Cheap Economizing Officer (CEO)

An interesting article about an american family of 7 who were able to live on an annual income of $35000.

What can the corporate world learn from this family -

1) Plan. A very crucial aspect of any business. Even though the corporates come up with beautiful literary pieces in the form of mission and vision statements, where they fail is to form a plan to achieve the same.

2) Organize. A well defined organization hierarchy is very important. It should define the reporting structure and help in establishing accountability.

3) Shop wisely. Not every outsourcing deal can result in cost savings. Shop wisely for vendors.

4) Communicate Effectively.

5) Team work.


Passing Note. Citi group is also looking out for a CEO. They could definitely use one cheap economizing officer.

Lose Leader

After having witnessed four Black Fridays and Cyber Mondays, I am just not convinced about the "Real" savings that a consumer makes. All this seems to be a marketing gimmick. The stores try to establish credibility thru the early bird sale and then just walk their way back smiling to the cash registers for the rest of the day. See this article for a detailed example of how stores try to establish such credibility.

Bangalore Economics

Mint explains the out sourcing activity w.r.t Bangalore in economics terminology.

Internal transaction costs went up while market transaction costs fell after the mid-1990s. That was the economic cue for outsourcing to take off, as companies found it cheaper to get certain things done outside rather than from within the boundaries of the firm

In his theory, The theory of the firm, British economist - Ronald Coase explains why the economy is populated by a number of business firms, instead of consisting of exclusively of independent people who contract with one another. According to him, Transaction Cost determines whether firms seek hired help or contract out for some particular task.

In an attempt to expend this theory to how departments are formed within a firm, I see why we have separate departments for Sales, Operations, Business Units, Technology units etc. For any service provided by one department to the other, there is a transaction cost incurred. Ex - the (tech) support dept charges the technology dept for all its services, technology charges the business units for its services etc.

Further, individual departments can get contracted out and this is where Bangalore has a major share.

How to increase the value of falling U$D

What is the value of four $1 currency notes? Did you say the answer is $4? You maybe right, but it can be worth more than that. US Bureau of Engraving and Printing sells uncut currency notes of various denominations. For example, a sheet of four $1 bills can cost $15. (as of 11/08/2007). The Bureau is trying to market its product as a gift idea for the holiday season.

Even shredded currency is sold at a highly economical price of $165 per ounce.

Bear and Bull

The Indian stock Index, Sensex, has been very bullish lately. Reasons - Contributions from RIL, ICICI Bank, ONGC, L&T and Bharti Airtel.

My blog entries have taken a bearish dip. Reason - Opportunity Cost.

Will return back soon in November.

Ig Nobel Winners in Economics

My Compilation of Ig Nobel Prize winners in Economics

1991 - Michael Milken, titan of Wall Street and father of the junk bond, to whom the world is indebted.

1992 - The investors of Lloyd's of London, heirs to 300 years of dull prudent management, for their bold attempt to insure disaster by refusing to pay for their company's losses.

1993 - Ravi Batra of Southern Methodist University, shrewd economist and best-selling author of The Great Depression of 1990 and Surviving the Great Depression of 1990, for selling enough copies of his books to single-handedly prevent worldwide economic collapse.

1994 - Juan Pablo Davila of Chile, tireless trader of financial futures and former employee of the state-owned Codelco Company, for instructing his computer to "buy" when he meant "sell." He subsequently attempted to recoup his losses by making increasingly unprofitable trades that ultimately lost 0.5 percent of Chile's gross national product. Davila's relentless achievement inspired his countrymen to coin a new verb, "davilar", meaning "to botch things up royally."

1995 - Nick Leeson and his superiors at Barings Bank and to Robert Citron of Orange County, California for using the calculus of derivatives to demonstrate that every financial institution has its limits

1996 - Dr. Robert J. Genco of the University at Buffalo for his discovery that "financial strain is a risk indicator for destructive periodontal disease."

1997 - Akihiro Yokoi of Wiz Company in Chiba, Japan, and Aki Maita of Bandai Company in Tokyo, for diverting millions of person-hours of work into the husbandry of virtual pets.

1998 - Richard Seed of Chicago for his efforts to stoke up the world economy by cloning himself and other human beings.

1999 - None

2000 - The Reverend Sun Myung Moon, for bringing efficiency and steady growth to the mass marriage industry, with, according to his reports, a 36-couple wedding in 1960, a 430-couple wedding in 1968, an 1800-couple wedding in 1975, a 6000-couple wedding in 1982, a 30,000-couple wedding in 1992, a 360,000-couple wedding in 1995, and a 36,000,000-couple wedding in 1997.

2001 - Joel Slemrod, of the University of Michigan Business School, and Wojciech Kopczuk, of the University of British Columbia, for their conclusion that people find a way to postpone their deaths if that would qualify them for a lower rate on the inheritance tax.

2002 - The executives, corporate directors, and auditors of Enron, Lernaut & Hauspie (Belgium), Adelphia, Bank of Commerce and Credit International (Pakistan), Cendant, CMS Energy, Duke Energy, Dynegy, Gazprom (Russia), Global Crossing, HIH Insurance (Australia), Informix, Kmart, Maxwell Communications (UK), McKessonHBOC, Merrill Lynch, Merck, Peregrine Systems, Qwest Communications, Reliant Resources, Rent-Way, Rite Aid, Sunbeam, Tyco, Waste Management, WorldCom, Xerox, and Arthur Andersen, for adapting the mathematical concept of imaginary numbers for use in the business world. (All companies were forced to restate their financial reports due to false or incorrect accounting and are U.S.-based unless otherwise noted.)

2003 - Karl Schwärzler and the nation of Liechtenstein, for making it possible to rent the entire country for corporate conventions, weddings, bar mitzvahs, and other gatherings.

2004 - The Vatican, for outsourcing prayers to India.

2005 - Gauri Nanda of the Massachusetts Institute of Technology, for inventing an alarm clock that runs away and hides, repeatedly, thus ensuring that people DO get out of bed, and thus theoretically adding many productive hours to the workday.

2006 - None

2007 - Kuo Cheng Hsieh, for patenting a device to catch bank robbers by ensnaring them in a net

Supreeth Quarterly

It has been 92 days and 38 postings since I started this blog. I also happen to have completed one quarter. How have I fared so far? What has been the learning experience? Has any reader of my blog been benefited by my postings? Where do I go from here? Do I see myself celebrating 5 years completion, 2 years completion or at least one more quarter of blogging?

Individually, it has been a great learning experience. I have been talking a lot in "Economic Terminology" and this has been irritating few of my friends. I do not know how long I will be able to continue to blog but my Economic learning will definitely continue.

One of the major learnings for me this quarter is about how narrow is the differentiating line which separates MicroEconomics from MacroEconomics. One can not talk about either of these in total isolation. I quote this because when I started blogging, I intended to study only microeconomics.

Happy Blogging to me :-)