turbulence

After the season of recalls, it is now time for the major players to reshuffle their stakes. The reason may be the unpredicted growth in automobile sales all over the world in the month of February. The recovery of JLR sales have increased the SPI of TATA Motors which in turn triggered Daimler to sell its 5.34% stake. Daimler, also plans to enter India by investing more than Rs.4000 crores for which it had collaborated with Hero Honda. However, the deal was called off. Now, after raising cash from stake sale at TATA, Daimler might strategically enter India and other developing nations.
In another move, Suzuki has raised its stake in Maruti-Suzuki to 55%, up 0.8%. Analysts say that Suzuki might go for further increase in stake in near future. Maruti, which sells every second car in India, has established itself as the crown jewel in Suzuki’s global operations and is a rare bright spot for sales across the world. It already contributes nearly 80% of Suzuki’s profits, and in volumes too, it has eclipsed its parent’s tally. So it is wise for Suzuki to leverage on this rare asset.
As the small car market is heating up, every major motor company is planning to launch small cars, whether they have experience or not. Ford for the first time, has launched a small car ‘Figo’ targeted at middle class people of India. Honda has also launched ‘Jazz’, a small car, but at a higher price(Rs.7.21 lakh) to target the niche market by making it a limited edition car. Except Toyota every car company plans to launch new products in recent months.
These big news in the automobile market in just a month calls for an in depth analysis by investors and consumers before taking major decisions. Is it a consolidation phase, where first movers might end up as market leaders or is it time to en cash on the growing automobile industry?

Rogues

Price wars, Political wars and now wars on patents. Today, with the world’s financial engine gaining momentum once again after the housing bubble, the coming years seem to be tough time for analysts.

Infringement of patents was seen as an integral part of emerging nations until recently when two top notch organizations from the developed nations jumped in the battle field arguing hard on the patent infringements.

In October, the lord of the ‘I’s (Apple) was accused by the King of ‘N’s (Nokia) for 10 patent infringements related to wireless data, speech technology, security and encryption technologies. Nokia, one of the largest player in the handsets market, has spend more than 40 billion Euros in the last two decades on R&D to develop such technologies. Nokia has agreement with more than 40 handset manufacturers world over for the usage of its technologies, however, Apple is an exception.

In early December, Apple counter attacked rival Nokia with 13 patent infringements!

And now Nokia has filed a case in International Trade Commission (ITC) against Apple.

Nokia experienced first quarter loss after a decade whereas Apple touched profits of $1.6 billion, thanks to the growth in sales of iPods and iPhones. Nokia is finding it difficult to digest this and doing all sort of analysis to find the root cause. In the race to satisfy the shareholders both these companies are compromising with their brand values which is built over decades. Who will win this patent war? Apple, Nokia or other competitors

Rogues

China, a communist country, started its economic turnaround with the concept of small organizations like Town and Village enterprises in the 70s. Many reports say that their infrastructure was the key to their miraculous growth. However, if we compare the infrastructure levels of India with that of China in early 80s, we find that the length of roads, expressways and railway tracks were all higher in India than China. During this period, China had only one resource called human resource or HR.

In the business cycle, all developed economies of the world have started with small innovations, developments and small organizations. Which grew by leaps and bounds with continuous improvement in process and technology. In the 90s, a general perception creeped in to the minds of people that Big is better and thus every country and organization competed with themselves to achieve the “Biggest Status”. Forbes list of richests, biggests and highests fueled this aspiration like a virus. Highest building, largest workforce, biggest company, largest plant, richest CEO and all sorts of permutation and combination.

Now, with the successful launch of TATA NANO (Smallest/Cheapest Car), TATA Swach (Cheapest water purifier: Threat to bottled water industry), micro financing products and other nano products, the “B” word seems to be dampening. TATA with its bottom of the Pyramid approach is poised to revolutionize the way world thinks. As C.K. Prahlad  said in his theory that the real money is residing in with the people at the bottom. TATA is also planning to launch its NANO housing model where in people can get cheap affordable accommodation even during housing bubbles bursting everywhere.

In contrast Reliance has lived through its glorious days by building the biggest complexes and biggest chains. Very often people forget that every big thing is build on the platform of small products. Like the mobile revolution by Ambanis which made mobile affodable to every Indian from top to bottom of the pyramid. IBM is going small by targeting Small and medium sized companies. FMCG companies have experienced the growth by launching the smallest SKUs (shampoo/oil in Sachets).

You name the industry and you would realize that small is big. Is it the magical tool which communism invented centuries ago or is it the magical tool which capitalists are exploiting?

Rogues

Artificial Wings at stake

The Russian planes are once again in the news! This time just before the most awaited air show MAKS-2009. This show is seen as the most important and largest exhibition for Russia’s aerospace industry. Coincidently the plane which crashed, Su-27, were to be part of the elite flying group the ‘Russian Knights’ in the upcoming show.

Earlier the series of crashes forced Russian air force to ground the entire fleet of Su-24s. Is it time for Su-27s or the entire Russian air fleet to retire.

Such events are tarnishing the image of Russian technology and it is high time to reorganise the systems and benchmark the quality of the artificial wings. The world should think in terms of making flying safe rather than branding the quality of planes.

Rogues