Banking post financial turmoil

Financial turmoil acts  as a heralding for a series of events about to take place.Banking organizations are the
most prominent to take the blow.History has shown that the reason for the biggest financial turmoil to date be it the great depression of 1929 or the recent financial crisis of 2008,has been the banking sector.Specially after  the 2008 financial turmoil countries across the world are making sure that they have a prudent and pragmatic banking sector.
Basel 3 is the proposed solution to make sure that various banks across several countries are better off dealingwith problem as serious as the recent financial distress.For trivial understanding purpose basel 3 just meansholding enough cash to make sure that even during financial downturns the bank will be able to meet it's creditorsexpectation and also will be able to do it's routine business without going bust.This two words phrase "more cushion"will imply a large number of imperatives for the banks management.Basel 3 proposes banks to hold more assets and that too in the form of equity,what this implies is that the banks will have to fore go some of its profits as it will not be able to lend to its probable customers.
Banking is now seeing a shift from the deregulation phase to the regulation phase.The very assumption that banksare self correcting and are better left to the markets was proven wrong.The Dodd-franc rule proposed by the  American government is expected to change the way the banks functions by effecting various aspects of banking  like their borrowing costs ,the amount of loans given as a percentage of deposits etc.One of the proposals is  to separate the commercial/retail arm from the investment arm known as the volcker rule.The basis for coining of the volcker rule is that banks should not be allowed to speculate with peoples money, rather it should be invested in safer assets like government securities bonds.The impact that this separation will have will be that banks wont be able to use the cheaper source of funds(deposits) to finance it's riskier and high returning  activities.This nascent development will force banks to move into more riskier domain of
business seeking higher returns which can justify the high cost of capital.so the question again rises whether the new set of regulations will indeed help the banks get more safer or will they be a cause of yet other agony for the banking sector.
Governments across the countries in order to restore the confidence among common public are coming up with schemes like deposit insurance.This poses a bigger challenge for Regulators and they are always on their toes to make sure the banks are operating properly and have sound business model in place.Switzerland which  is home to two of the worlds biggest banks UBS and Credit Sussie is taking a even tougher stance and has allowed the regulators to have a say in the banks decisions making.Any such step has its own draw back as it may force the bank to relocate somewhere else.
Another important aspect which needs some mulling over is that Financial markets are leaky i.e money flows from one financial market to another and banks no longer operate in a single country.These all make the work of the central bank way more tedious.The impact of a bank failing in one country may effect several other countries.This is what has happened in Greece case,it's various banks are highly correlated to the working of other big banks across Europe and hence even the proposal of soft restructuring of the debt has
been thwarted by the European central Bank.Here at this point I will like to throw some light upon how various banks across the countries are correlated to each other.
Interbank lending known as the money market is a short term money market where various banks turn to during times of financial distress.The financial distress could be ralated to meeting the minimum capital requirement or could simply be a source of liquidity required to pursue banks day to day activity.One of the major culprit of 2008 financial crisis was banks over reliance of this short term source of fund and once this source of fund dried up banks founded it quite difficult to go on with their current activities.This heavy reliance on short term funding implies that one bank is dependent on other which in turn is dependent on another set of banks and so on leading to a chain and hence even if one banks defaults there is a risk of whole banking sector falling apart and in order to prevent this it is the government which acts as the most important cog of this whole system.

European debt crisis

Every now and then for the last one year or so.we have been hearing about the latest development of the IMF bail-out package for troubled euro zone countries.The plethora of information highlighting different view points about what should Greece and other troubled euro zone countries do,have forced me to mull over this issue and come up with my understanding of the situation.
The bail regime for Greece started about one year ago.Earlier the politicians and the leading bankers thought that providing a stimulus package from the IMF coupled with the fiscal tightening by the Greece policy makers would do the trick and Greece should be able to ride through the tough waves.But now as the time has passed the proposed solution seems to be infeasible and once again the top European authorities of the likes of  European union and the European central bank are once again busy contemplating a new strategy which help this troubled economy to pass the stringent test which lies ahead.
The bond yields of Greece are rising at a very fast rate and for sure this rate is not sustainable for the government.It was planned earlier during the 1st IMF sanction that Greece will return to the  markets by 2012,butthe yields have risen to such an extent that it's impossible for the government to turn to private investors for its financing for the year 2012.What this has done that it has made clear that the current fiscal stimulus from the IMF is not enough and there is a need for other more pragmatic solution to this problem.The politician of the euro zone area are talking about possible debt restructuring,however the ECB is strictly opposing any such restructuring scheme.The ECB is opposed to this scheme because the write-down which comes with the restructuring will effect the banks who are currently holding the Greece government debentures.Jean-Claude Trichet, President of the European Central Bank is having a tough time convincing the politicians that any restructuring will effect badly not just the Greece banks but also various other large banks across the euro zone which are possessing the Greece government debentures.The probable solution which the ECB is suggesting that is to increase the maturity of the government bonds keeping the interest and the Principal intact.What this will do is that it will provide Greece with some more time but ultimately this is a short-term easing,ultimately the payment has to be made and at present level of 145-% of GDP deficit it is almost sure that Greece will not be able to do that.Restructuring is something which will have to be done-the sooner the better.
From the last we got an idea why restructuring is important in Greece case.But again as there are opposing concepts to every probable idea,this too has its cons.Most of the people who are opposed to this idea say that restructuring will promote other countries not to try harder to make sure that their fiscal policy are implemented with due diligence and in a punitive manner.Countries like Ireland and Portugal have al-ready been provided with IMF fiscal stimulus, so if we go in for restructuring for Greece case then we might have to consider restructuring for these two countries as well.This will for sure will put immense pressure on the European banks.
Finally to end this discussion i will like to conclude that restructuring has to be there in Greece case if we think of proving a long term solution.Without restructuring it will be impossible to sustain the deficit level and the Greece economy will succumb into dip recession much bigger than the Lehman brothers.What lies to be taken care of is the extent of restructuring and this is something which requires due diligence from the European politicians side.

Need for collaboration between corporates and social sector organization

In developing countries like ours own their is immense potential of unlocking new markets of business.But again as most of business men are agile the markets of high profit prospect has been captured.The urban area have seen sprawling of new business at a stupendous rate.The only market to have lacked this pace of launching of new businesses is the rural sector of India,the reason is quite obvious-no scope of sudden revenue generation
In the past decade the corporates have shown their potential through the phenomenal growth record of theirs.Social sector has been lagging in terms of growth that can be materialized i.e.growth which can be literally be shown on the various accounts statements.Of lately the social sector has come up with more and more innovative and the so called 'greener ideas' which seems the be the need of the hour of the 21st century.In India for example the innovative concepts like generation of electricity from husk and various other cleaner sources of electricity have come up and that to in large numbers.The government has also played a supportive role by promoting these initiatives through various subsidies schemes.What this has done that it has increased the growth rate of social sector at par to those of the corporates.
Now since the growth rate of both the sectors are commensurate to each other,most of the business savant are mulling over the possible collaboration of these two sectors.These two sectors combined can serve the need of the myriad people of the rural area in a new innovative and less costlier ways.Several examples have come up in which the collaboration of these two have not only been blessing for the rural India, but also has proven theirs economic viability.One such example is of E-Health Point.what this organization does is that it leverages technology to cater to the needs of the rural India.Diagnosis is done online so that the rural area people will not have to take the burden of traveling long distance as they can have a online diagnosis  at their village itself.Of-course the IT is acting as a facilitator here but again the idea has spawned by the various social sector organizations and with the help of corporates infrastructure they have turned the idea into a business model which is benefit able for both the corporates and the rural public.
The need of the hour as such is the that of a Hybrid value creation(HVC) with the collaboration from both the parties.This collaboration can recreate value across various dimensions like it can provide cost efficient as well a time efficient solution to the people and at the same time act as a new source of revenue generation for the corporates.But again for the revenues to become substantial some patience will be required as the growth aspects will not be as high as compared to various tested business models like urban retail and various financial models of the like of MF schemes etc.The benefits which this new collaborative platform has on offer is that the number of competitors are quite few and hence for those early movers whom in marketing term we call innovators have got a huge unlocked business potential needs to cater to.

pros and cons of multi-side platform

In  2009 toys company toys 'R' us sued amazon saying that it had violated some of the agreement of their multi- side platform deal in which amazon will provide the platform for selling the toys of toys 'R' us through it's online web-site.But it turns out that toys 'R' us learnt it the hard way that amazon was focusing more on toys 'R' client in order to create a rapport with them which was more oriented towards creating a value for amazon.
The above stated dispute is only one of the myriad issue which one needs to understand in order to get an insight into nuances of MSP. There are various issues which a firm should consider before going in for a msp with an existing platform provider like amazon,ebay etc.first of all let me elaborate the cons whcih are stated in a point wise manner
1.The platform provider can access  your customer base and can focus more on creating value for themselves rather than focusing on your concern.

2.Differentiating your product is quite difficult when you are using multi-side platform.This is the sole reason why exclusive companies like Louis-Vuitton prefer to have their own platform rather than going in for msp
.
3.seamless integration between you and the provider may not be there.


Now let us see what are the pros of going in for a MSP
1.lesser cost.this is quite obvious as you not concocting anything rather you are just using the service of an existing platform.

2.Access to larger customer base-the provider which you use will have been there in the market for quite some time and thus it is expected that their customer base will also be quite wide.This gives an instant access to the existing customer base.

3.Also these days the provider are providing some space for customization of your offering.This can be used as a tool for differentiating your product,but again no 100% customization is there.


Deciding whether to go for a msp or concocting yours own platform is a strategical problem.The firm must know what sort of business they are in, whether they have a long term orientation or they thrive more on short term gains.A mismatch between the orientation of the platform provider and the subscriber has always been a source of discrepancy.In the amazon case amazon has a long term orientation whereas toys 'R' us has a short-term orientation as toys market thrives mainly on short-term intermittent innovations.Most of the time the paltform provider tries to monopolize by setting in certain demands.Microsoft developed an opensocial paltform in which applications which can run on any social network platform like facebook,myspace,linkedln can be developed.As a barter for providing this service what microsoft demanded was an access to the customer of these social network sites.Linkedln sniffed some hidden motive behind this and opposed this motion of microsoft.Instead of going in with opensocial linedln created it's own platform which used only few features of opensocial which were quintessential like searching based on a particualr calendar date and an event to see who all members of linkedln or other socialnetworking sites where attending it.

Companies like google has been raking in quite a lot of money through advertisement wherein they charge the companies which use theirs ads to promote themselves.Generally the companies which use this feature of google pays on the basis what exact search pattern string which they will like to purchase,whenever the user types in the search string which a particular company has purchased,ads of that company will pop up along with the search results.A firm can also go in for more than one MSP for example the same firm can use the advertising facility of both google and yahoo.

In the past there has been the case where the MSP has become kind of monopolist and in order to discourage this type of monopolism various firms have chipped in to search for new service providers.But again while choosing new service provider firms must make sure that they are not tipping the new provider to become another monopolist.This is exactly what happened with apple's i tunes,initially it was encouraged to end the monopoly of napster but overtime it grew so large and commanded such a high stake in online music store business market that it itself has become a sort of monopolist.

To end this discussion all that can be summed-up is that whether to go in for msp or to build your own platform is a strategic decision.firms must have a complete knowledge of what they are striving to achieve including the knowledge of the customers which they are targeting, type of the market which they are into ,whether it has long term or short term orientation etc and various other factors which vary with the requirement of the firm.

what it takes to be a high potential employee

Recently there has been quite a buzz regarding how the various companies distinguish the top employees from the rest of the bunch.There are various different view points regarding whether the company should be overt about who are those top 3 or 4% employees whom they consider as high potential,some say that it's a good idea as this will encourage competition among the employees whereas others feel that this should not been done as it may demotivate those employees who are not on the list.This brouhaha about what should been done has been a source of inspiration of my mulling over what is it that being a high performing employees takes.


First of all if you want yourself to be projected as a high potential employee your performance has to be very good,there is no compromise on this front,but again this is not the only criteria.Another important thing is that you have to be very good at learning new things like various new technology it certainly gives you sort of edge over your peers and shows your knack for gaining insights about newer things,but again this is important only during your early days as time goes on technical agility do not play very important role.After certain time it is your qualitative qualities like your behavior which really counts.Factors like technical nimbleness are taken for granted once you reach a top position,so in order to distinguish yourself from the lot you will have to focus more on your soft skills.By soft skill I mean how you communicate to your peers,sub-ordinates,customers,what is yours attitude towards them etc.

The factors described in the above para are quite generic in nature,so now i will like to elaborate on the x-factors which distinguishes you from the lot.Let me list these factors point wise so that it is easier for the raeder to comprehend where this discussion is headed.

1.Desire to excel
Most of you will be wondering that how can this be a distinguishing factor as almost everyone of us have a high desire for success,but again the thing is having a desire is something and really working hard to make those desire come true is another thing.People who are so called high potential have this desire and are willing to sacrifice without feeling nostalgic or whining  about how things are going on.

2.Catalytic learning
Learning is a very important tool which once leveraged can do wonders.but again simply learning about something wont do we have got to learn about how to use in practical what we have learn t.In order to explain this point let me take a example suppose you are trying to learn a new language then you wont be able to learn it completely just by reading it what you have to do is that you have to try and speak in that language daily thats what called practical implication.

3.Enterprising Spirit
This point is of paramount importance in today's dynamic world where as they say no job is permanent.You may be working in one project for quite sometime but suddenly your boss calls up and tells you that you have to move on to some another important project.Initially there might be some inertia preventing you from moving on from the current project to the newer one as you devoted quite a lot effort of yours towards the ongoing project, but again as time goes on you have to accept the very fact that you wont always be working as per your wish sometimes you will have to put up with things.

4.Dynamic sensors
Again this point has gained quite a lot of importance lately.Most of the high potential employees get tempted by offers which seems quite lucrative initially only to be found not at all interesting later.high potential employees recover from a mistake committed by them quite fastly and hence their so called sensors are dynamic in nature.


This blog post of mine has been inspired from the june 2010 edition of the hbr.I have tried to present this fact from my understanding of the article and have tried my level best to not make is sound like a Verbatim

Vitality of Sustainablity for managers

The concept of sustainability has been there in the business world for a long time,however the area or to me more precise the broader aspects which it covers is increasing day by day.Earlier before investing in a new business avenue the most important factor which the top notch of the company used to see was whether the proposed business is financially viable or not.By financial viability they mean that whether the revenues which are being generated because of the implementation of the business idea outweigh the cost of implementing the idea.But now a days financial viability is not the only important criteria,sure it is there among the list of important things to checked of before the implementation,but certain other factors like the one which has gained the most importance-the environmental sustainablity.
Environment sustainability has become one of the influencing factors these days as companies are striving really hard to make an impact on its customers and to be seen as a company which places a great deal of importance to ecological conservation.Various companies herald this commitment of theirs through various programs like the corporate social responsibility(CSR).With the ever increasing pressure from the various NGOs, companies before implementing any of their plans make sure that they are in accordance with the environmental law existing in that area.The government too is encouraging the companies to be more and more environmentally responsible by using more and more greener ways of producing.The help from the government side comes in the form of various subsidies which are provided once the company reduces it pollution level.There are various methods of measuring the pollution level and the one which is quite famous these days is carbon footprint.Their is quite a tussle within companies to reduce their carbon footprint and be seen as a more greener companies.Recently government of India in order to promote this initiative has waived the import taxes on greener sources of power like solar panels etc which are imported from other countries.Even newer concepts like trading if carbon footprints has come up and has been in existence for quite some time in countries like US.However the carbon footprint trading concept proved out to be a sort of a fad.
The use of greener products is definitely a topic which the environmental specialist will like to foster,but again these products are not cheap and hence the initial set-up cost are quite huge and because of this high set-up cost reaching the break even point will be difficult until and unless there is large demand and the company is able to reach economies of scale.The developed countries are pondering upon the developing countries which are still in the industrialization phase to use more and more greener ways,however the most important issue which they are not addressing is that how the developing countries is going to have access to the huge capital investment required for this pourpose. This is one of the reasons why the copanhagen summit was not that successful.

china suppressing policy

China is on the verge of becoming the next superpower surpassing American dominance which has been there for quite some time.There is every reason for the Chinese to feel proud as they have been prudent in terms of their economy policy making,but as always no one can stand seeing others take over their position and America is no different.It has been making a large hue and cry about china's policy of devaluing it's currency which it is supposed to carry on in order to help it's exporters.But on the contrary china has been accusing the Americans of being highly skeptical when it comes to allowing the free inflow of Chinese Technological products.This blame game between two of the modern era super-power nations has been going on for quite some time.


A lot has been said about the political situation which prevails in America and their is a general feeling at least as far as Americans are concerned, that theirs country favors free expression of thoughts about the prevailing political/economical situation i.e it can be said that American flaunt this as a tool to vindicate to the outside world that each and every politician no matter which post he or she is occupying, is accountable when it comes to the violation of the law.It is this law abiding free from any form of sudden political turmoil self projection of America which has helped her to become the home of world largest corporate houses ,also its simplified corporate tax regime has been a sort of addendum favoring this bussiness friendly image of America.

Now moving our attention to china which has been recently under lot of criticism from outside world about its illegitimate ways of suppressing free expression of thoughts from media and other public figures.China's past has been quite shadowy when it comes about it openness to free operation of media and other forms of free expression of speech like from those of public figures.The image of china over the years has been of a autocratic system in which the rules governing the free expression of thoughts are vaguely defined.It has not been that china has enjoyed this projection of herself,in fact it has tried to come of this cocoon to project itself as a nation which favors 100 % clarity when it comes to the implementation of various laws protecting free expression of thoughts.there has been number of attempts made by the Chinese government to accomplish this,but it's approach has been sort of fitful in nature.Every now and then there has been instance which has proved this like the recent detention of Mr Ai one of the known dissident of china.No proper explanation has been given by the chinese authority about the reason of his detention and also no one has heard a single word about the whereabouts of Mr Ai after his detention nearly a month ago. Events like this put a sort of bad mark on the previously tainted image of the Chinese government.

We are living in the twenty first era in which the concepts like the world is flat and battle field is even exists.In this era no country can afford to be highly secretive about the way it handles and implements its law governing free expression of speech.If a country is exploiting human rights then it should be the other countries which should atep in a form of collaboration and raise a voice against such a country,In the case of china's detention of Mr Ai countries like American and the European countries raised their voice but it was too late.So prompt and timely expression of protest against the malpractice of  a particular country is what that is required.N o matter how big the nation is if she is suppressing the human rights of its citizen its the responsiblity of other country to chip in and make sure no such things happens in future.