Business Quiz

Business Quiz: 

Sum does some brain storming to prepare a few mosaic Quiz Questions. Try how many you can answer (Answer them by leaving a comment and leave your email address to know the correct answers)

Quiz1: Name the airline that used a famous Belgian Statue of a urinating child in one of its advertisement and used the words “pissed off high fares?” to play a spoof on one of its competitor's high fares.

Quiz2: Which head of an airline served in full cabin crew uniform as a flight attendent on a competitor airline’s flight after losing a bet on F1?

Quiz3: Which English word meaning "the faculty of making fortunate discoveries by accident" is derived from the name of an island in the Indian Ocean? How is it derived?

Quiz4: Name any other city that you can create by shuffling the letters in TOKYO?

Quiz5: Adnan Nevic, born on Oct 12, 1999 in Sarajevo, Bosnia; what is special about this person?

Quiz6: Which famous company derive its name from the last letters of the city that inspired it. 

Quiz7: Where on the earth would you find "one hundred thousand islands"?

Quiz8: Translate “Can’t you see this” into a Hindi idiom to name the F1 driver who is also the brand ambassador for a hair care product.

Quiz9: Name the company. Its business model is offering a daily discount deal, whereby the buyers/ customers buy a product or service very cheaply if a minimum number of people sign up for the offer.

Quiz10: Which animal is reputed to have a thousand legs?

Quiz11: Which famous gun derives its name from the two cities where it was designed and manufactured? 

Quiz12: Which American Multinational recently put out an advert seeking applicants for job vacancies? They said in the advert that ‘sexual minorities’ (transgenders, gays, lesbians, bisexuals) would be given extra points in the screening process. (The advert was later withdrawn due to public uproar).

Quiz13: Which Multi-National Company is named after a type of African antelope?

Quiz14: Name the politician. He is the mayor of a city in US and we have a Television channel by his name in India.

Quiz15: Name the politician whose teenage daughter got pregnant when she was campaigning for a political post. She also said during campaigning that “Russia is just across the border of an American state”.

Quiz16: Name the famous monument in Africa that features a scantily clad man and woman, holding a child. It’s a bronze statue built with a colossal expense of USD 27 millions.

Quiz17: Analyze the featured pic to name the product launched in 1990 by a legendary auto company. The product uses a type of patented engine that produces a "potato-potato” sound.

Quiz18: During which cricket match in India the crowd gave Pakistan a standing ovation after they defeated India…in India!

Quiz19: Name the fruit/ vegetable which gains prominence in the coming week. A type of beer is also brewed from this fruit/ vegetable. (Try and explain the reason for prominence)

Quiz20: Name the concept that is used by a publishing house to determine undervalued/ overvalued exchange rates based on an informal way of measuring. The pic features a very important element of this measurement concept.

Quiz21: Name the product I am referring to - Queen Victoria received this product as a wedding gift. There are over 2000 varieties of this product one of which is Leicester. NASA exploited a myth about this product to play a spoof on April fool’s Day.

Quiz22: Combine the name of a popular Bollywood movie based on Alzheimer's disease and the actress featured in the pic to name the company I am referring to.

Quiz23: Which airline’s flight steward quit his job by opening the door of a moving aircraft and jumping out through plane’s emergency chute?

Quiz24: You 'never' actually own this product, you merely look after it for the next generation. Name the brand who claims this.

Quiz25: Name the car company, whose cars are said to have a grill which look like a Greek Temple.

Quiz26: He used the code word of India - Sri Lanka cricket matches to receive and pass secret information. Name this head of a US company who was recently sentenced to prison over charges related to financial sector.

Quiz27: What is featured in this pic?

Quiz28: What is featured in the pic and what is this particular place called?

Quiz28: The Economist and Harvard Business Review have carried out separate articles on this “Hindi” word which roughly means frugal innovation. This term is also used for a type of a vehicle in rural India. Name the word.

Quiz29: Which Governor of a state in US recently ordered all the state employees to answer their phone by a particular salutation? This was done to boost employee morale and help sell the state to outsiders. (Hint: Only a lady can think of such a thing)

Quiz30: Name the non government organization whose logo is featured in the pic. The organization was formed in 1961 in England. The present Secretary General of this organization is an Indian.

Quiz31: Name the destination featured in the pic (Hint: Its an exotic SPA destination)

Quiz32: Name the famous animated sitcom which has a character called Maggie? It also was awarded a star on the Hollywood wall of fame. It is also famous for the annoyed grunt of one of its characters, “D’oh”.

Quiz33: Name the Bollywood actress who has live in Hong Kong, China, Japan, France, Switzerland, Krakow, Berlin, Belgium, Hawaii and England before moving to Mumbai?

Quiz34: What is common in these cities - Monaco, Melbourne, Valencia and Singapore?

Quiz35: Name the auto brand which derives its name from a river in Italy. There are museums devoted to this brand in Milan and England. The Indian government acquired this company in 1950 and after hitting record production in 1985, the production of this brand was ceased in India in 1997.

Quiz36: Name the car company - The world of bullfighting is a key part of this company’s identity and it names most of its cars based on the name of bulls

Quiz37: Name the brand whose advert featured models in the nude, wearing only shoes and a python wrapped around them. Also name the models.

Quiz38: The nickname 'SoLoMo' given by a popular venture capitalist refers to which three computer technologies.

Quiz39: Which international hotel chain advertisements feature these celebrities – Lance Armstrong, Christian Louboulin and Jerry Hall (among others)? Hint: Each featured celebrity has chosen a charity to which the hotel chain has made a donation of USD 10,000.

Quiz40: Name the company whose proposed headquarters in US is a ring shaped structure dubbed as spaceship.

Quiz41: Name the brand which the following tagline: ". . . . . mixes with everything except driving".

Quiz42: Name the airline: In Mar 11, the recording of an inflight transmission of one of its pilot's unintentional conversation with his copilot was released to the press. The conversation had foul language and discussed gay, overweight and older flight attendants.

Quiz43: What am I referring to when I say QE, QM, QV ? Name the company who owns these brands. Hint: Its related to travel industry. Its also got something to do with Monarchy.

Quiz 44: Which internet domain was launched in September and the addresses went on sale?

Quiz 45: What is common between New York City, London, Milan and Paris?

Quiz46: Name the brand associated with the following product names:

Red, Black, Green, Gold, Blue, XR21 and King George V

Quiz47: Name the brand associated with "eternity ring", "trilogy" ring and the "right hand ring".

Quiz48: Which airline would you be flying if you fly by "Queen's Own Aviation Company".

Quiz49: Name the airline in which cabin crew used to sing in-flight safety instructions (or sometimes interpret the instructions artistically). The featured picture depicts a Television Show that promoted the airline with a specialized concept. The airline ceases to exist now.

Quiz50: Name the country which is also referred to as the ‘eighth continent’ because of its rich biodiversity; 80-90% of the plants and animal species found in this country are found no where else in the world.

Quiz51: Name this fortnight long fair in which more than 7 million liters of beer is consumed. This is the largest people’s fair in the world.

Quiz52: Name the Company that played an April fool spoof on its subscribers wherein if anyone clicked on the company website’s main page, the whole page turned upside down. The company claimed this was a new layout.

Quiz53: Name the airline whose advertisement is featured in the pic. The advertisement appeared in the March 19th, 1979 issue of major dailies in the west. Yes, the shadow is in pretty much in the same place as where the planes hit on September 11^th, 2001. (I’ve cropped the pic to remove the name of the airline)

Quiz54: Name the airline. Every plane in this airline’s fleet is named with a destination containing some part of the airline’s name. The airline is also known for it’s “letter ads” i.e. the ads starting with Dear….and ending with Sincerely…

Quiz55: Relate the featured image to name the NGO which is one of the older human rights associations. It has a separate prison committee to provide assistance to its members who have been imprisoned, tortured, threatened, attacked, made to disappear, and killed for the peaceful practice of their profession.

Quiz56: Name the person. He became leader of a country in 1975. His policies and torture/ force resulted in the deaths of approximately 21 percent of the country’s population (approx 2.5 million people died under his leadership). Gas chambers were one of the ways used by him to execute people.

Why is depreciating Rupee a cause of concern?

The next two years of policy action (or rather inaction) will decide the fate of India’s growth story. It will decide whether India will emulate Greece or Chinese economy in the next decade or so.  Everyone expected India to be rather isolated from the sovereign debt crisis and rather be the growth engine for global economy along with China. But it is turning out to be the other way around. Depreciation of rupee relative to dollar is making news and is hurting when it hurts the most.

Rupee Depreciation

Rupee is currently trading at its cheapest level (in nominal terms) relative to the dollar. It is currently the worst performing Asian currency and its fall has been fairly steep. The depreciation makes Rupee cheaper to buy for the foreigners and it makes the foreign exchange expensive to buy for Indians. This makes Indian exports cheaper and imports expensive. If we compare the valuation of rupee relative to dollar in terms of purchasing power parity (by accounting for inflation); the rupee is overvalued even at these levels.

Why a depreciating Rupee is a cause of concern?

• India is heavily dependent on oil imports. A weak currency makes these imports expensive. Worst part is that these expensive imports are heavily subsidized in India
• High interest rates in India caused a lot of domestic companies to borrow abroad in the form of external commercial borrowings. The depreciation is hurting these companies hard as the interest and repayment of principal in foreign exchange is expensive. Indian banking system is cramped up because of excessive borrowing program of the government to plug its burgeoning fiscal deficit. This limits their lending limits to the private sector and demand for capital by the government is crowding out the private sector. Thus private sector sought permissions to borrow abroad which is hurting them in the light of a steep depreciation of rupee
• Though India’s external debt is not at very high levels, still currently the external debt of USD 313 billion is almost equal to the reserves of USD 330 billion. This limits the active participation of RBI in the money market to stem the steep fall of rupee and keep it near its desired levels. The reserves are not large enough to afford a money market intervention.
• Due to a current account deficit position (imports more than exports) the economy is dependent on inflows from abroad. The dependence on foreign inflows is keeping the economy on tenterhooks as any further depreciation will make it difficult for the RBI to accommodate outflow of foreign exchange by the investors in case of a global event. RBI may have to put controls in that case which might result in a full blow exodus of capital from India; the worst case scenario; but highly likely possible.
• India is running a very high fiscal deficit; close to double digits if we take the deficit of states into account. The deficit is being financed by foreign investment. The dependence on foreign investment to bridge the fiscal hole which is on account of unproductive subsidies and concessions and not on account of productive capital investment risks a catastrophic fall in the currency in case of a global event.
• Every major economy from US to Japan and from China to Korea is trying hard to keep its currency cheap relative to other currencies to give its exporters an advantage over other countries. Cheaper currencies make exports cheaper and thus the advantage. In fact China has accumulated hoards of American Dollars only because it aimed to keep its Yuan undervalued relative to the Dollar. It thus continued to buy Dollar is the money market to keep Yuan relatively undervalued. A depreciating rupee is good news for Indian exporters and it makes Indian exports cheaper. But there is little to rejoice as India currently is a net importer. Policy inaction and lopsided decision making is ensuring no major impetus to Indian exports. 

How credit risk can be hedged / transferred?

A tutorial on how credit risk can be hedged / transferred using the credit risk instruments. 

(Key inputs from CFA Institute Readings)

An investor faces three types of credit risk. The risk of default, credit downgrade of the debtor and widening of credit spreads on the debtor’s debt. The credit risk that the investor faces can be sold off to another party, basically like any other insurance contract. The party who assumes the credit risk (or who buys the credit risk) is called the credit protection seller. He may be willing to take this risk for several reasons. He may buy because he believes that the credit quality of the debt will improve. He may see value addition in some major corporate events like mergers or refinancing of debt at lower rates. All these would be positive credit events for the credit protection seller.

There are basically three products that transfer credit risk – Credit Derivatives.

1. Credit Options

                                                               i.      Credit options written on an underlying asset

                                                             ii.      Credit spread options

2. Credit forwards
3. Credit swaps

Credit options

1. The triggering events of credit options can be based on either
1. The value decline of the underlying asset
2. The spread change over a risk free rate
2. Credit options written on an underlying asset
1. Binary credit options provide payoffs contingent on the occurrence of a specified negative credit event
2. There are only two options

                                                               i.      Default

                                                             ii.      No default

3. If the credit has not defaulted by the maturity if the option the buyer receives nothing
4. The option buyer pays a premium to the option seller for the protection afforded by the option
5. Pay off can also be based on the credit rating of the underlying asset
6. A credit put pays for the difference between the strike price and market price when a specified credit event occurs and pays nothing if the event does not occur
2. Credit Spread Options
1. Payoff is based on the spread over a benchmark rate
2. Pay off formula

Credit Forwards

1. Their payoffs are based on the bond values or credit spreads
2. If a credit forward contract is symmetric the buyer of a credit forward contract benefits from a widening credit spread and the seller benefits from a narrowing credit spread
3. The maximum the buyer can lose is limited to the pay off amount in the event that the credit spread becomes zero

 Credit Swaps

1. It is a contract that shifts credit exposure of an asset issued by a specified reference entity from one investor to another investor
2. The protection buyer usually makes regular payments to the protection seller
3. In case of a credit event the protection seller compensated the buyer from the loss on the investment and the settlement by the protection buyer can take the form of either physical delivery or negotiated cash payment equivalent to the market value of the defaulted companies
4. CDS can be used a hedging instrument
5. Banks can use the CDS to reduce credit risk concentration
6. Instead of selling loans, banks can transfer credit risk by means of CDS

Situational profiling an investor by stage of life

Situational profiling an investor by stage of life

In life stage classifications, investment policy and particularly risk tolerance are determined by one’s progress on the journey from childhood to youth and adulthood, maturity, retirement and death. A person’s ability to accept risk should begin at a high level and gradually decline through his lifetime, while willingness to assume risk should be driven largely by cash flow considerations. An individual’s investment policy can be viewed as passing through four general phases:

o   Foundation

o   Accumulation

o   Maintenance

o   Distribution

Foundation

The individual is establishing the base from which wealth will be created (marketable skill, establishment of business, acquisition of educational degree). During this phase, the individual is usually young, with a long time horizon, which normally would be associated with an above average tolerance for risk. Risk tolerance should certainly be above average in the foundation stage if the individual has inherited wealth. Lacking such wealth, the foundation phase may be the period when an individual’s investable assets are at their lowest and financial uncertainty is at its highest.

Accumulation Phase

Earnings accelerate as returns accrue from the marketable skills and abilities during the foundation period and gradually reach their peak. In the early years of the accumulation phase, income rises and investable assets begin to accumulate. Income generally continues to rise as the individual reaches peak productivity. If individual personal spending habits do not change, the gap between income and expenses may widen throughout the accumulation phase, allowing for an increase in savings. This phase is characterized by increased risk tolerance, driven by their increasing wealth and a still long term horizon.

Maintenance Phase

The individual has moved into the later years of life and usually has retired from daily employment or the pressures of owning a business. This phase focuses on maintaining the desired lifestyle and financial security. Preserving accumulated wealth begins to increase in importance, while the growth of wealth may begin to decline in importance. Risk tolerance will begin to decline, not only is the individual’s time horizon shortening but his confidence in the ability to replace capital or recover from losses is often diminished. In this stage investors typically reduce exposure to higher volatility asset classes and increase exposure to lower volatility investments.

Distribution phase

Accumulated wealth is transferred to other persons or entities. This phase begins when the individual is still reaping the benefits of the maintenance phase and retirement. Tax constraints becomes important as investors seek to maximize the after tax value of assets transferred to others. Although asset distribution may take place in the later stages of life, planning for such transfers can begin much earlier.

Although the progression from accumulation to distribution may be linear, it is not necessarily so. Individuals in the accumulation phase may become dissatisfied with a career choice and return to the foundation phase. Situational assessments allow investment advisors to quickly categorize potential clients and explore investment issues likely to be of greatest importance to them. Dynamic relationship exists among the above considerations. The value of situational paradigms therefore lies more in their general insights into human behavior and less in their ability to fully interpret individual circumstances. Investment advisors should emphasize the process of gathering and assessing relevant situational information rather than the specific category in which an individual investor may fall.

Investment Decision Making in Systematic Investment Plans

Sum evaluated how heuristics affect investment decision making in Systematic Investment Plans. 

Investors face two challenges: making good decisions and sticking to them. Most individuals do not make decisions in the rational, well informed and unbiased manner assumed by standard economic theory. There 

are bounds to human rationality, self control and self interest which can be explained as under:

Bounded rationality (Human problem solving abilities) Limits on time and intelligence means individuals cannot be expected to solve problems optimally. Experimental evidence suggests most people use rule of thumb (or heuristics) to cope with the limits of their abilities and these heuristics can in certain contexts lead to systematic errors in decision making.

Bounded Self Control: When the right thing to do is apparent, people may fail to do it for reasons of self control (most of us have eaten, drank or spent too much)

Bounded Selfish: Failure to pursue own self interest to the extent normally assumed of homo economics

Status Quo Bias in Decision Making: The option to do nothing or endorse a previous choice

Portfolio Diversification and Investor Perceptions of Risk

There is evidence that investors in SIPs often display attitudes to risk and portfolio construction that are at odds with accepted investment principles. I try and explain some of them as follows:

Myopic Loss Aversion: Seeking to avoid short term losses despite the long term horizon usually in planning for retirement. There is also evidence that the balance of funds on offer unduly influences individual’s choice of asset allocation in SIPs

1/n heuristic: Investors take the range of offer as implicit guidance from the investment vehicles as to the appropriate asset allocation strategy – a so called endorsement effect

Company stock ownership/ Investing in industry in which the investor in employed: One of the most worrying aspects is the high level of investment in own company stock / same industry amongst employees in SIPs. The strategy is dubious as the stock is correlated with the employee’s labor income and future employment prospects. It appears employees do not view their employers’ stock or the industry in which they are employed as risky. The example of Enron highlights this heuristic in investing. Majority of Enron employees invested their pension plans in Enron own stock. Thus when the company went bust, employees lost their jobs and their savings at the same time. Another theory that supports the above belief is that investors like to invest in familiar industries/ companies. There is also a home country bias linked to this theory.

The obvious solution to dealing with significant behavioral barriers to the effective use of SIP for retirement provision is to offer some form of education to participant; which brings to light two kings of investors:

Planners: Who take active interest in providing for their own retirement

Avoiders: Who are either intimidated by financial matters or are simply uninterested

Less attention can be given to those planners who will seek information anyways; in order to have impact on avoiders’ information should be straightforward

Stakeholders in the investment industry should encourage investor education not only in later but also in spirit. It is this lack of education which caused investors to build unrealistic expectations from equities while not weighing the inherent risk in them. The result is a flight of capital from equity markets of domestic individual investor. Wounds take long to heal especially those caused by bears and bulls. It’s about time the investment industry presents a similar flight of capital from SIPs caused by losses to investors who have made wrong pickings without adequately considering the risk/ return interplay.

Euro Crisis: Where is the lender of last resort?

Sum constrasts the Euro Zone problems with countries who pursue an independent monetary policy and suggest a possible solution to the present Euro Sovereign Crisis. 

The Europe problem has been getting complex by the day. It started with Greece and inevitably everyone knew it is destined to spread to PIIGS (Portugal, Italy, Ireland, Greece and Spain) sooner than later. So here we are witnessing history in the making yet again. Europe, a union of nations formed to exploit synergies by forming a common understanding and policy framework on different subjects is falling like a pack of cards.

Complex and difficult situations demand serious path breaking efforts on the part of stakeholders to overcome the difficulty. The regulators and lawmakers in European Union are working their guts out to provide a temporary relief to the nations who found themselves underwater due to excessive spending and faulty policies. Once the bloodshed is controlled by temporary measures, efforts would then made to address the structural issues.

I have gone back and forth to the drawing board many a times trying to deconstruct the Europe Sovereign Crisis and start all over again in finding the missing link by studying the structural framework of Euro.

My recent efforts are aimed at contrasting the PIIGS with some other sovereign nations having independent currencies and monetary policies (i.e. having independent Central Banks). So I started with a comparison of Spain (Euro zone) with Britain (Independent currency and central bank). Both Spain and Spain have similar debts, deficits and inflation (in percentage terms). Spain, as a part of European Union has embraced the Euro and thus has given up its independent monetary policy in favour of a common European Central Bank. Britain, on the other hand Britain has an independent currency and has a central bank that pursues an independent monetary policy.

Let’s suppose that both Spain and Britain face a Sovereign Debt Crisis. The crisis is caused by excessive spending resulting in high fiscal deficit which is financed by foreign and domestic debt investments. As the debt repayment becomes due both the countries are overstretched with their finances and unless their debt is refinanced the creditors face a possible Sovereign Default. In the absence of any other source of refinance, the countries would only be able to refinance at steeply increased rates. Thus borrowing at high yields will increase the risk of a sovereign default by these countries in the future even higher.

If Britain is unable to roll over its debt at acceptable yield levels it will force its central bank to buy the bonds and in the process devalue its currency. Thus a liquidity crisis is averted by a devaluation of currency. In the case of Spain, refinance at acceptable rates is not possible because it does not have an independent central bank which can be forced to refinance the debt. Thus a liquidity crisis is highly likely in case of Spain if yield on refinancing of debt spikes higher.

One possible solution to this problem could be a consistent effort by the European Central Bank wherein it can give a guarantee to stand by its member countries in times of distress particularly when they face a liquidity crisis (or refinancing problems). For example if Spain needs to refinance its debt and it is unable to do so at reasonable rates, ECB should step in as a lender of last resort and buy the bonds. The value of Euro should thus be made up of weighted average of the respective members states economic parameters. Monte Carlo Simulations and Black Scholes Options Pricing Model can be reconfigured to accommodate financial parameters of member’s states. These parameters can be weighted in accordance with weights (which can be calculated using another set of economic parameters) to derive the targeted value of Euro. ECB should then balance inflation targeting with managing exchange rate expectations thorugh its monetary and fiscal policy.

At any stage the value of Euro should reflect the financial and economic strengths and weaknesses of its members. If PIIGS are refinanced by ECB, the relative devaluation of Euro in accordance with the weight PIIGS in Euro should be undertaken, so as to bring its value to a realistic level. It would not doubt be detrimental to the disciplined and hard working members who have instilled fiscal prudence and best practices in their respective states. A weaker currency would hurt the imports. A weaker currency however would be welcome across the board, especially by the exporters.

The downside to this solution is that bond purchases by central bank expand the money supply, potentially leading to inflation. A hyperinflationary economy may develop as a result of monetising budget deficits. Thus the reluctance of ECB to lend to governments is understandable. Germany is in particular still in the awe of hyperinflation in had to experience during 1920-24 due to monetizing its budget deficit. It’s opposition to such a plan is thus understandable, but as they say tough situations and circumstances demand tough solutions. So Germany pave way for a representative Euro, pay way for maintain order in the union your fondly formed.

Civil and criminal laws: Is obeying them our primary responsibility?

"The primary responsibility of citizens is to obey their nation’s civil and criminal laws"

The author’s statement that the primary responsibility of citizens is to obey their nation’s civil and criminal laws forms the fulcrum of modern society’s premise of fundamental rights and duties for its citizens. The modern society and representative form of governance confers upon its citizens certain fundamental rights and list the duties its citizens must perform as a part of a society.  The obedience of nation’s laws and regulations is one such duty the society expects from its citizens. But in my view the author’s statement is biased and invalid if seen in isolation and without giving due consideration to changing socio economic environment. 

Recently the world has seen uprising in West Asian countries particularly those which were under the rule of oligarchs and dictators. The uprising in these countries was primarily against the regime and autocratic laws and regulations which made the oligarchs and dictators strong while undermining the basic human rights of the common man. People revolted against a change in leadership in these countries and demanded for a representative form of government. The author’s statement of obedience of nation’s civil and criminal laws does not hold in the scenario when the common man is affected and he revolts for a change, sometimes even by undermining the nation’s. civil and criminal laws. 

Another situation where the above statement does not hold is when the present civil and criminal laws are unjust and formed by people who do not hold the mandate to do so. An example of this is the freedom movement of India led by Mahatama Gandhi. Under the leadership of Gandhi, India fought for its freedom from British Rule by practicing non obedience and non violence. 

In a democratic set up where laws and regulations are formed by a representative form of government and duties conferred upon the citizens; the primary responsibility of citizens no doubt is to obey the nation’s civil and criminal laws. Without such obedience, a rule of law will not prevail and a system of justice and fair society will be unthinkable.

In the end I would like to reiterate I do not agree with the author’s statement if seen in isolation. If we make provisions for civil disobedience and non cooperation by citizens if their common interests at large are affected by such laws and regulation, the statement can be accepted as a generalist opinion. The statement also holds for mature societies with a fair system of justice and legislature. 

What's more important in an enterprise; the process or the result?

“In any enterprise, the process of making or doing something is ultimately more important than the final product.”

An enterprise has a perpetual existence. It involves an ongoing process that involves many processes and procedures to produce or manufacture products or services for marketing, selling or consumption purposes. The final product goes through a rigorous process of transformation with varied degrees of time and effort.  A process of value addition takes place at each step to produce the final product right from the inception of idea to transformation of raw material and semi finished goods into a final product. Thus the author’s statement that the process of making or doing something in an enterprise is ultimately more important than the final product holds good in my opinion.

The primary reason why I believe process is more important than the final product is because the opportunity to gain a cost advantage or design leadership can be exploited during the various processed and procedures involved in the production process. Innovation if any can be introduced and core competencies developed during the process of making or doing something. The result of such efforts and competencies will reflect in the final result which the final product we are talking about. An example of this process preference can be found in the development of the cheapest car in the world – the Tata Nano; manufactured by Tata Motors. The company gave more importance to the process of designing and production of the car and obtained patents for the processes and production procedures used to manufacture the car. The end product, the world’s cheapest was not only possible through a product centric approach alone. A system led approach made the dream of producing the cheapest car in the world possible.

Another reason why I give more weight to the process than final product is because a systematic approach and streamlined procedures is required for the successful production, marketing and sales of a product. In the systems approach to management the focus of attention is on the processes of doing or making something. Two companies making identical products can be differentiated by the process and procedures each company is following. A well thought out and professionally structured process reflects in the DNA of the final product. One of the biggest examples of a systems led approach is the Apple. The company has introduced blockbuster consumer electronic goods which had caught the fancy of people. Although the company focused on making a cutting edge final product, it obtained its objective by prioritizing the processed and procedures for the same.

However it needs to be acknowledged that the final product is the ultimate destination an enterprises is aiming to reach. All efforts and resources of the company are thus directed towards achieving the objective of a superior final product. But the efforts and resources thus used are channelized through systems and procedures which if used otherwise will prove counterproductive in giving an edge to the company.

Thus I agree with the author’s statement that in any enterprise, the process of making or doing something is ultimately more important than the final product. This is especially true if we take a system led approach to management. An interplay of final product and strong systems and procedures in a coordinated fashion will ensure overall success of an enterprise.