Rupee Fall will hit You and me

This article was originally published in Postnoon on May 25th, 2012

I ran into my recently married cousin and his wife at a family function yesterday. I asked him, “Abhi, you were supposed to be on a honeymoon in California at this time! What are you doing here?”

Abhi: I had booked my trip with a travel agent six months back, as soon as Priya and I got engaged. The travel agent had told me that the trip would cost me a total of around Rs2,00,000/- Now he is asking me to pay him Rs2,30,000/- So I fought with him and cancelled the trip.

Nicky: Oh oh! The exchange rate has spoiled your honeymoon!

Abhi: No, it’s the travel agent. He is a cheat.

Nicky: No Abhi. It’s not his fault. His costs have gone up by more than 20% in the last one year. For the same facilities, same hotel, same cab, same restaurant, same entry tickets, his cost in Indian Rupees is much higher now due to the falling Rupee.

Abhi: What do you mean?

Nicky: See when you booked your trip, exchange rate was around Rs 51 per dollar. It means that for every $100, the travel agent had to shell out Rs5,100/- Now, the exchange rate is Rs56.3 per dollar. So for the same payment of $100, the travel agent needs Rs5,630/- .

Abhi: I blasted the poor agent for no fault of his. I must go back and apologize. But why is this happening? Why is the value of Rupee falling?

Nicky: There are multiple reasons. Our Government attributes it to the crisis in the Euro zone. Greece, Spain, Portugal, are all in bad shape. This is causing uncertainty in the Euro zone and hence the Euro. Investors and traders are selling the Euro and buying dollar. Increased demand for dollar is making it more valuable. So it is appreciating against most other currencies in the world.

However, Indian Rupee has been most badly affected when compared to other currencies like the Indonesian Rupiah or the Ringgit or Won. This is due to the weakening fundamentals of our own economy. Our GDP growth rate has slowed down, inflation is high and fiscal deficit is enormous. On top of that, the political will to take corrective measures is lacking. The allies need to be placated at every step, preventing any meaningful action.

Abhi: But why doesn’t the RBI do something about the exchange rate? If they supply dollars in the market, the rupee should stop depreciating right? And I have heard that the Indian government has huge reserves of foreign currency.

Nicky: You are right. If dollars are supplied to the market, the rupee slide should stop. But how much can the RBI supply that is the question. We have a reasonable reserve right now. But we should not forget that our oil and gold imports are also very high, which are both paid in dollars. Also, till the confidence in the economy is not restored, foreign institutional investors will keep fleeing the country with their money. New investors will not come into the country to invest.

Abhi: The country is going through all this, and I was upset about my honeymoon!

Posted by Uncategorized | 1 Reply

It’s never too late…

I don’t understand why this much needed bold step of petrol price rise is drawing howls of protest from every corner of this country?  I believe that had we taken this step a while back, we would not have been in this mess today.

Although this bad situation is fully sponsored by the UPA-2, it is a much needed step to curb the over-excited depreciating currency, which is swallowing industry’s growth prospects like a hungry shark.

We cannot ignore the fact that the burden which a common man has to face by this step would be irreparable, but in economics as they say… ‘All other things being constant’ only then the arms of economic prosperity works. The only way out is to keep trying different permutations and combinations of the available economic tools.

Let’s accept the fact that we are suffering because we made a choice, a choice of electing and believing the current government and nothing here is by chance.

The easiest question a common man like you, me or anyone can ask is… Why always petrol? Why not cigarette, diamonds, alcohol or any other tool altogether? That is because of the simple reason that India imports a major chunk of its oil requirements. On top of that we are obsessed with gold like anything. Clubbing together both these commodities constitute 42% of the total imports. These imports have to be paid for in Dollars which is actually creating a double whammy for India, in the sense that on the one hand, the fiscal and trade deficits are widening sharply and on the other the Indian Inc. is posting losses after losses.

I see four potential benefits arising out of this move.

1.) It will significantly reduce the mounting losses of oil PSU’s which will subsequently become the sources of profits for government. So the governments need not to borrow or print, which makes more money available for common man and companies at cheaper interest rates.

2.) Government does not need to set aside money for subsidies which it normally does, to compensate oil companies for their losses.

3.) It’s another positive  outcome would be a long due correction in Indian currency which will be very helpful to the corporate India.

4.) Last but not the least, I feel this steep rise in prices will prompt us to use petrol in a more judicious manner, which in turn later on could lead to a fall in the prices automatically, due to the fall in demand.

In the end, I contradict my above view by saying that…What is the guarantee that the revenues earned through above measures will not go to a politician’s bank account?

But Sadly Nothing in this life comes with a guarantee!

Contributed by Vijil Jain ( Class of 2013, IBS Hyderabad)

Emotion Catalyst: the difference between Sold to Bought

As rightly said by the greats of the industry, marketing is not an event that may commence at one and end at another point of time. Marketing is a process that has a start phase, a middle phase but unfortunately no end. Words might be forgotten for once, but the feeling an individual went through always stays in the backdrop of his mind. We are in an era of digitization from the old school days of supply dominated markets, trends have changed but one thing that has stood unshaken is the field of marketing is the EMOTIONAL factor. Whatever may be the marketing strategy applied, whatever may be the product: in case the emotion stimulus is not generated by the marketing strategy it’s almost a no-show. Emotional marketing generates the difference between “just another marketeer and company” to “that person and that company “. In the digital marketing era where the internet is flooded with advertisements and offers, finding the right combination of words to make an impact is a daunting task. A correct psychological impact has a long remembrance than an ordinary marketing pitch. Strategies that can make decisions to be emotionally driven rather than based on rationality can surely get a larger market cap. Emotional marketing not only generates a long term relation but also creates a passion and belongingness with the customers. The recognition of these brands becomes a part of people’s daily life cycle which leads to undying brand loyalty. Customer always shows keenness towards making a rational decision but somewhere down the line the rationality is highly guided by the emotional imbalance generated by the marketing strategy. Emotions once touched can surely lead to shedding of hefty pounds from even the shallowest of the pockets. The greatest mistake a marketer can make to his presentation is being Dull. The markets are filled with products; there are more number of pop-ups than pages on a website, people have almost all the needs fulfilled. The market demands are mere enhancements to an existing life style: all in all what is being presented is just old wine in a new bottle. With sales figure the only form of currency with the marketeer an emotional mismatch can lead to a exponential decreasing figures. Vivacious is what the markets are and those who can generate the aura of livelihood can surely become the market leaders. Mere emotions never sell in the market; one needs to have a strong logical reasoning to justify the emotional thirst. A shopper or a home buyer would always like to think about himself as a smart buyer, so uncovering the emotional impact is a difficult task. With positives come the negatives a wrong emotional impact can lead to marketing blunders.

Marketing has always been the game of those who can harmonize the emotional tunes to work for them.

 “Reasons lead to conclusions, emotions lead to actions”

Do you think fee waiver should be made mandatory for B-schools to help economically backward students?

Business Standard poses a question and solicits responses from students across India for their weekly column “ Student’s Corner”

The topic for last week was Do you think fee waiver should be made mandatory for B-schools to help economically backward students?

Here are all the responses sent by IBS students:

Fee waivers would not only bring a sigh of relief for many deserving students but also a ray of hope and motivation for many. But the challenge for the B-schools is to clearly and correctly identify the criteria of for the waiver, because of the immense variation in the fee structure across the nation. This makes the economic inability of a student a relative concept. If this challenge is subjugated, fee waiver would be welcomed by all management aspirants.

— Rhiva Singh, IBS Gurgaon.

Winning Entry

It’s difficult for students belonging to middle class families to afford a B-school without a loan, let alone economically backward students. A mandatory fee waiver to such students will not only provide support to their families but will also benefit B-schools by providing them a bigger pool of talent. It’s better to provide a poor but deserving student rather than providing for undeserving students based merely on their communities. Such waivers will provide equal opportunities to all students in real sense and will be a correct means to insure a growth towards a less divided India.

— Neha Singh, IBS Gurgaon.

Fee waiver should be given to those who ‘fall under economically backward student category’. There are so many potential students who can’t afford fees to study in top ranks B-schools in India. As a result, those potentials remain constant and can’t get the proper nutrition (knowledge and experience) to grow much more. Students belonging to backward classes by availing such facility can achieve more and such facility is also a big help to the parents. Students will feel less financial burden and they can freely concentrate on their academics. So, it should be given to economically backward student.

— Vishal Vijayan, IBS Ahmedabad.

Many eligible students do not go for higher studies like MBA because of exorbitant fees. So providing a relief in monetary term is very good option for them. But waiving the fee could be a major step. B-school can give the option to payback the fees after joining the job. Because of that student also take studies seriously and chances of having dispute among other people also stop. The major task is selecting right candidate for such a precious option.

— Manish Kumar K Gupta, IBS Mumbai.

IIM-A said that it educated 41 students for free in 2009-10. Definitely it was free for IIM because the burden of fee waived, was borne by remaining students in form of fee hike. Fee waiver is not borne by the institutions but is passed on to other students who manage to get fund through loans and other means. But in the end everyone gets same opportunity to sit for placements but while one has everything at stake the other nothing. Instead there should be a contractual agreement between the institutes and economically backward students to repay their fees when they earn.

— Anoop Periwal, IBS Mumbai.

Fee waiver should be made compulsory for under privileged students as many of them fail to make it to their dream campuses for want of finance. Instead of reserving seats for students ,which in many cases the students dont need as they come from affluent background, the primary focus should be on the family income. If a student’s family income is less than Rs 1.5 -2.0 lakh/year, he/she should be made eligible for a fee waiver. This might even create a wave and help to abolish reservation system which is being misused.

— Saurabh Saxena, IBS Mumbai.

While economically backward students could realize their dreams, fees need not be waived but could be sponsored by Government/Government banks/companies/large tax payers. Government could give an option for large companies or large tax payers to waive the sponsored amount in the tax. In this case, corporates have an added advantage by sponsoring such students by providing employment to them upon completion of their programme as well as save taxes.

— Divya Srinivasan, IBS Bengaluru.

To promote higher education at the lowest level, B-schools should mandate fee waiver to help and motivate economically backward students. Poverty is becoming hereditary in India, at least for a sizeable population and if youth are not well educated, then country growth is at stake. In India majority of people are not financially sound and with the increasing fees of B-schools, they cannot afford for higher education and remain incompetent. Not only B-schools but even banks can provide some facilities like education loan at low rates to support economically backward students.

— Chirag Kriplani, IBS Mumbai.

Implementation of fee waiver at B-schools will come only in fruition when students from economically weaker societies participate in these programs. The entrance examination fee, college form fee are also a matter of concern for these students. Also the numbers of students eligible to B-schools are puny. Hence government of India must run some program to educate weaker societies to let their children go for higher studies. Scholarships, funds and other help at school and graduation level must be provided to ease financial burden.

— Sandeep Guleria, IBS Gurgaon.

Putting the burden on the shoulder of educational institutions to provide cheap education by means of fee waiver for poor students might not be an effective and the right step. Such a step might serve the purpose to an extent but at the cost of quality of the education. Also, the effectiveness of such a system can not be guaranteed. Instead, the government should directly fund the education of poor students, being the most responsible and capable body.

— Kushal Bhadani, IBS Mumbai

Unemployment Benefits: From Facebook to increasing Crime Rate

I was always fascinated with watching young guys and girls from USA and other countries visiting Delhi for vacations as if it was their second home. Last week I got a chance to meet Jack through one of our mutual friend Prashant and after some formal discussion I asked him how come he was in India since the last 4 months. So Jack narrated his sad yet astonishing story, how in his state Pennsylvania crime is at an all time high so he is taking Unemployment Benefits there and working back here in India, “just for a change of air” and once the tenure ends he will return back home but he will make sure that he makes enough money over here. Now what the hell does that mean…!

In United States of America as soon as you become unemployed, you need to contact your state’s Unemployment Office to check your benefits eligibility. Maximum number of weeks that a US citizen can get unemployment benefits in New York itself is 79 which were earlier up to 93 weeks. You should not be surprised if the unemployment eligibility appears either generous or scanty .You can find little variations in laws in different states of America but the benefits could be extremely high for workers and the civilian labour force 97 percent and 89 percent respectively.

In Texas anyone can get Unemployment benefits based on factors like laid off, fired without misconduct, quit for medical reasons, quit for stalking and the list goes on which includes Unemployment Benefits if your employee reduces your working hours. In Pennsylvania  the Unemployment Benefit are controlled by Department of Labour and Industry  and is described under Special Session number 2 Article 1 “Unemployment Compensation law”. Here as well the laws are based more or less on similar parameters; which includes factors like last four quarter earning details, motivation to work, mandatory registration with job portal.

Now take a look at these figures among world’s top 10 cities offering best Unemployment Benefits Pennsylvania comes in top ten twice with its cities Pittsburgh on first rank and Philadelphia at sixth position with a weekly unemployment benefit up to $550.So they are earning almost 30,800 per week for not working in America, and in India this is what is offered to a Trainee MBA graduate for a whole month. There are other cities like San Antonio, Texas at 8th rank, Charlotte and Raleigh, North Carolina at 3rd and 5th spot.

Some more research and you will come to know that out of   top 25 global cities with highest number of Facebook users US cities occupy six different slots which includes New York, Los Angeles ,Dallas, Philadelphia.

Going by the crime rate in USA these are the same cities which are either hub for Gambling and Prostitutions or suffer from the epidemics of extremely high crime rates in the whole USA. According to the FBI reports on crime occurrence in difference cities of USA only in California state its cities like Los Angeles, San Francisco and Oakland were the chart toppers with highest number of Violent Crime reported, the point worth mentioning here is that Texas is the second state with highest number of such violent crime reported.

Now the question is it just by sheer luck that same city posses all these three features of high Crime Rates, largest Number of Facebook Users and highest and best Unemployment Benefits. According to my analysis it is a chain process. Someone who just left his job after working for one year is getting $550 for free, so why will he/she even think of working? Now he/she is free the whole day with his wallet full so he is online, being party to the increasing “online culture” trying out his/her hands at cyber crime, pornography and at the end, once they lose track completely they turn towards crime in real life. At the end of the day after they realise they want a change of air they do visit our beloved country.

Contributed by SHARIQUE MANAZIR ( Class of 2013, IBS Hyderabad)

Changing world of E-Commerce and Security Threats

E-Commerce unlike the common myth is not only about buying and selling of products and services over electronic system such as internet but includes wide range of functionalities like Electronic Fund Transfer, Supply Chain Management, Online Marketing, Online Transaction Processing and Inventory Management. Looking at the future roles and prospects of internet Mr. Michael Aldrich in the year 1979 invented online shopping through the assembling of T.V, telephone connection all together with a real time transaction processing system. The whole idea behind online shopping at that time was to gain higher market penetration in the highly competitive market and to provide ease of shopping.

But at that time hardly anyone had realised that the E-Commerce that started from a basic Electronic Data Interchange meant for B2B processes will expand its roots in almost all business processes. Forrestor Research estimates the USA online retail industry will be worth 279 billion $ in 2015. According to Mr. Rajan Anandan MD Google India the expected India E-Commerce industry is of net worth 7billion $ and is expected to go up to 40 billion $ in the next 5 years.

E-Commerce in various businesses

Under the B2C marketing the E-Commerce has its presence from a pin to Mercedes. We can buy goods and service ranging from fashion, accessories, books, furniture’s, cars etc. It includes the resale market, Matrimonial Sites, Tours and travel and fund transfer. E-payment of bills and E-ticketing in India is serving millions of customers every day.

Under B2B models firms are looking for electronic gateways for making all the contact in terms of dealings information exchange with vendors, suppliers, their corporate clients with the help of E-Commerce only.

Under the G2B models now the state and central government is using E-commerce as a platform for assigning tenders, licences , work permits etc to their potential customer. It not only makes the whole process hassle free but brings transparency along with it too.

Security Risk Involved

According to an estimate 57% of US businesses say that they are losing more  money through computer hacking than through regular crime, which amounts to a total figure of 559 million US $ last year itself. In USA total number of internet user are almost 24.5 crores while in India this figure goes to 10 crore. Countries like USA and UK have got stringent Cyber Laws to safeguard businesses and customers from any kind of malpractice while in India we are still in initial stage as a result of which we still do not have any exact figure of money drain happening because of lacunas in Indian Cyber Laws. Today Britain leads Europe as the heaviest users of Internet banking services, with over a third of the UK population visiting e-banks. Traffic has grown by over 27 per cent in the last six months alone, and the growth in Internet banking is increasingly spilling over into business banking too. The surge in the popularity of these e-banks is not without its problems however, as most of the larger enterprises have, at one time or another suffered some sort of a security glitch. Most of the online systems now boast 128 bit encryption with SSL (secure socket layer) which is as secure as it gets, provided that the bank side security systems have not been compromised. But this trend is far from being inevitable or even undisputed, as a recent survey from Datamonitor showed when it revealed that in the UK, 63 percent of those polled said that they preferred to visit the bank branch, 25 per cent favoured telephone banking, and only five per cent cited the Internet as their favourite way of interacting with their bank. Moreover there is no bad apprehension regarding success of E-Commerce in India which is very much visible from the success of business models like Flip-Kart and e-bay. We can say that even the online banking is preferable among young generations but are we still ready for a E-Banking is still a questionable looking at the lack of Special Cyber Laws for E-commerce in India.

(All data given above is from published sources)

Contributed by SHARIQUE MANAZIR ( Class of 2013, IBS Hyderabad)


It’s not Greek, Mr. Mukherjee

Published in the business section of on 22nd May, 2012

 The crisis in our economy is growing. Are we heading towards 1991?”, asks Mr. Murali Manohar Joshi (BJP) to Mr. Pranab Mukherjee in the Parliament on Wednesday, 16th May. The reply consisted of statements like “Indian growth story is intact“, “The rupee fall arising out of the weakness in Euro“, “India’s growth story has not come to an end. I have confidence in people and political system of this country“.

The problem is, apart from Mr. Mukherjee himself, and a few other Congressmen, nobody else believes in his words any more. Not denying the role of Euro zone crises in the fall of the rupee, one still needs to look inwards and ask the question, “where is the government machinery?”

Seems like they are just biding time for the innings to get over, without getting all out before the time is up. There hasn’t been a single confidence boosting measure by the government in the recent years.

Reforms are announced, Mamata squirms, reforms are rolled back, back to status quo. She is the villain, government is bechaara (poor thing) and lachaar (helpless).

Impact on Importers and Overseas Investments

The rupee has fallen to an all time low of Rs55/$ (on May 21). The CEO of a company, which is looking to invest close to $20 million in land and equipment abroad in the coming year, was clearly a worried man when he said, “Desh ki to batti lagne waali hai (the country is going to get ruined). The government does not have the balls to protect the economy. They should stop the flight of dollars. Take tough stands. My cost of capital has just gone up by 20% in a year! How do I compete with the Chinese, the Koreans, the Malays and the Indonesians? I am going to withdraw from the project if this continues.”

Similarly, the importers are concerned about the increase in their cost of buying goods and services.

Till Friday (May 18), the dollar has appreciated by 18.8% against the rupee. In the same period, the dollar has appreciated 0.82% against Malaysian ringgit, 7.67% against the Indonesian rupiah, 4.76% against the South Korean won and has depreciated by 2.84% against the Chinese yuan.

Except China, all the other currencies have suffered due to the flight to dollar. But they are still faring much better.

Impact on Exporters

The IT companies would have benefitted from the slide in rupee if they had not hedged their positions. Those who did not hedge, are sure to benefit. But, only as long as their customers do not start demanding for discounts, which they already have.

The micro, small and medium enterprises, which contribute to exports in a big way in sectors like gems and jewellery, textiles, handicrafts, etc are already badly hit due to the global economic crisis. Their concern is that the falling rupee might further accentuate their financing constraints, due to rise in borrowing costs.

The Reasons

Euro zone tried to save a country which was living beyond its means as a result of which euro is all over the place. This has resulted in the flight towards dollar, which itself is a fundamentally weak currency. But what is the alternative? Gold?

An already gold obsessed nation has more reasons to buy gold now. The money spent on importing gold does not have any multiplier effect as it just gets hoarded. For the year 2011-12, the import bill of gold accounted for about 25% of India’s trade deficit.

Oil is another commodity which forms a large percent of the import bills. Subsidising it is not helping matters. Not for the oil marketing companies, not for the economy. Removing the subsidies might upset didi, but it will reduce the fiscal deficit and lower consumption will result in lower imports, hence lower trade deficits.

Inflation (consumer price index) has once again gone up in April to 10.36% on an year-on-year basis, versus the 9.47% in March. GDP growth rate has come down, Index of industrial production is down, food bill and subsidies are the highest ever, and Mr. Mukherjee says, “I have confidence in the …political system of this country”.

The Culprit

The slide of the rupee is the consequence of a spineless government, not Greece. No steps by the RBI can stop the fall in the rupee, if the investor confidence is not restored in the economy. If the current team at the centre, the team which is credited with putting India on the growth trajectory, cannot do it, it would be a shame. Because then this very team would be blamed for the slowdown or rather the downward slide!



Life Insurance Simplified

This article was originally published in Postnoon on May 18th, 2012

As I walked into the lobby of my apartment block, Mukherjee was waiting for me, sitting on a sofa, with a piece of paper in his hand. The moment he saw me, he jumped up and extended his hand to greet me.

Me: How are you Mr. Mukherjee?

Mukherjee: I am fine, except that I don’t understand your world.

Me: My world?

Mukherjee: Yes, your world of investments, financial jargons, markets, assets.

Me: Ah! That? What’s troubling you?

Mukherjee: See I want to buy a life insurance. So I contacted an agent. After meeting him, I am totally confused. There are so many different types of policies. Now which policy should I buy?

Me: That’s it? Let me explain a few basic things about insurance to you. Hopefully, then you will be able to decide about which policy is suitable for you.

Since you have already made up your mind to buy a Life Insurance policy, you probably already know that such an insurance provides the beneficiaries, that is, your family, the financial protection in case of the death of the insured or in the case of terminal/critical illness of the insured. Most of the policies have exclusion which will not cover you in the event of suicide, war, natural disaster, fraudulent claims etc. The sum that will be paid to the beneficiaries depends on the sum assured at the time of buying the insurance. The premium that you will pay, will depend on a number of factors, like age, sum assured and the type of policy.

There are basically two types of Life Insurance policies. They can be for a specific number of years; term policies. Or for the entire life of a person; whole life policies.

Term Policies: As the name suggests, term policies are for a specified period, say 5, 10, 15 years up to a maximum of 35 years. The beneficiaries are paid the assured sum in the event of the death of the insured during this period. However, no money is paid to either the beneficiaries or the insured, if he or she survives the term of the insurance. These policies are known to have the least premium amongst all types of life insurance policies.

Whole Life Policies: Whole life policies assures the payment of the assured sum to the beneficiaries, irrespective of when the insured passes away. Similarly, the insured needs to pay the premiums throughout his life time. There can be variants of these policies as well. For example, you can buy a cash back policy where a certain amount of cash is returned to you after a few years, and the balance is paid to the beneficiaries after the death of the insured.

Mukherjee: But have a look at this sheet. It says that there are other policies too like the endowment plan and ULIPs.

Me: The other types of policies are nothing but additional features added to these two. For example, Endowment plans are term policies with elements of savings attached to them. So you buy a policy which ensures a certain sum to your family in case of your death, during the term of the policy, and in case of survival, you get the sum assured along with a bonus or return. You might even opt for an annuity plan. Which basically returns you the money in the form of an annuity (divided into equal annual payments over certain number of years), instead of a lump sum, upon survival. Unit Linked Insurance Policies, popularly known as ULIPs are again like term plans, where a part of the premium that you pay, gets invested in the stock markets.

Mukherjee: So it is not as complicated as it looks in this sheet?

Me: Not at all. Go home, discuss with your wife, and then decide on the policy you want to buy!

Leadership: Debugging Failures

Leadership is putting your plan of actions into the right direction and encouraging others to implement those actions with zeal and vigour. It is nothing more than convincing someone to do a task with a feeling of involvement rather than a burden. If the 10 letter word was as simple as that, what could have been the reason of public failures of leadership in almost all fields? You name it politics, sports, science even the Holy Guru’s also which some of the general Indian public seems to believe more than anything else in this world; there has been a complete downfall in almost all industries.  Here I present few of the pitfalls which if not corrected can lead to the downfall of a leader exponentially.

  Vision: if there is anything that brings the leader to the top is the vision he had once. A clear, passionate, straightforward yet vivacious vision should be clear in the mind of the leader. If   the vision loses its clinch of a laser you might see a disappearing leader. A dedicated leader with a clear path can think of defeating the obstacles, however If a leader cannot code or decode the vision with clarity, the leadership skills are in the shades of gray. A leader as a top notch individual should have confidence in his abilities.

 Communication: having a vision will be of no use in case a leader cannot transfer the vision to the people. A leader who can transfer “what he meant” to the followers with a clear motive can expect the people to sense the goals; it removes the misunderstanding and ambiguity part from all the tasks and conversations. Communication is of great importance if a leader is to drive people towards the goal and get the tasks accomplished.

People are not Resources: The biggest misconception with today’s business freak world is the interchangeable use of the word people and exchangeable item.  The biggest quality a leader can have in him is seeing people like a valuable resource rather than interchangeable piece of machinery.  A leader is always the one who focuses on strengths of others rather than their weaknesses. A leader who imbalances the importance of the path to be followed with the result that is the time a leader can expect to be running a one man army.

An individual who cannot manage himself can never manage others.  If there is ever a task of prime importance in the career of leader it is self management. A leader who leads a lot of people is always expected to be above all of the others. A leader, who cannot manage the hormonal balance of his DNA properly, will never present an image to convince others of success.

Leaders driven by fear of failures can never sound the bugle of success.

History will always remain a book of record and life will always be a free frolic like a feather.

Pricing Strategy used By Rikshaw Wala’s

If you are an Indian and especially from North and Eastern India you know very well how important Rikshaws are in day to day life of a common middle class person. The face of a dark, expression-less man pulling a three wheeled machine for meagre charge has been an integral part of your life. Yet you do not know that they are the only marketing brain who use multiple pricing strategy for the service they provide in one single day to achieve their Target.

It is probably the only public transport means without any fixed pricing system yet it is comes under one of the very profitable small scale industry fetching good money for the Riskhaw owners. Normally in every small city, town or village there is one person who owns few Rikshaws  then hire some people, mostly uneducated who do not

posses any special skills to earn their daily bread and butter for pulling it. On an average a Rikshaw puller makes around 300-500 rupees per day out of which he gives back almost one tenth to their Rikshaw owners and k

eeps the rest for himself. The  success  rate of this business structure is so good that even in Delhi which possesses one of India’s best transport structure ,Rikshaws are one of the most prevalent source of travel for shorter distance.

Being a guy from a small town of Bihar it always fascinated me as to what makes these” Rikshaw Wala’s”  decide upon what price should be charged from a customer. This problem is more obvious to arise because you actually do not use any petrol or sophisticated machine in Rikshaws to make them run. Yet I always wondered what could be the factors that derive their pricing strategy. So after doing a lot of research work and chatting with the story started to unfold.

It so happens that every Rikshaw-wala knows a generalised earning if he is working on a particular area for one individual day. Unlike Auto Rikshaw’s they do not have any fixed stands. So they fix a rough idea about the amount they will be earning for that day. They basically divide their pricing strategy depending upon operation time.

1.       Morning- Its is usually peak customer time with all office going people and students. So their main target becomes to get maximum customer if possible grab other’s customer by decreasing their offered price what in our Marketing terminology call “Competitive Pricing”. More the number of customers they carry more they make earning and in a sense closer to their “Target”.


  • This is the time where you can get better result if you bargain, but too much of bargain can at times let you stand alone because see ,its morning and there are many others like you who want that RIkshaw.
  • Pricing will be moderate at this time.
  • Number of Riksaws available will be less more so because demand is high at that time.

2.       Afternoon-This is the time when you can get to hear abnormally high rates. Mostly sun is high in the sky and even they know that pulling a cart along with someone at that times is something tough. So they prefer to go with “Premium Pricing” where if you are ready to pay price at the higher end then only you can expect their butts to move, else what happens is a common scene of people fighting with Rikshaw-walas “Yar he is asking too much…or bhaiyyaa are you mad”.They make sure they get almost closer to their daily earning target by getting one or two customer who agree with the Premium Pricing.


  • When you ask them how much they will charge, make sure you are ready with the genuine price for that distance, its better to agree than leave.
  • Good part is you will have lots of Rikshaw-walas to choose from as their will be many whose Morning shift was bad if you can find them you are lucky.

3.       Night – Here comes the night and you will face “Value Based Pricing”. They will all make you feel with moderately high pricing that “look its night and you need us more than we need you” and trust me while returning back home we do know that we need them more than they need us and that makes the price go moderately high.

  • Tips– Go home and sleep tight.
Contributed by SHARIQUE MANAZIR ( Class of 2013, IBS Hyderabad)
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