Growth imbalances and recession

The economic bubble that was waiting to burst in Dubai has finally burst and the Dubai ruler owned Dubai world has defaulted on debt payment. If one was to closely examine the development model of the region it is not too dissimilar to a Ponzi scheme. A a false sense of well being is artificially created by fueling growth by putting in more and more funds into grand projects that are exclusively the preserve of the rich. In the recession hit world the rich have become cautious and are not willing to consume as before. No wonder the bubble has burst.

The economy of the entire region is resting on a single petrodollar leg. Human capacity of indigenous people has not been built and the economy is sought to be created through expatriates who come in to the region for attractive remuneration. A diversified asset base that is built on the strength and innovation of the local people with support from experts from outside has not been created. It is high time that the Gulf region rulers start thinking on recreating a model that is more sustainable and maybe less jazzy but brings all round prosperity to the people of the region. It is also a lesson to both business and nations who need to look at their growth models more closely.

Increasing business footprint

Most corporates realize that business does not look up in spite of making investments in building a large sales force that knocks repeatedly on customer doors to sell products. We do not get the expected results because the business strategy, the offering be it a service or a product, the marketing pitch are not aligned to each other.

Some invest into consultants to help them identify problems, opportunities and help re-structure business.

The solution perhaps in having a highly experienced broad spectrum business advisor who can help refine business strategy on the one hand, position the offering, deploy their network of contacts and deliver results. But most such people are sitting on company boards and are not willing to invest time for others.

In today's age of specialization where experts have built skills in niche areas like re-structuring, financial management, process specialists, visioning, business strategy etc etc. getting broad spectrum macro business advisors is the challenge.

How India's poor saved the country from recession

As demand for good and services plummeted in the US, global exports got impacted and the world rapidly spiraled into recession. The Indian economy was jolted too but the social sector schemes aimed to provide employment to the poor suddenly appeared from nowhere to keep consumption and demand for everyday goods and services up. The poor continued to buy his daily quota of bread, oil, lentils and other consumer goods. Naturally the factories kept producing and profits continue to come.

This brings to us a new form of development growth model where the need of the poor nourished the welfare of the rich and the industrialized. I had never looked at social development from that angle.

To business this gives another opportunity to support social development not for the sake of charity but because this makes good business sense and is good for the shareholder. This calls for a re-alignment of corporate business strategy, focusing on this new market segment and taking advantage of it.

US military interventions impact on global business

The US is the largest economy of the world and the financial cost of Iraq and Afghanistan wars is still small in percentage terms. The quagmire in Afghanistan can lead to a prolonged US presence in the region not unlike that in Korea except here the shooting will continue. The financial costs will continue to rise as it seeks to douse one fire after another. History has taught us that ultimately wars take their toll on nations.

Smaller economies like those of China and India are increasingly becoming more and more independent in their thinking, hitherto small businesses of these countries have begun acquiring parts of US global corporations and manufacturing and services locations are moving East.

Global businesses world over will be forced to revise their business strategies. Entrepreneurs and other decision makers who are able to read the events early on will benefit, those who continue to wait will one day find that the best deals have gone to competition, costs have risen and profits have dropped. These are ones which will fade away and disappear into history, the visionaries will survive.