Monthly Archives: October 2012

Hurricane Sandy is a weather system that is converging on the east coast of the United States. Forecasters warned that the New York City region could face the worst of Hurricane Sandy as it picked up strength and turned toward the U.S. East Coast’s largest cities Monday, forcing the shutdown of financial markets and mass transit, sending coastal residents fleeing and threatening high winds, rain and a wall of water up to 3.35 metres tall. It could endanger up to 50 million people for days on end.

Sandy strengthened before dawn and stayed on a predicted path toward New York, Washington, Baltimore and Philadelphia — putting it on a collision course with two other weather systems that would create a superstorm with the potential for havoc over 1,280 kilometres from the East Coast to the Great Lakes. Up to 90 cm of snow were even forecast for mountainous parts of West Virginia.

The New York Stock Exchange, probably the largest in the world, has decided to close during the hurricane’s downpour over New York City. “Leave immediately. Conditions are deteriorating very rapidly, and the window for you getting out safely is closing,” New York Mayor Michael Bloomberg told those in low-lying areas. Water was splashing over the seawalls at the southern tip of Manhattan.

We don’t know what will happen to the low-lying Manhattan Island, but one thing is for sure.  Many global businesses have headquarters in NYC, major accounting, rating and capital investment firms also have offices in NYC.  With the ever present danger nearing the city, it is expected that many people will be told not to go to work.  This could potentially stall the global market trade and influence a myriad of other things.

Dell Computers, or just plain Dell is a company whose business model makes it’s turnover, the fastest in the industry. Less than a week  in inventory which equals a very large number !  Well, how did they get to this staggering amount of numbers ?

Their reason is Buying Direct/Direct Business Model (DBM) .DBM is a model which enables the supplier (Dell) to bypass retailers who will charge them for renting space and others,  and connect with the consumer  more directly.  The upside of this model is a lot of things, as mentioned by Mahesh Nagarajan, PhD:

1. Double Margin = Cutting our the middle men –> getting higher margins, the easier process to manage

2. Stronger Customer Relationship –> beter information and customer behavior is better captured

3. Reducing Variability/ Risk.

4. Customization –> giving customers what they want, builds loyalty and differentiation and therefore more revenue for the company.

In the end, this is what has made Dell more profitable in the long run, by using the model they are able to cut costs and increase their revenue.

Grameen Bank, which was founded by Muhammad Yunus, had humble beginnings. What was then a scheme to pull debt-ridden people with loans without interest, won Yunus the Nobel Peace Prize. But how did it become to a large, social venture ?

First of all, we need to differentiate what is charity and social venture/social entrepreneur. A charity works by giving out money. This is good, but it isn’t financially sustainable in the long run. There is so much amount of money that can be showered to people, whereas Social enterprises are entities/companies that help to solve problems such as poverty and healthcare, but possess a sustainable business model that is sound and long-term. This is what Grameen Bank has done.  It has become a problem solver for debt ridden people in Bangladesh and it has done so in a sustainable manner.  This helps the bank to operate on a day-to-day basis.

A part of how the bank can sustain in the long run is the amount of loans it gives to people and the rate of return.  The bank gives small amounts of loans along the course of the year, rather than one big amount of money which can be wasted on a single blow.  The plus of doing this is that the lendee can plan their spending or their investments so that they can pay back the bank in the allotted time frame.

By giving loans to these people, the bank has given people capital to start their own businesses and make their own money, so that they can provide for themselves and their families, and in turn, rise out of poverty.

A quote summarizes my blog post today,

“Give man a fish, then he can eat for a day. Teach a man to fish, then he will never be hungry ever again”

China, the global superpower which has stunned the world with it’s stellar performance in the global economic downturn has recently been showing signs of aging. According to the Globe and Mail, China’s growth which was capped at  7.7 per cent in 2012 – a figure leaps and bounds beyond developed Western economies – it had forecast an 8.2 per cent growth rate in May. Chinese GDP grew 10.4 per cent in 2010 and 9.3 per cent in 2011, the World Bank said.

“China’s slowdown this year has been significant, and some fear it could still accelerate,” the World Bank wrote in its East Asia and Pacific Data Monitor. The reason for this slow down is “lacklustre recovery in the United States and recession in Europe,” according to the World Bank.

The World Bank said that with the exception of Vietnam and China, which posted only 1 per cent year-over-year in July, all of the other major economies in the region saw a decline in exports. This was, the banks said, “a sharp change from the 15-20 per cent export growth rates recorded in 2011.”

Still, a slowing China is bad news for a Canada that’s “vulnerable to a further slowdown,” as BMO Nesbitt Burns Inc. chief economist Sherry Cooper noted Friday, in comments published before the World bank forecast was issued.

In addition to risks from “an overvalued currency, tighter credit conditions and the prospect of higher interest rates,” Ms. Cooper said, “commodity demand might weaken further as growth prospects in China, India and Brazil have dimmed and Europe is still mired in austerity induced recession and debt overload.”

Automobiles–or cars has revolutionized the way people move. It is a significant mode of transportation, offering the convenience and comfort that an airplane offers but with unrivaled flexibility.  Cars are essential to everyday life, from getting places, transporting goods, connecting far-away places.  The question arises when the reliability and the safety of the car comes into question.  A sample of this problem made it self known when Toyota car mats were interfering with the gas pedal, potentially harmful to the passengers and pedestrian on the road.  According to another Sauder blogger, that goes by the name Ryan Taggart, Toyota‘s recalls had been a problem since 2005, and was recalling more vehicles than it was selling. It had even got to the point where in 2007 Consumer Reports magazine halted recommendations on their car models.

According to my analysis, Toyota has to improve their products by better quality control and better manufacturing processes. The mistakes that are made can resonate more loudly if the problem is widespread.  I agree with Ryan’s view on the matter, he said “Toyota handled the mechanical issues very ethically and directed the blame to themselves as a company, and fixed the issues on every car, free of charge.” In my opinion this is the way to go for Toyota. They need to realize that the damage has been done and often the best defense is just explain and take full responsibility for the matter.