The Blog of Dato' Dr Anuar Md Nor – Page 15 – Insights of breakthrough innovations

Edible Bird’s Nest is more than Just Soup and Dessert

Posted on March 4, 2018March 11, 2018

Introduction

There are more than twenty four species of swift distributed around the world, but only a few species that produce nests that are deemed edible. The majority of edible bird’s nests consumed worldwide come from two species, namely Aerodramus fuciphogus and Aerodramus maximus . They can be found in areas covering Nicobar Islands, Thailand, Malaysia, Vietnam, Indonesia, Borneo and Palawan Island in Philippines.

Malaysia is estimated to produce about 350 MT of edible bird’s nest annually, and is mainly harvested in specially-designed bird houses which scatter throughout the country. The price of edible bird’s nest has been influenced by many documentaries in media channels such as National Geography showing harvesters, hanging high in caves in Thailand and Borneo, to harvest edible bird’s nest in caves. The harvesting of edible bird’s nest is dangerous, thus the justification of its price. A kilogram of edible bird’s nest in soap or consumed as sweet dessert with rock sugar will set diners back by about RM10,000 in high-end Chinese restaurants in Kuala Lumpur, Hong Kong and Singapore. The burgeoning economy in China had also spurred a high demand for edible bird’s nest which is given as a gift to cement business deals.

Bioactive Peptides from Edible Bird’s Nest

Edible Bird’s Nest Desert Sweetened by Rock Sugar

Edible bird’s nest is the nest of the swift that is formed from its coagulated saliva. In the nest, a pair of swift would raise a chick. The harvester would wait until the chick could fly before harvesting the edible bird’s nest. In effect, the harvester is providing a safe place for the swift to raise its young. Thus, the harvesting of edible bird nest is less harmful than the production of the more expensive food, i.e., caviar. In order to harvest caviar, the fish, sturgeon, had to be killed to extract the roes, which is caviar.

Studies by researchers at Malaysian universities have discovered key bioactive peptides from enzymatic hydrolysis of proteins of edible bird’s nest. The primary purpose of protein consumption is to provide essential amino acids, which are used by the body to synthesize various structural proteins required for homeostasis maintenance. However, the increasing popularity of functional foods and nutraceuticals has led scientists to seek protein-derived peptides that could prevent or even treat metabolic disorders.

The ability of these peptides to influence biological reactions and physiological conditions is what makes them “bioactive”. A bioactive peptide consists of a certain number of amino acids (2-20) that are usually encrypted within the linear protein chain and remain inactive until released by digestion. Thus, it follows that appropriate gastrointestinal tract (GIT) digestion conditions, food proteins could yield bioactive peptides. Peptide absorption from the GIT is then facilitated by specific or non-specific transporters, cellular endocytosis and simple translocation (passive diffusion) into the blood circulatory system. However, the level of such bioactive peptide release during food digestion is considered very low and of little consequence to human health.

Therefore the most useful approach involves customized in-vitro protein digestion with human or proteases in order to enhance bioactive peptide production. Upon completion of the enzymatic hydrolysis, the digest is centrifuged and the soluble portion is isolated as the protein hydrolysate while the undigested portion is discarded. High peptide solubility increases absorption potential during oral consumption.

A research group at Universiti Kebangsaan Malaysia, led by Professor Dr Abdul Salam Babji, had tested the desirable activity of bioactive peptides from edible bird’s nest. They include antihypertensive and antioxidant.

Apart from the demonstrated health benefits, one of the main attractions of food protein- derived peptides is the low risk of negative side effects that are normally associated with drug therapy. Therefore, even though peptides are less active on a weight basis, they can be used as preventive or therapeutic agents as relatively higher doses than possible with drugs. The relative safety of food protein-derived peptides may be attributed to faster clearance from the blood circulatory system since they susceptible to peptidase-dependent degradation. Moreover, unlike drugs, peptides are not stored “as is” in tissues but are rather used for the biosynthesis of new protein within the body. Unlike drugs, peptides do not require liver detoxification and are not excreted in the urine; therefore, potential damages to these organs are minimized during peptide therapy, even at high doses.

Bioactive peptides from edible bird nest have better bioavailability to be absorbed in the GIT as compared to the protein contained in the traditional edible bird’s nest soup. Traditional edible bird’s nest soup consumed together with its bioactive peptides should give better “value” to diners who pay for this expensive coagulated sliver of a swift.

We recently enjoyed a bowl of edible bird’s nest with the edible bird’s nest peptides. It was delicious!!

Uncategorized

Interlude: Technologies Developed by Malaysian Innovators

Posted on February 25, 2018August 23, 2018

Last Thursday, we had the opportunity to review new technologies developed and shown at the Malaysian Technology Expo (MTE) 2018.

Those who are interested to know more on the technologies, please get in touch with me.

Prof. Ir. Dr Dr Siti Kartom Had Developed a Power Bank Using Fuel Cell Technology

This power bank, which uses fuel cell technology, is very useful in areas where there is no source of electricity supply.

Prof. Dr. Noriah Had Developed Technology to Convert Waste Rice Husk into Amorphous Silica Using Laser

The technology she had developed is using laser to convert waste rice husk into amorphous silica. As the waste rice husk is completely converted, there is no residue in the process.

Assoc. Prof. Dr. Coswald Had Developed Formulation for Long-Lasting Denim Colour

The formulation is a dye that allows long-lasting blue colour of a denim.

A Team from National Metrology Institute of Malaysia Had Developed a Standard to Verify Gold Purity

The technology involved a standard gold block to verify density and purity that can be used to detect fake gold.

My Friend, Mr. Amir, a Fecund Inventor with His invention of Durian Opener

Lastly, my papaya is growing nicely, having reached a size of 6-cm long since January 24th, 2018.

Malaysian Innovators

Organizational Innovation in the Rubber Plantation Industry in the Form of Agency Houses: Part II

Posted on February 19, 2018February 19, 2018

Certificate of Rubber Companies Listed on London Stock Exchange

Background

In the early phase of the rubber industry in early 1900s, investors and speculators floated companies, which owned rubber estates or rubber lands in Malaya, on the London Stock Exchange. Their estates in major states like Selangor and Negri Sembilan had English-sounding names. Some of the English-sounding names included:

Aranlife
Balgownie
Beaumont
Blackwater
Braemer
Broome
Brown Comet
Caledonian
Carey Island
Castlefield
Coalfields
Cullerlie
Colwall
Devon
Didsbury
Easrnor
Ebor
Edinburgh
Effingham
Emerald
Galloway
Glenmarie
Golconda
Golden Hope
Haron
Harfenden
Hawthornden
Haytor
Highland & Lowlands
Holmwood
Inch Kenneth
Kent
Killinghall
Lambourne
Ledbury
Lunderston
Madingley
Merton
Midlands
Monmouth
New Amherst
Newbury
North hammock
Paradise
Pilmoor
Reading
St Andrew’s
Seafield
Seaport
Sedgeley
Shelford
Sione
Strathmore
Strathnairlie
Tremelbye
Vallambrosa
Wardieburn
Waterfall
West Country

We remember many of names existed until in the 1970s, while other estates were absorbed by larger companies. With a shipping travel time of about 40 days between London and Singapore in early 1900s, the owners of the rubber estates in London would need local companies or local managers to oversee their rubber estates in Malaya.

Enter the Agency Houses

The early rubber planters used the fund, raised through the flotation of public companies on the London Stock Exchange, to develop their rubber estates. However, the costs involved in opening up new rubber plantation on a scale dictated by demand lay well beyond the means of almost all rubber planters. In addition, the rubber planters had to wait for at least five years before the rubber trees could be tapped for latex.

Mincing Lane in London Where Shares of Rubber Companies Were Traded

Those early rubber planters had to seek capital from other sources, namely the established merchant houses based in Singapore and Penang, which have been operating since 1800s. The established merchant houses had the right contacts on the local and overseas financial market. It also involved experiences of business organizations and management techniques, of which most planters were woefully lacking, and the know-how for shipping and marketing rubber on the London market.

The big merchant houses which started in early 1800s, eventually dominated the rubber industry which came to be known as agency houses. By the end of the second decade of twentieth century, the agency houses had established itself in a dominating position in the rubber plantation industry and later in the oil palm industry. However, it took a generation to consolidate their position. During this period, the early rubber planters made it to the boardroom of rubber companies which were listed on the London Stock Exchange and the rubber speculators from the City of London itself died off and were replaced by the nominees of the agency houses.

The largest Agency House Formerly Known as Harrison and Crosfield

The major agency houses that existed in 1960s included the following:

Agency Houses	No. of Companies	Number of Estates	Planted Areas (acres)
Harrison Crosfield	42	111	231,180
Guthrie	22	39	182,800
Boustead-Buttery	37	58	121,870
REA-Cumberbatch	37	55	97,560
T. Barlow	19	42	102,440
Sime Darby	23	30	73,900
Oriental Estates	14	19	55,140
Plantation Agencies	10	29	48,040
Whittal	22	28	45,210
Harper Gilfillan	16	18	35,560
Ethelburga Agencies	1	9	27,860
J Warren	16	21	26,070
SOCFIN	6	10	62,150
East Asiatic	4	4	21,100
Unitac	7	12	20,260
Other Agencies	5	7	21,040

Source: Zorn Leigh Hunt, Manual of Rubber Planting Companies, 1960, and Strait Times Directory, 1962. Quoted in Fryer (1964)

Guthrie, Another Large Agency House

There were several differences between the pattern of interests of the two largest agency houses, Harrison Crosfield and Guthrie. The first was by far the larger. Guthrie, however, appeared a much more specialized organization: it controlled relatively few companies and fewer estates than smaller rivals. The properties under its management, however, were of very large size, including both the largest rubber and oil palm estate in Malaysia. Guthrie had also a leading position in the cultivation of oil palm.

By the 1980s, the agency houses were bought over by Malaysian interests Several names such as Sime Darby, East Asiatic and Boustead are still operating under the new Malaysian owners until today.

As a business historian, we appreciate and value the contribution of individuals who managed these agency houses and created a plantation industry from the jungles of Malaya in the early 1900s.

Our thanks to Mr. Lampard, Mr. T. Barlow, Mr. Boustead Brothers, Sir John Hay, Mr. Money, Sir J. Anderson and others.

Reference:

J. M. Tate. The RGA History of the Plantation Industry in the Peninsular Malaysia. Oxford University Press, Kuala Lumpur, 1996.

Malaysian Innovators

The Rubber Industry Had H. N. Ridley, the Palm Oil Industry Just Had Pragmatic Planters: Part 1

Posted on February 7, 2018February 8, 2018

Introduction

Legend had it that four seed s of African Elaeis guineensis brought over by the Dutch into Indonesia in 1848 and planted in Bogor, Indonesia, laid the foundation for the palm industry in Malaysia and Indonesia. The two countries now produce more than eighty per cent of palm oil in the world.

The earliest record of four seedlings showed two originated from Burdoun (Reunion) or Mauritius and two from Amsterdam. The Government of Holland, who ruled Indonesia, actively promoted the usefulness of the oil palm tree and established experimental plots at Banjar Mas in Java and Palembang in Sumatra, Indonesia. It took another fifty years before an oil palm plantation was established.

The lack of enthusiasm of local authorities of Java and the doubts of planters both about the profitability and the milling methods to be employed held back the development of the oil palm industry. The technology for processing palm oil was finally invented in the early 1900s. At that time, oil palm had to compete with rubber, which was experiencing near-fever demand to make tires for cars.

The foundation of the oil plantation industry is generally attributed to one M. Adrien Hallet, a Belgian with some knowledge of oil palm in Africa. He planted oil palms of Deli origin in 1911 on a large commercial oil palm plantation in Sumatra, Indonesia. Hallet recognized the avenue palm trees growing in Deli, near Medan, Indonesia, were more productive than the palm trees in Africa and also had superior fruit composition. Within three years, 2,600 hectares of oil palm trees were planted. However, the growing of oil palm trees stagnated during the First World War.

Deli, Near Medan in Indonesia Where Palm Oil Industry Started in Southeast Asia

In the meantime, another planter, M.H. Fauconnier, a Frenchman, who had been associated with Hallet, planted oil palm trees in neighbouring Malaya during 1911 and 1912 at Rantau Panjang, Kuala Selangor, Selangor. The oil palms were in full bearing by 1917 and in that year the first seedling were planted on an area later to be known as Tennamaram Estate. When we visited the estate, the first oil palm trees in Malaya were no longer there as palm oil trees grow for about thirty years. Nevertheless, the progeny of these early oil palm trees built the foundation of the globally important palm oil industry.

M. H. Fauconnier, The Pioneer Oil Palm Planter in Malaya

Other Planters Took Notice

The second commercial oil palm plantation was established by Messr. Guthrie at Sungai Buloh, near Kuala Lumpur, which was known as Elmina Estate. The first palm oil processing mill was established by Sime Darby in 1925 at the Tennamaram Estate, which extracted crude palm oil from oil palm fruits. Over the years, due to the growing population of Kuala Lumpur, Elmina Estate became a housing area, and nearby the largest prison complex in Malaysia.

In the period when rubber dominated the agriculture sector in Malaya, a few planters with an eye to overseas markets began growing the oil palm. Although palm oil was used in the manufacture of soaps, margarine, vegetable oils and grease, there was little progress in the industry. After the slump in rubber prices after the First World War, rubber planters were forced to search for alternative crops. No large-scale development occurred until 1924, when three rubber companies in the Guthrie group formed Oil Palm Malaya Ltd. The example was followed by other planters. Because of the need for capital and special expertise, especially in processing of oil palm, the industry was confined to large plantations, using the then advantage of existing rubber industry infrastructure. In addition, the oil palm, which in Africa grew naturally in riverine forests or freshwater swamps, flourished in Malaya’s tropical climate. Without pronounced dry season, Malaya was a place where an oil palm tree could be planted throughout the year..

Following table highlights the key events in the palm oil industry

Date	Events	Impact
1875	Oil palm was introduced to Malaya as ornamental plants	The beginning of the oil palm industry
1903	First trial on planting oil palm in Batu Tiga, Selangor, by Malayan Department of Agriculture	The first agriculture research on oil palm in Malaya
1910	First commercial plantation of oil palm started in Nigeria	The start of oil palm plantation for export of crude palm oil
1911	First large-scale planting of oil palm by a Belgian company in Sumatra, Indonesia	The start of oil palm plantation in Southeast Asia
1917	First large plantings Malaya at Tennamaram Estate and Elmina Estate	The start of the commercial palm oil plantation Malaya
1953	Market pool system established by Malayan palm oil producers. Previously, palm oil was exported in drums.	The development of markets for Malayan palm by industry players to reduce shipping costs
1956	Establishment of FELDA, one of the largest palm companies in the world.	A Malayan government agency responsible to develop rubber and oil palm plantations.
1961	FELDA planted oil palm on a 350-hectare plot	This was followed by rapid expansion in areas planted with oil palm
1966	Malaysia (independent Malaya) overtook Nigeria as the world’s leading exporter of palm oil	Malaysia gained leadership in palm oil industry by pioneering many industry innovations
1972	Four palm oil refineries started operations	Start of processing industry to produce palm oil products for export markets
1979	Establishment of Palm Oil Research Institute of Malaysia (PORIM), now known as Malaysia Palm Oil Board	Start of a research institute specializing in palm oil industry
1980	Establishment of Kuala Lumpur Commodity Exchange	The exchange facilitates the trade in palm oil products
1981	Acquisition of Guthrie by Permodalan Nasional Bhd (PNB), a Malaysian government-owned investment company	The largest Brutish-owned plantation company was acquired by Malaysian interests
1981	Introduction of weevils, an insect from Cameroon, Africa, to pollinate oil palm trees	This new technique eliminates manual workers to pollinate oil palm trees. It increases the productivity of oil palm to bear fruits
1999	Guthrie established the first oil palm estate in Indonesia	The first purchase of a large piece of land in Indonesia by a Malaysian company
2000	Acquisition of a large listed plantation company in Indonesia by Guthrie	This expanded the plantation land owned by Malaysian companies.
2008	Mergers of three palm oil companies owned by PNB	Created the largest listed palm oil company in the world with more than 500,000 hectares. As a result, Guthrie ceased as a company.
Now	Indonesia is the largest producer of palm oil in the world	The country has more areas than Malaysia suitable for oil palm plantations

Source: Dato’ Anuar Md Nor, The palm oil multinationals from Malaysia. Lambert Academic Publishing , 2015.

Continue in Part 2

Uncategorized

How Did Malaysia Excel in Palm Oil Industry?

Posted on January 31, 2018

The Previous Rubber Industry

The car industry in the early 1900s spurred the establishment of vast rubber plantations in Malaysia (Malaya then). Rubber companies with names of British towns were floated on the London Stock Exchange to fund the planting of rubber trees. Till the 1960s, rubber exports were the main source of revenue for the country. Smoked rubber sheets were sold by large British-owned companies to manufacturers in Britain, Germany and the US to produce a variety of rubber products, such as tires and conveyor belts. A city in Ohio, US, Akron, became the main beneficiary of the major demand for tires. It was called the “rubber capital of the world” until the 1950s, where large tire manufacturers established factories in Akron to supply booming car companies in Detroit, Michigan.

Today, Akron is no longer a rubber bustling city. The city is now encouraging new companies that could develop new products based on the knowledge of the rubber technology.

Throughout the period, Malaysia remained as the largest exporter of smoked rubber sheets. In the 1970s and 1980s the Malaysian government encouraged local firms to establish tire manufacturing plants to supply both local and export markets. As tires are bulky products, they need to be closed to car companies. As Malaysia did not have a large car industry, these tire companies are mainly servicing the local car companies as well as for the replacement market. Thus, Malaysia did not take advantage of its rubber to establish a rubber product industry. One bright spot is that Malaysia has managed to become the largest exporter of rubber latex gloves, albeit most of the rubber latex comes from Thailand.

A Different Path for the Palm Oil Industry

Palm Oil Tree with Maturing Fruit Bunches

Unlike the rubber industry, Malaysia had succeeded in taking advantage of its palm oil resource. We have conducted a PhD-level research on the key factors that allow the palm oil industry to innovate, from the planting of oil palm trees to the processing and development of new products for food and industrial applications. Various products were derived from palm oil such as substitute for chocolate, and washing powders. If we analyse the list of ingredients in our favourite consumer products, such as KitKat and Nutella, we will note that they contain at least one or two ingredients from palm oil. These ingredients are manufactured by large Malaysian palm oil multinationals, which have operations in many countries (See our book, The Palm Oil Multinationals from Malaysia: How they control a global Industry that started from four humble seeds. It is available from Amazon.com.)

Popular Consumer Products Containing Palm Oil Ingredients

The Presence of Institutional Networks for Knowledge Generation, Sharing and Adoption in Palm Oil Industry

The study had identified a close network that facilitates knowledge generation, knowledge sharing and knowledge absorption in the Malaysian palm industry. The close network was formed as a result of historical contexts and on-going interactions promoted by focal institutions with responsibilities to develop the palm oil industry. This close network, which we term the palm oil institutional network, links an industry-funded R&D institute with palm oil firms, governmental institutions, industry associations and groups of technical and scientific experts. The inputs from on-going and close interactions are utilized by the industry-funded R&D institute to develop its R&D programmes, especially medium- and long-term R&D efforts, which are avoided by commercial interests of palm oil firms.

Five types of network, which collectively create the palm oil institutional network, are; (1) government-mandated technological networks, (2) industry associational network, (3) institutional policy network, (4) government-linked corporate networks, and (5) expert informational networks.

The government-mandated technological networks (GTN) were formed by government legislation to formulate and undertake R&D activities for the palm oil industry. The main components of the GTN are a government R&D institute, the Malaysian Palm Oil Board (The MPOB), important industry associations, major palm oil firms, and technical expert communities. The MPOB is funded through a collection of levies paid by palm oil firms. The MPOB formulates its research activities through inputs obtained from industry associations, technical expert communities and members of industry associations on board of the research institute.

The MPOB is a Global Leader in R&D Activities of Palm Oil

The MPOB actively shares its R&D findings with palm oil firms through technology bulletins, conferences, workshops and technology licensing. It is the main generator of new knowledge for the palm oil industry over the last thirty years. This new knowledge is widely discussed among palm oil firms. As example was that the discovery of an African weevil for the pollination of oil palm by a private palm oil was quickly adopted by other palm oil firms, thereby increasing the overall productivity of the palm oil industry.

The industry associations are the earliest business networks in the palm oil industry. Initially these industry associations acted as social organizations for members and planters. As the palm oil industry expanded, these associations were invited by government to be involved in policy-making committees. These industry associations are a key component in the dissemination of information among its members. An important industry association is the Incorporated Society of Planters (ISP), whose members are managers of the plantation industry. The ISP helps, formally and informally, in the sharing of industry best-practices over many decades since its incorporation in 1919.

The industry associations help to create institutional routines, which are represented by regular interactions among various institutions. Firms in the palm oil industry are involved in guiding the direction of the palm oil industry through industry associations.

Institutional policy networks are linkages used by governmental units to formulate policies affecting the palm oil industry. The main objectives if the governmental policies had been to facilitate the business environment for the palm oil industry. The institutional policy network links public institutions with palm oil firms and industry associations for exchanging information, expertise, trust and other political resources.

Many governmental ministries are involved in institutional policy networks within the palm oil industry. Industry associations are involved in discussions, annual industry dialogues and sit on various governmental committees for inputs on policy-making. Common industry problems are regularly discussed and a united stance is arrived at to address these common industry problems.

Government-linked corporate networks are linkages among firms in which the government has significant direct ownership. These government-owned firms are often provided with incentives to undertake projects or activities that can strengthen the palm oil industry through technology acquisition and infrastructure development. Moreover, government-linked palm oil firms own substantial acreage of plantation lands

Government-owned companies, which are large palm oil firms, are instrumental in the generation and sharing of knowledge, with collaboration being an important R&D strategy.

Our research shows the long-term nature of research for a crop like oil palm requires palm oil firms to collaborate with other firms and governmental institutions to reduce costs and risks. As an example, the research to develop a new high-yielding oil palm can take over thirty years before a successful variety is commercialized for planting. Thus, the nature of the oil palm research provides strong motivation to collaborate, which leads to a permanent need of an institutional network.

The palm oil institutional network is supported by an informal personal network, which has been nurtured through a long history of social interactions and personnel transfers between companies. This informal societies and communities within the palm oil industry form a strong informal network for knowledge sharing.

The expert informational network (EIN) is a new type of network which is formally used by the Malaysian palm oil industry to search for new information and planning R&D activities. The EIN is set-up by the MPOB since its establishment thirty years ago, by the appointment well-known local and foreign experts to sit on a number of technical committees, named Programme Advisory Committees (PACs). The formal EIN allows the MPOB to consider independent inputs to plan its R&D activities as well seeking inputs of palm oil firms. As at April 2013, the PAC had sixty four members of experts from industry and academia.

Conclusion

Despite the African origin of oil palm, Malaysia first developed the palm oil industry from a small base to become the leading producer through technology accumulation processes. In order to generate new knowledge, the government established new institutions to undertake industry research and commercialize new technologies to benefit the palm oil industry. A tax was imposed on palm oil firms to fund the operation of an industry-focused R&D institute, and, in return, the palm oil firms are involved in guiding the direction of the R&D activities of the MPOB. The inputs for its R&D activities are drawn and refined through continuous and close interactions between palm oil firms, the MPOB, industry associations, governmental units and industry experts. The results of the R&D findings are disseminated in various codified and non-codified knowledge through various mechanisms. The MPOB also taps the knowledge of a global network of experts to search for new information and technology directions, which we call expert informational network (EIN), and is unique to the Malaysian palm oil industry for generation of new knowledge. These formal institutional relationships are reinforced by informal linkages among institutions and individuals in the Malaysian palm oil industry, which norms of relationships have been propagated by generations of industry executives, industry leaders and institutional heads.

Jobs and Automation

Drone and LED: Firework-Less Display

Posted on January 17, 2018

Introduction

The other day an electrician came to our house to replace all the conventional fluorescent lights with LED lights. These LED lights are now offered at most DIY shops, and house owners are slowly embracing LED lights. This is also helped by lower LED prices, and many brands are competing in the marketplace.

LED lights are found in many applications, such as car daylights, Christmas decorations, street lights and toys. Many new applications are being discovered

LED Display Using Drones

Recently, LED lights carried by drones have been introduced by the technology company, Intel Inc. (Intel) at an event in Las Vegas, US. Intel’s Shooting Star drones, which fly in formation, carried LEDS capable of more than four billion colour combinations. The company is said to have created a new, sophisticated art that is cleaner than the traditional firework display.

In a first-of- its- kind display, at the Consumer Electronics Show (CES) technology show in Las Vegas, Intel deployed 100 of its palm-sized drones to fly to a sound track of electronic music inside a theater in the Monte Carlo Resort. It later showed off 250 of its drones flying in synchronization with the formation show outside the Bellagio hotel dancing in the sky to form stars and concentric circles.

The entire swarms of drone are programmed with routines and controlled by one pilot. Intel noted that it had wanted to demonstrate the potential of its drone technology as well as offer a new form of entertainment and display.

Drones carrying LEDs are likely to replace fireworks which have around for centuries since there were invented by the Chinese.

Although interesting and dramatic, fireworks create a lot of dust pollution and noise. There are also dangers posed to the operators. Intel says that light shows are a way of re-defining night-sky entertainment. The new LED/drone combination offers better benefits such as the ability to create shapes and logos with a combination of colours and a vibrant mix of sounds.

Intel also notes that the positioning technology that keeps the drones close to each other without crashing could be used for other purposes, such as sweeping large areas during a search. Intel has previously demonstrated drone light shows at many events. However, those displays used larger drones that communicate with GPS. It said that GPS could not be safely used for drones flying indoors or in semi-enclosed spaces such as sports arenas, music stadiums and concert halls. Such spaces are also off- limits to fireworks This means that the miniature drones provide a new way to bring firework-style shows in venues where that would previously have been impossible.

New Opportunities

Unlike firework displays, which literally burn money, LED/Drone combination for display and entertainment is re-usable. This is a new business opportunity for an enterprising entrepreneur. Maybe, in the future, we may not need to have our car with headlights: LED/Drones combination would drive in front of the car to provide lighting. Not to forget the self-driving autonomous car. Bosch and other headlight manufacturers beware!

Reference: Mark Bridge Shooting Star drones could replace fireworks. The Times, January 12th, 2018.

Uncategorized

The Sweet Spot of Online Travel Agents

Posted on January 7, 2018

Introduction

My hard-working wife uses only a specific brand of toothpaste, Colgate. She has been long exposed to the advertisements of the toothpaste since she was small. These days, to a Malaysian child of 5-years old and above, nice foods mean McDonald’s, snacks mean Shell petrol stations and holidays means Tivago.

In fact, my wife told me that a 5-year old granddaughter of her friend already equates Tivago with holidays when the advertisement of Tivago appears on television.

Tivago is a well-known online travel agent. What is the business model of online travel agent? What is the sweet spot of online travel agent?

Tivago and other online travel agents have become the main channel to book hotels worldwide. In return, hotels secure room bookings and improve their occupancy rates. Less well-known hotels and lodgings also use online travel agents to market their facilities to consumers worldwide. The power of online agents is disliked by major hotel groups, as by using online travel agents they forgo a considerable income through paying commission fees to online travel agents.

At the same time, these hotels would lose market share to other hotels that work with online travel agents. As hotel rooms are perishable goods and cannot be reserved for future use, hotels must make a trade-off between potentially higher revenue from selling their rooms by themselves or lower revenue by selling the rooms by online travel agents.

The Business Model of Online Travel Agents

The online travel agent practices a number of business models , which are as follows:

The merchant model,
Hotel collect/Agency model,
Flexible/Opaque model

The Merchant Model

The merchant model involves the online travel agent purchasing a given quantity of rooms from a hotel at a wholesale price or rate. Then, the online travel agent will mark-up the price and offer the rooms to their online customers. Under the merchant model, the online travel agent bears the risk of unsold rooms.

Extensive use of online travel agents under the merchant model has resulted in erosion of unified pricing plans that are favoured by major hotel groups.

The Hotel Collect/Agency Model

The hotel collect/Agency model involves the online travel agent agreeing to distribute the rooms at an agreed-price with the hotels. The online travel agent receives a commission on each of the room when the guest leaves.

Flexible/Opaque Model

Under the flexible/opaque model, the online travel agent distributes rooms at an agreed price set by the hotel. Then, the online travel agent matches the bids of customers with the lowest price offered by the hotels. The online travel agent makes a profit through the price difference once the hotels accept the transactions. In the opaque model, customers purchase rooms on the online travel agent’s website without knowing the hotel brand before they make payment.

The three business models used by online travel agents involve having information about the buyers of rooms that is not available to the sellers of rooms and information about the sellers that the buyers of rooms do not know.

The Online Travel Agent Industry

The online travel agency is made-up of only a few firms. Although there are frequently new entrants, they tend to be gobbled-up by existing firms. The major companies own many different websites, some of which offer different services. Most of the websites function as metasearch engines that pull prices and offerings from their own networks. The term metasearch is used, since each provider’s website is a search engine that shows listing from only that company across times location, or services.

Revenue Streams

Revenues of travel online agents are derived from three main sources.

The first revenue is agency revenue where the online travel agent’s website is simply an intermediary that connects a customer with a provider of travel services. The costs of transactions are not borne by the online travel agent. There would be no costs of revenue and costs of goods sold associated with these transactions.

The second revenue is merchant’s revenue where the online travel agent is the merchant of record, and costs associated with the transactions are borne by the online travel agents. These costs include credit card processing fees, costs associated with securing a package or deal and any other fees that might be associated with the transactions.

The third revenue is from advertising. Advertising does not have associated costs since the advertisements are displayed on company-owned websites.

Conclusion

The online travel agent industry is one of intermediaries that is insulated from and tends to benefit from the intense competition among travel service providers like hotels and airlines. It is also at a stage of consolidation that direct competitors tend to be swallowed up. The cost of entering the industry Is low, simply requiring a website infrastructure and a search algorithms. New entrants that curve out a customer base are acquired, but the websites brand is usually maintained.

Many of the well-known websites are owned by Priceline or Expedia, as shown below:

Firm	Websites
Priceline	Booking.com Priceline.com Agoda.com KAYAK Rentalcars.com OpenTable Tivago.com
Expedia	Expedia.com Hotels.com Travelocity Egencia.com Carrentals.com Orbitz.com Cheaptickets.com
Tripadvisor	Tripadvisor.com
Ctrip	Ctrip.com

The travel online agent industry is enjoying a sweet spot and this is driven by the wealthy consumers in China, Japan, Europe, US and emerging countries who want to enjoy travel experiences.

Reference:

The Henry Fund, February 10^th, 2016. Online travel agencies
Paper submitted by my DBA students, Rajiv Mangruwa and Rosalind Sinnappan

Electric and Autonomous car

Electric Cars and Robots: Their Negatives and Positives

Posted on December 31, 2017

Background

Nissan Leaf, Leading Electric Car in the Market

Electric cars are hogging the headlines in many countries. For example in Norway, electric cars represent about 40 per cent of new car registrations. Charging stations for electric cars are everywhere. Norwegian government is providing incentives and perks to encourage drivers to purchase electric cars.

Buyers do not pay import tax and VAT on plug-in cars, shaving thousands of US dollars of the upfront cost. Running costs are lower because electricity is cheaper than petrol and diesel, while road tax is reduced, and will drop to zero in 2018.

Electric car owners also do not pay road tolls, ferry fees and city emission charges that other drivers face Moreover, the drivers can park for free and bypass traffic by driving in bus lanes.

A consulting company, EV-Volumes, which tracks electric cars globally, estimated the sales of electric cars have exceeded 3 million units. The list of car companies intending to offer electric car models is growing as shown below:

No.	Car Manufacturers	Models	Year
1	Daimler	Smart	2009
2	Peugeot	iOn	2010
3	Mitsubishi	I MiEV	2010
4	Nissan	Leaf	2011
5	Renault	Bongo Z. E.	2011
6	Tesla	Model S P90D, Model S 70D	2012
7	Bollore	Bluecar	2012
8	Honda	Fit EV	2012
9	Ford	Fpcus	2012
10	Renault	Zoe	2013
11	VW	e-Up!	2013
12	BMW	I3	2013
13	Chevrolet	Spark EV	2013
14	Fiat	500e	2013
15	Nissan	e-NV200	2014
16	Kia	Soul	2014
17	VW	e-Golf	2014
18	Mercedes	B-Class ED	2014
19	Tesla	Model X	2015
20	Nissan	Leaf	2015
21	Chevrolet	Chevy Bolt	2016
22	Renault	Zoe upgrade	2016
23	BMW	I3 upgrade	2016
24	Mercedes	Smart Fortwo	2016
25	Citroen	e-Mehari	2016
26	Opel	Ampera-E	2017
27	VW	eGolf upgrade	2017
28	Hyundai	Ioniq EV	2017
29	Mercedes	Cabrio, Forfour	2017
30	Audi	e-tron	2018
31	Jaguar	I-Pace	2018
32	Tesla	Model 3	2018
33	Daimler	Generation EQ	2019
34	VW	I.D.	2019
35	Lucid Motors	Air	2019

Source: FTWeekend, 4 November/5 November 2017

Tesla Model 3, Electric Car with Many Advanced Features

The March of Robots

Robots are quietly changing the employment landscape. The large mining companies such as Rio Tinto are replacing human drivers in managing the operations of the huge trucks that carry commodities such as iron ores. The drivers who drive these monster trucks are well paid but the job is dangerous. In Rio Tinto’s mines at the remote Pilbara in Western Australia, the monster trucks are now driverless. They are being controlled 1,046 kilometres away in a control room in Perth, Western Australia. These monster trucks operate 24 hours, without tiring.

In Santa Clara, California, US, robots are being used in selling houses. These robots are operated by the high technology property management start-up, Zenplace, and are intended to take the hassle out of coordinating showing times between real estate agents and prospective renters. The robot is operated by a real estate agent to save driving time in coordinating with the client’s schedules. Now, with the robot, the real estate agent can do between 150 and 20 showings a day, which enhances his/her commissions.

The two cases show that robots can have both negative and positive impacts. Even in a developing country like Malaysia, robots and automation are chipping away many routine jobs. Fortunately, the employees, who are affected by automation, are re-assigned to other jobs.

In 2018, the employees, whose jobs are taken by robots, may not be so lucky.

Best wishes for 2018 from Dato’ Dr Anuar Md Nor, President, Bison Consulting.

Uncategorized

Interlude: Work, Technology and Organization, Class September 2017

Posted on December 20, 2017December 20, 2017

Congratulation to All DBA Students

Dr Haji , virtual network expert and Dr Gina, over-educated insurance agent

A hard working pair

Internet travel expert from Indonesia

Eliana and two handsome guys from Middle East

Dr Anak, Dr Major, Dr Mohd Mazlan and Dr Mohammad Shahril

A clever group with great future ahead of them

Dr Haji, Dr Gina, Dr Rosalind and Dr Rajiv

The lady’s man with his class mates

Not in the pictures are Dr Barraa, Dr Daniel and Dr Shazleena

Uncategorized

Well-known Department Stores Fight Back Online Competitors

Posted on December 8, 2017

Introduction

Previously, locals and foreign tourists to London and New York would head to Harrods, Barneys, Bloomingdale’s when they were in town. Lately, lesser number of tourists is shopping at these grand department stores as they have been buying luxury handbags and cloths online.

The grand department stores are fighting back with an array of initiatives to draw customers in and engage them longer, according to an article in Financial Times, How to Spent It, published on October 7th, 2017.

They have been troubling times for department stores in London and Manhattan, New York, where competition from internet shopping is merely one of the challenges facing the grand old department stores. In their heyday they and their global counterparts encapsulated the spirit of their age, but that age is no more. What is left are vats edifices, which if they are to survive, have to reinvent themselves for the new times we are lining in and keep on their toes as their customers’ tastes and habits continue to evolve.

As Trevor Hardy, CEO of trend-forecasting agency The Future Laboratory, puts it, “ The department-store concept was invented for an era when consumption was inspired to-in had cultural currency. Today, the mere act of consumption is not much aspired to; the new breed of entrepreneurs notably spends very differently for the way earlier wealthy individuals used to spend, but that does not mean there is not still a lot of spending going on.”

If the reason of a department store is to sell, then it must sell those things that today’s consumers want to buy. It must also re-imagine the way it uses its space.

Mortimer Singer, president and CEO of business development and strategic consultancy firm, Marvin Traub Associates, identifies several “headwinds” that the US stores are struggling with. Firstly, there is what he calls the “new Davids”-lesser-known brands , well over 200 of them, that were born online and in many cases may only be doing about US$10 of business a year each, but collectively “are taking some US$4.2 billion out of the more established retail sector”.

Then there is the clothing and accessories rental business, which he says is booming in New York. This new business has saved consumers a lot of money a year.

Thirdly, what Singer calls the “aftermarket” is also affecting the department stores, with more and more women buying second-hand or “pre-loved” clothing and accessories from luxury websites such as Therearreal.com. Finally, Singer points to the mega-growth of the health and wellness industry, which is also taking huge sums of money that might in the past have been spent in traditional department stores.

In addition, to all that there is Amazon, which is expected to overtake Bloomingdale’s owner Macy’s this year as the seller of what in the US is known as “apparel”. Many grand department stores in New York are using new technology as one way to tackle the “headwinds”. Neiman Marcus, for instance, added features to its app that mean a friend could paragraph a pair of shoes and ask Neiman Marcus whether it stocks them or a similar design. On top of that, its stores now have “Memory Mirrors”, which offer customers 360 degree views of exactly how they look in the chosen garment.

Re-imagining Department Stores

Several department stores are beginning to offer food, while there is a recognition that their stores had not kept pace will all technology has to offer. Seamless omni-channel service is now mandatory.

Marigay McKee, former chef merchant at Harrods and former president of Saks Fifth Avenue, who now runs strategic business development company, MM Luxe Consulting, believes, “We have to bring the love and the humanity back into the experience of shopping. Stores need to concentrate on what I call ‘the three Es” – emotion, environment and experience-if they are to appeal to today’s customers.”

This means doing things like ringing up customers when an item comes in that the assistant feels the customer would like, letting people buy a dress in Chicago and change it in New York, or allowing them to buy online and return to a store ( or vice versa).

Hardy, of The Future Laboratory, identifies one of the key problems for modern-day department stored as the dramatic decline in the time customers spend in stores. “Managers need to work out how to get shoppers to stay longer, “ he says. “ They need to bring popular culture back into stores.”

One area with significant growth potential is wellness, health and beauty, and what Hardy call “self- transformation”. Saks Fifth Avenue offers skiing lessons. There are also boot-camp-style exercise classes and therapy treatments, from the natural to the high tech. Customers can also buy a Peleton exercise bicycle and follow spinning classes from home on a screen attached to the handle bars.

In London, department store, Harvey Nichols, is enticing customers into its stores and keeping them longer. It has invested a great deal in beauty and wellness, opening a new beauty lounge. As well as offering treatments such as LED facial, cryotherapy and vitamin and nutrient injections, the beauty lounge offer make-up masterclasses. It also makes a [pint of always having something exceptional to offer connected with these events.

A Harvey Nichols’s Department Store in London

The Future

Meanwhile a buying director of Liberty, which struggled for many years but is now trading profitability believes firmly that department stores are here to stay, but says they have to offer a compelling reason for customers to visit. “I try to enhance all the things that you cannot get online-this means we offer advice and in-depth knowledge about our products. It is all about eccentricity and the story behind a product. “I also see us as neighbourhood store.”

McKee, with her experience of managing retailers on both UK and US, is a believer in the future of department stores, but says they need to remember that they “have to become the host or hostess, while the customer is the guest”.

What is indisputable is that no stores can expect to survive if, as The Future Laboratory’s Hardy puts it, “all they do is to try to sell us more stuff”.

Reference: Lucia van der Post, Retail of two cities, Financial Times, How to spend it, October 7 2017.