Stock Market Lessons from Steve Jobs Resignation as Apple CEO

By Umakant Singh

On 24 August 2011, Steve Paul Jobs resigned as CEO of the Apple, due to his ailing health involving hormone imbalance.  Even though his departure was expected, announcement made   much industry follower thinking, what next for Apple, how new CEO Tim Cook will manage the transition, what competitor do and take can advantage of the situation. 

Born in February 24, 1955, Steve Jobs founded the company in 1976 and left the company in the mid-1980s then returned in 1997 when the company wasn't in very good shape. He was diagnosed with a rare form of cancer (Pancreatic Cancer) in 2003. He is credited for the introduction of several products that reshaped the personal technology industry and changed the way consumers use technology including the iPod, iPhone and iPad, and turned the company into the worlds biggest by market value.

Some observers expected the stock to plunge, but in fact the opposite happened. Apple shares closed at $376.18 that day. Over the next week, shares traded at $390 for three straight days.  Why investors were happy with his departure and share price increased.

This can be explained as “Stock market had already priced the information of Jobs’s ill health and meaning stock price of Apple already reflected information about future departure of Jobs.  The investors at stock market like certainty, by sending clear message that he is resigning as CEO, but will continue to serve as chairman of the board and Tim Cook will be new CEO, all uncertainty which raised from his taking a medical leave of absence were gone. In economics term, new information reduced unsystematic risk from the stock and boosted the share price performance.  Unsystematic risk means Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through appropriate diversification. 

Stock prices are affected by many other factors. For example  Apple Inc (NASDAQ: APPL) has a strong balance sheet with debt levels under control, a competitive advantage of innovative product, a dominant market position, high-quality assets, growth potential and strong operating cash flow and strong, trustworthy leadership. Steve Jobs highlights just how important strong leadership is in the eyes of investors and just how much impact management can have on the success, or failure, of a business.

One lesson for top management from Apple is that Companies should design products & services with the customer in mind and not shareholders in mind. Shareholders value is a sub product of customers value...a company has to be managed with a business and customer strategy and not a financial and shareholders satisfaction strategy.

Although most analysts expect the company to remain strong under the leadership of new CEO Tim Cook, questions remain about whether Apple can continue its track record of innovation over the long term.

Measuring Maternal Mortality

By: Umakant Singh

Reduction in the Maternal Mortality is one of the six health related MDG. In 2008, there were an estimated 358 000 maternal deaths in the world, or a maternal mortality ratio (MMR) of 260 maternal deaths per 100 000 live births.  India had the largest number of maternal deaths (63 000), followed by Nigeria (50 000).

Maternal mortality is an indicator of

–      Disparity and inequity between men and women.

–       It implies the place of women in society

–       Women’s opportunity with regard to health-care access and economic activity.

–      Weakness of overall health system

WHO defines maternal death as “ The death of a woman while pregnant or within 42 days of termination of pregnancy, irrespective of the duration and site of the pregnancy, from any cause related to or aggravated by the pregnancy or its management but not from accidental or incidental causes”. Accurate identification of the causes of maternal deaths by differentiating the extent to which they are due to direct or indirect obstetric causes, or due to accidental or incidental events, is not always possible – particularly in settings where deliveries occur mostly at home, and/or where civil registration systems with correct attribution of causes of death are inadequate.

Statistical measures of maternal mortality

Maternal mortality ratio	Number of maternal deaths during a given time period per 100 000 live births during the same time-period.
Maternal mortality rate	Number of maternal deaths in a given period per 100 000 women of reproductive age during the same time-period.

Approaches to measuring maternal mortality

Civil registration systems	Involves routine registration of births and deaths. Ideally, maternal mortality statistics should be obtained through civil registration data. However,  maternal deaths may be missed or misclassified;
Household surveys	Where civil registration data are not available, household surveys provide an alternative however require large sample size, expensive, uncertainty (wide confidence interval)
Sisterhood methods  (Cambodia)	obtain information by interviewing a representative sample of respondents about the survival of all their adult sisters (number of ever-married sisters, how many are alive, how many are dead, and how many died during pregnancy, delivery, or within six weeks of pregnancy). reduces the sample size, but it provides a retrospective rather than a current maternal mortality estimate (over 5 years prior to the survey);
Reproductive-age mortality studies	This approach involves identifying and investigating the causes of all deaths of women of reproductive age in a defined area/population by using multiple sources of data (e.g. interviews of family members, vital registrations, health facility records, burial records, traditional birth attendants)
Verbal autopsy15	cause of death through interviews with family or community members, where medical certification of cause of death is not available.
Census	A national census, with the addition of a limited number of questions, could produce estimates of maternal mortality; this approach eliminates sampling errors . Allows identification of deaths in the household in a relatively short  period (1–2 years), thereby providing recent maternal mortality estimates,

Causes of Maternal Mortality: Three Delays Model

The causes of maternal and child deaths are largely multidimensional and multidisciplinary

 Phase 1 delay. Delay in decision to seek care

–      Failure to recognize complications

–      Acceptance of maternal death

–      Low status of women

–      Socio-cultural barriers to seeking care: women's mobility, ability to command resources, decision-making abilities, beliefs and practices surrounding childbirth and delivery, nutrition and education

Phase 2 delay. Delay in reaching care

           

–      Poor roads, mountains, islands, rivers - poor organization

Phase 3 delay. Delay in receiving care

–      Inadequate facilities, supplies, personnel

–      Poor training and demotivation of personnel

–      Lack of finances

Maternal Mortality:  Socio-economic Determinants

Evidence and Community level experience show that Maternal Mortality is influenced by

–      Poverty

–      Women’s Literacy

–      Social Exclusion faced eg. rural and minority section

–      Better access to food and nutrition (anemia as a consequence)

–      Age at marriage and childbirth

–      Access to health services – including contraceptive and abortion services

 Some Contributing Factors to Maternal Deaths

• Adolescent pregnancy
• HIV among pregnant women
• Malaria
• Malnutrition
• Harmful traditional practices

What is needed to reduce Maternal Mortality?

• More resources for Maternal Health and health system.
• Better monitoring.
• Ensuring staffing in rural areas for EmOC.
• Efforts to improve quality.
• Addressing policy barriers - delegation & posting and transfers.
• Newer thinking - social health insurance, Voucher and Health Equity fund
• Maternity  Waiting Room
• Strong commitment to maternal  and newborn survival and health by political leaders and decision makers at national and local levels
• Community involvement, Resource mobilization and Partnership
• Realistic and appropriate investment in women’s education, health and economic empowerment
• Male involvement and participation in Reproductive Health issues and services
•  Implementation framework with clearly defined supervision, monitoring and evaluation mechanisms.

Any country can reduce MMR, but it needs political & societal commitment.  Country should invest in women to fulfill their potential to deliver as mothers, individuals, family members, and citizens.  My recommendation to all implementers and practitioners of maternal health is “Knowing is not enough,  we must apply;  Willing is not enough, We must do.” Geothe

Economic and Management Lessons from Arab Uprising

Economic and Management Lessons from Arab Uprising

Mine school principal used to say “An idle brain is the devil's workshop”.  The regime leaders in Middle East and North Africa forget this old saying. Educated young people with no job, has given rise to the popular revolt in the region over the past few months. It provides several economic lessons to draw for business managers.

Suicide by one man gave voices to millions of people. Population in particularly youths in Middle East and North Africa are inspired by Mohamed Bouazizi, a graduate and street vendor in Tunisia, who set himself ablaze after losing his livelihood to the police. Most of the countries where protest and demonstration happened such  as Tunisia,  Egypt, Libya, Algeria, Yemen, Bahrain, Jordan and Morocco and Syria have the same  characteristics of oil resource, unemployment, joblessness, high prices of food, nondemocratic - despite relatively high standards of living etc leading to disaffection among the population.  The region has made progress on a number of social indicators, such as literacy, life expectancy and access to basic services. However, its performance in indicator about asset and income inequalities, basic freedom of expression is dismal.

Many factors working together, caused Arab uprising such as

•    Income disparity among rich and poor
•   Higher education but  high rates of unemployment  among youth
•   Limited livelihoods options and social protection
•  Rise in food prices affects the lower income groups much more
•  Skill Mismatch
• an inefficient government bureaucracy, a web of red tape, inadequate infrastructure, corrupt elites, a weak public sector, 
• Autocratic political leadership and lack of redress when governments ignore citizen demands 
• Digitally-savvy youths and uncontrollable social media such as You-Tube and Twitter.

From the economic perspective, the trouble in the region is due to the rent curse. Rents are easy money or unearned wealth that flows to governments with little effort or wise government policy.  The rents come from natural resource (Oil Reserve), geography (the Suez Canal), Tourism (Pyramids) and remittances from its citizen working in other countries. The history of economic development suggests that rent-ridden countries create governments with few incentives to build strong political institutions or listen to their people.  Government need not tax its citizen to collect revenue and as citizens are not taxed, they have little incentive and no effective mechanism to hold government accountable.

Arab Uprising is contagion in terms of protests and demonstrations have spread to many countries in the region and world. The protests and demonstrations has  spreads to oil producers which lead to disruptions of oil supplies to the rest of the world affecting oil and financial market and ultimately world economy.

Now business needs to understand and forecast socio-political situation more than ever. They need to have serious discussions on socio-political issues because Demographic forces exert great socio-political pressure.  Business manager should expand their networks and contacts to get wider opinion on socio-political forces affecting business. 

One recommendation for the country leadership in the Arab and other similar countries in the world  is to create more jobs by

•        Opening up market for foreign investor;
•        Having higher economic growth rates;
•        Eliminate regulations to make it much easier to set up factories;
•        Promote private sector to absorb graduates of universities, through infrastructure development.
•        Boost the productivity of its private sector and build industries that will generate good jobs
•        Encourage entrepreneurship.
•        Education institutions need to provide skill needed for the job market
•        Promote equity-based growth strategies, social protection for all, and inclusive politics.
•        Promoting Public-Private Partnership Programs to attract private resources for infrastructure investments.
•        Continuing financial sector reforms to enhance the soundness of financial institutions and reduce bank concentration. 

The developed, emerging market economies, World Bank and other multilateral and bilateral institution has a key role to play in developing programs relating to education, infrastructure, and private sector development.  They should pursue programs that help the region "create a better environment for expanding economic opportunities and promoting democratic processes. Social policies especially social protection such as social insurance, cash transfer, health equity fund are also needed that protect all citizens from basic risks of unemployment, underemployment and ill health, and assist with the care of children and the elderly.

Reference

•       Egypt’s Rent Curse by Arvind Subramanian, February 22nd, 2011, financial Times.

•       What Will the Post-Mubarak Egyptian Economy Look Like? by Mohsin S. Khan and Svetlana Milbert, April 27th, 2011, Peterson Institute for International Economics.

•       www.wikipedia.org