Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Tuesday, May 7, 2013

Is Wal-Mart Losing The Plot?

The US retailer has turned soft on its initial aggressive plans for India. Are infrastructure bottlenecks and a far-from-ideal FDI policy in retail thwarting its growth ambition?

The government’s decision to allow 51% FDI in multi-brand retail and 100% FDI in single-brand retailing, though subject to riders, have brought good tidings for large international retailers eagerly waiting to tap into the estimated $500 billion Indian retail market. But even three months after the announcement of the policy, the Bentonville, US-based Wal-Mart, which has been plying wholesale retail in India since 2009, has not disclosed any concrete plans about how it intends to move forward on capitalising on the new retail regime. The company currently operates only wholesale stores in India via its joint venture with Bharti Enterprises, but it has so far been the most aggressive foreign supermarket operator in India, operating 18 cash-and-carry stores, selling to smaller retailers such as vegetable vendors, hospitals, restaurants and other firms.

The company expects to open its first consumer retail store selling directly to the public in 12-18 months, aiming to turn a profit in 10 years, something it could manage in China only after 12 years, where it operates over 350 stores. As of December 31, 2011, the overall losses of Bharti Walmart totalled Rs 7.65 billion. During the year, it posted over 140% increase in sales y-o-y at Rs 18.76 billion, but its net loss rose 66% to Rs 2.77 billion. The company is targeting $1 billion in sales in India by 2013-14.

According to the Investment Commission of India, the retail sector is expected to reach almost $660 billion by 2015. But instead of seizing on this consumer retail opportunity, the American retail giant finds itself entangled in an unsavoury controversy related to alleged payment of bribes in the country, which is a violation of US anti-bribery laws. The payments involve forking out “facilitation payments”, or “speed money” – or bribes – to advance the process to obtain 40 to 50 government licenses to set up retail stores. The US Foreign Corrupt Practices Act makes it a crime for US corporations and their subsidiaries to bribe foreign officials to win or retain business abroad.

With allegations flying thick and fast, and to avoid getting sucked into this vortex deeper, the company instituted a probe, which has led to the suspension of its chief financial officer as well as its entire legal team in the country. The development comes at a challenging time for Wal-Mart in the country, with political pressure mounting against the Congress-party’s drive to open up the retail sector to foreign investment.

To compound Wal-Mart’s woes, its investment of $100 million in a domestic unit owned by its wholesale joint-venture partner Bharti Retail is also being investigated by India’s Enforcement Directorate for possible infraction of the country’s foreign exchange rules. Wal-Mart’s investment in Bharti Retail has come under the scanner amid allegations that the former may have entered India’s front-end multi-brand retail business surreptitiously two-and-a-half years before the government actually permitted foreign investors in the sector.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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Rajita Chaudhuri-The New Age Woman
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Friday, May 3, 2013

“There are certainly more drivers apart from price”

Dr. Manish Gupta, Director – IBM Research, India asserts that innovations for the Indian market aren’t only about bringing down the price points

B&E: IBM has been driving a lot of R&D activity from India. What is your view on reverse innovation potential from this market?
Dr. Manish Gupta (MG): I am not parochial in this regard. I am not claiming that innovation will only happen here, it will happen in all parts. I feel that cost is just one aspect, and we in India often make the mistake of equating innovation with low cost. A lot of times, people talk about how can you bring down the cost. That’s only one form. In our work, we have seen several different drivers for ‘reverse innovation’. They can be related to the scale and price point, and they may simply be linked to different needs unique to the Indian market, which does not mean they are necessarily low cost. I prefer to use the term leapfrog innovation for this kind of innovation, where you have to rethink a solution, take a different approach to solving a problem, and then you can apply the same ideas to other markets.

B&E: What drivers do you see that will enable more of such innovation coming from India?
One driver is often scale, which many other people have pointed out. Often, the scale of what you see in a country like India and China is much higher as compared to the US. One example is what our own lab colleagues have done in the context of telecom accounts. As you know, IBM provides the entire IT infrastructure for telecom companies like Bharti Airtel and Vodafone. We deployed a solution in one of the telecom accounts in India I cannot name. We developed a first of a kind solution where instead of having different kinds of analytics applications working on their own copy, of what is call detail record data, we have brought in a streaming data solution. As the data gets generated, even when the data is new, different apps start their own processing. You have the data flow through different applications. While it was driven initially by scale & price point, it delivered some real business value, as the company can now access the same day’s data rather than the four days old data it accessed earlier. It has been pitched to the likes of AT&T, et al.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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Saturday, April 20, 2013

“India is the single-most important defence partner for US”

William H. Avery, who served in the US diplomatic service as an Economic Officer, is a master at trade development and commercial advocacy, and is a three-time recipient of the US State Department's Meritorious Honour Award. A prolific writer on international affairs, Avery tells Mayank Singh how India needs to start thinking beyond just Pakistan and China and take interest in building a strong military base in the Asian region. India has the potential, he says!

B&E: Asia is constantly represented on the international fora and its position is factored-in by different countries in their policy making. Your assessment?
William H. Avery (WAH): All the action is in this part of the World. We are seeing a shift of economic activity, which will be followed by military activity and military strength from the trans-Atlantic to the Pacific region, including China and India and all the regions that fall in-between. With regard to the subcontinent, principally, India and China are the places that are going to be significant. US also because it is a continent with 300 million people. So I think a new structure is emerging where there are three potential centres of power – US, India and China.

B&E: You have been talking of India becoming a superpower. Yet, you say that it will have to ‘achieve’ this position. What shortcomings on India’s part do you observe here?
WAH: I think India has many natural advantages. It has a demographic advantage. It has skill base, which is not just a technological skill base. What is missing in India is a recognition of how you build power in this World which requires military and economic strength, not just at home but overseas. And it requires a willingness to use power. If you look at India’s experience with Sri Lanka, it is very instructive. I think Rajiv Gandhi knew that for India to get to the next level, it had to be willing to play a strong regional role. But the problem is that when the LTTE assassinated Rajiv, India withdrew. So what you had for the past 20 years was not only India not becoming a global power but also failing to become a regional power! Another element is a kind of obsession with Pakistan. Pakistan, a barely functioning State, is quite clever in a way to bring India down to its level. India fell into that trap. And it was with the advent of the Indo-US Nuclear deal that India began to rise above it and perhaps only because of India’s economic growth was it was able to pull away from Pakistan. So some things are beginning to happen. But India needs to take a more activist approach to becoming a strong military power.

B&E: You have called the withdrawl of the Indian Peace Keeping Force (IPKF) from Sri Lanka as India's mistake. Also, you say that it should have been redeployed after the unfortunate assassination of Rajiv Gandhi. Your thoughts...
WAH: I do feel it was a mistake. I understand why it was made. And it is always easy to go back 20 years and look at it in retrospect, but the fact that a country allowed a former prime minister to be assassinated on its own soil and then nearly asked for the extradition of the assassins is pretty amateurish. And there’s nothing we can do to change that. However, it should serve a lesson. We should look at it critically and make sure that India does not make the same mistake again. I think the IPKF episode was one that pushed back India’s emergence as a global power by many years. However, it should be acknowledged that India did recover by 1998 – the series of nuclear tests was a huge step forward. So where India has been conventional in defence matters or rather meek, its nuclear diplomacy and its nuclear policy have been much stronger.

B&E: Do you see a bigger ploy of China in keeping India busy with Pakistan while increasing its arsenal and technological knowhow and economic opportunities, and then using them as pressure tactics?
WAH: It could be a Chinese strategy. I don’t know whether it is a conscious strategy or not. Having said this, I believe that India should not remain busy with Pakistan because there is a much wider world out there. The cross-border terrorism issue is significant and has to be monitored by India. At the same time however, India’s emergence as a global power will not come true if the Indo-Pak equation remains the key agenda on the diaries of India’s foreign policy agents for ever.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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Tuesday, April 2, 2013

Time to unleash the green growth

Be it climate change, water scarcity, biodiversity loss, or ecosystem degradation; green economics can weave together these strands. According to ‘TEEB’ report, ecosystem delivers essential services worth $21 to $72 trillion a year while the commercial opportunities in natural resource sector alone could be between $2.1-6.3 trillion by 2050. The implication: green and growth can go hand in hand.

Seeking Competitive Gains
Given the prevailing environmental and economic challenges, countries and corporations have come up with policies and strategies in order to shift towards cleaner and greener business practices along with green innovation. The International Energy Agency (IEA) is of the view that greener business practices will have important economic pay-offs in terms of resource efficiency. IEA estimates that 17% (approximately $46 trillion) increase in energy investment is required globally between 2010 and 2050 to deliver low-carbon energy systems, which will consequently yield a cumulative fuel savings worth $112 trillion. As a competitive factor, companies are seeking competitiveness gains through clean and green technology investment.

Environmetnal Challenges

OECD, in its recent report, states that the impact of economic activity on environmental systems are creating imbalances which are putting economic growth and development at risk. As a matter of fact, existing loss of biodiversity and degradation has already had dramatic consequences for business; soil erosion in Europe is estimated to cost 53 euro per hectare per annum. A 2007 report of the World Bank estimated that the cost of excessive use of groundwater in China was in the range of 0.3% of GDP (the cost fell largely on the agriculture sector). The TEEB 2010 report estimates the annual economic loss caused by introduction of agricultural pests in the US, UK, India, Brazil et al to be more than $100 billion.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Friday, November 30, 2012

Common Wealth of Nations

From Wealth of Nations to Common Wealth of Nations

In Common Wealth, the author Jeffrey D. Sachs, Professor of Sustainable Development at Columbia University and special advisor to United Nations Secretary-General Ban Ki-moon on the Millennium Development Goals, has elaborated upon some actions that are necessary to fulfil the hopes of generation in building a world of peace, sustainable development and Common Wealth.

These include learning about this generation’s challenges to become acquainted with the underlying science of sustainable development, travelling to see other places and cultures to understand the common interests and aspirations that unite all of us, starting or joining organisations committed to sustainable development i.e., Muhammad Yunus began Grameen Bank and gave life to the world-wide microfinance revolution, Paul Farmer started Partners In Health, Norman Borlaug helped to establish the wheat research institute CIMMYT and thereby helped feed the world, promoting sustainable development through social networking sites, getting politically engaged, demanding our politicians to honour government’s promises and donating time, dollars, and the energy to social networks.

Global survival in the long run will be achieved by recognising that the vast majority of people in the Middle East, China, India, and the rest of the world, just as in the United States, long for their own prosperity and security, not for domination over others. Our fears can easily get the best of us. We must therefore train ourselves and orient our policies to understand the world not only as we would see it but how others see it as well. That is the key to appreciating our common fate, and Common Wealth, on the planet.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

It pays to love George Bush!

Sans Bush, the nuclear pact would not have happened; it marks a paradigm shift in US's India policy

I will not term what has transpired as a Nuclear deal between India and US as a mere pact. It is, in fact, a process that has led to the end of international sanctions against nuclear commerce with India. These sanctions came into force when the US passed the Nuclear Non-Proliferation Act in 1978 and thereafter norms were set up for the 45-member Nuclear Supplier Group (NSG). Apart from ending India’s nuclear isolation and clearing the way for easier exchanges of technology pertaining to nuclear energy and other dual use technology items; the NSG clearance has now given us the opportunity to cooperate with countries like France and Russia so that we can expedite our moves towards energy security and self–reliance in the development of our indigenous fast breeder reactors.

Now, it is not just something that moves us into close cooperation with the US. Readers should remember that the Americans have not built any new reactor since 1982. Secondly, US firms like Westinghouse are not all American. The other prominent firm General Electric is there, and has shown a readiness on part of the US to treat India and deal with India as a serious partner.

I would say that the shift is extremely significant, having negotiated with the US on nuclear issues for four years, both in Delhi and Washington, between 1976-1980, at the time when US sanctions were coming into place. I never thought I would see such a paradigm shift in our relationship with the US during my lifetime.

The deal went ahead despite the efforts of China to equate India with Pakistan with regard to the nuclear sanctions. It was part of the greater Chinese policy to contain India. Transfer not just of conventional weapons but also nuclear weapons designs and technology to Pakistan is a part of this policy.


Source : IIPM Editorial, 2012.

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Tuesday, August 28, 2012

Rhino Soars

The poachers of Kaziranga National Park are now the custodians of the big beast…

Not many years ago, the people of Assam would wake up to news like ‘Rhinos poached!’, ‘Forest officials fail to protect the species that brought fame to the nation!’ and they would lament on the crumbling state of the Kaziranga National Park, a World Heritage Site. But today, the once pitiful state of the rhino and the National Park has been infused with new life thanks to the Eco-development programs that have been initiated by the forest officials.

The rhino census conducted in 2009 showed 2028 rhinos as compared to 1885 in 2006 (conducted by Assam Forest Department in collaboration with Asian Rhino Specialist Group), indicating a steep rise in just three years. According to the Indian Rhino Vision Plan (2020), the rhino numbers need to be taken to 3000, which before 2008 had seemed like a far-fetched dream due to rampant and uncontrollable poaching. The forest officials of Assam had no choice but to pull-up their socks and save the star species of Assam and of the nation. Majorly poached in Africa and Asia, rhino horns serve as aphrodisiacs and are used for medicinal purposes in East Asia, especially China and Vietnam. It was observed that mostly the tribal youth was involved in poaching, and they earned approximately Rs. 5000 for every kill. The forest officials decided to seek help from none other than the local villagers. In very little time they transformed the locals from poachers to preachers of anti-poaching! In 2008, Eco-development programs were adopted in which 110 villages surrounding the Kaziranga National Park were identified and the local tribes were given the opportunity to establish a permanent source of livelihood. The villagers were shown the possibility of leading a better life and receiving a regular source of income through respectable vocations like weaving, agriculture, bee-keeping, serving as local guides of the park. The villagers in return extended their help in tracking down the poachers, thereby restoring the rhino count in the park.


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Monday, August 27, 2012

RELIGIOUS FREEDOM: THE WORLD

The new Ambassador needs to introduce the right thought process

Even region-wise, while North and South American states have low restrictions on religion freedom, Middle Eastern and North African nations have strict restrictions. In 75 countries, governments have limited the efforts of religious groups to proselytise. Interestingly, while India has moderate to high levels of government restrictions but high level of social hostility, China has high level of government restrictions but moderate or low level of social hostilities.

Moreover, it has become extremely important to bring world’s most widely followed religions on one platform. This, in a way, can reduce restrictions over religious practices, curb human rights abuses and help mitigate inter-religious hostilities. Unfortunately, the ambassador of the US IRF plays more of a diplomatic role with countries like Iran, China, Burma et al, rather than playing the religous role. It is important for the US IRF now to stop acting as yet another front to fulfil the diplomatic initiatives of the US government; it has to focus on the larger goal that justifies its existence.



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Monday, August 13, 2012

Can we have a quake?

Natural disasters interestingly have created huge political legacies (in some cases, destroyed them); an easy read on why some politicians perhaps desperately wait for a natural disaster to come back to power

If Moses had the plagues to help him reserve his following, if Noah played to the end of the world tune to deliver his Ark to fame, then modern day politicians have had various brilliantly timed natural disasters to catapult up their political fortunes; and in some cases, even destroy them due to their lack of tactical intent. The more intelligent ones have used disasters to not only cleanse their corrupt and tainted pasts but to decimate opposition too. Presenting a cross-continent easy read correlation review.

On December 23, 1972 an earthquake in central Managua, in Nicaragua, helped reveal the social rifts of the Somoza family dictatorship, who reportedly embezzled a huge pie of the foreign aid. This quake became the key excuse for people (underpinned by Sandinista revolution) to come together to topple down the Somoza dictatorship. Likewise in 1976, in China, Mao’s successor Hua Guofeng converted the earthquake to his benefit. He popularised the Tangshan earthquake as a symbolic event and used it as an image-building exercise to eventually destroy the opposition’s hold in the region. During the same period, in Guatemala, the military dictatorship overlooked the rehabilitation of rural areas (and only concentrated on the capital city) after a major quake, and this led to one of the biggest uprisings in the country’s history. Although in this case dictatorship was somehow able to crush the revolution using brute force, some years down the line, in 1985, the self help groups of Mexico ignited the independence movement post the infamous 1985 Mexico quake and succeeded in putting a full stop to the one party system of the Partido Revolucionario Institucional.

While tectonic shifts on the surface have done a lot to make or mar political fortunes, similar tremors below the sea level have been equally omnipresent on making or marring political fortunes. The tsunami, which occurred a few days before the eve of 2005, killed over 220,000 people in 11 countries across the Indian Ocean; but the way it fired up the destiny of Thailand’s embattled Prime Minister, Thaksin Shinawatra is mind-boggling to say the least. For the uninitiated, the disaster happened a few months before the scheduled national parliamentary elections in Thailand. Thaksin – facing ignominious corruption charges – grabbed this opportunity. He did everything possible to make his voters believe that he was capable of handling the calamity. In the course of that endeavour, he denied the need for any international aid and executed a near-effective recovery plan. This bold effort of Thaksin decoded itself into greatly improved rating points.


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Friday, August 10, 2012

Cashing in on Cesarean?

Most women are hale and hearty and capable of an uncomplicated natural childbirth, yet surgical childbirths are increasing...

Any sort of experimentation with nature’s way always attracts attention and debate. Medicine in several ways has led to the triumph of human will over nature’s rules. But this time the world is divided over the delivery techniques of childbirth. Today, a mother can opt for a natural delivery or choose the surgical (Cesarean section) route, but a sharp increase in the latter method across the world has stirred widespread concern. While in the US, one in four children is born via Cesarean section (C-section), WHO has reported that one in five deliveries in India is by Cesarean too. Obstetrician David Campbell Walters in his book, Just Take it Out: The Ethics and Economics of Cesarean Section and Hysterectomy (1999) claims that in the US, ‘in 20 years, there will be no more vaginal births.’ If you look at Walters’ claim in light of the existing figures of C-section deliveries in metros like Mumbai and Delhi (20-25% C-section deliveries) and even in most provinces in China (where according to China Philanthropy Times, the average rate of Cesarean birth has reached 40 percent), his prophecy might actually become a reality in a large part of the world… But what is driving doctors and mothers-to-be to opt out of the natural vaginal delivery? Why do doctors like David Campbell Walters (though in minority) advocate that women be allowed to choose a pre-planned Cesarean?


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Wednesday, July 25, 2012

Case for a soft dragon!

China is quite concerned after the ‘Jasmine wave’ extended to the Middle East. But its response is worthy of condemnation

Freedom is a birthright, but China seems to believe that economic growth is a very viable substitute. However, post the events in Tunisia & Egypt, China seems to be much more paranoid than ever before.

Firstly, China has increased its defence budget and increased salaries of internal police personnel; ostensibly to avoid the horror of a revolt in uniform, even as it imprisons political activists recklessly. The recent arrest of artist and political activist Ai Weiwei is a case in point. Ai, who openly called for political reforms, was arrested on April 3 at the Beijing Airport on grounds of financial fraud. His friend, Zuoxiao Zuzhou, a Chinese rock star who was trying to urge people to support Ai, was also detained later. His crime was that he displayed “Free Ai Weiwei” in a live concert. Nobel laureate Liu Xiabao is still serving his sentence.

In a span of just a few days, four veteran activists – Liu Xianbin, Ran Yunfei, Ding Mao and Chen Wei – were arrested. The minimum sentence has gone up from 3 years to 10. Gao Zhisheng, a Christian human rights lawyer, was sentenced for subversion after he wrote open letters to the European parliament and US Congress calling for reform. The torture on him has been so severe that he twice tried to kill himself. Since 2010, there is no word about him. Reportedly, over 7-8 million Chinese are currently imprisoned and around 5000 face the death penalty every year, higher than the rest of the world put together.

Fourteen years ago, Libya was on the Chair of the UN Human Rights Council. Later, they were removed. Similar steps need to be taken against China.


Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
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Saturday, July 21, 2012

The new age Commercial Plane was not Airbus

The Worst start to building The new age Commercial Plane was not Airbus’. It was Boeing’s. Its biggest project – The Dreamliner 787 – has turned a Nightmare. There are other problems too. What went Wrong with Boeing? & can CEO Jim McNerney play Captain America? 

What caused Boeing’s health to deteriorate? McNerney has forever been known as a game-changer – a CEO whose radical change ways revived a corporation like 3M (it was under him that the company slimmed down, returned to profit-making and even dropped its old name – Minnesota Mining and Manufacturing). He tried the same at Boeing. To ensure that bottomlines improve, he adopted the outsourcing model. The idea was that instead of working with the traditionally accepted manufacturing practices, Boeing would work with engineers and labourers outside the company. It first started with the 787 program in 2005 and was then replicated on the 747s & 777s families. That meant trouble. A typical 787 (& 777) has 70% of its parts manufactured in Japan, Korea, Sweden, Canada, Italy, Australia, France, Germany and 15 other locations in US, that Boeing workers in Seattle put together. The entire exercise was destined to end up as a fragmented engineering act and a complex set of 50 confused suppliers, with minimum check on quality and overstretched supply-chain. McNerney took the big risk, Boeing took the beating. While its reputation & revenues did fall, the associated R&D costs have not only hurt bottomlines in the past year by up to $4.1 billion, but also threaten to erode the same in the years to come, as Robert Spingarn, analyst at Credit Suisse tells B&E, “Many bullish analysts and investors have been relying on declining 787 and 747-8 R&D to allow for meaningful earnings growth. But, even as these development programs inch closer to completion, the prospect of new R&D for a refreshed or new 777 and a clean-sheet 737 may offset any benefit. Either way, upside could be an issue if R&D cannot be tamed and if Boeing’s Defense business weakens beyond expectations.”

So what can Boeing do to expedite the process and ensure that cost control (outsourcing) and timeliness go hand in hand in future? Airbus, which contracts 52% of its aircraft body-making, is the answer. It assembles parts (in France & Germany) manufactured in 12 locations in the four nation cluster – Britain, France, Germany and Spain. And if cost reduction be the prime condition, Airbus’ assembly line for the smaller A320s in China is quite an example. The solution to convert Boeing’s global outsourcing mess into a strategic geographic advantage lies in creating regional assembly hubs. Like Airbus, it could begin with an assembly station in China for the new planes, to cater to the demand in the Asian region (like the $10 billion order from Air China & HNA Group for 5 747-8s, 6 777s & 32 787s received in March 2011). And considering that Boeing has to fast increase delivery pace in order to cater to a fresh demand, the newer assembly stations will only reduce its order-delivery lag. The question now is not whether it can cultivate a conservative approach to outsourcing or not. Rather, it is how Boeing can learn fast and act. Airbus, despite a more calculated approach saw its jumbo A380 suffer a couple of initial delays, resulting in $24.8 billion in added costs & lost orders between 2006 & 2009. Boeing has already lost many times more. Question is – will the hole in its pocket get bigger?

Fire on board, to software integration issues, to discovery of weak points in the composite metal used, to an in-flight engine shutdown, the Dreamliner has been more of a ‘nightmare’liner for Boeing. Though experts are of the opinion that this is not the end of the road for Boeing, and that revenues will continue flowing despite the fires and engine malfunctions of the 787s & 747s. The hefty order-log already recorded and expectations of huge demand from Asia and replacement orders in US & Europe will help its cause, as New York-based Alexandria Carroll of Goldman Sachs tells B&E, “For the near term, 787 & 747 challenges have the potential to create further volatility. However, we expect very strong new aircraft order demand, strong global air traffic, and the company’s supply restraint through the last cycle to all be larger positive drivers of the stock than challenges, which are a negative. The associated R&D tailwind catalyst are likely to be realised over the next few quarters.” Adds S&P’s Tortoriello, “Emerging economies in Asia and the Middle East will continue to improve, which should sustain demand for narrow-body aircraft, supporting Boeing’s total backlog of about 3,400 aircraft as of December 2010. In addition, US airlines continue to take deliveries to improve fuel efficiency of aging fleets. Further, the third-quarter 2011 delivery of the 787 should act as a catalyst for the stock, with about 850 aircraft recently on order.” While Goldman Sachs estimates revenues for Boeing in FY2011 to to touch $67.97 billion (a y-o-y rise of 5.69%), the figure as per Credit Suisse stands at $69.76 billion (rise of 8.48%).

Having said thus, McNerney has to realise that the storm will only gather over the coming quarters, faster and stronger than it did in the three years gone by. It’s more than half of his company’s revenues at stake (assuming that the Pentagon will continue to patronise Boeing’s Defense business as EU does to EADS-Airbus), and the clock for him is running backwards. He’s done nothing to make investors smile (Boeing’s Mcap has fallen by $2.13 billion since he took over in June 2005) and McNerney might be out before Boeing even gets out of this rut. In short, he has little time to prove that an intergalactic outsourcing strategy can work. If it hasn’t in seven years, it perhaps never will. Many airlines have bet their future on Boeing, and this equation can turn turbid sooner than expected, irrespective of how many dollars and elbow grease the new projects have called for. And it is already showing signs of that.


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