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Posted by sarmavangala on

No one can predict when disaster will strike—but knowing what to expect if it does will buy precious time.

 

Imagine yourself as a top executive in a company hit by a major crisis within the last 72 hours. First, and most importantly, there may have been serious damage to the community in which you operate. Your customers may have suffered, people’s livelihoods destroyed. The environment may be irretrievably damaged. Some of your employees and contractors may be injured, or worse. Your investors will be livid, and the board looking to assign blame. By the end of the first week, chances are your organization will be facing dozens of lawsuits, some set to become class actions over time.

Very likely, at this early stage, you will realize that verifiable facts are few and far between. Opinions and rumors abound. You will have little or no idea of the extent of any physical or financial damage or the extent to which the organization was complicit in the event. You don’t even know which of your top team members you can count on. Some of them may be implicated; others may be operationally inexperienced, unfamiliar with the political realities, or temperamentally unsuited to the new situation—filled with good intentions but uncertain what role to play.

The crisis will be manna from heaven for your organization’s natural antagonists, who will seek to take advantage of your misfortune. Competitors will try to lure customers and poach employees. Activist investors may plot a takeover. Hackers may target target your systems. The media will dig up every past error the company may have made.

Much of the anger, by the way, is directed at you. And it’s personal. Parody Twitter accounts may appear in your name, trashing your reputation. Your family may be targeted online. Reporters may be camping outside your home at odd hours of the day and night.

In the middle of all this chaos, what exactly do you do? Do you hold a press conference? If so, what do you say when you have so few facts? Do you admit wrongdoing, or do you say that what happened is not the fault of the company? Do you point to the cap on your legal liability, or do you promise to make everything right, no matter the cost? What do you tell regulators that are themselves under pressure, and demanding explanations?

The issues just described are not hypothetical. They are all real examples of experiences that organizational leaders we know have faced in multiple crises in recent years. What’s really troubling is that these experiences are now far more frequent, and far more devastating, than they have been in the past.

Every crisis has its own unique character, rooted in specific organizational, regulatory, legal, and business realities. But after helping around 150 companies cope with a range of corporate disasters, we have seen some clear patterns. These can teach companies some simple best practices they can follow to prepare for a better response, in case the worst happens.

The threat is growing

Many incidents inside companies never hit the headlines, but recent evidence suggests that more are turning into full-blown corporate crises (exhibit). The total amount paid out by corporations on account of US regulatory infractions has grown by over five times, to almost $60 billion per year, from 2010 to 2015. Globally, this number is in excess of $100 billion. Between 2010 and 2017, headlines with the word “crisis” and the name of one of the top 100 companies as listed by Forbes appeared 80 percent more often than in the previous decade.1Most industries have had their casualties. For instance, the US auto industry recalled a total of around 53 million vehicles in 2016, up from about 20 million in 2010, while the US Food and Drug Administration sent out nearly 15,000 warning letters to noncompliant organizations in 2016, up from just north of 1,700 in 2011.

 

Posted by sarmavangala on

We’re hiring: Small Calibre Ammunition Expert

 

As part of the due diligence for a client considering a manufacturer in the small calibre ammunition space, we are seeking an Expert who has led a small calibre ammunition manufacturer and has deep knowledge of this arena with especial reference to Europe.

This part-time engagement will be, initially, for a period of 16 days spread over2 months at a daily rate well in excess of GBP1 000 plus expenses.

Please contact Vincent Bodsworth, Head of European Operations, for a confidential discussion via e-mail:  vincent.bodsworth@metastrategyinc.com

 

Posted by sarmavangala on

10 Steps for National Destruction—Mugabe’s Step 3 Crush opposition

 

Step 3 Crush opposition

 

If there is a common theme to Zimbabwe’s elections it is that they are usually described as , ’A violent sham’, ‘Day-light robbery’, ‘Rigged’, ‘Opaque’, ‘A playground for thugs’, ‘A shooting range for Mugabe’s goons’., and so on.

 

Violent repression is a hallmark of tyrants and Mugabe excels at it. Prior to the general elections in 2002, over 100 political affiliates were murdered. For the 2008 elections, three candidates from the opposition party inexplicably died. Morgan Tsvangirai, Mugabe’s opposition leader was arrested, usually on trumped up charges, in 2000, 2003 and in 2007: the last detention resulting in documented beating at the hands of the Special Security Force.

 

The only independent newspaper, Daily News, had its business license revoked because it was critical of Mugabe and the ruling elite. The official version is that it was inciting violence and hence was a national security threat.

 

The most blatant and perverse misuse of power came about just after the 2002 election, an election widely ridiculed since it was obviously rigged.. On the eve of Mugabe’s swearing in ceremony, a grainy video was released purportedly showing Tsvengirai arranging with an ex-Mossad official for the ‘elimination’ of Mugabe. This was taken to be an assassination plot. Tsvengirai was charged with treason and spent the next few years fighting the charge and could not provide much direction or leadership to the opposition, just as Mugabe had intended. It so happens that the Israeli national, Mr Ari Ben-Menashe, has done consulting assignments for Mugabe and has a reputation spanning the globe as a con man and the Jerusalem Post refers to him as, ‘A notorious, chronic liar’.

 

Hitler had the Hitler Youth {Hitlerjugend or HJ} which was the youth organization of the Nazi Party. The HJ were disciplined and dedicated to a fault and were put to fight for the country when things started to get rough towards the end of the war and they carried themselves admirably. Mugabe has what he considers as the equivalent of the HJ in the Youth Wing of the Zimbabwe National Union Patriotic Front or ZANU-PF. However, the similarities end with the commonality of the word ‘youth’ in the names. This rag tag group consists of youngsters who revel in gratuitous violence, are feared by all law-biding citizens and have no chain of command except a nominal head who is 65 yrs old and is a lackey to Mugabe.

 

Mugabe counts on this wing to execute on his commands for neutralizing any unwelcome attention and will be called upon increasingly since Mugabe’s treasury is soon going to be bare and he may not be in a position to pay the police or army.

 

Mugabe will then have to call on his fourth step to national destruction, Legislate the almost impossible, to repress the people even further.

 

 

Posted by sarmavangala on

10 Steps for National Destruction—Mugabe’s Step 2 Hide the truth

 

Let’s start by getting our terminology straight.

Monopoly: One seller, many buyers.

At one stage, Microsoft, with its operating system, had a virtual monopoly. 

Monopsony: One buyer, many sellers.

Until 2012, it was illegal for wheat and barley farmers in much of Canada to sell their crops to any entity other than the monopsony Canadian Wheat Board.

Potemkin Village: Potemkin, the favourite lover of Russian Empress Catherine II, is said to have had a collection of fake, portable villages that he would erect along the river bank as the Princess travelled in her royal barge in the evening. For effect, he would also have camp fires.   Behind the elaborate façade was desolation and starving peasantry.

______________

In the first part of this 10 part series, we examined how Mugabe, owing to a referendum which did not go as per his plans, played the race and land card and effectively killed the engine of his country’s prosperity.  In this second part, we see how he continues to go down the path to national destruction since he has initiated it.

 

Step 2: Hide the truth

The state run monopsony, Grain Marketing Board , is a mystery to most Zimbabweans. The warehouses are guarded much like military installations and many foreign journalists have been expelled when they got too close to the truth regarding GMB. Local correspondents have been arrested when their pieces were considered ‘national security breaches’.

The GMB’s early days were very different. The UN’s World Food Programme {WFP} only had a procurement desk in the capital, Harare, staffed by 5 or 6 people who would channel the ample harvests stored in the GMB’s warehouses tofeed the rest of the continent. At the height of the Ethiopian famine, 20% of Ethiopia’s population depended on Zimbabwe’s harvest to survive.

The WFP now has hundreds of aid workers scattered across the country todistribute food locally. Fully 50% of the country’s citizens now count on WFP’s food—food that is grown in Canada, China and India—to survive. Mugabe does not even need to feed his own people.  The outlook is bleak since agriculture output has fallen sharply over the recent past and so more mouths will have to be fed by donor nations’ largesse.

The GMB has 80 warehouses which, according to the photos on its website, have grain sacks stacked from the floor to the ceiling 32’ (10 metres) above. Looking closely at the graphics representing the warehouse stock on hand, one notices that it is the one photograph reproduced multiple times. The web page that should direct brokers to procure container-loads of grain is now selling 500 g packs of potato chips and 500 g packs of rice.   Internet access is not a priority for most Zimbabweans and so they are unaware of the true situation. However, the farmers who sell to the GMB, and expect payment for their produce know better. They have stopped selling to the GMB since, in their opinion, it is bankrupt and cannot pay for their appropriations. Crops that are not mandated to be sold to the GMB are being favoured by farmers since they are assured of some payment from buyers.

 

Some years ago, when the situation was quite dire, Mugabe delivered a 20-page ‘international appeal’ which was prefaced by the following, “Land seizure was conducted to economically empower the poor and we criticise the donor community for their skepticism toward our pro-poor policies”. In this appeal, the blame for the food shortages was placed squarely on the shoulders of everyone except the engineer of the shortage, Mugabe. Using a cue from Potemkin, famous for his Potemkin Village {a fake village built only to impress}, Mugabe embellishes the data regarding the harvest of his country at every opportunity so that the donor community diverts its attention to other failed states in more need, such as Syria, DRC and Afghanistan. Widespread starvation is now almost inevitable owing to poor rains and the on-going plunder of the treasury.

It is almost certain that the citizenry will not rise up since Mugabe has a formidable mechanism in place to crush dissent and this is his third step towards destroying a nation which will be discussed in the next instalment.

Posted by sarmavangala on

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Junior Business Analyst

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Representative tasks

Analysis

  • Documents client organisation’s direction, structure, business processes and requirements.
  • Researches client organisation’s industry and competitive position.
  • Assists in the collection and consolidation of required information and data.

 

Execution

  • Understands project plans and is able to clearly articulate roles, project goals, and timelines.
  • Takes input from supervisor and is able to appropriately apply comments/feedback.
  • Adheres to project standards defined by project management.
  • Proactively carries out project support /administrative functions.
  • Establishes responsible deadlines and personal work plans and manages time effectively.

 

Core competencies

Communication

  • Listens to others and accepts input from team members.
  • Clearly articulate ideas and thoughts verbally.
  • Accurately prepares written business correspondence that is coherent, grammatically correct, effective and professional.

Technical Understanding

  • Proficient in Microsoft Office suite.

Problem Solving

  • Proposes solutions to problems and considers timeliness, effectiveness, and practicality in addressing client needs.
  • Generates innovative solutions by approaching problems with curiosity and an open mind, using existing information to its fullest potential.

 

Professional qualities

Leadership

  • Displays a positive attitude.
  • Demonstrates flexibility in day-to-day work.
  • Sets high standards of performance for oneself.

Teamwork

  • Establishes harmonious working relationships with team members.
  • Appreciates each team member’s contributions and values each individual member.

Client Management

  • Values internal and external clients and responds to their needs as they arise.
  • Establishes effective working relationship with clients.
  • Follows established communication guidelines.
  • Uses good judgement in what and how to communicate with clients.

 

Organisational responsibilities

Innovator Development

  • Understands the professional development process and becomes actively involved by setting challenging goals and meeting them through continuous learning.
  • Seeks input from mentors and supervisors.
  • Actively applies feedback received to day-to-day work and strives to improve performance.

Internal Operations

  • Accurately completes and submits time and expense reports in a timely manner
  • Accurately completes and submits status reports in a timely manner
  • Complies with all our policies and procedures

 

Academics

A 4-year degree from an accredited school in engineering or business is required.

Personal

Must be available for unfettered global travel, sometimes for extended periods.

If ADA is applicable, please self-identify.

Toronto, Dallas or Singapore will be the base office.

Residency status must allow the candidate to be able to live and work in the country where the base office is located.

Must be fluent in written and spoken English.

 

Must have a high degree of proficiency in both:

Arabic and Mandarin

 

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Posted by sarmavangala on

10 Steps for National Destruction – Mugabe’s Step 1: Kill the goose that lays the golden egg

 

Teacher, economics genius and kleptocrat Mugabe

Economic ruin thanks to the kleptocrat Mugabe

Kleptocracy and tyranny are nothing new but Robert Mugabe has been practicing these for almost 4 decades on a scale that is impressive.  He has received numerous honorary degrees and has even been Knighted {subsequently withdrawn}.  This 10 part treatment of his tactics should throw light on how tyrants achieve their ends.

Mugabe (93 years old), it is reported, checks in to a clinic on an almost monthly basis in Singapore and it is to be hoped that it is from there that the newswires will allow the world to refer to him as the late Robert Mugabe.  His 50 year old wife and former secretary is almost certain of becoming the next president and so the future for the country looks uncertain.

Let us start.

Chapter One: Kill the goose that lays the golden egg

True to form, where colonists entice tribal leaders to sign over vast tracts of fertile land to the pioneers, Sir Cecil Rhodes was able to garner huge land holdings, land which was the envy of all of Africa owing to its fertility.   For his trouble, the country that he founded was, in 1895, named Rhodesia. Rhodes believed that the Anglo-Saxon race was destined to greatness.

 

Cecil Rhodes, architect of Rhodesia and founder of the Rhodes Scholarship

Cecil Rhodes, architect of Rhodesia and founder of the Rhodes Scholarship

 

Ian Smith, who considered himself an apostle of Rhodes, was the prime minister of Rhodesia in the 60s and 70s and ensured that the 200 000 whites in his country prospered at the expense of the four million blacks and oft-repeated thatblack majority rule would occur ‘never in a thousand years’. Smith declared UDI (Unilateral Declaration of Independence) from Britain in 1965 promising, ‘A whiter, brighter Rhodesia’, and managed to hold on to power until 1980 when a bloody civil war, which cost almost 50 000 lives, brought Robert Mugabe to power and the country changed its name to Zimbabwe.

 

Ian Smith and Rhodesia. Picture taken during better times for both.

Ian Smith of Rhodesia.

The economy built and supported by white farmers and businessmen kept the country going for a spell and Mugabe who had called Zimbabwe, ‘The Jewel of Africa’, was able to build roads, 4 airports and a rigorous and inclusive educational system. The whites called him, ‘Good Old Bob’.

Whites started to buy land and invest in the country since they believed in his moderate rhetoric.

Power started to get to him and except for the white minority and a small, yet elite, group around him, there was discontent in the nation and a constitutional amendment that would have increased his power substantially did not go his way in a referendum in the late-90s.. That is when he started to write and execute upon his, ’10 step manual of national destruction’.

 

Chapter One: Kill the goose that lays the golden egg

He played the race and land card. ‘If white settlers took land from us without paying, we can, in a similar manner, take it from them,’ Mugabe stated. For good measure he added, ‘Don’t trust a white man, even a dead white man’.

A land grab of monumental proportions took place and, obviously, title to the land annexed was conveyed to Mugabe or his cronies.  Armed thugs would arrive at the farms and start building settlements in the middle of lush crops.   White farmers were kidnapped, or butchered or allowed to speed off in their pick-ups with just the clothes they were wearing.

The country known as the breadbasket of Africa became, in a space of a mere decade the basket case of Africa.   Maize (corn) production fell from 2 million tonnes per year to 700 000 in 2014, wheat from 300 000 tonnes to 27 000 and tobacco, a major foreign exchange earner representing almost 40% of f/x earnings dropped from 400 000 tonnes to just 27 000 tonnes. Livestock was used for food rather than husbandry and the few cattle that remain wander around the fields and have foot and mouth disease thus ensuring livestock rearing is an impossibility for the next century. Irrigation piping, farm machinery and everything else needed to run farms has been sold for scrap.

Zimbabwe now depends on food aid from FAO and the World Food Programme and its inflation has been recorded at stratospheric heights such that the salary picked up in the morning was worth only 0.1% of that amount by evening.

Inflation for September was 500 Billion per cent.

Inflation for September was 500 Billion per cent.

The number referring to September 2008’s inflation is 500 Billion %

Tyrants, paranoid about their diminishing support, focus their attention on a resented but economically vibrant and vital ethnic minority in hopes that there will be a marked turnaround in their ratings. Stalin obliterated the wealthy kulak farming class, Idi Amin ‘cleansed’ Uganda of the affluent commercial class represented by Indians and Hitler identified the Jews as the root cause of Germany’s ills and set about his ‘final solution’.

There was a spike in Mugabe’s popularity but the economic damage was extensive and long-lasting and he expended great effort to mask it. How he does it is the second chapter in his manual, ‘Hide the Truth’.

An apt description for Berlusconi

An apt description for Berlusconi

Berlusconi cannot hold a candle to Mugabe.

Posted by sarmavangala on

Remember when you Xeroxed something?

Xerox logo

Xerox logo

A strategic resource is property one owns that is long-standing and one’s competitors cannot duplicate it without incurring serious economic loss.

 

Xerox had such a strategic resource: its 1950’s patents on plain paper copying were rock solid. Buyers were prepared to pay upwards of USD4 000 for a copier that cost only $600 to manufacture.   Its only competition came from the old wet-process copier companies.

 

Every five years, the company produced ‘Strategic Plans’ but these were only financial projections. Xerox’s position could be likened to a hydro-electric dam. It takes a great deal of labour to build the dam, but once completed it has a serviceable life for many decades without further significant inputs.

 

Xerox then created another strategic resource: a world class rapid response repair and maintenance service to keep its breakdown-prone machines in working order. From the patent strategic resource, it created another strategic resource. The value of this is to keep the machines running. From this, the firm created another strategic resource: specially branded Xerox paper that went through the machines without jamming. Essentially it had, therefore, three strategic resources.

 

Management started to tap themselves on their back ascribing current profits to recent decisions they had taken not giving credit to the planting of seeds many decades back which were now yielding a bountiful harvest.

 

Books were written about Xerox’s management style, the innovative culture at Xerox which included suggestion boxes, the dress code and their office layouts as all contributing to their success.

 

Over time, management expended untold resources in trying to get into the computer business while their core skills lay in photocopiers and their maintenance. What they failed to do was to leverage the in-house skilled engineers and technicians on trying to make paper handling better and the machines smaller so that they could sit on a desk top. Canon, Kodak and IBM saw this gap and leapt in to start the enormously profitable line of personal copiers, printers and fax machines.

 

Management started to loosen their grip on tight integration and started adding many products and projects so as to project youthful vigour through bolt-on acquisitions. They became plump and ready prey for a new generation of upstarts.

 

Being in possession of a strategic resource makes a company lax and lethargic. In this way Microsoft sidles IBM, Dell outsmarts HP, Nvidia takes business away from Intel. In time, these upstarts also become inertia-bound and there are always nimbler, younger outfits waiting to spring into action.

 

This is the cycle of life.

 

So, next time one hears, ‘You’d better tweet that’, one should remember that there was a time when Xerox was also a household name and reconcile oneself to the fact that someone in the future will ask, ‘Remember when you would Google something?’

 

 

 

 

 

Posted by sarmavangala on

Hold the High Ground Trumps any other pricing model

 

Peterbilt Trucks

Peterbilt Trucks through the years.

 

Hold the High Ground Trumps all Other Pricing Rules

 

Daimler’s Freightliner and Western Star brands held 40% of the US heavy truck business in 2014, followed by Paccar at 26% with its Peterbilt and Kenworth marques and Navistar and Volvo each come in at 12.5%. This is a low growth, mature and highly competitive industry. Paccar, the subject of this study, has not lost money since 1939 and, not withstanding the economic turmoil of 2008-2009, its return on equity has averaged 16% over the past thirty years.

 

Fleet Operator’s Viewpoint

 

Synonymous with quality, Paccar has two brands in its stable: Kenworth and Peterbilt which are widely regarded as the highest quality trucks made in North America and the company does not fail to receive JD Power awards for its trucks as well as for its service. Paccar maintains its high standing despite charging premium prices.

 

What is Paccar’s secret to being able to sell at a premium? There is none. It is able to show that its trucks run better, run longer and its cost to operate is lower than its competition. This is vitally important to the fleet operator who looks at a fraction of a cent per mile in making procurement decisions.

 

As an example, a 2015 Kenworth W900L Sleeper lists at around USD165 000 and if it is driven 125 000 miles a year, the operator has to budget around $125 000 every year in operating expenses for fuel, repairs and insurance and all of these expenses are in addition to wages and benefits. It was for this very reason that Kenworth designed low drag, streamlined trucks 4 decades ago, well before its competition.

 

Quality leadership is a tenuous place

 

Quality leadership of Paccar’s kind is difficult to hold and there are three reasons for this: one cannot say one has a long-lasting product unless one has a product that has lasted a long time. This reputation take a while to establish but can evaporate in an instant. The second is the complexity in building a very involved, large, high-quality machine. The store-house of knowledge is passed on from engineer to engineer only when the company provides a stable, collegial workplace and thirdly, owing to purchasers’ myopic vision, they tend to be steered by the selling price rather than by future savings.

 

Custom interior of long-haul truck

Custom interior of long-haul truck

Owner-Driver’s Viewpoint

 

Paccar addresses the obstacles by its strategy of being the quality leader. It looks at quality not through the eyes of the fleet operator but through the viewpoint of the owner-driver. Owner-drivers increase their pay by driving themselves and their rigs for longer, harder, sometimes driving 16 Hrs a day. They look at efficiency but also have a broader view since their truck is their office, home, lounge and TV room on the road. Also, with the Paccar brand comes a kind of Harley-Davidson aura. The dealers are highly trained and experienced and their configurator tools allow the purchaser to custom design their rigs. Since Paccar builds each truck to order, inventories are low, both of production items and finished goods.

 

Paccar’s strategy is to do something well and consistently over the long haul.

 

Paccar’s make to order model means its variable costs are higher. The higher margins endears it to its dealership base which is more dedicated and loyal. Paccar does not make small trucks, only large ones and in the large truck sector it does not make cheap products.

 

In the design studio, on the shop floor, in the executive suites all the talk and focus is about truckers and the truck industry. They have no need for consultants to come in and tell them where their core competency lies or who their main customer is.

 

This is Paccar’s strategy. Good strategy is about design and design is about fitting various pieces together so they work harmoniously together.

 

Posted by sarmavangala on

China’s Judiciary as the Bedfellow of Corruption

Judge China

A senior judge in the Imperial Court

Part II – The Judiciary

In the first part of this set of papers, corruption in China was addressed. A case to counter this blight was made and, in the current paper, the ground is laid on a small, but not insignificant, step that can be taken to at least start the journey to clean up corruption.

 

Why is it necessary to address corruption? As consultants to industry, our clients, who, in the main, are successful business people, tell us two things that are high on their wish list:

 

  • I wish to invest in a country where I don’t have to bribe everybody, and
  • I want to invest in a country where the judges are not corrupt, where, if I have a legal case, I can expect justice in the courts.

 

The connection between corruption and the judiciary is undeniable.

 

One of the most central facts about China’s judicial system is it is intimately and inexorably intertwined with the party bureaucracy. In another way that is emblematic of the problem discussed is the courts are financed from local government sources rather than from provincial or central funds. It goes without saying, therefore, courts lean towards local pressures.

 

Judges lack life-long tenure and are hired only with the approval of the courts’ communist party’s political department and are subject to the discipline of the party organization.

 

Except for the most trivial of cases, judges normally operate in panels of three and there is a two-tier adjudication system. Once received by the filing court, the case is heard before a professional judge sitting with two people’s assessors. The assessors are chosen from a roster of approved laymen so as to give the proceedings a patina of democracy. As to be expected, the assessors take their cues from the judge in charge. A collegiate panel of three professional judges deals with decision-making on appeals to the second instance tribunal.

 

A case that can be received by the receiving clerk of the court can only be inscribed upon the authority of the local party. Hence, many cases can be refused to be received with no reasons offered. For a business seeking judicial remedies for their economic or social redress this is most frustrating.

 

A point that was raised above related to local interests. The protection of local interests may be crucial to the business dispute between a local company or individual and those from elsewhere.

 

In all of this, guanxi, the network of personal relations that judges find more compelling to satisfy than legal norms has to be acknowledged even if not eradicated. Hence, judges are ever heedful of maintaining social stability, i.e., take into account public opinion even if that requires the misapplication of substantive or procedural law.

 

Guan Xi

GuanXi

 

In cases involving the author’s clients, during proceedings, blandishments of an influential or aggressive litigant, who threatens to take the matter to ‘people in Beijing’, have scuppered their plans. The presiding judge does not take kindly to having the case heard elsewhere, especially if it is a local individual who chooses to go to Beijing.

 

The pressures on judges come from many sides:

  • Local government or party officials;
  • Members of the local people’s congress;
  • Members of the local people’s consultative conference {a.k.a. prominent residents};
  • Judges from a higher court and
  • Individual provincial or central party or government leaders.

 

Hence, the legal framework does not support the independence of the individual judge.

 

Quoting Sen. Marco Rubio, Chairman of the Congressional Executive Commission on China, ‘Local governments are the most significant source of external interference in judicial decision making’,

 

A possible two-pronged remedy for this would be to give judges life-long tenure, after a period of probation, and for the judge to have more real-life experience rather than academic achievements prior to being appointed to the bar. In this manner, the judge is more mature and less malleable.

 

The current system if far too entrenched to make radical changes in a short period of time without substantial resistance. The independence of the individual judge should be paramount and by making that person have tenure should alleviate the dependency of the judge on the local party machinery.

Posted by sarmavangala on

The Necessary Drivers to Make Modi’s Make in India Campaign A Success

Hyderabad2014

Ask anyone on the sidewalks of New York or Auckland to name globally recognized brands from different countries and the following would form a sub-set of their responses:

 

Japan has Canon, Sony, Honda …..

Taiwan has Acer, HTC …..

South Korea has Hyundai, Samsung, LG ….

India has …………………………………..long pause……scratching of head….. Jaguar/Land Rover {these were acquired brands and so constitutes cheating here}

 

What India lacks is a clutch of world-beating products. Herein lies the rub. Its Asian neighbours had 60 years of thoughtful leadership which marshaled agriculture, manufacturing and finance policy-makers towards the one goal of collective prosperity. The progression of Japan, for example, from a broken country and one on its knees in 1945 to a formidable economic powerhouse in 2015 was through small-holding agriculture to small-scale manufacturing to a world-leading manufacturer with Nikon, Komatsu and other internationally recognized brands in its stable. This progression was underpinned in its entirety by a finance and manufacturing policy that encouraged exporters and fostered intense internal competition.

 

Prime Minister Modi launched his Make In India campaign immediately upon taking up office in mid-2014. He recognizes the importance of manufacturing in driving economic prosperity. However, this manufacturing has to be of a particular type to achieve his lofty goal, viz., one that is export oriented.

 

Over the past six decades since independence from Britain, the various Indian governments gave scant attention to local manufacturers, except if they were run by favoured industrialists, but were quick to prevent imports, for both production and for consumption. In this manner, local competition was stifled and mediocre products were turned out.

 

QUANGO’s {Quasi-Autonomous non-Governmental Organisations} flourished under these artificial conditions and some were even able to come out with goods of unquestionable excellence. Hindustan Machine Tools (HMT) is a prime example of such an entity.

 

Walk into any hardware store in India and ask for a screwdriver. The tool handed to you is mediocre, except if it is an import—usually from China—and comes without a warranty. Against this backdrop, Modi intends to make India into a manufacturing titan fully capable of turning out stealth fighter jets and high-speed bullet trains and, that too, during his tenure as PM, say by 2020. This is a laudable objective but the timeline is hardly realistic.

 

For him to achieve success here, he has to look first towards education. The British, plantation style of education that India has had thrust upon it by its Colonial masters cannot produce the hordes of technocrats necessary to drive his dream. If he looks towards the much vaunted IITs as producers of the calibre of individuals he desires, he’ll be sorely disappointed. Over the past two decades, India has provided the world with IT professionals of exceptional quality. However, only about 3 million of an estimated 500 million in the Indian workforce are in IT. Had the graduates of the IITs and other colleges gone on to industry rather than IT or finance, which has been their wont, there would have been no need to have a Make In India campaign.

 

Almost 5 decades of policy neglect have created a situation where only 10 per cent of the work force is employed in manufacturing. Contrast this with South Korea where the focus was industry-based development for the past 3 decades and fully 30 per cent of the labour force is drawn into industry. So, secondary and post-secondary education will have to be re-aligned along the German, Italian and Swiss models with industry providing internships. They will become the incubators of the new crop of technocrats.

 

The next item on his To Do list is to look to the crumbling infrastructure. The roads and railways connecting the various cities and the road systems within the cities themselves have to have a serious expenditure in analysis and then monumental capital outlays have to be planned for upgrading most of these. Electrical capacity building will have to be an imperative. Private-Public partnerships may work in this context.

 

Finally, he will have to corral bureaucrats charged with land, labour and capital policy to provide the last supporting pieces. Agriculture land will have to be made available for the factories. Buying farmland and converting it to build factories is tremendously complicated and expensive; by law, companies have to pay four times the market price in rural areas The Special Free Zones, where enterprises are given special treatment, also will not suffice.

 

India continues to provide heavily subsidized power to agriculture and, at the same time, charge prohibitively high rates to manufacturing. China, and other countries hoping to develop, follow the reverse logic. Price baselining and making available a plentiful and regular supply has to be a given here.

 

 

The cost of labour in India is lower than in China. With the spectacular growth in China, wages there have moved up considerably. India has a plentiful supply of labour available at attractive rates.

 

India’s cost of capital is one of the biggest impediments to entrepreneurs. These costs are among the highest in the world and the root cause is the closed financial system in India. So, Modi has much on his plate if he wants this to succeed and all the items are priority number 1.

 

The realistic estimate to make everything fall into place and to have all the policy parties aligned should, at the very least, take a generation. This is a long time horizon for any politician but Mr Modi has to be credited with at least being able to identify the current malaise in India.

 

The Make In India initiative is going to have to have a lot of thought expended into it. The results will be immense, if the execution is done right.