Competing on Ports

I recently read an article on Gwadar Port. While the article mentions how the Baloch people are resisting the establishment of the port which they fear is another attempt at taking away the benefits of local resources by the Punjabi dominated disposition (Gwadar is one of the most impoverished districts and people have to consume contaminated water in absence of safe drinking water supply), it also highlights another element of geo-strategic politics. China is sponsoring the Gwadar port to get access to the Persian Gulf and reduce the distance to Europe. It aims to develop a highway consisting of rail, road and fiber between Gwadar in Pakistan and China. This has also alarmed the Indian officials who are vary of China's 'String of Pearls' policy and its attempt to undermine India's security. China also developed Colombo port and recently docked its submarine there. Also, another issue troubling India is access to Afghanistan owing to its troubled relations with Pakistan. India had thus planned to develop Chabahar Port in Iran close to the Gwadar Port as an alternative access to Afghanistan and Central Asia in 2003. Delayed for long, it hopes to speed up its efforts on the same. 

It is interesting to note that as economics become more important consideration in international relationships, Asia is looking at developing ports to realize the true potential of maritime trade. It would also be interesting to see how the whole situation pans out. As of now, China has moved faster in putting up a footprint all around India.

Choice between Integrated and Decentralized Distribution System

I was reading a research paper by McGuire and Staelin (1983) titled 'An Industry Equilibrium  Analysis of Downstream Vertical Integration' (McGuire, T. W., & Staelin, R. (1983). An industry equilibrium analysis of downstream vertical integration. Marketing Science, 2(2), 161-191.). 

The paper talks about the role of product substitutability in deciding whether a firm should choose to sell through a franchise or own-outlet. It is an important choice that many businesses have to make. While there are several factors like synergies, capital availability, regulation, etc., the paper uses game theoretic framework to understand economic benefits of the two approaches. The paper follows from the notion of bilateral monopolies and considers a model of two manufacturers selling differentiated but competing products and their decision about selling it through franchises/ private dealers (Decentralized i.e. D) or own store (Integrated i.e. I). This leads to 4 different possibilities II, ID, DI and DD. With assumptions of static linear demand and cost functions, different behaviors of the two players are considered. The decision variable is price. It was shown that II was the Nash Equilibrium when there is lower product substitutability and DD when there is high product substitutability. The consumers are always better off (lower prices) when the two players don't collude. Addition of a retail layer between cooperating manufacturers and consumers is of little help. With lower product substitutability, the condition is similar to that of a monopolist who would have no incentive of sharing the channel profit with an intermediary.

The paper gives us an understanding of a potential reason why firms may choose to decentralize and lose control even when the own-store outlets can work at the same efficiency as franchise. This is observed for highly substitutable products like fast-food, soft-drinks, etc. Though, it is also important to consider the other factors that may be governing this decision. Another fascinating aspect is that it considers channel management, a marketing problem from the lens of micro-economics.

Books

Books are great source of information. Some say books are one's best friends. Earlier, human society transferred knowledge though the oral tradition. The discovery of writing helped humans a lot. Some consider it as an essential part of human civilizations. So there were Indus Valley clay seals, stone inscriptions like Hammurabi's code. Papyrus and tamrapatra helped further helped transfer of knowledge. Gutenberg's printing press allowed for mass printing of books. The digital revolution opened up almost a new possibility. So now books are so common and except the still unfortunate illiterates of this world, almost everyone has encountered them in their lives. In the early years of one's life, they generally occur in the form of course books but go on to take form of comics, magazines, and a variety of books written for variety of purposes. Reading books becomes a hobby for some, while writing books becomes an employment for some. But all this while, books work as a medium to take one's views to other. Books are potent objects. Some acquire the form of scriptures and become guides on how to lead life, while others inspire revolutions. The great philosophers communicated their thoughts to the masses, the scientists presented their inventions and discoveries, the artists showcased their art in form of books. But all books aren't same. Some are written for entertainment,  while others are written with malicious intentions. Some are acclaimed as masterpieces, others criticized, and some just dumped. So people say choose your books wisely for even if you don't realize, they put ideas in your subconscious mind and in turn affect your actions. But same is true for movies, articles, conversations or anything which interacts with our mind. One can think of them as books and all these book a part of our thoughts and provide seeds or materials for new ideas, thoughts and works. It is a form of expression, where the tone, style, choice of words, all come together to present a unique narrative. In addition is the reader's perspective and inference which further modifies the final message delivered to our mind.

Books thus have an amazing effect on life. They also have the potential to change things. To give an example, though it may sound filmi, the movie Ratatouille illustrates how a cookbook changes the life of a rat and in turn people around it. So choose your book wisely. And even though, in the fast-paced life of today, few find time to read books, the moments spent are really momentous.

It just takes me to the feeling I experience when I go to a library - I am literally overwhelmed by the ocean of knowledge lying before me and I wonder how much of it can I partake.

History Lessons

History teaches us lessons. Lessons for present and future for it's oft said 'History repeats itself'. But it's interesting to realize how many of us do take lessons from history. And the bigger question is, do we take proper lessons from history ? These things are often dependent on individual's inference though as happens it's mostly in line with the author's view. For who looks at history in an unbiased manner ? If someone professes to represent the neutral opinion, the question would be what is neutral opinion, for it is dependent on what the person believes in. In such an opinionated world, how would one objectively look at history. Much of history is written by the winning/ dominant side but does that mean the losing side represented a wrong cause. For often the voice of marginalized and minorities go unheard in the history. But then, there is a trend among historians to present the alternative narrative. But what guarantees that the alternative narrative wouldn't take some imaginative plots to put forth a point as the main narrative sometimes do. How does one separate fiction from fact ?

If such are the concerns from historical narratives, does that mean one should just ignore them. Is the approach of Iran and other gulf countries right to ignore any history beyond the immediate. I would say, not. In spite of all the shortcomings in the historical telling, there is lot to learn from it. The mere existence of something related to history provides one a context of present situation. For it's not that we came out of blue. And as one studies more and even different narratives of same event, one can gain insight not just about the event but also how different people think about it. But as happens usually, one version gains prominence and comes to define past. Only something similar to Renaissance - at a societal level or individual level brings forth many perspectives about past that were not the hitherto accepted versions.

So let history teach us lesson, a lesson that is colored with author's views and our own inference, but a lesson nevertheless. For it's always good to have some context, or call it intuition before we decide in the present.

Free Life

It surprises me as to how incompetent we think ourselves to be when it comes to taking responsibilities or being in control of our life. After all, the life wasn't so easy for our predecessors who didn't know what would take their life, property or their relatives. In the old days, there were wars and strife; the whims and fancies of kings, nobles or religious leaders  made lives of commoners a cheap commodity and they lived in uncertainty. They didn't know when the king would change, or they would be subjected to so-called justice of arbiters. It's not that our lives are free of concerns, we do face vestiges of same issues in our lives when whims and fancies of few change the things for the rest. But to blame situations or external factors for the mess we are in, doesn't hold much ground.

To say, you are powerless to change the situation you're in is an excuse to hide our laziness and unwillingness to take control of the situation. But why do we flee from challenges so often ? Why do we want the bad time to pass away naturally and wait for the golden opportunities to present themselves ? Many of us are so conditioned to having things one way that no one wants to take the path less traveled. One would go to school, college, get a good job, marry, lead a life of savings and consumption, wither and die. Our dreams have shrunk in the narrow domain, the common path we tread on, offers. Thus, even the brightest minds go and do things that don't utilize their skills and potential to the right extent. But it's easy to blame the society and forget that we are free; free to make choices, free to take our own decisions, free to change our lives.

Or were we freer in the old times ?

Margaret Thatcher

The UK's Iron Lady is no more. With every nation having myriad politicians - good and bad, most of them fade from public memory rather quickly. The reason the whole world took note of her demise and so many people had so much to say about her, speaks enough of the impact she had. She stood by her conviction, famously saying she was not a consensus minister but a conviction minister. Her conviction in the individuals' ability to transform their life made her a vociferous proponent of free market economy, flexible labor laws and privatisation. She sought to reignite the animal spirits of an unenthusiastic nation. Her efforts bore fruit and the whole world took note of her, hailing her philosophy as Thatcherism. Her strong nationalist sentiment made UK stand against Argentina over the Falkland Islands. It's not that all she did was hailed, many of her decisions had her on yhe wrong side of people's sentiments. Nevertheless, there is plenty to learn from her and we may need leaders like her who stand firmly by their conviction and their duty towards the country.

Hey Driver

A road ride is something that is both thrilling and may get taxing. Everyone loves a smooth ride but what if you don't realize that you have taken a wrong turn. You have lost the sense of direction and all this while you thought the road was good ! This is what happens if we don't keep a track of various milestones and signages. We need regular calibration to ensure we reach our destination. Otherwise the world has too many a roads and you can travel a lot without ever reaching your destination. So hey driver! At the wheel, wake up, and start moving towards your goal before the fuel runs out and lest this adventrous journey becomes an agonizing one.