The Samsung case we discussed in the class today makes an emphatic point about when a company should build the brand?
Samsung used to be a cheap OEM supplier since its inception and they had built up capability whey decided they were ready to build the brand.
Another Important lesson is "when do you know you have built the brand?" You know it when you have integrated your operations to live the brand and the customer knows what you stand for.
You have the resources to invest in brand building and the capability and that's when you should go for it.
Friday, September 26, 2008
Thursday, September 25, 2008
Saturday, September 20, 2008
The Pizza Company Thailland
We had a very interesting case in the franchising class on the pizza company thailand. PPCL is the company which runs this pizza business.
They used to be the franching partners of the Pizza Hut for 20 years when suddenly when Pepsi separated its restaurant business with 3 companies- KFC, Pizza hut and Taco bell formed a new company- Tricon and they pressurised PPCL to include a non-compete agreement to renew the franchise.
PPCI rejected the clause and started a new company on their own. As a part of the fireflighting exsercise which was constituted to form a new company when Pepsi ditched PPCL, a core team was instituted which has these resources:
I have created this post to show that with people anything could be done. They formed the new company and it's up and running.
The link is to the company. It's a war out there and the fighters survive.
They used to be the franching partners of the Pizza Hut for 20 years when suddenly when Pepsi separated its restaurant business with 3 companies- KFC, Pizza hut and Taco bell formed a new company- Tricon and they pressurised PPCL to include a non-compete agreement to renew the franchise.
PPCI rejected the clause and started a new company on their own. As a part of the fireflighting exsercise which was constituted to form a new company when Pepsi ditched PPCL, a core team was instituted which has these resources:
The Minor Group HR manager
The general manager of the Burger King and Chicken Treat which were other businesses of Minor Group
The operations director for Pizza Hut Franschise
A purchasing/supply chain manager to ensure on time nation wide delivery
A research and development manager
Training Manager
MIS and accounting managers to ensure that the new concept contributed to economic profit
Development and Equipment representatives
The marketing manager
I have created this post to show that with people anything could be done. They formed the new company and it's up and running.
The link is to the company. It's a war out there and the fighters survive.
Thursday, September 18, 2008
The paradox of choice!!
The title of this post is the title of one of the most insighful books i have read and still reading. I love it.
I share some of the insights here.
Some people are maximisers and some are satisficers. I am talking from the population of people who have some standards for their lives. Now, satisficers are happy with "good enough" choices and maximisers seek to maximise everything. This is where the problem is. Every time they make a decision, they think of all the better alternatives they have had to give up.
For example, a maximiser buys a motorbike after much search. Now that he has the motorbike, there is a possibility of "postpurchase regret" Maximers cannot escape this because they will keep thinking about all the alternatives that he has given up and which could have been better.
It's not that satisficers do not have standards. They have standards but once they make a decision, they are happy with their decision which enables them to enjoy their decisions. They do not have to keep thinking about options they have left out.
There is nothing called a perfect world. A perfect world is a hypothetical reality where we do not have to make trade offs and get everything we want. This is an imaginary situation.
We all want to have choices. But what do these choices do to us? Does it help out lives? Does it help the way we make decisions?
unfortunately, the more choices we have, the more frustrated we are. We cannot decide what is good for us. I mean, think of buying a car. Which car should you purchase? Which category? Which design? Which company? Lets sa you boil down to a company. Maruti.
Now Maruti zen, versa, 800, Baleno, SX4, Lx, Px or Gx???? Ofcourse, I have not covered the entire range here. The opportunity costs of making one decision over all the others!!! Think about the opportunity costs of marriage!!!!
Counterfactual thinking has been the reason for the growth of the human society. If only we did not think about something that does not exist and could be a possibility, how would we evolve?? However, it is also the reason for regrets, both anticipative regrets and buyer's remorse.
More and more choices do not quite serve us all the time. We would ideally want to be left alone and not look at opportunity costs at all. e can help ourselves by being satisficers. The problem in keeping options open is that we are never quite done with the decision.
People do things which they do not have reasons for. "Why" does not always precede reality. Choice is supposed to benefit us, isn't it? But does it?
The opportunity costs of one choice over another present the paradox of choice!!
I share some of the insights here.
Some people are maximisers and some are satisficers. I am talking from the population of people who have some standards for their lives. Now, satisficers are happy with "good enough" choices and maximisers seek to maximise everything. This is where the problem is. Every time they make a decision, they think of all the better alternatives they have had to give up.
For example, a maximiser buys a motorbike after much search. Now that he has the motorbike, there is a possibility of "postpurchase regret" Maximers cannot escape this because they will keep thinking about all the alternatives that he has given up and which could have been better.
It's not that satisficers do not have standards. They have standards but once they make a decision, they are happy with their decision which enables them to enjoy their decisions. They do not have to keep thinking about options they have left out.
There is nothing called a perfect world. A perfect world is a hypothetical reality where we do not have to make trade offs and get everything we want. This is an imaginary situation.
We all want to have choices. But what do these choices do to us? Does it help out lives? Does it help the way we make decisions?
unfortunately, the more choices we have, the more frustrated we are. We cannot decide what is good for us. I mean, think of buying a car. Which car should you purchase? Which category? Which design? Which company? Lets sa you boil down to a company. Maruti.
Now Maruti zen, versa, 800, Baleno, SX4, Lx, Px or Gx???? Ofcourse, I have not covered the entire range here. The opportunity costs of making one decision over all the others!!! Think about the opportunity costs of marriage!!!!
Counterfactual thinking has been the reason for the growth of the human society. If only we did not think about something that does not exist and could be a possibility, how would we evolve?? However, it is also the reason for regrets, both anticipative regrets and buyer's remorse.
More and more choices do not quite serve us all the time. We would ideally want to be left alone and not look at opportunity costs at all. e can help ourselves by being satisficers. The problem in keeping options open is that we are never quite done with the decision.
People do things which they do not have reasons for. "Why" does not always precede reality. Choice is supposed to benefit us, isn't it? But does it?
The opportunity costs of one choice over another present the paradox of choice!!
Financial Services
Session with Prof Arindam Bannerjee
The financial services sector comprises of Merchant Banks, NBFCs, regulators, Asset Management Companies, Investment Banks, Wealth Managers,
Insurance companies.
How do the banks make money?
Merchant Banking or consumer banking is about accepting deposits and issuing loans. Now the idea is to give lesser rate of interests on the deposits and charge a higher rate of interest on the loan and make money in "the spread of the interest". It's called,"the spread"
Mutual Fund Companies like Fidelity are called Asset Management Companies (AMCs). In US, they are called Asset Managers. Banks can be sponsors to the mutual fund operators but they cannot operate a mutual fund. Similarly, investment banks cannot operate mutual funds. Sponsoring can be for the initial investment and protection money.
Mutual funds could be sectoral funds, diversifies funds among myriad categories.
Other financial servicec are Systematic Investment Plans, electroically traded funds etc.
Sovereign papers like kisan vikas patra and NSCs are guaranteeed by the government.
There is a category called derivatives. These are products within products. A derivative would always be linked to some product, like equity. For example, a reliance derivative product would be linked to reliance equity, debt instrument.
Derivatives can be:
Futures: You agree to buy or sell at a pre-determined price at a future date which is generally 3 months.
Options: You have the option to exercise the choice. You have oil futures and not oil options.
Swaps: 2 banks are involved in raising funds for their clients in different geographies.
There are index funds representing the entire stock index on a BSE for example and there are sectoral indexes. For example, index representing the infrastructure stocks.
Shorting strategy refers to a contrarian outlook of the market based on business fundaentals. George Soros has followed this strategy to make a lot of money. Please find out who that guy is. They have a bearish outlook to the market if the market is bullish and otherwise depending on their analysis of the situation.
Investment decisions.
Why are you investing?
Now it depends on the purpose of your investment. For example, you may need 10 lacs 10 years down the line for your son's education. You want a product that will give you return without risk. You would not want to take risks here.
Do you understand whwere you are investing? I forgot to ask the third question, he said there are 3
Okay, what do the investment banks do?
Investment banks provide advisory, underwriting services in case of IPOs, advisory of HNWIs, get banks together to fund M&As, sell securitised products. There are no investment banks recongnised in India. RBI has not even given a definition.
Lehmann Brothers, Meryll Lynch feel because of the sub prime crisis. AIG is an insurance company and not allowed to invest in mortgaged securities but they did and landed in this rut.
The financial services sector comprises of Merchant Banks, NBFCs, regulators, Asset Management Companies, Investment Banks, Wealth Managers,
Insurance companies.
How do the banks make money?
Merchant Banking or consumer banking is about accepting deposits and issuing loans. Now the idea is to give lesser rate of interests on the deposits and charge a higher rate of interest on the loan and make money in "the spread of the interest". It's called,"the spread"
Mutual Fund Companies like Fidelity are called Asset Management Companies (AMCs). In US, they are called Asset Managers. Banks can be sponsors to the mutual fund operators but they cannot operate a mutual fund. Similarly, investment banks cannot operate mutual funds. Sponsoring can be for the initial investment and protection money.
Mutual funds could be sectoral funds, diversifies funds among myriad categories.
Other financial servicec are Systematic Investment Plans, electroically traded funds etc.
Sovereign papers like kisan vikas patra and NSCs are guaranteeed by the government.
There is a category called derivatives. These are products within products. A derivative would always be linked to some product, like equity. For example, a reliance derivative product would be linked to reliance equity, debt instrument.
Derivatives can be:
Futures: You agree to buy or sell at a pre-determined price at a future date which is generally 3 months.
Options: You have the option to exercise the choice. You have oil futures and not oil options.
Swaps: 2 banks are involved in raising funds for their clients in different geographies.
There are index funds representing the entire stock index on a BSE for example and there are sectoral indexes. For example, index representing the infrastructure stocks.
Shorting strategy refers to a contrarian outlook of the market based on business fundaentals. George Soros has followed this strategy to make a lot of money. Please find out who that guy is. They have a bearish outlook to the market if the market is bullish and otherwise depending on their analysis of the situation.
Investment decisions.
Why are you investing?
Now it depends on the purpose of your investment. For example, you may need 10 lacs 10 years down the line for your son's education. You want a product that will give you return without risk. You would not want to take risks here.
Do you understand whwere you are investing? I forgot to ask the third question, he said there are 3
Okay, what do the investment banks do?
Investment banks provide advisory, underwriting services in case of IPOs, advisory of HNWIs, get banks together to fund M&As, sell securitised products. There are no investment banks recongnised in India. RBI has not even given a definition.
Lehmann Brothers, Meryll Lynch feel because of the sub prime crisis. AIG is an insurance company and not allowed to invest in mortgaged securities but they did and landed in this rut.
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