Methods of Corporate Restructuring

The important methods of Corporate Restructuring are: Joint ventures Sell off and spin off Divestitures Equity carve out (ECO) Leveraged buy outs (LBO) Management buy outs Master limited partnerships Employee stock ownership plans (ESOP) 1. Joint Ventures Joint ventures are new enterprises owned by two or more participants. They are typically formed for special purposes for a limited duration. It is a combination of subsets of assets contributed by two (or more) business entities for a specific business purpose and a limited duration. Each of the venture partners continues to exist as a separate firm, and the joint venture represents a new business enterprise. It is a contract to work together for a period of time each participant expects to gain from the activity but also must make a contribution. For Example: GM-Toyota JV: GM hoped to gain new experience in the management techniques of the Japanese in building high-quality, Continue reading

Emerging Markets for International Capital Investments

Of late emerging markets have become a buzzword among the  international investors for reaping greatest potential rewards which would be  impossible if they stayed put in their affluent hinterlands. The term emerging  markets (EMs) is a collective reference to the stock markets of the developing  nations.  A question, which overpowers a discerning mind, is why the  international investors are looking towards emerging markets for investing  their funds instead of established markets like US? Three reasons can be  given to answer this question. First, the average total return of emerging  markets  has outstripped those of  developed markets. Investments total return index computed by the IFC (International Finance Corporation)  which  measures the total return for each country based on those stock available to  foreign investors shows that return on investment in IFC composite of EMs is  61.64 per cent higher than the return on investment in US market over the  years. The Continue reading

Augmented Reality (AR) – Meaning, Operation and Benefits

Augmented reality refers to the utilization of computers to modify reality, usually in order to provide additional assistance when a human user is interacting with the real environment. The real world around humans provides a wealth of information which the human user must absorb and process through their senses. The most useful and informative of all human senses is the sense of vision and a huge amount of information about the ambiance is required to be sensed as well as processed by the human visual system. Computers are useful because they can provide an overlay of information to assist with the human processing of the information which they perceive through their senses, mostly the visual sense.  As an example, a human who is walking around an urban area can be provided additional information through a head mounted display which superimposes textual information about identification of buildings and other important landmarks Continue reading

Ketan Parekh Scam and It’s Impact on Financial Institutions

Ketan Parekh was threatening to sue the Bank of India for defamation, because it complained about the bouncing of Rs 1.3-billion pay orders issued to the broker by the Madhavpura Mercantile Cooperative Bank. He seemed to suggest there is nothing more that the authorities would be able to pin against him. At last investigations by the Central Bureau of Investigation and the Securities and Exchange Board of India reveal that the sheer magnitude of money moved around by Parekh or available to him for his market manipulation was a staggering Rs 64 billion. Money abroad The CBI called a press conference to announce it had unearthed a Swiss bank account in which Parekh was listed as the beneficiary. The Bureau claimed there was $ 80 million (Rs 3.4 billion) in the account, which has since been frozen. In the past, CBI announcements were usually followed up with a quick arrest, Continue reading

Make-or-Buy Decisions in Purchase Management

The make-or-buy decision is the act of making a strategic choice between producing an item internally (in-house) or buying it externally (from an outside supplier). The buy side of the decision also is referred to as outsourcing. Make-or-buy decisions usually arise when a firm that has developed a product or part–or significantly modified a product or part–is having trouble with current suppliers, or has diminishing capacity or changing demand. Make-or-buy analysis is conducted at the strategic and operational level. Obviously, the strategic level is the more long-range of the two. Variables considered at the strategic level include analysis of the future, as well as the current environment. Issues like government regulation, competing firms, and market trends all have a strategic impact on the make-or-buy decision. Of course, firms should make items that reinforce or are in-line with their core competencies. These are areas in which the firm is strongest and Continue reading

Difference Between Tall and Flat Organizational Structure

The concept of organization is born when two or more people work together in order to achieve a common goal. Purpose of an organisation is to create responsibilities and positions by which an organisation can carry out the work. Organisation may be formed in different sizes. All people working in the same organisation have their own functions, attitudes and techniques to apply for achieving their common goal.  In order to manage and control the resources, an organisation needs to be structured. Organization structure is formal system that makes the organisation to run smoothly and helps to focus the common goals and objectives. It gives a clear idea about the chain of command that need to be prioritized when a problem arise. It also defines what people are responsible in the organisation for different reasons. A solid structure provides the framework to deliver on business strategy. The structure of an organisation Continue reading