More about family business

· Difficulty in the managing a family business occurs when there is clash between family values (harmony, emotional, inward, continuity) and business values (profits, rational, outward, adapt, change)

· Managing transformation is not easy as the transformation is never on a single dimension. Both the family and the business undergo a series of transformation.

· It is the dynamics of family, business and ownership which influences the success of a business. Dynamics of family includes elements such as grand parenting, launching children and coupling. Dynamics of business includes elements such as start up, growth, professionalization, regeneration, etc. Dynamics of ownership includes elements such as cousin collaboration, sibling partnership, etc. In the intersection of these dynamics the family has to formulate its goals, objectives and long term plan.

· The portfolio planning in a family business is intersection of the family and firm resources that are available, risk aptitude of the family and the attractiveness of the new business on market size and feasibility.

· A family business enjoys not only tangible resources but there are numerous intangible resources that the family has built over a long period of time such as Emotional ownership, Trust among members, Social network across generations , Vision and values, Family reputation, Collective thinking, etc.

· Family businesses have transformed with changing society. Individuality has taken the core position because of several societal changes such as more number of nuclear families, increase in materialistic values, youth's need for freedom, the popularity of concept of living today, attractive opportunities for entrepreneurship / jobs etc.

· There are three dimensions of togetherness: Familial togetherness, economic and operational togetherness and trans- generational togetherness that define the bonding of the family.

· Trust, Integrity, Confidentiality, and capabilities shape the triangle of business stakeholders (family, management and board)

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Power and politics in a business

It is important to evaluate and understand the structure of the family business and how was it developed. How is the relationship shared between various owners, what is the history of the business, how it evolved over period. It is critical to understand what keeps various elements of the business together; whether it is shared values or goals or shared business wealth. 

We should never remove the focus from the role of power and politics in an organization in ensuring effective decision making. We should learn how power can divert critical resources to accomplish specific goals. Now there can be variety of source of power. Depending on the context, the source of power can be

• Knowledge gained by an individual over a period of time
• Skills and the respect gathered
• Social network that the individual has built

In family business the source of power can be authority exercised by the family member which often comes from seniority. Power is contingent upon a number of factors such as relative scarcity, criticality and uncertainty removal ability of person or sub units of organization. Politics is the tool that helps in exercising power to meet the objectives. At the places, where power is not clearly segregated, politics is a nuance. This is probably the reason why power is common in family business, while politics is common in non-family business.

Another strategy that is clearly very important is selecting the right people. The difficulties lie in change management process and how new policies would be adopted to align with the new strategy. The need is always to create a culture where everyone can call each other by name and there is mutual respect for everyone. The board plays the most crucial role in realizing this strategy. The owners should believe that professionalism demands that even outsiders can become owners of the company and be a part of the board. In contrast to the encroachment threat, non-family executives should welcomed by the open culture of the firm.

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Importance of constitution in a family business setting

The importance of family governance in today's age is extremely critical. I myself have seen families drifting apart because of business conflict resulting due to poor set-up of constitutional rules. I have seen families fighting over compensation, ownership, inheritance and rights. It is often difficult to reach to a consensus and the impact is either division of business and/or loss of family love and relationship. Well the disputes can be settled through mutual discussions governed by unwritten constitutions, it is prudent to learn about the importance of family business governance.

One should be able to anticipate the problems that could arise with newer generations taking up the business which should prompt the business leader to draft and sign a constitution long before the possibility of any tension would emerge. The core of a constitution is in the fact that it is established in a collaborative fashion rather than dictated by the family leader. It is important to understand that with next generations taking control over business the issues like "Who would exercise the maximum control? How the roles and responsibilities would be defined?, etc" are bound to arise and it is in the benefit of the business that these are avoided with the help of tools like constitutions.  

  

Also, the role of board of directors as an agent is extremely critical to maintain professionalization in a family business. The formulation of board of directors is hence required to be done with great sensitivity. The board should not be under the complete control of the family else the purpose of the formation of the board stands defeated. The interference from the family have to be minimum for the board. On the other hand, the board is expected to maintain a balance in terms of accountability, supervision, and strategy formulation. However the fact is that this perfect board-family relationship is very difficult to find.

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Are you thinking to join your family business?

Traditionally in a small scale or a medium scale family business, the family heir is expected to join the business soon after he sharpens his business acumen. He is often not expected to pursue any higher education as the 'on-ground' experience is given more weight over exposure to theoretical know-how. However in today's world of complex form of doing business, many of the families take the alternate route of "acquiring the knowledge first and then followed by applying the same to understand the latest trends and methodologies in the contextual industry".

In my view, both the paths hold their own importance although I am more of a supporter of the second path. In today's world where the competition is so high, it is important to stay ahead of all your competitors which mean that if your competitor is doing something innovative you have to respond by adopting a counter-measure that can actuate the most appropriate response. Higher education can bring in the required discipline in the business operations. It can help in executing innovative ideas to gain competitive advantage. From my point of view understanding the industry's modus operandi is very important and for that the plan of joining the family business can be postponed for some time.

Just to illustrate with an example, recently one of my uncle lost a huge chunk of business value because he was unable to track down the movements of the inventory from the warehouse to the main unit. While it was known to him that automation would bring in discipline to his business and would help him prevent the leaking, he lacked the practical experience of bringing about the change. An experience of modern inventory management of the industry would have helped him implement an enterprising solution with ease. My uncle could also have been more aware of the difference between continuous and periodic ordering policies.  Things would have been different if he had applied these widely used industry concepts.

Similarly for large scale family businesses there are innovative ways of doing things being tested in the industry every other day which can be applied to these business. An experience with a different business entity would only help dealing with the complex business reality. Additionally, the old businesses often fail to take steep path of growth and profit. Expansion becomes difficult when the age-old formula is continuous applied with minimum or no change. E.g. my father is in the wholesale business for almost 30+ years and he has never thought of venturing into retail space or he has never thought about vertical and horizontal integration of his current business.  

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Story of hope and optimism

Today I will share one of my favorite stories of hope and optimism. I am sure there are not many who have heard the name of Chris Gardener. What if I say he is same Chris Gardener of "Pursuit of Happiness" which was played by Will Smith. Now if you haven't watched the movie, don't waste your time here - just close your browser, step out, buy DVD and watch it. But if you are not in a position to watch the movie, allow me to tell you the story of this person who fought against all hardships and ultimately emerged as a winner. Chris had a very humble upbringing but the way he penned down his 'rags to riches' story is truly inspiring. His family life was never stable. He had to face two breakups in his early adulthood. His career never really got its shape as he had to change his profession multiple times from being a research lab assistant to a medical practitioner to a salesman. After his breakup from second wife, he had to bear the complete responsibility of rearing his child as well. Homelessness only added to the hardship. In-spite of all these, he was determined by his ambitions of making big in life. His story started taking good shape when he accidentally met a stock broker getting out of a Ferrari which introduced him to the lucrative field of finance and stock-brokerage. He never have had any kind of professional training in that field but luckily there were companies in the market which used to offer unpaid internship to such candidates. Determined by his desire to make a career in that field, he put everything at stake. He decided that he would stop selling medical devices and give all the time for the internship. He succeeds in getting an internship opportunity at E.F. Hutton. I must say that bagging that internship must have not been easy. The movie depicts the same in a very dramatic manner. Chris Gardener enters the interview room in shady clothes and the interviewer asks him, "What would you say if a guy walks-in without a shirt on and I hired him?". He replies, "He must have had on some really nice pants". The room bursts into laughter and he is hired. Chris accepts the internship and works really hard. He spent most of his day in the office working late-hours. He learns the trick of the business in a month and eventually becomes the master of the trade. 

The thing that inspires me the most in this story is the way he struggled through the life and still manages to come out victorious. We all pass through this phase but the way we overcome it truly defines us. What we really need to do is look up and challenge our-self to the limits. The look up campaign of Housing.com (https://housing.com/lookup) shares similar spirit

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Start of a new life

In India your career starts with your decision on what subject you are taking after completing your secondary education. The decision is a tough nut as your whole career path is dependent upon one crucial decision. In most of the cases, the choice is between commerce and science, at least in my experience. I went through the same dilemma as both choices fit my understanding of a good career or lets say I had no clue what I wanted to do in life. After considering all pros and cons and interests and fit, I ultimately reached to the conclusion that engineering is what I would like to do and so physics, chemistry and maths are going to be my friends for the next few years. You can say that it was the start of a new life, at least in poetic sense. 

The plan was to study hard for the next two years, appear for Joint Entrance Examination, get the best rank, study in the best college of India and then take it forward. The road ahead was dependent upon how well can I score in JEE which meant that I had to perfect each and every concepts of basic physics, chemistry and mathematics. I clearly remember the way I had to manage between school, tuition, travel and self study. The right amount of balance was critical as a day had only 24 hours. I would not call myself a very intelligent guy and so the only way to excel was to plan better and study harder.  I did study very hard. The common routine was something like this- rise up early, travel, go to school, travel back, open books, study, travel to tuition, home again, study, sleep. And the best part about that routine was that I use to enjoy it thoroughly. I admit that I uses to love those Irodov's physics problems. Solving those were nothing less than some sort of accomplishment. I always used to be proud of my mathematical skills, though I was more addict to calculus than the arithmetical topics. I remember how I used to avoid family functions and meetups so that I can concentrate on my studies. I remember how I used to avoid watching TV or playing video games which is not easy for a teenager. Fortunately, social networking sites had not evolved so much that time. 

The two years of hard-work did pay off. Needless to say I was among the top JEE rankers. When I look back I think those two years of focus was more important than anything else which paved my path. Indeed the start of a new life got defined by that phase of my life. When I read stories about https://housing.com/, I could connect with the way they are venturing into a new phase and the kind of sacrifices they are making in their journey. A sneak peak into behind the scenes of their marketing journey:

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Building our business #together

This is a story that dates back to the good old college times. The times when I made some friends for life. The times when the whole life revolved around them. Our source of happiness was nothing but the feeling of togetherness generated during the random sessions of mindless chatter and giggles. For the professors, we were nothing but a bunch of morons who were destroying their career by bunking classes. According to them we wasted few engineering seats which could have been offered to people who really craved for it. But nothing happens for no reason. I think the almighty had his own plans that he kept us going. It was one of those drunken nights when we started speaking out our mind. "We are wasting our life and not doing anything productive", said Karan. The comment sparked the attention of everyone. After few minutes into the discussion, we finalized that we all should channelize our time and resources in setting up a business. We agreed that we can succeed only if we leverage this bonding to establish a business. Further discussions revealed that creating fun was our greatest strength and may be our only strength. We had the skills which can transform a monotonous party into a happening one. We were famous in the campus for throwing and organizing the best parties. This was our Eureka moment when we decided that we should form a party-planner group. 

The target group of our was the age group 15-25, mainly college going people. We realized that 25% of the city population falls in that range and that the opportunity is really big as party planning business is not really organized. We discussed the pros and cons of the business model whether we can really take it off. One major concern was that the target group likes to organize parties on their own and they usually don't have much funds in their kitty to spend. We realized that it would be difficult to convince sophomores and college going students to spend, whatever little they have, for a professional party-planner's services. But we somehow convinced our-self that we should at least give it a try. We did start that business and in an year we organized around 37 parties which was not a bad number. We did manage to make good money but after an year or so we decided to call it a day, Although we separated after we closed the business, I can't forget the times that we spent together. I cherish each and every moment we toiled to transform a difficult business plan into a successful one.

That is my story of togetherness. Similar stories are shared by many start-ups today which really inspires me. One such story is of https://housing.com/. Number of start-ups have only increased in the recent years and I am sure we will hear many such similar stories.   

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How to negotiate your salary?

Negotiation is not just an art. It's a technique which anyone can master. Salary negotiation is mostly gut based but whether you have got the best deal or not is questionable. Through this post I am sharing a strategy you can employ to get a better deal in the salary negotiation process. 

Different people set different expectations from a new job. e.g. some people are ready to sacrifice their pay for less travel or the location or profile of their choice. Based on your expectations you are expected to negotiate. People forget these things while negotiating for salary. Best deal can be obtained from the negotiation if you write down the following on a plain paper

• what your employer expects from you 
• what is irrelevant for the employer
• what is your minimum expectation
• what is not very important for you

The trick of negotiation is to find out what is the most important thing for employer that you are ready to sacrifice. So the employer might want you to stay at the headquarters and you may be alright with it. You should use it to your advantage and communicate to him indirectly that you are making a big sacrifice on this front and then may be you can ask for better salary.

Overall, you can apply the following techniques:

1.  Anchoring and framing of salaries:  Anchor to a higher salary and salary given by competitors.

2.  Asking questions: To understand employer's reservation about location, business division and other components of job. Some of the questions you may ask:

• What kind of projects are they taking lately?
• What kind of MBA profiles are currently associated with the company and at what location?
• How fast have they moved in the hierarchy of the organization?
• What kind of benefits are a part of HR policy and are offered to all the employees?

3.  Offer MESO: An example is given below

#	MESO		#	MESO		#	MESO
Salary+ Bonus	Average		Salary+ Bonus	-10%		Salary+ Bonus	10% above
Business Division	Govt Adv		Business Division	M&A		Business Division	Fin Serv
Location	Intl		Location	Bangalore		Location	SemiUrban
Score	40		Score	40		Score	40

With the help of MESO you should try to understand the pain areas for the employer and areas where the employer is ready to give in.

4.  Understand the integrative issues and the distributive issues: Your negotiation arguments should keep the nature of issues to extract the maximum from the pie.

5. Take a break: In case the negotiation is not going in the direction of my desire, you should ask for a break and come back with a counter offer. 

If you are not comfortable with MESOs and integrative issues etc, feel free to post a comment. I would be happy to help.

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Different biases that affect your professional life

This article provides a broad perspective into different biases that 'play and impact' people's decision making and behavior. In most of the cases, the responses are a reflection of what one "should" against what one "wants" to do which explains the classic conflict between intentions and behavior. One solution to the conflict is to activate the 'want' cells when thinking about 'should' actions. 

In general, the behaviors can be bucketed into three types of biases: Escalation of commitment, Moral Licensing and Moral Compensation. 

Escalation of commitment happens when one has committed to a certain behavior in the first few instances and then continues to do so to justify the previous actions. The Satyam scandal is a perfect example of escalation of commitment. 

Moral Licensing is a behavior through which one tries to justify a morally incorrect behavior by issuing a license to self (which stems from one's previous morally correct decisions). 

Moral Compensation is a way of justifying morally wrong decisions by committing to a compensating behavior in the future.

The idea that should click is the understanding of such behavioral biases and the measures that can be adopted to handle the dilemmas when planning to join a new organization. One of the solution is to rehearse your reactions for all such possible situational conflicts and to use your network to take second opinions. The sources of such information can be

• People who have worked or are working in the organization 
• Your past experience
• Alums or peers who have worked in the industry 
• Secondary research - Google, Glassdoor.com etc.

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How people behave under different situations?

The post is about how people behave under different contextual settings. The reactions are most extreme when the onus of any mishap doesn't lie within. The Milgram experiment conforms to this behavior. It showed how far the people are ready to go, beyond their personal threshold level, to justify the expected behavior. In general, people are more committed towards the outcome of the assignment than its objectives and its impact.. A similar experiment, the Prison Experiment, delves into the extremities of role-playing by the volunteers even when it was just a mock environment. The experiment poses a very serious question, "How to behave rationally and responsibly when you are in an authoritative position but are expected to act against your judgmental bases". 

The idea to explore is how an organization culture is shaped to guide the behavior of people. Example of Disneyland is probably the one of the best examples that show how the organization's culture is deeply ingrained within the psyche of its employees that they remain in their character even when nobody is watching. This understanding also provides an insight into our child life bringing up. The way we structured our understanding of different situations and shaped our mannerisms to act and judge in atypical situations. 

In a corporate setting, we often come across situations where taking decisions is tough especially when the decisions have an impact on others' life. The cultural setting where good behavior can emerge in the same way as the undesirable behavior can amplify and overcome the internal voices. In my personal experience the culture of the organization dictated that the client deliverable's have to submitted on time no matter what. Although it was the organization's duty to fulfill the contractual obligations, it's not true that the system will fail if one deliverable is not submitted on time. 

Although the negative aspects of human behavior are more discusses, it is also important to analyze if there are any positives. One such positive behavior is the extent to which the people are willing to go for ensuring that the objectives are met. As a leader we'd often come across situations where the support from the team would be far more important than anything else. Most often the team cease to perform well because of the repercussions of failure would be very high. In such situations it is important that we try to take away the onus of responsibility from the sub-ordinates. Another positive I can think of is the way trust is built in the system. So as we saw the regular people had faith in the professor that the experiment is being conducted for the greater good of the organization or the society. This trust is important from the organization's point of view. This is probably the reason why we as child experimented because there was always a home leader backing our efforts and absorbing the accidental fatalities.

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The big Idea: How to measure the potential of your business?

This is just an example to illustrate how a business can be evaluated. You can evaluate your business idea similarly.

The Idea
"The idea is to bring people closer and enhance their network"

In today's age of information and pace, networking is of paramount importance. Although the technological spurt has ensured wider connections, most of the ties are weak in nature as they hardly meet in person. "Meet-Ups" is an attempt to fill this gap by bringing people on a single platform and network based on the common interest expressed. 

Set of considerations  :

• Tier 1 cities would be the most active in this kind of structure
• Age-group of 16-40 would be more interested in expanding their network
• The realistic conversion rate would be 1% of the potential targets as understood from the above two assumptions
• The target market is India

Yearly demand: About 10% of 50 million population in the target age group residing in Tier1 cities can be addressed i.e. a population of 5 Million.

Addressable market (A)= 0.5 Million

Willingness to pay: The business model is to charge the creator of the meet-up group an annual fee of Rs.500 and the members an amount of Rs. 100. About 5% of the people would be creating groups and rest of them would join a group member. Total revenue collection per year hence would be 500*0.05*0.5M+100*0.95*0.5M = 12.5M+47.5M= Rs. 60Million. The charges are normal and comfortably below the "willingness-to-pay" bar.

Surplus (B)= Rs. 6 Crores

Cost to manufacture or provide service: There is almost zero fixed cost involved. The costs would mainly be variable in terms of human capital responsible for managing the meet-ups and related operational issues. One person every 20 groups is what is fairly manageable. About 2000 groups is targeted and expected and hence the annual operational cost would be equal to approx. 4L*100= Rs. 4 Crores.

Total Cost (C) = Rs. 4 Crores

Value of the opportunity every year (O)= Rs. 2 Crores

Expected monopoly life of the idea (D)= 5 years

Total (monopoly) value of the opportunity (X=O X D = 10 Crores)

Rivalry and competition: Currently none. And given the unique nature of the idea not many competitors would pitch in. Expected competitive life of the idea (E) is about 3-4 years. Average market share (F) would be around 50% of the data presented above. Total (competitive) value of the opportunity (Y = F X O X E = Rs. 3.5 Crores

Total value of the opportunity = X + Y = 13.5 Crores

Enter or not:

The porters five forces would help in determining the market forces as presented below:

As clearly visible from the porters framework, the entry barrier is not strong. However the early entry advantage is immense. Networkers would prefer not to leave their groups once formed as the networking worth is expected to be quite high.

Given the assumptions how the business model would be implemented, the following reasons support the decision to enter the market    

• Gap in networking opportunities for people sharing common interest not yet addressed
• A trend in developed countries for the last few decades do tell stories about the validity of the idea
• Competitors are minimum and hence the risk of failure is also low on that front
• The upfront/fixed costs are very low and hence a chance can always be taken. Operational leverage
• The yearly revenue generation is around 10 Crores even when the estimates have been conservatively taken. As compared to the opportunity cost, this is quite a lucrative business
• The strength would be to build a common brand

Reasons that discourage market entry

• Difficult to break in early. It is important to make the ball roll at the very early stage
• Unexpected consumer behavior may deter the plan
• Legal hurdles of forming groups under the Indian law
• The social platforms may deter people to step out
• Frequency of meetings and participation can be a major issue in many of the groups

The analysis presented above indicates that the probability of not being able to scale up is not very low. However given the value of the opportunity and other reasons as stated above it is an exciting opportunity and the market should be entered.

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Importance of Cash and Hiring in a new business

Cash is like oxygen to a start-up, probably much more important than earning profits. The question of optimum burn rate is something which is critical for all kind of start-ups. The trade-off is between growth opportunity and the risk of failure. For a established firm it is easy to procure capital but this is not the case with the start-up. The optimum burn rate is decided on the basis of factors such as

• Cash to sustain operations e.g. salaries of the employees, office rent etc.
• Enough cash to acquire a new customer and generate positive NPV
• Growth is more important because you would like to fail fast than not to expand
• Amortize the idea over a larger volume of business

Hence on one hand the opportunity to expand is very lucrative but the risk of failure is also high. The ideal strategy would be to reduce the burn rate to an extent the survival is not risked and the growth opportunity is also not sacrificed which is more likely if they stick to their current model of operation and give some more time to reap profits.

Hiring is also one of the most difficult and important decisions for a start-up. It is difficult to find the right fit with the right skills and motivation to succeed in a start-up environment. It is difficult to assimilate a new employee within the already established inter-relationships in the organization. It is important that the new joinee complement the existing skill sets, share the vision of the company and stay committed for a longer period of time. The problems of the moral hazard and long-term commitment should be solved by giving stake and options to the first employees before the firm gets bigger.

Do read my note on the differences between an established company and a start-up when it comes to an innovative business idea..
http://buildyourbusinesshere.blogspot.in/2015/03/entrepreneurship-vs-established.html

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Entrepreneurship vs established companies

Success in entrepreneurship is about creating value in the otherwise saturated ecosystem. Disruptions in technological arena is what has pushed the rise of the likes of SUN Micro-systems. And it is not impossible to take on established and successful players. However it takes a lot of courage and conviction to target and reach the heights. And the liability of newness often decides the route that can be taken. Newness means that the customers would be apprehensive, the investors would be skeptical, the value creators would choose to stay away. But despite all the odds, it's important not to bargain because for some organizational objectives it is critical to play on the size. The task is to minimize the liability by doing something different or something similar but better than the rest. In my understanding, building large organization through an evolutionary process is more likely to succeed. It is critical to dominate through the power of superiority as the 'survival of the fittest' hypothesis operates even in the business environment. Developing a new organization is a process that is to be learned than to acquire. To create that disruption you need the best in the field with similar objectives and beliefs in the opportunity. It is not about spending everything to make a product successful but the resource organization to meet the objectives with the minimum. More often than not the "liability of newness" boils down to the maneuver between "all or nothing". Mediocrity is not an option if the target is the sky. Proactive initiatives and acquired sense of responsibilities and ownership make a good team who can prove to be equivalent to a team twice the size in an older organization. "Early bird catches the worms". Conviction on the success of the product is important to gain the time advantage.

It is worthwhile noting that it is the new players that bring the maximum technological disruption than the incumbents. This is the reason why big players fear a new player with a disruptive business idea as they know that they can become big in no time. This is probably the reason why they are ready to pay any price for newly formed but small enterprises. This is probably the reason why Facebook bought Whatsapp, Instagram etc. as their strategy is to exist in the social platform as the only dominant player. However it is quite possible that incumbents are unable to recognize the disruptions by an entrant or have chosen to ignore it. This is perhaps one of the main reason why SUN Microsystems was able to garner the market share in a very short period of time. 

It is also worth noting that even great companies can fail. Listening to customer is a good idea but in cases it can be the cause of its own destruction as well, particularly in the industry where consumers are not technically qualified and informed. One of the possible reasons of failure is that it is difficult to change the entire ecosystem when you are a big player and not the one who is leading the change. For example the evolution of the disk drive industry started with the fancy of IBM only later to be taken up more aggressively by non-integrated computer makers. Having said that then how to explain the modern model of running a business where customer is considered to be the "King". There are industries where the customers drive the innovative disruptions i.e. the customers can't be ignored on the criteria if the technological innovation is a norm.

In my view, it is important for the big players to identify the disruptions and the nature of the industry to prevent the possible downfall of its market prominence. It is important to embrace the might of the new players and incorporate continuous innovation as a part of its culture.

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Non Performing Assets problem in India

In the last few years, NPA problems in India have grown significantly. According to the RBI, the total value of NPAs stood at 9.8 percent of loans at the end of FY2014. The economic fluctuations of 2008-09 created avenues for possible default by individuals as well as institutions. However I feel the entire blame cannot be attributed to the economic cycles. The rating agencies and ARCs play the most critical role in assessing loans and credits and hence potentially alleviating NPA problems. But the government has not effectively encouraged the use of rating agencies. Consequently, the effectiveness of credit risk assessment and credit administration has come into question. In general, credit rating agencies provide independent assessment of default risk of an issuer on a debt instrument. But the current regulatory framework requires banks to have their own credit risk assessment framework. The reliance on external credit rating is limited to capital adequacy computation.

CRAs can help the lenders alleviate the NPA problems in the following manner:

• There is evidence of lack of rigour in the loan appraisal systems followed by the banks which is critical for identifying possible NPAs in advance. Rating agencies provide a better appraisal system.
• CRAs help the general investors to gain knowledge about the company they are interested to invest in. This enhances liquidity in the market as reduced information asymmetry leads to confidence in investors.
• For companies which don't trade in the market, the rating agencies can provide significant information to enable quality decision making by the banks.
• A standard rating system would ensure that only the most deserving entities get the debt from the market.
• It can help the corporates to explore alternate source of funds.
• Corporates can optimally price their bonds and equity issues.
• CRAs can provide a forward looking market based credit rating which would help the system to reduce the burden of stressed assets and potentially reduce NPAs.
• CRAs can provide a dynamic rating mechanism which can help the lenders to assess the credit risk in advance and the opportunity to take steps to mitigate those risks.

ARCs commands specialization in the field of sale of distressed assets. It help the banks in seizing collateral in secured loans. Although the idea behind the creation of ARCs was novel, the implementation has not been very effective. While the stressed assets increased 8 times in the period 2003-2013, the annual sale of assets by banks to ARCs increased only twice. The government has failed to empower the ARCs. I believe following actions can be taken to empower the ARCs to help reduce the current NPA problems:

• Reducing excessive regulatory interference
• Provisioning of regulations for sale of assets
• Empowering ARCs through building restructuring capabilities
• Addressing the issue of shortage of capital
• Reducing barriers to foreign investors
• Improving the effectiveness of the asset resolution mechanism

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Developing world in the next 10 years

The world is immersed in the pond of destitution- limited access to the supply of food, drinking water, healthcare and other basic necessities. The organizations have striven hard to find solutions to all such problems. They have indeed found success in many of their ventures. One such venture is the objective of achieving universal education and I believe that in the next decade the world will achieve the goal of universal primary education. As per 2011 data there are still about 57 Million children of primary school age who were not in school. It is a known fact that children with no quality education are exposed to exploitation and diseases. The situation is severe for female children as they are exposed to a greater risk at different time points in their life. However, data suggests that this problem, that has been a part of world's millennium development goal, has shown good progress and the world is likely to achieve the goal of net enrollment ratio of 100%. The improvement is particularly encouraging in the Sub-Saharan African countries where in a period of 5-6 years, the net enrollment ratio has increased from 65% to 77%. Overall this figure hovers around 88-90%. 

The root-cause of the problem is quite evident. It is nothing but the existence of sheer poverty and marginalization that is responsible for poor state of primary education. Digging deeper into the source of disparity would reveal three major factors: Income, Gender and Location e.g. the children from the poorest households are at least three times as likely to be out of school as their richest counterparts, rural children are nearly twice as likely to be out of school as urban children. Statistically, the largest income & gender disparity is seen in the South Asian and Sub-Saharan countries while the rural-urban disparity exists in all the countries. 

Different forums at the world level have come together and have embraced the mission of global education as one of the top most development priority. Countries like India have launched development schemes such as Sarva Shiksha Abhiyan to attain the goal. Some of the actions that are being taken by all the institutions, in particular UNICEF, to reach to the goal are:

• Awareness Campaigns: UNICEF has committed $233 million to stage global awareness campaigns on the importance of children going to school. Different campaigns also highlights the issues of gender discrimination and forced child labour. 

• Investment on improving facilities at school: In many places, schools are safe haven for children where they can find latrines, clean water, meals and possibly health care. "UNICEF has a strong presence in school-based water, sanitation and hygiene projects, supporting initiatives in 73 countries such as supplying hand pumps to primary schools and training teachers in hygiene education".

• Ensuring 'Right to Education': The support is being provided in the area of community-based early child care, parent education, nutrition, hygiene and other intervention initiatives.

I believe that the world is in the right path and pace of achieving the goal of universal primary education and would be achieved if various institutions keep implementing different initiatives on a mission mode basis.

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Improve vendor experience at a market place

Value proposition/incentive for sellers by an e-commerce marketplace

Brand Value of Seller: Use of better packaging is must. The market-place owner should check at periodic intervals whether the seller is maintaining the quality or not. If the quality is maintained they should be rewarded from your bucket of profits.

Reduced Concession rate: The use of better packaging will reduce damage of the products delivered to the customers. The concession rate of the delivered products will also fall, reducing the overall cost for the seller.

Incentives based on customer feedback: Needless to say, customer feedback should also be taken into the incentive structure. It is in the best interest of the seller only to ensure that the customer is delighted after making the order.

The following options can be taken to achieve the above mentioned:

• Ensure that good packaging is met, the marketplace should develop a process that ensures the availability of good quality packaging materials at the seller’s end. 
• Negotiate with the suppliers of the packaging material for a reduced rate for packaging material. 
• Create a customer feedback form for all the orders that include the quality of packaging. 
• Develop a metric that evaluates all sellers based on their packaging quality. Give financial and moral incentive system that appreciates the sellers who post good ratings. The guiding principle is to keep visibility and control of the packaging supply chain 
• Ensure that more suppliers are developed during a 5 year span that will reduce the cost of transportation and the lead time of delivery of the packaging material. The guiding principle is to keep the solution cost neutral in the long term (3-5 years) 

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Launching a product in India

A sound knowledge and understanding of the local market including understanding of the consumers' need and behavior pattern is required before launching a product in a region. A detailed account of the consumer behavior is a must before formulation of the right strategy.

Launch of any product in India should take into consideration the following behavioral patterns at the least:

• High degree of value orientation
• Quality oriented outlet: an orientation towards expensive known brands
• Trendy lifestyle, Higher disposable income
• Open minded and experimental
• High involvement when the product is purchased infrequently
• Influenced by freebies

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