Global Business |Update|
(A weekly
update on Global Business )
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
Issue 119
Global Business Update
(1st July’09----7th July’09)
Contents
Global Corporate
1 BA staff reject cost-cutting plan
2 GM bankruptcy plan gains approval
3 MG Rover in fraud investigation
4 Prius tops Japan's car sale chart
5 Qantas admits cargo price-fixing
6 Air India employees to get salaries by July 14
7 MTN to take Bharti stake in GDRs:
SEBI
Global Outsourcing
8 Snapple Deal To Outsource May Add Jobs In America
9 Diebold makes top 10 list of outsourcing providers
10 Reliance Plans to Outsource Management of Wired Services
11 NC Transit District Considers Outsourcing Operations
12 Cost cutting in U.S. to drive BPO healthcare business
13 IBM, Amul ink 10-year strategic outsourcing deal
14 Outsourcing of drug license a lucrative business
Global Economy
15 IMF more upbeat on 2010 recovery
16 US loan defaults hit record level
17 India outlines growth challenge
18 WTO backs trade in poorer nations
19 Eurozone retail sales post fall
20 Rogue trades cost oil broker $10m
Global Market
21 Economic optimism lifts European stocks
22 Asian shares mixed on fears of slow global economic recovery
23 Asia stocks sluggish before US jobs data
24 Bleak payrolls report mauls Wall Street
25 India joins Russia, China in questioning US dollar dominance
26 European stocks inch higher despite Nikkei’s 5th fall
Global Corporate
1 BA staff reject cost-cutting plan
A mass meeting of more than 2,000 British Airways cabin crew
workers has rejected the airline's plans to reduce costs by cutting jobs and
freezing pay. Staff said they were not prepared to accept an "assault" on
their pay, terms and conditions. Conciliation service Acas will chair a
meeting between BA and unions on Wednesday to try to reach an agreement. BA
has been striving to cut costs in the recession. In May, the airline reported
a record annual loss of £401m. The company had set a deadline of 30 June to
reach a deal on about 3,500 job cuts, a pay freeze and other changes, but no
agreement was made. At the meeting, workers rejected BA's proposals and
instead backed a union plan, which officials said could save between £100m and
£130m.
6th July 2009,
www.bbc.co.uk
2 GM bankruptcy plan gains approval
A US judge has approved a bankruptcy plan for car giant GM,
which allows the firm to transfer its profitable assets to a new
government-backed firm. Judge Robert Gerbert gave the plan the go-ahead late
on Sunday, saying the sale would prevent the death of the patient on the
operating table. GM filed for bankruptcy protection on 1 June, saying it would
be forced to liquidate if the plan was not approved. The new streamlined
General Motors will be 60% owned by the US government. The bankruptcy plan had
been opposed by several groups - including some of GM's bondholders, unions
and consumer groups - who had argued that their needs were being ignored in
favour of the interests of the carmaker and the government.
5th July 2009,
www.bbc.co.uk
3 MG Rover in fraud investigation
The Serious Fraud Office (SFO) is to investigate the
circumstances surrounding the demise of Birmingham-based carmaker MG Rover in
2005. Business Secretary Lord Mandelson said in a statement that the SFO must
see if there are grounds for prosecution. It follows a four-year inquiry into
the collapse, which led to 6,000 job cuts. A spokesman for the four executives
in control of MG Rover at the time called the decision mystifying and said
there was no evidence of fraud. Lord Mandelson told the BBC: "The inspectors
have done a very thorough job - it's certainly taken a long time - and they
need to place their analysis and their conclusions to the SFO for them to
examine and reach their own view.
2nd July 2009,
www.bbc.co.uk
4 Prius tops Japan's car sale chart
Toyota's Prius has become the first hybrid car to outsell all
other vehicles in Japan, figures show. It sold 22,292 Prius vehicles in June,
from 6,231 in the same month a year earlier and from 10,915 in May said the
Japan Automobile Dealers Association. A new model had helped bolster sales,
analysts said. In May the Prius had already become the top-selling car - a
category that excludes popular mini-vehicles with engines of up to 660cc.
Honda's Fit was the second most popular vehicle in the June, with sales of
13,016 vehicles. The firm's Insight, a hybrid marketed as a cheaper
alternative to the Prius, was ranked fourth. Hybrid cars are powered by both
by petrol and electricity. High oil prices and growing concern about emissions
blamed for global warming has encouraged Japanese carmakers to lead the global
development of hybrids.
4th July 2009,
www.bbc.co.uk
5 Qantas admits cargo price-fixing
Qantas Airways has pleaded guilty to being part of a conspiracy
to fix air cargo prices on routes from Canada between May 2002 and February
2006. It has been fined 155,000 Canadian dollars ($133,000; £82,000) by
Canada's Competition Bureau. Air France, KLM and Martinair have previously
pleaded guilty to the price-fixing charges. The bureau said that all four had
admitted fixing surcharges on routes leaving Canada. It added that the
investigation into other air cargo carriers was continuing. The other three
airlines involved were fined a total of 10m Canadian dollars.
7th July 2009,
www.bbc.co.uk
6 Air India employees to get salaries by July 14
Heeding to workers' demands, state-run Air India decided on
Tuesday that to pay the wages and salaries of its employees on the July 14 and
to the contractual staff on July 10. The employees covered under the Payment
of Wages Act and drawing wages up to Rs 10,000 per month "will get their June
wages on July 10, a company spokesperson said. The staffers of the AI's parent
firm National Aviation Company of India Limited and its subsidiaries, who are
not covered by the Act, will get their June salaries by July 14, a day ahead
of the day earlier announced by the management, the spokesperson said. The
decision came almost a week after the employees went on a two-hour agitation
to protest the delay in payment of their salaries by a fortnight. The
management has also asked the airline's top brass not to take their July
salary.
7th July 2009,
www.financialexpress.com
7 MTN to take Bharti stake in GDRs: SEBI
Bharti Airtel is considering issuing global depositary receipts (GDRs) to
South Africa's MTN and its shareholders, the market regulator said on Tuesday.
The Security and Exchange Board of India (SEBI) said MTN would need to make an
open offer under Indian takeover rules only when the GDRs are converted by the
South African firm and its shareholders to local shares with voting rights.
Bharti and MTN have been in exclusive talks that could lead to a merger
creating the world's No. 3 wireless group with more than 200 million
subscribers and combined revenue of $20 billion.
7th July 2009,
www.financialexpress.com
Global Outsourcing
8 Snapple Deal to Outsource May Add Jobs in America
Even Snapple, an American iced tea maker with a homespun image, is outsourcing
work to an Indian company. But in a twist, the deal may increase jobs in the
United States. The Dr Pepper Snapple Group said on Tuesday that it had signed
a five-year contract with HCL Technologies, a major information technology and
outsourcing company in Noida, India. HCL will manage Snapple’s computer
networks — but may be hiring in the United States to do it. HCL said that Dr
Pepper Snapple would be its “anchor service desk customer” in an operation in
Raleigh, N.C., that would eventually employ 500. With the new deal, HCL is
continuing to “bring on new staff at our new facility in North Carolina,”
Shami Khorana, president of HCL America, said in a statement.
2nd July 2009,
www.nytimes.com
9 Diebold makes top 10 list of outsourcing providers
Diebold has been listed among the International Association of Outsourcing
Professionals’ 10 best outsourcing providers within the services industry.
In addition to being among the 10 best leaders of industries that focus on
services, Diebold improved its position from the 2008 rankings in its third
consecutive year. Industry analysts say automated teller machine management
outsourcing is a growing area being considered by many banking executives,
especially those who struggle to get capital for investments but, still have
to compete for new clients, improve service levels and tackle aging
technology. Diebold’s outsourcing customers range from the largest global
financial institutions to smaller credit unions, with needs that range from
full information technology outsourcing to select pieces of the
infrastructure, such as currency management or monitoring.
3rd July 2009,
www.tutorial-reports.com
10 Reliance Plans to Outsource Management of Wired Services
Reliance Communications Ltd. plans to outsource the management of its wired
services network in a deal likely to be worth more than $750 million, a
company executive said Wednesday. We want to outsource voice and data wired
transport network the fixed-line network. The contract is to maintain and
manage all parts of this network, including the towers, power and cable
networks, Sandip Biswas, head of managed services at Reliance Communications,
told Dow Jones Newswires. He said the contract for wired services is likely to
be bigger than the $750 million, five-year outsourcing order given last year
for its wireless network to a joint venture between Reliance Communications
and France's Alcatel-Lucent. The joint venture, in which Alcatel-Lucent has a
67% stake, will be among the bidders for the new contract, Mr. Biswas said.
5th July 2009,
www.online.wsj.com
11 NC Transit District Considers Outsourcing Operations
The board of the North County Transit District agreed Thursday to consider
outsourcing its bus operations. The NCTD board voted to authorize the issuance
of a request for proposals for a private contractor who would handle bus
operations and maintenance for the next seven years. NCTD officials said
hiring a firm to handle bus operations is needed in light of the state's
decision to eliminate funding for transportation over the next five years. The
decision today was not easy, but reflects the board's desire to provide the
highest level of service to our customers," said Bob Campbell, chairman of the
NCTD board. As we move forward, we will continue to review all of our business
activities with a focus on reducing costs and increasing ridership, he said.
According to the NCTD, the state's decision to eliminate transit funding
resulted in a loss of $10.5 million annually and, combined with the downturn
in the economy, means the NCTD faces a deficit of about $19 million.
2nd July 2009,
www.tutorial-reports.com
12 Cost cutting in U.S. to drive BPO healthcare business
Outsourcing of healthcare services is expected to gain momentum as the
prolonged slowdown forces U.S.-based government agencies and healthcare firms
to cut spiraling costs and deal with a shortage in qualified personnel.
Companies such as Affiliated Computer Services, Cognizant Technology
Solutions, Convergys and Genpact whose customers include hospitals, insurers
and the Federal government, are expected to gain from the trend. Business
process outsourcing firms that offer healthcare services handle claims
administration, supply chain logistics, finance and accounting, billing, human
resources management and customer relations.
4th July 2009,
www.tutorial-reports.com
13 IBM, Amul ink 10-year strategic outsourcing deal
IBM today said it has entered into a 10-year strategic
outsourcing deal of over Rs 80 crore with the Gujarat Cooperative Milk
Marketing Federation (Amul). Under the terms of the deal, approved by the
GCMMF, IBM would help transform the information technology structure of GCMMF
and the milk unions to enable and support their accelerated growth plans. IBM
will manage and operate the IT environment of Amul for the next 10 years. SAP
ERP on the IBM technology platform is the chosen vehicle for this
transformation, IBM said in a statement. IBM will also build a
state-of-the-art data unit backed by a disaster recovery centre, define the
security policy and maintain and manage the entire technology and application
landscape. As a result, the co-operative would be able to further improve its
supply chain, strengthen customer focus and achieve manifold growth, the
statement said.
6th July 2009,
www.business-standard.com
14 Outsourcing of drug license a lucrative business
Although the health department has been trying to stop the
unethical practice of quacks or 'jhola chhap' doctors, yet it failed to put a
check on the malice of outsourcing of drug licence which might be a serious
risk to the lives of gullible patients in the absence of a qualified person
handling the sale of medicines at various private chemist shops in the city.
Normally, the health department issues two types of licences for operating a
drug or chemist shop. One is the Retail Drug License issued to run a general
chemist shop. The other is the Wholesale Drug License issued to persons or
agencies engaged in wholesale of drugs and medicines.
7th July 2009,
www.timesofindia.com
Global Economy
15 IMF more upbeat on 2010 recovery
Worldwide economic growth is expected to recover to 2.5% in
2010, says the International Monetary Fund (IMF). That is higher than the
IMF's earlier estimate of 1.9% growth next year, made in April, with the
increase expected to be led by India and China. But the IMF still expects the
global economy to contract 1.4% this year. For the UK, the IMF has revised
down its 2009 economic forecast by 0.1% to -4.2%, but it now expects the
economy to expand by 0.2% next year. The IMF had previously said it expected
the British economy to contract by 0.4% in 2010. Its latest estimates for the
UK are consistent with those from the Organisation for Economic Cooperation
and Development, but much weaker than forecasts from the government and many
independent analysts.
7th July 2009,
www.bbc.co.uk
16 US loan defaults hit record level
The level of people falling behind with consumer loans in the US
hit a new high in the first three months of 2009, the American Bankers
Association said. Rising unemployment was behind the missed payments, it
suggested. Delinquencies - payments that were more than 30 days overdue - rose
to 3.23% from 3.22%, the highest level since rates began being tracked in the
1970s. Credit card loan delinquencies also increased, rising to 4.75% from
4.52% in the last quarter of 2008. The US unemployment rate is now at a
25-year high of 9.4%. The number one driver of delinquencies is job loss, said
the ABA's chief economist, James Chessen. When people lose their jobs, they
can't pay their bills. Delinquencies won't improve until companies start
hiring again and we see a significant economic turnaround.
6th July 2009,
www.bbc.co.uk
17 India outlines growth challenge
India's government has unveiled its annual budget, saying the
first challenge is to return to a growth rate of 9% a year at the earliest.
Finance Minister Pranab Mukherjee said the growth rate for the present fiscal
year was projected at 6.7%. He said the second challenge would be to deepen
and broaden the agenda for inclusive development. The government increased
spending on urban poor schemes and the landmark jobs-for-work scheme to help
the poor. But shares fell as the budget was announced, with the benchmark
Sensex index closing more than 5% lower, as the market worried about how the
government would fund its increasing deficit. The index shed 869.65 points, or
5.8%, to a provisional close of 14,043.40.
6th July 2009,
www.bbc.co.uk
18 WTO backs trade in poorer nations
Aid agencies and major world bodies are to meet to seek ways of
encouraging trade by emerging nations during the economic downturn. The
two-day WTO Aid for Trade meeting will also be attended by the IMF, World
Bank, UN, and Organisation for Economic Co-operation and Development (OECD).
It will examine how aid - which is used to boost trading in poorer states -
can be sustained during a global recession. Aid for trade is needed now more
than ever, said the WTO and OECD. Earlier this year the WTO warned that poorer
countries would see their exports fall by 2-3% in 2009.
4th July 2009,
www.reuters.com
19 Eurozone retail sales post fall
Retail sales in countries that use the euro fell more than
expected in May, a further sign that consumers are still limiting their
spending, data shows. Eurozone retail sales fell 0.4%, month-on-month,
reversing April's 0.1% rise. On a yearly basis the drop in May was 3.3%,
according to Eurostat figures. As a whole, European member states that don't
use the euro, including the UK and Sweden, saw sales fall 0.5%. Individuals
are cutting their spending as job losses continues to rise. The latest figures
suggest the chance of a consumer-led recovery is not likely soon.
2nd July 2009,
www.cnn.com
20 Rogue trades cost oil broker $10m
A rogue trader at a London oil broker caused his employer to
lose $10m (£6m) after making unauthorised trades. PVM Oil Futures said it was
a "victim of unauthorised trading" on Tuesday, 30 June, and said it was now
conducting a full investigation. The rogue trader, believed to be Steve
Perkins, has been suspended. PVM said it had informed the Financial Services
Authority and the InterContinental Exchange (ICE), the location for much
European oil trade. The trades are thought to have caused a jump in the price
of Brent crude oil on Tuesday. PVM said it was now conducting business as
normal.
1st July 2009,
www.bbc.co.uk
Global Market
21 Economic optimism lifts European stocks
European stock markets rose on Wednesday as investors started the third
quarter with mild optimism following some upbeat economic data, but Asian
markets were only mixed after a disappointing Japanese business survey. The
FTSE 100 index of leading British shares was up 58.83 points, or 1.4%, at
4,308.04 while Germany’s DAX rose 67.80 points, or 1.4%, to 4,876.44. The
CAC-40 in France was 55.36 points, or 1.8%, higher at 3,195.80. The early
gains in Europe came after closely watched manufacturing surveys for both the
16 countries that use the euro and for Britain raised hopes that growth may
emerge later this year. The purchasing
managers index - a gauge of business activity - for the euro zone’s
manufacturing sector rose for the fourth month running to 42.6 in June from
May’s 40.7. Though a reading below 50 still indicates a contraction in
activity, the higher reading indicated a less marked fall in output.
Meanwhile, the equivalent index for Britain spiked to a 13-month high of 47 in
June from 45.4 in May.
1st July 2009,
www.livemint.com
22 Asian shares mixed on fears of slow global economic recovery
Asian stock markets put in a mixed performance on Wednesday, with Seoul and
Shanghai gaining but Tokyo weak as data showed the process of swinging the
global economy around to a recovery would be a slow grind. Oil held above $70
(around Rs3,350) a barrel after US industry inventory data showed a
bigger-than-expected fall in crude stocks, which pared some of the previous
day’s losses after data had unsettled investors about a potential US economic
rebound. In Japan, business confidence pulled back from a record low hit three
months ago, but the improvement was smaller than market expectations and still
a negative reading. That followed an unexpectedly steep slide in US consumer
confidence in June, which dented optimism on Wall Street about prospects for
recovery and weighed on shares in Asia.
3rd July 2009,
www.livemint.com
23 Asia stocks sluggish before US jobs data
Asian stocks were largely unchanged on Thursday ahead of the latest US
payrolls report, while the US dollar remained near a three-week low against
the euro, sensitive to lingering doubts about its reserve status. The US
unemployment rate is forecast to rise to a 26-year high of 9.6%, which would
test even the most die hard bulls on the extent of the recovery underway even
after Wednesday’s positive manufacturing figures from China, the euro zone and
the United States. Manufacturing data from the United States and other major
economies came out quite solid, but investors remain cautious ahead of US jobs
data and corporate earnings, said Yoo Soo-min, a market analyst at Hyundai
Securities in Seoul.
4th July 2009,
www.livemint.com
24 Bleak payrolls report mauls Wall Street
US stocks tumbled on Thursday, driving the S&P 500 down to its third-straight
weekly loss, as a steeper-than-expected slide in June non-farm payrolls
revived caution about economic recovery prospects. News that US employers shed
nearly half a million jobs last month and the unemployment rate jumped to
9.5%, the highest in nearly 26 years, dampened recent hopes that the recession
might be abating. Investors pummeled stocks across the board, but energy,
industrials, financials, technology and consumer-oriented shares were among
the hardest-hit sectors. These sectors were at the forefront of the broader
market’s recent recovery from the 12-year closing lows of early March as
investors bet that the worst of the economic slump was over.
6th July 2009,
www.livemint.com
25 India joins Russia, China in questioning US dollar dominance
An economic adviser to Prime Minister Manmohan Singh, Suresh
Tendulkar, said he is urging the government to diversify its $264.6 billion
(Rs12.7 trillion) foreign exchange reserves and hold fewer dollars. The major
part of Indian reserves is in dollars—that is something that’s a problem for
us, Tendulkar, chairman of the prime minister’s economic advisory council,
said in an interview on Saturday in Aix-en-Provence, France, where he was
attending an economic conference.
7th July 2009,
www.livemint.com
26 European stocks inch higher despite Nikkei’s 5th fall
European stock markets rose modestly on Tuesday following late day-before
gains on Wall Street, but the fifth straight retreat on Japan’s main Nikkei
index provided ample evidence that investor sentiment remains extremely
fragile. In Europe, the FTSE 100 index of leading British shares was up 17.66
points, or 0.4%, at 4,212.57 while Germany’s rose 9.35 points, or 0.2%, at
4,661.17. The CAC-40 in France was 8.89 points, or 0.3%, higher at 3,091.05.
The gains in European markets came despite further losses in Asia where stocks
were weighed down by waning investor optimism about the global economic
recovery ahead of this week’s meeting of the Group of Eight leaders (G-8) in
Italy.
7th July 2009,
www.livemint.com
Compiled By
Himanshu Gupta,
BBA Alumni (2005-08), Marketing
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
http://www.skylinecollege.com