Demystifying Agile/Scrum

Agile:

Literal meaning of agile is moving quickly and lightly.

Agile approaches are typically used in software development to help businesses respond to unpredictability.

Scrum:

Scrum is a management framework for incremental product development using one or more cross-functional, self-organizing teams of about seven people each.

Scrum uses fixed-length iterations, called Sprints, which are typically 1-2 weeks long (never more than 30 days). Scrum teams attempt to build a potentially shippable (properly tested) product increment every iteration.

Scrum is usually associated with object-oriented software development.

Waterfall model

Scrum Roles

Product Owner

·         Single person responsible for maximizing the return on investment (ROI) of the development effort

·         Responsible for product vision

·         Constantly re-prioritizes the Product Backlog, adjusting any longterm expectations such as release plans

·         Final arbiter of requirements questions

·         Accepts or rejects each product increment

·         Decides whether to ship

·         Decides whether to continue development

·         Considers stakeholder interests

·         May contribute as a team member

Scrum Development Team

·         Cross-functional (e.g., includes members with testing skills, and often others not traditionally called developers: business analysts, domain experts, etc.) Self-organizing / self-managing, without externally assigned roles

·         Negotiates commitments with the Product Owner, one Sprint at a time

·         Has autonomy regarding how to reach commitments

·         Intensely collaborative

·         Most successful when located in one team room, particularly for the first few Sprints

·         Most successful with long-term, full-time membership. Scrum moves work to a flexible learning team and avoids moving people or splitting them between teams.

·         3-9 members (originally 7 ± 2 members)

It implies teams have to work closely, everyone should be aware where the other person is – assist, grow & deliver.

Scrum Master

·         Facilitates the Scrum process

·         Helps resolve impediments

·         Creates an environment conducive to team self-organization

·         Captures empirical data to adjust forecasts

·         Shields the team from external interference and distractions to keep it in group flow

·         Enforces timeboxes

·         Keeps Scrum artifacts visible

·         Promotes improved engineering practices

·         Has no management authority over the team (anyone with authority over the team is by definition not its ScrumMaster)

Scrum Meetings

All Scrum Meetings are facilitated by the ScrumMaster, who has no decision-making authority at these meetings.

Sprint Planning Meeting

At the beginning of each Sprint, the Product Owner and team hold a Sprint Planning Meeting to negotiate which Product Backlog Items they will attempt to convert to working product during the Sprint. The Product Owner is responsible for declaring which items are the most important to the business. The team is responsible for selecting the amount of work they feel they can implement without accruing technical debt. The team “pulls” work from the Product Backlog to the Sprint Backlog.

When teams are given complex work that has inherent uncertainty, they must work together to intuitively gauge their capacity to commit to items, while learning from previous Sprints. Planning their hourly capacity and comparing their estimates to actuals makes the team pretend to be precise and reduces ownership of their commitments.

Until a team has learned how to complete a potentially-shippable product increment each Sprint, it should reduce the amount of functionality it commits to. Failure to change old habits leads to technical debt and eventual design death. If the top of the Product Backlog has not been refined, a major portion of the planning meeting should be spent doing this.

Toward the end of the Sprint Planning Meeting, the team breaks the selected items into an initial list of Sprint Tasks, and makes a final commitment to do the work.

The maximum allotted time (a.k.a. timebox) for planning a 30-day Sprint is eight hours, reduced proportionally for a shorter Sprint.

Daily Scrum and Sprint Execution

Every day at the same time and place, the Scrum Development Team members spend a total of 15 minutes reporting to each other in a standup meeting. Each team member summarizes what he did the previous day, what he will do today, and what impediments he faces. Topics that require additional attention may be discussed by whomever is interested after every team member has reported.

The team may find it useful to maintain a current Sprint Task List, a Sprint Burndown Chart, and an Impediments List. During Sprint execution it is common to discover additional tasks necessary to achieve the Sprint goals. Impediments caused by issues beyond the team’s control are considered organizational impediments.

It is almost always useful for the Product Owner to attend the Daily Scrum. But when any attendee also happens to be the team’s boss, the invisible gun effect hampers self-organization and emergent leadership. People lacking real experience of team self-organization won’t see this problem, just as fish are unaware of water. Conversely, a team that needs additional expertise in product requirements will benefit from increased Product Owner involvement, including Daily Scrum attendance.

The Daily Scrum is intended to disrupt old habits of working separately. Members should remain vigilant for signs of the old approach. For example, looking only at the ScrumMaster when speaking is one symptom that the team hasn’t learned to operate as a self-organizing entity.

Importance of Strategy Statement

Strategy

It is found that most of the successful companies are one whose executives clearly understand the company’s strategy in 35 words or less. Hence companies require strategy to be defined in a simple and clear statement.

A well understood statement of strategy aligns behavior within the business. Executives align their work energy and focus according to the organization's strategy.

Three critical component of a good strategy statement are show in the figure below:

Figure: Critical component of a good strategy statement

Note that the definition the objective should include not only an end point but also a time frame for reaching it. Scope or domain implies the part of landscape in which the firm will operate. Mention of what  your business will do differently from or better than others defines the all important means by which you will achieve your stated objective.

• A hierarchy of Company Statements

Figure: Hierarchy of Company Statements

The mission statement spells out the underlying motivation for being in business in the first place.

• Along with specific, measurable and time bound, the strategic objective should also be a single goal.
• There could well be a host of subordinate goals that follow from the strategic objective, and these might serve as metrics on a balanced scorecard that monitors progress for which individuals will be held accountable.
• A firm’s scope encompasses three dimensions: customer or offering, geographic location, and vertical integration. Clearly defined boundaries in these areas should make it obvious to managers which activities they should concentrate on and, more important, which they should not.
• The scope of an enterprise does not prescribe exactly what should be done within the specified bounds. In fact, it encourages experimentation and initiative. But to ensure that the borders are clear to all employees, the scope should specify where the firm or business will not go. That will prevent managers from spending long hours on projects that get turned down by higher-ups because they do not fit the strategy.
• Clarity about what makes firm distinctive is what most helps employees understand how they can contribute to successful execution of strategy.
• The complete definition of firm’s competitive advantage consists of two parts. The first is a statement of the customer value proposition. The second part captures the unique activities or the unique combination of activities allowing the firm alone to deliver the customer value proposition.
• Strategic Sweet Spot of a company is where it meets customers’ needs in a way that rivals can’t.

Figure: Strategic Sweet Spot

Glossary:

"Can you say what your strategy is?" by Collis and Rukstad

Overview on Networking Websites

With the advent of internet definition of communication is changed, its not only verbal or written now, it has other dimensions also. The other dimensions are sharing of photos, videos and thoughts. “Networking Websites” are those websites which helps you in communicating to other person(s). These sites provide one a mean either of direct messaging or by making communities or by giving you a mean to share/access multimedia contents. A social network service focuses on building online communities of people who share interests and activities, or who are interested in exploring the interests and activities of others.

Social networking has created powerful new ways to communicate and share information. Social networking websites are being used regularly by millions of people, and it now seems that social networking will be an enduring part of everyday life.

The main types of social networking services are those which contain directories of some categories (such as former classmates), means to connect with friends (usually with self-description pages).

Features Included by Various Sites

In order to gain market different companies concentrated on various ways to acquire the users. Some sites support the maintenance of pre-existing social networks, some help strangers to connect based on shared interests, political views, or activities. Some sites cater to diverse audiences, while others attract people based on common language or shared racial, sexual, religious, or nationality-based identities. Sites also vary in the extent to which they incorporate new information and communication tools, such as mobile connectivity, blogging, and photo/video-sharing.

How to Attain Sustainable Growth

Firstly, the users must regularly be feeded with something new – something to do. Ok I had created my profile, added few friends than what. If you have the answer for this, than you can assure yourself for growth.

Secondly, even if you had opened a networking website some privacy, maybe optional, should be present. Not everyone like there information is tracked by anyone. Privacy should be maintained not only at person level but also at group and community level.

Thirdly, the technology used should be able to sustain the pressure of growing no. of subscribers. If your site goes slow or starts malfunctioning with growth, than as promised of SDLC (Software Development Life Cycle) you have to put in more investment than what you have expected.

Fourthly, dealing with fake profiles, objectionable groups or things that users may not like. Such things need to be dealt with care, blindly deleting is not a solution. For example one might had created a fake profile, or might be using celebrity photo for fun. Deleting such a profile will made user to believe that organization is not caring about user’s interest. Also, letting an objectionable community to grow would also make user to feel bad. The possible solution is to take feedback from users and than accordingly take the necessary action.

Fifthly, keep tracking what user wants, how people grow there network. May be by giving them links of communities related to there interest, etc. There may be several parameters on which growth of network may depend, discussing all of them is out of scope of this paper.

List of Few Networking Websites

The following is list of few networking sites, the ranking is given when compared with all other sites (source: alexa.com). Ranking is based on no. of times a website is viewed.

1.) Yahoo! -> Rank One
Personalized content and search options. Chatrooms, free e-mail, clubs, and pager.

2.) YouTube -> Rank Three
YouTube is a way to get your videos to the people who matter to you. Upload, tag and share your videos worldwide!

3.) Facebook -> Rank Five
A social utility that connects people, to keep up with friends, upload photos, share links and videos.

4.) Microsoft Network (MSN) -> Rank 6
Dialup access and content provider.

5.) Myspace -> Rank 7
Social Networking Site.

6.) Blogger.com -> Rank 9

7.) RapidShare -> Rank 12
Users can upload up to 100 meg files for sharing.

8.) Hi5 -> Rank 16
One of the world's largest social networks

9.) EBay -> Rank 18
International person to person auction site, with products sorted into categories.

10.) Orkut.com.br -> Rank 19

Concluding Note

Yes you got it right ten out of twenty most popular websites are networking websites. Hence if started with in-depth vision these websites promise a growth with splendid colours.

Sources

- http://www.alexa.com/
- http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html
- http://www.inc.com/magazine/20070601/features-how-to-kill-a-great-idea.html

LTE – Changing the face of Wireless Broadband

Introduction to 3GPP LTE

3GPP LTE (Long Term Evolution) is the name given to a project within the Third Generation Partnership Project to improve the UMTS mobile phone standard to cope with future requirements

Key features of this “Evolution” include
• Significant enhancements in data rates (Min 100/50 Mbps DL/UL)
• Reduced latency (idle to active < 100ms, Small packets < 5 ms)
• Improved coverage and spectral efficiency
• Optimized network architecture (cost-effective solution for Carriers)
• Better integration with other open standards
• Mobility[Optimized: 0–15 km/h High performance: 15-120 km/h]

LTE giving a new dimension of Wireless Broadband

The 3rd Generation Partnership Project – Long Term Evolution is being started to provide higher data rate at low cost.

With flat and very flat architecture and making eNode-B more efficient the entire system cost has been reduced. Higher spectral efficiency is achieved by introduction of MIMO, cooperative MIMO, OFDMA and SCFDMA. Keeping in mind the constraint that might be put by different telecom authorities several flexible channel bandwidths, ranging from 1.25MHz – 20 MHz, are considered in the standards. Mobility, which gives LTE a major edge over other Wireless Broadband techniques, upto 120Km/hr is expected to be functional. Mobility even at 350Km/hr is also in consideration. Moreover LTE is designed to provide mobility between non – 3GPP and 3GPP network.

Reasonable power consumption at UE is also kept in plan.

Coming to data rate, LTE aims for data rate of 100Mbps at downlink and a data rate of 50Mbps.

The areas where LTE will put new bench marks:
• Rich voice, high quality video conferencing.
• P2P messaging, Photo messages, IM, mobile e-mail, video messaging.
• Browsing, Super-fast browsing, uploading content to social networking sites.
• Paid information, E-newspapers, high quality audio streaming.
• Personalisation, Realtones(original artist recordings), personalised mobile web sites.
• Games, Downloadable and online games, a consistent online gaming experience across both fixed and mobile networks.
• TV / video on demand, Broadcast television services, true on-demand television, high quality video streaming.
• Music, High quality music downloading and storage.
• Content messaging and cross media, Wide scale distribution of video clips, karaoke services video-based mobile advertising.
• M-commerce, Mobile handsets as payment devices, with payment details carried over high speed networks to enable rapid completion of transactions.
• Mobile data networking. P2P file transfer, business applications, application sharing, M2M communication, mobile intranet/ extranet.


Future prospects of LTE

If LTE hits the market in 2010, than in the next couple of year i.e. 2011 and 2012 LTE will going to make the significant market transaction. According to a new study by Juniper Research, nearly 24 Million Subscribers to Use 3G LTE Technology for Mobile Broadband Services by 2012.

One should keep in mind that other technologies like WiMax are going to give stiff competition. Hence LTE need to continually evolve in order to survive and grow in the market. LTE has to remain competitive not only in performance but also in cost.

Even a few people question that mobile whose prime purpose is voice communication, is there really a need for such a high data rate. LTE is not only for mobile phones it is targeting for all mobile devices, PDA, hand held devices and laptops. The following mentioned people will be the ready consumer for such high data rates:
• Anyone who is relying heavily on emails/web applications for daily communication.
• Professional performers.
• TV – Sports fans, live concert fans, anyone who cannot wait to miss the action.
• Video telephony – Business workers particularly who are at remote locations.
• Those who love online gaming.

LTE will get its start from developed economies, than it will move to progressive economies. Hence LTE will start from developed market of Europe and America.


Is WiMax a threat to LTE

As it has been projected that commercially available system of 3G LTE will be available by the year 2010, and WiMax had already started hitting the market, some people are skeptical about the success of 3G LTE. Remarks like by the time LTE reach to consumer the WiMax more or less would have taken the whole market. People also say that infrastructure and capital that would compel the telecom industry to restrain to WiMax and directly switch over to 4G instead of taking up LTE. In nutshell people say the reason of failure will be delay in entering the market.

Now coming back to question is WiMax a threat, the answer would be a big no. Reason being if you see the market trend for example processors, feature rich mobile phones, new OS and many more, what ever be the infrastructure been employed, every new technology is welcomed and been a success, provided it is better, faster, smarter and compatible with most of the previously used applications. Else we all know what the response the consumer gave to Vista.

What LTE answer to above mentioned doubts. 3G LTE promised that LTE is designed so that GSM, GPRS, EDGE operators can directly switch over to LTE network. As far as data rate is considered recent lab test achieved the targeted values, for example downlink data rate at 20 MHz is of 100Mbps and with 4X4 MIMO a data rate of 326.4Mbps was reached.

Conclusion

LTE has to hit the market in the year 2010, delay in months would result a certain negative deviation from projected profits. A delay greater than 18-20 months would give other wireless broadband technologies enough time to become strong and popular enough, that LTE may even find it difficult to breathe.


Dated: 25th Aug 08.

Businesses which Promise a Boom with Increasing Oil Prices

All of us know the direct impact of increasing oil prices on various industries. Here I am putting a thought on industries/business that could prosper with increase in oil prices. Such areas include renewable source of energy, cars with dual fuel concept, other substitutes of petrol and many more.

Renewable Sources of Energy:

“High oil prices in the 1970s ended the era of crude oil as a source of electric power and kick-started the wind energy industry in Europe and elsewhere.”

“Germany is on track to provide wind power generation to 30 percent of the nation’s electrical needs by 2020 and the addition of solar and hydro energy will further increase their use of renewable resources and move toward energy independence.”

With oil prices touching $130 mark and some analyst predict the trend to hit $200 figure. The renewable sources of energy is the alternative source for energy production. Renewable source of energy include wind, small-hydel, solar, bio-mass or ethanol and geothermal.

Will the current regime of triple-digit crude oil prices begin the era of renewable energy? Conventional sources of energy, including oil and coal, not only have to bear the brunt of higher costs, they are also under attack by the green brigade. These hydrocarbon fuels are blamed for global warming and climate change. Internationally, a lot of investment is taking place in green fuels which are renewable and non-polluting. The momentum is the strongest in Europe and the fever is just catching up in India.

This is a suitable time for investors to start accumulating right stocks in this space. Given the size of the global energy market, the sky is the limit for companies which get it right.

Wind Power
Initiated by government subsidies, the growth in wind energy in India has primarily been driven by technological advancement and higher scale of operations.
And as technology improves, wind energy is becoming cost competitive vis-à-vis conventional sources. As per analyst “the best way to gain from growth in wind energy is to invest in equipment suppliers”. Companies like Suzlon Energyis are aggressively investing in technology and manufacturing capacity to emerge as one of the top global WTG suppliers.

Small Hydel
Hydro power is one of the oldest sources of renewable energy. But it has lost out to thermal power due to the cost, complexity and time involved in executing large projects. These require construction of huge dams and reservoirs, damaging environment and displacing people. This has created global interest in small projects, which are simpler to construct and do not damage ecology. Small rivers, rivulets and artificially-created storage dams or other small water bodies can be tapped to generate up to 20 mw power, which can be used locally.

Solar Power
According to studies, the earth receives more solar energy in just one hour than the world consumes in one year. Unfortunately, today, solar energy contributes only 0.1% of the world’s total energy needs. The key challenge in harnessing solar energy is the efficiency of technology and equipment. The technology in the sector is still evolving and nearly half a dozen technologies are vying for supremacy. While solar energy costs are declining, the costs of other sources of energy, including generation and distribution costs, are rising. Hence growth in solar energy sector is anticipated in the coming future.

Moser Baer has now ventured into the less capital-intensive and high-margin business of solar photo voltaic cells (PVC). With a strategy to offer multiple PV technologies, the company is aiming at bringing down PV electricity costs to match conventional energy price points. In the long run, it plans to set up the world’s largest thin film solar fabrication unit in India. Its PV business earned revenues of $43 million in FY08.

Biomass

Renewable energy can be extracted from biowaste arising from trees, crops and garbage. This energy is released either by burning biomass in a controlled environment or converting it to other usable forms of energy like methane gas, ethanol or bio-diesel.
The bagasse obtained as a by-product by the sugar companies is used to generate power, which is either consumed internally or sold commercially.

Dual Fuel Cars:-

The days of cars emitting harmful pollutants and consuming petroleum products might be over with global automobile manufacturers trying to usher in 'green cars' -- vehicles that have combustion engines integrated with electric-powered motors.

Tata Motors is developing an electric car, besides a host of eco-friendly, hybrid, bio-fuel and compressed-air run cars, said the Chairman, Mr Ratan Tata, at the annual general meeting on Thursday, 24th July 08.

"With the scourge of global warming hanging heavy over our heads, it is high time we switched over to battery-driven vehicles," Tara S Ganguly, Kolkata-based maker of Tara Tiny, a series of electric cars and two-wheelers. With fuel prices skyrocketing, it's high time consumers opted for electric-powered, hybrid or compressed-air runned vehicles.

Some 'green' cars have already hit the market, while others are in the pipeline. Few of these new breed of cars include:

-Nissan Pivo 2 concept car
-Chevy Volt
-Golfs from Volkswagen

Substitutes of petrol:-

With already a large investment in petroleum driven technologies, the complete shift from to non renewable sources of energy is going to take its time. Hence, going for other alternatives seems to be a smart move. Such options include use of ethanol as transport fuel, use of Jatropha or Tuba-Tuba seeds for transport fuel production.

Ethanol Production

As already discussed, ethanol can be used as a transport fuel. The bagasse obtained as a by-product by the sugar companies is used to generate power, which is either consumed internally or sold commercially.

In India, leading sugar companies like Bajaj Hindustan, Balrampur Chini and Bannari Amman are actively into co-generation of power and manufacture of ethanol. India’s largest sugar company, Bajaj Hindusthan,earns 15% of its revenues from nonsugar businesses like ethanol and power generation. It intends to earn 35-40% of its revenues from value-added and non-cyclical business. It expects exportable surplus from its co-generation units to cross 100 mw in the sugar season, which will start in November ’08. It generated around 80 mw a year ago. For Balrampur Chini, power co-generation contributes more than 15% to the company’s total revenues and is a major driver of profit growth. In view of the recent capacity expansions, the total saleable co-generation capacity stands at 126 mw.

Besides the co-generation of power, sugar company Bannari Ammanhas also ventured into wind power generation while de-risking its business model. Power generation contributes more than 20% to its total revenues. Equipment suppliers like Praj Industries, Triveni Engineering and Thermax are yet another set of companies associated with bio-mass energy. They are leading suppliers of equipment to companies in this sector. Praj Industriesis one of the largest suppliers of processes and systems to companies manufacturing ethanol, biodiesel and distillery industry. The ethanol business contributes 85% of the order book of the Rs 700-crore company. Praj is involved in R&D to make breakthrough cellulosic technology for ethanol. Triveni Engineeringmanufactures steam turbines, high speed gears and water & wastewater treatment equipment. It earns 40% of its revenues from its non-seasonal high-margin yielding business of steam turbines and co-generation of power.

Thermaxis a leading manufacturer of engineering equipment like boilers and heaters, absorption cooling, power and cogeneration systems and water and wastewater solutions among others. Around 80% of its revenue comes from its energy business.

Jatropha and Tuba-Tuba Plantation

The oil produced from seeds of plants like Jatropha and others can be used as a substitute of petrol.

Apart from reducing the nation's dependence on imported petroleum and other fossil fuels, massive planting of Jatropha have many more advantages. It will have a huge employment generation and job creation impact in the rural areas where poverty or unemployment is high, since crop establishment/care (first to second year) and harvesting of fruits of Jatropha is labor-intensive. Furthermore, it will have vast economic multiplier effects in the rural areas as it will mean high resource inflows. As an agribusiness venture, planting Jatropha will require mills to be constructed where the oil will be processed. Transporting the harvested fruits from the farms to the mills will need roads and bridges to be constructed and hauling trucks to be procured. It may signal the start of economic upliftment of the people in areas where it will be planted.

While planning for such massive plantation, care need to be taken that we are not moving towards food crisis or that we are not playing with economy.

As Jatropha can be grown on waste/barren lands and with agricultural dependent country like India adequate planning will lead for prosperous growth of villages and uniform economic development of nation as a whole.

Sources:
-Times of India
-rediff.com
-indiacar.net
-greencar.com
-relocalize.net

Dated: 29th July 08

Cargo Business – Sister Life Line for Airways

With a large no. of challenges in front of Aviation industry, the growing cargo sector would not only help to increase the profit of different airlines, it can also serve as a lifeline in times of crisis. As the oil prices continue to increase and are expected to even touch 200$/barrel mark, there is tough time ahead for airlines.

With supportive government policies and in a developing economy like India there is no stopping for cargo business. It is said that there is a room for every one in the cargo industry. Everyone from airline giants to small courier services corporate are looking to capitalize in this growing sector. More mergers and acquisitions are expected in near future.

The government recently allowed the foreign carriers to have a 74 per cent stake in Indian cargo carriers. A total of 49 per cent FDI was earlier allowed in the cargo sector, but no investment by a foreign airline was permitted. According to a recent CARE report, in India there are nearly 2,500 companies in this segment— the huge potential and demand looks tempting. According to analysts, the opening up of the Indian economy to foreign investments is expected to attract more companies into the country, thereby adding momentum to market growth.

As per industry estimates, the Indian express industry is valued at Rs 7,000 crore and is growing at approximately 25% annually. Asia will witness the highest growth rates and India will account for almost 9% of this annually, as compared to the world growth rate of 4%. And in this whole number maze, India emerges as a priority market.

Today, the domestic express makes up about 58% of the total market, of which a little less than half is in the organised sector. The unorganised and semi-organised segments, comprising largely of regional and intra-city service providers, and EMS Speed post, account for the rest. Blue Dart, one of the pioneers in the industry clocked a profit of Rs 69.93 crore after taxation for the year ended December 31, 2007, up by 39% from the corresponding period of the previous year. Though Blue Dart has no plans to partner with a foreign airline, the company feels that all major companies will be looking out for opportunities to acquire small domestic companies and enter into the sector.

FedEx in India has grown almost 5 times in past one decade.

DHL Express India holds a market share of 60% in terms of shipments and handles over 7.2 million shipments in 2007. As per industry estimates, the Indian express industry is valued at Rs 7,000 crore and is growing at approximately 25% annually.

Some News:

15th Jul 08: The man who revolutionised aviation in India with his low-cost airline, Air Deccan, is set for a new beginning in the cargo and logistics space. Capt G R Gopinath is planning to raise $50 million through private equity to part-fund his $200 million cargo venture.

28th may 2008: With petrol prices expected to cross $200 per barrel in the near future, Jet Airways chief Naresh Goel said the aviation industry was headed for a deep crisis due to price wars among airlines, at home and abroad.

12th May 2008: SpiceJet announced the launch of its cargo operations in the country. Initially, the service would cover eight major cities and would be expanded to all 18 destinations of the airline in the second quarter of the current fiscal.

5th Mar 2008: As part of its diversification plans, low-cost airline SpiceJet is aggressively looking at cargo business and has already started putting in place the necessary infrastructure.

8th Feb 08: UB Group promoted Kingfisher Airlines is planning to float its own dedicated cargo airline through a tie-up with a foreign carrier.

8th Feb 08: Full service carrier Jet Airways is also planning to launch its dedicated cargo operations through a tie-up with the German carrier Lufthansa.

How FMCG firms can Grow During High Inflation

Fast Moving Consumer Goods (FMCG), are products that are sold quickly at relatively low cost. Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be large. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, light bulbs, batteries, paper products and plastic goods. FMCG also include pharmaceuticals, consumer electronics, packaged food products and drinks. When inflation rises, prices of packaged consumer goods also rise.

Strategy for Large Industries:-

By large industry here it means having a large customer base and are widely spread throughout the nation. Like Bharti having a Mobile customer base of nearly 66.83 million subscribers.

When the consumers are in large number even a small margin will still yield to high profits. Hence instead of increasing the price of commodity in same proportion the industries can absorb a large portion of the cost escalation and passing down a small part of input cost rise to the consumer. For instance, vegetable oil prices have shot up by nearly 40% in the last one year, but Wipro Consumer Care has taken a price mark-up of just about 14%, that too in two phases. The rest of the raw material cost escalation has been absorbed by the company. Take another example. Parle Agro has managed to maintain the price of the oldest SKU (stock keeping unit), ie 200 ml, of Frooti and Appy, which has been selling at a maximum retail price of Rs 10 for almost 10 years.

By doing so the large corporates poses a stiff competition for other such industries, which in turn helps the consumer and the economy as well.

A certain amount of inflation can be absorbed as long as the market growth rate continues to be in double digits. The same may not be true if growth rate slows down. Companies too believe, that because of growing market the business that a company can generate in the next 1-2 years is more than what one could have generated over the last 5-10 years.

Strategy for Small Scale Industries:-

Here I am talking about Industries whose customer base in limited to a particular region. There customer base is limited. Its hard to survive for such industries when Inflation is high and there is neck to neck competition in market.

When prices of almost everything are going up, be it property, talent, transportation or even raw material. There are only two options before a small organization. Option one, to bear losses till the market stabilizes again and option two, to increase volumes to be able to absorb rising costs.

In first case industries starts cutting down on production to minimize losses. Which further throw the SSI out of the market.
For second case to be implemented government support plays an essential role. Govt. can impose more taxes on large industries or they can provide machinery and required technology in relatively cheaper rates. Or other such policies.

I had given a good amount of thought how small industries will survive in such a scenario, but was not able to come up with a strong idea. What I strongly feel SSI can survive with, supporting government policies and by the far sighted vision of the entrepreneur. One should give deep thought and an insight before starting a SSI, making the industry to be strong enough to survive any such fluctuation.