching the 80 kms an hour mark, it’s time to take a ride in another vehicle, the Tata Motors’ SUV. For years, Tata wanted to do an Indica with his range of SUVs. But Tata Sumo and Tata Safari have never been perceived as low-cost, entry-level, but stylish vehicles. Another Indian competitor, M&M, has done wonders with its Scorpio. Foreign players like Toyota too have fared much better. In the high-priced SUV segment, Tata hasn’t been able to make any inroads.

Land Rover will be a coveted catch for Tata as the brand represents one of the most-sought after SUV. The recently launched Range Rover and the updated Disco models have done well and can provide Tata with a platform to ride the international markets. Tata Motors may sell its products along with Land Rover’s, thereby amplifying both the visibility and reach of the indigenous SUVs. Before you think that it is not worthwhile to associate with a loss-making brand, listen to Ford UK’s John Gardner.

“The Jaguar-Land Rover business has been a profitable one in recent times; 2007 has been best ever year for Land Rover, better than 2005 and 2006.” This implies that Land Rover can effectively be used as a brand extension. Masih agrees, “Tata Motors will get access to better technology from Land Rover that can help the former to reposition its SUVs in higher segments.”

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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Caution? Never met him!

Citadel taking a risky gamble on subprime assets with E*Trade
When one looks at the situation in subprime markets, one is reminded of a famous one liner by popular Hollywood actor, Will Smith, in the movie Hitch, when he says, “Basic principles? There aren’t any.” Months after all the subprime mayhem has been unleashed, the casualties are still being counted. And one would feel that the markets would be keen on behaving rationally for a while. But then, if that’s what you think, what would you make of Citadel Investment Corporation’s whopping cash infusion of $2.55 billion in a subprime tainted E*Trade Financial Corporation? And other similar big ticket infusions in Citigroup, Merrill Lynch & northern rock, among others?

The E*Trade deal has been sealed with the purchase of $1.75 billion of 10-year notes yielding 12.5%, and buying E*Trade’s $3 billion of asset backed securities for $800 million. It has increased Citadel stake up from 3% to just below 20% in E*Trade. E*Trade will get $2.4 billion in cash immediately. Out of this, $1.6 billion will be the price of E*Trade’s stock and senior unsecured notes.

So what’s the catch? Leading its ship into troubled waters is not new for Citadel, it earlier proved a saviour for distressed hedge funds Amaranth Advisers & Sowood. Opines Dr. Paul S. Kedrosky, Executive Director, William J. von Liebig Center in San Diego, “It’s not that big of an investment for Citadel considering its assets and access to capital.” Avers Robert Ellis, Senior Analyst, Celent, a global consultancy, “The bet is that Citadel was able to get much better terms after write-off of much of banking side’s loan portfolio, including almost their entire mortgage portfolio.” He estimates that there is considerable potential left in US online broking, where E*Trade is still one of the key players. Moreover, as Dr. Kedrosky comments, “They hope they’ll make money via control and eventual resale of over-discounted mortgage assets.” As we said, no basic principles at work in the markets!

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs