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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 127
Global Business Update
(2nd September ’09---8th September ’09)
Contents
Global Corporate
1 Mobile firms 'eyeing T-Mobile UK'
2 National Express gets £765m bid
3 Pfizer whistle-blower's drug fear
4 Google China chief leaves company
5 Bausch & Lomb set to axe 500 jobs
6 Pepsico among best employers for entry-level workers
7 Alcatel-Lucent appoints Subhash Bana as VP R&D for India ops
8 Onida to give brand a makeover
9 Kraft in £10.2bn move for Cadbury
Global Outsourcing
10 Volkswagen to reduce outsourcing, exec tells paper
11 Northrop Gruman Admits Late on Virginia Outsourcing Deal
12 Spirit will outsource some IT work to IBM
13 Innodata Isogen Signs $4 Million E-Book Contract with New Client
14 CanWest to Outsource Ad Production
15 APS explores outsourcing some IT work
16 Outsourcing from Belgium
Global Economy
17 Boost for eurozone recovery hopes
18 Downturn in US economy 'ending'
19 Central banks back new regulation
20 Airline losses 'hit $1bn a month'
21 Further decline in Indian exports
22 G20 pledges tougher bank action
23 Liechtenstein deal 'to net £1bn'
Global Markets
24 Asia shares edge up on Shanghai jump
25 US stocks rise on data, gold gains as hedge
26 European shares gain after 4-day losing run; banks up
27 WTO ruling in favour of Boeing reflects pre-crisis time
28 Global economy finally starts expanding again
29 Bank-owned asset management firms to benefit in new regime
30 Sensex crosses 16k, ends at 15 month high at 16,016.32
Global Corporate
1 Mobile firms 'eyeing T-Mobile UK'
Vodafone, France Telecom and Telefonica are all in talks with
Deutsche Telekom over buying its T-Mobile UK unit, the Financial Times (FT)
has reported. The FT said people familiar with the situation had told it that
all three were eyeing the UK mobile operator, although talks were at an early
stage. The recent stock market rally meant a sale could raise about 4bn euros
($5.7bn; £3.5bn), the paper said. France Telecom owns Orange UK, while
Telefonica owns O2. T-Mobile is currently the fourth-largest mobile operator
in the UK, with a 15% share of the market. O2 is the largest UK operator, with
a 27% share, followed by Vodafone (25%) and Orange (22%).
4th September 2009,
www.bbc.co.uk
2 National Express gets £765m bid
The largest shareholder in National Express has made a £765m
($1.25bn)takeover offer for the transport group. Spain's Cosmen family - which
owns an 18.5% stake - together with private equity firm CVC has offered 500p a
share, up from an earlier bid of 450p. Rival Stagecoach also said it had
agreed in principle to buy National Express's bus and rail operations from the
consortium if a deal went through. National Express's shares surged 13.8% to
469p, the biggest gain since May. The CVC-Cosmen consortium said its latest
offer was final, and would be withdrawn if not recommended by the board of
National Express. The offer follows recent turmoil at National Express, which
lost the rights to the East Coast route this year.
3rd September 2009,
www.bbc.co.uk
3 Pfizer whistle-blower's drug fear
A whistle-blower in the Pfizer healthcare fraud scandal has said
he felt he was swimming upstream when the firm was illegally promoting drugs.
"It's hard to do what's right when everyone else around you is following
management sales directive," John Kopchinski told the BBC's World Today. Mr
Kopchinski was awarded $50m (£31m) for helping expose Pfizer's wrongdoing.
Pfizer is paying $2.3bn after promoting four drugs for conditions different to
those for which they were approved. Ray Kerins, a spokesman for Pfizer, said
the company had a strong commitment to compliance transparency.
2nd September 2009,
www.bbc.co.uk
4 Google China chief leaves company
The man who led Google's expansion into China is leaving the
company to start his own business. Lee Kai-Fu, who joined from Microsoft in
2004, will step down as president of Google in greater China in September, the
company said. When he joined, Microsoft sued Google and Mr Lee, claiming he
had violated an agreement that prohibited him from working for a rival for one
year. The two sides later settled out of court, without releasing details. Mr
Lee went on to become the face of Google China. But during his reign Google
China had a difficult relationship with Beijing censors. In June, access to
Google in some parts of China was disrupted, amid a row over what Chinese
citizens should be allowed to view over the internet. A Chinese official also
accused Google of spreading pornography and breaking Chinese law.
5th September 2009,
www.bbc.co.uk
5 Bausch & Lomb set to axe 500 jobs
About 500 jobs are to be lost after contact lenses manufacturer
Bausch & Lomb announced plans to move production from West Lothian. The
American company has entered a 90-day consultation period with staff at its
factory in Livingston. The company plans to move the work to existing sites in
Ireland and the US. Bausch & Lomb, which has been in Livingston since 1996,
announced a phased withdrawal from the site over the next year and early 2011.
Gerald Ostrov, chairman and chief executive officer of Bausch & Lomb, was at
the plant when local management informed employees of the news.
5th September 2009,
www.bbc.co.uk
6 Pepsico among best employers for entry-level workers
India-origin Indra Nooyi-led Pepsico along with the US State
Department and General Electric have been named among the best employers to
launch a career in the US by BusinessWeek magazine. The league of best
employers is topped by accounting major Deloitte followed by three of its
competitors, Ernst & Young (2nd), PriceWaterhouse Coopers (3) and KPMG (4). In
the list of 'Best Places to Launch a Career 2009', featuring 69 entities, soft
drinks and beverages major Pepsico is placed at the 53rd position. The US
State Department is at the fifth spot while industrial conglomerate General
Electric is ranked 16. It also features the Central Intelligence Agency (CIA)
at 23rd place. Regarding the list, the publication said virtually all of them
are hiring far fewer entry-level employees than they did in 2008.
6th September 2009,
www.economictimes.com
7 Alcatel-Lucent appoints Subhash Bana as VP R&D for India ops
Telecom equipment maker Alcatel-Lucent has appointed Subhash
Bana as Vice President R&D for its India operations. Bana will oversee
engineering performance across the carrier and applications software
activities, the company said in a statement. He has over 24 years of
experience in defence, telecom, media and entertainment markets, including 14
years in Alcatel-Lucent.
2nd September 2009,
www.economictimes.com
8 Onida to give brand a makeover
In the face of India's changing consumer tastes, Onida has
decided to say goodbye to the 'devil', the company's mascot that for years
aroused envy of neighbours who didn't own its TV sets, and relaunch the brand.
The company's 'devil' ad campaign, whose tagline was 'neighbour's envy,
owner's pride, was a rage at one point in time, but the Indian multinational
feels it has outlived its objective due to change in taste and financial
capability of the consumer. At the time this famous campaign was launched,
owning a television was a matter of pride for Indians. However, things have
changed in the last 20 years due to liberalisation which has expanded market
for both domestic and global brands as well as spending capabilities and
owning a TV is no more a subject of neighbours envy.
7th September 2009,
www.financialexpress.com
9 Kraft in £10.2bn move for Cadbury
US giant Kraft Foods has proposed buying UK confectionery firm
Cadbury in a £10.2bn ($16.7bn) move. Kraft said that the purchase of the maker
of Dairy Milk would protect jobs in the UK - including saving a factory
earmarked for closure. Cadbury, whose shares leapt 36% on the news, had
unequivocally rejected the approach, Kraft said. The US firm added it wanted
to create a global powerhouse in snacks, confectionery and quick meals. As
well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand and
Halls lozenges, Trident and Dentyne gum brands, and liquorice allsorts maker
Bassett's. It span off its drinks division as a separate business last year.
8th September 2009,
www.bbc.co.uk
Global Outsourcing
10 Volkswagen to reduce outsourcing, exec tells paper
Volkswagen plans to manufacture more car parts itself rather
than buying from outside suppliers as part of a bid to boost productivity, the
German carmaker's head of production told a German newspaper. We are
increasingly thinking about insourcing, production head Jochem Heizmann told
daily Braunschweiger Zeitung in an interview provided to Reuters on Tuesday
before publication on Wednesday. It's about engineering, about jobs in
production and about making prototypes. We could also intensify in-house tool
making. And we will certainly make more components ourselves, he was quoted as
saying.
2nd September 2009,
www.reuters.com
11 Northrop Gruman Admits Late on Virginia Outsourcing Deal
According to InformationWeek, Northrop Gruman has admitted that
it is nine months behind schedule on revamping Virginia's information
technology systems. Under the ten-year, $1.9 billion outsourcing deal,
Northrop Gruman was supposed to complete the transition this past June. Now
the contractor says the move won't be complete until at least March 2010. The
admission is part of a corrective action plan "the contractor submitted to the
Virginia Information Technologies Agency. Says Tom Shelman, VP and general
manager for the Civil Systems Division at Northrop Grumman Information
Systems. Controversy reached a height in June when Virginia lawmakers began an
investigation into the outsourcing deal. There has been at least one casualty
of the deal: State CIO Lemuel Stewart, who was axed shortly after a
presentation in which he claimed Northrop Grumman was not meeting its
contractual obligations.
2nd September 2009,
www.tutorial-reports.com
12 Spirit will outsource some IT work to IBM
Spirit AeroSystems said Wednesday that it is outsourcing some of
its IT work to IBM, a move that will result in the elimination of jobs for 37
Spirit employees and 15 contractors. Debbie Gann, Spirit spokeswoman, said the
company would work with the employees to find them other jobs with Spirit,
with IBM or in the community. She said the move came as part of an evaluation
of "what we're good at, what other people are better at. Though Spirit is
based in Wichita, it has to be able to support its operations worldwide, she
said. Spirit has seven facilities in five countries. In addition to the United
States, Spirit has operations in the United Kingdom, China, Russia and
Malaysia. The employees affected are among 455 Spirit employees and 22
contractors in IT. Gann said. Most were on Spirit's help desk.
4th September 2009,
www.tutorial-reports.com
13 Innodata Isogen Signs $4 Million E-Book Contract with New Client
INNODATA ISOGEN, INC. a leading provider of knowledge process outsourcing
services, as well as publishing and related information technology services,
today announced that it has signed an agreement to provide e-book production
services to a new client. Innodata Isogen estimates that the agreement will
generate approximately $4 million in revenue over a period of about two years.
The agreement with this client requires that Innodata Isogen not disclose the
client`s name. The agreement calls for Innodata Isogen to convert thousands of
titles from hard copy and various electronic formats - such as PDF, InDesign
and Quark - to the EPUB format. EPUB, the official standard of the
International Digital Publishing Forum, is an open standard for "reflowable"
content, meaning that the text display can be optimized for almost any device,
and is increasingly accepted as the leading standard for e-book production and
publication.
3rd September 2009,
www.tutorial-reports.com
14 CanWest to Outsource Ad Production
Facing $4 billion in debt and negotiating with creditors,
Canwest Global Communications Corp. informed employees last week that it will
outsource some ad-production now performed in Calgary and Regina to Affinity
Express, Elgin, Ill., which has facilities in Pune, India, and Manilla, the
Philippines. The number of jobs the move will eliminate at the Winnipeg-based
group is not yet known. A Canwest spokeswoman said the cost-cutting measure
was taken in response to the industry's and the overall economy's downturn.
The move follows similar outsourcing earlier this year at Canwest's Ottawa
Citizen, as well as at numerous U.S. newspapers in recent years.
4th September 2009,
www.editorandpublisher.net
15 APS explores outsourcing some IT work
Arizona Public Service Co. is researching what it costs to have
computer-programming work done offshore, but a company official said APS has
no plans to send jobs overseas. The move comes as utilities face increasing
pressure to keep prices low, but some regulators say using offshore labor
might be going too far. APS has about 400 employees who work in its
information-services department, and another 400 or so contractors to augment
its staff. In June, APS asked for quotations from contractors in hopes of
finding some new companies that can provide labor and to set standard prices
for the work, spokesman Dan Wool said. APS asked for hourly rates, in U.S.
dollars, for workers who can perform a variety of tasks, including areas such
as Oracle databases, Web development and help-desk support.
5th September 2009,
www.tutorial-reports.com
16 Outsourcing from Belgium
Belgian Grand Prix is not the only race where Indian hopes are
riding high. A worsening economic crisis is forcing companies such as AXA,
Dexia Bank, Belgacom, drugmaker UCB and car insurer Allianz in Belgium explore
IT offshoring and back-office projects, making it almost USD6.5-billion
opportunity for Indian outsourcing vendors including TCS, Infosys and Wipro
apart from MNC rivals. According to Quantum Step, an outsourcing advisory
firm, customers in Belgium will spend around USD1.8 billion on infrastructure
management outsourcing, almost USD2.6 billion on application development and
maintenance and nearly USD2 billion on BPO this year. We have recently
started discussions with some Indian suppliers for pure offshoring of our ERP
maintenance "it would be fair to assume that until last year, we were not
prepared for any such initiative", said an official at one of the biggest
Belgian enterprises.
7th September 2009,
www.offshoringtimes.com
Global Economy
17 Boost for eurozone recovery hopes
Eurozone economic activity rose in August for the first time in 15 months,
according to an influential survey. The latest Purchasing Managers' Index (PMI)
figure rose to 50.4, raising hopes that the eurozone could soon emerge from
recession. Any score above 50 shows an increase in economic activity. This is
the first time the index has been above this benchmark score since May 2008.
But separate figures show that retail sales in the eurozone fell in July. Also
on Thursday, the European Central Bank kept its main interest rate on hold at
1%. The disappointing retail sales figures also cast doubt on a quick
recovery. Sales in the 16 countries that use the euro fell by 0.2% in July
compared with the previous month, defying expectations of a rise in consumer
spending. Weak sales of food, drink and tobacco, down 0.5%, caused the overall
drop, the official Eurostat figures showed. There was no change in sales of
other goods.
3rd September 2009,
www.bbc.co.uk
18 Downturn in US economy 'ending'
US Federal Reserve policymakers are increasingly confident the
downturn in the US economy is ending, minutes from their latest meeting show.
The assessment by recently re-appointed Fed Chairman Ben Bernanke and his
colleagues struck a more upbeat tone than the last assessment in late June.
But there was uncertainty about how quickly the economy would grow in 2010.
Unemployment, which is set to move above 10% this year, may impact on consumer
behaviour, they warned. However the Fed said that consumer spending appeared
to be levelling out and that the housing market was becoming more solid, while
manufacturing was stabilising. The prospects for US exporters will also
brighten, as the economies of other countries improved, the policymakers
added.
4th September 2009,
www.bbc.co.uk
19 Central banks back new regulation
Central bankers have backed new measures to strengthen
supervision of the global banking industry. A meeting of the Bank for
International Settlements (BIS), which consists of the world's central banks,
pledged to increase bank's capital requirements. The plans should
substantially reduce the probability and severity of economic and financial
stress, the BIS said. But the BIS did not set out a timeline for
implementation of the proposals. The measures will be outlined in detail by
year-end and be introduced in a way that does not impede the recovery of the
real economy. The BIS meeting comes just after the finance ministers from the
Group of 20 richest nations meeting in London backed a system that rewards
long-term performance rather than short-term risk-taking.
7th September 2009,
www.bbc.co.uk
20 Airline losses 'hit $1bn a month'
Airlines are likely to have lost more than $6bn (£3.7bn) in the
first half of 2009, according to the International Air Transport Association (Iata).
This figure - an average of $1bn a month - is double the amount Iata said in
December that airlines would lose during the whole of 2009. Airlines made
losses between April and June, when they would usually make 50% of their
annual profits, Iata said. Meanwhile, budget airline SkyEurope has filed for
bankruptcy. The loss-making Slovakian airline, which was set up in 2001, has
suspended all flights with immediate effect. And American Airlines has said it
is cutting 921 flight attendant jobs as it deals with a downturn in
passengers, and lower revenue.
2nd September 2009,
www.bbc.co.uk
21 Further decline in Indian exports
India's exports declined at an annual rate of 28% in July, the
10th month in a row of falls, after the weak global economy continued to hit
demand. The country exported $13.6bn (£8.2bn) of goods and services during the
month, the official figures showed. At the same time, India's imports were
down 37% to $19.6bn in July. Last week, the Indian government announced a
series of measures to help exporters, including tax breaks and better access
to finance. The latest export figures come a day after the Central Statistical
Organisation said the country's economy expanded at an annual rate of 6.1%
between April and June, up from 5.8% from January to March, lifted by
government stimulus spending.
4th September 2009,
www.bbc.co.uk
22 G20 pledges tougher bank action
Finance ministers from the world's most powerful economies have
agreed a series of measures to try to regulate the global banking system. They
want a system that rewards long-term performance rather than short-term
risk-taking. However the G20 meeting in London did not agree on specific
limits on the amounts individual bankers get paid. Britain, the US and Canada
opposed the idea, but the Financial Stability Board is to examine the issue.
It will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania
later this month. The G20 countries agreed on measures requiring banks to
disclose the pay and bonuses of their highest-paid employees and to allow
bonuses to be "clawed back" if decisions which seemed successful later go
wrong.
8th September 2009,
www.bbc.co.uk
23 Liechtenstein deal 'to net £1bn'
A breakthrough deal to recover lost tax from Britons holding
bank accounts in Liechtenstein will net £1bn, Chancellor Alistair Darling has
said. HM Revenue & Customs struck an agreement last month with the Alpine tax
haven to exchange information. Up to 5,000 British investors are thought to
have funds in secret accounts in the country - which would mean an average
pay-back of £200,000. The Revenue has requested details of 100,000 offshore
accounts worldwide. Tackling offshore evasion tax evasion and tax havens was
"not only fair" but "particularly important... especially at a time when we
expect public spending in the period ahead to be tighter", Mr Darling told the
CBI Scotland annual dinner.
5th September 2009,
www.bbc.co.uk
Global Markets
24 Asia shares edge up on Shanghai jump
Asian shares edged up on Thursday as a surge in the volatile
Shanghai market helped underpin indexes around the region, offsetting a rocky
start to the month on worries the global economic recovery is losing steam.
European stocks were set to struggle in early trade after a dip on Wall
Street, with futures on the Dow Jones Eurostoxx 50 down 0.2%. The sharp
pull-back in US shares on Tuesday stirred some worries that equities may have
topped out and are due for a deeper retreat after rallying almost non-stop for
six months on the improving corporate earnings and growth outlook. The steady
drop in government bond yields over the past month has also been taken as a
worrying sign that bond market is ahead of stocks in seeing an economic
deterioration on the horizon.
3rd September 2009,
www.livemint.com
25 US stocks rise on data, gold gains as hedge
US stocks rose on Thursday after better-than-expected retail
sales in August spurred optimism, but gold climbed to almost $1,000 an ounce
in a sign of lingering risk aversion and fear of future inflation. Crude oil
slipped, settling just under $68 a barrel, as disappointing news from the
labor market outweighed upbeat data showing that the US service sector and
retail sales improved. The yen fell from a seven-week high against the US
dollar and declined versus other major currencies as a bearish tone earlier
this week in world stock markets eased and reduced the Japanese currency’s
safe-haven allure. US government debt prices fell, pulling benchmark yields
back from seven-week lows, amid nervousness ahead of a key US employment
report on Friday.
4th September 2009,
www.livemint.com
26 European shares gain after 4-day losing run; banks up
European equities rose on Friday after four sessions of losses,
with financial and commodity shares gaining ground ahead of keenly-watched US
non-farm payrolls data. At 0818 GMT, the FTSEurofirst 300 index of top
European shares was 0.8% higher at 957.08 points. It is up 48% since a record
low in March, but still down about 17% on a year ago just before the collapse
of Lehman Brothers accelerated the global credit crisis. Banks were among top
gainers, with Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of
Scotland, Swedbank and KBC up 1 to 4.8%. Miners got strength from higher
metals prices, with zinc jumping 5% to 13-month high on renewed confidence in
the global economy. Gold has gained about 5% in two days to trade near $1,000
an ounce, copper rose 0.6%, and aluminium was up 0.5%.
4th September 2009,
www.livemint.com
27 WTO ruling in favour of Boeing reflects pre-crisis time
The World Trade Organization’s ruling that European loans for
Airbus were illegal subsidies is being cheered by US lawmakers loyal to the
Boeing Co, even though the preliminary decision may seem quaint in a world
where government subsidies, bailouts and takeovers are now commonplace.
Friday’s ruling reflects the world as it existed five years ago when the
United States brought the case against the European Union, arguing that such
subsidies were unfair trading practices. But since then, the deep global
recession has led to hundreds of billions of dollars in government subsidies
and intervention in nearly all the world’s major economies, including big
government ownership stakes in banks, and auto and insurance companies.
Furthermore, other countries, including China, Japan and Brazil, are busy
expanding or developing their domestic airline industries.
5th September 2009,
www.livemint.com
28 Global economy finally starts expanding again
It’s not just the manufacturing sector that has started to
expand globally—the services sector, too, is expanding. The JPMorgan Global
Services Business Activity Index was at 50.5 in August, the first expansion in
15 months. In India, the new services purchasing managers’ index (PMI),
sponsored by HSBC Holdings Plc, showed a reading of 54.9 in August. That’s
higher than the manufacturing PMI of 53.2, implying the services sector is
recovering more rapidly than manufacturing. But we need to be cautious about
that conclusion, because one of the components of the index is the business
expectations sub-index, which has jumped sharply to 73.1. Optimism may be too
high. The gross domestic product (GDP) data for the first quarter of 2009-10
showed that the overall growth rate for the services sector was lower than in
the two preceding quarters.
6th September 2009,
www.livemint.com
29 Bank-owned asset management firms to benefit in new regime
Bank-owned asset management companies (AMCs), and those that
don’t depend hugely on distributors to sell mutual funds, will enjoy an
advantage over others in the Rs7.5 trillion Indian mutual fund industry after
the recent regulatory changes, said a report of consulting firm McKinsey and
Co. Capital markets regulator Securities and Exchange Board of India (Sebi)
has recently banned AMCs from charging investors upfront fees. It also clamped
restrictions on the so-called exit loads. There are 38 AMCs and roughly
one-third of them are owned by banks. The Sebi move has forced AMCs to take a
new look at their revenue models as they now cannot charge sales and
distribution expenses to investors. According to the McKinsey report, the
importance of proprietary channels will increase as bank-owned AMCs look to
leverage captive infrastructure.
7th September 2009,
www.livemint.com
30 Sensex crosses 16k, ends at 15 month high at 16,016.32
The key benchmark Sensex of the Bombay Stock Exchange (BSE)
today crossed the 16k mark to end at a 15-month high of 16,016.32 with a big
gain of 327.20 points on heavy speculative demand from Foreign Institutional
Investors (FII'S) and mutual funds, propelled by strong global cues. The Nifty
index of the NSE also ended at a 15 month high at 4782.90 with a gain of
102.50 points. The Sensex and Nifty closed at a fresh 2009 high on the back of
support from heavyweights and hopes of an easing recession.
7th September 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