Assignment On Global Business Strategy
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Assignment No.1 Global Business Strategy
Submitted to: Prof. Upendra Kachru
A National Company:-
Submitted by:Chinmaya parija
A domestic company is a company that operates within the country of its own origin. A firm incorporated under the laws of the country or state to which it is subjected to and where it does business. For example, a firm incorporated in India is considered a domestic corporation in India but a foreign corporation elsewhere.
A Multinational Company:UN (1973) - A multinational enterprise is a company which controls assets, factories, mines, sales offices, and the like in two or more countries. UN (1984) - An enterprise or company:• •
Comprising entities in two or more countries, regardless of the legal form and fields of activity of those entities; Which operates under a system of decision making permitting coherent policies and a common strategy through one or more decision making centers, and in which the entities are so linked, by ownership and otherwise, that one or more of them may be able to exercise a significant influence over the activities of the others, in particular to share knowledge, resources and responsibilities.
Risks Common to both types of companies:1. Social and Cultural: It includes differences in religion, language, literature, music, values, ethnicity etc. 2. Government Regulations: It comprises of small scale reservations, tariffs, taxes, trade barriers, intellectual property rights etc. 3. Customer Tastes and Preferences: It consists of lifestyles, usage, price, attributes, familiarity etc. 4. Economic and Competitive Context: GDP, Buying Parity, Infrastructure, Nature of Industry and Players.
Special Risk of an MNE:➢ They have an active coordinated management of operations located in different countries. ➢ Sovereignty: They are abiding by the laws of all the countries where they operate and cannot bent on them. ➢ Competitive Strategy: They function in multiple markets so they can use the profits from one market to subside the losses of the other. ➢ Performance Measurement: Their performance evaluation is subjected to currency changes, economic parameters and competitive environment.
What is RECESSION:-
In economics, the term recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters. The usual dictionary definition is "a period of reduced economic activity", a business cycle contraction. The United States-based National Bureau of Economic Research defines economic recession as: "a significant decline in the economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."
Global Economic Meltdown 2008:The state of the economy dominated state and national politics for 2008, surpassing even the historic presidential election The first half of the year was marked by record prices for food and fuel around the world. The year closed with a financial meltdown that threatened not just the U.S. economy but the global one. In Asia, the price of rice rose from about $400 a ton to more than $1,000 a ton. American big box stores like Costco and Sam's Club had a hard time keeping rice in stock, even as retail prices soared. In America, the price of a gallon of regular unleaded peaked at more than $4 a gallon. In March, Wall Street giant Bear Stearns failed, followed by Indy Mac Bank in July and Lehman Brothers, Merrill Lynch and Washington Mutual (WaMu) in September. In September, the Federal Reserve stepped in to take over Fannie Mae and Freddie Mac as well as one of the world's largest insurance firms, AIG (American International Group). In October, the Fed announced it would lend money directly to U.S. corporations.
Reasons for the Global Economic Crisis:In 2008, an economic recession was suggested by several important indicators of economic downturn. These included: •
High oil prices, which led to drastic high food prices (owing to a dependence of food production on petroleum, as well as using food crop products such as corn ethanol and biodiesel as an alternative to petroleum).
•
Global inflation.
•
A substantial credit crisis leading to the drastic bankruptcy of large and well established investment banks as well as commercial banks in various, diverse nations around the world.
•
Increased unemployment; and signs of contemporaneous economic downturns in major economies of the world,
•
Global recession.
Comparison between National & MNE as Per 2008 Data:NATIONAL COMPANIES MNES
DLF UNITECH MOSER BAER TCS FINANCIAL ANALYSIS:COMPANY SHARE NAME PRICES 07 DLF 1089.00 UNITECH 495.00 MOSER BAER 311.00 FINANCIAL ANALYSIS:COMPANY SHARE NAME PRICES 07 TCS 1133.95 HUL 220.00 NESTLE 1530.00 HEROHONDA 715.00 ICICI 1226.00
HUL NESTLE HERO HONDA ICICI
SHARE PRICES08 328.80 49.35 75.90
MKT CAP07
SHARE PRICES08 591.70 237.00 1450.00 840.00 450.90
MKT CAP07
183,066.79 79,262.51 5147.15
106,016.63 47,222.70 14,462.04 13,932.07 137,109.43
MKT CAP 08 48,059.72 6591.00 1188.20 MKT CAP 08 46,786.87 55,297.74 14.007.42 16,007.85 49,913.01
In other data we can see that the sales of HUL in 1st quarter 2008 was 3793.94 ,while in 3rd quarter is 4027.87.In case of gross profit 507.73cr in 1st quarter and 708.98 in 3rd quarter. In the case of HERHONDA net sales in sept.2008 are 3189.71 as compared to 2788.65 in mar.08.The gross profit is 497.11 as compared 475.10. In the case of DLF the net sales decreases from 1613.32 in mar’08 to 1074.95 in Sep’08.while in case of is 800.69 in sep’08 as compared to 712.05cr in mar’08. The net profit of ICICI bank was 1149.84cr in mar’08 as compared to 1014.21cr in Sep ’08. The net sales of NESTLE was 1090.01in mar’08 as compared to 1107.08 in mar’08.In case of it is down to 214.58cr in sep’08 from 245.23crin mar’08. In the article published in THE FINANCIAL EXPRESS, it is said that the companies like HUL,ITC are doing well irrespective of the fact that there is
recession is going on. The main reason behind this is these are FMCG companies. It is also clearly visible in the data. In other facts it is also evident that the domestic companies suffer most in comparison to MNES. Since most of the MNES which are operate in FMCG or pharmacy sector are safe in comparison to other companies. The market capitalization of domestic companies dropped significantly by over 50% in comparison to 35.9% of MNEs. In that article it is said that most of the MNEs are operate in FMCG and Pharmacy sector which are defensive in nature. But in case of domestic companies it is different, since they operate in various sectors like infrastructure, real state, automobile etc. That is why there is decline in the profit of UNITECH, DLF and TCS etc.
REFERENCE:www.google.co.in www.wikipedia.com www.businessstandard.com www.businessstatistic.com Ppt of GBS by Prof. Upendra Kachru
Submitted to: Prof. Upendra Kachru
A National Company:-
Submitted by:Chinmaya parija
A domestic company is a company that operates within the country of its own origin. A firm incorporated under the laws of the country or state to which it is subjected to and where it does business. For example, a firm incorporated in India is considered a domestic corporation in India but a foreign corporation elsewhere.
A Multinational Company:UN (1973) - A multinational enterprise is a company which controls assets, factories, mines, sales offices, and the like in two or more countries. UN (1984) - An enterprise or company:• •
Comprising entities in two or more countries, regardless of the legal form and fields of activity of those entities; Which operates under a system of decision making permitting coherent policies and a common strategy through one or more decision making centers, and in which the entities are so linked, by ownership and otherwise, that one or more of them may be able to exercise a significant influence over the activities of the others, in particular to share knowledge, resources and responsibilities.
Risks Common to both types of companies:1. Social and Cultural: It includes differences in religion, language, literature, music, values, ethnicity etc. 2. Government Regulations: It comprises of small scale reservations, tariffs, taxes, trade barriers, intellectual property rights etc. 3. Customer Tastes and Preferences: It consists of lifestyles, usage, price, attributes, familiarity etc. 4. Economic and Competitive Context: GDP, Buying Parity, Infrastructure, Nature of Industry and Players.
Special Risk of an MNE:➢ They have an active coordinated management of operations located in different countries. ➢ Sovereignty: They are abiding by the laws of all the countries where they operate and cannot bent on them. ➢ Competitive Strategy: They function in multiple markets so they can use the profits from one market to subside the losses of the other. ➢ Performance Measurement: Their performance evaluation is subjected to currency changes, economic parameters and competitive environment.
What is RECESSION:-
In economics, the term recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters. The usual dictionary definition is "a period of reduced economic activity", a business cycle contraction. The United States-based National Bureau of Economic Research defines economic recession as: "a significant decline in the economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."
Global Economic Meltdown 2008:The state of the economy dominated state and national politics for 2008, surpassing even the historic presidential election The first half of the year was marked by record prices for food and fuel around the world. The year closed with a financial meltdown that threatened not just the U.S. economy but the global one. In Asia, the price of rice rose from about $400 a ton to more than $1,000 a ton. American big box stores like Costco and Sam's Club had a hard time keeping rice in stock, even as retail prices soared. In America, the price of a gallon of regular unleaded peaked at more than $4 a gallon. In March, Wall Street giant Bear Stearns failed, followed by Indy Mac Bank in July and Lehman Brothers, Merrill Lynch and Washington Mutual (WaMu) in September. In September, the Federal Reserve stepped in to take over Fannie Mae and Freddie Mac as well as one of the world's largest insurance firms, AIG (American International Group). In October, the Fed announced it would lend money directly to U.S. corporations.
Reasons for the Global Economic Crisis:In 2008, an economic recession was suggested by several important indicators of economic downturn. These included: •
High oil prices, which led to drastic high food prices (owing to a dependence of food production on petroleum, as well as using food crop products such as corn ethanol and biodiesel as an alternative to petroleum).
•
Global inflation.
•
A substantial credit crisis leading to the drastic bankruptcy of large and well established investment banks as well as commercial banks in various, diverse nations around the world.
•
Increased unemployment; and signs of contemporaneous economic downturns in major economies of the world,
•
Global recession.
Comparison between National & MNE as Per 2008 Data:NATIONAL COMPANIES MNES
DLF UNITECH MOSER BAER TCS FINANCIAL ANALYSIS:COMPANY SHARE NAME PRICES 07 DLF 1089.00 UNITECH 495.00 MOSER BAER 311.00 FINANCIAL ANALYSIS:COMPANY SHARE NAME PRICES 07 TCS 1133.95 HUL 220.00 NESTLE 1530.00 HEROHONDA 715.00 ICICI 1226.00
HUL NESTLE HERO HONDA ICICI
SHARE PRICES08 328.80 49.35 75.90
MKT CAP07
SHARE PRICES08 591.70 237.00 1450.00 840.00 450.90
MKT CAP07
183,066.79 79,262.51 5147.15
106,016.63 47,222.70 14,462.04 13,932.07 137,109.43
MKT CAP 08 48,059.72 6591.00 1188.20 MKT CAP 08 46,786.87 55,297.74 14.007.42 16,007.85 49,913.01
In other data we can see that the sales of HUL in 1st quarter 2008 was 3793.94 ,while in 3rd quarter is 4027.87.In case of gross profit 507.73cr in 1st quarter and 708.98 in 3rd quarter. In the case of HERHONDA net sales in sept.2008 are 3189.71 as compared to 2788.65 in mar.08.The gross profit is 497.11 as compared 475.10. In the case of DLF the net sales decreases from 1613.32 in mar’08 to 1074.95 in Sep’08.while in case of is 800.69 in sep’08 as compared to 712.05cr in mar’08. The net profit of ICICI bank was 1149.84cr in mar’08 as compared to 1014.21cr in Sep ’08. The net sales of NESTLE was 1090.01in mar’08 as compared to 1107.08 in mar’08.In case of it is down to 214.58cr in sep’08 from 245.23crin mar’08. In the article published in THE FINANCIAL EXPRESS, it is said that the companies like HUL,ITC are doing well irrespective of the fact that there is
recession is going on. The main reason behind this is these are FMCG companies. It is also clearly visible in the data. In other facts it is also evident that the domestic companies suffer most in comparison to MNES. Since most of the MNES which are operate in FMCG or pharmacy sector are safe in comparison to other companies. The market capitalization of domestic companies dropped significantly by over 50% in comparison to 35.9% of MNEs. In that article it is said that most of the MNEs are operate in FMCG and Pharmacy sector which are defensive in nature. But in case of domestic companies it is different, since they operate in various sectors like infrastructure, real state, automobile etc. That is why there is decline in the profit of UNITECH, DLF and TCS etc.
REFERENCE:www.google.co.in www.wikipedia.com www.businessstandard.com www.businessstatistic.com Ppt of GBS by Prof. Upendra Kachru
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