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Wise Owl’s Words of Wisdom
Here are words of wisdom from the wise owl that’ll prevent people from falling financially ill as well as cure people from their financial illness.
Don’t buy things that you don’t need with money that you don’t have to impress people who don’t matter.
Start saving today rather than waiting for an auspicious day or waiting for a larger amount to start with or waiting for some extra income.
Avoid buying packaged products because you might end up buying something which you don’t need. Avoid buying things in bulk as you end up consuming more quantity and consuming stale products as well as blocking up your money and space.
Treat your secondary income (incentives, bonus, dividends, rent etc.) with the same respect with which you treat your primary income (salary). It ensures that you do not end up blowing up your secondary income.
Escape the mental trap that all borrowings is bad. There is no need to hesitate to borrow if it is for investments. But think twice before you spend even if you have plenty.
Financial decisions must be free from the clutches of emotions. No financial decision must be made out of fear or out of greed.
Never keep all your eggs in one basket. Always have three baskets to put your investment eggs. Low risk basket, High risk basket and a no risk basket. |
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China rules the world trade
China’s trade surplus for July stands at $ 24.4 billion. The July figure has raised
China’s total trade surplus for the first seven months of this year to a whopping $ 136.8 billion. This is an increase of 67 percent over last July’s trade surplus.
The European Union is
China’s biggest trading partner. The
United States is second and
Japan is third. Trade with European Union rose by 28.5 percent, with the
United States by 17.5 percent and with
Japan by 15.2 percent. This phenomenal growth has been achieved despite recalls of faulty and contaminated Chinese goods such as tires, toys, toothpaste and seafood.
In the past few months,
China has introduced a number of measures to reduce its massive trade surplus. It has withdrawn the rebates on value-added taxes. It has imposed additional taxes on export of some goods. It has introduced new tax policies. Despite all these measures, demand for Chinese goods is rising steadily.
The
US lawmakers feel that the Chinese currency yuan is undervalued and that gives an edge to Chinese exporters. Hence they are pressing for sanctions against
China. But it is unlikely that the
US will take any drastic steps against
China, given the fact that
China has advanced $ 400 billion to the
US in the form of subscribing to US Government debts.
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India is now a $ 1 trillion economy
India has joined the exclusive club of trillion-dollar economies which now consists of 12 countries.
United States,
Japan,
Germany,
China,
UK,
France,
Italy,
Spain,
Canada,
Brazil and
Russia are the other members of this exclusive club.
India’s GDP achieved the trillion-dollar milestone much earlier than expected due to the tremendous strengthening of Indian rupee against the US dollar. It is good news for the investors. Stock market prices in eight out of ten countries that achieved the trillion-dollar status, appreciated handsomely during the twelve months after they crossed the trillion-dollar mark.
India has overtaken
Japan as the world’s third largest economy next to US and
China. The
United States has officially acknowledged
India’s nuclear status. And
India is likely to get a permanent seat in the UN Security Council.
Will this milestone bring happiness to the 300 million Indians who live on less than a dollar a day or bring comforts to the 600 million Indians who do not have a toilet in their homes is a question Indians must find an answer.
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How to price your product right
One of the most difficult decisions for any business is how to decide on the right price for any product or service. The ultimate objective of any business is profit generation. No one starts a business to make losses. Hence the price must cover at least the cost of the product.
Here are certain guidelines that could help one in deciding the right price at which to market his product or service:
Market Survey: Choose at random, five to nine people, explain the features of your product or give them free samples and find out how much they would be willing to pay for your product.
Competitor’s price: Find out your competitor’s price. Your price can be equal, slightly less or slightly more than your competitor’s. If your price is way above than your competitor’s price, people may not be willing to shift to your product. If your price is way below than your competitor’s price, people might think your product is inferior to your competitor’s product.
Nature of product: If your product is a branded product, then it can be priced higher than the market price as it will command a premium. But if your product is a generic product, the price must reflect the average market price.
Differential pricing: Fix different prices for different customers. A frequent-buying customer or a bulk-buying customer can pay a lower price whereas a one-time customer or a retail customer can pay a higher price.
Differentiate packaging: Offer two versions of your product with some unique features, such as additional warranty, free upgrades etc. And charge a two-tier pricing structure.
Marginal price increase: When your product starts selling like hot cakes, don’t raise your price too much. Your customers might move away from your product. If you feel it is safe to raise the price, then raise it gradually so that the customers can absorb it.
Marginal price reduction: If you are considering a price reduction to boost sales, a small reduction of 1 to 2 percent is appropriate. If you discount your price too much, you could damage your product’s image permanently.
Virgin Atlantic courts Air Asia
Virgin Atlantic, the flagship carrier of Sir Richard Branson will take up a 20 percent stake in Air Asia X, a subsidiary of highly successful budget carrier Air Asia of Malaysia, founded by Tony Fernandes.
Tony Fernandes had earlier worked as an auditor with Branson’s Virgin Atlantic and as financial controller with Branson’s Virgin Records. He bought Air Asia, a heavily indebted Malaysian Government subsidiary for just 1 Malaysian dollar (25 US cents) and transformed it into a profitable budget carrier in just one year.
When he started Air Asia in October 2001, immediately after the Sep 11 incident, considered as the worst day in the history of commercial aviation, everyone predicted it was suicidal. But Tony Fernandes thought differently. He thought it was the right time to start an airline as the aircraft leasing cost was almost 50 percent lower and experienced airline staff were available for a song as most airlines laid off staff. And with his famous slogan ‘Now everyone can fly’ he revolutionized the air travel in south east asia. Today Air Asia is the most preferred regional budget carrier in south east Asia. Despite offering budget fares, its safety and service are appreciated by all air travellers.
Air Asia X will begin its first long haul flights to
Australia and
China in the first week of September. It will initially use three leased planes till its order for 15 wide- bodied jets from Airbus is delivered.
Mr. Tony Fernandez is planning to introduce budget flights to the
UK in July next year. No one who knows his track record will have any doubt about what he says he intends to do. |
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Marketing Food and Beverage to Children
The alarming increase in childhood obesity has prompted the Governments and health advocates to persuade the food and beverage companies to change their marketing and advertising strategies.
Eleven industry leaders have committed to either refrain from advertising to children under 12 or review their marketing strategies. The 11 companies are Cadbury, Campbell soup, Coca-cola, General Mills, Hershey, Kellogg, Kraft, Mars, McDonald’s, Pepsi and Unilever.
Coca-cola and Pepsi have already agreed to stop selling soft drinks in elementary and middle schools under an accord initiated by the American Heart Association and former President Bill Clinton. Burger King, Kraft (makers of Oreo cookies) and Procter & Gamble (makers of Pringle potato chips) have all agreed to review their marketing strategies to children.
General Mills, makers of Cheerios, Chex, Trix and Wheaties cereals have agreed to market only cereals with less than 12 grams of sugar. Kraft has agreed to reduce the size of the serving or change the percentage of ingredients so that there is less calories.
Unilever has laid down certain principles to be followed while advertising to children. It prohibits any direct appeal to children asking them to persuade their parents to buy the advertised products for them. | |
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US Subprime Mortgage Mess
The subprime mortgage crisis in the
US is rattling the world’s financial markets. But why it should affect the entire world?
Prime mortgages are loans available to buy homes at the lowest interest rates to customers with the highest credit worthiness. Subprime mortgages are loans available to buy homes at higher interest rates to borrowers whose credit worthiness is lower. Subprime mortgages carry an attractive low introductory interest rate for the first three years, which rises dramatically in the subsequent years.
The latest report says that nearly 20 percent of all subprime mortgage installments are in arrears. Borrowers are not able to cope up with payments because of rapid increase in the installment amount. They are unable to avail refinance as they had already opted for a high-cost mortgage. They are unable to sell their houses as either there are no buyers or the real estate prices have fallen drastically. Result the mortgage finance companies repossess the houses leaving the borrowers homeless.
Mortgage foreclosure is not just a financial problem. It is considered as a symptom of increasing economic difficulty. A home is considered an individual’s greatest asset and only as a last resort an individual sells his home. It could happen only when one or more of the five Ds is present – Death, Divorce, Downsizing (loss of employment), Disability and Disease. It not only affects the individual, it affects the peace and prosperity of the society as well. Vacant homes increases criminal activities and reduce the real estate value.
Earlier only banks were allowed to offer mortgage loans. Today all financial institutions including insurance companies and fund management companies are allowed to offer mortgage loans. The heavy loss suffered by these fund management companies is rattling the world financial markets because these companies have raised funds from all over the world.
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In This Issue |
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1. Wise Owl’s Words of Wisdom.
2.
China rules the world trade.
3.India is now a $ 1 trillion economy.
4. How to price your product right.
5.Virgin Atlantic courts Air Asia.
6. Marketing Food and Beverage to Children.
7. US Subprime Mortgage Mess. | |
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