Quarter 4 - Week 7

This week was by far the most hectic week we've faced. Or so I felt. I think my last blog entry is an indication of that. I seem to have written something about a website(?) and I was talking about the chapter or book I guess. Anyway, I was pretty thrilled (very wierd actually) to have made a slumber mistake, that's when you're hammering away at the keyboard but you are actually sleeping, that I didnt bother to correct it. Dont try this at home, or in your car. Bad consequences!

So why was this week so bad? Because we've just finished two exams and left college at 7:00! As if it wasn't enough that we were scribbling whatever little we knew from 2:30 all the way till 6:30, it began to pour cats and dogs and we couldn't even go home! And some of the more enthu mugpots amongst us were discussing solutions despite our dirty stares. The fact that I was paying keen attention through one ear to the solutions and listening to a project team mate discuss our next week woes through the other, AND that none of my answers matched the said solutions was pretty much winding me up. And the blasted rain..!

But enough about me and my general woes, close to one year into the course I should probably learn to suck it in and move along. You dont get an IIMB backing if you're solving exams with a smile now, do you? And so, on to this week's bhaashan..

OperMan - This week we played a game, not as fun sounding as the last Beer Game, but good fun nonetheless.... we had a case were we had to forecast the demand in the coming weeks and place orders accordingly so that our net inventory was as close to the minimum as possible. First some gambling when we were just trying to fool around, then some wisdom dawned when we kept getting screwed in our numbers and so we made a master plan.... which was supposed to work. I am still not sure how we arrived at it, just that it made a lot of sense at the time. The word 'delirium' keeps popping up in my mind.

The next day we discussed how we could have gone about the actual task and what patterns we were to look for. The prof mentioned that while it's good to forecast demand, you should also try to keep it somewhat stable.Why...? Because we have PEOPLE doing the actual manufacturing! Now what kind of a good manager would you be if you let your employees chill off one day, and slog like their life depended on it the next day! So, inventory optimization be damned, be a nice guy. Keep it to a minimum, but you dont have to be oh-so-efficient. Fancy my Operations Management professor telling me that!

CorpFin - Miller and Modigliani seemed to have a lot of time on their hands, they kept coming up with new nuances for their theorems. Maybe they weren't doing the PGSEM. Or maybe they just knew that they ought to come up with some cool theorems with the unterior motive that people all around the globe would be burning the midnight oil just to understand what these guys were trying to prove.

I'm just cranky from the exams I guess, it wasn't really all that bad. The prof really knows how to make it all sound like fun. From what I remember, we were essentially talking about how taking too much debt can be bad for the company. The whole principle goes as follows, you can take up two times the equity(or share value) as debt. Yes, you're allowed to take loans... no, it's not a bad sign. No, your Indian uncle and aunty won't look at you with pity... Yes, you can marry your neighbour's daughter, this is not a financial problem. But. If you cross it like 4 or 5 times, then the equity shareholders start beginning to think, and they think really hard because they've seen this happen before, and they all hightail it for the exit! So, be responsible and dont hide the bad news was what was coming across.

The next session seemed to roam a little bit around the point, we even had a nice looking graph that told us at what time we should stop pushing for debt, or even if we were, try and buy some companies who were profitable so that your equity value goes up... SO you can take more debt! It keeps coming down to one fact. If your company goes bankrupt, your equity shareholders are able to limit their losses to their investments, but the debt guys, sure they get all the assets repossessed.. but they'll never be able to get their true value.

MPPO - I am getting a little more bored than usual now. The topics were all good, Performance Appraisal and all that... how to appraise, what kind of interaction to have etc. etc. etc., but I just kept getting distracted... maybe because of the exams. But even the cases seem to be so obvious, I am not sure how much new stuff I learnt this week. We saw a video in the second session, it was all about how you conduct an appraisal and what can go wrong... there were a couple of interesting points in it, but I dont know, it all seemed so.... general! This was supposed to be common sense, how could we miss this? And sure, it was nice to know that everyone seems to hate appraisals... the fact that I'm being given a letter grade and in a way rebuked like a child, is not something that everyone felt pleasant about. And here we are getting As, Bs and Cs...

All in all, a tiresome week. I'm just glad we're done with the exams.

I really am.

Quarter 4 - Week 6

C.K. Prahlad passed away this weekend. The person who brought our attention to the fortune at the bottom of the pyramid, and who campaigned and spoke eloquently on the topic tirelessly left our world at the age of 68. On Sunday morning, our prof spoke to us about this, and for two minutes our class stood in silence, in respect for the man who drew the world's attention to the strength of the poverty stricken masses. I am sure that students in management institutes worldwide gave him the same mark of respect, and personally I can't help but be awestruck at the respect he commanded.

In comparitively lesser news, we had our second and last three-day session for this quarter, yes, that's right Fri, Sat and Sun. So essentially, we've completed seven quarters. This week saw a change in profs for the CorpFin subject, more on that later.

OperMan - Well, nothing really stood out. This was more about inventory management and how and when to keep safe stock, or in regular parlance, buffer stock at optimum levels to ensure lowest possible costs. Really, nothing so important in my opinion.

CorpFin - Our prof just shifted since we've embarked on Act II of our elective. This prof seems very different from our first prof. He somehow managed to bring some liveliness to one of the most boring subjects I've ever studied. We recapped a bit into the first quarter to discuss balance sheets and P&L statements. We then went on to discuss the Miller-Modigliani principle. And the rest I have to read. However, I know most of what we skipped in the Website,so I think I could explain that.

A firm's beta, is the risk premium of the individual stock, above the safe Treasury bills/G-secs. Meaning, if u were to take the stock in the firm, it has a risk/cosy of capital associated with the general tendency of the market as a whole, and another part that is associated with the unique risk of that stock. So this way, we can calculate betas of a bunch of stocks in a portfolio. It was interesting to see the connections between betas.

MPPO - Performance management and appraisal. A lot of people felt that the current system seemed inherently flawed. A lot of discussion of what happens in our companies, and the advice also seemed similar. Too much theory, wish there was similar takeaway.

An abrupt post, but when you have a lot to study, efficiently prioritizing everything, well there's so much to do. The actual jumps now will begin this week. Time for me to and prepare for the quisses. Until next week....

Quarter 4 - Week 5

This week we had an interesting session by Professor Suryanarayana A of the NS Raghavan Centre for Entrepreneurial Learning. He spoke to us about what makes an entrepreneur tick and about the incubation systems they have in place for the budding entrepreneurs amongst us. A little interesting tidbit - Contrary to popular expectation, entrepreneurs are amongst the most risk averse of people out there. It's just that they've managed to take care of their most important fear - that of failure, and the rest is history... or future, as we see it.

I think I have entrepreneurial qualities that way... I have no fear of failing my exams. But then again, do my personal idiosyncrasies really matter when you're here to know about this week's sessions? And so, here we go.

OperMan - We had a different professor filling in for our regular prof(whatever happened to letting the class free for once?!), and he took us on a trip through Toyota's processes for the manufacturing of cars. Together, we questioned if there might be some connection between the case we studied, and the recent news in which Toyota's name has come up and none too favorably at that. It was a nice long walk through the Just In Time process where we studied how it works, and in a way related it to the culture of the workers in Toyota. The next session we had our mid term examination, and hence there was more of attempting to write what we understand of OM and hope that our bottlenecks dont stop our flow. Or whatever, I didnt get enough sleep anyway.

CorpFin - I know there was a lot of talk of Risk and all that, I remember the Beta word being thrown around a lot, but I draw a blank after that. Considering how we have a midterm next week, I'll be well placed to explain what I learned (or the prof was attempting to teach me) once I brush through those chapters again. However, I did get to look through what I studied last week due to our well timed exam this week, and hence I can explain the fundas of Investment and even the complications that taxation brings, to a somewhat lucid extent. It basically goes like this. I think I explained Present Value last week. So if you subtract the cost you paid initially from this PV, you get the Net Present Value or NPV ( a cool short form). Which should be positive or else you're making a mistake in investing in it. So that's one way of doing it. What we learnt newly is, for some god forsaken reason, some people felt that NPV isnt necessarily the only way of determining the profitability of investments, and hence they came up with three or four more methods based on how lazy they were (atleast from what I read, some of these have been downright described as simplistic and lazy solutions by the author), except for one - the IRR. This essentially tries to calculate what is the expected rate of interest at which the original funds are expected to grow, to get an NPV of zero - or to ensure there is no loss. Hence, you can compare different investment options based on their respective IRRs.

Dont understand? Join PGSEM. Then we all wont understand. Just kidding, it makes sense, we just need a lot of time and attention and patience to really understand. Apparently, PGSEM students have this in plenty. So join us to develop these senses. If nothing else, your significant other might begin to think that you pay more attention once you finish the PGSEM. Scout's honour! Our alumni attest to this!!

MPPO - This week we discussed how the theories of motivation that we learnt last week can be applied in the real world. We also went through what happened in organizations that grow rapidly, and the unexpected/unintended consequences of this for the employees. We had a couple of cases where we saw how people began to feel better at their work when provided with some forms of job enrichment. This seems to point towards the fact that people, when given a sense of entirety regarding their roles, seem to find their jobs more fulfilling and hence are intrinsically motivated. While both caselets seemed to paint a rosy picture, I wish I had a glimpse into atleast a single case where such a solution did not work, so we could analyse what went wrong. For the rapid organization growth session, the role of the HR team was highlighted and the role that they play seems to have been given the lime light. This is more than I can say is given to the HR in our organization, or probably any other that I know of, atleast today. I do agree with the prof when he says that whatever the HR does seems to be hidden, and that probably somewhere the HR head is discussing with the country heads to identify areas of improvement, but maybe it's just me, but as long as I feel that someone is observing and studying me and not interested in directly communicating with me for whatever valid reasons that they have, I find it hard to trust and really open up regarding the problems that we face. For I dont believe they'll truly understand. They are incapacitated by their distance from us, and their analysis of us from a remote spreadsheet. It's like looking through the bars of a zoo cage to determine what makes the tiger walk up and down the edges and not sit still during the day. Maybe their consensus might be right, but would the tiger really feel that the ones that stare at it all day are helpful and not threatening, or would they stay defensive and never open up.

But then again, I dont have a solution on how a minute percentage of the firm that claims itself to be an HR team can "sync" with the thoughts of the greater majority of today's equivalent of blue collared workers. Maybe they have a solution. From that distance. Who knows?

Quarter 4 - Week 4

As was expected, a few of my friends made a plan to go for a trip out of town since it was an extended weekend. As was expected, they've stopped asking me. I wish they had asked. I would have said no, but still. Even it was on Sunday, I'd have said no. Why's that? Because when every other person in town was either goofing off, or going to church at odd hours over the weekend, my entire class was sitting from 8 AM to 2 PM on all three days in the cosy comforts of IIMB, paying attention to teachers who were explaining stuff that BETTER BE USEFUL TO ME somewhere down the line, or it was yet another opportunity cost of an unforgettable trip getting the better of me!

Classes on a Sunday. Yeesh. But all for the future good I always say, or rather I say after CorpFin class. More on this later.

OperMan - This week we had a case discussion about a company that was in the manufacturing line. Now most of the funda of determining a process comes from trying to optimize some steps to ensure that a bottleneck doesnt take up too much time in the system. Essentially, if one operation in a series is a bottleneck, this means that whatever comes after it gets a little free time while this operation churns out its output at a slooow pace. This means more coffee time and mingling time for the guys after this step, while the guys before this step will continue to slog. Kinda like my manager sitting after I do my work, just so he can take two minutes to send a congratulatory mail every now and then for work that took me six months. Aah, I'm kidding. My manager's awesome. Anyway, the next two days we were going to understand the fundas of Supply Chain Management (Ooooh ! Yes, I know.)

We played a beer game (Yea! in IIMB! Whoever said that Indian education is conservative?) where we were fortunately/unfortunately not given real beer bottles, but using some tokens we simulated what happens when an order is placed by the customer, and if I'm the retailer, then my supplier, and HIS supplier, and the supplier's supplier's supplier are involved in a serial chain, then it starts predictable at my end, but at the final point the demand is erratic. You need to go through it to really get it. Or use wiki/google. Your choice. Fun game, and the analysis of it was done on the second day. Interesting learnings. Join IIMB to learn it. I didnt sit through 1.5 hours of class on a Sunday instead of going to a cool place, just so I can share my learnings here. (Sorry, I seem a little upset).

CorpFin - OMG! I ACTUALLY UNDERSTAND what happens in this class now. I dont know if I mentioned it before, but since we had a test this Saturday, I tried (read 'was compelled/forced') to go through the first three or four chapters in this book. It's in a way like the ManAcc classes from last quarter, boring classes, simple fundas. All you need to do is pay attention, and read before class. Any way, the whole funda goes like this: When you buy something, then you need to make sure that this thing is profitable, not just immediately but over the long run. So how do you know if it is? Simple, you understand Compound Interest right? Great... so what happens is you do this backwards, but the value of the 'rate of interest' you use is not what the SBI gives you (those cheap, mean misers!) but what an object of equivalent risk gives you. For e.g. if I was to buy some shares, I could have instead put that money into something else that was comparable in terms of return. So I will try to figure out using 'backwards Compound Interest' (for lack of a better term) to find out if the 100 Rs. I spend today will be worth more or less in the case of the investment that I'm going to make, when compared to the other benchmark investment I was going to make. You basically have two rates to compare now right? So use that to find out the 'Present Value' of investments. You'd be surprised that this can be even applied to stocks and bonds and the dividends that come out of it, it's growth opportunities etc. Yes, it's a way for you to realize if your fund manager is making a fool of you! Assuming you've attended a CorpFin class.

Of course the prof taught something much more this week, but I can only explain that to you next week since we have a test on it this week. Yes, another test, I seem so blessed.

MPPO - This week was more about interaction, communication between people and what the possible barriers could be, and how we can empathize and listen, I mean really listen to people, and finally the different theories of motivation. Pretty insightful weekend, with the class sharing a lot. I think the surprise test that was there this week shook people up, so more of them were reading the articles before coming to class. I even saw a few people READ the material in the class just before the MPPO class! Fine way to spend Rs. 1250 (Yes, that's the price per individual class session, according to my poor calculations!). In fact, I guess one of these people had suddenly woken up in MPPO class, that he sent a mail to the prof that we can be a little more effective in class, that the training was getting diluted by people's talk and discussion than the topic on hand. I think OperMan got the best of him, but all of us did agree with him on some level. Less complaining about our work, more connecting to the day's topic! So the last session, we did just that... and I frankly liked this class better. There was more discussion regarding THE topic, and we kept referring to the case. Was good. I liked.

Anyway, on to prepare for the next week's test. And OperMan midterm. I love my life.