Various Forms of Exchange Control

Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by non-residents.    The various forms that exchange control has taken are briefly discussed below: 1. Exchange Pegging This device is usually adopted during war in order to minimize exchange fluctuations. The internal value of a currency may depreciate due to inflation but the government may seek to keep its external value at a higher level than warranted by the purchasing power parity in order to facilitate international transactions. England during First World War and again in the Second World War adopted the method. Between 1916 and 1919, the Sterling was kept artificially pegged at 4.765 dollars — a value which was higher than the real value of the Sterling. This was done by raising loans in America and through these funds, purchasing Continue reading

Internal Factor Evaluation (IFE) Matrix

An Internal Factor Evaluation (IFE) Matrix is a strategy formulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all €‘powerful technique. A thorough understanding of the factors included is more important than the actual numbers. An  Internal Factor Evaluation (IFE) Matrix can be developed in five steps: List key internal factors as identified in the internal €‘audit process. Use a total of from ten to twenty internal factors, including both strengths and weaknesses. List strengths first and then weaknesses. Be as specific as possible, using percentages, ratios, and comparative numbers. Assign a weight that ranges from 0.0 (not important) to 1.0 (all Continue reading

Evaluation of Acquisition Targets

Valuing an acquisition candidate is similar to valuing any investment. The analyst estimates the incremental cash flows, determines an appropriate risk-adjusted discount rate, and then computes the net present value (NPV). If firm A is acquiring firm B, for example, then the acquisition makes economic sense if the value of the combined firm is greater than the value of firm A plus the value of firm B. Synergy is said to exist when the cash flow of the combined firm is greater than the sum of the cash flows for the two firms as separate companies. The gain from the merger is the present value of this difference in cash flows. Sources of Gains from Acquisitions The gains from an acquisition may result from one or more of the following five categories:1) revenue enhancement, 2) cost reductions, 3) lower taxes, 4) changing capital requirements, or 5) a lower cost of Continue reading

Top 13 Reasons Why Organizational Change Fails

Now a day’s change in the organisations is really norm because at the moment organisations are facing many factors which are influenced by both the external and internal environment. As we can see that world is changing at very rapid speed so it is very important for any organisation to adapt the changes to survive in this competitive market. It is also very vital for any organisation to fulfill the needs of their customers to sustain in modern world so for that particular reason they have to take some bold steps by implementing the changes in their business models this can be according to the current trend in the market, innovations in technology and customers demands. For the successful business it is very important to make changes because it is a demand of time. Organizational change is the process of transformation. It may be cause success or failure. Change becomes Continue reading

Stability Strategies Followed by MNC’s

The stability grand strategy is adopted by an organization when it attempts at an incremental improvement of its functional performance by marginally changing one or more of its businesses in terms of their respective customer groups, customer functions, and alternative technologies — either singly or collectively. E.g: A copier machine company provides better after sales service to its existing customer to improve its company product image, and increase the sale of accessories and consumables. This strategy may be relevant for a firm operating in a reasonably certain and predictable environment. Stability strategy can be of three types; No Change Strategy, Profit Strategy, Pause/ Proceed with caution Strategy. 1. No-Change Strategy It is a conscious decision to do nothing new. The firm will continue with its present business definition. When a firm has a stable internal and external environment the firm will continue with its present strategy. The firm has no Continue reading

Case Study: iPod, Apple’s Best Innovation

Apple had in effect recognized an opening inside the digital music market. They had acknowledged that there was a drop in sales of digital music players due to the goods presently on the market being inadequate. Apple will have believed that the then current crop of music players were insufficient thus prompting them into designing the phenomenon that is the iPod. Due to the success of the Sony Walkman, Apple decided they wanted to enter the music player market. Therefore the company expanded from the core product of computers and software manufacture into many areas including personal music/media players (iPod). The creator of Apples iTunes was Steve Jobs, an in-house software creator. Apple released the first iPod into the market place on 23rd of October 2001. It proved hugely successful due to the software created by Steve Jobs which allows users to download music directly from the internet to the Continue reading