The Hindu Business Line : Uncommon advantage

Will all the small shops in India simply disappear under the onslaught of Wal-Mart and the other giant merchants who are sure to follow? Will the Indian consumers abandon their small-shop owners for a broader selection of goods at lower prices? These are some of the questions that Robert H. Bloom raises in The Inside Advantage: The Strategy that Unlocks the Hidden Growth in your Business (www.tatamcgrawhill.com). Bloom is of the view that if what's happened in developed nations around the globe is any indicator, many small Indian shops will perish, while still others will look deep inside their small business for an `inside advantage' that they can use to survive and thrive. "These more nimble and creative shop owners will discover their hidden potential .. They will identify an uncommon offering - a specialisation they can own."

An example given in the book is of a publisher of financial data, who brings out a comprehensive annual survey describing subscribers' views of financial industry trends in considerable detail. "The publisher will release the survey with great fanfare on the opening day of its most important industry convention in order to dominate the show's news and press.

This relevant, topical, and reliable data will celebrate the firm's uncommon offering - its authoritative position in the financial publishing industry." The five hallmarks of a good persuasive strategy, the book says, are being action-oriented, not just a vague promise or sincere commitment; defining the specific action; the first word must always be an active verb; strategic, not tactical - it must state `what' your product will do, not `how' it will do it; being honest and achievable; and tightly integrated with your definition of the core customer and the reality of your uncommon offering.

Insights of value.

Waste-cutting

One of the chapters in The House of Dimon by Patricia Crisafulli (www.wiley.com) is `The turnaround of Bank One,' where you get to read about the huge challenge of waste disposal. "With $1.5 billion in expenses to be reduced at Bank One, Jamie Dimon was on a search-and-destroy mission when it came to wasteful spending. Gone were the pagers, cellphones, multiple subscriptions to the Wall Street Journal, and other perks. In aggregate, they added up, but more important was the symbolic impact of the cutbacks."

If anyone doubted that there was a new boss in control and he meant business, then the cancellation of a gym membership or a magasine that had previously been paid for by the company was a noticeable sign, the author describes.

Interestingly, Dimon refused to sacrifice quality of customer service even in the midst of a firmwide cost-reduction campaign, as this quote shows: "One call centre was answering 80 per cent of their calls in 40 seconds. That was their standard. I said, `You're kidding me. Change it right away - today.' They said, `We're going to have to hire a hundred people.' I said, `I don't care. Hire a hundred people.'. Can you imagine waiting on a phone for 40 seconds before someone answers it? Who waits that long?"

Engaging account.

Snags in fiscal analysis

Despite the significance of analysis and interpretation of financial statements, financial analysis suffers from limitations that analysts and investors should keep in view, cautions Paresh Shah in Financial Management, second edition (www.biztantra.in). "Assets are disclosed in the balance sheet at historical cost which is different from current cost. Personal judgments also affect the figures of balance sheet," he adds.

Among the limitations that Shah lists is the absence of universally accepted standard terminology, considering that accounting is not an exact science. To a great extent, however, this problem gets mitigated when Accounting Standards are adopted widely.

Another drawback, he rues, is that financial statement analysis measures only the business performance, completely ignoring the human aspect.

The results disclosed by financial statements may be misleading if the price level changes are not taken into consideration, Shah notes. He concludes by observing that financial analysis can at best spot the symptoms of inefficiency. "A final decision in this regard will require further investigation and thorough diagnosis."

Starter material.

D Murali