Good Morning Ishan

Saturday, January 1, 2011

FOREIGN DIRECT INVESTMENT IN FINANCIALMARKET

Following the globalization trend, the financial sector seems to have drastically increased their foreign direct investments in recent decades. Nonetheless, it is evident and well documented that financial firms are far more passive in global diversification than non-financial firms. In terms of value, Berger, DeYoung, Genay, and Udell (2000) document that, even though both the domestic and cross-border transactions have increased rapidly, the gap between domestic and foreign M&A in financial sectors has actually widened over the period 1990-1998. Domestic M&A values have been consistently over 25 times higher than those of international M&As in financial industries (their data source is Securities Data Company). Also, Focarelli and Pozzolo (2001) note that the cross-border M&A deals among banks are only about half of those among non-financial firms in the 1990s. The phenomenon is especially puzzling. There appears to be plenty of motives for banks to extend their presence abroad. For instance, Saunders (2000) identifies favorable factors for globalization specific to U.S. banks: the use of the dollar as an international medium of exchange, capital flows to offshore branches and subsidiaries of U.S. banks caused by political risk concerns, the U.S. domestic banking activity restrictions, and improvements in technology and communications. This paper intends to investigate the reasons for such inertia. The conventional FDI framework may shed some light on this issue. One answer may lie on the nature of the banking business in which ownership advantage is relatively modest and internalization is not critical, compared to its manufacturing counterpart, as well as their differences in financial aspects.

Case Study

Leadership Style

Mr. Surendra Soni has recently joined as the Managing Director of an automobile company, which at present is incurring heavy losses. He has been entrusted with the formidable task of rejuvenating the company. He faces many challenges to achieve this task, such as controlling costs, improving quality, increasing the productivity and boosting the morale of the employees.

Mr. Soni, in his previous company—also an automobile company, as the Deputy Managing Director, had proved to be a proficient manager and an effective leader who had successfully inspired his employees to increase the productivity. He was commended for his maximum concern for both people and production and also for bringing about integration between the needs of the employees and of the company.

Business News

· Air India Express to shift HQ to Kerala

· Ralls acquire Metahelx Life

· Board to fast-track hotel project

Air India Express to shift HQ to Kerala

The headquarters of low fare subsidiary of national flag carrier Air India--Air India Charters Ltd (AICL)--will be shifted to Kochi in Kerala.

However, the engineering wing of the company will operate from Thiruvananthapuram, a company statement said on Thursday.

AICL, which operates Air India Express, is currently headquartered in Mumbai.

Air India Express primarily serves the market in West Asia and South East Asia with a fleet of 21 Boeing 737800 aircraft.

Rallis acquire Metahelx Life

Rallis India Ltd, a subsidiary of Tata Chemicals Ltd, on Thursday said it has completed the acquisition of a seeds research firm Metahelix Life Sciences Pvt. Ltd for an all cash deal of `100 crore.

It managed to successfully finish all the formalities required for acquisition of a majority stake of 53.5% in the Bangalore based Metahelix Life, Rallis India informed the Bombay Stock Exchange in a regulatory statement.

Consequently, Rallis has become the holding company of Metahelix, it said.

On 9 December, Rallis India had announced picking up a majority stake in Metahelix Life.

Board to fast-track hotel project

In order to fast-track clearances to all hotel projects in the country, the Cabinet has approved the creation of a Hospitality Development and Promotion Board (HDPB). The board will be a single window for every project.

It will review and monitor all projects after holding discussions with ministries or departments concerned on a regular basis. However, HDPB will not supersede statutory clearances given by other agencies. The secretary (tourism) will be the chairman of the board at the central level while the chief secretary of every state will head the respective state boards.

Insurance Glossary

Collision Insurance - Covers physical damage to the insured's automobile (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.

Comprehensive Insurance - Auto insurance coverage providing protection in the event of physical damage (other than collision) or theft of the insured car. For example, fire damage or a cracked windshield would be covered under the comprehensive section.

Thought of the day

"Because a thing seems difficult for you, do not think it impossible for anyone to accomplish.”
- Marcus Aurelius

Amway Product Line

· Nutrition & Wellness-Nutrilite

· Cosmetics-Artistry, Attitude

· Home Care-Dish drops, LOC, Zoom, Prewash Liquid, Pursue, SA8

· Personal care-Glister, persona, Satinique, Dynamite, G & H

· Commercial Products-APSA

Interview of Peter Drucker

To many people Peter Druckur is a business icon. The 92 year old has written more than 30 books about society, politics, economics, and management during the past 60 years. He has also contributed articles to the Wall Street Journal and Harvard Business Review.

Drucker was born in Vienna in 1909. After receiving his law degree, he worked in finance and journalism before moving to the United States. Soon after arriving in the United States in 1937, he began writing books. Through these books and his academic work at Bennington College in Vermont, New York University Graduate Business School, and Claremont Graduate University in California, Drucker has carved out a niche as one of the leading business thinkers of our time. He recently took a moment to share his thoughts with Information Outlook.

Information Outlook: What place do you think librarians and information professionals occupy within the broader organizational legions of knowledge workers?

EQ vs. IQ - emotional intelligence, intelligence quotient

Emotional Intelligence and the Heart Take Their Rightful Place beside IQ and the Brain

Compelling evidence recently has surfaced; leading scientists to believe that Einstein's superior intellectual ability may have been related to the region of his brain that supports psychological functions. This new evidence is no surprise to those behind the latest rage in corporate competence - the idea of emotional intelligence (EQ) as a counterpart to intelligence quotient (IQ). Nor is the concept of EQ totally new to successful global communicators, many of whom have refined their emotional and communication competencies to a fine art.

Research shows that emotional intelligence may actually be significantly more important than cognitive ability and technical expertise combined. In fact, some studies indicate that EQ is more than twice as important as standard IQ abilities. Further, evidence increasingly shows that the higher one goes in an organization, the more important EQ can be. For those in leadership positions, emotional intelligence skills account for close to 90 percent of what distinguishes outstanding leaders from those judged as average.

Case Study

Tata Indica V2 Xeta: Competing in the Indian Small Car Market

This case is about the marketing strategy undertaken by Tata Motors Limited, (the market leader in commercial vehicles in India, and one of the major players in the passenger vehicles segment), in 2006 to sustain and enhance its market share in the burgeoning passenger car market. In January 2006 the company launched the Indica V2 Xeta Petrol (Xeta) car as a refurbished version of its existing petrol car Indica V2 Petrol MPFI. According to the company, Xeta was to benefit the customer by better meeting their needs compared to existing options in the market - specifically by rendering better fuel efficiency at a competitive price. Indica was an umbrella brand under which Tata Motors had developed both diesel and petrol cars.