Friday, April 12, 2013

Time to unleash the green growth

Be it climate change, water scarcity, biodiversity loss, or ecosystem degradation; green economics can weave together these strands. According to ‘TEEB’ report, ecosystem delivers essential services worth $21 to $72 trillion a year while the commercial opportunities in natural resource sector alone could be between $2.1-6.3 trillion by 2050. The implication: green and growth can go hand in hand.

Seeking Competitive Gains
Given the prevailing environmental and economic challenges, countries and corporations have come up with policies and strategies in order to shift towards cleaner and greener business practices along with green innovation. The International Energy Agency (IEA) is of the view that greener business practices will have important economic pay-offs in terms of resource efficiency. IEA estimates that 17% (approximately $46 trillion) increase in energy investment is required globally between 2010 and 2050 to deliver low-carbon energy systems, which will consequently yield a cumulative fuel savings worth $112 trillion. As a competitive factor, companies are seeking competitiveness gains through clean and green technology investment.

Environmetnal Challenges

OECD, in its recent report, states that the impact of economic activity on environmental systems are creating imbalances which are putting economic growth and development at risk. As a matter of fact, existing loss of biodiversity and degradation has already had dramatic consequences for business; soil erosion in Europe is estimated to cost 53 euro per hectare per annum. A 2007 report of the World Bank estimated that the cost of excessive use of groundwater in China was in the range of 0.3% of GDP (the cost fell largely on the agriculture sector). The TEEB 2010 report estimates the annual economic loss caused by introduction of agricultural pests in the US, UK, India, Brazil et al to be more than $100 billion.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Monday, April 08, 2013

Asian bond market report

Capital flows into emerging East Asian bond markets remained strong as investors chased yields during the first half of the year. Relatively strong economic fundamentals, interest rate differentials, and the potential appreciation of regional currencies acted as the key pull factors for these countries to offer higher yield on relatively longer tenure bonds.

Indices heading south again

Unresolved sovereign debt issues in the United States and the ongoing Eurozone debt crisis has jolted investors’ confidence on global asset markets. Rising risk aversion has sharply dragged down global equity markets, particularly in the aftermath of Standard & Poor’s (S&P) downgrade of US sovereign debt. However, considering the baseline scenario, MSCI indices show that the Emerging Europe stock markets have been the worst affected lot since the 2008 financial crisis. And the scenario has been further aggravated by the sovereign debt crises in mature markets and the potential impact on the wider economy. This has led investors to re-think their definitions of risk-free and risky assets and prompted safe haven flows into gold, the bonds of higher rated corporates.

Us stands tall at the top spot

As suggested by an Asian Development Bank report, demand for local currency (LCY) government bonds picked up in the middle of 2010 and remained strong throughout the first half of 2011. Overall, there has been a bullish flattening of yield curves in most markets; in many cases there has been a downward shift of the entire yield curve. Total LCY bonds outstanding in emerging East Asia grew 2.4% on a quarterly basis in 2Q11 to reach $5.5 trillion, with growth driven more by the region’s corporate markets rather than its larger government markets. The most rapidly growing corporate bond markets in 2Q11 were Indonesia (8.9%), the People’s Republic of China (PRC) (6.3%), Malaysia (4.9%), and Singapore (4.7%).


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

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Thursday, April 04, 2013

Search for The Next ‘Hundred Zeroes’!

Technology Companies are setting up VC funding Arms, Raising optimism of a Great Inorganic Leap forward. Seriously, aren’t corporate venture funds already too overrated?

When Google founders Sergey Brin & Larry Page decided to take up VC funding of $12.5 million from Kleiner Perkins Caufield & Byers in 1998, they told the VC firm’s partner John Doerr that they were willing to hire an outside CEO, but they backtracked a few months later; saying they would like to go on their own. They were then taken by Doerr to meet a number of CEOs like Andy Grove of Intel, Jeff Bezos of Amazon & Steve Jobs of Apple to really appreciate what a CEO’s job entailed. Finally, they relented on the outsider proposition, provided the outsider was Steve Jobs and no one else, before finally being convinced to explore further!

Considering Steve Jobs’ iconic personality and a high probability of a clash of equals, that may not have been a genuinely good idea. But this anecdote from Steven Levy’s book titled In the Plex: How Google Thinks, Works & Shapes Our Lives, really underscores how Google’s founders never really were comfortable letting their baby being run by anyone but themselves. The inevitable happened this year, when Page took the reins as CEO and Eric Schmidt became Chairman. Page already is talking about taking Google back to its start up days when it comes to the culture of innovation.

They have always been concerned about the company slowing down on growth. Levy mentions that they once fired all the middle managers for that! In fact, though not all may take such extreme action, that reflects a genuine concern of technology companies beyond a certain size, as they risk getting blown over by the next disruptive technology in a dynamic industry. This fact has proved true for companies like Microsoft, Yahoo!, HP, BlackBerry, Dell, IBM and Google itself, to an extent. Apart from a number of initiatives to get the company on the innovation drive again, which include working on book search and autonomous vehicles, one of the Google’s most ambitious moves is with respect to its VC firm Google Ventures, which has earmarked $200 million to fund promising start up companies (touted as a move to find the next Google?). That’s significantly large by VC standards and Google claims that it has a special secret algorithm that can help it find what the next big start ups would be. Apart from Google itself, a number of big technology names are on the list of corporate venture funds like IBM, Intel, SAP, Microsoft and National Semiconductor. But how successful can this VC model led by technology companies be?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

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Monday, April 01, 2013

B&E This Fortnight

INTERNATIONAL

BUSINESS, ECONOMY & FINANCE

Japan Upbeat on M&As

Taking a giant step towards shaking off the slump bedevilling the Japanese industry, pharma giant Takeda and nuclear reactor manufacturer Toshiba have decided to lead the nation’s aspirations for cross-border takeovers. The unprecedented earthquake has taken a heavy toll on the entire nation, shrinking the Japanese economy by more than 3.7% for the first quarter Y-o-Y. So, realising that they can’t survive on domestic business alone, Takeda agreed to take over pharma company Nycomed, which gets most of its revenue from emerging markets, for $13.7 billion, whereas Toshiba agreed to shell out $2.3 billion for buying Landis+Gyr, a Swiss electronic-metering company. Taken togther, the two deals account for a whopping $16 billion. Japanese companies have traditionally followed the policy of hoarding cash, especially in times of economic distress. But now the thriftiness is being shrugged off as more Japanese firms now scout for across-the-border acqusitions. Boosting the M&A wave further are big firms like Mitsui Sumitomo Insurance Co, which has readied plans for the acquisition of Indonesia-based PT Sinar Mas Multiarta’s life insurance unit for $818 million; another company, Sumimoto Mitsui Financial Group Inc has been in talks to buy 25% stake in Malaysian Financial lender RHB Capital Bhd for $1.6 billion.

Symantec’s purchase

Symantec Corp, makers of Norton, the popular anti-virus software will acquire Clearwell Systems, a privately held database specialist firm, for $390 million in an all cash deal. The deal is expected to close in the September quarter. With this move, the world’s No. 5 software maker is aiming to shore up its storage and cloud computing capability, and become a key player in the data discovery market. Symantec has said that Clearwell’s eDiscovery tools will help its Enterprise Vault eDiscovery system and also the other cloud-based database. Clearwell specialises in ‘electronic discovery’ or the categorising/processing of data, a market that Gartner estimates will be worth $1.7 billion by 2014. Law firms are increasingly relying on such IT companies that can archive and search massive troves of court documents, which simplifies the vital discovery process and cuts down on time and costs otherwise spent on painstaking staff work. Symantec disclosed that the purchase would dilute adjusted earnings by 1.5 cents per share for the 2012 fiscal, and is expected to add to fiscal 2013 earnings. Symantec shares held steady around $19.57 in after-hours trade following the announcement.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles

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Thursday, March 28, 2013

“It’s a Problem if firms cannot Grow without The Founder”

As an Academician who was also on The Corporate side, Dr. Michel Kalika, Dean, EM Strasbourg Business School, has seen The Best & Worst of both worlds. In This Exclusive interview, he discusses Contemporary Business Issues and Compares Indian Students to those overseas

In a career span of over 26 years, he has been a professor, a corporate professional, a researcher and now the Dean of EM Strasbourg Business School, University of Strasbourg, based in France. Dr. Michel Kalika resumed his new job in 2008 and under his supervision, the school has grown from 1400 to 2300 students and has become one of best B-schools in France and the second best in R&D. He has co-authored twenty books and approximately a hundred other publications. In an exclusive interview with B&E’s Bhuvnesh Talwar, Dr. Kalika talks about his affinity for Indian students and the international scenario on education and careers.

B&E: How should the academic mix be at B-schools? Specifically, how do you intermingle industry inputs and theory in your business school?
Michel Kalika (MK): In France, you have two great systems: you have the elite Grande Ecole programmes, and you have the traditional university system. While universities accept everybody, the Grande Ecole programmes – like the one at our business school – are competitive courses. In these, it’s not just about classroom teaching and creating book bugs. Industry interface comes only with enough practical teachings in the classroom. This is what happens at Strasbourg. Managerial practice and theoretical knowledge go together, because we have a strong support from the chamber of commerce. For instance, we have 170 companies who are supporting the B-school, and we have 104 faculties. Around 300 practitioners are coming and teaching during the courses. We are well known for the creation of case studies. Each week at the business school, we have one or two conferences on different topics. Practitioners are very often invited to speak at the B-school. They come and often offer the students jobs and internships. That is why our students find jobs very easily. Three to four months after the programme, 80% of the students are working. Around 40% of our students find jobs outside France.

B&E: In this era where B-schools teach their students to be founding entrepreneurs, what are the advantages and disadvantages of having the company’s founder as the CEO?
MK: The competencies of a founder are not the competencies of a CEO. When you are a founder, you focus on entrepreneurship. You are creative, imaginative, and want to grow the company. But, I feel very often, founders need the help of professional managers. It is very difficult for a founder to keep control on the company, when the company is growing more and more. So, I will say that the two functions are complementary; there’s a synergy between the two. What I say to my students is that if you start as a founder of a company, please be careful. You need to be able to understand when you will need the help of the manager. And I say to the professional managers that you must understand how the founder is thinking to be able to help him maintain the control on his company.

B&E: What is your thought on optimal timing for the exit of a founder CEO, and what factors should be counted?
MK: I don’t have a general answer. Sometimes a founder needs a strong help of the manager, after I would say 5-7 years. But, the founder can stay in the company. It would depend on the relationship between the manager and the founder. When you have served in the development of a company, you have steps. The steps are in the form of 5 year and 7 year plans. So, there is the first step after 5-7 years, and then another step after 11-12 years. It thus depends on the rate of growth of the company. If the company is only in domestic markets and another competitor is developing internationally, then you need a professional manager very soon. The founder is not always very good in understanding the culture of a different country. As the founder is focussed on his business, he may have difficulty in understanding another country’s business practices and culture.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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