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 95
Global Business Update
(17th Dec.’08----23rd
Dec.’08)
Content
Global Corporate
1 Tata 'to inject cash into Jaguar'
2 Toyota braced for historic loss
3 Furniture chain MFI closes down
4 Union members back BT pension cut
5 Wagon Automotive cutting 292 jobs
6 We’re hiring 90,000 people: Anil Ambani Group
7 IBF asks Subhiksha to clear advt fee dues
8 Arriva expects to hit full-year target
Global Outsourcing
9 Vengroff, Williams and Associates, Inc. Identifies
Outsourcing Trends for 2009
10 Accenture results top Wall St view, outlook lower
11 Outsourcing companies may suffer from exposure to US automotive industry
12 i2 Technologies apoints CEO
13 Credit crisis: Outsourcing mania set to grow bigger
14 IndiaBook Indian SEO Company launches Search Marketing Outsourcing Services
15 Affordable Outsourcing for Small Business
Global Economy
16 Brown warns on volatile oil price
17 Surprise rise in UK retail sales
18 Dollar and sterling slide further
19 India inflation at nine-month low
20 Iraq economy 'on track' says IMF
21 IMF urges spending to spur growth
22 Japan forecasts no growth in 2009
Global Markets
23 Weaker yen boosts Japanese shares
24 Wall Street stocks decline in early trade
25 US stocks slip after Toyota warning
26 Markets edge lower amid choppy trade
27 US bankruptcies surge 30%, touch 10.4 lakh cases
28 US investors pull $72 bn out of stock funds in Oct
Global Corporate
1 Tata 'to inject cash into Jaguar'
Tata Motors, the owner of Jaguar Land Rover, is to inject tens of millions of
pounds into the British carmaker, according to the Financial Times. A
spokesman for Tata Motors did not deny the report. A cash injection by the
Indian owner would give the UK government more time to decide whether to use
public money to bail-out the company. Business Secretary Lord Mandelson had
cast doubt on a bail-out, saying the state was a lender of last resort.
Debasis Ray, head of corporate communications for Tata, did not deny the
report but would not say how much money would be injected. The carmaker has
asked the government for financial support and its case has been backed by
unions which say the industry needs help. Labour peer Lord Bhattacharyya had
suggested ministers were discussing a £667m loan package for Jaguar.
22nd December 2008,
www.bbc.co.uk
2 Toyota braced for historic loss
Japan's biggest carmaker Toyota has forecast its first annual
loss in 71 years due to plummeting sales and a surge in the value of the yen.
The firm said it expected a loss of 150bn yen (£1.1bn) in yearly operating
profits - from its core operations. Company chief Katsuaki Watanabe said the
current downturn was of a size that came only "once in a hundred years". Japan
posted a trade deficit in November of $2.5bn (£1.7bn) as exports fell at a
record rate. The rising yen saw export levels down 26.7% from a year earlier,
the ministry of finance said. The carmaker had recorded an operating profit of
2.27 trillion yen last year. Toyota said it still expected to make a profit on
a net level for the year ended March but has cut its forecast sharply to 50bn
yen, down from a previous estimate of 550bn yen. It is the second profit
warning by Toyota in less than seven weeks. This latest estimate is far lower
than its net profit of 1.7 trillion yen earned the previous year.
21st December 2008,
www.bbc.co.uk
3 Furniture chain MFI closes down
Furniture retailer MFI has now ceased trading with the loss of
1,400 jobs after the business failed to sell, its administrators have said.
The company's 111 stores have now all been closed. Customers with outstanding
orders will get a refund. MFI went into administration in November as the
downturn in the housing market took its toll on demand for new kitchens and
bedrooms. Sales had fallen in recent years due to competition from rivals such
as Ikea. The administrators MCR could not say what redundancy payments would
be made to the staff who had lost their jobs. Around 30,000 customers have
been left with outstanding orders. Between 40% and 50% paid by debit card,
cash or cheque. This means they have to rely on the administrators to refund
them, along with the MFI's other creditors. They have been advised to apply
for a refund.
19th December 2008,
www.bbc.co.uk
4 Union members back BT pension cut
Members of the Communication Workers Union (CWU) have given
strong support to plans which will cut the benefit of their pension scheme. On
a 40% turnout they voted by 67% to 33% to accept BT's recent proposals. BT
wants to cut the traditional link with final salaries, raise the normal
retirement age to 65, and build up pension entitlement at a slower rate. The
changes for 65,000 staff in the BT final salary scheme will affect pensions
earned after 1 April 2009. Maintaining the defined benefit pension and
improving the defined contribution pensions in BT have been our key objectives
in these negotiations, said Andy Kerr, deputy general secretary of the CWU.
17th December 2008,
www.bbc.co.uk
5 Wagon Automotive cutting 292 jobs
Wagon Automotive has been forced to lay off 292 workers after
the UK arm of the car parts business went into administration earlier this
month. The jobs will go as the company's Walsall manufacturing plant closes
after administrators Zolfo Cooper failed to sell the business. Wagon has been
hit hard by the dramatic global slump in car sales and by competition from low
cost rivals. The company fell into administration after it failed to secure
new funding. Its sister site in Coventry remains open. The Walsall plant makes
panels and door parts for Honda, Ford, General Motors, Land Rover and Nissan,
all of which have suffered sharp falls in sales. Several of its customers have
cut back production or temporarily shut plants in order to reduce their own
costs.
20th December 2008,
www.bbc.co.uk
6 We’re hiring 90,000 people: Anil Ambani Group
In the midst of massive layoffs being announced by various corporate houses
hit by a global economic slowdown, Anil Ambani Group on Friday said it is not
planning any job reduction and is rather planning to create up to 90,000
employment opportunities in the next few months. Debunking the reports that
the group is laying off 6,000 people in its financial services and
entertainment businesses, a spokesperson said, there are no layoffs. In fact,
the coming three months are high investment period for tax saving products and
we are going to appoint almost 75,000 to 90,000 agents and sales
representatives in the coming months, he added. Earlier this month, Reliance
Life Insurance's Chief P Nandagopal had said that the company would recruit
90,000 insurance agents and 2,500 sales managers by March 2009.
21st December 2008,
www.financialexpress.com
7 IBF asks Subhiksha to clear advt fee dues
Consumer supermarket chain Subhiksha Trading Services has come
under fire from television channels for not clearing advertising dues that run
around Rs eight crore. The Indian Broadcasting Federation, the apex body of
television channels, has written a letter to the retailer asking dues of Rs
7.8 crore to be cleared. The broadcasters have already put an embargo on
taking up advertising spots for the retail chain. When contacted a
spokesperson of Subhiksha Trading Services confirmed receiving the letter from
IBF but said the company was not directly responsible for the dues. Some of
our media dealings are through our media buying agency and some are handled
directly with the respective channels. For channels that we deal directly
with, we have no dues, the spokesperson said.
22nd December 2008,
www.financialexpress.com
8 Arriva expects to
hit full-year target
Arriva, the bus and train operator, on Thursday said it expected to fulfil its
predictions of achieving a 50 per cent increase in sales and improving revenue
growth for the full year. In a trading update, the group said revenue growth
at its UK bus operations were stable at 6.3 per cent on provincial services
and 4.5 per cent in London. Sales in continental Europe were up 50 per cent
for the 11 months to November 30. The company predicted a £60m increase in its
fuel bill for 2009. Arriva have fixed 85 per cent of fuel requirements for
2009 at an average of 42.4p a litre, compared with 29.2 paid for 2008.
20th December 2008,
www.financialexpress.com
Global Outsourcing
9 Vengroff, Williams and Associates, Inc. Identifies Outsourcing Trends for
2009
Vengroff, Williams & Associates, Inc., the leading provider of receivables
management and business process outsourcing solutions, forecasts an increase
in outsourcing market activity as well as some major paradigm shifts to the
outsourcing framework in 2009. Increased adoption by mid-size firms and
financial institutions of BPO and more stringent governance expectations will
be driving factors for the year ahead. The capability to manage relationships
for mutual value is what will differentiate the top providers in an
increasingly commoditized environment. Looking back, VWA saw 2008 as a pivotal
year for the credit markets and as such predicated that CFOs would elevate
receivables to their list of priorities to ensure that their cash flow was
optimized to ride out the anticipated tough economy in 2008. According to VWA
president Robert Sherman, the company has in fact seen a 32% increase in new
business in 2008. More than 30% of VWA's new client acquisition through
September 30, 2008 is related to third party collection contracts.
18th December 2008,
www.tutorial-reports.com
10 Accenture results
top Wall St view, outlook lower
Technology outsourcing and consulting firm Accenture Ltd on
Thursday reported a quarterly profit that topped Wall Street's forecast, but
the company lowered its fiscal-year outlook slightly due to currency effects.
Accenture showed revenue growth over most of its operating groups in the
quarter, and Chief Executive William Green said the results demonstrated its
relative resistance to the global financial turmoil. People are betting their
companies on some of the initiatives that they're taking, and we're the kind
of people they'll come to in order to make sure they get the results they
need, Green told Reuters. He acknowledged a very somber, very quiet mood among
some of the company's clients. But he said the current business climate can
provide opportunities for Accenture, such as growing its outsourcing business.
There’s not a board of directors out there who isn't asking the management,
have you considered sourcing alternatives? Accenture said its net profit in
its first quarter ended Nov. 30 rose to $479.9 million, or 74 cents a share,
from $381.3 million, or 60 cents a share, in the year-ago period.
17th December 2008,
www.guardian.co.uk
11 Outsourcing companies may suffer from exposure to US automotive industry
The failure of the US senate to approve the $14 billion bailout
of the ailing US automotive industry sent shock waves throughout world equity
markets last week, and the specter of a major US automotive company going
bankrupt now looms large. While it seems almost unconscionable that the US
government would allow iconic brands like Ford, General Motors or Chrysler to
go under, Lehman Brothers' collapse serves as a lesson that anything could
happen in the current economic climate. While outsourcing contracts were
considered to be 'safe', long-term revenue streams, the current malaise in the
automotive industry will be of great concern to those that are exposed to it.
Using its IT Services Contracts Database of all publicized outsourcing
contracts worth over $1m, Datamonitor estimates the value of contracts between
automotive companies and IT outsourcers globally to be over $7.5 billion to
2015. Nearly $3 billion of these contracts are sourced from the US Big Three
alone, with almost all of the exposure linked to General Motors. Worryingly,
this figure is just for the deals that have been made public: if General
Motors' approach to outsourcing has been replicated by its more opaque peers,
the total value of US contracts still outstanding could reach nearer $8
billion.
21st December 2008,
www.tutorial-reports.com
12 i2 Technologies apoints CEO
Software maker i2 Technologies Inc. said Friday the board of
directors has appointed Jackson Wilson Jr. to the position of chief executive
officer. Wilson, who is executive chairman, is replacing Dr. Pallab Chatterjee,
who has decided to leave Dallas-based i2 Technologies to pursue other
opportunities, the company said. Prior to this appointment, Wilson was a
member of the i2 board of directors. He was appointed executive chairman of
the board last May. He also has served as chairman of the audit committee and
the strategic review committee. In August 2004, Wilson retired as chief
executive officer of Accenture’s Business Process Outsourcing. Prior to that,
he served Accenture Technology Ventures as managing general partner.
20th December 2008,
www.tutorial-reports.com
13 Credit crisis: Outsourcing mania set to grow bigger
The outsourcing mania is all set to grow bigger. Contrary to the
popular perception that outsourcing will take a hit in the wake of slowdown,
companies in the American and European economies are increasing the use of
global resources to come through the crisis. The plan of action includes
business process redesign, integration of offshoring processes and strategic
cost management to improve co-ordination and efficiency. Be it knowledge
process, business process or legal process, outsourcing in all forms is set to
take a giant leap as it has become a “strategic priority” for companies in the
uncertain times.
22nd December 2008,
www.economictimes.com
14 IndiaBook Indian SEO Company launches Search Marketing Outsourcing Services
India SEO a Professional Internet marketing Firm located in
Chandigarh, northern part of India, since 1999 has launched an outsourcing of
organic search marketing services at economical rates to its strategic SEO
partners and customers in UK, US, Canada, Australia, and other Europeans
countries with the beginning of 2009. IndiaBook CEO says "Recent recession in
financial market has open a new door of opportunity for the Indian SEO
agencies to provided SEO services world wide because of advantage of
cost-effective services, increased efficiency, increased productivity, shared
risks, reduced operating costs, increased quality, better services and more
time to focus on core competencies.
23rd December 2008,
www.tutorial-reports.com
15 Affordable Outsourcing for Small Business
For many who like to do things yourself it is important to keep
in mind that proper knowledge of small business accounting is required if you
want to keep your finances in order. One important aspect which will help you
decide whether or not you should hire someone to the accounting job is to know
to the best of your abilities what your budget and financial responsibilities
are. Remember that bookkeeping is just one of the many expenses you will incur
during the process of running your business so you need to be able to properly
allocate your resources.
22nd December 2008,
www.potterworldonline.com
Global Economy
16 Brown warns on volatile oil price
Volatile oil prices remain a threat to the global economy,
Gordon Brown has warned, following the sharp fall in prices in recent months.
In a speech to an energy summit in London, Mr Brown said the "wild
fluctuations" in prices in recent months had damaged the global economy. He
called for improved regulation of oil markets to stabilise prices and
investment in clean energy technology. Prices have tumbled from $150 a barrel
to below $40 in the past six months. Prices are now at their lowest level
since the middle of 2004 after hitting record levels in July. Mr Brown told
energy ministers that the high oil prices of recent years had stoked inflation
and forced governments to keep interest rates much higher than would have
otherwise been the case. This had hurt families and businesses, particularly
in developing countries dependent on oil imports.
19th December 2008,
www.bbc.co.uk
17 Surprise rise in UK retail sales
UK retail sales rose unexpectedly last month, official figures
have shown. Total sales volumes climbed 0.3% in November from the previous
month, the Office for National Statistics said. Sales were up 1.5% from a year
ago. Analysts had been expecting sales to fall in November, and recent surveys
have suggested trading has been weak. The rise in monthly sales was led by
household goods, which were up 3.9% in November - their biggest monthly
increase since July 2007. Food sales were up 0.2% for the month, while those
of clothing and footwear were down 0.1%. The level of overall retail sales
made via the internet was 3.8%, up from 3.2% in October.
18th
December 2008,
www.bbc.co.uk
18 Dollar and sterling slide further
The dollar and the pound have weakened
further as interest rate cuts continue to undermine the two currencies. The
dollar fell to $1.423 against the euro after the Federal Reserve slashed rates
to between zero and 0.25%. The pound also hit a new record low against the
euro of 1.057 euros on the expectation of further cuts in interest rates by
the Bank of England. And some branches of the Travelex money exchange at
Heathrow airport were offering less than 1 euro for £1. Branches at Terminals
1, 2 and 5 are offering travellers a rate of 0.9998 euros to the pound. The
commercial rate offered at foreign exchanges is almost always lower than that
used in financial markets. In other currency movements, the pound has also
weakened against the dollar, falling by almost 4 cents to $1.505.
19th December 2008,
www.bbc.co.uk
19 India inflation
at nine-month low
Inflation in India has fallen sharply, mainly due to
declining fuel prices, official figures show. The wholesale price index
dropped to a nine-month low of 6.84% in early December - down from a high of
almost 13% in August. Analysts say the lack of demand for commodities such as
steel and coal may also have had an effect. The Indian government has
announced a series of measures in recent weeks to boost flagging economic
growth. These include $4bn of extra spending to stimulate the economy. The
rapid decline in inflation reinforces the impression that the Indian economy
is slowing sharply after the economic boom in recent years. Some economists
are predicting that the growth rate will be cut in half in 2009.
20th December 2008,
www.bbc.co.uk
20 Iraq economy 'on track' says IMF
Economic development in Iraq in 2008 has been "encouraging"
according to a review of the country's economy by the International Monetary
Fund (IMF). Improved security and a more stable political environment mean
economic activity has picked up on the back of increased oil production and
exports. IMF deputy managing director Takatoshi Kato said the authorities had
kept the economic programme on track. But the IMF warned that the sharp drop
in the price of oil may stall progress. Oil is now more than $100 a barrel
cheaper than it was in July this year. Continued efforts to stimulate economic
growth depend on continued improvements in the security situation and
prioritisation in the use of lower oil revenues, Mr Kato said. Oil revenue in
2009 would be much lower than in 2008, he added. To compensate, the Iraqi
government has already prepared measures to reduce spending next year.
19th December 2008,
www.bbc.co.uk
21 IMF urges spending to spur growth
More spending by governments will be needed to stimulate
worldwide economic growth, the head of the International Monetary Fund (IMF)
has told the BBC. Dominique Strauss-Kahn said he feared measures announced by
the Group of 20 nations last month would not be enough. The IMF has already
cut its forecast for global growth next year, and he said the next projection,
due in January, would be even worse. Mr Strauss-Kahn spoke of 2009 as really
being a bad year. I'm specially concerned by the fact that our forecast,
already very dark... will be even darker if not enough fiscal stimulus is
implemented, he said in an interview with BBC Radio 4.
21st December 2008,
www.bbc.co.uk
22 Japan forecasts no growth in 2009
Japan's government has forecast that the country's economy will
have zero growth in the year ending March 2010. It is the first projection of
no growth from the world's second largest economy in seven years. It follows a
revised projection for the current fiscal year that the economy will shrink by
0.8%, instead of the 1.3% growth forecast in July. The Bank of Japan (BOJ) has
cut its key interest rate to just 0.1%, down from 0.3%, taking it lower than
US rates. The BOJ leaves itself exposed to pressure to now cut rates to zero
Koji Ochiai, Mizuho Investors Securities. The BOJ also announced that it would
increase its purchase of Japanese government bonds to 1.4 trillion yen
($15.7bn; £10.5bn) a month, up from 1.2 trillion yen. A small rate cut alone
would not help the economy much, said Norio Miyagawa, economist at Shinko
Research Institute.
19th December 2008,
www.bbc.co.uk
Global Markets
23 Weaker yen boosts
Japanese shares
Japanese shares rose, despite the release of data showing a big
fall in exports in November, as a weaker yen gave relief to exporters.
Overall, Asia-Pacific stock markets got off to a mixed start for the week.
Early gains in Taiwan, Hong Kong, South Korea and Australia on the US
government’s plans to help its biggest car makers disappeared as trading
progressed. The FTSE Asia Pacific index was 0.3 per cent lower by late
afternoon in Hong Kong. Oil rose in Asia on plans for production cuts by the
members of the Organisation of Petroleum Exporting Countries. Nymex light
sweet crude was 56 cents higher than on Friday in New York at $42.92 a barrel
in Singapore.
22nd December 2008,
www.ft.com
24 Wall Street stocks decline in early trade
US stocks fell slightly in early trade on Monday as investors
reacted to the government’s announcement last Friday of a bailout for the
vital auto sector and new details of President-elect Obama’s planned economic
stimulus package. Trading volume was expected to be thin during the
holiday-shortened week. Many analysts are expecting a round of bargain hunting
to end the year. Mr Obama has expanded the goals of his proposed economic
stimulus, with a plan to create or save an additional 500,000 jobs. The
President-elect raised his jobs target over the next two years to 3m – up from
the 2.5m goal set last month – after US unemployment hit its highest level for
15 years in November.
20th December 2008,
www.ft.com
25 US stocks slip after Toyota warning
Wall Street began a holiday-shortened week cautiously on Monday,
slipping as investors reacted to a bleak outlook from Toyota Motor and
disappointing earnings from drugstore operator Walgreen. Trading volumes were
very low, however, and are likely to stay that way throughout the week. So the
market's movements may not be indicative of its long-term direction. A
truncated week is going to make it tough to generate any firm takeaways from
trading, said Craig Peckham, equity trading strategist at Jefferies & Toyota
and Walgreen provided more evidence of companies' struggles amid a sharp drop
around the world in demand for all types of products. Walgreen's profit fell
10 per cent in its fiscal first quarter, short of Wall Street expectations,
due to the costs of opening more than 200 new stores. The company said it will
slow down its expansion because of the recession.
22nd December 2008,
www.profit.ndtv.com
26 Markets edge lower amid choppy trade
Weak Asian stocks and caution ahead of the expiry of the monthly
derivatives contracts weighed on the market. Nevertheless, the market breadth,
indicating the overall health of the market, was strong, on optimism from rate
cut by India's biggest lender and on a likely second government stimulus
package for the economy. The BSE 30-share Sensex was down 9 points. The Nifty,
gained 8 points, to trade at 3,085. The near month December 2008 derivatives
contracts will expire on Wednesday, 24 December 2008, as the markets are
closed on Thursday, 25 December 2008, for Christmas. Volatility was high right
from the onset of the trading session. After an initial slide, the market
firmed up in early trade. It retreated shortly to reach the day's low in
morning trade before bouncing back. The market moved between positive and
negative zone later. India's largest commercial bank State Bank of India (SBI)
rose 1.25% after it slashed its lending rate by 75 basis points, with effect
from 1 January 2009.
20th December 2008,
www.profit.ndtv.com
27 US bankruptcies
surge 30%, touch 10.4 lakh cases
The world's largest economy, the US, has seen a spurt in
bankruptcy cases, with such filings jumping as much as 30 per cent for 12
months ended September 30 compared to the year-ago period. According to the
Administrative Office of the US Courts, as much as 10.4 lakh bankruptcy cases
were filed in federal courts across the country for the year ending September
30. The figure represents a 30 per cent surge in comparison with just eight
lakh filings in the same period a year ago. For the nation's Federal
Judiciary, the fiscal year ends on September 30. The latest bankruptcy data
are for October 1, 2007 to September 30, 2008. Interestingly, September was
the month in which "the highest of any 12-month period" bankruptcy cases were
filed after the implementation of the Bankruptcy Abuse Prevention and Consumer
Protection Act in 2006. It was September, when the Lehman Brothers filed for
Chapter 11 bankruptcy protection, the largest bankruptcy filing in the US
history with the Wall Street company holding over 600 billion dollars in
assets.
19th December 2008,
www.profit.ndtv.com
28 US investors pull $72 bn out of stock funds in Oct
With stock markets collapsing amid the global economic turmoil,
investors are losing faith in equities and have pulled out as much as $72
billion from stock funds in October alone. According to the Wall Street
Journal, one of the characteristics of the long market downturns in the 1930s
and the 1970s has returned and rank-and-file investors (retail investors) are
losing faith in stocks and have pulled out record sums from equity schemes of
mutual funds. Citing data from the Investment Company Institute, a mutual fund
trade group, the Wall Street Journal report stated that investors pulled out a
record $72 billion from stock funds in October alone. However, more recent
figures are not available but mutual-fund companies say withdrawals have
remained heavy. It further stated that if history was any guide, the funds are
unlikely to return quickly. The WSJ report said that individual investors
arguably form the bedrock of the market, but it's difficult to exactly know
about their stock holding as they own equities through mutual funds,
retirement accounts and other vehicles.
19th December 2008,
www.profit.ndtv.com
Compiled by:
Himanshu Gupta
BBA (MAHE) L3,S2 - 3rd Year
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
www.SkylineCollege.com