A rapid, big bang approach to airline deregulation is not a good model to follow, suggests a new book from Response (www.sagepublications.com).
For the incumbent airlines, it is not reasonable to expect that overnight there will be a 180 degree switch from being a competition-sheltered organisation with protected routes, regulatory pricing, and lack of meaningful competition to being a savvy marketing strategy and customer-oriented organisation that deftly fights off swarms of low-cost start-up airlines, write Jagdish N. Sheth, Fred C. Allvine, Can Uslay, and Ashutosh Dixit in Deregulation and Competition: Lessons from the Airline Industry.
It is not that the authors argue for guaranteed spots for the incumbents. Just that the industry needs time to adjust itself to a new regulatory vision, and that interruptions and uncertainty for airline consumers are minimised if the policy does a soft landing.
Another recommendation in the well-studied book is that the standard for entry of new carriers should be set high, so that they have the financial resources and commitment to scale with significant operation competence. This is how it was done in the US cellular phone industry, a similarly capital-intensive sector, note the authors.
When the government decided to expand the cellular phone market and auction off licences for frequencies, only two or three companies or consortiums were allowed to purchase in each band.
India did the opposite way with regard to the airline industry and opened its doors to unbridled competition, the authors rue. Most of the new entrants lacked the financial resources and business savvy to compete and few survived. A second wave of eager start-ups is now taking place and there will certainly be another tumultuous shakeout, cautions the book. Instead of going through successive waves of expansion and contraction, a more orderly process would be served by setting the bar high for entry, whether the new entrants are government or privately backed.
Disturbing to read even on terra firma!
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Football and globalisation
Is the world globalised? No, it is actually semiglobalised, says Pankaj Ghemawat in Redefining Global Strategy (www.tatamcgrawhill.com). His notion contradicts the current fanfare about frontiers subsiding and creating a flat world in which people find both work and opportunity without being constrained by their location, observes Nikos Mourkogiannis in his foreword.
A flat world may be rhetorically appealing to some, but extensive empirical observation and analysis suggest that cultural, political, and geographic barriers between countries still loom large and have a major influence on global strategy. The author discovers many parallels between football and semi-globalisation. Footballs global progress mirrors that of many economic indicators of globalisation, he writes in the intro. There was a peak before World War I, followed by a reversal during and between the two world wars, and then a revival after World War II.
In footballs failure to gain traction in the US, by far the worlds largest sports market, Ghemawat sees a lesson: that globalisation remains uneven and incomplete. Among other indicators are the roles that Latin cultures, reasonable temperatures, and threshold levels of economic development play, apart from restrictions on cross-border mobility in World Cup play but not club play.
He presents the CAGE framework to explain cross-border variations; the acronym stands for cultural, administrative, geographic and economic differences among countries. ADDING Value scorecard is another concept in the book, where the letters indicate: adding volume, decreasing costs, differentiating, improving industry attractiveness, normalising risks, and generating and deploying knowledge and other resources.
Then comes the AAA triangle, comprising adaptation, aggregation and arbitrage
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I care technology
It is essential to have a systematically maintained and updated Assets Register of all buildings, plants and equipment, insists B. K. Roy in A Guide to Maintenance Management (www.jaicobooks.com).
Plant items should be divided or sub-divided into several categories depending on their use/availability, technical groups, maintenance methods. Cost, importance to production, availability/criticality, age, safety requirements, susceptibility to wear and tear, etc., should also be considered while categorising the items, he elaborates.
A chapter on maintenance management methods speaks of MOR and terotechnology. While MOR is maintenance by objectives and results, terotechnology is a multi-disciplinary function.
A word derived from the Greek root word tero or I care, that is now used with the term technology to refer to the study of the costs associated with an asset throughout its lifecycle from acquisition to disposal, defines www.investopedia.com.
Terotechnology uses tools such as net present value, internal rate of return and discounted cash flow in an attempt to minimise the costs associated with the asset in the future. These costs can include engineering, maintenance, wages payable to operate the equipment, operating costs and even disposal costs.