Why Are Some Products Designed To Fail?

Why Are Some Products Designed To Fail?

Designed to Fail – sounds baffling at first instance, isn’t it? Well, what if we say that it is true! That products and services today are intentionally manufactured to be defective or to get worn out soon. But why would companies do that? Why would they produce an inferior good that could actually hurt their brand image? Let us find out.

Crux of the Matter

The Centennial Light
The Centennial Light is the world’s longest-lasting light bulb, burning since 1901. The handmade bulb has never been switched off and is running for 120 years! If handmade bulbs can survive this long then why don’t our present day bulbs?

Phoebus Cartel
In December 1924, senior executives of world’s top light bulb companies had met in Geneva, Switzerland.

Major firms include : Philips (Netherlands), General Electric (US), Tokyo Electric (Japan), Osram (Germany), Associated Electrical Industries (UK), etc. This group came to be known as Phoebus Cartel.

Purpose Of Cartel
In a move to increase the sale of their products, the cartel decided to cut down the lifespan of their bulbs to 1000 hours, which was then almost half of the existing period. Each member’s sample light bulb was tested at a lab to see if they have confirmed with the 1000 hour limit.

Companies were heavily fined if bulbs surpassed the limits. For instance, for a bulb lasting 3,000+ hours, a fine of 200 Swiss Francs for every 1,000 bulbs sold was charged.

Life of Bulbs over the years
While Phoebus Cartel died in 1939, the practise of planned obsolescence continued.

What Is Planned Obsolescence?
It is a strategy of making a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a predetermined period of time. It also means not creating an efficient product even if the manufacturer can easily provide its customers with a better product.

The Case Of Inkjet Printers
Inkjet printer manufacturers employ smart chips in their ink cartridges to prevent them from being used after a certain threshold, even though the cartridge may still contain usable ink or could be refilled. The poor durability and high cost of repair turn printers into nothing but disposable commodities. As a result, consumers find it easier to buy a new printer instead of repairing the old one.

The Case Of Apple
In 2017-18, Apple confirmed that it did slow down some iPhones, but said it only did so to “prolong the life” of the devices. iPhone owners “were not informed that installing iOS updates (10.2.1 and 11.2) could slow down their devices”.

As a result, Apple was fined 25 million euros by the French authority DGCCRF that was probing Apple for “planned obsolescence” in Apple’s iPhone. Later, Apple also agreed to pay $113 million to 34 states in the US to settle an investigation into its practice of slowing down iPhones.

  • Osram apparently means “to poop” in Polish. As a result, many believe that this company failed badly in Poland.
  • In 1924, American automobile market began reaching saturation point. To maintain unit sales, General Motors executive Alfred P. Sloan Jr. suggested annual model-year design changes to convince car owners to buy new replacements each year, with refreshed appearances headed by Harley Earl and the Art and Color Section.
  • The origins of the phrase planned obsolescence go back at least as far as 1932 with Bernard London’s pamphlet Ending the Depression Through Planned Obsolescence. The essence of London’s plan would have the government impose a legal obsolescence on personal-use items, to stimulate and perpetuate purchasing. 

How Is Digital Yuan Different?

How is Digital Yuan Different?

In our last story on Digital Yuan, we saw the composition of Digital Yuan and some of its disruptive features. In this story we dive deep into some strategic areas of the currency and try to understand how it is positioned to impact the global economy in long run. And of course, this story answers many of the questions surrounding the new digital currency.

Crux of the Matter

How Is Digital Yuan Different From Bitcoin?

  • Bitcoin is a decentralized currency which means that it has no controlling authority like a government or a central bank. Digital Yuan on the other hand is the legal tender issued by China’s central bank.
  • In bitcoin, the identity of its users is not known. While Digital Yuan with its innate traceability feature overcomes the user anonymity issue.

Currency Stability
China will not increase its money supply by introducing new form of currency. With every Yuan introduced digitally in the market, an equivalent worth of physical cash will be drawn out from the circulation thus ensuring the stability of economy.

Will Digital Yuan Disrupt The Global Financial System?
The US Dollar holds 88% share in international foreign-exchange trades. Moreover, at present most of the international settlements happen over the SWIFT technology which is a messaging network used to securely transmit information through a standardized system of codes. The US administration has a significant authority over both the mechanisms.

The Chinese Renminbi holds mere 4% of share in international foreign-exchange trades. Hence, simply with its own digital currency, China cannot replace US Dollar in international transactions. But it will definitely open up new options for people to transfer money and maybe at better margins.

Dollar Weaponization
With US being the prime source of dollar, it has the ability to freeze institutions and nations by laying various sanctions on them. Sanctioned nations are kicked out of the global financial system as banks and financial institutions are prohibited from doing transactions with them. This entire phenomena is known as Dollar Weaponization.

Examples Include:

  • Crippling Economies of Iran and North Korea owing to US laid sanctions.
  • Blocking the movement of top military officials financial assets in Myanmar amidst the coup.
  • The unending US – China conflict followed by multitude of economic and financial sanctions laid on China.

Aim Of China
One of the prominent aims of Beijing for introducing Yuan is to limit the power of US dollar in international settlements.
Thus, nations that are penalized by US can transact and transfer their money through Digital Yuan – without the knowledge of US.

This takes away sanction leveraging power of the US.

Nicholas Burns, American diplomat

Final thoughts?
It is maybe farfetched to say that Digital Yuan will take over US Dollar. Nevertheless, the building blocks are too important to be ignored.

  • The official currency of China is Renminbi. Yuan is the basic unit of the renminbi, but internationally the word is also used to refer to the Chinese currency.
  • One yuan is divided into 10 jiao and one jiao is divided into 10 fen.
  • The United States dollar is called Meiyuan in Chinese, and the euro is called Ouyuan.

How Did Lijjat Papad Set The Women Empowerment Ball Rolling?

How Did Lijjat Papad Set The Women Empowerment Ball Rolling?

Provides economic opportunities through domestic activity, makes extraordinary leaders out of Indian women, empowers women by providing them with a respectful income source – this is what Shri Mahila Griha Udyog Lijjat Papad has been practicing since its inception in 1959. Let us have a look at the journey of Lijjat Papad.

Crux of the Matter

The Humble Beginnings
Seven Gujarati women with an aim of a creating a sustainable livelihood for their families started the venture of making Papads. They borrowed ₹ 80 from Chhaganbhai Patel (also called Chhagan Bapa), a noted social worker and philanthropist, who later guided the Lijjat Empire too.

The seven women are Jaswantiben Popat, Banuben Tanna, Jayaben Vithalani, Laguben Gokani, Parvatiben Thodani, Ujamben Kundalia, and Diwaliben Lukka.

The System of Co Owners
Lijjat Papad eventually expanded as a cooperative society. Well, the membership was restricted only for women, a policy that stands to date. Men in the cooperative are salaried employees majorly in the roles of accountants, drivers or security guards. Simply put, men are not members/owners in the cooperative society.

A Typical Day Of Lijjat Sisters

1. The working kick starts early in the morning when a group of women start kneading lentil (urad) dough.
2. Another group of women arrive with finished goods which is then tested for quality at the branch laboratory.
3. The second group of women then pick up freshly prepared lentil dough to prepare dry papads at home.

How It Empowers Women
To be a part of Lijjat Group, the only condition is that each women has to abide by the quality norms. Lijjat has welcomed the ‘Work from Home’ methodology long before it was accepted as a working medium in corporate world. The reason was quite straight which was to enable a homemaker to balance her family while earning an alternate income source.

The Glorifying Growth
The business which began with 7 women making 4 packets of papads on their building’s terrace now employs 45000 women across 82 Indian branches with presence in 15 nations. Lijjat Papad’s journey from seed capital of ₹80 in 1959 to ₹800 crore turnover in 2018 is overwhelming to say the least.

Perks Of Being A Lijjat Member

  • Women have the freedom to choose their work area.
  • Members can become a part of managing committee if selected in elections.
  • Seniority in the cooperative society doesn’t matter. Work responsibilities and work output makes the difference.
  • Women can apply for educational loans and scholarships for their children.

The Uncompromising Attitude on Quality

  • In 2002, the “Businesswoman of the Year” award was given to “The Women Behind Lijjat Papad” at The Economic Times Awards for Corporate Excellence. Lijjat received the “Best Village Industries Institution” award from KVIC for the period 1998–99 to 2000–01.
  • Lijjat believes in the philosophy of sarvodaya and collective ownership. Sarvodaya is a Sanskrit term meaning ‘universal uplift’ or ‘progress of all’. The term was used by Mahatma Gandhi as the title of his 1908 translation of John Ruskin’s tract on political economy, Unto This Last, and Gandhi came to use the term for the ideal of his own political philosophy.
  • Lijjat Patrika, the in-house magazine, is published and circulated for a nominal rate to those interested in the activities of Lijjat. It has emerged as a strong mode of communication for information related to significant events and initiatives at Lijjat, in addition to presenting articles on women.

Solving the Mystery of Digital Yuan

Let us know about the disruptive nature of world's first digital currency designed by China's Central Bank- Digital Yuan.

Since 2014, China’s Central Bank has been working on designing its very own Digital Currency and is now making real world trials across China’s major cities. But what is Digital Yuan and why is it making such a huge buzz in the global economy. Read the story to know more.

Crux of the Matter

What Is Digital Yuan?
Digital Currency Electronic Payment (DCEP) i.e Digital Yuan is a digital version of China’s physical currency Yuan. Simply put, the aim is to to digitize Yuan currency notes and coins in circulation. The currency is designed by China’s central bank People’s Bank of China (PBOC)

What Is So Amusing About It?
Digital Yuan will be the world’s first Central Bank Digital Currency (CBDC). It is at present only digital currency that has a legal tender backed by nation’s central bank PBOC.

How Is It Different From Regular E-Wallets?
To avail the services of an online payment, we need to link the wallet to our existing bank account. Thus, a bank is an intermediary for the transactions to happen. Now the money that is transacted via banks is still the physical currency in circulation. Hence in online payments, we are simply transacting physical money via electronic mode.

However, that is not the case with Digital Yuan. To use this digital currency, one will have to install an app, put the digital currency in the wallet and then directly start transacting – just like we do with normal (physical) cash.

What Good Will It Do?
Physical currency is expensive to produce and store. Moreover, it is easy to counterfeit and can thus be employed for illegal purposes. These issues can be resolved by replacing the existing currency with Digital Yuans. Lastly, it will increase competition and thus efficiency in the online payment space.

What Is The Ruckus Around Controllable Anonymity?
Digital Yuan had been under scrutiny for invading an individual’s privacy as it is trackable. As per PBOC member Mu Changchun, monitoring is limited to the transaction undertaken, keeping the identity of parties involved private.

It Is Also Programmable Money
Digital Yuan is programmable – it means that to a larger extent the government can influence the way in which the money can be spent. Say if the Chinese govt wishes to increase monetary flow in the system, they can put expiry dates on Yuan utilisation. This will increase spending, and thus induce the required sentiment in the economy.

How Will The Money Be Distributed?
It will be in 2 tier system:

1. China’s central bank will issue digital Yuan to commercial banks.
2. In turn, commercial banks will be responsible for handing over the Digital Yuans to general public. They will also be provide the service of transforming physical currency into digital.

  • The official currency of China is Renminbi. Yuan is the basic unit of the renminbi, but internationally the word is also used to refer to the Chinese currency.
  • One yuan is divided into 10 jiao and one jiao is divided into 10 fen.
  • The United States dollar is called Meiyuan in Chinese, and the euro is called Ouyuan.

The Success Formula Of Dream11

The Success Formula Of Dream11

With another IPL season kicking off, India’s very successful and first ever fantasy gaming startup Dream11 is back in news. Started by two young professionals for their love towards football, the startup has seen its dry days before turning into a unicorn. But wish to explore how it works? Read on.

Crux of the Matter

Back Story
Harsh Jain and Bhavith Sheth founded Dream11, a sports fantasy platform in 2008. The platform currently offers users to play fantasy cricket, hockey, football, kabaddi, and basketball. Until 2012, Dream11 worked under an ad-based model – it earned revenue through posting advertisements on its platform.

But What Is Fantasy Cricket?
Let’s say a user creates a team of 11 players out of the total squad available for an upcoming match. User gets points based on the performance of their players in the ongoing (real) game. Points are allotted as per runs scored, runs chased, wickets taken, throws, fielding, etc. At the end of the match, each user gets a rank as per the aggregate points scored.

Business Model Of Fantasy Sport
There are 2 types of contests:
1. Paid Games – Where Rewards are given
2. Free Games – Where no rewards are given

In case of paid contest, the fee ranges between ₹30-60. Now the entire money gets pooled and at the end of the match, the money is distributed to the top rankers as per the undisclosed pre-decided norm.

The Catch

Users are tempted to win a huge amount by paying a small entry fee. This helps to get increased participation. Also, minimum withdrawal amount of ₹200 tends to get the users back to the platform. They at least keep trying until their account balance hits the minimum withdrawal limit.

How Does The Business Monnetize?
2 major revenue avenues:
1. Fantasy Sport: Out of the total pooled money received, Dream 11 keeps 15% of the amount as platform fee.
2. Advertisements: It showcases advertisements of various brands on its platform.

Dream11 In Numbers
The following infographic gives a numeric insight upon the Dream11 platform.

  • In April 2019, Dream11 became the first Indian gaming company to enter the “Unicorn Club”. 
  • In 2017, a case was registered against the company in an Indian High Court. The court, in its ruling, stated that playing the Dream11 game involves superior knowledge, judgement and attention. The Court also held that “the element of skill” had a predominant influence on the outcome of the Dream11 game. 
  • Dream11 is not available on the Google Play store for Android devices as Google does not allow apps that run cash contests. To participate in a Dream11 game, a user must be at least 18 years old and needs to get their profile verified using their PAN.