China Dream, success menu

The greatest twenty-first century phenomenon is the China Dream that has flabbergasted the entire globe in one go. How an under-developed country lived so long in economic isolation opening up only in 1979 for foreign  investment for the  first time, took such great stride in  last four decades to become number one geoeconomics power is miracle indeed. How this happened?

The top notch item for this great success menu is how China went on the aspect of capacity building. By using the special economic zones (SEZ) China got investors to cough up large quantum of capital by way of cash, infra-structure, machinery & equipment along with modern top of the range technology that is often shared with the host along with the liberty to use patents & intellectual property.

Linearity of geoeconomics goal is the second most vital ingredient in the menu for success. It was driven via three lanes:

a) Cost effectiveness of manufacturing and associated labour efficiency of Chinese workers who were given on the job training as well as off-site training in technical and managerial skills.

b) Sheer economic focus that downplayed the enforcement of labour laws, conformation to human rights, more than that, dismissal of environmental safeguards in its entirety

c) No way, distraction of the primary economic mission was entertained or allowed to proceed

Worker discipline & dedication ranked third in the success menu. Chinese Communist Party (CPP) doctrinaire emphasised no-nonsense approach by every Chinese who must do his part in turning out items from the production line with such dedication & diligence, such that occurrence of errors was totally eliminated. Moreover, workers were brainwashed to the effect that the mite he contributes goes long way in the blossoming of China Dream. Put it another way, it was national pride to be part of the production endeavour.

CPP cadres were represented both in the factory floor and at management round table who depending on the situation per se would choose flexibility over regimentation or regimentation over flexibility as the case may be. Rest of the workers go along with the decisions without qualms or objections.

The thin line separating ideology with pragmatism as the fifth ingredient is always observed fiducially. Evidently, the CPP cadre in corporate management use tack with foreign partners and force with Chinese labour to implement public policy of China based on Marxism-Leninism and thereafter mesh it with company business policy framed by the investors so that right brew of pragmatism in policy perspective is achievable along with achieving business goals.

Sixth, it is the crisis management that functioned as the crown. At any moment crisis brews in the labour group or in production process both the workers and foreign investors join hands in managing the crisis in cooperation rather than confrontation.  

Seventh wonder is strategic thinking that prevails in the minds of corporate management spearheaded by foreign investors who have track knowledge and exposure. Ostensibly few disagreements have taken place so far. At the end of the day sense of comradery prevails amongst both foreign partners and the Chinese hosts who later join in the evening for beer with lot of cheer! 

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

Choosing right business strategy, where to begin?

Strategy is thinking and choosing the best alternative from competing options identified and whetted by corporate management. “Well planned is half done” goes business legend! A well thought of business strategy has the strength to stand the test of competition in the market place leading towards seamless execution and splendid completion. 

While everything begins form the first step of understanding what the customer wants, the presumption that customer is fully aware of what he wants exactly, must be rebutted. In point of fact, most customers have only vague idea of what they really needs. Say “I want to buy a laptop”.  In other cases customers think that some features they are aware of is all what they need. Say “I need to watch videos on laptop”.

A successful marketer should be able to point out that the laptop, he is selling has audio & video facility, capacity to prepare documents and help being in touch with the customer’s friends & relations via Wi-Fi communication and surf the world online. Every ground breaking deal must have the ingredient of introducing unique features built-in the laptop the marketer is selling that are not available right now in products sold by competitors. By now the prospective buyer is hooked on this particular laptop and is happy to buy it because he would be much ahead of his friends & colleagues who use different brands of laptop. 

Arising from the above but on a diametrically opposite angle is the second aspect of management conviction that customer acceptance is firmly tied with product quality on one-to-one basis. In the market you still have plenty of goods that are not of superior quality but sold in large quantity. Detergents and colouring such as blue are apt examples.

This proves that marketers have misperception in understanding product quality as the sole driver for every purchasing decision.  What they do not realize is that, the customers have their own perceptions and prejudices as regards to what constitutes product quality. Royal Blue is still ringing in the ears when it comes to buy colouring agents for washing and rinsing clothes. 

This is where customer research comes into play. Of course marketing departments in companies have their own arms of marketing research and also buy research products made by independent consumer research organizations and rating agencies. These research products outline findings in terms of type of goods, demand & supply, brand loyalty, buying patterns, customer predilections and prejudices. In addition there is wealth of information regarding demographics that include, income bracket, marital ratio, sex ratio, family background, racial connotations etc.

Finally in formulating successful business strategy, nothing is emphasized more than the co-ordination between marketing and manufacturing departments. Delivering value is the privileged task of the marketing department that is occasionally advised by the manufacturing as to what is possible and what is not possible in turning out products that marketing department recommends as winning ones. 

Speaking on parallel, manufacturing department must understand perfectly the customer profile, what he currently needs and what additional features could attract him more.  After coalescing with marketing, manufacturing department should map out the plan to create the unique value that customers buy en masse when the product is launched finally! 

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Nord Stream 2, fait accompli by Putin

Vladimir Putin took a leaf from the first of the Chinese 36 stratagem that says “Deceive Heavens to Cross the Sea”. This stratagem states that progress of any event must not be made known to the enemy until the last moment. When it is found a done deal the opponent has to adjust to the situation and accept the deal. Joe Biden POTUS did precisely that. How Putin brought about fait accompli with concerned parties?

USA

Up until recently “Using the strategy of blocking at the dead-end, America seeks at worst to stop the project forever and at best to delay the project while extracting concessions from both Germany and Gazprom.” (Read). After talks with German President Angela Merkel in the White House President Biden told reporters on Wednesday 21 July 2021, “Nord Stream is 99 percent finished. The idea that anything was going to be said or done that was going to stop it is not possible.” Admission of the failure of the dead-end strategy has opened up new vistas for America, Germany & Russia in geoeconomics. Biden was quick at the draw a la Clint Eastwood.

Germany

For Angela Markel, this is her parting gift to the German nation as she steps down after almost 16 years stay as the helms woman. Although she bequeathed this to her party Christian Democratic Union of Germany, how they will use this trophy in the upcoming election in September 26, is unknown. The Green Party riding high in the forecast polls has consistently opposed to Nord Stream 2. Annalena Baerbock the young & dynamic co-leader has been nominated recently as the Green party’s candidate for Chancellor. Polling at 30% of votes she has every chance to win the election.

But natural gas is a vital geoeconomics issue for whichever party that wins the election. There is all round acceptance that gas production in Europe as a whole is sliding and Netherlands, one of the leading supplier in Europe is lowering down her production target. Meantime gas consumption in Europe is rising exponentially. Germany has to either find alternative sources or to expand capacity of the Nord Stream 1 with Nord Stream 2. The US$ 11 Billion Nord Stream 2 is a suitable one on the basis of it being a known devil in terms of Russian supply of gas to Germany and thence to other European countries. The supply is currently pitched at 55 billion cubic metres (bcm) via Nord Stream 1. When both Streams are in operation it could double as high as 110 bcm.

Russia

The grand master of business strategy, Vladimir Putin concealed the real progress of laying of pipelines for North Stream 2. Occasionally in order to heat up controversy Russia would announce certain percentage of work completed and so on to hoodwink both USA and European countries that are opposed to it from the beginning. Russian & German secret services joined hands to release false information as and when it suits them fine.

When the project is almost complete only Foreign Minister Sergey Lavrov talked about Dead –End strategy by America to stop the construction. Finally, when Angela Merkel met Biden few days ago the actual position of the project was made known to the latter’s astonishment and that of CIA. Since the Fait accompli is clear President Biden required an honourable exit. That was provided by Germany & Russia to close the case amicably.

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

Singapore Airlines selects cost leadership business strategy

Of late, many full service airlines are tottering at the seams due to humongous cost structure weighing them down. Fixed cost apart running cost also has emerged as bricks around their necks. Keeping head straight as a profit making company amidst competitive environment is herculean task. But Singapore Airlines tell us a different story: success via cost leadership 

In the foregone days assessing the health of an airline was limited to the key ratio of cost per flight hour. As the cost structure has major divisions of fixed and variable the tendency towards controlling fixed cost was considered as strategic focus. A break-even point was arrived at and every fixed cost was listed out and the largest amongst these were put under nicroscope for vetting.

Lease rental or loan amortization in case of ownership of the plane along with maintenance, refurbishing, airport and hanger cost, insurance premium, staff cost other than the crew are collated and marked as important elements to be controlled. By increasing or decreasing flight hours this cost can be leveraged. The ideal is to bring the breakeven point fairly at low level so that during sluggish demand airlines could still survive. 

Variable cost on the other hand change in proportion to the use of aircraft per se along with the number pf passengers the plane carries. Flight maintenance, fuel cost, crew cost, in-flight catering, landing cost and supply and use of consumables vary a lot. In fact, the human cost of flying is around one third of the total variable cost and fuel might range between 17 to 20% that too depending on the price fluctuation at a given time.

Theoretically it is possible to reduce fixed cost marginally and variable cost fairly. However, in practice, it cannot be done and what the airlines needed was a ratio that spotlights the effectiveness of the cost incurred in running the flight per se. To do that airlines have identified a suitable ratio in the form of cost per seat occupied. Put it other way cost per passenger. Both notional fixed cost of the aircraft while in flight and the full variable cost of flying are added and the total is divided by the seats occupied or passengers flown. 

Singapore airlines has had major success in using this ratio, and her cost per seat, is the lowest among full service airlines. What is surprising is that this cost per seat braces what the budget airlines are experiencing in their own itinerary. There is more to it than meets the eye. Singapore Airlines record the lowest cost per seat not only in long-haul flights but also in short regional travel as well.

How this super profit is made possible? To the amazement of analysts, Singapore Airlines outlines her business strategy as cost leadership in fixed and running cost. Two arms of this business strategy are worth noting. First arm is the creation of value where the company rightly identifies the needs of international travellers and offer the best and unique service to these sophisticated travellers which in turn becomes the normal standards in every flight.

The second arm is delivering value by synchronizing input and output in a cost effective manner. Inputs by skilled and well trained staff who deliver customer focused service during the flight is supplemented by catering in-flight of such international standard that makes one time fliers to become frequent fliers. More than anything else, every aspect of value delivery is kept strictly in line with overall cost effectiveness. 

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Global health governance, geoeconomics imperative

An international process of arriving at consensus for chartering course over global health is right now an urgent geoeconomics imperative. America as a solo superpower projecting vast power via economic means had to face major defeat as all her president’s horses and men failed to contain and control the Corona virus.

Lessons learnt from the recent pandemic proved that a country or a group of countries like G7 cannot tackle an issue that affects the entire globe without the participation of all the countries. Besides, the binary approach of East versus West has also failed miserably to see light at the end of tunnel. More importantly, even with the kind of expertise in biology and virology, the west stonewalled on their refusal to lift property rights over anti-virus inoculation despite the fact that President Biden openly declared in May 2021 his support for temporary waiver of these rights.

It is in the backdrop of these developments, a leaf from the adage “prevention is better than cure” induced the international community that instead of wrangling over intellectual rights of pharma companies they concentrate on their own initiative, upon the subject of global health governance so that in future the globe as a whole would not be caught in similar epidemic awaiting to happen, and if happened, that could put it asunder the entire geoeconomics world order.

In addition to approve vaccines from China, Russia and the developing world where medical research is making great strides as in the case of  India who was once dubbed as the World Pharmacy the need to build a firewall against future viruses raising their heads be curtailed and quarantined. Curiously, many suggestions are expressed from different quarters as regards to the purpose and mission of such global governance:

1. Preventive measures: Public health as a major social overhead must be recognised as such and a substantial amount be allocated in the annual budget proposal of every country. This amount could be tied to a percentage of the GDP

2. Proactive measures: Countries must band together in regional or sub-regional form in public health clubs that seek to take all necessary steps regarding proactive measures to avoid any such epidemic taking place in their domain. If necessary the members in the club must take concerted actions in affected countries outside their respective club from where tourists and travellers arrive on their shores

3. Data collection & analysis: This relates to each and every data on the size, scope and spread of any contiguous disease that had the potential for wide-spread distribution. Occurrence, symptoms, treatment and post recovery complications and convalescence procedures must be collated and shared among members and concerned international bodies

4. Burden sharing: If and when a member or country outside the club declares emergency and call for international support, steps must be taken to send all necessary requirements including inoculation, drugs and other public health products such as oxygen, ventilators, mobile care vehicles, make-shift hospitals and many others.

5. Financial aid: A consolidated fund be established under the auspices of the public health club in order to support beleaguered nations that are unable to generate income within their shores to manage items 1, 2 and 3 of the suggestions listed above. For example countries like Lebanon cannot stand on its own even securing economic survival let alone managing public health. The contribution to this fund may be voluntary or compulsory as an individual member country deems fit.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist