...Group - 5 Somnath Bhaduri Neeraj Jain Naveen A. Kumar Kirti Katiyar Harsh Agarwal Dipankar Duttagupta Group - 5 Somnath Bhaduri Neeraj Jain Naveen A. Kumar Kirti Katiyar Harsh Agarwal Dipankar Duttagupta MIDDLE-INCOME TRAP IN INDIA MIDDLE-INCOME TRAP IN INDIA TABLE OF CONTENTS 1. Introduction……………………………………………………………………………………………… 2. The Middle Income Trap…………………………………………………………………………… 3. Reason why countries are struck in Middle-Income Trap…………………………. 4. India enters the Middle Income Group…………………………………………………….. 5. Factors causing Middle Income Trap and Economic Slowdown………………… 6. Income inequality and its relevance…………………………………………………………. 7. How to avoid India falling into Middle Income Trap…………………………………. 8. Conclusion………………………………………………………………………………………………… INTRODUCTION According to International Monetary Fund World Economic Outlook (April-2015), GDP (nominal) per capita of India in 2014 at current prices is $1,627. India is in the lower-middle income category. India’s entry to the middle income group has raised the question whether it will be able to avoid the ‘middle income trap’ which refers to prolonged stay in the middle income category and failure to move ahead to the high income category. India’s economy has developed quickly in the last decade, improving living standards and experiencing strong growth in such critical sectors as ICT (information, communication and technology). In recent years, however, circumstances...
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...Walmart vs Target Calculate profit margin, net marketing contribution, marketing return on sales (or marketing ROS), and marketing return on investment (or marketing ROI) for both companies. Which company is performing better? Profit margin: Profit / sales Net marketing contribution: Gross Profit - marketing costs Marketing ROS: net marketing contribution / sales Marketing ROI: net marketing contribution / marketing costs According to the data shown in the table above Target is preforming better than Walmart. At the first observation, one would assume that Walmart is performing better because of its higher sales and profits. However, the data above shows that Target is preforming better and is more efficient than Walmart. First, Target’s profit margin is 4.9%, this means that its profits make up 4.19% of its sales, while Walmart’s profits only make 3.51% of its sales. This tells us that Target manages its expenses relative to its net sales. Meaning it has managed to keep its expenses relatively low to its sales. Second, the net marketing contribution. This tells us the net contribution to profits after all marketing expenses are accounted for. Walmart here has a higher value because it generate more sales than target. By looking at the value one would assume that Walmart is better off because it has a higher net contribution to profits, but this does not mean that it is preforming better. Third, the marketing ROS. Target has an ROS of 15.9%, this means that its...
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...ASSESSMENT 2B: Identifying Decision Traps Decision Making Exercise 2 Introduction We all remember the hot summer(winter in Australia) when we heard the news that Lehman Brothers filed for bankruptcy during the terrible ‘sub-prime meltdown’(Investopedia 2009). As a giant among investment banks with a history over 150 years,Lehman Brothers suddenly collapsed in few months. How did Lehman Brothers go bankrupt? Why did it happen? Are there any methods that could have been used to avoid the doomsday? These questions will be discussed below. Case study overview In early 2007, with the stock reached $86.18(Investopedia 2009), Lehman Brothers seemed to have done a great job. Therefore ,the company underestimated the risks posed by rising ‘home delinquencies’(Terry 2008) and overestimated the risk-enduring capacity of the US housing market. One real estate investment broker described Lehman as ‘the real estate A.T.M(Terry 2008).Then Lehman’s share price went into a tailspin when the dark days came in August 2007. Dramatically, at the end of 2007, Lehman’s share price rebounded, as ‘global equity markets reached new highs and prices for fixed-income assets staged a temporary rebound’(Terry 2008).However, Lehman failed to seize the chance to ‘trim its massive mortgage portfolio’(Investopedia 2009). According to the Investpedia (2009), the news was a deathblow to Lehman, leading to a 45% plunge in the stock and a 66% spike incredit-default swaps on the company's debt. With...
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...Case Analysis of Trap-Ease America A group of investors had formed Trap-Ease America after obtaining the worldwide rights to sell a patented and innovative mousetrap from an inventor. The group hired Martha as president to develop and manage the company. Trap-Ease America regarded housewives as the best target market. Because the company believed that women will be attracted to the safety and cleanliness that the traps offer. Unlike traditional spring-loaded traps or poisons, the tarp lures the mouse into a square tube in which it will be trapped alive. There is no danger in baiting and setting trap. It can also avoid the “mess” resulted by the traditional trap’s operation. Martha sold the trap directly to large retailers such as Safeway, Kmart, and CB Drug. The traps sold in packages of two, with a suggested price of $ 2.49, about five to ten times more expensive than the traditional trap. Martha promoted the mousetrap mainly through trade show and personal selling. Despite the innovativeness of the trap and its success at gaining public attention, sales are disappointingly slow. Following are analysis of the problem Trap-Ease faced and some suggestions. Martha and the investors believe they face an once-in-a-lifetime opportunity that the patented mousetrap will bring huge profits. But things were not going on well in the start-off. We know that in order to evaluate any investment opportunity investors need to conduct a detailed analysis concerning a variety of different issues...
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...Global poverty and inequality are problems that affect a large portion of the world’s population. In fact, over half of the world’s population has an income below America’s official poverty standard. To understand this massive gap, one must realize that global poverty is very different from U.S. domestic poverty. The United Nations set a goal to cut global poverty rates in half in 2015. In order for this to occur, nations must reduce extreme poverty through low-income nations having faster GDP growth. This gives greater priority to eliminating the structural, cultural, and legal “inequality traps” that both impede upward mobility for the poor and inhibit economic development. Due to the increasing views on global poverty, there has been a big push regarding ways to alleviate this problem. The main sources to alleviating global poverty are medical assistance, direct aid, education, family planning, and government reform. In society, there are many different effects when it comes to poverty and discrimination. To begin to understand how to alleviate the problem of global poverty, one must understand the effects of poverty and the impact of where one is brought up. Where you grow up and who you grow up around are two of the major elements of poverty and are known as neighborhood effects. The definition of neighborhood effect is the effect of the neighborhood you grew up in on your adult outcomes. One program that the U. S. Department of Housing and Urban Development came up with...
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...Part 1 1. How old do you have to be to get a credit card? What requirements do you need, besides age, to obtain a credit card? You must be 18 years old and you must have some kind of income. Or, a parent who has a card account at the bank as well. Also, have the parent cosign the card and open a savings/checking account at the bank. 2. What are some benefits of using credit cards? Card offers protection from theft. You can buy goods/services when you need them even if you don't have the money at the time. They can be used for emergencies. 3. What are some consequences of using a credit card? Credit cards give the belief that you can actually afford things. If you miss your bill, your credit score gets damaged. 4. What is credit history? Your past with credit cards. How you handled them and how you payed your bills. 5. How does your credit history affect what credit cards you can get and your APR? If you don't pay your bills on time, your credit history will be worse and you will have less access to cards while your APR on those cards will be higher because the companies don't believe that they can trust you to pay. 6. How do you think people can get into credit card debt? A situation occurs such as a job loss or a medical emergency and credit card bills are not the family's main priority. 7. Do you feel that consumers are being protected? No, because credit card companies target the consumers that are in debt. They are the real people to make money...
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...each day from poverty. How can poverty be defined? And what is the difference between absolute and relative poverty? In the paper I will address these issues along with sociological views of poverty. Poverty is a social issue that affects the world. Poverty causes many to be malnourished and die at a young age, it is a cause of deviant behavior such as crime, and also causes the poor to be marginalized from society and have little voice in public and political debate causing individuals to remain in poverty. Poverty is a condition of people who lack adequate income and wealth. Whereas absolute poverty is individuals live without adequate food, clothing, water or shelter. In other words the little money they make is not enough to provide these necessary materials of life. The United Nations defines absolute poverty as living on less than $1 a day, which equates to over one billion people, or about one–fifth of the world's population, falling in that category. The poorest part of the world is now in Sub–Saharan Africa. According to Thomas Malthus the amount of land, food, and water was fixed; there could be no more of these natural resources than what was available. As the population increased in size, it would eventually outstrip the environment's ability to sustain them (Malthus, 1798). This would result in poverty, misery, and famine for the peoples of the world. His premise has become known as the Malthusian trap. In 2009 over 1 billion...
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...wealth was negatively related to GDP growth but we saw that the regressions were subject to many problems like OVB, reverse causality * Historical growth 1960-1990 * World: 1.7% (double after 43 years) * East Asia: 3.3% (double after 23 years) * South Asia: 1.9% (double after 38 years) * Sub-Saharan Africa: 0.2% (double after 348 years) Difference between OECD and rest of the world: * Convergence in graph b (OECD sample). Low initial wealth, high growth rate. * But in the rest of the world, there is no convergence or negative relationship between initial wealth and GDP growth. Rather, there is a positive relationship meaning the richer you are, the higher your growth rates. Growth Convergence and Absolute Income Divergence * There can be convergence in growth rates but...
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...severe damages. Many of the US financial institutions have suffered heavy losses due to the effect of this crisis. In addition, the crisis is increasingly spreading to the economies of some countries in Europe and in Japan... As a result, some powerful banks in these countries are also suffering from the impact of the crisis. The consequences of the crisis are not only observed in the dimensions of business operation and the economic growth rate and employment rate in the US, but also taken into consideration on the global impact on the shift of international investment capital flow in particular and the world’s economic growth in general. Therefore, it is really necessary to find out what creates this crisis in order to help other countries avoid it. My...
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...get support from social welfare organizations. According to Carnoy (1994), women earn low wages in the labour market and the general condition of the welfare state contribute to the growing number of single mothers living in poverty and this attracted so many social welfare organisations like UN, UNICEF, PLAN international amongst others to support women through giving them soft loans and food. ii. Empowerment, since women have to work for themselves. iii. Freedom/flexible in decision making b) Disadvantages of female headed household Female headed households are always under the threat of rapist, womanizers and often become easy targets of criminals. i. As females are less equipped with the skills of high income generation such as tertiary education, they are not able to take up better jobs in labour market, their mobility to search job at various workplaces is also restricted, several times they are less preferred at workplace in comparison with their male counterparts and they get lesser wage or salary for the same job. Thus it makes a female headed households vulnerable to shock of poverty and risk of survival. ii. This not only restricts time with children, but opportunities for personal rest and recreation, not to mention the active cultivation of links with kin, friends and neighbours and workmates which might enhance their access to ‘positive social capital’ such as mutual aid. 2) * Economic stress. The single parent may...
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...Recommendations Cash Connection is a payday lending institution looking to differentiate itself from its competitors and acquire a large portion of the payday lending industry in order to escape the ill-effects of the impending regulations imposed by the government. The payday lending industry is highly competitive and the task of gaining a large hold on the market is not an easy task. This is why the company seeks to develop a strategy that can efficiently achieve results that not only put Cash Connection on top of the market but also keep it there. Cash Connection has proven that being the first store in a new market is typically the one most profitable, with secondary stores cannibalizing the first and decreasing over profitability of the group. Despite the fact that there are untapped markets, it would seem that expanding is not the best option right now. Cash Connection has shown a decline in profitability for the past few years that would make opening more stores impractical due the financial burdens they would place on the company. That doesn’t mean that expansion has to be counted out, it just cannot be the focus of the strategy as a whole. A strategy that increase the revenues generated by existing stores while taking customers away from competitors would provide the foundation for increasing the number of locations available for Cash Connection to do business. By repeating this cycle, Cash Connection should be able to gain an upper hand on the payday lending industry...
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...Note: Solve any 4 Case Studies Case 1: Cub Foods In 2003, Cub Foods had 78 corporate and 30 franchised stores. The chain built its success by focusing on its primary market: families of four or five individuals with adults ages 24 to early 40s who are informed. Value-conscious consumers – consumers like Leslie Wells. Leslie Wells’s recent expedition to the new Cub Foods store in Melrose Park, Illinois, was no ordinary trip to the grocery store. “You go crazy,” says Wells, sounding a little shell-shocked. Overwhelmed by Cub’s vast selection, tables of samples, and discounts as high as 30 percent, Wells spent $76 on groceries - $36 more than she had planned. Wells fell prey to what a Cub executive calls “the wow factor”. A shopping frenzy brought on by low prices and clever marketing. That’s the reaction Cub’s super warehouse stores strive for and often get. Cub Foods has been a leader in shaking up the food industry and forcing many conventional supermarkets to lower prices, increase services, or, in some cases go out of business. With Cub and other super warehouse stores springing up across the country, shopping habits are changing too. Some shoppers must drive 50 miles or more to a Cub store instead of going to the nearest neighborhood supermarket and bag their own groceries at Cub Foods. Their payoff is that they find almost everything they need under one roof, and most of it is cheaper than at competing supermarkets. Cub’s low prices, smart marketing, and...
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...Case Analysis: Ingvar Kamprad and IKEA Our group will illustrate IKEA’s general development in chronological order. We analyze its’ different strategy in corresponding stage, and look into IKEA’s future development. Part 1：IKEA’s initial development 1. Sources of IKEA’s successful entry in Sweden: Ingvar Kamprad saw a great opportunity when the furniture prices increased 41% faster than household goods between 1935 and 1946, and started selling low price, good quality and simpler design furniture primarily to the younger generation of customers who wanted to buy furniture for their first apartment. The tradition in Sweden was to sell expensive, long lasting (family heirloom) furniture, which after the war was too expensive for people. Instead of locating small stores in the central –more expensive part- of the city, he positioned his warehouses in the suburbs, which was a more cost efficient location which also allowed customers to park their cars. Also, because the furniture cartel banned Kamprad to sell directly to customers at shows and persuaded the manufacturing cartel to stop supplying furniture, IKEA started to sell with the help of catalog and started to supply from a different supplier, which allowed him to reduce his prices even more. He also introduced less expensive raw materials and a less-formal working environment. 2. Management process in the Europe-wide operation: In the Europe-wide operation process, we think the most challenging task for IKEA is...
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...ABSTRACT: Asian economies went through significant transformation during the 2000s. They became part of global supply chains, major global commodity consumers and large capital exporters, and were also deeply involved in regional co-operation initiatives. These factors contributed to global disinflation in manufactured goods prices, abundant global liquidity and strong growth in commodity-exporting economies including Australia. (maybe because of 1997-1998 Asian financial crisis) In the coming decade, Asian economies are likely to continue their ascendancy, albeit at a slower pace, which should eventually decouple Asia from the advanced economies. With increasing domestic cost pressures, Asia may also become a new source of global inflation. Asia’s exports of capital to advanced economies may shrink as the region rebalances and outflows should focus more on portfolio investment and foreign direct investment (FDI). In the coming decade, a potential crisis in a major Asian economy such as China could trigger the next global recession. SUMMARY: History: more than 1000 years before the industrial revolution, the combined share of China and India in the world economy was routinely greater than 50% (but whether they will assert influences on the world economy depends on assumption of sustainability) 1993: the East Asian miracle, HPAEs (world bank 1993), no China India 1997-1998 Asian financial crisis (triggered by the withdrawal of foreign capital from the region, however...
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...Secular Stagnation: Facts, Causes and Cures Edited by Coen Teulings and Richard Baldwin CEPR Press a A VoxEU.org Book Secular Stagnation: Facts, Causes, and Cures A VoxEU.org eBook Centre for Economic Policy Research (CEPR) Centre for Economic Policy Research 3rd Floor 77 Bastwick Street London, EC1V 3PZ UK Tel: +44 (0)20 7183 8801 Email: cepr@cepr.org Web: www.cepr.org ISBN: 978-1-907142-77-2 © CEPR Press, 2014 Secular Stagnation: Facts, Causes, and Cures A VoxEU.org eBook edited by Coen Teulings and Richard Baldwin CEPR Press abcde Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of almost 900 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Executive Committee of the Centre does not give prior...
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