2017/06/26

Travis Kalanick steps down as chief executive of Uber

A new era begins at the ride-hailing giant

La predicción de Hegel: ¿Qué esperar en Venezuela?

Hoy con Sam
Aunque la lectura de la concepción del denominado Dios-Estado hegeliano dio pauta a un sinfín de interpretaciones, por ejemplo, la de los ingleses, quienes desacatan la razón como fundamento del Estado, o bien, la interpretación italiana que ven en los textos del hegelianismo el fundamento para crear autoritarismos como el fascismo y el nacionalsocialismo, lo cierto es que la magna obra del filósofo alemán, Fenomenología del espíritu, puede incluso en nuestros días seguir siendo un instrumento para el análisis de la condición de los Estados modernos. Aunque la estructura del mundo ha cambiado, se denota que la condición de los gobernantes y ciudadanos sigue siendo tan raquítica como en el siglo XVIII.
Si realizáramos una analogía entre la situación actual de Venezuela y lo descrito por Hegel hace tres siglos, descubriremos que el filósofo realizó una especie de predicción de la condición actual de este país. Hegel creía que un Estado debía salvaguardar siempre el principio de racionalidad, esto se puede traducir como garantizar las libertades de los ciudadanos; un Estado que no cumpliera este objetivo, estaba condenado.
Al no cumplirse este cometido, se daría pauta a una dialéctica entre gobierno y ciudadanía descrita por Hegel de la siguiente manera. La inevitable lucha entre gobierno y sociedad comenzará, se desatará la lucha de clases por alcanzar y dominar el poder estatal. El gobierno argumentará que desea elevar a la sociedad a un estado de igualdad; la sociedad reclamará a que ciertos individuos se subyuguen a la voluntad del pueblo.
Análogamente el gobierno de Maduro dice preservar los principios bolivarianos de libertad e igualdad, su canciller de Relaciones Exteriores argumenta que el país busca la estabilidad de la sociedad venezolana. Paradójicamente su pueblo se subleva y desea la destitución de su gobierno. Además, seguramente podrán juzgarlos por la nueva autoridad ciudadana resultante.
Pero las similitudes no terminan, Hegel habla de dos vías para la transformación del Estado: la reforma política y la revolución. Si los gobernantes optan por la reforma, el gobierno debe someterse a la voluntad de los ciudadanos y ratificar la igualdad social. Si el pueblo opta por la revolución es porque la clase dominante no accede a la reorganización y redistribución de bienes.
Durante la 47° reunión de la Organización de Estados Americanos (OEA), la canciller venezolana, Delcy Rodríguez, dijo que su gobierno no aceptará el rechazo a la Asamblea Nacional Constituyente propuesta hace años por la indignada ciudadanía venezolana y que hoy es rechazada. Con ello, denota que por ese rumbo no habría una reorganización del gobierno.
Para algunos intérpretes del hegelianismo como Lorenz von Stein, la revolución es el único método para generar un cambio substancial en las estructuras del Estado. La historia nos ha enseñado que los gobiernos autoritarios terminan por derrumbarse.
Tal parece que el destino llevará a Venezuela a una inminente revolución, y mucho me temo, como lo escribe Hegel y lo reitera Stein, tan pronto acabe la revolución es factible que los ciudadanos se encuentren con un nuevo enemigo: ¿Otra nueva revolución, agregada subsecuentemente? El tiempo lo dirá.
Cuánta crueldad trae consigo el poder autoritario. ¡Y cuánta complejidad trae un cambio de poder a través de la fuerza revolucionaria! Venezuela, un gran país de grandes personajes que han ilustrado al mundo y ciudadanos maravillosos, en una encrucijada basada en la ignorancia que le dio el voto al populismo.
Samuel Podolsky
@sampodol
spodolsky@elsemanario.com

Ya vuela en México el primer dron que se controla con las manos

Se llama Spark y a través de gestos se puede controlar desde el despegue hasta el aterrizaje; su principal objetivo es simplificar al máximo la experiencia de vuelo, afirma compañia DJI


Se llama Spark y a través de gestos se puede controlar desde el despegue hasta el aterrizaje. Foto: Captura de vídeo

La compañía china DJI presentó en México el Spark, el primer dron que se controla con simples movimientos de las manos, a través de los cuales el usuario direcciona el dispositivo hacia donde el decida.
 
Es el primer dron que se puede controlar desde el despegue hasta el aterrizaje con gestos, con el lanzamiento oficial en MéxicoSpark entra a América Latina”, señaló Cinzia Palumbo, gerente de Marketing en esta región.
Destacó que la novedad de este dispositivo consiste en lo fácil que es controlarlo, “ya que hasta ahora los drones se habían hecho muy populares con fotógrafos y empresas, por eso hemos querido simplificar al máximo la experiencia de vuelo”.>
Asimismo mencionó que la variedad de vuelo de este dron está determinada por las diferentes opciones de control, ya que se puede hacer de manera remota, a través de un dispositivo móvil o gestos y movimientos con las manos.
Tenemos modos de vuelos inteligente para que cualquiera pueda tomar fotografías sin experiencia previa; también tiene características de seguridad, un sistema  que permite al dron mantener un vuelo estacionario, muy preciso y también le permite evitar obstáculos automáticamente y regresar al punto de origen de forma automática”, resaltó.
Precisó que Spark cuenta con una cámara que captura fotografías con una calidad de 12 megapixeles,  graba videos de alta definición, cuenta con un estabilizador mecánico de dos ejes y la tecnología UltraSmooth que reducen los temblores y la distorsión del obturador.
Palumbo señaló que DJI incluye en este nuevo producto dos modos de grabación, el primero que permite a la cámara crear panorámicas horizontales o verticalesajustando su estabilizador y orientación de forma automática.
El segundo modo, agregó,  ayuda a dar un enfoque más agudo a una zona mientras que el resto de la imagen se suaviza, creando fotografías únicas con una pequeña profundidad de campo.
Además, Spark cuenta con el modo Sport, que le permite llegar a una velocidad de hasta 50 kilómetros por hora; esta opción es ideal para los apasionados del deportes que quieran capturar cada una de sus aventuras.
La directora de Marketing para América Latina de DJI dijo que Spark es básicamente para que las personas puedan contar sus historias de una manera muy sencilla.
Destacó que este producto ya está disponible en las tiendas oficiales de la Ciudad de México y el público lo puede encontrar en cinco colores diferentes como blanco, azul, verde prado, rojo y amarillo.
Finalmente, Palumbo dijo que este dron ha tenido buena aceptación en otros países y confió en que México sea el mercado de punta para Spark en América Latina.

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*MTB

Why Fairness Matters in Reforming Flood and Health Insurance Programs

costs-in-the-health-care (1)As Congress looks at restructuring two national insurance plans — the American Health Care Act of 2017, and the National Flood Insurance Program — legislators must address the issue of fairness. That is the view of Wharton professors Howard Kunreuther and Mark Pauly, who co-authored the book, Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry.
In this opinion piece, they argue that considering the issue of fairness in designing these programs is not merely an exercise to aid the old and needy. Rather, it is also to make legislators think about what policies will make premiums less onerous to people with lower risk so they will not be discouraged about getting coverage.
The United States of America is at a critical moment as Congress is attempting to determine how two insurance programs should be structured to help Americans who need protection from physical and financial risk. Both the reauthorization of the National Flood Insurance Program (NFIP) and the American Health Care Act of 2017 raise questions as to whether affected individuals would be treated more fairly under the new legislation than they currently are.
For us, fairness in the context of new legislation means consideration of the impact that a sudden increase in premiums or unexpected changes in the terms of coverage will have on the well-being of the affected individuals.
When the National Flood Insurance Program (NFIP) was enacted in 1968, there was a concern that high premiums would significantly reduce property values and that this could become an unfair economic strain. For this reason, the NFIP specified that homeowners living in high-risk areas at the time the law was enacted would be charged a subsidized premium.
The same potential conflict regarding fairness applies to health insurance. Is it fair that those with pre-existing medical conditions or those who unexpectedly acquire high-risk conditions might have to pay much higher health insurance premiums than when they were less at risk?  Yet this is what will happen if private insurers are allowed to charge risk-based premiums and politicians decide to provide limited subsidies to cushion those higher premiums.  However, is it fair to impose high premiums on individuals with low risks to finance such subsidies? And is it fair to offer no reward to those who take steps to improve their health status and thus reduce their future health spending risk?
Elected representatives on both sides of the aisle continually espouse the principle of fairness across a wide range of issues, including trade, tax reform, and jobs. If they truly want to extend that allegiance to the principle of fairness, they might wish to consider offering some form of financial assistance to help working class families who become high risk for floods or to help them buy or continue coverage for health care. The choice of the right amount of support regarded as fair is ultimately a political issue where voters’ perspectives may differ.
There are efficient ways to address the fairness problem for both insurance programs that might gain bipartisan support. With respect to health insurance premiums, it is easy to justify assisting low income and older people who want to buy coverage. Empirical studies of Medicaid programs suggest that individuals care about other people’s health conditions. Many taxpayers are thus likely to support having the public sector cover part of the cost of health insurance for those whose health might be improved by having insurance.
“There are efficient ways to address the fairness problem for both insurance programs that might gain bipartisan support.”
In the case of flood insurance, those subject to water-related damage should receive information on the cost of insurance that reflects their flood risk. If this risk-based premium exceeds a proportion of their income or housing costs, they could be given an insurance voucher or tax credit so they could afford insurance. A new RAND study recommends that those whose total housing costs — including flood insurance premiums — exceed a certain percentage of their income be provided with financial assistance. This would ensure that taxpayers are not subsidizing high-income individuals.
It is important to encourage property owners in flood prone areas to invest in cost-effective, loss-reduction measures. Homeowners could be offered a long-term home improvement loan, tied to the property, to pay for cost-effective ways to mitigate future losses, such as elevating the house or moving utilities to a higher floor, so that the annual cost of the loan, paid all or in part by vouchers or tax credits, would be less than their savings from the reduced risk-based premium. This proposal is not only fair, but also encourages property owners to reduce future losses from inevitable disasters. It also avoids using taxpayer dollars to assist uninsured and unprotected victims from hurricanes and floods who will demand and may receive federal disaster relief.
In summary, the proposed flood and health insurance programs should be designed with reasonable premiums for high-risk individuals so they will want to purchase coverage that protects them against catastrophic financial losses. At the same time, one needs to be concerned about not discouraging low-risk individuals from purchasing insurance by imposing the subsidy burden on them alone through premiums much higher than their risk rather than on the general population through a broad-based tax. By considering the issue of fairness as an important criterion in designing these programs, we will have taken a major step in enabling high-risk individuals to have coverage while at the same time maintaining the basic principles of insurance.

2017/06/23

How a Yoga Guru Is Mastering the Consumer Goods Market in India

Baba RamdevCan an Indian yoga master and spiritual guru pose a threat to established multinationals in the fast moving consumer goods (FMCG) market in the country? Baba Ramdev, a 51-year-old politically networked saffron-robed yoga expert and astute businessman, certainly believes so. Patanjali Ayurved, the company he front-ends, recently posted revenues of Rs.10,561 crore ($1.6 billion at Rs64.34 to a dollar) for the financial year 2017 (April 1, 2016 to March 31, 2017). That’s double of what it posted last year. What’s more, while most FMCG firms in the country grew around 8% to 12% annually over the past five years, Patanjali has grown over 20 times; in 2012, it reported a turnover of Rs.446 crore ($69 million).


Positioned on the plank of ayurveda and the goodness of natural ingredients, Patanjali prides itself on being a home-grown brand that offers its products around 15% to 30% cheaper than competition and ploughs back its profits into nation-building activities such as education and supporting farmers. It is the fastest growing FMCG firm in the country and has one of the widest product portfolios. In January this year, a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and market research firm TechSci Research, said: “Patanjali Ayurved has turned out to be the most disruptive force in the Indian FMCG market.”
At a recent press conference in New Delhi, Ramdev and Acharya Balkrishna, CEO of Patanjali and a close friend of the yoga guru, declared the company’s 2017 results. Incidentally, Patanjali is an unlisted firm with no obligation to disclose its numbers. Balkrishna owns around 95% while the rest is held by a small group of individuals. Ramdev himself apparently has no stake in the firm. Addressing the media, Ramdev and Balkrishna said that profits have grown 100% since last year. They are now looking to double the turnover to Rs.20,000 crore ($3.1 billion) in the current year and aiming to cross Rs.1 trillion ($15.5 billion) over the next five years.
Towards meeting these targets, the company has planned various steps. These include investing Rs.5,000 crore ($777 million) in new manufacturing facilities, rolling out new products and increasing the distribution and retail network. Patanjali’s retail presence includes a mix of exclusive franchise outlets, modern trade, neighborhood stores and online. So far, the company has invested mainly through internal accruals. It is now looking to raise bank loans.
Ramdev has always been very vocal that he is fighting against the “economic colonization” of the domestic market; Patanjali advertisements talk of “rescuing India from economic slavery and loot of foreign companies” and appeal for “boycott” of foreign firms. At the press conference in New Delhi, he said: “So far, FMCG has meant MNCs in India; we have broken that monopoly.” In a direct reference to the American oral care giant Colgate-Palmolive, he added: “We don’t know when Colgate will close its ‘gate’ … they have already de-grown.”
Ramdev was referring to the impact Dant Kanti, Patanjali’s toothpaste, has had on Colgate-Palmolive. He claims it has a market share of 14%; industry analysts say it could be anywhere between 4% and 14% depending on the sampling universe. The American firm derives nearly 75% of its India revenues from toothpaste and is the leader in this category in the country. In a presentation to investors, the company said that its market share in India dropped from 57.4% in 2015 to 55.6% in 2016. Several brokerages have flagged competition from Patanjali as a threat to MNC giants in the toothpaste segment. For instance, in January, broking house Prabhudas Lilladher said in a report on Colgate-Palmolive: “We believe that toothpaste is perhaps one of the few categories where Patanjali has been able to create a strong niche and has right to win.”
The Patanjali Effect
That Colgate-Palmolive is taking cognizance of Patanjali is evident from some recent measures. For instance, while earlier the company, which has been in India for the past 80 years, had herbal variants with neem and clove, last year it launched an India-specific toothpaste called Cibaca Vedshakti. Positioned as “packed with the goodness of natural ingredients to help keep dental problems away,” it includes lemon, cloves, eucalyptus, basil, camphor and thymol. Cibaca Vedshakti is priced lower than Patanjali’s Dant Kanti. In an investors call in 2016, Bina Thompson, senior vice president, Colgate-Palmolive, said: “In India, consumers believe strongly in natural ingredients.”
“So far, FMCG has meant MNCs in India; we have broken that monopoly.”–Baba Ramdev
Earlier this year, Hindustan Unilever (HUL), the Indian subsidiary of Unilever, the Anglo-Dutch consumer goods giant, launched around 20 products including toothpastes, shampoos and skin creams under its relaunched brand Lever Ayush. These products have been co-created with Arya Vaidya Pharmacy, a leading Ayurveda institute. Interestingly, while Ayush was launched as a premium brand in 2001, the relaunched Lever Ayush is positioned as a mass brand with products priced between Rs.30 and Rs.130 (less than $2). HUL has also rolled out natural variants under brands like Tresemme and Fair & Lovely in India and is reported to be bringing in a new brand called Citra, an organic skin care line from Indonesia.
In an investors call in October last year, acknowledging Patanjali’s growing presence, Andrew Stephen, head of investor relations at Unilever, said there were a “couple of great examples” in India in the herbal segment that “everybody is looking forward to with great interest.” Talking to business daily Economic Times in December last year, Sandeep Kohli, executive director-personal care, HUL, said: “Ayurveda is a growing trend …. Lever Ayush is designed to attract and retain consumers with authentic ayurveda-based offerings.”
Indian firms with strong ayurvedic offerings are also reworking their portfolios. At Dabur India, for instance, ayurvedic products currently contribute around 60% of the company’s domestic sales. Dabur plans to increase this to 75% by 2020. “In India, herbal and ayurveda will be the dominant themes for us. There is a realization that there is a bigger opportunity for us in ayurveda than we thought,” Sunil Duggal, CEO of Dabur India told business daily Business Standard last yearIn an earlier interview with Economic Times, Duggal had said: [Ramdev] is someone no one has dealt with before and therefore there are no existing analogies which can match him. So, we have to deal with [Patanjali] differently.”
Abneesh Roy, senior vice president at Edelweiss Financial Services, notes: “Because of Patanjali, ayurveda is becoming core to the strategy of all other companies.” Ankur Bisen, senior vice president-retail at consultancy firm Technopak Advisors, agrees. “Take for instance, [Indian] companies like Dabur, Emami and Hamdard. They have been selling ‘Indian’ products like red tooth powder, chyawanprash (an ayurvedic formulation that helps build immunity), etc., for decades. But they took the route of multinationals to position these products as modern products or underplayed these products in the market. Patanjali’s success has made them re-think the approach.” S. Ramesh Kumar, professor of marketing at the Indian Institute of Management Bangalore (IIMB), adds: “MNCs and others will be forced to introduce lower- priced offerings.”
“Patanjali Ayurved is a rising star that came in from literally nowhere and put the fright into long entrenched competitors across the FMCG space,” says Harish Bijoor, brand-strategy specialist & founder, Harish Bijoor Consults. According to Bijoor, Patanjali has trifurcated the FMCG segment in India. “The first: MNC competition. The second: Indian MNCs fighting the [global] MNCs, vertical to vertical. The third: Baba-cool companies of the type represented by Patanjali Ayurved and the likes of Sri Sri Ravi Shankar, Baba Ram Rahim and a whole tribe of gurus who also happen to make FMCG.”
Racing Ahead
At present, Patanjali’s portfolio comprises more than 500 products across food, personal care, home care and health care. Cow ghee (clarified butter) is its highest selling product with sales of Rs.1,467 crore ($227 million), followed by toothpaste (Rs.940 crore/$146 million) and shampoo (Rs.825 crore /$128 million). Other key products include bathing soap (Rs.574 crore /$89 million), mustard oil (Rs.522 crore/$81 million), wheat flour (Rs.407 crore/$63 million) and honey (Rs.335 crore/$52 million). It even has noodles in its product collection. The company claims to have 15% market share in shampoo, 14% in toothpaste and 50% in honey. Currently, the bulk of Patanjali’s products are manufactured at its facilities in Haridwar, which is around 130 miles from New Delhi; the rest are from third-party manufacturers.
India’s branded FMCG segment is estimated to be more than $65 billion at present and, according to a study by the Confederation of Indian Industry and Boston Consulting Group, it is expected to grow to $220billion-$240 billion by 2025. Media reports say that Patanjali, which began as a small pharmacy in 1997 and ventured into FMCG In 2006, is now the second largest FMCG player in India after HUL, which clocked Rs.30,782 crore ($4.7 billion) for the trailing four quarters. (India accounts for around 8% of Unilever’s sales and is the biggest among emerging markets). Patanjali is reportedly ahead of giants like Nestle India (Rs.9,159 crore/$1.4 billion), Colgate-Palmolive (Rs.4,010 crore / $622 million), GSK Consumer Healthcare (Rs.3,784 crore/$587 million) and P&G Hygiene and Healthcare (Rs.2,388 crore/$370 million). It is also giving old and established Indian firms a run for their money. ITC’s non-cigarette FMCG business clocked Rs.10,337 crore ($1.6 billion) for the trailing four quarters, Godrej Consumer Group Rs.9,134 crore ($1.4 billion) and Dabur Rs.7,690 crore ($1.1 billion).
Edelweiss’ Roy feels it would be more accurate to put Patanjali among the top three or four FMCG players in India since firms like P&G also have unlisted entities in the country which should be taken into account. At the same time, he adds: “Patanjali is easily the most successful FMCG company in India in the past many years. It is … giving well entrenched companies a run for their money. By next year, it should become the second largest FMCG company in the country.”

Bijoor thinks that further doubling turnover in one year is “a stupendous task,” but he adds that “with all the plans in place and considering the fact that Patanjali products are distributed in only 6% of retail outlets nationally today, the potential exists.” However, Bijoor notes, it’s important to recognize the fact that the brand is still “largely regional and suffers from poor distribution.”
“Because of Patanjali, ayurveda is becoming core to the strategy of all other companies.”–Abneesh Roy
A.K. Prabhakar, head of research at financial services firm IDBI Capital, feels that Patanjali’s $3.1billion target for FY 2018 is unrealistic. In an interview with Business Standard, he pointed out that other firms are resorting to aggressive pricing to take on Patanjali. “I believe 20% to 25% growth is a more realistic and achievable target.”
 A Dream Run
So what is the magic behind Patanjali’s phenomenal growth so far? Experts cite three key factors. Ramdev’s personal brand equity, Patanjali’s disruptive pricing, and the company’s positioning of the goodness of ayurveda and natural ingredients.
 Take Ramdev himself. Indians, by and large, have always had a leaning towards spiritual gurus. Ramdev, with his friendly demeanor, seems to have a special connection with them. His yoga camps, televised yoga sessions and free health consultations are all extremely popular. Ramdev is also highly politically networked and seen to be particularly close to the Bharatiya Janata Party headed by Prime Minister Narendra Modi. He has strong nationalistic leanings and is vocal about them. One of Ramdev’s pet agendas is repatriation of black money. Another is to drive foreign companies out of India. All these along with his business acumen (Ramdev is closely involved in all critical aspects like new product development and pricing), and many a controversy (he claims homosexuality is a disease and that he has a cure for it), make for a potent combination. The brand ambassador of Patanjali, Ramdev, is a brand by himself.
An October 2015 Edelweiss report co-authored by Roy says: “For the consumers, Baba Ramdev remains the face of Patanjali and its products. Baba Ramdev, during his yoga sessions, showcases the Patanjali products. After the session, he makes the attendees aware of the benefits of using Patanjali products. Till date, close to 70 million people have come in contact with Baba Ramdev through his yoga camps and it is believed that this can increase to 200 million going ahead. This highlights the potential reach that the Patanjali brands can have without much mainstream advertising. Also, being associated with Baba Ramdev helps in creating a perception among consumers that being ayurvedic, Patanjali products are healthy.”
“Ramdev’s widespread popularity, propelled by televised yoga camps, has provided the brand push for Patanjali,” says Devangshu Dutta, chief executive of consulting firm Third Eyesight. Pointing out that over the years Patanjali has successfully built the momentum to “displace previous ayurvedic market leaders in the consumer’s mind and create a credible alternative to multinational brands,” Dutta adds that Patanjali’s “Indianness” is a challenge to multinationals, while its sheer size and penetration is a challenge for other Indian companies. “A flat management structure enables rapid decision-making that allows the business to be extremely flexible and aggressive when it needs to be.”
 On the controversies surrounding Ramdev, Dutta notes that worldwide, successful brands are built more on public relations than on advertising, and controversy is a very strong driver of PR. “In that sense, the Patanjali group has had rich dividends from its approach to PR. Starting from the image of a swami in saffron robes propagating consumer products to using food safety concerns around market leaders’ products to their advantage and openly taking a swadeshi [nationalistic] stand against multinational brands, the Patanjali group’s PR voice is strong and clear. Whether this will remain so as the business grows is something only time will tell.” (In 2015, when Nestle’s Maggi noodle brand was embroiled in controversy over high levels of lead and MSG, Patanjali quickly launched instant noodles to plug the demand gap.)
 Another strong plank of Patanjali is good quality at disruptive pricing. Most Patanjali products are priced around 15% to 30% lower than competition. In a media interview, Balkrishna said: “We buy raw material directly from farmers and we work on a single channel right from the farmer to the end consumer and that is the real reason why our quality and costs are under control.” Other factors that contribute to Patanjali’s competitive pricing include lower overheads (salaries and administrative costs, for instance, are much lower than those of regular corporates), lower distribution margins and lower advertising and promotional spending.
Interestingly, while its advertising costs are lower than others (according to Balkrishna the company’s ad-spend is less than 3% of turnover), Patanjali is among the top advertisers in the country. Balkrishna attributes this to tough negotiations. “Differentiated advertising” has been a “pivotal factor” propelling Patanjali into the limelight, notes Edelweiss’ Roy. He points out that Patanjali ads highlight the pricing difference with competitors, educate on the benefits of the product, emphasize that Patanjali is an Indian firm and claim that unlike MNCs, Patanjali is extremely involved in charity and nation building. “From our survey it has emerged that these advertisements create a buzz among the target audience and encourage trials,” says Roy.
IIMB’s Kumar points out that with its positioning of “value for money,” Patanjali would be successful in several categories “due to the simple reason that the penetration of brands in most categories is still low in an emerging economy.” Bisen of Technopak Advisors feels one reason for Patanjali’s success is “the subtle shift in consumer lifestyle and needs that manifested in a latent demand that other companies missed out.” Another reason is the “package of wellness, nationalism and natural synced with the social and political narrative” of the country. Bisen adds: “Positioning the quality, purity and natural promise at value pricing created a strong demand pull. This pull was aptly serviced through an ecosystem of distribution that supported fast proliferation in the market. No other FMCG major earlier used exclusive brand outlets for their product range.”
 Sustaining Momentum
Going forward, does Patanjali have the potential to make a big dent in the performance of other players? It’s a mixed bag, says Bisen. Pointing out that it is easier to grow in a few categories and reach scale, he says: “In the FMCG space, if the initial idea is a success, the challenge comes in replicating the idea to other categories, managing growth and managing category extensions. Also, the leading FMCG majors have all spent significant time now to appreciate Patanjali as a key competition and have developed strong counter-offensives. Therefore, the initial years of easy march may now hit some [roadblocks].”  Potential threats for Patanjali, Bisen notes, include “spreading itself too thin, [a] change in the social and political narrative that dilutes the nationalism theme, and strong response from competition.”
“MNCs and others will be forced to introduce lower-priced offerings.”–S. Ramesh Kumar
Another headwind could come from the new goods and services tax (GST), whose objective is to replace all taxes levied by the federal government and the states with one central tax. At present, ayurvedic products are taxed only 5%, but under GST the levy will go up to 12%. This could impact Patanjali’s pricing significantly.
 Patanjali needs to be “totally paranoid” about quality as it expands, says Bijoor. “If Patanjali messes up on quality as it expands, it will pay the price. That price will be a quick glass-ceiling for its volumes.” IIMB’s Kumar suggests the biggest challenge for Patanjali is to scale up and make the products available across the country. “This involves several aspects of sourcing, manufacturing and distribution.”
 An October 2016 Edelweiss report observes that distribution remains an area of improvement for Patanjali. It notes that according to a survey it conducted, while 35% users believe that availability of Patanjali products is a problem, 49% of non-users have not used Patanjali due to non-availability. The report adds that buying Patanjali products from kirana (neighborhood “mom and pop”) stores is still small at around 26%, while for most other consumer goods companies this is 70% to 80%.
However, a January 2017 Edelweiss report seems more optimistic. It states: “Patanjali has over 5,000 retail outlets and its products are available through around 1 million shops. By FY18, it plans to scale up its shop portfolio to over 3 million. Apart from this its products have strong presence across modern trade. Once it has 3 million outlets, its penetration will be comparable to the likes of Britannia, Colgate, Dabur, etc., though below HUL’s network of over 7 million shops.”
Patanjali watchers also say that any major impact that Patanjali makes on global multinationals is likely to be restricted to India.
New Battle Fronts
In the meanwhile, Ramdev wants to open other battle fronts. To challenge restaurant chains such as McDonald’s, KFC and Subway, Patanjali plans to enter this segment. “We are working on the business plan and branding,” Ramdev told press reporters, adding that the company is working to put together around 400 vegetarian recipes. “When we get these recipes together, all these multinationals serving chicken or mutton will have a hard time countering us.” Patanjali is also planning to enter the apparel business with jeans and sportswear and compete with firms like Levi’s, Nike and Adidas.
Not everyone is enthused about these proposed expansions. Says Bisen: “I am wary of category extension beyond FMCG so early in the journey, when the market potential in FMCG itself is huge. Dairy, processed food and condiments are all exciting spaces. If I had private capital to allocate, I would focus on consolidating my position in the chosen space.”
A sharp critic when it comes to Patanjali’s “greed” to spread across categories, Bijoor says: “There is a line it must draw for itself. Using ayurveda is a good thing to do. But stop where ayurveda stops, and stop where ayurveda looks ludicrous.” He cautions that Ramdev and Balkrishna must not dissipate attention at this stage. “Width is important, but depth in those areas where you have achieved early and big success is a must. Never compromise on that.”
“To my mind, the Patanjali brand is rooted intrinsically in well-being, so growth in food seems a natural outcome to me but not packaged, fast-food and snacks,” says Dutta. “Similarly, there are areas of apparel, such as yoga-wear, which would be a natural extension, but jeans would seem to challenge the integrity of the brand.” At the same time, he points out that most brands these days “don’t care to create or maintain a core ethos” and most consumers have “only a passing, superficial engagement” with them. In such an environment “more tangible and immediate factors, such as the price and availability” play an important role. Dutta notes: “Currently, the Patanjali Group is following economic logic, the way any business would – identifying areas in which it can create significant turnover and margin using its brand name and goodwill.”




‘The End of Loyalty’: Shock and Awe for Many American Workers

end-of-loyalty

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Rick Wartzman discusses his new book: The End of Loyalty, The Rise and Fall of Good Jobs in America.
the-end-of-loyaltyThe previous generation of American workers had a different relationship with their employers than the workers today. Many skilled-labor employees stayed with one company for the long haul, earning solid wages, good benefits and a pension in exchange for loyalty and hard work. But those days are long gone, notes Rick Wartzman. The reduction in salaries, retirement, health care and other perks has prompted a breakdown in the relationship between employee and employer, a problem that Wartzman focuses on in his book, The End of Loyalty: The Rise and Fall of Good Jobs in America. Wartzman, a Pultizer Prize-winning former journalist who is a senior adviser at the Drucker Institute, joined Knowledge@Wharton to talk about the new state of the American worker on the Knowledge@Wharton show, which airs on SiriusXM channel 111.
An edited transcript of the conversation follows.
Knowledge@Wharton: Do you expect that this relationship between employee and employer is going to continue to have this divide?
Rick Wartzman: There are a lot of pressures that we’ve seen building over the last 30, 40 years, and I don’t see them abating anytime soon. Everything from the pressures of automation and technology, globalization and the decline of unions. We now have less than 7% of the private-sector workforce in America that is part of organized labor, which served as a great counterbalance to corporate power through the 1940s, 1950s and 1960s. That’s no longer there. Also, there’s this incredible pressure to maximize shareholder value, pressure from Wall Street that has explicitly put stockholders above all other stakeholders, including workers. I don’t see any of that changing anytime soon, unfortunately.
Knowledge@Wharton: When did this shift kick into gear?
Wartzman: You can see it really kick into gear in the early to mid-’70s. There were some big shocks to the U.S. economy that exposed a lot of fundamental weakness that had built up in previous decades. That left a lot of companies scrambling and their workers in a much worse-off place. A lot of the downsizing that followed those things never reversed. So, that was the big shock.
What surprised me in doing the research in my book — and my narrative arc goes from the end of World War II up until today — was how these pressures actually started building much earlier than I imagined. The social contract, as I describe it — job security, pay, health care benefits provided by companies, good pensions — those things were still sort of improving and on the upswing through the 1950s and 1960s. But by the late 1950s, the early seeds of the unraveling of the social contact were already being planted.
“Corporate culture is a kind of reflection of our national culture and societal norms.”
Knowledge@Wharton: Is it partly that as the generations have changed, so have the expectations?
Wartzman: I think very much. One of the other things that really jumped out at me in doing the research was how much cultural norms have shifted in America, and in turn how much corporate cultural norms have shifted. Corporate culture is a kind of reflection of our national culture and societal norms. You had a generation that came through the Great Depression and World War II and there was definitely much more of a “we” mindset, we’re all in this together. I think there’s much more of an individualistic, “I” mindset that began to set in by the 1970s, 1980s and prevails today. That’s certainly part of what’s going on here.
Knowledge@Wharton: What impact did the recent recession play on the narrative that you’re bringing forward in the book?
Wartzman: Again, it sort of exacerbated a lot of the anxiety that workers had. One of the phenomenon that we have seen is that for the last three recessions, you’ve had this so-called jobless recovery. What used to happen is that there would economic ups and downs, normal fluctuations in the business cycle. When businesses would lay people off, they would typically bring them back to their factory jobs when business recovered. In fact, it wasn’t until the mid 1980s that the Department of Labor began to even track what it called displaced workers.
Beginning in the 1980s you began to see massive downsizing that really picked up in the 1990s. And then each recession becomes something where employers are not looking to bring folks back after the economy recovers. They restructure in the interim and realize, we can do more with fewer hands. And those jobs often never come back.
Knowledge@Wharton: Then is the goal now of both business and government to try to avoid recession?
Wartzman: Maybe. I’m not an economist. I’d leave that to brighter minds at Wharton and elsewhere. What I can tell you as a historian is there have been times where people in Washington, particularly, think that they’ve licked the business cycle. They’ve figured out how to conquer recession and through the levers of fiscal and monetary policy make it so that recession won’t ever come again. And it always comes again, or at least it always has come again. I’m skeptical that we’ll ever be able to reverse that. History just suggests otherwise.
Knowledge@Wharton: In the book, you look at these issues surrounding the labor force and jobs through the eyes of four well-known legacy brands over the last 70 years: General Motors, General Electric, Kodak and Coca-Cola. Why those four?
Wartzman: I picked those four companies for a couple of reasons. One is my book starts in 1943, shortly after the founding of an organization called the Committee for Economic Development. The CED is still around today. It’s part of The Conference Board now. But it was a leading business voice, along with the National Association of Manufacturers and the U.S Chamber of Commerce, back in the 1940s. But it was a much more moderate voice in terms of its politics and ideological orientation than some of the other more hard-line business groups. At the end of World War II, the leaders of the CED set out a vision for what America should look like in the post-war economy and society.
“We have moved from a blue-collar society to a knowledge society, a knowledge economy.”
Those four companies were all instrumental in the founding of the CED. Just as a narrative device, it was a great place to begin with these titans of industry who led the companies back then. I have them begin the book and lay out their vision for what America should look like.
Knowledge@Wharton: Let’s start with Kodak. If you go back 40, 50 years, it was as powerful and strong a company as there was in the United States. Their attempt to transition to the digital economy failed. Is that the biggest element that really impacted Kodak?
Wartzman: It was, ultimately. Kodak is credited with inventing the digital camera but could never quite wean itself off film. I talked to a number of former executives there who said that the fat profit margin of film was like a narcotic. The money was just too much coming in from film while they had that business, until it was no more. Suddenly, they looked up and it was no more.
Historically, the interesting thing about Kodak is that it’s one of the companies that was never unionized. They practiced what was termed “welfare capitalism,” and their notion was to lavish great pay and great perks on their very large workforce at the time. This was done with a variety of impulses in mind. One was because there really was this ethic that I described earlier where employers wanted to give more to their employees. They felt a measure of loyalty to them and expected loyalty in return. There was also an attempt to keep unions at bay. Kodak wanted to do this by making it so that there was no need for a union. We pay our people great and give them great benefits. Who needs these organized labor folks around?
Knowledge@Wharton: Give us the story from the Coca-Cola perspective.
Wartzman: Coke is interesting. It is headquartered in Atlanta, Georgia. It’s essentially a giant advertising agency branding firm. In terms of workers, the real action occurs at the bottling plant level. There has been union activity over the years, mostly with the teamsters. The real pivot point in the book for Coca-Cola comes under the leadership of Roberto Goizueta, who ran the company from about 1980 to the late 1990s when he died. He was hailed as a great CEO and certainly did an incredible amount to lift the value of Coca-Cola’s share price. But I use him as a way to focus on this pivot, which again I see is really key in this whole story to how we have gone to put maximizing shareholder value above all else, including maximizing investment in our workforce.
Knowledge@Wharton: GM is one of the remaining legacy brands in this country, even though it went through the recession and then the ignition switch recall. Give us the perspective of GM in this.
Wartzman: GM in some ways was really the paradigm American company and the world leader as a corporation for a long time, certainly through the 20th century. It had incredible benefits. It had incredible pay, largely at the frontline level through the power of the United Auto Workers. I really use them to talk about the importance of unions, of organized labor in the rise of the social contact between employer and employee.
It’s important to note not only at companies like GM that were heavily unionized, but when the American workforce was 25%, 35% percent unionized in the private sector, there was a tremendous spillover effect. It wasn’t only unionized workers who benefited, but it was also workers at companies that weren’t organized and white-collar labor as well. They were all lifted up by the tremendous power and this collective voice and countervailing force to corporate power that unions had.
Knowledge@Wharton: It almost makes you wonder if the auto industry is going to be the last of the unionized industries in the United States.
“Each recession becomes something where employers are not looking to bring folks back after the economy recovers.”
Wartzman: Yes, absolutely. Although there have been big shifts, certainly at GM and elsewhere. They moved to a two-tier wage structure. Even unionized workers at GM found themselves in a position that they had never been in before, which was that even full-time auto workers were in some cases struggling to make ends meet. Those used to be tremendous jobs, and they still are relatively good jobs compared to many in the service sector, but they certainly aren’t the jobs that they once were.
Knowledge@Wharton: Should General Motors take the most strong view of what happened to Kodak in terms of the shift to the digital world? There seems to be opportunity for the auto industry to be more automated through robotics and such
Wartzman: Absolutely. GM, like most major companies, has certainly done a lot to automate over the years. Its workforce has shrunk considerably. It once had 700,000 employees. It was a giant, giant company. It is a small fraction of that today in terms of its employment, and that’s for a variety of reasons including all the financial troubles it had. But certainly automation is a big piece of that, and that was already happening well before its bankruptcy.
Where I think you are seeing a shift at GM, if you talk to executives there now they would describe themselves as a mobility company. Ford does this, too. They just had a shakeup there in this regard. But GM would say, “We’re a mobility company,” and they’re certainly looking to autonomous vehicles, for example, as a big part of their future. I believe they owned a chunk of Lyft now, so they’re trying to move with the times.
I looked at all four of these companies, took a deep dive over this long, 75-year historical arc, and you had two of them — Coca-Cola and General Electric — that have done quite well over a long period of time. And you had two that out-and-out struggled with Kodak and GM, although GM has come back some. It doesn’t matter whether they were the huge successes over this time in GE and Coke, or the ones that really hit hard times and hit bankruptcy in terms of Kodak and GM, the story for their workforce is pretty much the same. It doesn’t matter whether they were riding high or riding low.
Knowledge@Wharton: GE went from a company that had such a big retail element in terms of lighting to looking at energy and other opportunities. That’s as big a shift as any of these companies have made.
Wartzman: One of the things I greatly admire about GE is its ability to reinvent itself over a long period of time. It seems like every leader, every CEO has been able to do a really excellent job of this. Some have pushed on it harder than others in terms of disrupting themselves, but certainly Jeff Immelt [who just announced plans to retire] is doing a lot in terms of becoming much more of a digital company centered around the internet of things. He’s clearly an admirer of what’s going on in Silicon Valley and has based a bunch of operations there to draw on digital technology and be part of that world. You have to admire them for that.
What GE represents in the book is another shift, and that is they have more workers abroad now than they do in the U.S. I’m not condemning these companies for any of this. It makes sense why GE is serving so many people abroad. That’s where its customers are. It isn’t going there, in most cases, just to chase cheap labor. It’s going there because that’s where its markets are. I totally get that. I’m not saying we shouldn’t automate or advance technology. That’s how we move forward as a society, how we increase productivity, which is a key to raising living standards over time for everybody. I’m not saying that they’re the wrong direction to move in, but there is a cost that comes with it, and we’ve certainly seen that in terms of the rising anxiety and anger of a lot of working folks.
Knowledge@Wharton: One of the men before Jeff Immelt was CEO Jack Welch. What role did he play in this process?
Wartzman: He was a huge figure in this kind of national narrative. I got to spend some time with Jack Welch, which was quite a treat. He was the one who really shook up a hidebound, bureaucratic General Electric and made it much more nimble. There were some great things that came with that. He really empowered workers, including those down on the front lines, to offer up their ideas, and he made GE much more a meritocracy. He also shed a lot of bodies in the process. By one count, as many as 170,000 jobs were lost under his time as GE’s leader, and that earned him the moniker Neutron Jack because supposedly just the buildings were left standing after he was done.
Knowledge@Wharton: In general, when you think about the relationship between employee and employer? Are employees more savvy about watching out for the pitfalls than they were 30 or 40 years ago?
Wartzman: I think there’s a deep split on that question. One of the other things that you’ve seen in the big trends over this 70-year arc is that we have moved very steadily from a blue-collar world. Even though only about 30% of the U.S. workforce had factory or blue-collar jobs back in the 1950s, that was still kind of the ethos in America, if you will. We were oriented in that direction. It was a big part of the culture. The magic of those jobs for folks was that you could get one of those jobs and have a path to the middle class with relatively little education and few skills. That doesn’t work anymore.
We have moved from a blue-collar society to a knowledge society, a knowledge economy. So we have this incredible divide. If you go to school, if you get a degree, chances are you’re going to be OK. There are a lot of questions now about whether a college degree pays off, and a lot of young people are carrying a lot of debt. Those are real issues. But by and large, all the evidence shows that if you’re college educated you’re going to do fine in this knowledge economy.
But you have to remember that more than half of adults in America don’t have any post-secondary degree, not a college degree, not a community college degree, not a technical certificate of any kind. The real question is what happens to them? What do they do in this knowledge economy? I don’t see that they have many choices. I don’t think they can say, “Well, my factory’s about to close, I’m going to move over here.” Move over where?