Global Governance leading to global transformation is seen as a possibility now. Though, I think, it is a requirement now .It might be a possibility, from indifferent consciousness viewpoint.However, from that viewpoint everything is a possibility?
Going ahead, in the same thought wave , third world war also looks like a possibility. The kind of financial catastrophe we are seeing in 2008, happened earlier in 1930. These was known as great depression.That, point of time, we had already the league of Nations, which is certain form of early stage human unity ( though US didn’t participated in it) . But to get to a consciousness, which can support even a inferior form of human unity, called as UN, the world has to cross, the Second World War (1937 – 1941) killing 70 million people . Only then some of the nations understood the importance of creating new financial order, after the conclusion of World War II in 1944 at Bretton Wood . It took 14 years from Great Depression at 1930 , loss of 70 million people, and loss of few trillion wealth, to reach a human unity as inferior as UN ,which the global leaders are now feeling inadequate to solve global crises we are facing right now.
Does it mean to create Global governance now , we should follow the same pattern from the Great Depression to World War II, and then only be able to create a new social and financial order which has happened earlier with Bretton Wood ?
And then this will continue again, that, after some time that form of human unity will be also invalid, and we have to create a new form of Human Unity to address global problems, we would be facing at that point ?
Do we need to loose another 70 million people and waste a wealth of another few trillions to create every time a new form of human Unity ?
What is use of knowledge and knowingness and building consciousness, if we can’t change certain global thought patterns which will make the globe face the same situation again and again.
From this viewpoint the World Government should not be only seen as a theoretical possibility , but we should act towards it ,that it becomes a practicle reality.
Sunday, December 21, 2008
Thursday, December 18, 2008
The Way to Personal transformation
Sometimes, some people meet, somewhere, and they get transformed, with the experience of that moment . This was the specific story with me last Monday .
A Journey of only one evening, which brought me close, to my heart and soul.The irony, is we did not know each other, until the previous moment. Then we met. There was an explosion of emotions. There was a complete forgetfulness of everything. We lived completely in that moment . We enjoyed the life in that moment.
This has been, one of those moment, which we will all, remember in life . It is one of the moment ,when we get opportunity, to share with all of us, who we really are . For sometime we felt collectively , that we have gone back to our days of childhood , when we are simple and free and creative , to express all the time, what and who, we are.
For me it was a intense experience of Personal transformation when I met Abhinav and Gita and could share with them my life .
I wish, I have more of these moments to fill each others life.
Friday, December 12, 2008
Thursday, December 11, 2008
Global Transformation - A practicle requirement
That right now Global governance is not an theoretical and academic debate . Infact , it is the most practical solutions on the range of the global problems we are facing right now . As, I have mentioned that the financial regulatory framework we had based on the bretten wood and the institution build on that base are already facing a crisis which has taken epidemic proportion . You need a new system of regulation which is well understood and contemplated on the recent G-20 summit . The World is waiting for Obama to take over in 21st Jan, that the necessary structural requirement of a new regulatory framework could be build. I had couple of opportunities to consult this multilateral organization and I have felt that the changes which have taken place in the global arena is not well reflected on their institutional structure . So we right now have a practical need of building new forms of Global financial institution and Governance . Human unity is no longer a question of academic debate , it is a practical requirement to settle a number of issues we have right now in hand.
Friday, December 5, 2008
Personal Transformation through Creative Problem Solving
Did you know that dealing creatively with problems could be your way to developing intuition, healing relationships, empowering your organization, evolving the brain to a new level and bring total transformation in your life?
Problems, according to conventional ways of thinking, are obstacles to a goal. We learn to live with the unsolved ones which grow into the crises which dominate our lives. Creative thinking reverses this order and alters our perception of a difficult situation. A problem becomes a challenge and then, an opportunity. Consider this; one company in the USA had spent millions of dollars to develop a multipurpose adhesive which turned out to be a failure, as it would peel off. They turned this failure into an opportunity in the post-it pads. These yellow little squares of paper can be stuck and peeled off for reuse. Creative thinking alone sees such opportunities.
When I first developed and applied the Creative Problem Solving (CPS) process in 2003 as a worhshop leader on a Entreprenuership Mindset Development Workshop for NSIC, it was mainly for the industry, distribution system, plantations and government. Three years later, I refined it further during my consultancy work with diverse organizations and, teaching Entrepreneurship in Management Schools like IIMC and ISB&M. Though originally intended only for solving problems, over the years I discovered its tremendous power to transform individuals and organizations.
It's based on a principle thought which was stated so beautifully below.
What the caterpillar calls the end of the world, the master calls a butterfly: Richard Bach.
Problems, according to conventional ways of thinking, are obstacles to a goal. We learn to live with the unsolved ones which grow into the crises which dominate our lives. Creative thinking reverses this order and alters our perception of a difficult situation. A problem becomes a challenge and then, an opportunity. Consider this; one company in the USA had spent millions of dollars to develop a multipurpose adhesive which turned out to be a failure, as it would peel off. They turned this failure into an opportunity in the post-it pads. These yellow little squares of paper can be stuck and peeled off for reuse. Creative thinking alone sees such opportunities.
When I first developed and applied the Creative Problem Solving (CPS) process in 2003 as a worhshop leader on a Entreprenuership Mindset Development Workshop for NSIC, it was mainly for the industry, distribution system, plantations and government. Three years later, I refined it further during my consultancy work with diverse organizations and, teaching Entrepreneurship in Management Schools like IIMC and ISB&M. Though originally intended only for solving problems, over the years I discovered its tremendous power to transform individuals and organizations.
It's based on a principle thought which was stated so beautifully below.
What the caterpillar calls the end of the world, the master calls a butterfly: Richard Bach.
Tuesday, December 2, 2008
Leading towards Uncertainity through Business Continuity Planning
SME's must now take a more flexible approach to planning: each of them should develop several coherent, multipronged strategic-action plans, not just one. Every plan should embrace all of the functions, business units, and geographies of a SME and show how it can make the most of a specific economic environment.
These plans can’t be academic exercises; executives must be ready to pursue any of them—quickly—as the future unfolds. In fact, the broad range of plausible outcomes in today’s business environment calls for a “just in time” approach to strategy setting, risk taking, and resource allocation by senior executives. A SME’s 10 to 20 top managers, for example, might have weekly or even daily “all hands on deck” meetings to exchange information and make fast operational decisions.
Greater flexibility through planning also means developing as many options as possible that can be exercised either when trigger events occur or the future becomes more certain. Often, options will be offensive moves. Which acquisitions could be attractive on what terms, for instance, and how much capital and management capacity would be required? What new products best fit different scenarios? If one or more major competitors should falter, how will the company react? In which markets can it gain share?
As companies prepare for such opportunities, they should also create options to maintain good health under difficult circumstances. If capital market breakdowns make global sourcing too risky, for example, companies that restructure their supply chains quickly will be in much better shape. If changes in the global economy could make a certain kind of business unit obsolete, it’s critical to finish all the preparatory work needed to sell it before every company with that kind of unit reaches the same conclusion.
A crisis tends to surface options—such as how to slash structural costs while minimizing damage to long-term competitiveness—that organizations ordinarily wouldn’t consider. Unless SME'S evaluate their options early on, they could later find themselves moving with too little information or preparation and therefore make faulty decisions, delay action, or forgo options altogether.
These plans can’t be academic exercises; executives must be ready to pursue any of them—quickly—as the future unfolds. In fact, the broad range of plausible outcomes in today’s business environment calls for a “just in time” approach to strategy setting, risk taking, and resource allocation by senior executives. A SME’s 10 to 20 top managers, for example, might have weekly or even daily “all hands on deck” meetings to exchange information and make fast operational decisions.
Greater flexibility through planning also means developing as many options as possible that can be exercised either when trigger events occur or the future becomes more certain. Often, options will be offensive moves. Which acquisitions could be attractive on what terms, for instance, and how much capital and management capacity would be required? What new products best fit different scenarios? If one or more major competitors should falter, how will the company react? In which markets can it gain share?
As companies prepare for such opportunities, they should also create options to maintain good health under difficult circumstances. If capital market breakdowns make global sourcing too risky, for example, companies that restructure their supply chains quickly will be in much better shape. If changes in the global economy could make a certain kind of business unit obsolete, it’s critical to finish all the preparatory work needed to sell it before every company with that kind of unit reaches the same conclusion.
A crisis tends to surface options—such as how to slash structural costs while minimizing damage to long-term competitiveness—that organizations ordinarily wouldn’t consider. Unless SME'S evaluate their options early on, they could later find themselves moving with too little information or preparation and therefore make faulty decisions, delay action, or forgo options altogether.
Allindialive is now a Hottest Startup
Recently, NEN listed Allindialive as a Hottest startup.
Allindialive Hottest Startup link
We thank the NEN team for considering us a hottest startup.
Allindialive Hottest Startup link
We thank the NEN team for considering us a hottest startup.
The Heart of a Business Plan
People relates heart to emotions . Business Planning relates heart to passion, that is the main reason for the Business plan, in the first place.
What is the passion of a business ?.
It is to give a service or a product which benefits a group of customers which are representatives of society .
In the case of Allindialive , it provides Entreprenuership development education and Business advisory services to Small and Medium Enterprises (SME). Somehow the entire business is based on the idea to help and serve the SME's that they could be successful . This is the heart of Allindialive business plan. It also includes that how the process of these help can be profitable that the entire service could be sustained for a long time.
In the same way the heart of other business plan are based on these same ideas which cane be fragmented into more structured format like these ..
1. Target Customers
2. Service and Product Profile
3. Profit margin out of the Service/product delivered.
If the root of the passion of the business plan is clear , then other components falls in right synchronity.
This month , I have Judged near about 14 Business plans of Indian Institute of Management , Business planning Competetion , Ideas to Implementation (i2i2009)
and found that some of the business plan has heart problems and so the synchron ity was missing.
There are also some plans which are quite healthy in thier heart and so the overall balance is absolutely visible.
What is the passion of a business ?.
It is to give a service or a product which benefits a group of customers which are representatives of society .
The Case Study of Allindialive
In the case of Allindialive , it provides Entreprenuership development education and Business advisory services to Small and Medium Enterprises (SME). Somehow the entire business is based on the idea to help and serve the SME's that they could be successful . This is the heart of Allindialive business plan. It also includes that how the process of these help can be profitable that the entire service could be sustained for a long time.
In the same way the heart of other business plan are based on these same ideas which cane be fragmented into more structured format like these ..
1. Target Customers
2. Service and Product Profile
3. Profit margin out of the Service/product delivered.
If the root of the passion of the business plan is clear , then other components falls in right synchronity.
This month , I have Judged near about 14 Business plans of Indian Institute of Management , Business planning Competetion , Ideas to Implementation (i2i2009)
and found that some of the business plan has heart problems and so the synchron ity was missing.
There are also some plans which are quite healthy in thier heart and so the overall balance is absolutely visible.
Friday, November 21, 2008
Who is asking you to become interested ?
One of the prime reason of Global financial meltdown is excessive importance of self-interest and ignoring the higher interest .
The root of the problem is the lack of self regulation . The irony is these is what the Government expected , when they outsourced the regulation job of the credit expansion to the Bank itself . It started from 1980's when there is a group of policy changes from Global powers to facilitate free market . The banks where given complete freedom and they where asked to do there own risk management practice as if they don't do it , they will loose money.As it happens in all cases , when the power went to the banks they became greedy.So , they didn't cared for risk management , and they went on expanding credit crisis , which lead to global credit crisis 2008.
When the consulting community alerted the banks on possible setback , they might have said " I am not interested".
There are seminars and workshops and synopsium which focused on the issue of ethics . People laughed and joked and said ... " Come on lets do business , we are not interested to hear this "
Unfortunately, I was workshop leader for some of this workshops where I explained the collective mal-practice has a ripple effect over the entire community .
Nobody is interested to hear my theory .
Why ?
Bcoz , there are only few people in the world , who has the time to think about the things which can effect us collectively . We have become urgent oriented community and not a importance oriented community . So until unless somebody does not hard press , we don't understand the importance of something which can effect us.
Sometimes our conscience has to be interested to go beyond our self-interest.
The root of the problem is the lack of self regulation . The irony is these is what the Government expected , when they outsourced the regulation job of the credit expansion to the Bank itself . It started from 1980's when there is a group of policy changes from Global powers to facilitate free market . The banks where given complete freedom and they where asked to do there own risk management practice as if they don't do it , they will loose money.As it happens in all cases , when the power went to the banks they became greedy.So , they didn't cared for risk management , and they went on expanding credit crisis , which lead to global credit crisis 2008.
When the consulting community alerted the banks on possible setback , they might have said " I am not interested".
There are seminars and workshops and synopsium which focused on the issue of ethics . People laughed and joked and said ... " Come on lets do business , we are not interested to hear this "
Unfortunately, I was workshop leader for some of this workshops where I explained the collective mal-practice has a ripple effect over the entire community .
Nobody is interested to hear my theory .
Why ?
Bcoz , there are only few people in the world , who has the time to think about the things which can effect us collectively . We have become urgent oriented community and not a importance oriented community . So until unless somebody does not hard press , we don't understand the importance of something which can effect us.
Sometimes our conscience has to be interested to go beyond our self-interest.
Tuesday, November 18, 2008
New Bretton Wood
Year 1944.
Sixty-four years ago at a conference in Bretton Woods, New Hampshire, the foundations for post-war international finance were laid.
The year in which Bretton Wood conference was held and two global financial institution World Bank and IMF were created.
There where expectation that G-20 summit will lead to a new Bretton woods . However , the expectation were not met in the G-20 summit these year at 14th and 15th Novembor.
However , the leaders are concerned , as the amount of bad debt increases in US market which have crossed $1 trillion which created ripple effect in the entire global economy.
Suddenly the regulators have started finding out the fallacy of the financial risk management practices of Financial institution which originated these scale of Bad debt which has paralyzed the entire the global economy.
What kind of new regulatory systems can be implemented which maintains the free-market environment and also does not lead to excessive amount of bad debts that will lead to toxic assets?
G-20 didn't have the answer and it requires the financial rules to be rewritten to create the answer.
Sixty-four years ago at a conference in Bretton Woods, New Hampshire, the foundations for post-war international finance were laid.
The year in which Bretton Wood conference was held and two global financial institution World Bank and IMF were created.
There where expectation that G-20 summit will lead to a new Bretton woods . However , the expectation were not met in the G-20 summit these year at 14th and 15th Novembor.
However , the leaders are concerned , as the amount of bad debt increases in US market which have crossed $1 trillion which created ripple effect in the entire global economy.
Suddenly the regulators have started finding out the fallacy of the financial risk management practices of Financial institution which originated these scale of Bad debt which has paralyzed the entire the global economy.
What kind of new regulatory systems can be implemented which maintains the free-market environment and also does not lead to excessive amount of bad debts that will lead to toxic assets?
G-20 didn't have the answer and it requires the financial rules to be rewritten to create the answer.
How to grow business in 2009 ?
Business Growth in 2009 ?
Yesterday , I had a chat with one of my old business friend . He made a interesting comment , which to be honest scared me a lot .
Here is his comment about Business Growth from 2009-2011
I was little taken aback with the statement . Honestly ,upto yesterday , I have never thought of my survival strategies beyond 3 months . These days the environment changes so fast, that planning beyond 3 months is something which is obsolete . There is need to redesign the plan .
Infact , I called him up to fill a survey which we are conducting in North and Eastern India for United Nations Conference for Trade and Development (UNCTAD) and and getting somewhat very frustrating responses.
And over to it this statement . The market sentiments are very low these days and often you have scores of rejection of anything as simple as filling up a survey response .
I pondered and found, that there is general negative statement, which is ruling the market these days.
We need understand that the market is symbol of our collective requirement . The collective requirement of the human society has not changed, only the interfacing structures, between the requirement generator and the provider has changed .
The new structures are replacing the old interfacing structure . The new structure has already evolved . And the process of transition is on .
The business all over the world needs to adjust to these new realities in order to succeed .There has to be comprehensive understanding created about how the global market will operate now onwards.
We will discuss about these new financial paradigm on which the business can also grow in the upcoming post.
Yesterday , I had a chat with one of my old business friend . He made a interesting comment , which to be honest scared me a lot .
Here is his comment about Business Growth from 2009-2011
If you can survive next 3 years , you can survive next 300 years
I was little taken aback with the statement . Honestly ,upto yesterday , I have never thought of my survival strategies beyond 3 months . These days the environment changes so fast, that planning beyond 3 months is something which is obsolete . There is need to redesign the plan .
Infact , I called him up to fill a survey which we are conducting in North and Eastern India for United Nations Conference for Trade and Development (UNCTAD) and and getting somewhat very frustrating responses.
And over to it this statement . The market sentiments are very low these days and often you have scores of rejection of anything as simple as filling up a survey response .
I pondered and found, that there is general negative statement, which is ruling the market these days.
We need understand that the market is symbol of our collective requirement . The collective requirement of the human society has not changed, only the interfacing structures, between the requirement generator and the provider has changed .
The new structures are replacing the old interfacing structure . The new structure has already evolved . And the process of transition is on .
The business all over the world needs to adjust to these new realities in order to succeed .There has to be comprehensive understanding created about how the global market will operate now onwards.
We will discuss about these new financial paradigm on which the business can also grow in the upcoming post.
Monday, November 17, 2008
Risk Management and Merchandise Export Finance
Market liberalization has brought profound changes in the way price risks are allocated and managed in merchandise export sectors. Price risks increasingly are allocated to third party organization like factoring companies rather than absorbed by the merchant. The success of market reforms crucially depends on the ability of the emerging small and medium size export sector to make full use of the range of modern marketing, financing, and price risk management instruments.
The merchandising export sector have two process to address while risk management in export .
A) Avoiding Risk by making proper Buyer assessment
B) Recovering money through recovery agency.
On this avoiding risk is a more cheaper solution as presently the recovery agents all over the world is charging 25% of the money looking at the griming market situation .
Obviously there are political and war risk and at the same time there is risk of the buyers bank becoming insolvent . At certain cases however it is seen that there is a deliberate attempt of the buyer not to pay looking at the tough market condition now.
Still small exporter could implement better risk management practices to solve this problem. They can start with correspondence and then put up the case with the relevant authorities and after that they could even file a legal suit under Export Insurance cover and at the end hire a debt collection agency.
The merchandising export sector have two process to address while risk management in export .
A) Avoiding Risk by making proper Buyer assessment
B) Recovering money through recovery agency.
On this avoiding risk is a more cheaper solution as presently the recovery agents all over the world is charging 25% of the money looking at the griming market situation .
Obviously there are political and war risk and at the same time there is risk of the buyers bank becoming insolvent . At certain cases however it is seen that there is a deliberate attempt of the buyer not to pay looking at the tough market condition now.
Still small exporter could implement better risk management practices to solve this problem. They can start with correspondence and then put up the case with the relevant authorities and after that they could even file a legal suit under Export Insurance cover and at the end hire a debt collection agency.
Friday, November 14, 2008
Export Risk Management for Small exporters
For small exporters failure to get payment for one consignment is a big deal . It can lead even to the bankruptcy of the organization . Looking at that, there is a burning to need to put right kind of 'Export Risk Management' program in practice. Specially chances of bad debts has to properly analyzed . Most of the small exporters doesn't have proper risk management practices . Following key areas has to be looked after in order to implement proper risk management practices in export.
1. Understanding the Pre-shipment and Post-shipment framework from Bank /Institution.
2. Defining the mode of payment in export which would be benefiting-
a) Direct to customer
b) Through Merchant Exporters
c) Overseas Agent
3. Understanding the barriers which could lead to major problem areas for bad debt
a) Identifying new markets for your product
b) Identifying genuine buyers in new market
c) Understanding the quality norms
d) Financing pre-shipment post shipment activity
e) Cost of Export insurance program
f) Bureaucracy in export process
g) Payment risk in foreign markets
h) Volatile foreign exchange
4. Other items of risk
a) Insolvency of buyer
b) Insolvency of buyers bank
c) Deliberate attempt of buyer not to make payment
d) Foriegn currency risk
e) Political and war risk
f) Rejection due to various other reason ( quality issues,
documentation,perishibality of goods)
5. Possible ways of managing risk
a)Correspondence only
b)Complaint to Indian Embassy
c)Complaint to Export Promotional Council
d)Complaint of authorities in buyer's country
e)Filed case under under ECGC/insurance cover.
f)Intiate legal action against the company.
g)Hire debt collection agency
6. Work on the reason like quality , delay in supply and commercial dispute
7. Using following services from other agencies
1. Market Research report from export promtion council
2. Service of overseas buyer assessment agency
3. Export insurance cover.
4. Forward cover for foriegn agencies
5. Factoring companies
6. Service to debt collecting agencies
1. Understanding the Pre-shipment and Post-shipment framework from Bank /Institution.
2. Defining the mode of payment in export which would be benefiting-
a) Direct to customer
b) Through Merchant Exporters
c) Overseas Agent
3. Understanding the barriers which could lead to major problem areas for bad debt
a) Identifying new markets for your product
b) Identifying genuine buyers in new market
c) Understanding the quality norms
d) Financing pre-shipment post shipment activity
e) Cost of Export insurance program
f) Bureaucracy in export process
g) Payment risk in foreign markets
h) Volatile foreign exchange
4. Other items of risk
a) Insolvency of buyer
b) Insolvency of buyers bank
c) Deliberate attempt of buyer not to make payment
d) Foriegn currency risk
e) Political and war risk
f) Rejection due to various other reason ( quality issues,
documentation,perishibality of goods)
5. Possible ways of managing risk
a)Correspondence only
b)Complaint to Indian Embassy
c)Complaint to Export Promotional Council
d)Complaint of authorities in buyer's country
e)Filed case under under ECGC/insurance cover.
f)Intiate legal action against the company.
g)Hire debt collection agency
6. Work on the reason like quality , delay in supply and commercial dispute
7. Using following services from other agencies
1. Market Research report from export promtion council
2. Service of overseas buyer assessment agency
3. Export insurance cover.
4. Forward cover for foriegn agencies
5. Factoring companies
6. Service to debt collecting agencies
Monday, November 10, 2008
Allindialive reviewed in Education Times of Times of India
Allindialive.org is reviewed in 'Education Times' of Times of India .
Allindiaive Review Link
The site address mentioned as www.allindialive.com is a printing mistake and the real site is www.allindialive.org.
Allindiaive Review Link
The site address mentioned as www.allindialive.com is a printing mistake and the real site is www.allindialive.org.
Friday, October 24, 2008
SME Loan restructuring through Loan Repayment planning
The present situation of economy is increasing non-performing loans in the banking industry maybe directly or directly related to the downturn in the Global economy. Basically, these problem loans are the result of the borrower’s inability to generate enough income to repay the loans. This inability may be due to management weakness, over-gearing, poor marketing, low productivity or sheer unresponsive to changes in the business environment. Whatever the reasons, timely diagnosis and treatment of these problem loans is paramount to prevent a disastrous outcome. The extent of any cure will depend upon the size of the problem, how quickly it is brought to light and the responsiveness of the business owner to act concertedly.
Lon restructuring is an specialist Job
The task of reviewing a problem account and considering practical remedial solutions is not for new-entrant to banking. The job is enormous as it normally entails identifying the cause(s) of the problem, procuring an accurate financial picture of the business and developing financial and strategic restructuring plans. Upon conceiving the “actual” situation in hand, the person in charge not only has to convince the bank to accept the plan but also need to convince the owners / management to act on the plan drawn
To be effective the person in charge, needs to recognize the importance of economic, market and other external factors. They also need to be a Financial Analysis, Consultant, Economist, Lawyer, Salesman, Beggar and Butcher!
Can All the Accounts Be Restructured / Rehabilitated?
To the hard pressed collection / recovery officer, restructuring is an exercise to defer classifying the delinquent accounts as non-performing and hopefully, the problem would resolve by itself. Unfortunately, this is not the case. As the saying goes, “what will happen, will happen”. Certainly, not all accounts can be rehabilitated. It is only borrower’s having the right “ingredient” and business that can be considered.
The Highlights of the repayment plan
At the end of the entrepreneur should able to supervise and follow up his distressed SME accounts more effectively by working closely with the bank.
It is important to learn
• Determine whether an account can be rehabilitate
• Determine the types of borrowers involved
• Understand and appreciating the financial predicament of distressed borrowers
• Determine the options available to the borrower in resolving the problem.
Following issues are extremely important to understand
• Loan structuring
- why is it so important
- how it can cause problems for the borrower
- what does it involve
• The role of a workout specialist
• Understanding and appreciating why good companies can turn bad
• Businesses do not fail overnight – spotting the tell-tale signs of trouble
• Determine the cause(s) of the problems(s)
• Options for businesses in difficulties
• Assessing the situation
o Conducting a situational audit of the business
o Is the business still viable?
o Is it worth saving?
o What is involved / required to make it work? What additional resources are required?
o Can the borrower do it?
o Should the bank do it?
• Structuring term lending
• Studying cash-flows to determine capacity to service interest / repay the loan
• Studying cash-flows to structure the repayment schedule
• Loan covenants and support - importance of - some types – structuring
• Drawing up action plan – monitoring progress – taking remedial actions
• Knowing when it doesn’t work!
Lon restructuring is an specialist Job
The task of reviewing a problem account and considering practical remedial solutions is not for new-entrant to banking. The job is enormous as it normally entails identifying the cause(s) of the problem, procuring an accurate financial picture of the business and developing financial and strategic restructuring plans. Upon conceiving the “actual” situation in hand, the person in charge not only has to convince the bank to accept the plan but also need to convince the owners / management to act on the plan drawn
To be effective the person in charge, needs to recognize the importance of economic, market and other external factors. They also need to be a Financial Analysis, Consultant, Economist, Lawyer, Salesman, Beggar and Butcher!
Can All the Accounts Be Restructured / Rehabilitated?
To the hard pressed collection / recovery officer, restructuring is an exercise to defer classifying the delinquent accounts as non-performing and hopefully, the problem would resolve by itself. Unfortunately, this is not the case. As the saying goes, “what will happen, will happen”. Certainly, not all accounts can be rehabilitated. It is only borrower’s having the right “ingredient” and business that can be considered.
The Highlights of the repayment plan
At the end of the entrepreneur should able to supervise and follow up his distressed SME accounts more effectively by working closely with the bank.
It is important to learn
• Determine whether an account can be rehabilitate
• Determine the types of borrowers involved
• Understand and appreciating the financial predicament of distressed borrowers
• Determine the options available to the borrower in resolving the problem.
Following issues are extremely important to understand
• Loan structuring
- why is it so important
- how it can cause problems for the borrower
- what does it involve
• The role of a workout specialist
• Understanding and appreciating why good companies can turn bad
• Businesses do not fail overnight – spotting the tell-tale signs of trouble
• Determine the cause(s) of the problems(s)
• Options for businesses in difficulties
• Assessing the situation
o Conducting a situational audit of the business
o Is the business still viable?
o Is it worth saving?
o What is involved / required to make it work? What additional resources are required?
o Can the borrower do it?
o Should the bank do it?
• Structuring term lending
• Studying cash-flows to determine capacity to service interest / repay the loan
• Studying cash-flows to structure the repayment schedule
• Loan covenants and support - importance of - some types – structuring
• Drawing up action plan – monitoring progress – taking remedial actions
• Knowing when it doesn’t work!
Thursday, October 23, 2008
Regularity on Business Planning
Some entrepreneurs, do modify there business plans on regular intervals . Some do not . There is an essential disadvantage of not modifying the business plan on regular intervals . One of them, is related to the validity of assumptions made in the plan . The Business plan need to be updated with the changing market scenario . Otherwise , it becomes a part of history .
Infact,I feel Business planning is a process . Once a person starts religiously following the process , he creates clarity in lot of avenues of Business . That clarity helps him to structure the plan in a better fashion , which could lead to better revenue outcome.
Infact,I feel Business planning is a process . Once a person starts religiously following the process , he creates clarity in lot of avenues of Business . That clarity helps him to structure the plan in a better fashion , which could lead to better revenue outcome.
Wednesday, October 22, 2008
Business Plan written by Professionals for aspiring entreprenuers
There is a big doubt on the minds of aspiring entrepreneur, on the practice of recruiting a professional/consulting firm on writing their Business Plans. Most of the aspiring entrepreneur remains in a very excited stage, on the early days of business . This makes them think less of the requirements of the audience, of the business plan. In addition, they are more aligned to their emotional satisfaction and sometimes completely lost in their ego trip.
Obviously , these was hard for them, for sometime, when a person from the opposite side comes and starts dissecting their idea . Suddenly they feel lost of the entire excitement with realizing , the ground realities that a investor looks for .
However ,to me it looks like a stage where the business has start maturing from a seed stage to a sapling stage . The growth of the business brings more objectivity and these is something, an aspiring entrepreneur has to realize, early and not guard his idea in feverish emotional excitement.
I realize the Business Planning Event season has come, as the organization all around India are coming to me for with request for different role play on their business plan event starting from becoming a Judge to Mentor Business Plans .
I have already got the invitation to Judge the Business Plan Event of Indian Institute of Management , kolkata , known as i2i2009. I have been associated with i2i for some and other role, since its inception . But these time , Indian Institute of Management , Indore and National Entrepreneurship Network has invited me to mentor some of the Business Plan which has been selected in the Preliminary round of there Business Plan Competetion Sanjeevini.
Looking for a exciting time ahead with a bunch of aspiring entrepreneur . I had always a great interaction with them and there energy level remains very high ,in these seed stages of business.
Obviously , these was hard for them, for sometime, when a person from the opposite side comes and starts dissecting their idea . Suddenly they feel lost of the entire excitement with realizing , the ground realities that a investor looks for .
However ,to me it looks like a stage where the business has start maturing from a seed stage to a sapling stage . The growth of the business brings more objectivity and these is something, an aspiring entrepreneur has to realize, early and not guard his idea in feverish emotional excitement.
I realize the Business Planning Event season has come, as the organization all around India are coming to me for with request for different role play on their business plan event starting from becoming a Judge to Mentor Business Plans .
I have already got the invitation to Judge the Business Plan Event of Indian Institute of Management , kolkata , known as i2i2009. I have been associated with i2i for some and other role, since its inception . But these time , Indian Institute of Management , Indore and National Entrepreneurship Network has invited me to mentor some of the Business Plan which has been selected in the Preliminary round of there Business Plan Competetion Sanjeevini.
Looking for a exciting time ahead with a bunch of aspiring entrepreneur . I had always a great interaction with them and there energy level remains very high ,in these seed stages of business.
Tuesday, October 21, 2008
Working with a Small Business Mentor - Do's Don'ts
There's more to an effective mentoring relationship than organized meetings. After mentoring a lot of entrepreneurs, I feel a lot of time , small business entrepreneur could not take the best from the mentor .
Mentor-Mentee relationship is a very ancient form of relationship, and has a tradition of knowledge sharing both in business and life . Following are do's and don't to get the best out of your mentor
Mentors are human being. They also fail . They don't let their fall to become a failure. That's why its important to take an interest in the person as a human being. I have an mentor who makes millions of dollars a year doing mentoring. After I ask my question I always ask him about what’s going on in his life, or share a joke or tell him something funny that’s happened to me.
Value the opinion of the mentor , even if you don't apply at later stage. If a value a opinion will learn from what you listen. Otherwise you will only listen and learn nothing.
Don’t try to wste a lot of your mentor's time at first. Connect in a way that’s quick and easy.
Be clear about what you’re doing and what you need. There is so much “dusty thinking” in the world. . Work on developing a clear elevator speech and mission statement. Think about one or two specific questions you need answered and think about your words and how to ask those questions clearly.
Listen, listen, listen
Thank the person for their time. Tell them what you’re going to do and then when you take action, be sure to let them know what you’re doing. Always, always, always tell them when you take an action step.
Reciprocate once in awhile. If you see a great article that you think he would enjoy – send it to him with a quick note. .
With mutual respect, demonstrated through action as well as attitude, your mentoring relationship can be mutually rewarding.
Mentor-Mentee relationship is a very ancient form of relationship, and has a tradition of knowledge sharing both in business and life . Following are do's and don't to get the best out of your mentor
Mentors are human being. They also fail . They don't let their fall to become a failure. That's why its important to take an interest in the person as a human being. I have an mentor who makes millions of dollars a year doing mentoring. After I ask my question I always ask him about what’s going on in his life, or share a joke or tell him something funny that’s happened to me.
Value the opinion of the mentor , even if you don't apply at later stage. If a value a opinion will learn from what you listen. Otherwise you will only listen and learn nothing.
Don’t try to wste a lot of your mentor's time at first. Connect in a way that’s quick and easy.
Be clear about what you’re doing and what you need. There is so much “dusty thinking” in the world. . Work on developing a clear elevator speech and mission statement. Think about one or two specific questions you need answered and think about your words and how to ask those questions clearly.
Listen, listen, listen
Thank the person for their time. Tell them what you’re going to do and then when you take action, be sure to let them know what you’re doing. Always, always, always tell them when you take an action step.
Reciprocate once in awhile. If you see a great article that you think he would enjoy – send it to him with a quick note. .
With mutual respect, demonstrated through action as well as attitude, your mentoring relationship can be mutually rewarding.
Thursday, October 16, 2008
Building reccession resistant small business : Part - III
Innovation is denoted as a fundamental trait on entrepreneurs. However, it is also seen as a byproduct of practicing creative disciplines, in some or other forms .The ability to govern ourselves and channelise our energies in creative direction will lead to building up innovative ideas in due course of time. The small business has to focus more on governing internal factors then on governing external situation in bringing changes, which could positively resist recession. The team and the entrepreneur plays a big role on differentiation the small business by practicing innovation, in every range of activities. With the growth of Science and Technology humanity is more aligned to govern the nature , then to govern themselves . This creates an essential misbalance in the harmony of inside and outside realities . We pretend to be more comfortable with outside realities then inner realities . Small business could not afford this kind of mistake . Though present financial situations shows that even big business and financial institution could not afford to do so. More safe side strategy for the small business, would be where entrepreneur changes himself first, to provoke change in the people around him . Later he could also transmit this changes to his supplier and customer . There is no better way to have sustainable change other than one, which starts from an individual and moves slowly, and gently towards the collective. Moving from self governance to corporate governance is the path which would prevent any form of personal and organizational recession to happen . This is more inexpensive and better way to handle recession in comparison to creating debt cycles and worsening financial situations.
Wednesday, October 15, 2008
Building Reccession Resistant Small Business - Part II
The practical equivalent of abundant thinking is creativity . A person whose pattern of thinking is always engrossed with scarcity, has hard time to use his creative abilities . It is very important for small business owner, to have creative capital , who might be already scarced with financial capital . Infact , innovation and finding out new and efficient ways to deal with the pressure of recession, opens new business avenues for small business owners .
The process of innovation is referred as very disruptive . So the structural approach might not be so good to bring out the best form of innovation from people . Any recession, be it personal, organizational or family, has a very unstructured approach, which forces people to think differently. That is how some small business are able to take advantage, of the condition of recession, with smart application of intelligence and talent .
We can see this happened earlier . When Y2k surfaced, some of the people forecasted about the end of the road of software industry and going back to manual processes . It never happened that way , which we can see now. On the contrary some smart Indian companies really reaped benefit of the Y2k problem and turned themsellves to a global software major .
We can understand that innovation is the key on handling recession . We had to think differently about our businesses and life and then we can bring something so new and different that every Small Business Owners (SBO) could come out from the recesion with flying colours.
The process of innovation is referred as very disruptive . So the structural approach might not be so good to bring out the best form of innovation from people . Any recession, be it personal, organizational or family, has a very unstructured approach, which forces people to think differently. That is how some small business are able to take advantage, of the condition of recession, with smart application of intelligence and talent .
We can see this happened earlier . When Y2k surfaced, some of the people forecasted about the end of the road of software industry and going back to manual processes . It never happened that way , which we can see now. On the contrary some smart Indian companies really reaped benefit of the Y2k problem and turned themsellves to a global software major .
We can understand that innovation is the key on handling recession . We had to think differently about our businesses and life and then we can bring something so new and different that every Small Business Owners (SBO) could come out from the recesion with flying colours.
Tuesday, October 14, 2008
Building Reccession Resistant Small Business - Part I
Last couple of months , the mainstream media is continuously bombarding with words like recession, foreclosures , credit crunch ,rising food prices, share market fall , financial crisis . It is successful to build a mental state of 'fear' on recession globally . The media have even walked ahead and started comparing with the patterns of great depression in 1930 . They may be right and they can be wrong also . But , what is remarkable is the kind of negative sentiment of scarcity it has created in last few months . All these years we have been hearing that the natural resources are scarce . Now we have reached in collective mental state , where even the monetary resources around the world is scarce. It proves the fact that when we start thinking scarcity , we add more to block of scarcity . One of my friend , was telling me that in last 2 weeks he is not trying to look at newspaper and TV , and pulling himself hard to concentrate on the project where he could make a difference. I think ,it is the most wise thing to do , to prevent the economic reccession to take the shape of personal reccesion.
I think recession is a testing time of mental approaches. Often when a recession comes in a macro economic level , it gets converted into organizational and individual level very fast . I was a part of dotcom industry when it was hit by recession in 2001 . Suddenly, every customer of our organization , was scared about us, who were buying different line of web consultancy support . Though the kind of a recession which we are having at that point of time, was a correction of the inflated valuation which was associated with dot com industry . It has nothing to do with incorporating Internet as a part of Corporate strategy to reach out different lines of customer base , which we are offering to the market at that point of time . Yet , we are badly hit .
I know from my personal experience, that it was hard to call an motivated team member, and tell him about the pay cuts which is going to happen from next month . It created such a negative energy all around the team. I continued observing how the recession in the organisational level , is getting circulated in personal level . There were no longer training camps and extended group discussion where we felt a common bonding , about how the organisation and the project we are doing, was important to us .
Often ,organisation in the time of reccesion ,takes a very hard approach towards thier tangibles . It is the most smart thing to do . But when the tangibles like money get scarce , it had to meet up by intangibles , like time and good advise that the organisational motivation stays intact . It is this which makes a difference between a sustainable business and unsustainable one .
There is also a need of changing our mental approaches from scarcity to abundance . Recession is a testing time for of our collective mental attitude towards scarcity . If we collectively think , something is scarce, it has multiplier effect, and then we see everything around is scarce . Our collective mind has a enormous power, to turn a thought which is bombared by mainstream media into a collective thinking pattern . So , the modern media and global connectivity has a huge negative multiplier effect , which will definitly add on to the reality of the global reccession .
That's to build reccession resistance the individuals and institution has to nurture the thoughts of prosperity and abundance and realise that universe is abundant . Infact ,to take a more practicle example we have to look at the our body and the different organism which functions in the body. Could they be valued in reference to money ? As says mastercard ad ... ' which I liked very much ' there is certain things which money can't buy' - it can't buy a starry night , it can't buy true love , it can't buy your exact body.
We have to understand that reccession is a mental approach . Unfortunately ,our economic theories are based on this mental approach . The fundamentals of economic understanding is based on scarcity . We have to raise questions about the validity of these fundamentals ,otherwise the world can never get out from the trap of economic reccesion , though the nature is always abundant . There is requirement of new theories which is based on the ideas of abundant thinking .
( To be continued ..)
I think recession is a testing time of mental approaches. Often when a recession comes in a macro economic level , it gets converted into organizational and individual level very fast . I was a part of dotcom industry when it was hit by recession in 2001 . Suddenly, every customer of our organization , was scared about us, who were buying different line of web consultancy support . Though the kind of a recession which we are having at that point of time, was a correction of the inflated valuation which was associated with dot com industry . It has nothing to do with incorporating Internet as a part of Corporate strategy to reach out different lines of customer base , which we are offering to the market at that point of time . Yet , we are badly hit .
I know from my personal experience, that it was hard to call an motivated team member, and tell him about the pay cuts which is going to happen from next month . It created such a negative energy all around the team. I continued observing how the recession in the organisational level , is getting circulated in personal level . There were no longer training camps and extended group discussion where we felt a common bonding , about how the organisation and the project we are doing, was important to us .
Often ,organisation in the time of reccesion ,takes a very hard approach towards thier tangibles . It is the most smart thing to do . But when the tangibles like money get scarce , it had to meet up by intangibles , like time and good advise that the organisational motivation stays intact . It is this which makes a difference between a sustainable business and unsustainable one .
There is also a need of changing our mental approaches from scarcity to abundance . Recession is a testing time for of our collective mental attitude towards scarcity . If we collectively think , something is scarce, it has multiplier effect, and then we see everything around is scarce . Our collective mind has a enormous power, to turn a thought which is bombared by mainstream media into a collective thinking pattern . So , the modern media and global connectivity has a huge negative multiplier effect , which will definitly add on to the reality of the global reccession .
That's to build reccession resistance the individuals and institution has to nurture the thoughts of prosperity and abundance and realise that universe is abundant . Infact ,to take a more practicle example we have to look at the our body and the different organism which functions in the body. Could they be valued in reference to money ? As says mastercard ad ... ' which I liked very much ' there is certain things which money can't buy' - it can't buy a starry night , it can't buy true love , it can't buy your exact body.
We have to understand that reccession is a mental approach . Unfortunately ,our economic theories are based on this mental approach . The fundamentals of economic understanding is based on scarcity . We have to raise questions about the validity of these fundamentals ,otherwise the world can never get out from the trap of economic reccesion , though the nature is always abundant . There is requirement of new theories which is based on the ideas of abundant thinking .
( To be continued ..)
Thursday, October 9, 2008
SME learning experience
Starting a small business is always a exciting experience . There are also lot of problems. However , I would like to refer them as learning opportunity . To start with there is lack of clarity with the business .I think , that is not the right time to incorporate the business . As there are lot of things, gets changed.
So, it is more important to wait for sometime to let the ideas to settle down. There is also requirement of intensive market research inorder to make the idea more clear and to get a clear set of target customer. Besides, it is a common tendency to spend a lot of money in the office and decoration . However, it is not a wise idea to spend a lot of money in office and decoration , unless the business requires a retail outfit to start with.
The rules of starting and small business is in fact applying the " Keep it simple " principle.
So, it is more important to wait for sometime to let the ideas to settle down. There is also requirement of intensive market research inorder to make the idea more clear and to get a clear set of target customer. Besides, it is a common tendency to spend a lot of money in the office and decoration . However, it is not a wise idea to spend a lot of money in office and decoration , unless the business requires a retail outfit to start with.
The rules of starting and small business is in fact applying the " Keep it simple " principle.
Wednesday, October 8, 2008
SME Training and Capacity Development
One of the way corporate could achieve its sustainable development goals is by SME trainning and capacity development on the larger community where it is having its organisation . This infact has a direct effect on the economy of that particular location and create better acceptance from the local community . It is one of the best way to handle the unrest, which is reportedly growing in different place of India and World, while creating different Heavy Industries on a location.
Lonmin is following this path in South Africa(Mooinooi area) to create a better relation with the larger community .Lonmin is a primary producer of Platinum Group Metals (PGMs). It creates value by the discovery, acquisition, development and marketing of minerals and metals.It has offices in Johensburg and a mine in Mooinooi area. It is funding a business incubation centre which will further facilitate the process of SME training and capacity development in the localities.
This is a fantastic model which other business can follow to avoid, land and other conflict from the localities , in case of building operation related to 'Heavy Industries'.
Lonmin is following this path in South Africa(Mooinooi area) to create a better relation with the larger community .Lonmin is a primary producer of Platinum Group Metals (PGMs). It creates value by the discovery, acquisition, development and marketing of minerals and metals.It has offices in Johensburg and a mine in Mooinooi area. It is funding a business incubation centre which will further facilitate the process of SME training and capacity development in the localities.
This is a fantastic model which other business can follow to avoid, land and other conflict from the localities , in case of building operation related to 'Heavy Industries'.
Monday, October 6, 2008
Integrating SME Financing and Business Incubation alongwith sustainable business
Can these three most important fields of SME's be integrated ?
SME Financing and Business Incubation though sound closer .Sustainable business stands as world apart.
Let me ask you to look it more closely ? Are they not related ?
Sustainability is a value which every organization should have in there DNA, in order to sustain for a long time. If sustainability is not a part of a business strategy for SME's , it is very hard for them to survive in the present Global situation where we see a certain degree of environmental and social consciousness in the mass. To enable this strategy in a grand scale we need financial instruments and that's why SME finance is inter-related with Sustainable business strategy . The missing link is the business incubation by which SME's could get a infrastructural back up before they startup there enterprise .
From these point of view , three most important factor for SME growth is - a business strategy which is sustainable in nature and which can access to different SME funding instruments and get the infrastructural back up for its intial phases, that its business comes into maturity faster.
SME Financing and Business Incubation though sound closer .Sustainable business stands as world apart.
Let me ask you to look it more closely ? Are they not related ?
Sustainability is a value which every organization should have in there DNA, in order to sustain for a long time. If sustainability is not a part of a business strategy for SME's , it is very hard for them to survive in the present Global situation where we see a certain degree of environmental and social consciousness in the mass. To enable this strategy in a grand scale we need financial instruments and that's why SME finance is inter-related with Sustainable business strategy . The missing link is the business incubation by which SME's could get a infrastructural back up before they startup there enterprise .
From these point of view , three most important factor for SME growth is - a business strategy which is sustainable in nature and which can access to different SME funding instruments and get the infrastructural back up for its intial phases, that its business comes into maturity faster.
Friday, October 3, 2008
The Foundations of sustainable business
There are some remarkable changes, happening in the financial Industry, which has strong implication into the businesses worldwide and related industries . Further,financial institution are thought as the very foundation of our global economy . In Europe there are banks which have assets valued more than some of the nations economy . In US , the general entrepreneurial aspiration is focused around, building large financial institution ,like in India ,it is about building IT companies . The changes which are happening in the last one year, and which get worsened in last month is indication, of an important paradigm shift of the global economy. It was surprising to see such large financial institution like Morgan Stanley and Lehman brothers which have survived some of the biggest threats of economy and related depression in this century, are not able to survive through the credit crunch . Now that a systematic help is assured from the end of Government , it is worth to reflect that are this financial institution are fundamentally sustainable .
The foundation of sustainable business is holistic in nature . It is not the narrow intention of money multiplication that can make a sustainable business . Money multiplication is obviously one important thing , but we have to understand that Money is the means of exchange . It is nothing more than that ,nothing less than that. The sum total of Global money symbolizes the availability of Global resources in forms of products and services to all humanity . That's why we cannot narrow down our focus an dissect multiplication of money out from the Global resource availability and build stand alone financial products which just multiplies the currency notes without looking at the available resource pool. Most of this financial institution have just done that . They narrowed down their focus into just money and build instruments of money multiplication which has nothing to do with Global resource availability.
They have forgotten the holistic element of money and the important connect of multiplication with Global resource pool ,and that's why the value of their assets evaporated very fast . The foundation of sustainable business is on 'connected money' ,in India which is known as 'Artha'. Artha fundamentally doesn't means money only. Currency or money is the outer expression of the concept of artha. But 'Artha' is much larger concept , which indicates good governance that satisfies the subjects, with productivity that uplifts society, and is friendly to environment .
Artha is the holistic concept of money ,which makes a business sustainable as it is based on the idea that currency is an exchange mechanism of the available goods and services . It is not a smart de-risking technology, where you make layers of movement of money and growth without the growth of the gross productivity alongwith services and products that reflects that .
The element of good corporate governance which involves upliftment of society and friendliness with environment, that's why is the important foundation to make sustainable business.
The foundation of sustainable business is holistic in nature . It is not the narrow intention of money multiplication that can make a sustainable business . Money multiplication is obviously one important thing , but we have to understand that Money is the means of exchange . It is nothing more than that ,nothing less than that. The sum total of Global money symbolizes the availability of Global resources in forms of products and services to all humanity . That's why we cannot narrow down our focus an dissect multiplication of money out from the Global resource availability and build stand alone financial products which just multiplies the currency notes without looking at the available resource pool. Most of this financial institution have just done that . They narrowed down their focus into just money and build instruments of money multiplication which has nothing to do with Global resource availability.
They have forgotten the holistic element of money and the important connect of multiplication with Global resource pool ,and that's why the value of their assets evaporated very fast . The foundation of sustainable business is on 'connected money' ,in India which is known as 'Artha'. Artha fundamentally doesn't means money only. Currency or money is the outer expression of the concept of artha. But 'Artha' is much larger concept , which indicates good governance that satisfies the subjects, with productivity that uplifts society, and is friendly to environment .
Artha is the holistic concept of money ,which makes a business sustainable as it is based on the idea that currency is an exchange mechanism of the available goods and services . It is not a smart de-risking technology, where you make layers of movement of money and growth without the growth of the gross productivity alongwith services and products that reflects that .
The element of good corporate governance which involves upliftment of society and friendliness with environment, that's why is the important foundation to make sustainable business.
Thursday, October 2, 2008
Built to Last - Business Plan for Enviromentally Sustainable Business
Business and Financial institutions (FIs) are under closer scrutiny than ever before. Investors and regulators are increasingly asking challenging questions about corporate governance, the social and environmental impacts of operations and investments and how business support their local communities.
Answering these questions is not easy and requires organizations to change policies and practices. This may seem a daunting task.The best place to handle the concerns is having proper planning provision on the business plan itself and allocating expenses for the regulatory scrutiny and turning regulation as a opportunity of growth in new segments.
This seems to be the best way to make business sustainable .
Monday, September 29, 2008
Business Planning in Software Industry
Business Planning is a very regular activity in both off-the-self and custom software Industry. The present fall down of the global financial institute , would definitely lead to contraction of the market on terms of value and growth . As, all financial instruments heavily used both custom and off-the-self software to get their solutions to customer.
Custom and off-the-self Industry background :
Custom and off-the-self Industry background :
The custom software industry grew rapidly during the tech boom of the late 1990's. When the economic downturn hit, however, business spending on equipment and software contracted even more than the overall economy. Business spending on computer equipment and software rose 6.4 percent in 2003, eight percent in the first quarter of 2004, and ten percent in the second quarter. Unlike the prepackaged software industry, which sells to consumers as well as corporate users, the custom software industry relies almost exclusively on corporate demand.
Whether demand for custom software services will continue to rise is far from certain. The present financial crisis is leading to lot of problems in custom software industry. Consumer confidence is declining, as is the rate of job creation. As businesses become more uncertain of the economic climate, they will be likely to control spending and be less likely to initiate new information technology projects. Businesses may be expected to continue to invest in ongoing IT projects and new projects that they believe will help them reduce costs or gain a competitive edge.
Seeking New Markets
In order to remain competitive, the custom software industry must expand into new markets. Fortunately, as long as the business world continues to grow and change, there will be a demand for new systems to keep up with the demands of the current business climate. New challenges facing the business world are often new opportunities for the custom software industry.
One challenge facing the corporate world is the increase of government regulation in the wake of recent accounting scandals. Compliance requirements with new Federal and state regulation can be expected to drive capital spending in the information technology fields of data storage, automation, architecture, and services. New regulations require companies to not only store data for several years, but to be able to retrieve the records quickly at the request of a regulator or auditor. While the regulations rarely require specific technologies, compliance essentially demands sophisticated programs for indexing, tracking, archiving, backup, and retrieval. Many companies are turning to customized software solutions to meet these demands.
Another market opportunity for the industry is the rise of consumer-driven healthcare (CDH), a concept in which consumers make more choices in their healthcare and health coverage. For example, under the CDH paradigm it is sometimes possible that a prescription for a given drug may be charged as either a preventive drug or a treatment for a chronic condition, with the medical coverage being different for each option. The consumer would make the choice, which would need to be tracked by either the consumer's employer of care provider.
Employers instituting more consumer-centric initiatives into their employee health care programs will need to make a number of strategic, operational, and IT decisions. The CDH market has a wide range of variation among regional and employer-specific models, making it ideal for providers of customized information technology solutions. It's also a developing market with little standardized software support in place. Even as prepackaged software solutions are developed for the CDH market, it is likely that they will need to be complimented by custom development in order for companies to create a total IT solution.
Competing with Off-the-Shelf Software
Prepackaged business management software has grown more sophisticated, providing more competition to the custom software industry. Prepackaged software is generally less expensive to acquire and requires less time to implement.
There are still advantages to having custom designed software. Few companies require all the features and functionality that come with off-the-shelf software and often end up adapting the software package to their needs. In many cases, a smaller, simpler application designed to meet the company's needs is more efficient.
Businesses must weigh the pros and cons of each option. Some companies argue that using packaged software forces workers to adopt standard processes that improve overall business performance. Others argue that if the company must change the way it operates to fit a prepackaged software model, such a change may rob it of its competitive advantage.
Conclusion
While economic indicators are uncertain, corporations will likely remain cautious about new information technology projects and investments. It is likely that demand for custom software development will continue, however, as corporations strive to meet new regulatory and business challenges.
Business Plan Editing - Adding the Believability factor
The most important factor of a Business Plan is believability. Infact, that is what Business editors has to focus, very extensively, to write a successful business plan . Often the entrepreneurs write that their products or services are best in the market . However , adding an authority, who is saying that same statement , will add a lot of believability on the plan. Even if the endorsement is not from an authority, mentioning some third person also creates a certain form of believability .Business editors has to realize the fact that any form of endorsement, creates a positive impact in the mind of investors.
Sunday, September 21, 2008
Could CFO forecast Credit Crisis ?
It is expected from a Chief Financial officers to forecast the economic trends and prepare for the worse . However , present Credit Crisis , has put a question mark on the job of high profile CFO's, while the large scale global financial corporation, are all in problem .
Though only CFO can not be blamed for the entire soup . There are other factors too. The overly complicated financial instruments which are existing in the market , on which everybody understands that nobody understands, is a reason of concern too.
However, most of the CFO's, pretty well understand there companies financial statements.The problem here is little different . As still,there is a lack of understanding of how the number in the corporate books have relation with the overall figures, existing in National and Global context.
This relation is something which the high profile financial professionals have failed to understand which has deeper cause of such magnimous level of global financial crisis.
Though only CFO can not be blamed for the entire soup . There are other factors too. The overly complicated financial instruments which are existing in the market , on which everybody understands that nobody understands, is a reason of concern too.
However, most of the CFO's, pretty well understand there companies financial statements.The problem here is little different . As still,there is a lack of understanding of how the number in the corporate books have relation with the overall figures, existing in National and Global context.
This relation is something which the high profile financial professionals have failed to understand which has deeper cause of such magnimous level of global financial crisis.
Planning for a Holding Company
A holding company is a company that owns part, all, or a majority of other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself, rather its only purpose is owning shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies. Sometimes a company intended to be a pure holding company identifies itself as such by adding "Holdings" or "(Holdings)" to its name, as in Sears Holdings.
There are obviously certain critical advantages , that a Holding company offers to its promoter. At times holding company stands as a parent company for a large conglomerate present in a multiple Industry . This certainly brings some form of focus in the overall strategic moves of the conglomerate which otherwise can loose its focus on the pressure of diversified operation.
So planning for a Holding company was done keeping different situation in mind . Recently , in Indian Banking sector ,it was seen, that two major banking conglomerate SBI and ICICI is looking for the holding companies structure, for the inherent benefit it brings in restructuring the strategic space.
On other cases , planning for a holding company could bring a strong positional advantage in a particular sector or sub sector. It is definite ,that the planning largely depends on the context of the Organizational and industrial environment.
There are obviously certain critical advantages , that a Holding company offers to its promoter. At times holding company stands as a parent company for a large conglomerate present in a multiple Industry . This certainly brings some form of focus in the overall strategic moves of the conglomerate which otherwise can loose its focus on the pressure of diversified operation.
So planning for a Holding company was done keeping different situation in mind . Recently , in Indian Banking sector ,it was seen, that two major banking conglomerate SBI and ICICI is looking for the holding companies structure, for the inherent benefit it brings in restructuring the strategic space.
On other cases , planning for a holding company could bring a strong positional advantage in a particular sector or sub sector. It is definite ,that the planning largely depends on the context of the Organizational and industrial environment.
Friday, September 19, 2008
New age of learning
Technology is redefining the scope of learning . Just in time learning is become more common place. The human society is moving in a lighting speed to a zone where learning would become as pervasive as it can. In future we could have robotic angels who would deliver us whatever we want to learn at any point of time.
Until we reach there, there is WiZiQ, an educational auction service from Educomp, which helps teachers to offer there services to the students. Its free . Earlier there was dimdim which had also the integrated conference framework which was also free, compare to WebEx .I have used WebEx , I have used DimDim and also WiZiQ . I could only say the things are really getting better and better, in the syncrhonous elearning space .
Lately , there was also concept of Semantic learning and Mobile learning . I published a research proposal on semantic learning 2 years back , when people where not talking about semantics so much as it is now . The paper was published by idealist.
http://www.ideal-ist.net/Countries/IN/PS-IN-406/?searchterm=PS-%20IN-406
At, that point , I conceived about the same angel, who would, deliver us whatever we want to learn at any point of time, through the semantic web reskiller.
Until we reach there, there is WiZiQ, an educational auction service from Educomp, which helps teachers to offer there services to the students. Its free . Earlier there was dimdim which had also the integrated conference framework which was also free, compare to WebEx .I have used WebEx , I have used DimDim and also WiZiQ . I could only say the things are really getting better and better, in the syncrhonous elearning space .
Lately , there was also concept of Semantic learning and Mobile learning . I published a research proposal on semantic learning 2 years back , when people where not talking about semantics so much as it is now . The paper was published by idealist.
http://www.ideal-ist.net/Countries/IN/PS-IN-406/?searchterm=PS-%20IN-406
At, that point , I conceived about the same angel, who would, deliver us whatever we want to learn at any point of time, through the semantic web reskiller.
Wednesday, September 17, 2008
Australia and Newzealand experiences currency rebound
The Australian and New zealand dollars rallied against the U.S. and Japanese currencies after the U.S. government agreed to take over American International Group Inc. to save it from collapse.
The South Pacific currencies, favorites of so-called carry trades, rose as the government agreed to lend as much as $85 billion to the country's biggest insurer and Barclays Plc, the U.K.'s third-biggest bank, agreed to acquire the North American investment-banking unit of Lehman Brothers Holdings Inc.
With the AIG news this morning and the Barclays news make the International market,a better risk environment,which led to the recovery Aussie and kiwi currencies.
The Australian dollar rose 1.2 percent to 80.04 U.S. cents at 5:05 p.m. in Sydney from 79.08 cents late in Asia yesterday. It climbed 2.8 percent to 84.70 yen from 82.38 yen yesterday.
The New Zealand dollar gained 1.9 percent to 66.43 U.S. cents from 65.21 cents late in Asia yesterday. It bought 70.29 yen from 67.91.
The currencies rose amid reports that the AIG agreement will avert a failure that could have threatened more financial companies and added to chaos in world markets.
The New Zealand dollar yesterday dropped to the weakest in more than four years against the yen and Australia's slid to a 2 1/2-year low as a global stocks rout curbed demand for the nations' higher-yielding assets.
The New Zealand dollar rebounded off its lows in line with the recovery in U.S. equity markets amid hopes that government authorities will take action to prevent a systemic failure of the banking system.
The Australian currency has fallen 19 percent against the dollar since reaching a 25-year high on July 16 and 17 percent versus the yen.
Global growth expectations are being revised down a bit and so are expectations for many commodity prices, and our currency is usually affected by changes in sentiment there'.
Interest rates are 7 percent in Australia and 7.5 percent in New Zealand, making them favorites with investors seeking higher returns.
Still the Bond market seems to be failing in Both Australia and NewZealand.
In carry trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits.
Australian government bonds fell. The yield on the 10-year note rose 12 basis points, or 0.12 percentage point, to 5.57 percent. The price of the 5.25 percent security maturing in March 2019 fell 0.942, or A$9.42 per A$1,000 face amount, to 97.485. Bond yields move inversely to prices.
New Zealand's two-year swap rate, a fixed payment made to receive floating rates, rose to 6.89 percent, from 6.8 percent yesterday.
Tuesday, September 16, 2008
The Trend of Mass customisation in Apparel Industry
The Apparel industry is going through a new phase of mass customization by using web technologies . The user can design his own apparel and t-shirts and whatever he wants to wear. The new trend is to switch from mass production to custom-fit (personal) production.
Using this method, manufacturers can rapidly produce models with the customer's body measurements. Internet based models are used to help customers and manufacturers for custom-fit production. Customers can generate different models using reusable components that are provided from related apparel manufacturer via the Internet. Customers can also easily take their body measurements with this tool.
The idea is to prepare user-friendly software for having customer's own designs with proper body measurements in their houses via personal computers and other communication appliances. To create a cost-effective solution in custom-fit (personal) production, Internet infrastructure is proving itself the best choice.
Using this method, manufacturers can rapidly produce models with the customer's body measurements. Internet based models are used to help customers and manufacturers for custom-fit production. Customers can generate different models using reusable components that are provided from related apparel manufacturer via the Internet. Customers can also easily take their body measurements with this tool.
The idea is to prepare user-friendly software for having customer's own designs with proper body measurements in their houses via personal computers and other communication appliances. To create a cost-effective solution in custom-fit (personal) production, Internet infrastructure is proving itself the best choice.
Monday, September 15, 2008
Market Research ; The Building block of a Business Plan
Last year in Octobor, I was into a TiE Networking meet in kolkata. I met a fellow gentleman who raised financed few days back ,at that point of time . He made a very interesting remark about why some business plan are funded and some are not .
He mentioned that normally a business plan made by an entreprenuer is inside-out, which articulates an entreprenuer passion, over the vision of his business. So, it talks about his aspiration to start a business, and which oppurtunity he can handle comfortably. However , in general, the plans which are funded are opposite way . The funded plan talks about a market oppurtunity first, and then elaborates it, and justifies that how the said business could comfortably, handle the market oppurtunity.
I cannot agree with him more . This is the reason , I think Market Research, is the building block of any business plan . Infact , it is orginal research ( known as primary research) which creates orginal data, can show the reliabile justification to the investor, that how the business could make a difference with his money, and give him 5x-10x return.
He mentioned that normally a business plan made by an entreprenuer is inside-out, which articulates an entreprenuer passion, over the vision of his business. So, it talks about his aspiration to start a business, and which oppurtunity he can handle comfortably. However , in general, the plans which are funded are opposite way . The funded plan talks about a market oppurtunity first, and then elaborates it, and justifies that how the said business could comfortably, handle the market oppurtunity.
I cannot agree with him more . This is the reason , I think Market Research, is the building block of any business plan . Infact , it is orginal research ( known as primary research) which creates orginal data, can show the reliabile justification to the investor, that how the business could make a difference with his money, and give him 5x-10x return.
Sunday, September 14, 2008
Doing Business in India
Recent World Bank Study on "Doing Business 2009" has ranked India 122 on the ease of doing business . The rank of India has increased by 2 points, from the earlier rank of 120 in 2008.The report mentions that India significantly reformed on the trade between borders and usage of information technology on providing citizen services.
More regulatory reforms were recorded worldwide between June 2007 and June 2008 than in any previous year, according to Doing Business 2009. For the fifth year in a row, Eastern Europe and Central Asia led the world in Doing Business reforms. Once again, Singapore tops the rankings, followed by New Zealand, the United States, and Hong Kong, China.
This year's top reformer is Azerbaijan.It improved on 7 out of 10 of the indicators tracked by DB and moved up 64 slots in the overall rankings.
More regulatory reforms were recorded worldwide between June 2007 and June 2008 than in any previous year, according to Doing Business 2009. For the fifth year in a row, Eastern Europe and Central Asia led the world in Doing Business reforms. Once again, Singapore tops the rankings, followed by New Zealand, the United States, and Hong Kong, China.
This year's top reformer is Azerbaijan.It improved on 7 out of 10 of the indicators tracked by DB and moved up 64 slots in the overall rankings.
Saturday, September 13, 2008
Common sense is not common
I was having a detailed discussion with a startup entrepreneur . He has a good model along with brilliant set of products and services . Now, these products and services had a deeper inter-relation and represents a particular category of business domain . This eventually makes him a niche owner . However , I observed, that the ownership of the niche was accidental rather than intentional. So , the entrepreneur completely unaware of the niche he has created , which had a larger market potential is averse towards scaling and better monetisation of the business .
To get a niche , and then focusing on the niche to scale the model to create better monetisation is the most common sense thing to do. However , most of the startup entrepreneur having used to 'do it myself ' attitude, sometimes stops his enterprise, to move into the next level growth. It's like those parents , who find it hard to loose themselves in the growth process of the child, and step back for sometime , that the child takes more responsibility.
Infact ,I created some opportunities for this startup entrepreneur, that he can move in the next level of growth . But his operational psyche is stopping him to take an strategic role , which can lead his enterprise in next levels of growth.
Common sense is really uncommon.
To get a niche , and then focusing on the niche to scale the model to create better monetisation is the most common sense thing to do. However , most of the startup entrepreneur having used to 'do it myself ' attitude, sometimes stops his enterprise, to move into the next level growth. It's like those parents , who find it hard to loose themselves in the growth process of the child, and step back for sometime , that the child takes more responsibility.
Infact ,I created some opportunities for this startup entrepreneur, that he can move in the next level of growth . But his operational psyche is stopping him to take an strategic role , which can lead his enterprise in next levels of growth.
Common sense is really uncommon.
Wednesday, September 10, 2008
Particle physics to Business Continuity planning
Thank God !! The greatest experiment of science, to unveil the mysteries of universe , is found to be safe . Yes , the 'safe' is the key word for the multibillion dollar project, as many feared that it could create some black holes, while the subatomic particles collide in the Large Hadron Collider, which could eventually create a lot of natural calamities to earth.
Though there is no such devastating natural calamities as thought by some people , however there was a strong earthquake in Iran, around the same time. Perhaps it could have no relation with the experiment .
Not much is known about the 'Higges boson' known as God's particle and the field it creates. Getting more clarity on the Higges mechanism was the principle objective of this large scale research .
But what if there are more dimensions then are our regular conception of 3 dimensional space backed by one dimensional time . Scientist expect to find new dimensions also, when this subatomic particle meets in the speed of light . If that dimension , is non-local, then obviously there can be effect of such experiment into geographically distant zones , where strong evidential relationship could not be found.
At times , I have seen these same phenomenon while developing a Business Continuity plan. There might be datas which are entitled into two seperate categories, and who don't have any oppurtunities to establish any kind of formal relationship . Still ,all of a sudden , when our Business intelligence moves in higher plane, the relationship which is so uncommon ,looks very common . This is the starting point of innovation, where a Entreprenuer gets a intuitive revelation to work in a vision which apparently looks impossible. A new pattern gets created in a disruptive fashion. That is somewhere , a relation could be found with the act of Business strategising, and finding substructures of subatomic particles alongwith thier interplays.
Though there is no such devastating natural calamities as thought by some people , however there was a strong earthquake in Iran, around the same time. Perhaps it could have no relation with the experiment .
Not much is known about the 'Higges boson' known as God's particle and the field it creates. Getting more clarity on the Higges mechanism was the principle objective of this large scale research .
But what if there are more dimensions then are our regular conception of 3 dimensional space backed by one dimensional time . Scientist expect to find new dimensions also, when this subatomic particle meets in the speed of light . If that dimension , is non-local, then obviously there can be effect of such experiment into geographically distant zones , where strong evidential relationship could not be found.
At times , I have seen these same phenomenon while developing a Business Continuity plan. There might be datas which are entitled into two seperate categories, and who don't have any oppurtunities to establish any kind of formal relationship . Still ,all of a sudden , when our Business intelligence moves in higher plane, the relationship which is so uncommon ,looks very common . This is the starting point of innovation, where a Entreprenuer gets a intuitive revelation to work in a vision which apparently looks impossible. A new pattern gets created in a disruptive fashion. That is somewhere , a relation could be found with the act of Business strategising, and finding substructures of subatomic particles alongwith thier interplays.
Sunday, September 7, 2008
Strategies and tactics : How they differ ?
1.0 The Difference of Strategy and Tactics
Strategies are different from tactics . One is more holistic in nature and the other is reductionist. The most important differences of strategy and tactics are given below :
1.1 Strategies are proactive and tactics are reactive.
1.2. Strategies are internal in source and the business venture has absolute control over their application.
1.3. Strategy can only be applied once, after that it is process of application, with no unique element remaining.
1.4. The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc.
2.0 The Content of Strategic Planning
Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions:
2.1 "What do we do?"
2.2 "For whom do we do it?"
2.3 "How do we excel?"
The most important aspect of strategic planning in Business is how do we beat the competition.In many organizations, Strategic plan is viewed as a process for determining where an organization is can survive competetion the next year or more -typically 3 to 5 years, although some extend their vision to 20 years. In business lingo this is referred as Sustainable Competitive Advantage.In order to determine where the organization is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. These analysis is the pretext of resulting document which we know as "strategic plan".
Saturday, September 6, 2008
Types of Business Plan
There can be two types of Business Plan - internal or external .
1.0 Externally Focused Plans
Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals.
1.1 For Profit
With for-profit entities, external stakeholders include investors and customers.
1.2 Non Profit
External stake-holders of non-profits include donors and the clients of the non-profit's services.
1.3 Government
For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.
2.0 Internally Focused Business Plan
Internally focused business plans target intermediate goals required to reach the external goals.
2.1 Revamping Systems
This business plans may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization.
2.2 Reviewing Performance
An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures.
2.3 Strategic Plans
Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.
1.0 Externally Focused Plans
Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals.
1.1 For Profit
With for-profit entities, external stakeholders include investors and customers.
1.2 Non Profit
External stake-holders of non-profits include donors and the clients of the non-profit's services.
1.3 Government
For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.
2.0 Internally Focused Business Plan
Internally focused business plans target intermediate goals required to reach the external goals.
2.1 Revamping Systems
This business plans may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization.
2.2 Reviewing Performance
An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures.
2.3 Strategic Plans
Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.
Friday, September 5, 2008
East Indian SME's
The entrepreneur and their SME's constitute an important part of the economy of
Given the critical nature of the entrepreneur to this region's economy there would be following measures taken to encourage the local climate of innovation.
1. Small Business and Entrepreneurship training institute should be started where grass root entrepreneurs can learn the basic business skills.
2. Government should help to encourage credit and lending for start-up companies.
3. Intellectual Property Rights (IPR) should be promoted and protected.
4 Red-tape should be reduced, single window system should be introduced.
5. Foreign investment should be facilitated; small companies can be service providers to foreign companies.
6. Infrastructure, connectivity enhanced.
7. Entrepreneurs should have facilities that can they rise up after failure . For this purpose,there is a need of
restructuring Bankruptcy laws .
8. Government should encourage entrepreneur to start export oriented units and provide necessary support in case
they where subject to Bad debts.
Thursday, September 4, 2008
Business Formulae
Once you find your own business formula , you can take you business in many levels . Its just like mathematics, where there is a importance of understanding the formula.In business, the business model is the formula. Further it is important to understand, how to apply that formula, to solve different Business problem.
I think,that is the Journey of Business , from idea to implementation.
I think,that is the Journey of Business , from idea to implementation.
Wednesday, September 3, 2008
Why do you need a Business Plan ?
There has been always a question in an Entrepreneurs mind that " Do I need a plan ? ". My answer is simple - Yes you need it . And these are reasons why you need it ?
Planning helps to focus and set the priorities right . Often, we find that startups gets overwhelmed, with issues popping one after another . That is where we need a plan, to keep ourselves focused and not get carried away.
Here is how a business plan helps
1. Creates focus in your mind .
2. Helps to define priorities
3. Take rational decision
4. Present the Business to different stakeholders
5. Have the grip in the Cash Flow of the Business
6. Rope in partners, investors , critical employees
Yes .. you need a plan in this complex economic structure of the globalized world to make your business successful .
Planning helps to focus and set the priorities right . Often, we find that startups gets overwhelmed, with issues popping one after another . That is where we need a plan, to keep ourselves focused and not get carried away.
Here is how a business plan helps
1. Creates focus in your mind .
2. Helps to define priorities
3. Take rational decision
4. Present the Business to different stakeholders
5. Have the grip in the Cash Flow of the Business
6. Rope in partners, investors , critical employees
Yes .. you need a plan in this complex economic structure of the globalized world to make your business successful .
The Export Scenario of Indian SMEs
Indian SMEs have achieved considerable progress in terms of growth of number of units, gross output, employment generation and exports, yet exports of manufactured goods from India India
It also needs to be emphasised that the modern sector of the Indian SMEs, which uses latest state-of-the-art technologies, has already developed a niche in establishing sound subcontracting arrangements among large enterprises in India
Indian SMEs have already attained a status, in terms of technologies and managerial skills, to enter into supply arrangements for a number of intermediate products to support the output of large industries at costs and standards which are internationally competitive. SME’s contribution to exports is significant, more than 50 percent including indirect exports. Their contribution is particularly phenomenal and more than 50 percent in marine products, processed foods, woollen garments and in traditional products.
Tuesday, September 2, 2008
Smaller enterprise are much greater in number
In most economies, smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition. Globally SMEs account for 99% of business numbers and 40% to 50% of GDP.
In India, SME constitute an important segment . The contribution of SSIs alone has been greater than 7% to GDP and 40% to Industrial production. It is the second largest provider of employment after agriculture. SMEs also contribute to 35% to total exports directly and a significant amount of exports indirectly through large trading houses or third parties. The SMEs are dominant players in some of India’s major export sectors namely Textiles and Garments, Leather products, Gems and jewelry, Handicrafts among others. They also contribute substantially in industrial goods segments in sectors such as electricals, engineering, rubber and plastics.
In India, SME constitute an important segment . The contribution of SSIs alone has been greater than 7% to GDP and 40% to Industrial production. It is the second largest provider of employment after agriculture. SMEs also contribute to 35% to total exports directly and a significant amount of exports indirectly through large trading houses or third parties. The SMEs are dominant players in some of India’s major export sectors namely Textiles and Garments, Leather products, Gems and jewelry, Handicrafts among others. They also contribute substantially in industrial goods segments in sectors such as electricals, engineering, rubber and plastics.
Addressing participants in the award ceremony for SME sector in 1st Sepetembor,2008, the Indian Prime Minister, Dr Manmohan Singh, elaborated the importance of the SME sector for employment generation.
"The very positive contribution that this sector makes to employment is of utmost importance to our vision of shared and equitable growth. This sector provides employment to over 42 million people. It contributes about 45 per cent of the total manufacturing output and nearly 40 per cent of India's exports. It is the capacity of this sector to generate economic activity at the local level that prompted Gandhiji to give the pride of place to Khadi. He dreamt of an India comprising of self contained villages using local raw materials, local skills, serving local markets and providing employment to people locally near the places where they live," said Singh.
The Prime Minister further elaborated the resilience and the adaptability of this sector in the wake of a changing economic scenario.
"This sector has shown continued dynamism in terms of growth in the number of enterprises, production and the capacity to contribute to manufacturing output and exports. There were apprehensions about the impact of liberalization on the growth of this sector. However, experience during the past decade has amply demonstrated that this sector cannot only survive competition, but can also grow faster than the overall manufacturing sector. This demonstrates the high degree of resilience, entrepreneurial skills and the capacity for adaptation of people operating in this important sector," he added.
This again shows the importance of the SME in the growth of Indian economy, and also its unique contribution on employment generation.Monday, September 1, 2008
New RBI Governer ? Good news for Indian SME ?
The RBI wants inflation down at 7 percent by the end of the 2008/09 fiscal year in March. It stepped up monetary tightening aggressively in June and July as inflation, driven by high fuel and commodity prices, headed for double digits.
The benchmark lending rate is at 9.0 percent, its highest in seven years, and the central bank has also tightened banks' reserve requirements to stop surplus cash stoking prices.
The effect of tightening monetary policy had directly fall on the interest rate of Loans where both SME's and household got effected. The tightening monetary policy has also showered its curse on the growth of the SME Sector.
While economists expected Dr. Subbarao to keep the central bank's anti-inflation stance with tightening monetary policy, as a Bank regulator it is yet to experience what would be his stance on opening up the Banking sector to more foreign Banks.
Further,there are real concerns about how he would handle the relationship between the finance ministry and the central bank as the government heads towards national polls due by May, with India's budget pressured by subsidies and policies such as a loan waiver for poor farmers.
While the central bank has gained greater independence in recent years, the finance minister has often urged banks to keep their interest rates steady to ensure credit flow for development, even as the RBI was raising them.
Dr Subbarao's task will be tricky. Long term, the government wants the $1 trillion economy to grow 8-10 percent a year to reduce poverty and create jobs but it has slowed from annual rates of 9 percent or more in the past three years.At the same time, as elections loom, policy makers are concerned inflation will be a ballot box issue as it hits India's millions of poor the hardest.
The challenge is the growth rates have to go up to 10 percent to fight poverty and deprivation. At the same time, inflation will have to be kept under control given the political expectations in numerous elections coming up. Inbetween , Dr Subbha rao has to really do a lot of balancing act to make the both side of equation, in a stable condition. Once this balance is achieved , it could be really good news to SME's.
Sunday, August 31, 2008
Increasing sources of risk capital
Sources of risk capital is extremely limited in low income countries . Infact , that is the reason at first place , that those countries are denoted as low income countries. There should be an initiative taken to increase the supply of such financing .As , risk capital is the basis of entrepreneurial ecosystem in a particular domain and demography.
The Investor could invest by using an wholesale approach , establishing a private equity like vehicle which will be managed by Independent Investment Management Firms , which could be selected on a competitive basis. Thus it will develop the capacity of Investment manager to successfully invest risk capital in small business in low income countries.
The Investor could invest by using an wholesale approach , establishing a private equity like vehicle which will be managed by Independent Investment Management Firms , which could be selected on a competitive basis. Thus it will develop the capacity of Investment manager to successfully invest risk capital in small business in low income countries.
Saturday, August 30, 2008
Indian Mathematics in Vedic Period ( 1500 BCE -400 BCE)
Ancient Indians were involved in different forms of Mathematical study.The effort on understanding the deeper patterns of quantity,structure,space and change, in the Mathematical framework, reached its extremity in the Vedic period. Though there are other great Mathematicians who came after wards and followed the tradition.
The religious texts of the Vedic Period provide evidence for the use of large numbers . By the time of the last Veda, the Yajurvedasamhita (1200-900 BCE), numbers as high as 1012 were being included in the texts. For example, the Mantra (sacrificial formula) at the end of the annahoma ("food-oblation rite") performed during the asvamedha ("horse sacrifice"), and uttered just before-, during-, and just after sunrise, invokes powers of ten from a hundred to a trillion:
"Hail to śata ("hundred," 102), hail to sahasra ("thousand," 103), hail to ayuta ("ten thousand," 104), hail to niyuta ("hundred thousand," 105), hail to prayuta ("million," 106), hail to arbuda ("ten million," 107), hail to nyarbuda ("hundred million," 108), hail to samudra ("billion," 109, literally "ocean"), hail to madhya ("ten billion," 1010, literally "middle"), hail to anta ("hundred billion," 1011, lit., "end"), hail to parārdha ("one trillion," 1012 lit., "beyond parts"), hail to the dawn (uśas), hail to the twilight (vyuṣṭi), hail to the one which is going to rise (udeṣyat), hail to the one which is rising (udyat), hail to the one which has just risen (udita), hail to the heaven (svarga), hail to the world (loka), hail to all."
The religious texts of the Vedic Period provide evidence for the use of large numbers . By the time of the last Veda, the Yajurvedasamhita (1200-900 BCE), numbers as high as 1012 were being included in the texts. For example, the Mantra (sacrificial formula) at the end of the annahoma ("food-oblation rite") performed during the asvamedha ("horse sacrifice"), and uttered just before-, during-, and just after sunrise, invokes powers of ten from a hundred to a trillion:
"Hail to śata ("hundred," 102), hail to sahasra ("thousand," 103), hail to ayuta ("ten thousand," 104), hail to niyuta ("hundred thousand," 105), hail to prayuta ("million," 106), hail to arbuda ("ten million," 107), hail to nyarbuda ("hundred million," 108), hail to samudra ("billion," 109, literally "ocean"), hail to madhya ("ten billion," 1010, literally "middle"), hail to anta ("hundred billion," 1011, lit., "end"), hail to parārdha ("one trillion," 1012 lit., "beyond parts"), hail to the dawn (uśas), hail to the twilight (vyuṣṭi), hail to the one which is going to rise (udeṣyat), hail to the one which is rising (udyat), hail to the one which has just risen (udita), hail to the heaven (svarga), hail to the world (loka), hail to all."
This shows the rigor on the collective study on Mathematics in the Vedic Age, which is prominently known for its spiritual study.Further, Satapatha Brahmana (9th century BCE) contains rules for ritual geometric constructions that are similar to the Sulba Sutras.
The Sulba Sutras (literally, "Aphorisms of the Chords" in Vedic Sanskrit ) (c. 700-400 BCE) list rules for the construction of sacrificial fire altars. Most mathematical problems considered in the Śulba Sūtras spring from "a single theological requirement," that of constructing fire altars which have different shapes but occupy the same area. The altars were required to be constructed of five layers of burnt brick, with the further condition that each layer consist of 200 bricks and that no two adjacent layers have congruent arrangements of bricks.
According to ( Hayashi 2005 p. 363), the Śulba Sūtras contain "the earliest extant verbal expression of the Pythagorean Theorem in the world."
"The diagonal rope (akṣṇayā-rajju) of an oblong (rectangle) produces both which the flank (pārśvamāni) and the horizontal (tiryaṇmānī)
produce separately."
Since the statement is a sūtra, it is necessarily compressed and what the ropes produce is not elaborated on, but the context clearly implies the square areas constructed on their lengths, and would have been explained so by the teacher to the student.They contain lists of Pythagorean triples , which are particular cases of Diophantine equations . They also contain statements (that with hindsight we know to be approximate) about squaring the circle and "circling the square."
Baudhyana (c. 8th century BCE) composed the Baudhayana Sulba Sutra, the best-known Sulba Sutra, which contains examples of simple Pythagorean triples, such as: (3,4,5), (5,12,13), (8,15,17), (7,24,25), and (12,35,37) as well as a statement of the Pythagorean theorem for the sides of a square: "The rope which is stretched across the diagonal of a square produces an area double the size of the original square." It also contains the general statement of the Pythagorean theorem (for the sides of a rectangle): "The rope stretched along the length of the diagonal of a rectangle makes an area which the vertical and horizontal sides make together."
In all three Sulba Sutras were composed. The remaining two, the Manava Sulba Sutra composed by Manava (fl. 750-650 BCE) and the Apastamba Sulba Sutra, composed by Apastamba (c. 600 BCE), contained results similar to the Baudhayana Sulba Sutra.
The tradition Sulba Sutras also proved the fact that the religious ritual carried out in the Vedic times had wide usage mathmetical principals for perfecting the material requirement of the rituals.
Friday, August 29, 2008
SME finance gap - The reason SME requires to build good Business Plan
A substantial portion of the SME sector may not have the security required for conventional collateral based bank lending, nor high enough returns to attract formal venture capitalists and other risk investors. It stands in between the two extreme zone of risk averse investment and risk prone investment. In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring). This has led to claims of an "SME finance gap" – particularly in emerging economies.
There have been at least two distinctive approaches to try to overcome the so-called SME finance gap.
The first has been to broaden the collateral based approach by encouraging bank lenders to finance SMEs with insufficient collateral. This might be done through an external party providing the collateral or guarantees required. Still ,it is seen that, to convince both the external party and the Bank , SME would require good business plan .
The major obstacles a SME faces are mainly in the form of:
- lack of satisfactory business plans, accounting and other information;
- inadequate assets for use as security; and
- insufficiently high levels of profitability, gearing, liquidity, stability, and other business-financial performance criteria on the part of funding applicants.
The second approach has been to broaden the viability based approach. Since the viability based approach is concerned with the business itself, the aim has been to provide better general business development assistance to reduce risk and increase returns. This often entails a detailed review and assistance with the funding agency.
A common aim or feature of the viability based approach is the provision of appropriate finance that is tailored to the cash flows of the SME.
Although the returns generated by this approach in less developed countries may never be attractive to Western venture capitalists, they can be significantly better than conventional collateral based lending – whilst at the same time being less risky than the typical venture capitalist project. Some investors have promoted this approach as a means of achieving wider social benefits, while others have been interested in developing it largely in order to generate better financial-economic returns for shareholders, other investors, employees, and clients.
In the past, a significant obstacle to applying this approach in less developed countries has been getting the information required to assess viability plus the costs of transferring and providing business development assistance. However, in the last several years improved information and communications technology have made the process easier and cheaper. As technology and information sharing etc. continue to improve, the approach could become significantly more cost-effective and attractive to established financiers with viability based approaches and to consultants providing business plan development assistance to SMEs in other, more mainstream areas.
With higher profitability than traditional SME finance and lower risk than traditional venture capital, this might even be dubbed the new "Growth finance sector".
Wednesday, August 27, 2008
Emerging Market , Private Equity , International Financial Corporation
Emerging market is a new destination for successful PE funds. Most of the SME of Emerging Asian market is drawing a substantial ammount of PE funds. At the same time,Private equity is becoming an increasingly important sector globally, in emerging markets. In fact, the past year was a remarkable one for emerging markets private equity: fund raising for the asset class tripled, driven largely by a strong rise in exits and cash returned to international investors. The numbers were up for all regions.
Perhaps even more telling, the picture that is taking shape today is fundamentally different from before: private equity in emerging markets is no longer considered an exotic asset class. Private equity professionals are breaking down the borders of investing by bringing innovation in investment, and recognizing that globalization is transforming the private equity business.
Emerging market is also redefining International Financial Corporation (IFC) role in the sector
Over the past 20 years, IFC's had experienced that there is a strong relationship between fund performance and development impact, and that the quality of the fund manager is the main driver of performance. Consequently, IFC's current investment strategy for funds has a strong focus on experienced teams with a proven good track record. It also seeks managers who add commercial value to the companies in which they invest, rather than just supplying capital.
Agricultural Consumption in Power Sector of Haryana
HSEB found it increasingly difficult to meet the demand and provide adequate
supply of electricity: by 1997, the state witnessed a peak shortage of 11% and energy
deficit of 25%. No generation capacity had been added within Haryana after 1990 and
the State became increasingly dependent on imported power. However, the
transmission system reportedly deteriorated over the years because of lack of adequate funds for expansion and rehabilitation and poor operational efficiencies.
The transformer failure rates were high due to overloading, the quality of power supply was poor and the non-technical losses were excessive.Financially, the HSEB was incurring huge losses. As of 31st March 1998, the accumulated financial loss had reached Rs. 16079.7 million and continued to grow due to non-remunerative tariffs, high technical and non-technical losses and poor revenue collection. HSEB’s poor financial health affected such basic functions as system maintenance, expansion and rehabilitation and led to large outstanding current liabilities.
At the same time the phenomenal growth in agriculture consumption is also a area of concern for HSEB as agricultural consumption was subsidized. The phenomenal growth is demonstrated by the growth in the number of electric pumps-sets/tube-wells. On March 31, 1970 the number of electric-operated tube-wells was 68,226. Within a decade this number rose to 204,340, representing a 300% growth in ten years. The number of agricultural connections grew further to 0.35 million by the early 1990s. Agricultural connected load has followed the same pattern of growth, registering an average increase of 8% per year between 1970 and 1990. Such a growth in the agricultural load is the result of a deliberate policy to promote agricultural production in the state through green revolution. It is interesting to note that between 1970 and 1990 the average pump size per connection, calculated from the connected load and the number of connections in a year, remained practically constant at about 4.7 kW per connection. Since then, the average connected load has increased continuously, reaching 5.8 kW per pump in March 2000.
Consequently, the electricity consumption increased from 1328 MU in 1982-83 to
2543 MU in 1989-90 and further to 4570 MU in 1999-2000.There are at least four main reasons for such a significant rise in the average estimated consumption per connection:
1) First, the number of unmetered connections has increased. At present, only about
20% of the agricultural connections have meters and even some of these meters are
defective. Consumption of unmetered connections and connections with defective
meters is estimated by the utility and it is a matter of debate whether the estimated
agricultural consumption is overstated.
2) Second, in absence of a meter, the consumer has the freedom to consume as much
power as he wishes and it is likely that he would consume much more than his metered
counterpart. The tariff differential between a metered connection and a flat rate
connection is such that a flat-rate connection becomes economically rational for a
consumer if he can consume much more power than a metered connection.
3) Third, the data on connected load may be inaccurate depending on whether or not
the records are updated by the utility. It is generally believed that flat rate consumers increase their pump size without declaring the higher pump rating, because their charges increase proportionately with the pump rating.
4)Fourth, irrigation requirement increases with need to increase in agricultural
production and area under irrigation. It can also increase as the ground water level falls.
All these factors could have influenced the electricity consumption in Haryana.
Unless meters are installed, the true consumption is difficult to establish.
supply of electricity: by 1997, the state witnessed a peak shortage of 11% and energy
deficit of 25%. No generation capacity had been added within Haryana after 1990 and
the State became increasingly dependent on imported power. However, the
transmission system reportedly deteriorated over the years because of lack of adequate funds for expansion and rehabilitation and poor operational efficiencies.
The transformer failure rates were high due to overloading, the quality of power supply was poor and the non-technical losses were excessive.Financially, the HSEB was incurring huge losses. As of 31st March 1998, the accumulated financial loss had reached Rs. 16079.7 million and continued to grow due to non-remunerative tariffs, high technical and non-technical losses and poor revenue collection. HSEB’s poor financial health affected such basic functions as system maintenance, expansion and rehabilitation and led to large outstanding current liabilities.
At the same time the phenomenal growth in agriculture consumption is also a area of concern for HSEB as agricultural consumption was subsidized. The phenomenal growth is demonstrated by the growth in the number of electric pumps-sets/tube-wells. On March 31, 1970 the number of electric-operated tube-wells was 68,226. Within a decade this number rose to 204,340, representing a 300% growth in ten years. The number of agricultural connections grew further to 0.35 million by the early 1990s. Agricultural connected load has followed the same pattern of growth, registering an average increase of 8% per year between 1970 and 1990. Such a growth in the agricultural load is the result of a deliberate policy to promote agricultural production in the state through green revolution. It is interesting to note that between 1970 and 1990 the average pump size per connection, calculated from the connected load and the number of connections in a year, remained practically constant at about 4.7 kW per connection. Since then, the average connected load has increased continuously, reaching 5.8 kW per pump in March 2000.
Consequently, the electricity consumption increased from 1328 MU in 1982-83 to
2543 MU in 1989-90 and further to 4570 MU in 1999-2000.There are at least four main reasons for such a significant rise in the average estimated consumption per connection:
1) First, the number of unmetered connections has increased. At present, only about
20% of the agricultural connections have meters and even some of these meters are
defective. Consumption of unmetered connections and connections with defective
meters is estimated by the utility and it is a matter of debate whether the estimated
agricultural consumption is overstated.
2) Second, in absence of a meter, the consumer has the freedom to consume as much
power as he wishes and it is likely that he would consume much more than his metered
counterpart. The tariff differential between a metered connection and a flat rate
connection is such that a flat-rate connection becomes economically rational for a
consumer if he can consume much more power than a metered connection.
3) Third, the data on connected load may be inaccurate depending on whether or not
the records are updated by the utility. It is generally believed that flat rate consumers increase their pump size without declaring the higher pump rating, because their charges increase proportionately with the pump rating.
4)Fourth, irrigation requirement increases with need to increase in agricultural
production and area under irrigation. It can also increase as the ground water level falls.
All these factors could have influenced the electricity consumption in Haryana.
Unless meters are installed, the true consumption is difficult to establish.
Subscribe to:
Posts (Atom)