Monday, November 23, 2015

Does Stock market reflect the fundamentals of any country’s economy?

What is Stock Market?

To begin with, let’s first understand what exactly does the stock market mean. Stock Market is an index representing the movement in the share price of major companies listed in the Stock Exchange of respective Countries. It is a platform where the prospective buyers meet the sellers and vice versa to carry out the transaction of purchase or sale of shares. These buyers and sellers are investors who either are in possession of some shares of any number of companies or are willing or looking to buy shares of companies.

We also need to understand the mechanism behind movement of share prices. Basically, it is a demand and supply mechanism. The demand for shares is created by the Buyers and its supply is created by Sellers of the shares. The intention of any Buyer or Seller to transact at stock exchange is based on an opinion which is popularly known as market sentiments.
Market sentiments are based on Company’s press briefings, Industry specific announcements, Government’s macro-economic indicators like GDP growth, Inflation, Fiscal Deficit, Foreign exchange stability, Industrial Output, monetary policy etc.

Few Instances

The National Bureau of Statistics show that, in 2004, China's GDP reached 13.65 trillion Yuan (US$1.65 trillion), rising 9.5 % year-on-year. Meanwhile, the composite index of the Shanghai Stock Exchange dropped 15.15 %. China's GDP has maintained a growth rate of more than 7 % in recent years. But the composite index of the Shanghai Stock Exchange fell gradually, from 2,245 points on June 15, 2001, the highest point, to 1,187 points on February 1, 2005, a six-year low.

We can consider even Tehran Stock Exchange (TSE) for its performance. The TSE index has taken a serious beating since December 2013.  It reached close to 89,000 points before falling to less than 65,000 in early September 2013, when the ministers’ letter was written to President Rouhani.  The letter was written on September 9 2013 but came to light during December 2013.  The brouhaha that followed, however, was not about the TSE and what its poor performance means for the economy, which appears to be heading for a double-dip recession. Attention has instead focused on division within Rouhani’s coalition government and what it means for the future of his austerity program. This is a loss of more than one-third in the value of the index, and a similar loss in the wealth held by those who hold its stocks.  The decline in the index is even sharper if we correct for inflation, registering a loss of 48%.

But, before we feel sorry for TSE investors, we should consider the amazing run they had up to December 2013.  In the two years before heading south, the index had risen by 252% in nominal terms and 100% after accounting for inflation.  Even with the sharp decline since 2013, between December 2011 and September 2015 the index gained 9.4% per year in real terms.  This isn’t bad for an economy in recession and with negative interest rates.

So, it could be aptly derived from the above discussion that stock market is a good indicator of any country’s economic performance but it cannot be considered as a true indicator of any economy. The reason behind this would be that share price movements always reflect the market sentiments of investors. In other words, share market movement is purely investor’s perception which is based on Buyers and Sellers expectations about the future performance of the companies listed in stock exchange.

Concluding, it could be derived that movements in share prices may indicate economic health of the country’s economy, but never measure it. Economic health of any country could only be based on the key economic indicators.

-Manish Aakrit
 Student, INLEAD
 INBM, October 2015


Amaravati, the dream capital of Andhra

India’s move to build smart cities got a major push when Prime Minister, Narendra Modi recently laid the foundation stone of Amravati, Andhra Pradesh, Chief Minister Chandrababu Naidu’s dream capital. Amaravati, the capital of the truncated Andhra Pradesh, is planned to be developed as a "futuristic" world-class city with expertise from Japan and Singapore, and the cost of building it could be in excess of $2 billion. The land acquisition model that the state used for acquiring nearly 32,000 acres for the capital has been lauded by many and the Centre. An area covering 30 villages between Vijayawada and Guntur, some 35 km away from Amaravati town. For, this is the only place where the Krishna flows north instead of east or south which is considered to be auspicious by many.

The Seed Capital development Area will cover 16.7 sq km and comprise the AP Legislative Assembly, Legislative Council, High Court, Secretariat, Raj Bhavan, quarters for the ministers and officials, and the township for government officials. Work on this is already started. Expected to be completed by 2018-19, the Seed Capital Area (SCA) will be home to about 3 lakh residents. The business hub is expected to generate about 7 lakh jobs in various sectors, including government. There will be a thriving, state of the art, Central Business District (CBD) for business and living. The master plan envisages nodes and corridors for a transit-oriented development approach. So, there will be an integrated network of 12km of Metro railways, 15km of Bus Rapid Transit systems, 7km of downtown roads, 26km of arterial and sub-arterial roads and 53km of collector roads. A regional expressway and an outer regional expressway will connect various towns to the core capital region. A dedicated freight corridor will connect with highways leading to New Delhi via Hyderabad. National Waterway 4 proposed to be developed on Wazirabad-Vijayawada-Vodarevu Port and Wazirabad-Vijayawada-Rajahmundry-Kakinada routes connecting other places via rivulets and canals. An airport planned at Mangalagiri, and five corridors will have high-speed railways.

AP Govt’s innovative crowd-funding initiative

In the past 10 days, since the launch of ‘My Brick, My Amaravati, a crowd-funding initiative, over 34 lakh digital bricks have been sold online. When one buys a digital brick for ₹10, one’s name is engraved on it and it is kept in a repository for ever. And the donor gets a certificate of commendation from Chief Minister N Chandrababu Naidu, which reads: “Every brick matters and every effort is valued. Your gesture will go a long way in realizing Amaravati as a true people’s capital.” The idea of the government, as explained in the portal, is not only to ensure people’s participation but also get donations. A special window for international donations will also be opened shortly. The total number of donors who bought the 34.40 lakh bricks as of Monday evening stood at 52,764, raising ₹3.40 crore so far. The state government estimates that it will need at least ₹1 lakh crore to construct the new capital. Efforts are also on to approach The Guinness Books of World Records to enter this initiative as the first crowd-funding programme using the concept of digital bricks.

Irrespective of all what’s going on in our country right now, be it bans or secularism issues, one good thing that is emerging is the constant effort of the government to boost economic and infrastructural development in the country. Now it’s the time for us all to get over these social taboos and beliefs and join together as Indians to take our country to a new level altogether since efforts like building Smart Cities and Digitalizing India, are steps forward in the same direction.

-Anshul Gupta
 Student, INLEAD
 INBM, July 2015

Monday, November 16, 2015

Hospitality Scenario in India

The hospitality sector of India is growing tremendously and is considered as one of the highly lucrative industries, contributing substantial amount of foreign exchange to the economy. The World Travel and Tourism Council (WTTC) has predicted that India has the potential to become number one tourist destination in the world with the demand growing at 10.1 per cent per annum,. The size of the hospitality sector of India is considered as a sum of market share of two segments. The first segment is revenue obtained from travel businesses while second is revenues acquired from hotel businesses.

 India has a strong presence of several foreign players in the country’s hospitality spaces. Some foreign companies include IHG, Accor, Starwood, Marriott, and Carlson Hospitality.
 Government initiatives to encourage foreign direct investment in Indian Hospitality Sector
  • 100 percent Foreign Direct Investment in Hospitality and Tourism sector under Automatic route.
  • Announced drives like Atithi Devo Bhavah, Colors of India, the Wellness and Incredible India in order to promote Indian hospitality and tourism.
  • The Indian government is planning to streamline the taxation charged on hospitality industry and follow the single tax structure across the whole country. The provision of single window clearance at Central, State and local government level will help to reduce the bureaucracy and procedural delays in the sector.
  • Relaxation in tax will encourage FDI in the hospitality sector, as more brands will try to penetrate the industry in order to bridge the current gap of availability of rooms and services. 
Opportunities available for foreign investors to invest in Indian Hospitality industry
  • The Cumulative Annual Growth Rate of the Indian hospitality sector has been growing at 14% every year. The industry has projected an asking room inventory of more than 200,000 rooms by the end of this year. This is where a real opportunity lies for foreign investors to invest in the Indian hospitality sector.
  • Most of the reputed foreign players have already collaborated with Indian companies which are into hospitality business. The entry of famous foreign players like Kentucky Fried Chicken, McDonald’s, Pizza Hut and Domino’s has offered a global glamor to Indian hospitality sector.
  • Indian Five Star hotel segment has grown very rapidly in the last few years at a growth rate of 12 percent. This segment can be categorized into three sub segments which are Business, Luxury and Leisure.
  • Meetings, Incentives, Conferences and Exhibitions (MICE) group has also played an important role in Indian tourism and hospitality industry.
  • The constant interest of foreign players in Indian hospitality market demonstrates its potential as a strong sector in times when other sectors are facing the heat of Euro zone crisis.
 -Ms. Bindu Menon,

  Senior Faculty, INLEAD 

All that Glitters is Gold…(Bond)

The Current Account Deficit (CAD) in India had touched alarming levels of 4% of GDP (India’s GDP is about 1.2 trillion dollars) in 2011, it then touched a scary 6% in 2012 and since then has come down to a low of 0.2% of GDP in the last quarter of fiscal 2014-15. I will take a small detour to explain what actually is CAD. To begin with, Current Account is the earnings of a country by way of international and domestic trade, net income from abroad and net transfer payments made against services imported or exported from a country. A country enters into a CAD if their payments abroad are more than their earnings.

The drop in CAD figures is a sign of a healthy economy, primarily attributed to the fall in Oil bill with the prices per barrel of crude oil falling to a low of $60. Another major contributor to our CAD is an ever increasing import of gold due to a very high demand in the domestic market. India currently imports about 1000 tonnes of gold every year, leading to outflow of foreign exchange, and pressure on current account. Our erstwhile Finance Minister Mr. P Chidambaram had in early 2014 put in place quantitative curbs and enhanced tariffs on gold imports. But the fact of the matter is that a huge cache of gold still finds its place in our economy via the smuggling route.

While crackdown on smuggling may be an answer, it’s not a long term solution. So GOI (Government of India) is looking at three options very seriously, the first one being Sovereign Gold Bonds, the second being Gold Monetisation scheme and the third being Issuance of Gold coins

In this article I will be primarily focusing on Gold Bonds. For details on other schemes keep watching this space.

Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold aimed at bringing down gold imports and providing an alternative to physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity, which is a maximum of 8 years. The bond is issued by the Reserve Bank of India on behalf of the Central Government.

Gold bonds will carry an interest rate of 2.75%, and will be sold through banks and designated post offices. Applications for the bonds are being accepted till 20th of November, and the bonds will be issued on 26th of November. Gold bond aims to provide people an alternative to buying physical gold. The bonds would be worth 2 gm of gold all the way till 500gm. This is the first tranche of the gold bond scheme. The price of the first tranche is Rs. 2684 per gram. There will be more such tranches.

Benefits and Challenges

Household savings garnered from the bond will be put to productive use by the government as also earn interest for the bondholder. Gold bonds are free from issues like making changes and purity in the case of gold in jewellery form. The bonds, to be sold by banks like SBI, either directly or through their agents, can be also be held in the  demat (dematerialized / paperless) form thus eliminating risk of loss of scrip. They can be traded in stock market and can be given by parents to their children as gifts. Moreover, it’s a Sovereign bond and hence GOI will never default in its payments.

On the other hand, the Gold Bond Scheme might fail to find many takers as the price of a gram of gold at current prices is Rs. 2,599, with the expectation that it will fall through 2016 primarily due to a stronger dollar, which is lower than the price of Gold bond. Moreover the interest rate payment would be in cash, whereas investors may look at payments in gold!

The first Gold bond will roll out on the 26th of November 2015, and we have to wait and watch the public response to such initiatives. It is a good initiative by GOI to curb gold imports, but how successful, only time will tell.

- Monica Mor

  Senior Faculty, INLEAD

Images Courtesy- Google Images 

Monday, November 9, 2015

Caviar: a luxury indulgence

 Caviar is, undeniably, the most luxurious and exclusive food known to mankind. Its origin is rooted in the Persian word khag-avar, which means "roe generator". Caviar is always featured one among the list of extravagant gourmet dining. The taste may not appeal to everyone, but for the ones who love caviar they like it for its rich and creamy taste. Love it or hate it, there can be no doubt these pearly globules are considered ‘high luxury’ and a connoisseur’s delight.

Caviar is fish roe or eggs that are lightly salted with non-iodized salt. As a matter of fact all female fish lay eggs, so they all have roe. However, not all fish roe is suitable to be caviar. Genuine caviar comes from only the sturgeon fish; beluga, osetra, sevruga, and starlet are considered the best. Classic caviar comes primarily from Iran or Russia, harvested by commercial fishermen working in the Caspian Sea. Tins of caviar must list the name of the fish first, unless it is definitely sturgeon roe.
Here’s an A to Z on one of the most famous dishes all around the world:
  1. Caviar is one of the oldest delicacies before raw oysters, before Champagne, before even truffles were deemed a delicacy; caviar was coveted by kings and the aristocracy. Ancient Greeks, Romans and Russian tsars were all known to splurge on caviar.
  2.  Beluga is always sold in blue color tins, osetra in yellow and sevruga in red.
  3.  Caviar should be removed fifteen minutes before serving from the fridge and the box opened just before serving.
  4.   Caviar should never be frozen.
  5.  Caviar should never be served on metal utensils — the sensitive "berries" (the proper name for roe) can develop a very off-putting metallic taste. Caviar spoons made from bone, mother of pear or tortoise shell and are sold in specialty shops for just such occasions.
  6. There are etiquette rules attached with caviar. When served on a small cracker or canapé, it should be eaten in one bite, but caviar served as an appetizer should be mixed with chopped egg whites and yolks and placed on toast points before eating.
  7.    Caviar and ice-cold vodka is a classic combination.
  8.    The most expensive is the exclusive variety called Almas, which in Russian means "diamond", and its price is almost as high as that of the precious gemstone. It is one of those items that are not for sale just anywhere. Few select Caviar House & Prunier stores, the only place in the world where it is available for sale. Its classic presentation makes a unique gift: it comes in a metal container bathed in 24-karat gold. The price? A kilo (2.2 lbs) can cost upwards of $ 25,000. 
         So, the next time you have Caviar, you would know exactly what you’re getting into.

-       - Ms. Bindu Menon,
           Senior Faculty, INLEAD 

Friday, November 6, 2015

The ‘Hop’aholics’ Paranoia

When Barbara, 36, relocated to Atlanta from Boston for a marketing job, she realized almost immediately it was the wrong decision. So the social media manager made the bold decision to leave the new role after only two months, rather than stay for a year to smooth future employer concerns over such a short-term stint. To support herself between jobs, Barbara did some freelance graphic design work. In the meantime, she struggled with whether she should include the two-month stint at the Boston firm in her resume.

According to career experts, candidates who changed jobs four or more times in 10 years are most likely to be labeled job-hoppers, according to a 2014 survey of 160 CFOs by recruiting firm Robert Half International. And 93% of hiring managers say they would overlook a candidate for taking on too many short job stints, according to findings.

These short stints can still hamper the hiring process if addressed incorrectly. One needs to be able to explain why they left the previous job and what they learned going forward. And it’s more important to vet the subsequent role to make sure it’s a good fit.

Younger job candidates have more leeway when it comes to ditching a job earlier than planned, according to Michael Butler, who is head of HR for Bristol, UK-based Radius World Wide and is based in Boston in the US. “If you can get two years out of someone early on in their career, you are doing pretty well,” said Butler. Older candidates past their thirties should aim to switch no more than three jobs in about ten years, Jones said.

But an unavoidable question emerges here – How long is too long?

There are benefits to short stints if you’re working to ripen your skills. However, employees at large companies are often expected to stay for at least a couple of years, which gives them time to figure out company politics and achieve some professional goals. When seeing an applicant from a large firm, hiring managers are definitely looking for stability.

No matter why you left a job, honesty is the best policy when it comes to your resume, particularly as social media and sites such as LinkedIn now make it easier for recruiters to do a background check and uncover previous experience. One should rather keep even a two-months-long stint on their CV rather than omitting it altogether. It’s important to acknowledge the short-term position and explain what you’ve learned about yourself and your career goals during the role, in order to show the interviewer that you’re serious about advancing in your career. Critically, changing the dates of a previous job to cover up a gap in employment is unethical.

Finally, having too many short-stints on your CV may raise a red flag to employers, signaling that you're not performing to your capabilities when taking on a new role.

-Mr. Sumit Chakravarty,
  Faculty, INLEAD

Images Courtesy- Google Images 

Monday, November 2, 2015

Politics behind state elections

With the fourth leg of the Bihar elections wrapping up yesterday, there’s just one more phase to go before the D-Day on November 8, 2015.  Among the various voices that were heard during the Bihar elections, the country is now curious to know what the supreme voice – ‘the voice of the janta’ has in store not only for the state but also for the entire country.

India has a federal government structure with elected officials at the federal, state and local level. At the national level we have a Prime Minister and at the state levels we have Chief Ministers. Election dates across different states and at the national level do not coincide and are held at a space of 5 years, unless there’s a political emergency in the country. It often happens that the political party at the center may not be in power across different states and union territories. This creates some glitches when it comes to getting bills passed (which requires majority voting) unanimously across both the Lok Sabha and the Rajya Sabha.

Why is a state election important?

This year Bihar state elections has taken the center stage in all global news diaspora, and is probably the second most watched election spectacle after the November 2016 US presidential election primaries. The criticality of this election lies in the importance that Bihar holds in Rajya Sabha. If BJP manages to win seats in Bihar, it gets a majority in the Upper Council and that will be beneficial by way of central government’s ability to pass stalled policy bills.

What are the kinds of funds that are spent on state elections?

The government in 2014 cleared a proposal of the Election Commission to raise the expenditure limits for Lok Sabha elections from Rs. 40 lakh to Rs. 70 lakh for each Lok Sabha constituency in bigger states and from Rs. 22 lakh to Rs. 54 lakh in smaller states. The bigger states include Maharashtra, Madhya Pradesh, Uttar Pradesh, West Bengal and Karnataka etc, and the smaller states include Goa and other hilly and north eastern states. Election expense includes details of expenses on public meeting and processions, campaigning through electronic and print media, expense on campaign workers, expense on vehicles used and expense on campaign materials. In reality however, parties spend anywhere from 100 to 1000 crores to woo voters with freebies like alcohol, saris, food grains, bicycles, etc.

The dark side of elections

In the ongoing Bihar elections about 46 contesting candidates have criminal cases registered against them. Yet these are the politicians who have the money and the muscle power to contest. Apparently most state elections are caste based and there is a huge dependency on backward classes and rural communities who form a major chunk of the vote bank. Then there have been one off cases of rigging of election booths and of EVM (Electronic Voting Machine) tampering. There have also been rumours of phone tapping of election candidates by opposition party members in a bid to search for skeletons in their closets, as also of horse trading, i.e buying of MLAs.

As in any election, state elections have their fair share of controversies and corruption issues, despite an extremely vigil Election Commission. Nevertheless, it’s still an opportunity to elect the right representatives who if honest will do things right and for citizens’ welfare.

India is sanctum sanctorium of democracy and election is the only way people can get their voices heard in the Parliament at the center and legislative Assemblies in the states.

- Ms. Monica Mor
  Sr. Faculty, INLEAD
Images Courtesy- Google Images 

India and Africa, the way forward…

Indo Africa Summit held recently between 26th and 30th of October 2015, had premiers from 50 African nations visiting New Delhi and participating in this historic initiative by the Government of our country. India, since the BJP has come to power, has seen many countries showing interest in conducting business in our country. Quite often we have seen heads of governments of emerging countries trying to woo developed countries like the US, UK, Australia, Canada and Germany in a bid to give a boost to their international trade. However, Mr. Narendra Modi has been making ample efforts to build relations with other developing countries.

This Indo Africa summit is the third such summit, the first being in 2008. India and Africa share a historic relation of struggle against colonialism and apartheid. “Cairo to Cape Town, Marrakesh to Mombasa”, where the words used by Modi to describe the extent of relation that India wants with Africa.

What’s in it for Africa?

There are 54 nations within the African continent, of which South Africa is the most developed one. Africa is the second largest and the second most populous continent with an area of 30.22 million square kms and population of 1.11 billion. Africa’s population is amongst the youngest in the world and hosts a large diversity of ethnicities, cultures and languages. There are 54 countries in Africa some which have been struggling since long with civil strifes and corrupt dictatorships. This has led to the countries now wanting to break out and establish business relations with other continents.

India will offer 600 million US dollars, which includes an India-Africa Development Fund of 100 million dollars and an India – Africa Health Fund of 10  million dollars. Then again there will be about 50,000 scholarships given to African students. There have also been discussions on cooperation for climate change while creating a forum of solar-rich countries. Incidentally India and Africa contribute least to global warming, which is more a prerogative of the developed world. India’s trade with Africa is currently valued at about 75 billion dollars.

What’s in it for India?

India will get deeper inroads into all or most of the African economies by way of Skills development and IT training programs.  In fact Egypt under its new investment law can be the hub of Indian investments in the continent by offering tax incentives and extremely liberal custom duties. Egypt is India’s largest trading partner with volumes of $5 billion slated to touch $8 billion in the near future. India had apparently also aided in providing safe passage to Egyptian citizens stuck in Yemen as also delivering their Earthquake relief aid to Nepal.

Many of our companies both, private like Airtel and Luminous, and public like GAIL and OIL have already made inroads. We are hoping that this will encourage more companies to also make inroads, thereby adding to India’s exchequer.

Moving forward we are expecting more such summits with other nations as well such that in the long run benefits trickle down to benefit all sections of our society.

- Ms. Monica Mor
  Sr. Faculty, INLEAD

Images Courtesy- Google Images 

Tuesday, October 27, 2015

Net Neutrality- The Hot Debate

‘Net Neutraility’ has become a topic of hot discussion in the recent times. If you’re also one of the active Indian netizens, I’m very sure that the term might have also caught your attention, especially after AIB’s much famous video on the same. 

To the unaware, ‘Net Neutrality refers to the concept of an “open internet” whereby end-users can access the lawful content, applications, services & devices of their choice. Policymakers around the world are considering whether and how to ensure that the internet remains “open” & Internet access service providers do not improperly block or degrade content sent over their networks.’ This is probably the most proper description of the controversial phrase “Net Neutrality” as stated on the site


Due to intense lobbying by telecom operators like Airtel and Vodafone, the Telecom Regulatory Authority of India (TRAI) had been planning to block apps and websites to extort money from customers. In essence, if you do not pay for your YouTube app, then you can’t view it on your phone. However, this plan of blocking Net Neutrality has been put on hold due to widespread customer uproar and since then there have been multiple public discourses on the concept.

Net Neutrality is a legal right for citizens in few countries across the globe including USA, Chile, Netherlands and Brazil. Chile was the first country to adopt it as a part of its General Telecommunications Law in the year 2010. The first time Net Neutrality debate arose in India was when Airtel along the lines of Verizon, USA launched Airtel Zero in April 2015.

How will Airtel Zero work?
  1. Mobile app makers register with ‘Airtel Zero’ to give customers toll-free access to their apps;
  2. Airtel informs customers about these toll-free apps;
  3. Customers download and access these apps at zero data charges – and enjoy their favorite online tasks (e.g. entertainment, shopping) for free;
  4. In a nutshell, it creates special “fast lanes” for the paid content.
The Loophole?

Well, as an Airtel customer, you can only access the apps your service provider allows you to. If Twitter doesn’t sign up with Airtel, then you may as well get ready to say bye bye to your tweets and your followers. This is unlike the present circumstances where for a monthly payment for your broadband charges you can view all apps and  websites. 

Flipkart was one of the first companies’ to sign up for Airtel Zero for a specific bandwidth speed to be allocated to them. However, soon after the public furor, it pulled out of Airtel Zero, which itself since then has been withdrawn by Airtel.

Net Neutrality in USA

A similar hue and cry had arisen in USA when Verizon and Comcast, two prominent US service providers had come up with Net Zero. After multiple rounds of discussions early this year, the Federal Communications Commission of USA came up with the FCC’s Open Internet rules which are designed to protect free expression and innovation on internet and to promote investment in the country’s broadband networks, thereby adopting Net Neutrality in its entirety.


An open letter was sent to Narendra Modi by  ‘youth ki awaz’, an online youth blog, after his discussions with Mark Zuckerberg, who has been trying to promote his company’s as a platform for digital inclusion in India.  According to this open letter, contrary to Facebook's claims, the company in fact plans to target users of with restricted access to Facebook and sites that have registered with For other sites not registered with, consumers will have to pay more. This again according to the forum is a violation of net neutrality.

The debate is ongoing and we are hoping that Net Neutrality sooner than later, becomes a public law in India.

- Ms. Monica Mor

  Senior Faculty, INLEAD 

Images Courtesy: Google Images 

Monday, October 26, 2015

Greenwashing consumer’s green hopes…

With Deepawali round the corner, almost every Indian household is busy with whitewashing their homes and repainting them with colours to reflect the spirit of firecrackers and Goddess Lakshmi. Ironically, around the same time, we are also hearing about a new concept called “Greenwashing”.  And the concept becomes starkly clear in the light of the recent Volkswagen (VW) emission controversy that has set the Green industries crackling under pressure.

Decoding the term "Greenwashing"

Greenwashing was a term coined by New York environmentalist, Jay Westervelt, in 1986. He observed that some of the hotels that had placed Green Cards in Hotel bathrooms highlighting reuse of towels ostensibly to ‘save the environment’, where in fact doing so just to garner publicity which could lead to increased profitability. Westervelt thus labeled this and other outwardly environmentally conscientious acts with a greater underlying purpose of profit, as Greenwashing.

Accoding to Terrachoice, a consulting firm that studied this phenomenon, found that 95% of the products marketed as eco-friendly had committed at least one of the “seven sins” of Greenwashing. 

 The seven sins are:
  1. Sin of the hidden trade-off: A claim suggesting that a product is green based on a narrow set of attributes.
  2. Sin of no proof: An environmental claim that cannot be substantiated;
  3.   Sin of vagueness: A claim that is so poorly defined that it remains ambiguous.
  4.    Sin of worshipping false labels: A product that’s using fake green labels;
  5. Sin of irrelevance: An environmental claim that maybe truthful but unimportant like CFC-free, since all products have to be, as CFC is banned;
  6. Sin of lesser two evils: A claim that maybe true for the product, but risks distracting consumer from the greater environmental impacts of the product category as a whole, like say fuel-efficient SUV;
  7. Sin of fibbing: An environmental claim that’s totally false, like products claiming to be Energy Star certified when they are not.

What happened at Volkswagen?

Volkswagen has for the longest time portrayed itself as a Green Crusader, with its 2013 Think Blue campaign and the stolid German trust as the harbinger of all its Social Responsibility campaigns. In the year 2013, under the Think Blue campaign, VW promoted its new fuel efficient and low emission models. In 2015, VW promoted diesel as a low-emissions alternative to gasoline and spent about $77 million in the US market. And as everyone now knows, VW was using software to trick emission tests on 11 million of its vehicles. Not only has this casted an aspersion on VW’s brand name, it has left discussions on all Green initiatives’ dubious and questionable.

Other examples of Greenwashing campaigns, and this list is definitely not exhaustive:

  •  American airline EasyJet’s claim that traveling on their plane is better for the environment than driving a hybrid car;
  •   Tyson Foods USA which was using “all natural” labels on its Chicken, even though they were treated with antibiotics and genetically modified corn;
  •   Clairol’s shampoo brand, Herbal Essences’, claim of a ‘truly organic experience’ was busted with the discovery of chemicals in the shampoos like lauryl sulfate and propylene glycol which aren’t really that organic;
  • In 2014, Korean car manufacturers Kia and Hyundai paid $300 million fine for overstating the gas mileage for its 1.2 million vehicles.

So, in a world of false promises, here’s another one that customers are now easily playing into since it’s all about caring for the environment. In India too, this fad has been catching up with people willing to pay more for organic and environment friendly products. Going further, Greenwashing should be highlighted more especially since customers are nowadays more gullible especially when it comes to electronic products, baby toys, diapers, pet food, paper products and even laundry detergents.

- Ms. Monica Mor
  Senior Faculty, INLEAD

Images Courtesy: Google Images 

Thursday, October 22, 2015

Hospitality Industry undergoing a technological Transformation

Every industry is experiencing a technology-driven renovation, and the hospitality industry is no different.  Bitten by the technology bug, there has been a change in the way business is being done. This technological revolution is allowing businesses to have a more convenient, informed and valuable relationship with their customers.

Listed below are few technological advances that are transforming the hospitality industry and enabling a new level of customer service:

1) Online booking systems

They are extremely widespread in the hotel industry, with many restaurants also beginning to accept them. This would require a well-designed, mobile-friendly website with a simple interface.


Electronic point of sale (EPOS) systems are becoming more and more sophisticated, allowing hospitality venues to operate more efficiently and provide better customer service. By integrating with CRM, inventory management, information on capacity, reservations, stock, loyalty programs and more is accessible.

3) CRM

Customer Relationship Management (CRM) software allows contacts and information to be organized and managed in one place. An effective CRM makes it easier to build ongoing relationships with customers, as well as making important details easily accessible to all staff via a cloud-based application.

4) Marketing Automation

 Marketing automation allows personalized emails to be sent to customers and prospects based on their activities and personal information. Advanced marketing automation software allows much more complex tasks to be performed, such as emailing customers who have been visiting or clicking on certain areas of the website or social media pages.

5) Social Media

 A social media presence is crucial, particularly given that Facebook is a popular platform for check-ins and reviews of restaurants and hotels. Attractive images are usually the most popular type of post. Businesses should also choose their social media platforms carefully based on their target audience, rather than simply joining all of them.

6) Smartphones

Hilton Worldwide has taken advantage of this by offering guests the ability to check in and out, select their room, check maps and make extra requests or purchases all from their smartphones. Another revolutionary service that soon will be made available is smartphones to function as room keys.

7) Smart appliances

Lighting, temperature, blinds, alarms, TV, radio and room service will all be controlled from a single tablet device, or from a single app that guests can download and login to from their own device.

Irrespective of the changes that these technology brings about , the truth is that they are there to enhance, not to replace, the core offerings of a hospitality business. Top quality food and customer service are still the fundamental pillars of the industry, but the technologies can make it easier to consistently deliver a memorable experience to your guests.

- Ms. Bindu Menon
  Senior Faculty, INLEAD 

Images Courtesy: Google Images 

Monday, October 19, 2015

Hotel Industry calling for Green Revolution!

“Sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance.” - Ban Ki-Moon    

The Hotel Industry seems to have taken good inspiration from Mr. Ban Ki-Moon’s words of wisdom. Recent years have shown the Hotel industry trying to "green up" its operations, but the real question is, has this “Operation Green” gone beyond leaving out little cards to encourage guest reuse towels and linens?       

Hotels and hotel chains are taking sustainability more seriously, those little cards may seem like token environmentalism to some, but they can actually result in significant water, waste and cost reductions. The website Economically Sound reports that a 150-room hotel can conserve 72,000 gallons of water and 480 gallons of laundry soap every year by placing the cards in its guest rooms.  

Green Hotels

In another initiative, the industry has also started with a new concept called the Green Hotels. Green hotels are basically lodging properties that implement environmentally friendly practices and programs to save water and energy while reducing solid waste. The goal for green lodging properties is to minimize their impact on the environment.

The relevance of being green in hospitality is growing – introducing and implementing green practices to save water, conserve energy, and reduce waste, with the added benefit of decreasing overall operating costs. The significant savings yielded can be applied to enriching the quality of guests’ hotel experience.

Do eco-conscious hotels appeal to travelers?
Environmental initiatives are not just the ‘good’ thing to do – but have business-building power by positively driving the decision-making of consumers about where to spend their money. A key element to ensure success with the roll-out of green practices is thorough education of hotel staff, from management through all departments in the organization. It is empowering when employees play a role in assisting the hotel fulfill its eco-conscious mission. Making a mindset of sustainability-consciousness part of the business culture is a reflection of a hotel’s commitment to corporate social responsible.
Few green practices that the Hotel Industry has adopted are as follows:
·         Biodegradable 100% recycled room keys
·         Carbon Neutral and Hybrid vehicle/transportation service upon request with Concierge Services
·         Bed linens changed upon guest request to aid in water and energy conservation efforts
·         Towels replaced upon guest request allowing guests the option of re-using existing towels
·         All light panels in meeting rooms are allow users to select the most efficient setting based on the event
·         Food not consumed for meetings is provided to hotel associates free of charge or donated to local charities
·         Local and organic food products are offered (options are limited due to short growing season) limiting carbon offset for shipping
·         Electronic thermostats in guestrooms with pre-set settings to minimize energy consumption
·         Biodegradable gift/amenity bags are used

Tom Brokaw, a famous American television journalist once said, “It's easy to make a buck. It's a lot tougher to make a difference,” and the Hotel Industry seems to be coming around the idea just fine.

- Ms. Bindu Menon
  Senior Faculty, INLEAD 

Images Courtesy: Google Images 

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