Credit Crisis to Recovery

There is an excellent article published in ‘The McKinsey Quarterly’ on recovery of the companies from credit crisis. As companies shift their attention from fighting the crisis to getting the most from the recovery; these are the key points:

One has to understand what they should expect as normal after the crisis has fully passed and to set appropriate performance targets.

A weak economy makes it easier to implement unpopular operational changes and divestitures: companies have more leverage over suppliers, unions and regulators are more cooperative, and employees understand the need for change. When the economy strengthens, these advantages will quickly vanish.

An intense focus on reducing costs and working capital will leave many companies incapable of responding to a rapid pick-up in demand. Can they respond without either bringing back high costs or cutting the quality of their products?

Businesses that may emerge from the recession at a competitive disadvantage could find a quick and effective solution in joint ventures with companies in a similar predicament.

Growth requires capital. To finance growth, CFOs should prepare a battle plan—including ways to line up new equity, as well as bonds and new debt—that can be activated if necessary.

Take advantage of the buyers’ market for talent and other resources as it costs less in the current market.

One has to understand and know what risks a recovery might bring. Risk management and contingency planning are typically better at highlighting day-to-day issues than at anticipating major shifts.

Velocity (v) = Frequency (f) × Wavelength (λ)

We all know that this is a very famous equation in Physics for finding out the velocity of sound wave. I find it a very interesting equation as it has a great application in our professional life as well.

In my thirteen years plus working experience, I had heard people saying very often “our frequency is/is not matching” or “our wavelength is/is not matching”. I differ from these statements in a great way. I do not understand what our frequency/wavelength matches or not matches means. It does not matters whether our frequency/wavelength matches or not matches, what matters is that the velocity should match in order to move forward or to go to the next level.

Let me explain my theory of understanding in details. What is frequency? It is number of vibrations in unit time in terms of Physics and in professional life it means the responsiveness shown to changes or the adaptability to new concepts. You will find that the young professionals are more flexible and quick in this. So frequency (f) is higher for young professionals. So I think that frequency differs from person to person with respective to age group.

What is wavelength? According to Physics, it is the distance travelled by the sound wave in unit time. In professional life it means farsightedness or one’s capability to see the future. You will find grey haired people having more farsightednesses due to their experience. So wavelength (λ) is higher for experienced professionals.

What is velocity? In terms of Physics, it is the speed at which the sound wave travels and in professional life means going ahead or moving to the next level at a pace. I think we should not be bothered whether frequency (f) or wavelength (λ) matches/not matches; but what is important is that their product that is velocity (v) should match. It should be a combination of young professionals whose 'f' is higher and experienced people whose ‘λ’ is higher as then ‘v’ which is a product of ‘f’ and ‘λ ‘will be higher which companies will be looking for.

So I think the right statement to make is “our velocity is/is not matching”.

Will we call it foreign investment or neocolonialism?

I came across an interesting article in Economist and I feel that the issue should be brought into limelight. Everyone should be aware of this fact and I want all your views on this before it gets too late.

Rich countries are acquiring huge farmlands in poorer countries for importing food crops to their countries to tackle the crisis. The government in countiry like Ethiopia leased lands to the investors in Saudi Arabia. The investors is spending $100m to raise wheat, barley and rice on land leased to them and are exempted from tax in the first few years and may export the entire crop back home. Now the interesting fact is that, the World Food Programme (WFP) is spending almost the same amount as the Saudi investors for providing food aid to the Ethiopians as they are suffering from hunger and malnutrition.

Investment in foreign farms is not at all a new thing. But several things about the current trends are new. One is its scale. A big land deal used to be around 100,000 hectares (240,000 acres). Now the largest ones are many times that. So I leave it to you now...will we call it foreign investment or neocolonialism???