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Thursday 20 August 2015

WHO WILL OBSOLETE WHOM ?

Some 40 years back , marketing guru Ted Levitt wrote in his seminal essay ,

" Marketing Myopia " , said :

" If you don't make yourself obsolete , someone else will "

It is high time , traditional Indian Businesses/Industries ask of themselves :

" Who is about to make me obsolete ? From where does my threat come ? "

It seems like the aging Goliaths of India are about to taken on by the Davids of the new-born Start-Ups !

It is :

> Brick & Mortar Retail.........Vs........ E Commerce Portals

> Full Service Banks ............Vs.........Payment Banks

> Estate Agents.................. Vs........ Real Estate Portals

> Recruitment Agencies....... Vs........ Job Portals

> Auction Houses.................Vs........ E Bays of the World

> Advertising Agencies......... Vs ........Google / InMobi ( and ilk )

> Security Agencies............ Vs.........Remote Security Services

> Own Local Factories...........Vs.........FoxConns / Flexitronics etc

> Local Grocery Store...........Vs.........Hyper Local mobile apps

> Marketing Agencies...........Vs......... B2BmessageBlaster

> Credit Card Industry......... Vs........ Mobile Wallets

> Fossil Power Stations........ Vs........ Solar / Wind Power plants

> Delivery Boys / Girls..........Vs........ Drones

> Music Labels ( Records ).... Vs........ Music Streaming Services

> Text Books..................... Vs......... Pre-loaded Tablets

> Unit House Construction.... Vs......... 3 D Printed Pre-Fab houses

> Own Servers................... Vs......... Cloud based Computing Services

> Own Service Departments..... Vs...... Full Service Agencies

> Car Drivers..........................Vs....... Self Driven Cars

> Taxis Services...... .............Vs...........Uber / Ola etc

> Marriage Brokers............... Vs.......... Matrimony / Dating sites

> Physical Classrooms...........Vs........... Online Education

> Customs Barriers.............. Vs........... Online 3D Manufacturing

The list just does not seem to end !

And , in every case , Information Technology / Digitization , is the driver of the Change

It is time , traditional Indian business persons stop feeling uncomfortable / threatened by the Start Ups

It is time they realize that :

> There are no exclusive domains of expertise

> There is no protection under the former " License Raj " System

> There are no insurmountable " Industry Barriers "

> There are no inbuilt / inherent advantages in any Industry

> Entry-levels are getting lower and lower , in all industries

> Chaos Theory prevails ( remember , " A butterfly flapping its wings in

Brazil , brings floods in India " ? )

> National Borders cannot stop winds of change , which blow through

internet / mobiles / TV ( - and soon 3D Holograms ? )

> Of the World's 800 million starving ( malnourished ) persons , nearly

400 million live in the Northern States of India

> Within 5 years , 100 million starving Africans will run-over Europe ,

forcing a drastic lowering of Europe's " Standard of Living " , and an

" Averaging Out of UnEmployment " across the World

As a result , Europe will buy less from India !

> If till yesterday, " Necessity was the mother of Invention " , today it is

" Threat of obsolescence is the mother of Innovation "

Alvin Toffler ( author of " The Third Wave "- 1980 ) , recently said :

, “ In our society everything we know is changing so rapidly that our heads are filled with obseledge, obsolete knowledge. How much of what we know is already obsolete or on its way to being obsolete ? ”

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hemen parekh

21 August 2015

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Friday 14 August 2015

A REFERENDUM ON GST ?

Shri Arun Jaitley-ji and Shri Piyush Goyal-ji are saying ,

" Come what may , but GST will be implemented by 01 April 2016 "

May be they know of some way to bypass Lok Sabha / Rajya Sabha ?

If our Constitution allows , NDA would perhaps consider a Nation-wide referendum , which reads :

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" Do you support implementation of a nation-wide GST as per Bill introduced in Lok Sabha ?

YES ( ) / NO ( ) "

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NDA may even allow legitimate Voters to vote on this , using a One-Time Use / Self-Destruct , mobile app called :

GST

I hope that all those who vehemently criticized 3 repeat Ordinances on Land Acquisition Bill , would support such a solution , after watching the helplessness of NDA to pass GST in the last session of Lok Sabha

Because , if they oppose the referendum , voters would know who stands in way of India's economic progress !

And voters would remember that while voting in all the coming elections - State or Central !

I suspect that a Referendum may not be constitutionally valid - and , therefore , may not have the force of a law

Nor can any Central Government , resort to a series of referendums on ,

> Land Acquisition Bill

> Equal Representation of Women Bill...........etc

Long term - and a permanent solutions to opposition parties stalling the proceedings of Parliament , can be :

# Double the " Number of Sessions " and " No of Days in each Session "

and " Working Hours of 9 am to 9 pm "

# Alternate Sessions to be re-named ,

> " Stalling / Debating " Session , and

> " Voting / Bill-passing " Session

# Remove all chairs from the Houses . All business to be conducted while

standing ( Speaker would continue to seat ). This will work wonders !

# Like in most other Parliaments around the World , allow each speaker to

speak for no more than 5 minutes

We may improve upon this by switching off mike after 5 minutes

# Introduce a " Stay at Home " Allowance of Rs 10,000 / - per each day

of absence , for the Opposition MPs who remain absent

during " Stalling / Debating " session and Rs 20,000 / - per day for

absenting during " Voting / Bill Passing " session

# Any other innovative incentives that will motivate Opposition MPs to

remain absent

One last suggestion :

Even if NDA government shies away from a GST Referendum , I urge TV Media Channels to commission one , on their own

The results would have a sobering effect on all slogan - mongers !

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hemen parekh

15 August 2015

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Tuesday 11 August 2015

COMPETITIVE ADVANTAGES ARE TRANSIENT

What is the significance behind following recent announcements ?

# Indian company , Apollo Tyres will invest 475 million Euros , to set up a

tyres manufacturing plant in Hungary ?

# Chinese company , Foxconn will invest $ 20 billion , to set up 10-12

factories in India , in next 5 years ?

My guess :

# For manufacture of tyres , Apollo finds that labour-costs in Hungary are

lower than the same in India .

Also , that it has a huge export-market for its tyres in Europe , so it

makes sense to set up a plant nearby in order to reduce transport costs

# Same reasons for Foxconn , for its electronic products , sold world-wide

Conclusion :

# Each country enjoys certain " Competitive Advantage " ( over other

countries ) , at a given point of time , for a given product or service

In present cases , that could be , " Labour Costs "

But " Competitive Advantages " are transient ! Never permanent !

And these may not be the same for ALL products or services , at ALL times !

Eg:

For a highly automated product like a " Integrated Computer Chip " , labour costs are an insignificant percentage of total manufacturing costs , whereas Capital Costs ( plant / machinery ) are a major element

For this reason , for manufacture of such chips , countries having low labour costs , cannot claim that as an advantage

Again , capital intensive manufacturing needs huge amount of finance, where India is at a " disadvantage " , vis-a-vis developed countries , due to its very high rate of interest on borrowing

So , each country , has to remain on constant look-out for its own competitive advantages , at each point of time (- and before it ceases to be an advantage )

In case of Foxconn , its Chairman Gou , even went to the extent of saying :

" In our Maharashtra-based factory , we will employ labour-intensive manufacturing processes "

What he meant ( but did not say ) :

" Only till such time , Indian labour-costs rise and catch up with the labour costs in our Chinese factories - where , we have started installing robots "

That reminds me of the incidence ( reported in book " Steve Jobs " ) where President Obama , asked Steve Jobs to stop outsourcing Apple products to Foxconn and move their manufacture to USA , in order to create jobs in USA

Steve's answer ( - since , he never minced his words ! ) :

Over my dead body !

[ And Obama dare not ask this question to current Apple CEO , Tim Cook , who continues with the same " Competing Policy " for last 4 years ! ]

Obviously , Steve had no love lost for jobs of his fellow citizens !

It is no different with Foxconn Chairman Gou , whose only concern is to keep Foxconn , globally competitive , no matter , where it manufactures its products - any exhortation from President Jin Ping , notwithstanding !

And , I get a feeling , that if PM Narendra Modiji , were to try and persuade Apollo Chairman , Shri Kanwar , not to put up that plant in Hungary but set it up in India to create jobs in India , he might get a somewhat similar - but of course , a vastly polite - answer !

Within past 12 months , India's trade imbalance with China has gone up from $ 36 billion to approx $ 48 billion

With yesterday's devaluation of Chinese Currency by 2 % , this may get worse

Of course , this devaluation , will not lower the labour costs in China , which will still keep rising

So , devaluation can only be a " Transient Competitive Advantage " for the Chinese Manufacturers !

On the other hand , of the final cost of a " Manufactured Product " :

> labour costs = 10 % - 20%

> material costs ( including bought-out components ) = 50% - 60%

> overhead costs ( selling / admin / advt / interest etc ) = 20 % - 40 %

So , how much of " Final Cost " can be reduced by a 10 % increase in :

> Labour Productivity ( thru mechanization / automation ? )

> Materials Productivity ( thru Vendor Development for better quality ? )

> Overhead Productivity ( thru Computerization of Manual Systems ? )

It would seem to me that , as far as increasing our "Competitive Advantage " in Manufactured Products is concerned , the same lies in increasing our " Materials Productivity "

Our top most priority should be upgrade the capabilities of our 40-50 Million MSME ,from whom the organized large companies , purchase components / sub-assemblies

Large companies should focus on R&D / Design / Buying / Final Assembly and Quality Control , leaving manufacture of components / sub-assembly to MSME units

Only this can help us to continuously increase our Competitive Advantage , even as labour costs keep rising in the large exporting companies

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hemen parekh

12 August 2015

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Monday 10 August 2015

Maid in India ?

That is the title of a news-report that appeared in Economic Times ( 06 Aug 2015 )

It seems Central Labour Ministry is about to come out with a ,

" National Policy for Domestic Workers " ,

whose salient provisions could be :

> Hiring of domestic workers only through a Placement Agency

> Employer/Employee to sign a formal Contract , listing " Standard

Practices " (- like , Model Standing Order / Show-cause Notice /

Domestic Inquiry etc ? )

> Placement Agency + 2 Trade Union Reps to be the " Third Parties "

to the contract ( - to be signed before a Labour Commissioner ? )

> Employer will be responsible for :

* Social Security

* Payment of Minimum Wages ( - what about " Annual Bonus " ? )

* Weekly Off

* Maternity Leave of 2 months

* 30 days of Paid Leave per year

* Contribution to ESIS / EPF

* Providing proper accommodation ( - will 1BHK suffice ? )

* Providing Meals ( - if employed by a Govt Officer )

Although not mentioned in the article , I have no doubt that the proposed Policy / Act / Law , will also cover , explicit provisions , covering :

* Detailed " Job Descriptions " for each type of domestic job

* Grades ( Unskilled / Semi Skilled / Highly Skilled , etc )

* Wage / Salary Scales

* Dearness Allowance ( linked to CPI for 100 % neutralization ? )

* House Rent Allowance ( when house is not provided )

* Leave Travel Allowance ( not necessarily , to home town visits ? )

* Children's Education Allowance

* Bachelor's Allowance ( for employees without children ? )

* Outstation Allowance / Travelling Allowance

* " Stay - at - home " Allowance , when employer is on holiday !

* Washing Allowance ( for uniforms to be supplied by Employer )

* Local Conveyance Allowance ( when Scooter is not provided ? )

* Lunch Allowance ( when meals are not provided )

* Shift Allowance ( if required to work in second shift )

* Overtime Wages @ 250 % of normal wages

* Machine Operating Allowance

[ if required to operate domestic appliances such as Grinder/Mixer ,

Dish Washer , Washing Machine , Micro-wave Oven , Gas Stove ,

Vacuum Cleaner , Refrigerator , Pressure Cooker etc ]

* Compensatory Working Allowance

* Casual Leave / Sick Leave / Accident Leave

* Leave without Pay

* Accumulation / Encashment of PL

* Paid Holidays

* Effective Working Hours / Shift Timings

* ID badge / Job Time Card / Clock Punching

* Supply of Uniforms / Safety Shoes / Umbrellas etc

* Providing of Creche ( for Employee's Children )

* A clearly defined / time-bound , Promotion Policy

* Probationary Period / Retirement Age

* Grievance Procedure............... etc

Have I left out any other provision ? Readers are invited to contribute

What could be the implications if this Act is passed ?

# Tremendous increase in corruption

{ Always happens when you pass an " Un-Observable Law " , which gets

broken , a million times a day ! }

# Birth of a " Parallel / Illegal " Employment Market

# Endless litigation ( with great demand for Labour Lawyers ! )

# Huge slowdown in hiring of domestic help , rendering millions of

domestic servants , jobless

# Deterioration of Work Ethics ?

# Huge boost to manufacture of Domestic Appliances ( MakeinIndia ? ),

which may be able to absorb some of the domestic help rendered

jobless - after re-skilling . Making best of a bad bargain !

Does anyone get a sense that we are trying to fix things which do not need

fixing ?

Have we got our priorities , all mixed up ?

And pray , when did you last try to hire a house maid ?

If you too , feel that we should leave this matter to be settled , one-on-one , between the Employer and the Domestic Worker , do forward this blog to :

Shri Bandaru Dattatreyaji, Minister for Labour (bandaru@sansad.nic.in )

Or send your feedback from : www.labour.gov.in

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hemen parekh

11 Aug 2015

B2BmessageBlaster

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Thursday 6 August 2015

ROMP - A Panacea ?

In past few years , our Lok Sabha has been repeatedly paralyzed by slogan shouting MPs

Perhaps , the past two weeks were the worst in the history of Lok Sabha , with no business conducted

Someone suggested that MPs be made to lose their salaries for this period , following the universally / legally accepted rule : No Work , No Pay

This won't work . Our crore-pati MPs could not care a hoot for loss of pay !

Only thing that might work :

A mobile app called , " ROMP / Recall Our MP " ( Idea for a Start-Up ? )

Only voters who qualify as follows , will be permitted to use this App , in order to recall an MP :

* He must be on Electoral Roll

* He must have actually voted ( even if NOTA ) , in the last general election

{ This criteria is bound to boost voting percentage to 95 % ! No need to

make voting compulsory ! }

* He can " Vote to Recall " , only MP who got elected from the constituency

from where he cast his vote in last election

* He can vote only if there is no Criminal charges filed against him

* The App itself will accept his " Rating / Vote " only on two days of the year

announced by the Election Commission for each constituency

* Any other criteria that readers may wish to suggest ( crowd-sourcing )

ROMP will show following criteria , with " YES " or " NO " buttons against each :

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LOG-IN :

# Suspend MP for next Session................................ YES.......NO

# Recall MP.............................................................YES ..... NO

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Justify your recommendation by " Rating " your MP , below

( Unless rated on each criteria , your vote will be invalid )

Is this MP ( who is being rated by you ) :

# Honest.............................................. YES........NO

# Of high Integrity................................. YES........ NO

# Sincere.............................................. YES........ NO

# Hard-working .................................... YES........ NO

# Punctual.............................................. YES....... NO

# Dignified............................................ YES........ NO

# Follows Speaker's Orders..................... YES........ NO

# Good Listener....................................... YES......... NO

# Awaits his turn to speak.......................... YES........ NO

# Asks only relevant questions.................. YES........ NO

# Approachable to Voters.......................... YES....... NO

# Answers Voters' Emails promptly............... YES...... NO

# Provides regular feedback to Voters ............. YES.......NO

# Addresses other MPs with respect............... YES..........NO

SUBMIT

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Conditions governing use of ROMP :

> It can be downloaded from the web site of Election Commission , upon

filling up a form, requiring all kinds of proof that you are a genuine voter

> Upon being satisfied ( that you are a genuine voter ) , the Server will

issue a User ID and Password, to log in before you can use the App.

It would be better still , if biometric identification is integrated with the

App , since AADHAR cards are already having such identification

> ROMP can be downloaded only once

> At least 66 % of the Voters who had actually voted in that Constituency

during the last General Election , should take part in ROMP event for it

to be considered valid

> Only in case more than 2/3rd ( > 66 % ) of " Ratings " cast recommend

Suspension or Recall , will the Election Commission / Speaker act

according to People's Mandate

> However , in case where those 66 % are divided between " Recall " and

" Suspend " , then " Suspend " will prevail

> Rating results will be made public on Election Commission web site on the

next day and also published in leading Newspapers

I do believe that the present NDA government is keen to introduce / pass ,

" RIGHT TO RECALL BILL " in Lok Sabha as part of Electoral Reforms

Except that the combined opposition may defeat it in Rajya Sabha !

Which MP would want to sign his own death-warrant ?

But even without a legal backing , I feel ROMP would have a salutary effect

on the behavior of our MPs , who would know that they are being watched,

and their conduct is being evaluated ! - and will be made public !

ROMP , along with my earlier suggested mobile Apps ,

( look up hemenparekh .... in )

> VotesApp

> I SIN><U SIN ,

will take us many steps closer to a Digital India

If you endorse my views , please forward to all Policy Makers

If not , please do come up with a better idea !

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hemen parekh

07 Aug 2015

B2BmessageBlaster

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