Kaivalyam

Yes, that’s right … Alexa is the new Santa Claus for the present generation kids! With voice assistants in every home, it became easier for children to order for toys of their choice. Even those children that are too young to spell, have made their way to ordering Alexa to bring them toys and candy. According to WSJ article ,   Brenda Dickson’s 3 year old and 6 year old children almost bought 100 boxes of jelly beans. Dickson heard the kids asking Alexa and managed to cancel the order immediately. Unlike Brenda Dickson’s children, Zibby Owen’s son successfully managed to place orders on Amazon. Owen’s son who is only 4 years old uses her ipad to watch “Paw Patrol” show and somehow figured out to to use microphone and placed orders for his favorite Paw Patrol toys!   Owen realized it only after multiple boxes were delivered to her house but, she let her son keep few toys and returned others. She also made sure to delete shopping app in her ipad. Picture of orders place...

Time Value of Money (TVM) is the concept where investors prefer the idea of receiving money now than in the future. For example, if you are given the option of choosing to receive $1000 today or $1000 after 2 years, it is better to choose receiving $1000 today because it has more value and utility. The money can be used to re-invest and gain interest. TVM can be broken down to Present value (PV) and Future Value (FV).  Present Vale and Future Value Present value helps us understand how much the cash that will be received in future is worth today. Future value helps us determine how much the cash received today is worth in future. Both PV and FV can be determined with the help of formulas below. PV = FV / (1+ r)^ t  FV = PV * (1 + r) ^t  where, FV = Future value of money PV = Present value of money r = interest rate t = number of years Conclusion Just as the phrase “time is money”, the value of the money that we have today wil...

Statistics in Business I really wonder why I hated numbers and math as a child. Probably it required me to think or because it was cool to be part of “math hating” group in school or because I never liked my math teachers. Although I always said I hate math, in reality, I am closer to it than I thought. Like my Professor Dr. Karri said, “you can’t do MBA and hate numbers! Ain’t business all about numbers?” Also, I have master’s in pharmacy with a pharmaceutics major. Ain’t pharmaceutical formulations all about math? Whatever is the case, I am sad that I missed to see the value of math earlier in my life. But, I do believe that there are ways to improve it. The more I know about math, the more interesting it is. All business decisions such as measuring performance, forecasting future, understanding risks and ROIs, researching market data etc., are all made easy with the help of statistics. With the knowledge of statistics, we can learn to logically manage and analyze data. Wh...

Corporate Social Responsibility (CSR) -- it is the hottest topic out there. Should we trust that companies live up their values or there are any underlying motives? But, let's first start by exploring the definition of Corporate Social Responsibility (CSR). It is defined as the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life ( World Business Council on Sustainable Development, 2000 ). So, CSR is based on the belief that companies make positive contributions to society. Some examples of CSR activities that organizations participate to be socially responsible are as follows: Philanthropic CSR- Companies donate to the needy via charities. Their donations include clean water programs, helping those affected by natural disaster etc. Environmental CSR- It is very important to limit pollution. Companies participate in CSR by lim...

Economies of scale and economies of scope are two different ideas both of which help the company to cut costs of production. Economies of scale focuses on costs that can be saved when there is an increased level of production of one good while economies of scope emphases on total average cost benefits when there is a production of variety of goods. Economies of Scale Costs can be saved because they are spread over large number of goods. Variable costs or the costs per unit. For example, to produce tap water, water companies should build huge network of pipes that stretch across wide areas. The costs associated are very high. However, since that will be shared by all the households in that area, the average costs come down. A large business will have more cost savings with higher production levels. Economies of Scope Economies of scope concept is utilized by a company when uses its current resources to diversify into related markets. For example, a farmer may se...

Unique Selling Proposition (USP) is defined as t he factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition. The crucial factor to effective selling is USP.USP is framed using the 4P’s (Price, Product. Place & Promotions) also known as marketing mix. A strong USP helps a company to stand out from its competitors. Customers can have a variety of options and it will be difficult for companies as well as customers if they don’t know what separates product/service from another. Therefore, companies develop USP in order to create differentiation and be remembered in a packed marketplace. Companies use different approaches like brand image or understanding the targeted segment group buying motivations etc. Forming a USP is not easy and requires lot of creativity and understanding the market. It is also important to defend and preserve USP as competitors will do what they can to neutralize i...

“Traditional SWOT analysis” … SWOT analysis is a powerful tool that is used by companies to build business strategies. It stands for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is usually done in an organized way using a 2*2 grid like pattern. By observing where they are, companies can develop strategies that help them to stand out from the rest. Strengths Strengths are positive attributes of a company. These are internal factors and can be controlled. The following questions help to identify strengths: What do you do better than others? What do customers/competitors see in you as your strengths? What physical assets or human capital do you see as strengths? What is the advantage that you have that competitors don’t? etc Weaknesses Weaknesses are negative attributes and can weaken strengths of the company. These are internal factors and can be modified for betterment. The following questions help to identify weakness: What issues c...

Last week, I wrote about how printing money can be a viable solution to boost economic growth of a nation . If implemented properly, it can help in eliminating the debt of a nation. However, it comes with its own set of challenges. I will also discuss about addressing these challenges.  Challenge 1 – Excessive printing of money We all know that excessive printing of money can cause an alarming inflation. This was faced in countries of Zimbabwe, Germany and Weimar. Recommendation - Money financing should be used sparingly, and for specific situations such as to pull an economy out of a lengthy slump or to write off excessive public debts. If we accept money finance as a normal operation there is a danger that future governments will abuse it greatly.   Challenge 2 - “Printed money takes the form of credit which mostly goes to investors or the government” (Osama Diab,2017) The first beneficiaries of the printed money are financial institutions, who have access ...

Yesterday, I was talking to my husband about my dream home with big beautiful quartz island, a large custom closet, an elegant fireplace and other never-ending list of wishes. He sarcastically laughs out loud and tells me that we need a “money printing machine” to make my dreams come true. “Printing money” - that word caught my attention and we begin a new conversation about it from economic point of view. Both of us had different perspectives (obviously! 😉 ) on how it will affect economic growth of a nation and so we ended the argument without any conclusion. Still curious, I did my research and here are my conclusions. According to me printing money could probably be a feasible solution for economic growth of a nation if done correctly. Of course, they are many challenges associated with it but, before we talk about challenges, we should first start from the enormous debt that our economy is facing today and how can printing money can be helpful. United States has enor...

In my last blog entry about shareholder activism , I mentioned that activists, particularly, hedge fund investors have short term horizons and aggressively push the companies to focus on temporary profits. But where do hedge funds get money to invest in these organizations? What is their motive? Hedge fund raises its money from wealthy individuals, corporations, endowments etc., Hedge fund has a manager who makes decisions for the fund. The manag ers are usually investments advisers and the performance of hedge fund depends on them. The mangers convince investors that they can manage their funds in a profitable manner. They attempt to do so in order to attract many other huge investors to form partnerships with them. Two and twenty is a commonly used fee practice in hedge fund business. This means an annual maintenance fee of 2% is charged by hedge funds to maintain assets irrespective of whether the investment makes a profit or not. If any profits are made, 20% of those profit...

According to Ernesto Hernández-López,  shareholder activism   refers to any action a shareholder may take, based on his/her right as a shareholder, with the objective of influencing the management of the corporation. An activist shareholder’s role is to exert push onto management when they believe management is doing a poor job. They can do so by asking the management to disclose issues and urge action either by suggesting them to change a procedure/policy or even demand to substitute the board of directors. Some economists favor activism and consider it to be an essential aspect for long term success of an organization (if employed properly). Even if the activist investor is dormant, the company stays vigilant. Recently, AT&T board was attacked by a hedge fund manager at Elliot Management Corporation, also recognized as one of the aggressive activist investors in the market. Elliot laid out its concerns to the board about its expensive acquisitions...