Big Retailing - opportunities and threats ?? Indian context.

Retaling is a great business opportunity. For centuries we have had small businessmen selling their wares and provisions in villages, towns and cities and making a living. There are millions of them across the country. The breadwinner of these million households work on sub optimal efficiencies to manage the expenses of households and lead a moderately decent life. This disaggregation often necessitated by distances and times is ablessing factor for majority of Indians.

The big time retailers like Walmart, Tesco and so on, work on aggregating the geographically dispersed entities and provide economies of scale in purchase, transportation, storage and sale. Here is now they work.

Procurement : The big retailers are able to procure from cheap vendors in different parts of the country or for global sourcing vendors, from different countries leveraging on the cheap labour and availability of natural resources.

Transportation : They transport in containers and use multi-modal transport, plan for the most efficient mode of transport and thus leverage on the availability of cheap bulk transportaton modes.

Storage : Planning for centralized storages at critical and central locations, can help save costs of spreaded warehousing, security, inventory in these warehouses, though finally in case of damage, the extent of damages is more.

Sale : Having limited number of outlets offering good quality goods, at lower prices offsets the problems related to the geographic spread of the stores and the related travel. The retailer shelf is the final point of access for the end customer, the performance metric of fill rate is paramount over the geographical distance trvlled to reac this retail outlet.

Being big players, Walmart can armtwist their smalltime vendors into agreeing to lower prices for products. On the vendor's part, he is assured of volumes and less marketing effort and may eventually give in to the big retailer, even if it means lower margins. Vendors with excess capacity usually agree to this setup easier as it also assures them of optimal utilization of their capacities. Vendors planning to hit it big, will accept these conditions as they are assured of steady markets and growth of the industry, even though it means less returns over some extanded period of time.

The opportunities big retailing holds in the country is terrific. We are a country of 1.2 billion people and about half of them are in the major villages, towns and cities. The logistics advantages associated with these big retailers serving these urban customers translates into quick and large returns by way of profits and lower costs.

When the highly efficient big retailers establish themselves in the market, the conventional less eficient small players are wiped out of the market. These marginalised, dispossessed sections of the populations have to go through tough times, individually and for their families. But the flip side of this dispossession is the opening up of opportunities to set up service centres / providing small logistics supporting facilities etc to the majoer players and thus helping in the overall efficient management of the retailing sector.

The threats associated with the big retailers is the wiping out of conventional and ancestral occupations and acceptance of novel and often unheard methods of livelihood. Like a farmer moving out from farming to providing logistics support by way of transporting goods, foodgrains etc, to helping the vertical integration of the big retailer by going back to the farm and growing the produce and be assured of greater returns than what was being earlier offered to farmers by the middle men. Evenhouth this may not be a great threat altogether, the fear of change, for whomever it is, either the big retailer or the small vendor, is painful.

After our study here, we arrive at the conclusion that opportunities are greater than the threats associated with the entry of big retailers into the Indian markets. It can otherwise be summarised as the benefits of aggregation over disaggregation, the benefits of centralised operations over decentralised operations, the benefits of centralised logistics over decentralised logistics.

Under the watchful eye of the customers and the goverment regulating these players in issues of labour employment, remuneration, fair prices to the producers and fairness in dealings, the entry of big retailers can be made beneficial for the whole economy.

george..

Managing Globalization - in retailing ....

Globalization is a major issue being talked about everywhere..

I have always had a positive feeling about globalization. It is sure to bring benefits to the country and it's billion plus population. See how the new software companies have grown. Were it not for globalization, would Infosys, Wipro, TCS and Satyam have become the global names and brands they are today ? Would so many Indians be working onsite in foreign lands and earning hefty salaries and sending an equal amount of money homeward, home remittances. Would so many of our youngsters have got jobs with hefty salaries just stepping out of their educational institutes ?

Would the infrastructure field have grown this big ? Would the railways have been able to give so much of profits ? Would the big names in Industry, Tata Steel, Bajaj, Mahindra etc been able to realise their potential but for the competition which was available in the doomestic market because of the arrival of the foreign brands into India ? Would Indian banks have become so customer friendly and profitable had it not been for the competition by foreign banks ? Our insurance industry, educational system, healthcare and what not ?

One area which still baffles me is the area of retailing which is a cause for serious concern. Big names like Walmart, Tesco, Metro are entering India and how will their entry affect the small store owner, the dookanwala round the corner ?

In major cities we are seeing the booming of not only superstores, but hyperstores and malls. A customer who enters this place can have a complete shopping experience, right from buying vegetables, sweets, bakery items, the weekly grocery and fish and meat to a complete haircut, visit to the beauty saloon, shopping for clothes and paying the monthly electricity, telephone bills etc...

How will the small retailer survive in the onslaught of the major players who have very effective networks and supply chains delivering terrific value through their networks. Are these vendors to die or join hands with the big players or turn to some other professions ??

Can somebody give an answer to this? The future is very dim for these people.

George..

What's ailing Kerala self financing professional education scene??

The self financing professional education scene in kerala is in real doldrums. MIT and Stanford are two great self financing technical institutions which have grown to great levels (hence nobody need develop any aversion to the self-financing term. If the goverment cannot fund education, leave it to the private sector. Liberalisation is in the air everywhere..). Why cannot the political leaders of Kerala understand the present global educational scene and take responsible actions ??

The present medical and engineering professional education scene ( self financing) is divided into two groups, those which are supporting the government or are forced to support the government for getting some favours and others who are supporting the stand taken by the Supreme court that the managements which are running the professional institutions can decide the admission and selection process and thus be separate from government interference and policies.

The self financing medical colleges unity was split when the govt managed to get some of the private managements to it's side on the basis of agreeing to their fee structure, on the promise that the Mohammed committee (court approved committee vetting the fee structure) would be vetting their fee proposal, even though this was against the basic premise given in the constitution and was demonstrated by the Supreme court in it's verdicts which sated that there cannot be cross subsidy of fees in the classroom, ie. one student studying in a class cannot subsidise the studies of another student studying in the same class.

Basically it is this stand taken by the supreme court which has been violated by the kerala govt in it's understanding with the splinter self financing medical association and the splinter self financing engg college association. The high court stay , today, 26 July 2007, on the agreement between the Kerala govt and the splinter self financing medical managements has turned the whole process of admissions (in govt merit quota) upside down in both the engg and medical fields. The self financing engg college emanagements have already anounced that they are walking out of the agreement with the government.

The Marxist Kerala government has been receiving repeated beatings / whippings from both the Supreme court and the High Court on many occasions i this issue ever since they took over power about 16 months back. And in spite of such shabby treatment, the govt, the education minister and the student organisations supported by the ruling party are issuing threats and disparate remarks to the press and media on a daily basis, as if they can influence public opinion and interfere in the judicial process at any point of time. These people do not understand the value of their wasted efforts and are only interested in getting some cheap publicity on national and regional media.

It remains to be seen how long this stalemate between the government and the private self financing managements will continue.

george..

The nasty Presidential elections of 2007..

The recent Presidential elections raised many points on whether Ms Pratibha Devisingh Patil Shekhawat was the automatic natural choice of the ruling coalition UPA for the Presidential post or imposed on it by the obstinacy of the Left parties.

In electoral coalition politics it is possible that a particular popular candidate is not chosen as a candidate, instead somebody else. (This time there was no popular candidate in the beginning itself)

The nomination of Pratibha Patil was such an event. And to say that she was handpicked by Sonia Gandhi and is her protege is baseless. This is being projected by BJP as they are still sore with her for their 2004 electoral defeat. ( She singlehandedly marched to the opposition camp and routed them from their safe settlements, lock, stock and barrel and banished them from the capital region, hopefully for ever. They are still to forgive her for that action and never will !!!!!!!!!! )

Pratibha may not be a dashing personality as Kalam or flashy like Ms. Angela Merkel of Germany, but remember what people were telling about Kalam at first, a politician should have become the president , not a technocrat. It is political immaturity to prejudge Pratibha this early. Flashy performances are deceptive..

It was the vicious campaign launched by BJP against Pratibha, for whatever reason ( or just to get their RSS candidate, Bhairon Singh Shekhawat propped to the pres chair?) which made this election quite nasty.

BJP which is renowned for it's personality bashing / character assasination ( in it's blood.., they raised the same charater assasination attempts against Sonia Gandhi during election time and failed miserably like a bunch of fools ), failed miserably this time too. It just required an article in Outlook accusing Bhairon Singh Dhekhawat of being anti-national and corrupt, besides being a fundamentalist, fighting against plurality in the Indian society that brought BJP to it's knees. Never in their wildest dreams did their 'communal' smarties Arun Shourie and Arun Jaitley realise they would be caught and exposed unawares and shamelessly on their own turf !!

In the meeting they had in the former PM's residence the next day after election to choose the VP candidate, there was no mention of their shameless defeat the previous day - vadi koduthu adi vangicha katha .. It was already a forgotten story !

In a democracy it is ok for people to have different political thoughts and lineage, at the same time it needs close introspection as to whether the stand is acceptable in society or not. Even after multiple repeats of faiscoes if a party still does not understand it's popularity base, it is in for serious trouble, digging it's own grave.

Elected directly or indirectly, pratibha is the representative of the majority of Indians. Whether the majority is right or wrong, only time can tell !!

Being loyal Indians, we can only hope that the majority decision is for the best !! (Responding to Padmakumar, I would have been happy if all 120 crores of this country could become Presidents, but only one among them can finally adorn that post. The grace to accept that is vital for the survival of democracy)

This is a link to the wikipedia resource on Ms Pratibha Patil, which points light to some of the avaoidable controversies she has found herself in.

http://en.wikipedia.org/wiki/Pratibha_Patil

george..

Ms Pratibha Patil, new President of India..

After a virulent campaign for the Presidential post, the new incumbent from Maharashtra is all set to occupy the chair of the President of the most populous and promising democracy in the world.

Ms Pratibha Patil was elected on saturday, 21 July after she beat the present Vice president Bhairon Singh Shekhawat and a nominee of the fundamentalist BJP led opposition NDA by a margin of over 3.5 lakh electoral college votes, comprising the elected representatives from the state asemblies and the Lower house of Parliament, the Lok Sabha.

She was given the certificate of being elected by the Scretary general of Lok Sabha, Shri Achary and takes oath from the Chief Justice of India Justice K G Balakrishnan.

Her nomination to the post of President by the ruling UPA led to a major fissure in the NDA camp with Shiv Sena, a regional party looking only at regional interests, deciding to go with the Congress, to support a Maharashtrian candidate for the post. Trinamool Congress also failed to go with the NDA. AIADMK which was leading the Third Front which was anstaining, at the last moment decided to vote. In short this election though lot of character assasination was involved, led to a reshuffling of party loyalties and equations.

The UPA nominee for the Vice President post, Hamid Ansari, former Indian permanenet representative to the United Nations is sure to win hands down. Hamid Ansari is also a great writer and statesman. http://www.hindu.com/nic/0059/index.htm

Exciting days ahead..

george..

Migration for development - Ban Ki Moon, UN Secy Gen.

We have moved into the second stage of globalization. In stage I there was movement of goods and capital. While that is still going on, in stage II we find movement of labour and skills is going on.( though this is not a new phenomenon at all ..) Countries are opening up more to immigration. How this immigration can bring about development and help share in the world's prosperity is what the article by Ban Ki Moon, the Secy Gen of UN is about.

" Migration can be an enormous force for good. If we follow the evidence, and begin a rational, forward-looking conversation about how to better manage our shared interests, we can together help usher in the third stage of globalisation — a long-awaited era where more people than ever before begin to share in the world’s prosperity."

I found it informative..

http://www.hindu.com/2007/07/11/stories/2007071153701100.htm

george..

Negative campaigning by NDA against Pratibha Patil..

Negative campaigning .....

It was real funny to learn that NDA comprising the BJP and other parties were putting up a site for Pratibha Patil in the Presidential elections in India. Never in the jistory of politics has there been such a " helpful act" by the opposition putting up a website for the winning candidate. www.knowpratibhapatil.com

They want Ms Pratibha Patil accept responsibility for the actions of her relatives. ( They want Ms Pratibha Patil to accept responsibility of their actions after losing out in sugar mills and to pay back their loans)

And the funny part is that NDA does not have any plans to put up a website for their own candidate, knowing fully well that he is a loser. Having served the British during the time when Gandhi gave the call to Indians to boycott British goods and launched the Quit India Movement, our Vice President joined the British police in 1942.

Pl read this expose from Outlook magazine " Is Shekhawat worth the salt ??

http://outlookindia.com/full.asp?fodname=20070716&fname=APresident+Election++%28F%29&sid=3

Adding injury to insult, Shekhawat was "suspended for taking bribe" on August 21, 1947 in free India and spent six months outside and through some influence was reinstated to the police force..

Do Indians need such a corrupt person to occupy the high post of President of the country which has been decorated by great respectful people ??

The ploy by NDA leaders of setting up the website for Ms Pratibha Patil will only hit back at them.. It shows the negative mentality of the NDA and it's constituents ..

george..

The growth of the emerging economies like India and China and the emergence of India as a software development destination can be attributed to the ' frivolous' (?) pace of globalization. Is it good or bad for the world. ? Only time can tell.

But we have had economists like Amartya Sen and Joseph Stiglitz ( Nobel lauretes worried about this phenomenon) and an equally strong rebuttal of their stand by Prof Jagdish Bhagwati in his 2004 book In Defense of Globalization. Having been influenced by Thomas Friedman's book exhorting globalization and also the articles and books by Joseph Stiglitz against globalization, the articles written by this Gujarati brother of the former Chief Justice of the Indian Supreme court Justice P N Bhagwati is a sure eye opener. The Left calls him, the greatest Free Trader in the world as of today. He extolls the virtues of free and open trade, non-protectionism and so on.

A doyen among economists specialising in international trade and the phenomenon of Globalization.

Homepage at Columbia Uty. - http://www.columbia.edu/~jb38/

Through this recent artilce he says that it is technology not globalization which is driving down wages in the developed world.
http://www.columbia.edu/~jb38/FT%20Jan%203%2007.doc

On Protectionism - http://www.econlib.org/library/Enc/Protectionism.html

What wikipedia has to say http://en.wikipedia.org/wiki/Jagdish_Bhagwati

A good review of his book " In Defense of Globalization" http://www.boloji.com/bookreviews/043.htm

His book 'In Defense of Globalization' (2004), Oxford University Press is a worth read..

The greatness of this Indian is that he is next in line for The Nobel Prize in Economics.. Why is it taking such a long time for him !!

--

Sincerely

George Easaw

Race for teraflops ..or Petaflops .. ??

The 2007 bi-annual list of the world's top 500 supercomputers finds no mention from India.

The IBM machine Bluegene/L at the Lawrence Livermore National Laboratory, California tops the list with a speed of 280.6 teraflops. The Jaguar Cray XT4 at the Oak Ridge National Maboratory is a far second at 101.7 teraflops. IBM/HP Machines finds mention in the top 500 from within India, but no indigenous development.

CDAC by 2010 is planning to get machines working at 1 Petaflop, 1e 1000 teraflops( 1000 trillion or 1 x 10 to the power 15 floating point operations per second..

The IBM petaflop machine BG/P with 1 petaflop will be out in 2008.

At present speeds it will take almost 100,000 PCs to catch up with one of these 1 petaflop machines.

Single chip multiple core machines in the petaflop ranges will be available in 2010 with about 150,000 to 500,000 cores. The real challenge is to develop system software and scalable algorithms which can match these speeds..

The MDGRAPE - 3 from Japan already clocked 1 petaflop in June 2006 but being a special purpose computer does not find mention in the top 500 supercomps in 2007.

Your handheld calculator operates at 10 flops.. oops !!

info courtesy The Hindu, 5 July 07 + http://en.wikipedia.org/wiki/FLOPS

george..

USS Nimitz drops anchor off Chennai ..

USS Nimitz, the nuclear powered carried dropping anchor off Chennai was a big news..

It is powered by two nuclear power plants and has 56 fighter jets on board, the 56 year old ship is one of the largest aircraft carriers in the world.

Fears of radiation from the ship have caused some fear among environmentalists and politicians.. But the visit is a sure shot way to boost US Indo military relations especially after the events of '98 after India exploded the nuclear bomb.

photo courtesy Times of India, photo taken at 6 AM 4 July, after it dropped anchor.

george..

Munnar evictions goes into top gear !!

It was quite good to see VS, CM of Kerala, going to Munnar today and personally overseeing the evictions processes. Today it was one of the big guns in Munnar, Tata Tea. Tata Tea has some 1,25,000 acres in Munnar under tea plantation. Actually the land was under the custordy of Tata, but two years back they have handed over the possession of these estates to their employees as they found that managing these estates were against their core competencies and was becoming more of a a liability than a resource. 50,000 acres of these do not have proper records and from a long time Tata has been occupying these lands.

The action today was spectacular in that about 2000 acres of this has been reclaimed from past Tata employees and govt has planted it's board there. Tata in a move to minimise damage has in turn said that those lands were govt lands and not occupied by Tata at all, which is not true.

A major blow for Tata, this is the best action by VS ever since the evictions stated. In due course of time more land being held by Tata for which Tata does not possess records, will be reclaimed.

Even though this smells of some vindictive action against big businesses, unless this was done the poor farmer in Munnar would never have been able to realise his dream of owning land in Munnar, everything was with the big boss, Tata. Under the shade of such big businesses the pinarayi faction in CPM has owned land in the name of farming and converted that to big tourist homes and party offices.

Like a very benevolent big brother Tata was giving employment to the poor people of Munnar on the land originally owned by these poor landless labourers. What an irony ?

In Kerala only such land ownership issues come under public scrutiny and action taken on it. Consider the other states inn the country. The poor still remain poor and the rich continue to grow rich !!

Eventhough the land no more belongs to Tata, it is being pulled into the limelight and it's reputation is getting damaged,. As the politicians see, there is lot of political mileage in regaining land from the Tatas than any poor peasant or shopkeeper..

In Bengal, the CPM govt is trying to get land for Tata at Nandigram while in Kerala CPM govt is trying to take away land from the Tatas !!

george..

NAM and it's relevance ..

The recent mention by US Secretary of State, Dr Condoleeza Rice on the irrelevance of the non-aligned movement and it's immediate rebuttal by the Foreign Minister Pranab Mukherjee deserves special mention.

From a bipolar world, the world has moved to a multipolar world, with the Islamic states on one hand and China, Russia, North Korea and other rogue / failed states on the other. With each passing day the US monopoly of freedom and justice is being challenged by these countries.

To court India at this point, 'a multiethnic democracy', to be led into the new world order by US was quite natural to expect from a politician like Dr Rice, particularly fresh from the experience of Gauntanamo Bay, Abu Ghraib. When US is ready to wage pre-emptive wars for the so called 'good of mankind' and support unsustainable lifestyles of it's citizens, weaponise space, fight for agricultural subsidies for it's farmers, covertly support regimes which terrorise it's citizens, how can emerging economies support such thinking and policies.

If US thinks it can influence India and Indian foreign policy, it is badly mistaken. Being the most vibrant democracy in the world and the birth place of democracy, ( accordiing to Amartya Sen, The Argumentative Indian), India can take care of itself and will hold on to it's sovereignity. India does not want any alignment or exclusive attachment to any country.

NAM can concentrate on South South ( meaning developing countries) collaboration, technology and economic and trade linkages .. Providing leadership in this area is definite to bring in lasting peace and a sutainable society, making this world a happy place to live for the coming generations.

george..

Rains continue to hammer Idukki..

Incessant rains that is how I characterise the rains which have hit Idukki this year. The last three days we have had heavy rains. for the second time during this rains, my kids had holidays for school as the school, lying in a low lying area , St Pius at Kuttikanam, got watersogged and classes had to be suspended.

Iduki as such is very prone to landslides and road blockages, The road to Munnar has been blocked for the past three days. Luckily on Saturday when we went to Kottayam, the roads were clear. The pain is only to reach the plains of Mundakkayam, after that it is ok.. The return journey was very tricky, Lucky I took a driver along.

This wednesday I have asked Binu to accompany me. Everything with God.

The backache is subsiding. Taking care. We also met Dr Rajan at Pallam on Saturday and he has advised me to take some medicines and gel to apply. The pain has gone. Started exercises too.

george..