The Focus by Club Ecobizz - September Volume 2

8/3/2019 The Focus by Club Ecobizz - September Volume 2

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Vol 2, Sept 2011


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From The Editors Desk

IBS Hyderabad

Inside the Issue:

1. The Shrinking Denominator

- Rajlakshmi Mitra2. Financial Crunch at Air-India

- Puneet Gupta

3. Improving IndoUS Ties

- Rahul Bhargava

4. SpotifyA Tryst with Technol-

ogy

- Shiv Mundhra

5. Neural Networks in Business- Juhi

6. Mobile Marketing

- Keerthichand

7. If its in Your Psyche, Its in

the Market

- Mansimran Kaur

8. Rockonomics

- Charu Attri

Hey There,

Its almost the end of this semesterwith a flurry of assignments, presenta-tions and project submissions doing therounds all across campus. However, ClubEcobizz has been working round theclock to ensure that youre ahead of thecompetition by covering relevant issuesand in-depth analysis of trends.

Ranging from Currency Deprecia-tion, The Air India Crisis, Indo-US Ties toan economic viewpoint on Neural Net-works and Consumer Psychology along

with trends such as Mobile Marketingand Rockonomics.

To close on this Semester, We wishthe Junior Batch all the very best for theirfirst set of End-Terms and the SeniorBatch a whole lot of luck for the upcom-ing Placements as the theyre pretty ac-customed to the End-Terms already!

Heres hoping that you have a great andenriching read!

Warm Regards,

Neha Sharma

Editorial Head

Neha Sharma

September Vol 2, 2011. The Ecobizz Newsletter

Editors Desk

*Newsletter Published by Piyush Agarwal


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IBS Hyderabad

The Shrinking Denominator

- Rajlakshmi Mitra

of investor confidence and termination of foreign

investments in the country which would ulti-

mately make it impossible to finance the currenttrade deficit! In spite of all this, this practice con-

tinues. Why?? The only argument made by manyis, US and other economies can recover by im-

proving upon exports, and a devalued currencywould help doing that. More and more countries

are realizing the trade advantage from weakercurrencies and have plunged in this currency

war. They are reluctant to appreciate their cur-

rencies because of thefear that doing so will

not only lead to loss oftheir permanent share

in market but alsotheir competitivenessin market share.

China had been gain-ing unfair trade ad-

vantage through itsweak currency, but

has been pressurizedby European Union

countries to raise itscurrency.

The US debt is so

large that simple

measures like increas-ing tax, reducing defi-

cit cant resolve the situation. Also effectivemeasures like reducing entitlements and with-

drawing overseas troops cant be implemented ifthe political situation of US is considered. As a

result, US is pumping huge reserves of liquidmoney in its commercial banks.US banks todayhold $1.6 trillion excess reserved money, which

was $1 trillion a year ago. Whereas, only $77 bil-lion is the amount required to reserve. Almost an

We are living in an era of cheap currencies.Gone are the days when devaluation was takenup to balance the deficit of payments, to speed

up manufacturing sector, create employmentopportunities thereby providing social and eco-

nomic growth. Putting it in a better way, depreci-

ating currency is not a reliable measure to im-prove economy, unless and until Government

executes proper economic planning so that theamount of devaluation stabilizes the external

value of money.

But the present situa-tion deliberately devi-

ates from the execu-tion of the fact that

devaluation of cur-rency is unreliable. In

fact, it seems as if ithas become a practiceand not remained a

necessity anymore. Asmore and more coun-

tries are bleeding indebt, the easiest way

the Governments find

to cope is cheapentheir currencies and

create more money.Dont they realize that

creating more andmore money dilutes its buying power? If they do

realize this fact, then why are countries indulged

in this global currency war? Have they ignoredthe fact that there are many dangers associated if

value of money is reduced too quickly? I dontthink there is any dearth of world class econo-

mists who may not be acquainted with the factthat rapidly depreciating currency leads to lack

This depreciation of currency hascome up as a result of a thread of

events.US is under huge debt andfiscal deficit. The fiscal deficit hasbeen over 10% for three years andnet debt has risen by 24% points

of GDP over three years!


Economics


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inflation. Presently, prices of gold, oil, wheat,

sugar, soybeans are touching new heights. How

is the common man supposed to survive? Why ishe paying the price of this currency war without

any fault of his? A commodity price is taken asratio of demand in the numerator and the value

of currency in the denominator. While the popu-lation is proportionately increasing day by day,

causing the demand to rise manifold, keeping thedenominator high, the value of dollar and euro is

drastically decreasing. The denominator is

shrinking!!!! As a result there has been a hugegap in meeting the demands of the people.

World economies should gear up, realize thatdepreciating currency is not the only way to

grow economy. Economic growth is incompleteunless and until the demand of the crowd is opti-

mally met.

unimaginable situation for any d eveloping coun-try to hold such huge amount of liquid money.

The effect has been more disastrous. With hugedebt and economy paralyzing gradually, unem-

ployment rate has risen. Consequently, the big-gest fear is that, i f the unemployment rate contin-

ues to rise, investors will lose confidence, busi-

nesses will be unwilling to take risks, therebyelevating the tendency to hold assets in liquid

forms, etc. So, if US economy continues to per-form badly in the second half of the year, US

Government will be forced to print money anddevalue its currency. Well, there are signs of re-

covery from the debt crisis, but the impact on the

globe is going to last long.

The long lasting effect of which I am talking

about is while the countries are involved in thisrat race of cheapening currencies to gain trade

advantage, arent they focusing on the flipside of

the situation? Arent they aware of the fact thatsteep decline of currency gradually leads to infla-

tion? US will come out of the crisis some day orthe other as it has that much of capability to do

so but, if this continues, will other countries beable to overcome the vicious trap of inflation? Asthe currency deteriorates, import of goods and

services become more expensive, hence causing

IBS HyderabadIBS Hyderabad Economics



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IBS Hyderabad

FINANCIAL CRUNCH AT

AIR INDIA-Puneet Gupta

be discussed.

REASON FOR DOWNTURN

The foremost reason for its downturn is ineffi-ciency in its operations but the management at-

tributed other reasons for its financial mess. Ac-cording to them, rising fuel prices, high interestrate for loan payments with low returns are the

major reasons for their downfall. Further the fuelsuppliers also backed

out in supplying oilto AI which lead to

the cancellation ofmany domestic aswell as international

flights affecting thebrand as a whole.

From the last few

months oil priceshave been on risingside affecting the sup-

ply of it to AI. It re-ported a cumulative

loss of 22,165 crores

and estimating Rs6,994 crore losses in

2010-11. Moreoverthe political interfer-

ence on a daily basiswas hampering the growth of AI. Even the bail-

out packages by the Indian government didntmake any great difference. As a result the questionof its revival becomes the most frequent question asked

among the analysts.

IMPACT ON ORGANISATION AS A WHOLE

The impact of being operating in losses could beseen in the form of strikes by employees as it was

AI selects Booz, Rothschild for cost restructur-ing, AI may announce 50% incentive cut, Pilots refuse to meet with Air India manage-

ment, AI asks employees to accept salary cuts .

These are the news headlines that have beenflooding the media and all major newspapers in

the past few days. The oldest and largest airlinein India serving Asia, Australia, Europe, and

North America, is facing financial crunch andconstantly incurring

losses. It seems that the MAHARAJA (Mascotof Air India) is losingits shine under the blackclouds a nd unable to

control i ts kingdom.

India is emerging as aglobal player in the

aviation industry.

Increasing per capitaincome, low air fares

by different carriers,major business and

tourist destinationhave accelerated the

growth of Indianaviation. This kind of

a scenario offers am-

ple opportunity toAir India to encash on this opportunity by pro-

viding its best services but due to its financialinstability, it has not been able to avail these op-

portunities.

But now the question is how Air India can ensureits survival in such a competitive market where

every player in the industry is executing its op-

erations at its best. Before we offer remedies, Ithink the possible reason for its downturn should

Maharaja, which used to be

always in skies and dreamt high is

facing financial crunch due to

which many problems crop up.

Turnaround and financialrestructuring are being planned to

survive in the market for long run

but ultimately it is their efficiency

which can save it from this crunch.

IBS Hyderabad Strategy

September Vol 2, 2011 The Ecobizz Newsletter


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The company has to take some efforts to over-

come the problems. Since the major reason for

increasing the cost is Aviation Turbine Fuel(ATF), the focus should be to optimize the fuel

cost. For that it has to reduce the number of flightsto non profitable routes and combine flights to certain

routes like Delhi Mumbai Chhattisgarh. Sec-ondly, it should offer superior services to gathermore and more traffic and maximize its revenue.

Another problem that is being faced by Al in its

working is its capital shortage, due to which it isconstantly taking funds which increases the in-

terest costs. The aircrafts which are obsoleteshould be disposed off and replaced it with mod-

ern aircrafts to bring efficiency. Another solutioncould be to follow the norms in order to become

a member of star alliance which will drastically

reduce their costs and increase the overall effi-

ciency. Airlines such as LUFTHANSA, SCANDI-NAVIAN have been enjoying this status wherethese airlines have been recognized as worlds

most reputed airlines. Star alliance provides con-nectivity throughout the world attracting more

customers for their member airlines. In the longrun, it should optimize its staff by lay off (if nec-essary). Moreover, it should reduce its debt bur-

den to maintain its credibility and recapture itslost market share and finally the govt. should

also extend its support time to time and ensure

its survival.

Many domestic flights are planning to go inter-

national, even some airline such as INDIGO hasstarted c reating tough competition for loss suffer-

ing unit and take away its market share. Therehas to be a collective effort from management aswell as employees side to carry forward the leg-

acy which was once started by J.R.D. Tata. If ade-quate steps are not taken, then we wont be able

to see MAHARJA in the skies again in future

not able to provide remuneration to its employeeon time. There was a lot of hype related to can-

cellation of flights. It lead to coordination prob-lems with the management as there was 50% cut

in PLI (Production Linked Incentive) and three

months salary to its employees also remainedunpaid. There was no harmony between the em-

ployees and the management which further

added to the misery of MAHARAJA

Recently Al was given the opportunity to become

a member of star alliance (worlds largest airline)but that could also not be exploited due to non

fulfillment of norms which further added to theirmisery because it could not provide highest in-

dustry standards of customer service, securityand technical infrastructure.

Since Al represents the nation to the rest of theworld, it is the responsibility of the Government

of India to take some precautionary measuresand help Al to come out from the severe crisis

that is currently being faced by MAHARAJA. Intime of crisis, people tend to spend less and save

more of their money which indirectly affects air-

line industry. The government is looking for itsturnaround and financial restructuring to bring it

back on the right track. In the revival plan, theGovt. decided to provide 6600 crore of capital to

Al to clear off its dues but Deloitte (consultancy

firm) made negative comments about its turn-around strategy and found some flaws in it. Ac-

cording to them, it has overplayed its revenueand growth projections (assumption that fuel

price would not raise) are also not justified. Sonow the onus lies on the management to take it to

the skies and make it f ly once again.

REMEDIES

IBS Hyderabad Strategy



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Improving Indo-US ties

- Rahul Bhargava

the second US president to visit India in his first

term. The highlight of the visit was that he ad-

dressed a joint session of the Parliament of India.Addressing the session, Obama extended his

support calling India-U.S. relationship a defin-ing partnership of 21st century and cited India

as a strong contender for the permanent mem-bership of United Nations Security Council.

When nations talk they discuss mutual benefits

with respective interests.US too had some mo-tives. The US President

visited India as an arrayof prickly bilateral issues

confronted him, includ-ing differences over the

proper regional roles tobe played by China and

Pakistan; the status ofconflict in Afghanistan;international efforts to

address Irans controver-sial nuclear program; re-

strictions on high-technology exports to

India, outsourcing, and so on. Obama's Indiavisit changed US approach towards India perma-

nently. US saw India as a prominent future

power and declared it as an important ally. Maybe its too early to say whether US treats India

with the same trust as it treats its main allies Brit-ain, Australia and Japan. Obama's India visit for

sure can be seen as the most successful US Presi-

dential Visit.

However there are certain issues related to the

foreign policy which are susceptible. India ques-

tions US approach towards South Asia especiallythe subcontinent. India criticizes the Obama ad-

Every time I come across anything about thediplomatic talks between the delegates of boththe nations, I wonder what they really talk a bout.

Nirupama Rao shaking hands warmly with her

counterpart draws attention. I cannot control myeagerness to know what agendas are being dis-

cussed and in what contexts and direction. Thenthe very next day comes the news with quotesand speeches highlighting the discussed agendaswhich enables me to form

a perception about the

success or failure of theofficial talks. But the per-

ception keeps on chang-ing as the day wears on

when I analyze the differ-ent opinions held by the

experts, journalists, edi-

tors and ex-diplomats vianews channels and inter-

net. I share my opinionwith friends, parents and

colleagues. At the end ofthe day I draw a conclu-

sion which may be

against or favorable to the desired outcome and Iput it forward. The democratic structure encour-

ages millions at di fferent thinking levels to do thesame. From think-tank parliamentarians to ex-

perts and from scholars to an illiterate fruit ven-dor comes a divergent view which creates a need

to debate whether the ties between the worlds

greatest democracies are improving. Lets initi-

ate this debate!

Richard Nixon was the first US president to un-

dertake a visit to India in his first term in officeand that too in way back in 1969. Four decades

hence, in November 2010 Barack Obama became

Hillary Clintons visit earlierthis year in July signifies that

the U.S. views India as agrowing world power today

with which it shares commonstrategic interests mutually

beneficial to both the nations.

IBS Hyderabad Emerging Markets



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pear. Obama administration's move to limit H-1B

visas with respect to foreign workers has been

condemned by the ministry of External Af-fairs. S.M. Krishna stressed that India would de-

bate against U.S. "protectionism" at various inter-national forums. Moreover, India's then Com-

merce Minister, Kamal Nath indicated to moveagainst the outsourcing policies of the US.

The fact of the matter is United States has sought

to strengthen its relationship with India as it rec-ognizes India as its key strategic partner to serve

its interests.

India and US also stands unite to fight terrorismand aspire to create a strategically stable subcon-tinent.

The deals for the purchase of artillery like Boeing

C-17 military transfer aircraft during Obama'sNovember 2010 visit, makes the U.S. one of the

top three military suppliers for India, followingIsrael and Russia. These are positives but on the

other hand India keeps on expressing its con-

cerns that US's non-military aid to Pakistan will

be used to build up military against India ratherthan countering insurgency. India also blamedthe US for delaying the full implementation of

indo-US nuclear deal. India advocates that theUS has pressurized India to sign the agreement

through Comprehensive Test Ban Tr eaty (CTBT).

Analyzing the above findings we can say that itis leading to a mixed bag of opinions where one

ministration for linking the Kashmir dispute to

the instability in Pakistan and Afghanistan. To be

frank, the Obama administration is barking upthe wrong tree. To some extent we can advocate

that there is a slight downturn in India-U.S. rela-tions following the election of Obama as

the President of the United States primarily dueto Obama administration's desire to maintain its

relationship with Pakistan till its forces are op-erational in Afghanistan to keep a watch on them

and also to imp rove r elations with

China. However, the leaders of the two countries

repeatedly dis miss these concerns.

Coming to Trade Relations, the United States and

India do share common interests. IT services,machinery, dia-

monds, chemicals, iron and steel products, coffee

, tea, and other edible food products are the major exports to the U.S. whereas aviation equip-

ment, engineering materials and machinery, in-struments used in optical and medical sectors,

fertilizers, and stones and metals are the major

imports from them.

American direct investment of $9 billion whichaccounts for 9% of total foreign investment in

India establishes a fact that the US is Indias larg-est investment partner. The US has invested

heavily in the countrys major sectors like powergeneration, telecommunications, ports, petro-

leum and mining.

But matters are a bit complicated than they ap-


http://en.wikipedia.org/wiki/Teahttp://en.wikipedia.org/wiki/Tea


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may feel that the ties between two nations are

getting broader and better but the other may feel

that it is the opportunistic attitude of the US tocounter the economic slowdown as US measures

India as the potential market for investment thatresulted in Obama announcing removal of export

control restrictions on several Indian companiesand concluded trade deals worth $10 billion in

order to create 50,000 jobs in the U.S. during his

visit.

Its a simple logic. India has changed its foreign

policy of maintaining strategic and military rela-

tions with the Soviet Union after its dissolutionwhich India had developed during the cold war.

This surely has improved the ties with the U.S.which is always desired between any two na-

tions. But the problem lies in the neighborhood!

The US also finds itself in a mess where Chinaadvocates itself as an all weather friend of Paki-

stan; for India there are tensions over boundarieswith Pakistan in J&K plus rift between China &

India with respect to Tibet and ArunachalPradesh. The planets superpower US seems to

be the viable option to gain support from at this

juncture.

What India can do is that it can use for itself the

so called superpower of the US by asking theUS to initiate the diplomatic talks with both

China and Pakistan. To conclude, the best policy

at this stage would be to resume the talks withPakistan and control China which necessarily

requires US intervention or support to be dip-

lomatically precise!



QuotesOut and About the World

We have not made any new policy

decision. The Supreme Court asked us

how we calculate the poverty line, we

gave the factual explanation MontekSingh Ahluwalia, Chairman - Plan-

ning Commission"The euro is much, much more than a

currency. The euro is the guarantee of

a united Europe. If the euro fails, then

Europe fails." Chancellor Angela

Merkel."We're nearing the end of rate hike cy-

cle, but only when we see a modera-tion in inflationary pressure and slug-

gishness in growth, we'll see the RBI

reducing rates," chief investment offi-

cer Vetri Subramaniam

We see community organizations as

major service providers and economic

drivers rather than as recipients or dis-

tributors of charity, and coordinators

of volunteers. Today they constitutewhats referred to as the social econ-

omy - Julia Gillard

The overall picture is downbeat but

for the performance of steel and ce-

ment, which indicate positive moods,

said Madan Sabnavis, Chief Econo-

mist with Care ratings

"During the meeting, we discussed our

economic situations,, macroeconomicpolicies, and policies and cooperation

in areas such asinvestment, infra-

structure construction, high technol-

ogy, energyconservation and environ-

mental protection." - Chinese Premier

Wen Jiabao


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SPOTIFY- A Tryst withTechnology

- Shiv Mundhra

There is a new planet of music waiting,

SPOTIFY. Europes extravagantly successful

streaming music product has just shown us thefuture. Just like other streaming music players

like Pandora, Grooveshark, Last.fm, MOG.comand Lala , Spotify delivers a hu ge music collection

which one can listen through Internet, Mobiledevice, Desktop client or in Offline mode. Spotify

created in October 2008 by Daniel EK and MartinLorentzon in Sweden. The service has approxi-

mately ten million

users as of 15 Sep-tember 2010 and

about one million ofwhom were paying

memb ers (source:Spotifywiki). Co-founder Daniel Ek

said he wanted tocreate some-

thing better than pi-rating music which is

fast, simple and freeto an extent. Spotify

will let the userstream all one wantsfrom a library of 15

million songs at nocost. It is currently accessible with Microsoft

Windows, Mac OS X, Linux, Telia Digital TV andmobile devices running iOS (iPod/iPhone), An-

droid, Windows Mobile, S60 (Symbian), webOSand Sonos. It is increasing its network through-out and as of now the service is available in

Finland, France, Netherlands, Spain, Sweden,UK, US and soon Denmark because it takes time

to arrange licensing agreements with record la-

bels and local publishing right societies.

One might not even be aware of the rival that is

Spotifys a different kind of service, it allows

you to stream music event if you dont own it . So

perhaps Spotify will think iCloud is really just

second hand news- BBCs Rory Cellan-Jones.

Music is life and life is Music, one of the firm

notation which I believe strongly in. It takes youto an emotional level which is not matched to

any other source of entertainment. Listeningonline music is one of the best ways to stay in the

perfect mental state.With the growth ofInternet the demand

for online music isgradually increasing

which increases thedemand for th e

streaming music ser-

vices.

Music streaming ser-

vices are becominggradually more im-portant with the

growth of the Internetbecause most of the

users do not have fastaccess to download

large multimedia files quickly. Through Stream-ing, the client browser or plug-in can start dis-

playing data before the entire file has been trans-

mitted.

I have been using Spotify for over a year now and Ibelieve it has redefined streaming music. Now I thinkits redefining personal and social music. Their latestiteration of their desktop application integrates beauti- fully with Facebook. You can see a friends profile,which includes their favorites artists and saved play-

lists. Andrew Mager

Its time to leave the piratingto Jack Sparrow..!! The new

planet of music industry is onthe GO..! Discover it with

SPOTIFY.

IBS Hyderabad Technology

http://gizmodo.com/5821056/why-did-it-take-so-long-for-spotify-to-come-to-the-us?tag=spotifyhttp://gizmodo.com/5821056/why-did-it-take-so-long-for-spotify-to-come-to-the-us?tag=spotifyhttp://gizmodo.com/5821056/why-did-it-take-so-long-for-spotify-to-come-to-the-us?tag=spotifyhttp://gizmodo.com/5821056/why-did-it-take-so-long-for-spotify-to-come-to-the-us?tag=spotify


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ter, Flickr and e-mail, just send them a link to a

track or playlist and right away they can listen to

it. Spotify integrates with last.fm service, hence-forth by activating last.fm every song you listen

to will be sent to last.fm so that you can get rec-ommendations for new tracks. Spotify integrates

with Shazam, the iPhone application which canrecognize songs just by listening to it. Now if you

hear a new song you like, just by Shazam you

can download it with no extra cost.

In order for Spotify to continue the success story,

the music industry needs to get completely on

board with their music existing in the cloud. Oneof the users of Spotify says I am listening to onSpotify and as a consumer I dont see why I shouldeven want to. There is the option to buy, of course, butafter playing around with Spotify for two days I never

once felt compelled to purchase a song. I know theyllbe there waiting for me the next time we log on, so

why should I bother clogging up precious memory

space on my computer by actually buying them.

To this I would say that the music industry needsto find a way to become completely comfortable

with the idea of legal streaming because aftertwo days of poking around Spotify, it is clear thatthis is going to be the future of music industryand this is what the music industry should look

like. Its no wonder some of the companies are

holding out but as someone on the consumer end

of the spectrum Spotify is a w onder to behold.

attacking the music titan of the past decade when

iTunes is about to mature completely and rap-

idly. The same was being accomplished byiTunes during early 2000s when it set the stage to

decimate Tower Record -a retail music chain whichcurrently exists as an international franchise and

an online music store. For those who are notaware, Spotify is a digital right management based

streaming service that allows users to stream se-lected music from a range of record labels. It has

a wonderful selection and is compatible with the

computer, smart phone, tablet & android phonesand is backward compatible to play music from

existing iTunes library.

Just think of Spotify as your new music collec-tion. It enjoys complete advantage over iTunes in

delivering music with its relative pricing. Al-

though iTunes and Spotify deliver music overthe net, Spotifys price is far below the level of

iTunes. For $10 a month, you can enjoy unlimitedmusic as long as you are listening through Spo-

tify music player. It has associated its businessmodel around low pricing. ITunes does not

stream music; it requires you to download songsto your iOS before you can listen whereas Spotify

is one of the top online services for streamingmusic. With Spotify, all the music starts stream-

ing right away without any cost. The unique ser-vice Spotify offers is that you can use its OfflineModewhich allows you to dial an album to lis-ten thousands of music tracks without connectedto the web at no extra cost. Along with the sub-

scription plans, the service also offers the chanceto listen before one can make purchase with the

Spotify Free account. Through Scan and Match

service Spotify scan the tracks on your computerand then download those to your mobile device

without synchronize your device with the com-puter. Spotify also allows you to listen song even

when they dont own it, thereby help you to cre-ate your own better playlists and this playlist onyour computer will sync to all your mobile de-

vices making it easy to take your playlist on thego. The social feature of iTunes Ping is just a

wash at present whereas Spotify makes the bestuse of social networking. You can listen to the

same songs your friends are at ,free of costthrough Facebook which is built in to the desk-top application. You can also share your favorite

playlists with your friends over Facebook, Twit-

IBS Hyderabad Technology



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Neural Networks in Business

-Juhi

gence and is developed by experience.

Its a chaotic world out there! Chaos is said to be

exhibited when there is a nonlinear mappingsbetween input and output i.e. when system runs

randomly. Traditional techniques were not able

to capture this non-linearity. This need has led tothe advent of neural network in business. Each

neuron represents a traders decision process andso neural network represents the complex entan-

gled decision process network of the market i.e.

their interaction.

Technical analysis

which uses historicaldata (past prices) to

determine future mar-ket works a step lessthan neural network .A

step which is the majorand most important

part of Neural network.Nowadays 90% of trad-ers use technical analy-

sis due to unavailabilityof any other better op-

tion. The weak point inthis method is its sub-

jectivity and its time-delay nature. Different

people interpret its fi-

nal result (charts, bar graph etc) differently andloose many potential data of stock movement

which occur in between analysis. These bargraphs and charts along with some other raw

data become one of the inputs of neural network.

Neural network works on the formula of findingtrend and pattern in the data by learning how to

combine all the methods effectively in the most

We have heard about World War I, World WarII and sometimes about fictitious World war III,but have you heard about World war IV. Yes, Im

not mistaken, you heard it right. World War IVhas been already started where battlefields are

world trade and manufacturing. Everyone is try-

ing hard to forecast the market precisely or elseto be as closer as it could be to the forthcoming

market.

Till date, a lot of work

has been done on ways

to predict the market.However none of the

techniques have beensuccessful enough to

beat the market.Market analysis tech-

niques such as techni-cal analysis, fundamen-tal analysis and regres-

sion have done a good job in predicting the

market but due to in-crease in competency

level and number of

players involved, needof the hour is accuracy

and consistency. Thedemand of the preci-

sion has lead to the expansion of the applicationof one of the concept which previously used to

revolve around neural processing of the brain.

Neural Network is named and designed after thehuman cells (neuron) and its massive inter-

interconnected network. Like neurons whichcontribute to human intelligence and perform

intelligent operation developed by experience,neural network also contribute to artificial intelli-

Neural Network has generated ahope in the mind of researchers

and investors to unravel themarket mysteries for which

current methods wereinsufficient. Researchers define

market as a system whichexhibit chaos

IBS Hyderabad Marketinomics



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idea took a great jump. The first NN to be ap-plied to a real world problem is Madaline, which

was used as adaptive filter. These successescaused a fear among people that these thinking

machine without having any morals and values

can overtake or hamper the societal well-being ofhuman. With the borne of this feeling, further

research in this area came to halt. But this ideawas not fully extinguished as seen in Japan but

as said a spark neglected makes a mighty fire.

Seeing Japan, Us defense started the work whichwas left in between and all these effort had led to

what we are talking here about. Its applicationencompasses many fields now. Some of the uses

of NN are: predicting costs, forecast revenue,processing documents, tracking commodity mar-

kets and Futures, foreign exchange trading, fi-nancial planning, company stability, risk man-

agement ,target marketing, customer research

and bankruptcy prediction. Banks and other fi-nancial institution use to check their credit (loan)

-cash match to estimate bankruptcy probabili-ties .It is also used to plan the constituents of a

profitable portfolio in real-time. This all uses arein addition to its previous usage in biological and

technological field like recognition of speaker,

diagnosis of hepatitis,3-D object recognition, un-

dermine detection and many more.

By comparison, neural networks really have no

rules. Instead these systems look for patterns.

efficient manner. Some argue that expert systemcan be used in the same fashion as NN. It is

found that expert systems need information ex-plicitly to work properly but as market exhibitschaotic characteristic (partially deterministic and

partially random) there might be some chance ofrequired information to be missing or incomplete

and in that situation expert system can give dras-tic results. NN can handle such dynamic data

better by its educated guesses. Market scenar-

ios are very complex due to large data set, mas-sive networking and large number of exchanges

happening in just a fraction of second. This allcause experts (human) itself have difficulty in

completely understanding it. Formulation ofmarket scenario is difficult thats why applying

expert systems to the stock market become aproblem .Here NN comes into picture, as it itself

extract rules (on which it will work) from the

current data and its experience without having

them explicitly stated.

The idea of artificial NN came around 1943 but it

was conceptualized fully in 1949. John von Neu-mann whose contribution can be seen on various

platforms has contributed here also. Imitation ofthe perceptron-mechanism which fly uses to flee

when risk comes nearby it with the operation ofthe eye-to the neural network function had beenbuild in hardware and is the oldest NN still in

use today. With the advent of computers, this




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14

They are trained to minimize the error by provid-ing input pattern and using Back-propagationtechnique (use weights of each unit in such a way

that the error between desired output and actualoutput is reduced i.e. error derivative of

weights).These all are becoming too calculativebut heres the benefit. All the calculation and the

thinking part (analysis) are done by NN system

integrated with Expert system. You have to justupdate it with most recent data to make it at par

with or above Natural NN- Paul Tudor Jones, Liz

Cheval, Gary Klopfenstein and John Henry.

Work has been done to contradict Efficient Mar-

ket Hypothesis (EPH) which state that marketalways beats traders as soon as any opportunity

is discovered it is used by all and this in turnmakes opportunity to be so obvious that oppor-

tunity ceases. It is hoped that NN will outper-form the market or index averages. In recentdays most development in NN is proving that

this principal works. But still much work is leftout to take it to new heights which require them

to be put on specialized chips. Companies areworking on 3 models of neuro chips- digital, ana-

log and optical. These all look very promising.Traders are apprehensive about it and are eagerto use it to its full advantage.

The patterns consist of a number of inputs suchas price history, technical indicators, fundamen-tal data or even information from other markets.

If a trader can pin down some kind of pattern,

they are in business.

Till now the best solution is integrating the ex-pert system and Neural network. Neural net-work can perform its own prediction and expert

systems which can validate the prediction. Theonly problem faced by NN is that it cannot ex-

plain its result which can be overcome by the

integration.

All the methods predict future stock movement

from using past information. The difference lies

in their assumption. NN does not follow anysuch assumptions but derive its entire base from

data itself. To have a NN which matches our ex-pectation, first NN is trained as humans are

trained. The only difference is that for humans

time is the constraint but for NN it is the data.Types of data fed in NN over and above the tra-

ditional methods are Fundamentals-volume,yield, price/earnings, Technical-moving aver-

ages, volume trends, Market indices, Interna-tional Indices, G old price/Foreign Exchange

rates, Interest Rates Economic statists-exports,

imports, Previous experiences.




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15

MOBILE MARKETING

- Keerthichand

of people towards a particular product or a ser-

vice. The first essential step in this regard is to

make the customer aware of the existence of the

product or service.

In these contemporary times, when almost every

person is on the move, it is also necessary for thebusiness to be on the move. So, in this scenario,cell phone advertising serves as a boon to the

business. The audi-

ence can be reachedvirtually twenty-

four h ours a day

and they can bereached anywherethat they take theircell phone. Hence,

it is quite evidentthat this sort of ad-

vertising has gotenormous potentialin its functioning

and implementa-tion.

Initially, when the

trend of mobilemarketing first hit

the markets it did not appeal much to the major-ity because they were unfamiliar to this sort of

advertising and did not f eel co mfortable with the

inboxes of their mobiles being flooded with theads of various products and services advertised

by various companies.

But, as time progressed people slowly startedgetting accustomed to this trend as they could

see that they would be missing out exciting offersof totally new, refreshing ,trendy products and

qualitative services if they ignore the typical

Have you ever wondered the word mobilewhich means movement would be replaced byan instrument that would help people communi-

cate with each other over long distances? Yes, I

am talking about the favorite toy which has be-come one of the basic amenities of everybody in

this fast-paced world-THE MOBILE . So, ismobile marketing all about marketing through

mobile phones?Well, as a matter of

fact, we can say

that it is true to anextent in relation to

the contemporaryperception about

the definition ofmobile marketing,

but a more tradi-

tional school ofthought regarding

mobile marketing isthat it is

marketing on the

move.

To be precise, the

Mobile MarketingAssociation updated its definition of Mobile Mar-

keting as Mobile Marketing is a set of practices

that enables organizations to communicate andengage with their audience in an interactive and

relevant manner through any mobile device ornetwork.

So, it is very much evident that mobile marketing

has many forms about it and undoubtedly theuse of mobile phones in this mode of marketing

is just one of i ts forms but, definitely the mosteffective and prominent one. The bottom-line of

any mode of marketing is to draw the attention

Mobile marketing with the use ofmobile phones became a huge hit in

the markets. People of all age groupsand strata of the society use one

mobile or the other so extensivelythat they can be considered almost

integral parts of their bodies

IBS Hyderabad Marketing



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16

persons of various companies had to visit officesto create a buzz in the corporate class and some-

times had to bear the brunt of humiliation from

the officials in the light of creating disturbance atinopportune moments. To top it all, a lot of

money had to be invested in carrying out promo-tional activities in this fashion, which most of the

times did not go in line with the budget allottedfor promotion of the particular product or ser-

vice.

Apart from this even the advertising carried outthrough television made huge holes in the pock-

ets of the company that resorted to advertising.So in my view in these turbulent and troubledtimes the advent of mobile phones and the subse-

quent emergence of mobile marketing turnedout to be a panacea to overcome the various

problems associated with advertising. Thus, wecan say that the cost associated with mobile mar-

keting is much less compared to that of telemar-

keting.

Technology has played its role in facilitating the

popularization of mobile marketing. Location-

three or four liner ads sent in the form of an SMS

or a small video sent as an MMS.

So, at the end of the day, this trend percolated

into the minds of people to such an extent thatthey started liking it and also started to be on the

look-out for their mobile updates regarding thenew launches of a product, special offers, infor-mation about discount sales or a new and inter-

esting service.

Before the advent of mobile phones, advertisingwas carried out on a massive manner through

TELEMARKETING, which means advertisingof various products and services through the me-

dium of television and radio. As radio became

obsolete with time, most of the telemarketingwas done via television. Television reached a

huge base of customers as many people glued

themselves to the idiot boxes.

However, with the e mergence of corporate

world, people belonging to the higher strata ofthe society could hardly find time for television

viewing .So in order to create visibility the sales-




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17

carried out without prior permission from the

customers leading to privacy violations.

I personally feel that howsoever attractive and

lucrative may be the features provided throughmobile advertising if consumers do not have con-

fidence about the protection of their privacy, thislack of faith from consumers front would prove

to be a hindrance to the widespread deployment.

Therefore, at the end of the day professionals

who design the implementation of mobile adver-tising must be capable of striking a balance be-

tween consumers privacy and creation of buzzabout their brand. The balance should be at-

tained to such a degree that the iridescent feath-

ers of mobile marketing must glow to such alevel of radiance that they such nullify the lacu-

nas which may arise in the wake of intrusion into

customers privacy.

based services (LBS) that are offered by certaincell phone networks facilitate in custom advertis-

ing reach a huge base of mobile phone users who

are the subscribers f rom a particular location.GPRS internet and the technology of QR codes

facilitated the promotional campaigns of variouscompanies through social networking and free

online services.

Well, most of us could notice that th e contempo-rary world has turned to be a repository of many

individuals highly enthusiastic about games andthose who are passionate regarding gaming. So,

capitalizing on this mad rush for games, brandsare resorting to delivering promotional messagesas part of mobile games or are even going to the

length of sponsoring entire games to drive con-sumer engagement. This is known as Ad -funded

mobile game or mobile advergaming.

In a nutshell, we could elucidate many aspects inlength and breadth that portray the rosy side of

mobile marketing however, on the other sidethere are certain privacy concerns in this regard

because most of the times mobile advertising is




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18

If its in Your Psyche; its

in the Market- Mansimran Kaur

for higher priced apparel crisply ironed and

hung in a lifestyle showroom as compared to its

close substitute which is put to sale at a localmarket at a considerably lower price. This is be-cause we often feel that the apparel in the mallhas a higher value attached to it and is high on its

quality contents. Another more interesting situa-tion is when we choose the higher priced Coca

Cola bottle as in place of RC Cola when both ofthem have the same composition cater to the

same target market and

have positioned their re-spective brands in the

same way.

Though the law of de-mand speaks that, the

lower the price of a prod-uct, the higher is the de-

mand for that product.But talking about the reallife scenario there is an

absurd situation whereconsumers, when perceive

that the price of a good istoo low reduce the quantity of units bought by

them. This situation is hard to believe but is afact and this may lead to an upward sloping de-mand curve which says that as the price of a

good falls, the quantity of units sold decreases.And this may lead to an upward sloping demand

curve which says that as the price of a good fallsit lowers its quantity of units sold. What deter-

mines the degree of reduction in a productsprice? Whether the price is too low is determined

by the price of the products in the same cate-

gory .If the mean price range of soft drinks isRs.50 per 2 liter then any soft drink priced below

the benchmark price will lead to considerable

reduction in i ts sales figures.

The marketing theories have it that customersindulge in shopping because of the needs arisingout of different external stimuli. Now these

needs are satisfied by different products the mar-

ket has to offer. A mammoth role in this mecha-nism is played by the price of the product. A lot

of sellers in the market go in for psychologicalprice setting strategies and a lot of mechanics

goes behind setting such price levels.

Some consumers happento believe that higher priceis positively correlatedwith the quality of the

product that is displayed

in the best shelf position inthe most popular hyper-

market. This psyche iswhat drives the buying

pattern of any consumer.This is what is encourag-

ing the consumers to be-

come more brand con-scious and indulge in im-

promptu and luxury buying. Such buying behav-ior has proved to be advantageous for posh chain

of stores but the small businesses must be alertand choose a right pricing strategy keeping intact

their quid pro quo.

Pricing is more than just about numbers; it is a play

on perception. In many cases, the psychology of pric-ing is more important than the actual price itself.

The above lines very well explain the fact that the

price of the product has a lot to do with what

customers perceive of the product and not sim-

ply explain the traditional working of economics.

This behavior is common to us all. We often go


A tug of war between thetraditional laws ofeconomics and the

contemporary human mind

seeking improved quality isvisible in all aspects of life.



19/23

19

rary price cut policy but ends up losing its sales

because it has made a mark in the consumers

minds that the goods being sold here are not du-

rable and of the best quality.

To look at a real life market situation a lot of for-

eign subsidiary brands like Cantabil, Tippy Coo-per are offering their goods at a discount of 70%,

80% and sometimes even higher than this. Thisstrategy is a mere reduction in prices to sail

through the market jam packed with sellers offer-

ing substitutes of the same good.

This kind of demand situation can lead to a back-

ward bending demand curve violating the law o fdemand absurdly. In my opinion what is preva-

lent in todays market situation is the consumer

psyche rather than the law of demand d etermin-

ing the market clearing price of the good. Law ofdemand speaks only about the quantity but theconsumers are more conscious about the quality

which makes them behave in a way violating the

traditional mechanics of economics.

To understand the psyche of consumers we mustrecognize that offering discounts or temporary

price cuts will lead to increase in the sales andthis in no way will violate the law of demand.

We must understand that there is a difference

between a price of the product being too low andprice of a product being temporarily cut keeping

in mind the promotional strategies.

Its strange but true that depending upon how

low is the price ,our demand for the good will

first increase but if the price of a good furtherdeclines then a reduction in quantity of the good

is evident just because of the psychological rea-son of being perceived of it as a poor quality

good.

There also arises a situation where it is hard to

distinguish between a promotional price cut anda price that is low enough to transfer a consider-

able amount of your sales to your competitor.Sometimes it may happen that offering high dis-

count rates makes your store to be termed as theaam aadmi store losing out on the part of market

segment that consists of the upper middle classand the business class customers. In such a situa-

tion though the company is following a tempo-




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20

Rockonomics

into empirical data and researched the cost and

revenue patterns of a concert, why artists (even

the high profile ones likerolling stones etc.) need to

do it and what goes on into

making a concert a success.

In 2002 some of the bands

who toured showed the fol-

lowing earning patterns:-

The Rolling stones earned

$39.6mn touring and noth-ing was earned in terms of

recordings (recording new

songs).

Aerosmith Earned $11.6mn from touring as

opposed to $1mn from his recordings.

Red Hot Chili Peppers $6.1mn from touringand just $3.4mn

from their recording

business

Britney Spears$5.5mn (touring)

and $1.8mn

(recordings).

Creed $10.9mn fromtouring and $1.1mn

from recordings thatyear.

Here are few inter-esting observations

that surfaced aboutthese bands and

their earning pointswhen they go in the

The top 10% of artists make money selling re-cords, the rest go on tour. Scott Welch, manager of

Alanis Morisette and LeAnn

Rimes.

A Thousand bodies swayingalong connected solely to

the tune they hear and thebaritone of this one person:

Rock concerts truly are phe-nomena when it comes tothe experience in itself. Met-allica is one band which has

wide fan following in

breadth, height and width.So there was no question as

to House full and no doubt that all the tickets

have already been sold. All in all, expected re-sults. But why would this band or any otherband ;with a mil-

lion devoted fans

who buy any andevery LPs, records

and publishings;need to go touring

and play in con-certs? Sure it is

about the Adrena-

line punch, thekick you get from

playing live andthe rush of being

on stage. So why

do it?

Some researchersactually went outthere and looked

Concert tour needs a lot ofmanagement in terms of

fixed costs like stagemanagement, price of the

location, findingpromoters to cover the

costs etc. In other words itspells Dough issues !

IBS Hyderabad Trends

- Charu Attri



21/23

21

across wherein the view was literally

360. To accommodate such an idea they

went on to create a setup called TheClaw wherein a four legged structure

was used to increase the venues capacityand this helped U2 grab a huge chunk of

audience. The structure cost of each oneof these added up to about 15mn to

20mn. On top of that was the cost of thewoofers and speakers which were inte-

gral part of the structure.

(U2 concert with The Claw at Rose Bowl)

What do the bands genuinely earn from isthe ticket sold and the merchandise thatfans pick up at such venues. It is actually

believed that 100% of the merchandise

earnings go to the band!Merchandising includes selling t-shirts, lo-

gos, posters, banners, stickers and evencustomized buttons with their name on it

in case of take back the night someideas are as radical as selling the custom-

ized guitar stripes. So when tickets aresold the revenue earned is shared withthe promoters but the merchandise reve-

road to feed the appetite of all those who wor-

ship and thrive on this culture:-

As seen above top artists across all genres ofmusic be it Bluesy Rock and Roll to Rapor Jazz, all of them have quite many par-

ties to share the profits earned from re-cordings such as their promoters, their

manager, the record company to thecomposers. In the data stated above one

can see that a majority of the artists earnless from their recording and new songs

as opposed to the concerts and tours.

Concert time: Yes, it feels unavoidable for aband to hit the road looking at the aboveanalysis, but hold up, even a concert

needs money to be doled out. Why?

Fixed costs! You get a sponsor? That is greatbut before you get all happy about it re-

member that even they want a share.Then there is the advertising cost, the

cost for the stage setup and the outlook.

In 2010 U2 won the Billboard Touring award,for their U2 360 Degree Tour. They de-

cided to hold concerts in stadiums all




22/23

22

need to be taken care of. If someone

wants to be a band manager then he has

to look into all of them so as to transforma concert into memorabilia where the

fans soak up every moment. In short theexperience does come with a cost but the

earnings in terms of fan following andrevenue can be ground breaking. I would

like to sum up with instances of unbe-lievable amount pocketed by some per-

formers fuelled by people who travel

near and far just for that one live per-

formance!

Madonna- Sticky & Sweet Tour-$162,000,000

Bruce Springsteen & the E Street Band -

Magic Tour-$204,500,000

Bon Jovi-Lost Highway Tour-$210,600,000

(earnings in 2010 concerts of few artists and

bands)

nue goes to the band.

High quality and low quality seats. Basedon the benefits included and the posi-

tioning of the seat, differentiation of the

price can be easily done. This is done incase of high fixed costs wherein the mar-

ginal cost is below the average cost. Solike in any movie theatre, we can see dif-

ferent prices for different kinds of seatsin the arena e.g. VIP passes backstage

passes (imagine product differentiationas in paying more to have a nice conven-ient spot to park and enjoy the concert

without any qualms). Also VIP parkingtickets for those who can pay the pre-

mium.

Also we all know higher the level of loyaltythe fan has higher he would be willing to

pay for the ticket. Here the idea of hugeconsumer surplus comes into play

wherein the hardcore fans are willing to

pay a premium for the concert based on

their level of perceived value.

There are a million aspects to a concert that


http://jamtopia.com/tickets/?ticket-keyword=Madonnahttp://jamtopia.com/tickets/?ticket-keyword=Madonnahttp://jamtopia.com/tickets/?ticket-keyword=Bruce+Springsteenhttp://jamtopia.com/tickets/?ticket-keyword=Bruce+Springsteenhttp://jamtopia.com/tickets/?ticket-keyword=Bon+Jovihttp://jamtopia.com/tickets/?ticket-keyword=Bon+Jovihttp://jamtopia.com/tickets/?ticket-keyword=Bon+Jovihttp://jamtopia.com/tickets/?ticket-keyword=Bruce+Springsteenhttp://jamtopia.com/tickets/?ticket-keyword=Madonna


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For Readers

Dear Readers,

I believe you appreciate the transformation of The Focus. Your praise and encouragement

has always been a source of motivation for us. Therefore, in case you have any comments orsuggestions for improvement please leave them in the COMMENTS section our website

www.ecobizz.weebly.com or Stu-z. We at Ecobizz will be more than happy to incorporate

your suggestions.

Further, those of us with a flair for writing and are seeking an opportunity to see their

thoughts in print. Here is your chance to let your dreams to turn into reality. We publish

articles from our readers; you could be from any walk of life within or outside of IBS, Hy-

derabad, a student, a faculty, a professional, a homemaker or a self employed entrepreneur.

We believe that every individual must get an opportunity to express oneself. The article

should be of around 1,000 words concerning economics, politics, social issues, management

or business. You can e mail your contribution to [email protected].

Regards,

Team Ecobizz

IBS Hyderabad Feedback
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The Focus by Club Ecobizz - September Volume 2