MANAGEMENT is efficiency in climbing the ladder of success; LEADERSHIP determines whether the ladder is leaning against the right wall - Stephen Covey

Tuesday, September 27, 2005

Making India a Global Hub

India fever is spreading in the world's investment community. The Western press rarely mentions that certified growth miracle, that leviathan of global trade—China—without adding "and India." In an admittedly unscientific test, a Google search reveals over 10 times more references linking "India" and "China" than "India" and "tiger" and 100 times more than "India" and "maharaja." But amid all the hoopla, it is well worth asking whether India is really ready to play a central role in the global economy. Instead of going through the familiar litany of strengths and weaknesses, it would be useful to pose the question in a different way: does India have the mind-set it needs to be a player in a globally integrated economy?
Mind-set is a difficult concept, and even more so when we speak of a nation's mind-set. But it does seem that there are times when a nation feels confident that it can take on the world, meet any challenge, and achieve any dream. If properly channeled, this spirit can be an enormous aid to growth. In some ways, India is well prepared to be a global hub. It has a multicultural, multiethnic society with a vibrant democracy and a free press that readily exposes its shortcomings. That being said, India is still not as open to foreign goods and services, labor, or knowledge as it should be. On the International Monetary Fund's trade restrictiveness index, India has a score of 8 out of 10, which places it among the most restrictive countries.
Well, why on earth should India be so closed an economy? (Well, did i hear someone say "Dammit we have opened up for the past decade or so")..... but i truly believe results have to speak for themselves. I strongly believe that this slow & sluggish growth coupled with political bureaucracy would definitely not incite the attention of foregin investors in core sectors and therefore I feel that a lot of homework needs to be done by the Indian Govt....wake up guys! Better late than never!

The Essence of Leadership

I jus read this article from HBS Working Knowledge website & thought i could share it with ROW (Rest of the World). Hope u enjoy reading it as much as i did. Click on this link to view this article

Sriram mentioned at Trevors' Blog

Click on the below link to see Trevors' mention about Sriram.

Sriram says: "I sincerely hope to live upto Trevors' expectation & with the rest of the world in KISS (Keep it Simple Stupid!)"

Friday, September 23, 2005

Balanced Scorecard

When Robert Kaplan and David Norton published “The Balanced Scorecard: Measures that Drive Performance” in the Harvard Business Review in 1992, the idea of measuring business performance from financial and nonfinancial perspectives was novel. Their original balanced scorecard significantly advanced the notion that effective performance measurement must provide a view of both. Today, the balanced scorecard is one of the most widely used and hotly debated management tools in the executive arsenal. Countless permutations of the original Kaplan and Norton framework, in an equally varied multitude of applications, have been tried by all kinds of organizations. Although the original balanced scorecard concept was meant to assess the health of an entire business, the basic concept has been adapted to fit business units and support organizations. When it works, the scorecard is a powerful resource to help executives understand past and current performance, and plan for the future.
Do scorecards fail?
As is the case with any business tool, however, the scorecard is not a magic wand; its value depends heavily on how it is implemented and an incorrect / careless implementation could take the organization for a ROYAL RIDE!

The New CFO Agenda

Linking finance with strategy leads to an integrated and transformative role for the 'new-age' Chief Financial Officer in terms of pursuing the long-term goals of the organization, not just the quarterly bottom line. But, i would like to know how many CFOs are willing to change and how many organizations want their CFOs to change? Looks like there has always been a bias towards "hard-core" accounting and finance rather than truly understanding the business (actually the term business accountant is THE WORD than mere accountant!). For me, accountant is jus another BEANCOUNTER! was always called that and will continue to be called so unless he / she is willing to change for the better in terms of combining financial & accounting skills with BUSINESS acumen.....well, do u guys think that if the BUSINESS doesnt exist, would the accountant exist?? Maybe, its high & wild time for accountants (a.k.a. beancounters!) to hone skills in the right direction and get relevant! Better late than never! Amen!

Transparency is essential to risk assessment

Disclosure and transparency are the partners of good governance. They demonstrate the quality and reliability of information -- financial and non-financial-- provided by management to lenders, shareholders, and the public.
a) Empirical evidence indicates that high standards of transparency and disclosure can have a material impact on the cost of capital.
b) Reliable and timely information increases confidence among decision-makers within the organization and enables them to make good business decisions directly affecting growth and profitability.
c) Information also affects decision makers outside the entity--shareholders, investors and lenders-- who must decide where and at what risk to place their money.
d) The information a company provides should show decision-makers and outside interests whether and to what extent corporations meet legal requirements.
e) Disclosure helps public understanding of a company's activities, policies and performance with regard to environmental and ethical standards, as well as its relationship with the communities where the company operates.
f) Disclosure and transparency, as well as proper auditing, serve as a deterrent to fraud and corruption, allowing firms to compete on the basis of their best offerings and to differentiate themselves from firms who do not practice good governance.
g) Research has demonstrated that disclosure and transparency also enhance stock market liquidity.

Thursday, September 22, 2005

The Best of Steve Jobs

The following is an abstract from a Tom Peters presentation
Reproduced below is a set of quotes by Steve Jobs (Founder Apple Inc)....I found them to be so true & fitting!
1. “Sometimes life hits you in the head with a brick. I’m convinced that the only thing that kept me going was that I loved what I did. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. Don’t settle [for less]. As with all matters of the heart, you’ll know when you find it.”

2. “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They some how already know what you truly want. Everything else is secondary.”

3. Stay Hungry. Stay Foolish.
Comments pls??

Wednesday, September 21, 2005

What Indian consumers want from banks?

A McKinsey survey highlights that India's retail-banking customers seem unreachable—hidden behind an impenetrable wall of loyalty to local banks and a general aversion to credit. This survey of urban banking consumers, however, shows that the most profitable and fastest-growing segments—the young and the relatively affluent—are quite willing to give foreign entrants a chance or maybe a run for their money. Multinational banks able to deliver quality service and a sophisticated portfolio of financial products might create an opening in this wall of loyalty and capture a share of India's fast-growing retail-banking market. Looks like banks (MNC & Indian ones) in India are going thro a phase of "biting the bullet"???? Hey, but one thing.....which other country offers such "thick spreads" as India for banks to make their money?? No wonder, we gotta whole host of MNC Banks out there waiting to grab a slice of the pie...all i hope is that the pie doesnt get smaller!!....I suppose u knw what i mean.

The Dangers of Over-Diversification

We’ve all heard the financial experts expound on the benefits of diversification and that a personal stock potfolio must be diversified to some degree; none of us wishes to “put all our eggs in one basket” and expose ourselves to the inherent risk of holding only one stock. But can you go too far in spreading your bet? It's important to remember that no matter how diversified your portfolio is, your risk can never be shrunk down to zero!
Many investors have the misguided view that risk is proportionately reduced with each additional stock in a portfolio, when in fact this couldn’t be farther from the truth. There is strong evidence that you can only reduce your risk to a certain point at which there is no further benefit from diversification. So, to conclude...its back to basics....dont put all ur eggs in one basket! - Does anyone dare to challenge this view????!!

It is better to be a dog in peaceful times than a man[ager] in chaotic periods

To paraphrase an old Chinese proverb, "It is better to be a dog in a peaceful time than be a man[ager] in a chaotic period." And if the recent spate of research about the looming demographic crisis in the World's leading economies is anything to go by, there will be plenty of managers who will be yearning after a dog's life rather than face dealing with the problems that lie just around the corner. According to consultants at Deloitte, impending baby boomer retirements, a widening skills gap and outdated approaches to talent management are combining forces to produce a "perfect storm" that threatens long-term business performance. "This trend will leave behind companies that do not begin to rethink their approach to talent management" What do u think?

Friday, September 16, 2005

Management Lesson!?

A young boy enters a barber shop and the barber whispers to his customer, "This is the dumbestkid in the world. Watch while I prove it to you.
"The barber puts a dollar bill in one hand and twoquarters in the other, then calls the boy over and asks, "Which do you want, son?" The boy takes the quarters and leaves.
"What did I tell you?" said the barber. "That kid never learns!"
Later, when the customer leaves, he sees the same young boy coming out of the ice cream store. "Hey,son! May I ask you a question? Why did you take the quarters instead of the dollar bill?" The boy licked his cone and replied, "Because the dayI take the dollar, the game's over!" - Whats the management lesson?

The board is key to good corporate governance

An effective board of directors, properly constituted, is the linchpin of good corporate governance. Boards are responsible for managerial performance in meeting the stated objectives of the corporation, compliance with applicable laws and regulations, and protection of shareholder rights.

How the board BE constituted
The board should be composed of qualified individuals of integrity with a diversity of experience. At a minimum, qualified means a good working knowledge of corporate finance. Each board member should be able to devote sufficient time to his/her duties and responsibilities

Boards should be composed of a substantial number of independent directors. Boards should disclose to their shareholders and stakeholders their criteria for independence. Board committees on compensation, audit, and nominating should consist only of independent directors. Executive sessions of the board should also be comprised only of independent directors.

For family-owned business, outside directors are essential to "ask the hard questions" of family owners, where the relationship between the business and the family may be blurred.

Board responsibilities SHOULD include:
1) Approve a core philosophy and mission
2) Monitor and evaluate corporate performance
3) Monitor and evaluate corporate strategy
4) Review and approve material transactions not in the course of ordinary business
5) Determine executive compensation
6) Evaluate senior management performance
7) Manage Executive Director/CEO succession
8) Maintain legal and ethical practices
9) Communicate with shareholders
10) Evaluate board performance

Why corporate governance matters

Sound corporate governance practices have become critical to worldwide efforts to stabilize and strengthen global capital markets and protect investors. They help companies to improve their performance and attract investment. Corporate governance enables corporations to realise their corporate objectives, protect shareholder rights, meet legal requirements and to demonstrate to a wider public how they are conducting their business.
Corporate governance is the relationship between corporate managers, directors and the providers of equity, people and institutions who save and invest their capital to earn a return.
It ensures that the board of directors is accountable for the pursuit of corporate objectives and that the corporation itself conforms to the law and regulations.
Premium for good governance
Research shows that investors from all over the world indicate that they will pay large premiums for companies with effective corporate governance. One such study conducted by The McKinsey Quarterly found that institutional investors in emerging market companies would be willing to pay as much as 30 percent more for shares in companies with good governance. Furthermore, it showed that companies with better corporate governance had higher price-to-book ratios, demonstrating that investors do indeed reward good governance.
Lower Borrowing Cost
The importance of corporate governance has been recognized by the financial sector - most recently, corporate governance practices are also being looked at by rating agencies, and they have an impact on the cost of capital.

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