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Second car 1996-Dodge intrepid October 30, 2006

Posted by Laxmi Goutham Vulpala in Life in general, Uncategorized.
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Finally was able to finish up my used car purchase.  I think I got a good deal inspite of having to spend 400 bucks on the front bumper assembly.

 Lets see how this works out.

Merck’s Vioxx Catastrophe – Case Summary October 26, 2006

Posted by Laxmi Goutham Vulpala in case studies, Uncategorized.
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Background

Merck is one of the most reputable drug companies. It is very highly regarded for its   innovative drug discoveries to treat diseases such as AIDS, Osteoporosis, High cholesterol and Hypertension and have improved the human lives around the world.
Merck’s innovative ability, its reputation along with the meticulous submission of documents  allowed the company to secure FDA approvals much faster than its competitors.

When Merck released its drug Vioxx for the treatment of arthritis, the drug’s effectiveness combined with an effective direct to consumer marketing campaign made it a blockbuster drug with $2.5 billion in sales, but when it was revealed during a study that the drug increased risk of cardio vascular disease by at least three times, Merck quickly withdrew the drug from the market.

Mistakes

Merck can be faulted for several questionable decisions and judgments with the Vioxx launch. They either ignored or dismissed several early indications of increased risk of heart attacks both in its own studies and other published articles, in an attempt to get to the market faster. This proved to be deadly when further studies conformed the suspicions and lead to ultimately lead to another bad decision of recalling the drug from the market too soon. This was probably an attempt to avoid potential lawsuits, when the jury was still out on whether the benefits of vioxx outweighed its risks. Merck should instead of a recalling, should have continued to work with FDA and have them make the decision of what corrective action needs to be taken.

The decision to withdraw neither helped Merck with the pending lawsuits nor improved their image, as they would have hoped for, instead they lost the market of customers who would still have taken Vioxx in spite of the risks.

Lessons Learnt

As a result of this fiasco, implications for big pharmaceutical firms like Merck are clear, they have take more time to conduct more clinical studies and assess the health risks associated with the drugs even if it means a delay in the entry of the drug into the market.

They also need to be more open and communicate these risks more effectively to doctors and patients using these drugs, this will help prevent potentially devastating lawsuits. They will also need lobby for favorable legislations to limit damages awarded in case something goes bad unintentionally.

Merck  also need to emphasize and communicate more effectively about  the amount of money spend for social programs and how their research saved innumerable lives and counter the negative press they receive for their high prices.

Source (Marketing Mistakes and Sucesses Hartley)

Buying an Used Car October 24, 2006

Posted by Laxmi Goutham Vulpala in Uncategorized.
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Buying a used car can be quite stressful, I am shopping around for a cheap used car and I realise how cumbersome the whole process is and how it eats up lots of time.

There is an option to directly buy from a dealer and avoid all the hassles of buying from a private owner but then the cost difference is too big to ignore.

When buying from a private owner, Information Assymetry comes into play, Obviously the buyer cannot find out  everything about the car  in a small test drive and seller doesnt reveal everything he knows about the condition of the car.Taking it to a mechanic isnt an option in all cases.

Here is where I think most owners who maintain their car well and honest sellers  lose out. It is assumed by the buyer that car has more toubles than the seller is willing to reveal, and the buyer  will offer a discounted value based off the faulty assumption.

Looking up for values of the car in kbb.com and edmunds.com is another reason for my gripe. The spread of values of car on both sides is too huge  sometimes there is a 50 – 100% difference. So dont know whom to trust.  Also the “condition” of the car as an option is too arbitrary.How does the buyer evaluate between “good” and “fair” for a 10 year old car?

Looking up the VIN in CarFax does help to a certain extent to make sure that the car has a clear title and was not rebuilt

Chit Fund Business Online October 13, 2006

Posted by Laxmi Goutham Vulpala in Ebusiness.
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I have been thinking about some ebusiness Ideas and am trying to see  if the chitfund business  this business can be implemented on-line. It is one of the famous businesses in south India with the total turnover runnig into several hundred crores of rupees. Several companies(Margadarshi, Shriram Chits)  are making a ton of money using the basic idea. For millions of poor and middle class investors this was the primary source of savings in India for a long time.

This is how its supposed to work ( a simple explanation from margadarshi website)

“Chit is a mutually beneficial scheme where in a group of people contribute towards the chit value and one member from the group is given the prize amount and the dividends are distributed to all the other members. For Example if we consider a chit value of Rs.100000/- with 50 members in the group each member has to contribute Rs.2000/- where by (50 X 2000) Rs.100000/- is collected.

The auction is conducted in which the members participate and the person who discounts the maximum is declared as the prized subscriber. If there are more than one participant for maximum discount the Successful Bidder will be determined by way of lottery. Where in, the tokens bearing the numbers allotted to the members is put into a box and one token is drawn by any of the member present in the auction and thus, the member whose number is mention on the drawn token will be declared as the Successful Bidder.

45% is the maximum bid allowed, which means a person foregoes Rs.45000/- and the balance Rs.55000/- is paid to the prized subscribers. Out of 45% discount 5% goes to the company towards company’s commission for conducting the chit and balance of the discount amount is distributed equally amongst all members of the group. That is 40 % is distributed to all the members by which next month they have to contribute (Rs.2000/- – Rs.800/-) = Rs.1200/- only and Rs.800/- is declared as dividend for that month.

When there are no maximum bidders, then the members will bid in the open auction that is conducted within 5 minutes for each group and the person who bids the highest is declared as Successful Bidder. For Example: Suppose, in the 10th month the Successful Bidder was declared at 40%, then all members of the group will get a dividend of Rs.700/-each i.e. (Rs35000/-divided among 50 members) and each member has to pay Rs.1300/- towards Installment.

Therefore the members have to pay the installment amount less the dividend, the dividends earned workout to be the interest on the Installment payments made by the member. Successful Bidder is supposed to give the required sureties depending on the future liability of the chit. Only Non-Prized Subscribers whose payments are up to date can participate in the auctions.

Every month there is a Successful Bidder who gets his prized amount on submission of required Guarantors. The company is prepared to disburse the prized amount within 72 hours provided the sureties are satisfactory and documentation is verified and approved. The prized subscriber has to continue to pay the monthly installments till the termination of the chit.

Those members who do not want to borrow funds contribute to the chit and after the 40th month if there are no bidders for the auction, lot declares one of the remaining members as Successful Bidder and the prized amount is paid to them. They either have options to submit sureties or prefer Future liability deducted upon which balance amount is paid from the Prized amount. The dividend accrued for the 50 months are the returns on investment for the monthly deposit made to their accounts.”

With social networks so prevalant online  these days and sucess of online financial sites  like  prosper.com,  may be this is a viable idea. I am not sure what else can be done to sell this idea in the american market?

This business will broadly supposed to work something like this: A group of members enroll into a scheme, for enrollment they provide their ACH account number’s so that their installment in automatically collected on the due date. the bidding process will be totally transparent once the the bidding is complete the dividends will be distributed to the members of the group via ACH. The commision amount in this case goes to the service provider.

 Dr.Stefan Klonner seems to have done a lot of research in this area. Will post more on this topic as I  learn more.
 

Vihaan’s attitude October 11, 2006

Posted by Laxmi Goutham Vulpala in Uncategorized.
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Yesterday night, Vihaan had a fit when I didnt give him something and started throwing tantrums,He was angry at me  and threw one of the books I was reading down.I  wanted him to say sorry for what he did.  I dont know what he had in mind but for some reason he just  didnt want to say the word sorry.He went crying to swapna and my mom and thought they would come to his rescue, but when they also insisted that he say sorry, he kept crying, we told him that everyone would stop talking to him and no one would ever play with him again, still didnt say sorry, this went on for 1:30 hr when we were finally planning to sleep, he finally came to to me and said sorry after a lot of crying.

Considering that he is just 22 months old I dont understand how he has such big ego (may be because he is a scorpio), It’s definitely bigger than mine and swapna’s for sure. 

Freakonomics October 4, 2006

Posted by Laxmi Goutham Vulpala in Books.
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Got a hold of an audio version of this book. It has been on the NY-Times bestsellers for a long time now.

Authors talk about several interesting things like how legalizing abortions affected crime rates,detecting  cheating by teachers and  sumo wrestlers etc. 

The book also talks  about Information Asymmetry , a topic which  I found very interesting from economics classes. Although internet has reduced assymetry to a great extent, the playing field is still not totally levelled yet.

Constructing incentives in such a way that the agents act in clients best interests was one of the good things I learned. Real estate agent example was a real eyeopener.

I am not sure if I agree with all the conclusions authors reach, Especially about their stats about ‘Parenting’ not having any affect on how the child turns out, but overall its interesting to look at things from their perspective

Officially 31 today October 2, 2006

Posted by Laxmi Goutham Vulpala in Life in general, Uncategorized.
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Cant believe I am 31 already. Life goes on so fast, Lately I don’t enjoy my birth day’s any more, Its depressing that I am already in my 30’s.