Microeconomics in Real Life – Household TV

By: Varun Khandelwal

Indian Television Household industry is a great real life example of application of Microeconomics. Till late 80s, Indian Manufacturer like Crown, Salora, Texla, Oscar and Beltek were the market leader of Black & White TVs in India. However, advent of Color TV technology which was great substitutes of obsolete Black and White TV led new market leaders like Videocon, BPL and Onida emerge in TV market. This is a great example of Threat of Substitutes (Color TV overruling B&W TV market) and significant impact of Technology on firms.

Below is the industry analysis of the TV market incorporating Porter’s Five Forces model:

Till late 90s Videocon, BPL and Onida enjoyed leadership and apparent oligopoly in the TV market. However, advent of MNCs such as AIWA, Akai, LG, Philips and Samsung changed the landscape of TV industry. Especially Akai and AIWA which used to work upon procurement/assembly based model brought upon the cut-throat price war in TV market. For an instance, earlier prices of Color TVs used to be around Rs 20,000 for a 21’ TV. However, Akai and AIWA through its smart operations and marketing strategies brought down the same TV cost to almost half. Moreover, it brought concept of TV exchange for the upgraders and rebuyers leading to same TV cost mere Rs 5000. At the same time, world leaders like LG and Samsung started Sales on Volume strategy to push their quality product in Indian market.

From the above table it could easily be observed that with increase in demand the nominal price of TV has decreased significantly and hence obeying the Demand-Supply rule. New Technology advent and price war also led to significant shift in Demand and Supply curve many times. Another point to note is that demand of TV is highly seasonal in India. During festivals and marriage season, there is always a high demand for TV. TV market has become highly competitive market and the life cycle of any new TV has become too small. Currently, TV industry in India is undergoing tremendous changes in terms of Technology and customer segments. New augmented features in TV, becomes in expected and generic within months. New technology based television like HDTV, LCD are replacing traditional color TV very fast. The few important things TV manufacturing/marketing firms should keep in mind are:

1.       Research and Development and Innovation are the key to become successful in TV market.

2.       Quality and trustworthiness is important. TV is still bought by majority consumer for a long term basis so they want good quality.

3.       Smart Pricing strategy is required to have an edge among so many competitors and no product difference.

4.       Consumer Segmentation is important for every TV

5.       Increase in disposable income in India will lead to further increase in Demand of TV.

Hence, we can observe practical application of microeconomics in Household Television industry of India.

EDF website is UP!!

I am excited to tell you that a great mile-stone has been achieved.

The long awaited EDF website (beta phase J) has marked its entry on Web. (Please open the attached link)

The website is Great piece of Innovation as it uses only free Internet applications/technology.

Few features of the website are:

1.       Maintenance is just free of cost.

2.       The website is based on Web 2.0 technology.

3.       Any number of people can contribute to the website at the same time.

Next steps:

1.       Inauguration of the website: Mark the right date and call esteemed guest, once all below things are done.

2.       Content for the Website: I have kept few old content in website. Please contribute. I will give admin rights to the people who wants to contribute.

3.       Linking with www.greatlakes.edu.in :   Already in contact with Web com. It will be done after all things are proper.

4.       Products: T-shirts procurement for EDF eShop. Ayush is working upon it.

5.       EDF logo and Brand name for EDF: I have kept an old logo for EDF for the time-being.

Few brand name which I thought for “brand EDF” are:

a.       “Enspire”: the name is made of “En” from Entrepreneurship and “spire” from Inspire. Basically it conveys the inspiration for Entrepreneurship which is probably the goal of EDF.

b.      “Seed”: A seed gradually becomes a big tree.

Group Cohesion and Development

 (Picture taken by Supriya. SK16)

Recently, I saw an English movie – Miracle (as asked by Prof before session). The movie is a real story about young, restless and individualist hockey players transformed into a great US hockey team, who later won the 1980 Winter Olympics. The movie is about building THE team, raising the team spirit to higher levels, sense of belonging. The most important message it conveys is about group cohesion which increases the performance of the team significantly.

What is cohesion in the group? It’s the feeling of attraction, connection, positivity towards the p for the reason of friendship or due to the pride one feels on joining the group. Many groups use the “hazing”, in forms of sacrifices or doing something extraordinary to before joining the group. It increases the cohesion of the members between each other as well as towards the group as a whole. Organization and institutions follow a difficult procedure to select the right candidates. It’s just a modern ways of hazing, so as to get right people in the group. Also, organizations spend lot of moolahs just to create a great cohesion between team members.

I still remember the great cohesion developed between members during Sarkundi Expedition, one of my very difficult Himalayan Expedition. Our group name was Sarkundi-16. Within 10 days the members developed a great cohesion for each other as well as for the SK-16 as a whole. We passed all difficulties with a great co-ordination, shared the food, water and basic necessities with each other. The great cohesion of SK-16 became as the benchmark for all other groups later.

 (The Sarkundi Expedition - SK16 group)

(SK-16 group at the base camp after completing the expedition safely. Even on having people of extreme demographics, the group developed a high cohesion and friendship in just 10 days. Probably the difficult goal put us together. Most of us are still in touch with each other. Miss you SK-16.)

But I was surprised with a study being done upon the relationship between group cohesion and performance. It was found out that performance of the group have higher impact on cohesion than vice-versa. Hence,

Performance à Cohesion == Higher Impact

Cohesion à Performance == Comparatively Lower

It nullifies many assumptions that cohesion may lead to better performance. Instead, the focus upon increasing better performance may lead to greater cohesion between team. However, most of the organizations focus upon increasing team cohesion, probably because it is objectively achievable or it’s the HR’s bread-butter. :-O

Another interesting study was the importance of group norms. Norms are major deciding factors of a team to accelerate or retard its performance. Let’s say the people in the group made the point of working less or being unproductive then on having a higher cohesion the group’s performance will significantly decrease. Hence, keeping right norms for the group is highly essential to get a high performance team. The role of the leader here is highly significant as he needs to set productive norms for the team while keeping the team cohesive.

Group Development happen in stages like Forming (members become familiar), Storming (tensions among members for status), Norming (establishments of rules, roles, structure, relations etc), Performing (achieving goals) and finally Adjourning (termination and completion of tasks). Also, each group members passes through various quantum of commitment towards the group which happens during entry, acceptance, divergence and exit from the group.

Leadership

A leader needs to know the importance the cohesiveness in the group and how to leverage it. He should also know about the group development and group life-cycle to articulate his decision and actions accordingly. Leadership is important to get high performance team by increasing cohesiveness of the group and keeping productive norms in place.

Individualism v/s Collectivism

Why do people join group? Human being is social animal. The answer lies behind the human being mind set to discover oneself, to be a part of something and to go beyond what he is. People lived life in solitude have either possessed super natural powers or they experienced the harmful affects like madness, illusions, memory loss.
The group behavior could be categorized in two worldviews: Individualism and Collectivism. All the people you find around could belong one of these categories or they may show one of the above characteristics at a particular situation. Individualistic could be termed as “I” or “Me” while collectivism as “We”. Individualist or Idiosyncratic theory revolves round the benefit of oneself before the group while the Collectivist theory put the group’s goal on priority.

World of Individuals
Everyone in this world in unique and in my opinion, whole world is just full of individualist. But if it so, then why a person sacrifice his interest for a group or society. Why shouldn’t he always do what he wants to do? Well, the answer lies behind the benefit the individual reaps by putting himself into social/group norms. Hence, it’s a trade-off between individualist and collectivist.  An example of it is that many people do not want to marry, or spouse does not want to conceive a child but just to conform to the society principles, these individualists do these against their will and in the result they reap benefit of affiliation, social status, power, and respect from society. Hence, unknowingly the individualist for their benefits shows collectivist behavior. This is how society works as Collectivist from Individualist. Coming to myself, even I believe I am an Individualist with Collectivist compromise with society. :P

Human Psychology
Most people prefer not to admit their faults, limitations. People readily embrace +ve feedback, but they question comments that are critical, they make mistakes they blame external factors but when they succeed they quickly claim credit.

One very important fact is about social comparison and social support. It has been found out that Misery Loves Company, Miserly Loves Miserable or More Miserable Company, Embarrassed Miserly Avoids Company. I could relate it with my real life examples: I met with an accident thrice, got fractures and hospitalized. The misery it brought me to lead me to keep searching for people like me with whom I may discuss, share my misery. It used to give an ultimate satisfaction. Even today if I find someone is some kindda same situations, I can easily empathize.

Leadership

As people have different minds, it’s important for a leader that he must understand the individualist and collectivist behaviors of people and act accordingly. As people do not like critics, leaders should always try to give positive feedback for improving people rather than criticizing them. Recognize their achievements and bring open and conducive environment so people even admit their mistakes. 

Group Dynamics and Leadership

A group is a collection of people with a sense of attachment. It could easily be differentiated with a category which is just a collection of people with something in common. Basically the idea of group is very vague and depends a lot upon the context and situation. A real life experience with me makes it clearer. I was required to catch a bus from Delhi to my native, Meerut. When I reached at bus stand, there was a huge crowd waiting for the bus from a long time. I started waiting with them when bad news just passed that buses have stopped plying for my city. Suddenly that collection of people who even did not know each other became together and went to talk to Bus Stand Manager about this unannounced decision. After long hours of altercations, the manager agreed to the “GROUP” of people and started the bus services. The example makes it so clear that when a mere collection of people become a GROUP of people. A group is a strong entity and has strong connection of belonging. However, we may have high sense of Group feeling or low sense of “groupiness” depending upon the situation, type of group, members and lot many factors. On very important quality of a group is that many a times the quality of the group could be very different than the members of the group. Also the outcomes of the group work could be outstanding many a times but could be worst of the entire world sometimes. This is what the Group, it could be miracle and could be a shackle. :)

Remembering another recent experience where Group created miracles was during Great Lakes-OBT where the difficult task were made just a game of tic-tac-toe by the various groups of Great Lakes.
(The tyre game during OBT )

(Our group celebrating after finding one card after a long time during Orienteering game at OBT which is just like a treasure hunt. From left to right, Varun - the member, Harsh - the counter, Tanya - the navigator, Venkat - the pacer, Swapnil - the reader, Jagadish - the runner. It was all great group work.)

Understanding groups’ dynamics is a complex task but it’s important to understand how a group behaves and works to become a successful leader. Sometimes, the members of the groups are highly varied in nature, quallities or what so ever but still they are required to be oriented towards a single goal. Orienting all the group members towards one goal requires team skills as well as great leadership powers. So anybody who is interested in honing leadership skills must know how group works, how they behave in a group and how to manage a group.