Cost Reduction Strategies I

Perhaps I have missed the bus. Few months back when every damn company was going through cost reduction/cutting my post would have been more apt. Actually this post would be apt anytime because my cost reduction strategy is not about firing people, reducing travel cost, etc. The strategies are more macro level, reducing the bigger redundancy in technology. May be a little futuristic.
Let us take travel: Air Travel. What is the point of carrying something which is not adding to payload. Yes I am talking about the power plant. The power plant in an aircraft weighs around 30% of the entire structure of the aircraft. And thus when the airplane is flying, you are burning more fuel to carry something which does not really want to travel or to go to that destination. You might thinking....Hey What the heck!!! Are you mad?? How is the aircraft going to fly without those power plants. Exactly that is my point in this blog of cost reduction strategies.
Can some innovation be made so that the power plant remains at the airport. The airport keeps getting energy from the power plant while in flight and reaches the destination without carrying the power plant. This is the modern concept of wireless power transfer. Think about the massive infrastructure set up cost, the wires, the transmission lines, the distribution centers that need to be set up in order transmit electricity from the generating stations to the end users. You need to step up the voltage through transformers, and know not what else, suffer massive maintenance costs. Why do you need all this?? Cannot energy be transferred without wires & cables. Can we not have a source & a receiver something like two mobile phones, where one mobile phone is the generator and the other is the aircraft or the end user would be using the power. Thus electricity would be transmitting on its own through the air and reach the receiver.
In fact  such technology is upcoming & more on the development stage. MIT professors have developed a technology by which you can charge your mobile phones without connecting to the power source. You keep them on the table and they get automatically charged from the power sources in your home. Wireless Power Transfer. But certainly the amount of power required in charging a mobile phone is much less than what is required to run an aircraft. Moreover the distance by which this charging is to be done is way smaller in the mobile phone case, because the distance between the power source and the mobile is within your home. But in the case of an aircraft would be thousands of kilometers. Hence it would take some time before this technology is applied to air travel.
However there is prospect that an electricity driven car would directly drive in to a power station. Just park their for a minute and get charged without connecting to any wire. There is substantial cost/energy to be saved if this technology really develops.

One More period of Slumber

I am passing a period where there are so many things in my head. And yes some of them are causing aches. I want many things to change but frankly have not seen a single window through which I can shout yes I can see the end to the tunnel. There are a multitude of things and I know things will turn good soon, but when is that soon. Once more I want things to fall in place. And this time I want them to fall in the proper place not in the way it happened after my final placement in IIM Calcutta. And this itchy condition is not allowing me to think through, hence the hiatus in blogging.

Food For Thought: Incremental Understanding

I accept Saurabh that the ultimate effect of this valuing up of the rupee in totalitarian would be inflation and nothing else ,
I get back to my previous view that the effect on GDP would be short term & in the long run everything production level comes back to the previous value.

However I stand by my statement that there would be a kind of utilitarian effect in the form that some wealth would be redistributed from the rich to the poor. The explanation is provided by taking a look at the classical Long Run Aggregate Supply Curve (LRAS). Whatever is shown in the figure is nothing new. I am only going to take a little help from the graph in explaining the phenomenon.
Initially there is an equilibrium and natural level of production is being met. When the rupee is valued up, as I said before people in the short term would not mind spending a little more. (Explanations provided in the previous blogs). This would increase the income of certain people who in turn would demand more and thus Aggregate Demand (AD0 to ADf) Curve would go up. Wages being sticky Short Run Supply Curve comes into the picture: resulting Y (production level) increase to Y*. Hence increase in GDP. But soon wages increase due to increase in price to the intermediate level Pi and supply curve goes up to SRASf finally everything settles down and a higher price level is reached Pf while production comes back to the level Y. Thus ultimate effect is there is no increase in GDP. However inflation happens.
Though I still hold:
1) There would be a redistribution of wealth.
2) Short term recession, consumer sentiment can be overcome by this phenomenon.
Then again why should a government take this ultimate step when recessionary cycles have become so short term in nature.

Food For Thought: Question From Economics II

Remember the last food for thought that I provided. The one where I had tried to seek if there would be an indirect positive effect on the national economy: GDP if the local currency is valued up => Food for thought I.
It was argued and even I was of the belief that the effects whatever would be very short term in nature. If there is a positive effect on the GDP, it would be short term & over the years everything would normalize and move toward natural or long term output value i.e. in the long run there won't be any effect on the production/consumption of the country.
Now take this: Recently I thought that the effect can actually be long term. In fact such an effort can actually help in more equitable form of redistributing money in the economy. The thought came to my mind when I went to a place to get some of documents photocopied. That person charged me 0.50 cents for each page of photocopy. Pretty reasonable isn't it. Wait convert that to rupees!! 7 RS per page of xerox. This is exactly what would happen if the rupee is valued up. Small petty jobs which are valued low cannot be priced lower than a certain limit. And hence the cost of these jobs would increase. Well this cost is actually increasing the wealth of the people who perform such jobs. Their spending power increases & wealth is actually redistributed from the wealthier to these people.
Again budding/prospecting economists What is your take on this???

Just a few updates: And an informal invite.

Life has been a mixed bag for quite some time now. Looking back I have not made a single post in February. Naturally for those of you who are not in touch with me would wonder the reason for the slumber. Well the beginning of February was spent in planning one more trip to India. The middle of the month was spent in India & the last few days of the month recollecting the fond memories of the trip & also fighting a variety of virus that affected the entire value chain of my living system. I had cold, I had fever & I had an upset stomach (See I am talking like a consultant as well: Value Chain!!!). The reason I started the blog stating my life has been a mixed bag is because of the fact that right now I have no clue where my career at this moment is heading. Sometimes I feel that the entire MBA has been a waste just going by the fact that I hardly use the skills that I developed in my two years at IIM Calcutta. I feel sad sometimes hopeless that I am losing it: my skills in finance, statistics & economics. Would I be ever able to utilize those skills which I had always thought were among the best.
This hopeless situation is somehow made beautiful by the variable that came into my happiness function sometime back. The fond memories of the last India trip is centered around the time I spent with her. Previously I had written a blog on Childhood love. It is true that childhood loves are special but I am so happy that I had to spend such a long time to ultimately find her & find the best who could ever come to my life. I use the world of blog to publicly announce her arrival. Many of you who are in touch with me, already know, for the rest this is the official announcement. Previously I had thought I would take some more time before settling. But now I see that as pointless. Even our parents thought so. And so dear friends this is an informal invitation to the ceremony that is going to take place in August 6th tentatively. Please be there & wish us the best for the journey ahead.

PS: The date stands corrected and it is going to be 2nd August

On Bose & Basu-s

For those of you who get confused let me tell you that the Bose & the Basu-s in this world are the same. It is something like Banerjee/Bandhopadhyay, Roy/Ray, Pal/Paul & so on. This hotchpotch in the surname surprisingly is found only among the Bengalis. I have a possible explanation: This Quandary is created by the British, and in fact a direct fall out of the "Phirangs"- setting up their offices in Calcutta. The higher ranked officers (the British) twisted the names of the middle level Babus (the Bengali workers) to suit their tongues. This fact is corroborated by the fact that the quandary is found only among the upper caste Bengalis: The social class that found a sit below the "Phirangis".
No this blog of mine is not on etymology, nor it is on the history of British Rule in Bengal. Rather I am writing this blog as a reply to those peers of mine who want me to prove the intellectual, & emotional supremacy of the Bose & Basu-s. You see I am a Bose/Basu myself & no doubt would only look at the brighter side of things. I have been asked to provide names of the Bose & the Basus who have made it big in the world/India arena. I started and the bag is immediately full:
Netaji Subhas Chandra Bose (You Know him)
Rashbehari Bose (You Know him)
Jagadish Chandra Bose (You Know him)
Satyendranath Bose (You Know him)
Amar Bose (of the Bose Sound Systems Fame)
Mihir Bose (BBC head)
Khudiram Bose (Martyr)
It is something like you name it and I have it. Well my critics do not stop here. Next they would tell me I am a Basu & not Bose. Humm!!! I get "gagahoo". I need to prove that even Basus are great. (I mean Bose & Basus are same but those who have adopted the Basu in their certificates are no less mortals). But hey my search engine got severely loaded in finding the right Basu to my choice. I could remember only two immediate names. Jyoti Basu & Bipasha Basu. And I HATE both of them from the core of my heart. I was pressurized to the point that I change my name from Basu to Bose. Well however today morning I did some googling, a little research and I could sense even Basu-s have made it big. I leave it to you to do the googling:
Kaushik Basu (Cornell educated economist)
Debabrata Basu (Of the famed Basu-s Theorem)
Siddhartha Basu (Kaun Banega Crorepati)
Kunal Basu (Writer)
I have a bigger list. But I stop over here. So there you go critics, "you have it on your face", while on one side you have "Boson Particles" on the other hand you have "Basu's Theorem". Take that!!!!.
PS: Well I am not debating I am just proving a point. No Vindication. So I am ending with one negative point. Bose/Basu-s belong to the kin called Kulins in Hindu Caste System. It was said that a father who gets his daughter married to a Kulin guy would go to heaven after death. A fodder that helped the Bose/Basu's to marry in tens. Alas I am born in a different world ;).

To Jyoti Basu (Contd...)

Thanks that there are many Bengalis who think like me...and want to remember Jyoti Basu in the same light as me. I could not help posting a comment on my last blog. Sarcastic but nice read :).

He was a great leader no doubt, with all the aspects necessary to be termed as a great leader - things like a shrewd brain, criminal attitude and a very very thick skin. He lead WB through the most turbulent times, and with great success. He was the visionary who understood that education (and knowledge as a result of that) was the reason behind all social problems like people demanding their rights. Most importantly, education brought about the huge potential problem of rural people saying no to blindly following the "Raja r party". Having realized that, this visionary took legendary steps to ensure that a whole generation or two were made to go through a rotten educational curriculum that ensured their eternal struggle in life. They were not employable at national level, so the only option left for them was jobs (or whatever) created by the CPIM. We at B Schools, we must understand how great this strategy was, he created the pull factor by ensuring lack of emplyable
skills and supplied the push factor by actively recruiting for the famed party network - the famed Cadre Raj. It's a lesson, a great lesson in strategy/marketing/operational excellence. And yes, he created the financial backbone too - by making each and every industry pay for their well-being. Anyone who wanted to do business in WB, had to finance the great cadre network. Look here gentlemen, we are probably looking at the best possible system that was put in place to ensure long standing undisputed rule by a single party. When we reflect back at what Bengal is today, we must pay homage to this great visionary. It is a sad day today, specially as we come to terms with the fact that he could not get the best treatment possible. Look at what he had got, treated at AMRI hospital. That, after being treated throughout his life in the UK and other advanced countries (please ignore that these were the very countries he used to despise in his public speeches). It is extremely sad that he could not be taken to the best hospitals in the UK in his final years and we will probably never be able to forgive ourselves.

Too many emotions overflow my mind today, words are not enough to express them.

Just a final word -
Would have liked him to survive for a year or two more. He deserved to see the culmination of the downfall of CPIM - the demon he created as mean of looting the state. That would have been his ultimate prize. Sadly, he (just like his great follower - Mr. Chakrabarty) did not get the opportunity. I am sad today, sad from the core of my heart - for Mr. Basu and for the citizens of WB who also would have liked him to stay on till 2011.

Any such comment is further welcome.