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The Euro crisis is getting out of control. As long as Germany and France thinks that there is an awful lot to be gained by preserving the euro, they will only be prolonging the crisis. Frankly, If there was a neat solution to the problem that doesnt involve breaking up of the euro, it would have been devised and implemented. It is very apparent that the euro experiment has failed and must be aborted right away. Countries as diverse as Italy and Germany cannot have the same currency. Even a fiscal union couldnt have averted the inevitable breakup. It could have only delayed the crisis.

India's organized retail is estimated at $28 billion with around 7% penetration but is expected to grow to 21% and become a $260 billion business over the next decade, says a recent report by Boston Consulting Group. What modern retail offers to companies experimenting with new categories is the chance to educate customers which was not the case with a general trade store. Category creation and market development starts with modern trade but as more consumers start consuming this category, they penetrate into other channels. Market development for new categories takes time so brand wars for leadership and consumer franchise will be fought on the modern retail platform. A new brand can overnight compete with established companies by tying up with few retailers in these categories

The work of winner of 2011's economics Nobel prize, Christopher Sims  is empirical and, therefore, directly useful to policymakers. He  has used a powerful but relatively simple analytical tool, called vector autoregression, to explain why different things like income and inflation take different periods of time to respond to a change in, say, interest rates.  His work establishes that the effect of a rate hike on the GDP is immediate and causes a contraction; inflation takes longer to respond and starts cooling only after five or six quarters. The research has been so influential that most central banks worldwide structure their policies with his results built into them. 

Companies often need considerable perseverance to exploit a BEMI(big enough market insight). Consider Pampers, which P&G introduced in 1961. The product took advantage of two major trends at the time: the growing affluence of consumers, which was driving their desire for greater convenience, and the fact that women were increasingly joining the workforce. But having that BEMI and creating a profitable product to exploit it were two entirely different matters. The problem was that, in those days, disposable diapers had to be made by hand because the paper used in them made mass production impractical. Even after five years of intensive research, P&G was only able to bring the manufacturing costs down to 10 cents a diaper, which wasn't competitive with diaper services (at about 3.5 cents per diaper). P&G finally developed a machine that could mass-produce disposable diapers at the right price point, opening up what would eventually become a multibillion-dollar market. Tha...

Joshua Bell, one of the world's best violinists, played incognito inside a Washington DC subway station. During his continuous 45-minute performance, Bell played six pieces by Bach, Shubert, Massenet, and Ponce—some of the most powerful music written for a solo violin. His instrument: a 1713 Stradivarius worth about $3.5 million dollars. Two days prior, Bell had performed at a sold-out concert in Boston, where the tickets averaged $100. But back in DC, 1,097 people went through the subway station. Only seven stopped and listened for a while. About 27 gave money but continued to walk past the musician. There was no applause at the end, and the total sum collected during the performance was $32.17. This reinforces the theory that when you market service, you should ensure that there are enough number of strong cues and props that conveys the value.

Right sizing departmental silos usually doesn't affect the cost structure permanently. Because the underlying work hasn't gone away, the fat creeps back. The cost reductions last only until everyone goes back to their old ways in a few years.  The pattern is like the behavior of someone who goes for repeated liposuction surgeries without changing his lifestyle to permanently keep his weight under control. An alternative approach to cost cutting is built into the "Six Sigma" methodology as popularized by GE. Companies launch process improvement projects with hard financial targets. These projects get costs out, but  when the project leaders ("Black Belts") leave and move on to their next project, the costs creep back. The quoted financial savings from Six Sigma projects, while valid, aren't having long-term effects on their cost structure. To perennially keep costs down companies need to change the way that work is accomplished — the business proce...

Forrester Research predicts that by 2012 half of all consumer purchases will be either transacted online or digitally driven in some way — influenced by search, social media, or emerging digital platforms like location-based services and digitally augmented store environments. In a digitally connected world, the companies that compete and win are in two businesses: their core business, which sells the products and services the company has always sold, and a new business, that can be called as the Software Layer — a layer of technology that surrounds the core business and serves as the focal point of interaction with the outside world. The most effective companies run their core business as effectively as they always did, and they also run their Software Layer. To win, they must run their Software Layer as vigorously and effectively as the Googles of the world run their organizations. With great digital user experiences, companies can generate more levels of interaction, more engag...

There are Below-the-Line (BTL) campaigns and then there are the likes launched by Ford in India which redefine benchmarks in terms of consumer engagement. In a bid to attract more consumers towards its best selling vehicle Figo, the US auto major launched its largest ever advertising campaign christened ‘Swap your drive’. The campaign is based upon the idea of prospective customers swapping their old cars for any of Ford’s model for a week. Challenging people’s perceptions head-on is the best way to transform opinions. Nothing influences a customer’s notions about a car as much as an extensive ownership experience. Ford seems to have turned the very idea of customer engagement on its head

While on a market visit in rural UP, towards the end of 2009, the Coca-Cola India & South West Asia, president, Atul Singh observed that there were pockets with intermittent or no electricity connectivity, which meant that selling the beverage chilled, was a task. While the eutectic coolers were already there, freezers specially designed and developed for the places where power shutdown is for longer duration up to 10 hrs, the bigger issue was selling chilled cola in areas with no supply of electricity. The brief was given to the technical team and solar coolers were created, that have been piloted in rural Agra for now. While the coolers' solar power could help the rickety shop remain open much longer even after dark; in addition it had a mobile charging unit, which led to many walk-ins. Result: sales went up nearly 5 times in the areas where this concept was tested. This bottom-up innovation, once rolled out on a large scale, is likely to be exported to other markets a...

The most common branding mistake, in my view, is to focus solely on functional benefits based on the assumption that customers will have the motivation and capacity to seek out relevant objective information and apply that information to a structured decision process leading to a logical decision. The mistake is particularly prevalent in the high-tech and B-to-B world. However, we know that the driving assumption is nearly always very wrong. Further, superiority on functional benefits that matter to customers is difficult to create. Even when they emerge, competitors usually copy or appear to copy them quickly. The alternative is to surround the brand with bases of a customer-brand relationship that go beyond the offering. Consider dimensions such as: • Shared interests—Pampers on baby care, Muji on lifestyle. • Personality—Zara as trendy, Virgin as irreverent and creative. • Passion—Whole Foods Market’s passion about food, Nike’s passion about athletic excellence. • Or...

The only way to achieve real growth is to engage in brand relevance competition, using innovation to create new categories or subcategories for which competitors are irrelevant and build barriers to keep them out of the game. The alternative — fighting the brand preference battle with "my brand is better than your brands" strategy based on incremental innovation and expensive marketing — virtually never changes the marketplace. There is too much inertia. Customers simply lack the motivation to change habitual brand purchases even in the face of brilliant market programs that ask them to do just that. In virtually every industry the only meaningful change in market share patterns occurs when one brand succeeds in changing the game by establishing a new category or subcategory Hyatt is currently seeking to carve out subcategory in an established arena with its Hyatt House concept which aims to provide a "home" experience for travelers. There will be a central lo...

the most successful products in the industry are various Apple devices (the iPad, the iPhone, and the Mac), the Amazon Kindle, and the Netflix service. These three companies create more mainstream evangelists as a percentage of their total users than other companies. So what's the difference between an iPad and a Samsung HDTV? Why does one create raving fans and the other create users Apple knows what its customers want because of its CEO, Steve Jobs. He has proven that he knows, on instinct, what will succeed with consumers. In fact, he famously avoids customer input and focus groups because he is so sure about his own gut feeling. But because your CEO is not Steve Jobs, you'll have to do talk and listen to your customers like crazy Here are 10 questions to ask: 1. Who in your home uses our product? 2. Why do they use it? (Leave it open ended, just like that.) 3. What do you do with the product? 4. What features do you use most? Why? 5. Which features do you ...

First, accepting plastic reduces the expense of counting, transporting, and preventing cash theft. Just as important, consumers aren't limited to spending what's in their wallet.

Enlargement fatigue has a mirror image: apathy and resentment. By expanding, the EU has a remarkable tool for influencing its neighbours, but only in the right circumstances. A country must want to join, it must be given strict conditions for reforms, it must settle disputes within and on its borders and it must see the promise of membership as genuine. Membership without conditions spells trouble; conditions without membership spells betrayal.

There are a number of contenders for the title "the best corner in Formula One". There is the roller-coaster switchback ride of Eau Rouge at Spa, the almost flat-out right handed flick of Copse Corner at Silverstone or the equally challenging 130R at Suzuka. However most drivers will tell you that, despite its relatively unassuming name, Turn 8 at Istanbul Park circuit is the ‘the big one'. They love it. Circuit designer Hermann Tilke often draws criticism for his "Tilkedromes". Critics complain that in the late 1990s he created a series of look-alike tracks, each of which produced dull races. However, when in 2005 Istanbul Park hosted the inaugural Turkish Grand Prix the track proved to be a winner with the drivers. The anti-clockwise design unashamedly copies some of the great corners at other tracks in the world. The first three corners are identical to the Senna-S combination at Interlagos. However Turn 8 is unique. The ultra-long, quadruple apex corner...

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.’

Increased borrowing leads to more foreign investment in government bonds pushing up the exchange rate. The current account deficit that arises is the counterpart of the capital inflows necessary to finance government borrowing Indeed,  recent work  by LSE economist  Ethan Ilzetzki  with two co-researchers from the University of Maryland published by the NBER suggests the following: Fiscal multipliers are zero in countries with flexible exchange rates. Fiscal multipliers are lower in open economies. Fiscal multipliers are zero in high-debt countries.

Recent work by LSE economist  Ethan Ilzetzki  with two co-researchers from the University of Maryland published by the NBER suggests the following: Fiscal multipliers are zero in countries with flexible exchange rates. Fiscal multipliers are lower in open economies. Fiscal multipliers are zero in high-debt countries. Increased borrowing leads to more foreign investment in UK government bonds pushing up the exchange rate. The current account deficit that arises is the counterpart of the capital inflows necessary to finance government borrowing

Last year (2010-11) a sum of Rs.46,267 crore was raised through public equity issues. The mobilisation was roughly the same as that of the previous year.  In 2010-11, a total of 57 public issues entered the market, compared to 44 the previous year. Of these, 52 were initial offerings and the remaining five follow-on offers. The average deal size was Rs.811 crore. Ten issues were for Rs.1,000 crore and above. At the other end, there were six issues of less than Rs.50 crore and none below Rs.10 crore.

Administered interest rates are an anachronism when interest rates are essentially market-determined . There can be no justification for continuing with regulated interest rates whether on saving bank deposits or small savings like provident funds and national savings certificates. deregulation of interest rates is essential for product innovation and price discovery in the long run The need to reward savers (high household savings have been the prime driver of investment) and provide them with some stability in an environment where they have no social security is only part of the reason for the desire to maintain status quo.  The main reason is the higher cost of funds that de-regulation is bound to bring in its wake. Savings bank deposits provide banks with a stable deposit base. Hence the mad scramble among banks for CASA or current and savings accounts. Once rates are de-regulated , it is quite possible competition will drive interest rates up; especially in a situation w...

India's insurance industry will outpace economic growth and is likely to reach $350-400 billion in terms of premium income by 2020, making it among the top three life insurance markets, an industry report revealed.  India will also be among the top 15 non-life insurance markets by 2020, according to an industry study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the US-based Boston Consulting Group.  The report points out that penetration of the insurance industry, premium as percentage of the country's gross domestic product (GDP), has increased from 2.3 percent in 2001 to 5.2 percent in 2011.  In addition, there has been a vast increase in the coverage of insurance. The number of life policies in force has increased nearly 12-fold over the past decade and health insurance, nearly 25-fold.  Better terms and availability of a wide variety of products, like unit-linked products, whole life, maximum net asset value (NAV) guarantee...

Old-fashioned totalitarian societies control information by suppressing what they consider inconvenient for their people to hear, while the more sophisticated capitalist democracies control information by swamping the truth in a deluge of disinformation, through which it is virtually a full-time job to sift.

Some of the problems for small IPOs have to do with the economics of the capital markets business. First, we have larger players in the institutional investing segment: foreign institutional investors (FIIs), mutual funds and insurance companies. “Investor corpuses have been growing by leaps and bounds,” says Rashesh Shah, chairman and CEO, Edelweiss Capital, a Mumbai-based financial services firm. “Life Insurance Corporation, for instance, collects around Rs 75,000 crore each year, apart from all the other insurance companies.” All of this capital seeks liquidity in large investments, which implies large-cap stocks. But the most significant number that highlights the shift in the investor structure is the fall of retail investors’ ownership of equity: from 16 per cent of total market cap a few years ago to just 8 per cent. In the US and other developed markets, the number is just under 20 per cent. Second, small firms are assumed to have dubious reputations, based on historical ex...

RBI's latest release of 'Statistical Tables relating to Banks in India' is quite revealing when we juxtapose FY00 and FY10 data. We've had several measures that have been invoked under financial liberalisation while a lot has also been spoken of on inclusion to add a social dimension. How has this model worked?  The study of data over these 10 years has some interesting stories to tell. Three aspects of banking development could be looked at: banking structures, business profile and financial performance. Under banking structures, the growth in network increased from 67,532 branches to 87,768. However, the share of rural branches came down from 48% to 37% while that of urban and metro increased from 30% to 40%. Quite clearly, banks have been going to places where there is business.  Simultaneously, the staff strength came down by around 14% to less than a million i.e. 869,412 (FY09). Banks have effectively used technology to replace surplus manpower. The business profil...

Actually, in many ways, Wall Street benefits from the big public sector unions. The states’ enormous, albeit inadequate, pension assets are invested in equities and other exotic instruments peddled by Wall Street. Historically, government workers paid for more security, with lower wages. In exchange for smaller salaries they got job security and generous benefits. Eventually, they began to see their security as a right. With salaries matching private sector now, It seems government workers are now getting the better deal. Taxpayers are explicitly on the hook to make sure these contracts are honoured.

Once upon a time, America had a relatively good system for dealing with displaced workers. But the shallowness of its recessions and the rapidity with which employment tended to spring back led to complacency and neglect of these institutions. In Europe, by contrast, governments responded to persistent high unemployment with a wave of labour market reforms and investments in retraining and other measures to return workers to the labour force. Recent jobless recoveries have therefore left the American economy with a declining participation rate, while Europe has done better. Growth in trade with China contributes to the closure of the local textile mills, which significantly damages the local economy. The most skilled workers then leave; they can do better in growing towns nearby, and they probably have the financial resources to relocate. The low-skill workers left behind do not move. Why? Well, they may not be able to afford to do so, but other factors make staying in place more at...

President John F Kennedy would have been delighted to know that his inaugural address is still remembered and admired 50 years later. Like other great communicators - including Winston Churchill before him and Ronald Reagan and Barack Obama since then - he was someone who took word-craft very seriously indeed. Continue reading the main story Recipe for Success 1. Contrasts 2. Three-part lists 3. Contrasts combined with lists 4. Alliteration 5. Bold imagery 6. Audience analysis He had delegated his aide Ted Sorensen to read all the previous presidential inaugurals, with the additional brief of trying to crack the code that had made Abraham Lincoln's Gettysburg address such a hit. Fifty years on, the debate about whether he or Sorensen played the greater part in composing the speech matters less than the fact that it was a model example of how to make the most of the main rhetorical techniques and figures of speech that have been at the heart of all great speaking for more tha...