How to Tame a Wild Tongue Essay

The writer dialogue within relation to a dilemma she faced about her own language and how she represents herself through her language. Gloria Anzaldua who is a Chicano talks about how Chicanas have problems expressing their feelings. Since they lack a native language, instead it is a product of several languages. And their language Chicano Spanish has incorporated bits and pieces of several versions of Spanish. The author speaks about people who are neither Spanish nor live in a country in which Spanish is the first language; for a people who live in a country in which English is the reigning tongue but who are not Anglo; for a people who cannot entirely identify with either standard Spanish no standard English. So she emphasizes the importance to have their owned language. A language which they can connect their identity to , one capable of communicating the realities and values true to themselves- a language that comprises a variation of two languages. I knew after reading the first few paragraphs of Anzaldua’s â€Å"How to Tame a Wild Tongue† (1987) that she was going to have a lot to say. In this passage Anzaldua expresses the challenges she faced growing up in America as a Chicano. She gives a brief breakdown of who she is, where she comes from and which languages she prefers to speak. Her argument starts off explaining how she was made to be ashamed of existing. She then walks us through how she overcame the tradition of silence. Inspired by Mexican movies since her childhood, it was the shock of reading a published Chicano novel that gave her the strength to bite back. She wrote† When I saw poetry written in Tex-Mex for the first time, a feeling of pure joy flashed through me. I felt like we really existed as people† (pg40). As a child she was told by the dentist that he had never seen anything as strong and stubborn as her tongue. It would push out wads of cotton, drills and needles. It was her tongue that would got her three licks on the knuckles at recess if she was caught speaking Spanish in school. She writes† I remember being sent to the corner of the classroom for â€Å"talking back† to the Anglo teacher when all I was trying to do was tell her how to pronounce my name. †If you want to be American†, speak American. If you don’t like it, then go back to Mexico where you belong† (pg34). Language cannot be separated from the culture as an independent aspect. Any language is a culture itself and there is no language in the world which does not express the heart and spirit of people who speak this language. Gloria Anzaldua is famous for her books written in an amusing blend of English and all possible Spanish dialects; she wrote about the numerous layers that could be found when studying thoroughly any language, and she also used Spanglish as it is impossible to stop the assimilation of the cultures and languages. She also argues that there is a linguistic terrorism makes her language constantly change. I totally agree with her and firmly believe that this mimicry is not positive assimilation but a gradual wiping off the limits holding connection between people and their history, traditions and roots. It seems to me, people have stopped appreciating the non-material values, such as language. This issue is widely discussed but does not seem to be altered though. I think we start losing our genuine culture because of unwilling to read classical literature or have any particular interest in the way the language is built. When reading Anzaldua I thought about how stubborn she was in her intention to sharpen everything she did. I admired her skill to listen and to her, she taught me to be attentive to what people actually say. I felt deeply sorry about â€Å"linguistic terrorism† happening with Chicano language and I hope for better.

Tata Corus

CONSOLIDATED FINANCIAL STATEMENT PROJECT TATA- CORUS ACQUISITION SUBMITTED TO: Dean Dr. Badrinath Prof. K. Govindarajan SUBMITTED BY BADRI NARAYANAN – 112071013 TABLE OF CONTENTS SR NO 1. PARTICULARS PART 1 †¢ Global steel industry †¢ About TATA Steel †¢ About Corus PART 2 †¢ Legal form †¢ Mergers and Acquisition †¢ Method †¢ Terms of transaction †¢ Valuation Matters 2. 3. PART -3 †¢ Reasons for the merger †¢ Objectives for a merger †¢ Culture differences †¢ Post – Acquisition 4. PART 4 †¢ Outcome of the merger – success or failure †¢ Financial indicators †¢ Milestones of the TATA Corus deal 5.CONCLUSION 6. BIBLIOGRAPHY PART – 1 GLOBAL STEEL INDUSTRY Steel was an alloy of iron and carbon containing less than 2 per cent carbon and 1per cent manganese and small amounts of silicon, phosphorus, sulphur and oxygen. Steel was the most important engineering and construction material in the world. It was used in every aspect of our lives, from automotive manufacture to construction products, from steel toecaps for protective footwear to refrigerators and washing machines and from cargo ships to the finest scalpel for hospital surgery. Most steel was made via one of two basic routes: 1.Integrated (blast furnace and basic oxygen furnace). 2. Electric arc furnace (EAF). The integrated route used raw materials (that is, iron ore, limestone and coke) and scrap to create steel. The EAF method used scrap as its principal input. The EAF method was much easier and faster since it only required scrap steel. Recycled steel was introduced into a furnace and re-melted along with some other additions to produce the end product. Steel could be produced by other methods such as open hearth. However, the amount of steel produced by these methods decreased every year.Of the steel produced in 2005, 65. 4per cent was produced via the integrated route, 31. 7percent via EAF and 2. 9 percen t via the open hearth and other methods. At a steel mill, the crude steel production process turned molten steel into ingots, blooms, billets or slabs. These were called semi-finished products. Semi-finished products were solid blocks of steel, usually with a square or rectangular cross section. A flat steel product was typically made by rolling steel through sets of rollers to produce the final thickness. There were two types of flat steel products- Plate products and Strip products.Supply of raw materials was a key issue for the world steel industry. IISI managed projects which looked at the availability of raw materials such as iron ore, coking coal, freight and scrap. Scrap iron was mainly used in electric arc furnace steelmaking. Apart from scrap arising in the making and using of steel, obsolete scrap from demolished structures and end-of life vehicles and machinery was recycled to make new steel. About 500 million tons of scrap was melted each year. Iron ore and coking coal w ere used mainly in the blast furnace process of iron making. For this process, coking coal was turned into coke, an lmost pure form of carbon which was used as the main fuel and reductant in a blast furnace. Typically, it took 1. 5 tons of iron ore and about 450kg of coke to produce a ton of pig iron, the raw iron that came out of a blast furnace. Some of the coke could be replaced by injecting pulverized coal into the blast furnace. Iron was a common mineral on the earth‘s surface. Most iron ore was extracted in opencast mines in Australia and Brazil, carried to dedicated ports by rail, and then shipped to steel plants in Asia and Europe. Iron ore and coking coal were primarily shipped in capsize essels, huge bulk carriers that could hold a cargo of 140,000 ton or more. Since the World War II, the steel industry had experienced three distinct phases- growth (195073), stagnation (1974-2001) and boom (2002-2006)3. The demand for steel grew at an annual rate of 5. 8per cent duri ng 1950-73 as the industrializing nations were building their civil infrastructure. The oil shocks of 1973 through 1979 slowed consumption in the second phase. The production of crude steel grew at 0. 6per cent p. a. over the entire period. Steel prices declined by 2-3 per cent p. a.During 1999-2001 the industry‘s overcapacity hovered near 25per cent globally. Only a few companies were able to sustain. Since 2002 the annual steel production had grown at 7-8per cent driven almost entirely by the double digit growth in China. The huge demand from China had caused a commensurate leap in steel prices. The industry had experienced a drop in the over capacity from 23per cent in 2001 to about 17per cent from 2003-2005. But the demand from China had also witnessed a structural change. From 2002-2004 China‘s capacity for producing crude steel increased on average by 55per cent. By 2005 China became a net exporter of steel.In the first half of 2006 China overtook Japan, Russia and the EU 25 to become the world‘s largest steel exporting country. In June 2006 that winning companies in the steel industry would have somewhere between 150m-200m tons of annual capacity by 2015 and that scale was crucial in the pursuit of value. Shanghai Baosteel, which, although founded in 1998, had already become the world‘s fifth largest steel maker producing 22. 7 m tons in 2005. The potential acquisition of Corus by Tata Steel would create a new entity with a production volume close to Baosteel‘s. CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRYThe countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i. e. 419m ton, Japan accounts for 9% i. e. 118m ton, India accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth. The steel industry has been witnessing robust growth in both domestic as well as international markets. In this article, let us have a look at how has the steel industry performed globally in 2007.ABOUT TATA & CORUS â€Å"Tata Steel has always believed that the principle of mutual benefit – between countries, corporations, customers, employees and communities – is the most effective route to profitable and sustainable growth. † Tata Steel Limited is a multinational steel company headquartered in Mumbai. It was established by Jamsetji Tata in year 1907 and changed its name TISCO to Tata Steel in 2005. It is the tenth-largest steel producing company in the world and the largest private-sector steel company in India measured by domestic production with an annual crude steel capacity of over 28 million tonnes per annum.It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial pre sence in over 50 countries. They were world's 56th largest and India's 2nd largest steel company with an annual crude steel capacity of 3. 8 million tonnes. Based in Jamshedpur, India, it was part of the Tata group of companies. Tata Steel’s larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia.Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel). Tata Steel’s vision is to be the world’s steel industry benchmark through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency. Corus Group is a multinational steel-making company headquartered in London.It is the world's seventh largest and seco nd-largest steel-maker in Europe and now a subsidiary of Tata Steel. Corus Group was formed through the merger of Koninklijke Hoogovens and British Steel in 1999 forming the third largest producer of steel behind POSCO of South Korea and Nippon Steel of Japan and was a constituent of the FTSE 100 Index until it was acquired by Tata in 2007. In 2010 Corus announced it was changing its name to Tata Steel Europe and adopting the Tata corporate identity. British Steel Corporation was a large British steel producer, consisting of the assets of former private companies which had been nationalized.In 1988 the company was privatized as a result of the British Steel. Koninklijke Hoogovens was a Dutch steel producer founded in 1918, located in Ijmuiden. The Corus was having leading market position in construction and packaging in Europe with leading R&D. The Corus was the 9th largest steel producer in the world. PART 2 LEGAL FORM Generally, there are many forms of combination of two companies , such as acquisition, merger, takeover and hostile takeover etc.. They are different terminologies used under different situations.Though there is a thin line difference between them but the impact of each kind are completely different. Merger: A merger is when two companies which are about the same size or strength come together to form a single company. They combine their respective resources for mutual gains or to reduce competition. In such a case, the deal gets finalized on a friendly terms and both the companies share equal profits in the newly created entity. Acquisition: When one company acquires the other and rules all its business operations, it is known as acquisitions. In this process of restructuring, one company overpowers the other company.Among the two companies, the one that is financially stronger and bigger in all ways establishes it power. Then we can know that acquisition is usually happen when the company is different in size, and both the acquiring company an d subsidiary want the combination in the meantime, in another word, the subsidiary company is not resisted to the combination. It is frequently used to describe more friendly acquisition, or used in conjunction with the word merger, where the both companies are willing to join together. Takeover: Takeover also occurs when one company purchases another, it is the similar with acquisition, but takeover enerally happens when a company buys another company which is not doing well or has gone bankrupt, and when the transaction is done in an unfriendly manner in more or less a forceful way in which the company being acquired is resisting. The acquiring company usually initials the combination. Accounting Method: Pooling of interests: This is generally accomplished by a common stock swap at a specified ratio. For example: When M&I Bank merged with National City Bank Corporation, the common stock of the two companies were swapped at a ratio between . 55 and . 5363 shares of M&I for every sh are of National City. Such mergers are only allowed if they meet certain legal requirements. Purchase acquisition: This involves one company (the acquirer) purchasing the common stock or assets of the target company. The acquiring company offers to purchase the target company‘s stock at a given price in cash, securities or both. This offer is called a tender offer because the acquiring company offers to pay a certain price if the target‘s shareholders will surrender or tender their shares of stock.Generally, this offer is higher than the stock‘s current price to encourage the shareholders to tender their stocks. The difference between the share price and the tender offer is called the acquisition premium. Consolidation: The existing companies are dissolved and a new company is formed to combine the assets of the existing companies. Both companies’ stocks are surrendered and new stock is issued in its place. E. g. both Daimler-Benz and Chrysler ceased to exis t when the two firms merged and a new firm DaimlerChrysler was created. Some other related terms are horizontal, vertical and conglomerate mergers.Horizontal mergers happen when a company merges with another company which is a direct competitor in the same product lines and markets. A vertical merger occurs when the company merges with the suppliers or customers. Conglomerate mergers occur when the companies combined have no relationship to one another. It’s a friendly takeover and 100% acquisition was done by TATA steel. For the consolidation, TATA used acquisition method. TERMS: Following are some key terms of the transaction: 1. Tata Steel purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal cumulatively valued at $12. 4 billion. The deal was the largest Indian takeover of a foreign company and made Tata Steel the world’s fifth-largest steel group. And a wholly owned subsidiary, called Tata Steel UK would be set up by Tata Steel. 2. T ATA financed its acquisition not only through its own equity contribution but a package of market securities: a) Equity Capital from Tata Steel Ltd USD4. 10 billion. b) The non-recourse debt from a consortium of banks USD6. 14 billion from. c) Quasi–Equity funding at Tata Steel Asia Singapore USD1. 25 billion. d) Long term Capital funding at Tata Steel Asia Singapore USD1. 1 billion. 3. A new board for the new entity after acquisition: This consists Ratan N. Tata, chairman of Tata Steel, Jim Leng of the Corus group, Muthuraman, Managing Director of Tata Steel, Ishaat Hussain and Arun Gandhi, directors of Tata Sons was formulated to develop and execute the integration and further growth plans. It is the group of top managers from both companies; it can help the new entity fit in much quickly with different culture. Investors in a company that is aiming to take over another one must determine whether the purchase will be beneficial to them.In order to do so, they must ask thems elves how much the company being acquired is really worth. Naturally, both sides of an M&A deal will have different ideas about the worth of a target company: its seller will tend to value the company at as high of a price as possible, while the buyer will try to get the lowest price that he can. There are, however, many legitimate ways to value companies. The most common method is to look at comparable companies in an industry, but deal makers employ a variety of other methods and tools when assessing a target company. Here are just a few of them: 1.Comparative Ratios – The following are two examples of the many comparative metrics on which acquiring companies may base their offers: Price-Earnings Ratio (P/E Ratio) – With the use of this ratio, an acquiring company makes an offer that is a multiple of the earnings of the target company. Looking at the P/E for all the stocks within the same industry group will give the acquiring company good guidance for what the targe t's P/E multiple should be. ? Enterprise-Value-to-Sales Ratio (EV/Sales) – With this ratio, the acquiring company makes an offer as a multiple of the revenues, again, while being aware of the price-to-sales ratio of other ompanies in the industry. ? 2. Replacement Cost In a few cases, acquisitions are based on the cost of replacing the target company. For simplicity's sake, suppose the value of a company is simply the sum of all its equipment and staffing costs. The acquiring company can literally order the target to sell at that price, or it will create a competitor for the same cost. Naturally, it takes a long time to assemble good management, acquire property and get the right equipment.This method of establishing a price certainly wouldn't make much sense in a service industry where the key assets – people and ideas – are hard to value and develop. 3. Discounted Cash Flow (DCF) A key valuation tool in M, discounted cash flow analysis determines a company's c urrent value according to its estimated future cash flows. Forecasted free cash flows (operating profit + depreciation + amortization of goodwill – capital expenditures – cash taxes – change in working capital) are discounted to a present value using the company's weighted average costs of capital (WACC).Admittedly, DCF is tricky to get right, but few tools can rival this valuation method. Synergy: The Premium for Potential Success For the most part, acquiring companies nearly always pay a substantial premium on the stock market value of the companies they buy. The justification for doing so nearly always boils down to the notion of synergy; a merger benefits shareholders when a company's post-merger share price increases by the value of potential synergy. Let's face it, it would be highly unlikely for rational owners to sell if they would benefit more by not selling.That means buyers will need to pay a premium if they hope to acquire the company, regardless of what pre-merger valuation tells them. For sellers, that premium represents their company's future prospects. For buyers, the premium represents part of the post-merger synergy they expect can be achieved. The equation solves for the minimum required synergy: In other words, the success of a merger is measured by whether the value of the buyer is enhanced by the action. However, the practical constraints of mergers, which discussed often, prevent the expected benefits from being fully achieved.Alas, the synergy promised by deal makers might just fall short. PART 3 REASONS FOR MERGER Synergies from the TATA-CORUS Deal I. Tata Steel would get an access to the European market. Corus has already a welldefined network in European Market. If Tata Steel had independently entered the European market, it would have taken a considerable time to develop a wellestablished network. In the post deal scenario it will become a global player with the balanced presence in developed European market and fast growing Asian Market. II.Tata Steel will have a strong position in construction, automotive and packaging market sector. III. It will have a low cost position in Europe and South East Asia. IV. It can double the size and profitability V. The deal has expanded scale from 7 MTPA to 25 MTPA and reaps significant economies of scale. VI. The merged entity would become world’s 6th largest steel company with 25. 6 MTPA of crude steel production. VII. The combined entity will have more efficient operations through enhanced optionality to optimize asset base and material flow, including sourcing of raw materials, and semi-finished steel.VIII. Better equipped to race intensifying competition arising from consolidation in the industry globally. IX. Both Tata Steel and Corus are a strong cultural fit. X. Tata Steel would benefit from Corus’s pan-European distribution network. XI. The acquisition gets with Tata Steel’s stated objective of having a global distribution n etwork. XII. There a strong cultural fit both the two companies. Both Tata Steel and Corus have strong commercial relationship. OBJECTIVES OF THE MERGER Tata’s objectives for buying Corus 1. Tata is looking to manufacture finished products in mature markets of Europe. . At present manufactures low value long and flat steel products while Corus produces high value stripped products 3. A diversified product mix will reduce risks while higher end products will add to bottom line. 4. Corus holds a number of patents and R & D facility. 5. Cost of acquisition is lower than setting up a green field plant and marketing and distribution channels 6. Tata is known for efficient handling of labour and it aims at reducing employee cost and improving productivity at Corus 7. It had already expanded its capacities in India. . It will move from 55th in world to 5th in production of steel globally. 9. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to som e of the largest steel buyers open new markets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. 10. A presence in mature markets would also provide Tata Steel an opportunity to go further up the value chain as demand for specialized and high value-added products in these markets is high. 11.Corus is also very strong in research and technology development, which would add to the competitive strength for Tata Steel in future. 12. As stated by Tata, the initial motive behind the completion of the deal was not Corus’ revenue size, but rather its market value. Even though Corus is larger in size compared to Tata, the company was valued less than Tata (at approximately $6 billion) at the time when the deal negotiations started. Corus’ objectives for selling 1. Corus needs supply of raw material at lower cost 2. Total debt of Corus is 1. 6bn GBP 3.Though Corus has revenues of $18. 06bn, its profit wa s just $626mn (Tata’s revenue was $4. 84 bn & profit $ 824mn) 4. Corus facilities were relatively old with high cost of production 5. Employee cost is 15 %( Tata steel- 9%) 6. From Corus’ point of view, the basic reason for supporting this deal were the expected synergies between the two entities. Corus has supported the Tata acquisition due to different motives. With the Tata acquisition Corus has gained a great and profitable opportunity to make an exit as the company has been looking out for a potential buyer for quite some time.Benefit for the Tata’s stakeholders: Any advantage and profits from this deal will merge only when Tata Steel would be in a position to export low-cost slabs toCorus. †¢ There may be restraints to exports as Tata Steel will need to heed the requirements of its other acquired companies in South East Asia of NatSteel and Millennium Steel. †¢ This effect may change if the Tatas can acquire businesses in the low-cost regions suc h as Latin America, opening up an assured source of slab-making that can be exported to Corus’s plants in the UK. †¢ Iron ore policy in India undergoes a major change in the coming years. If global consolidation becomes possible with the merger of Thyssen Krupp with Nucor or Severstal with Gerdau or any the top five players. The possibility of pricing stability may ease the performance pressures on Tata-Corus and moderate the risks of restructuring at high cost plants in UK. †¢ If Tata considers global listing say in London it may help the group commands a much higher price-earning multiple and give it more flexibility in managing its finances. Objectives – Achieved or not: Going by the stock market reaction initially, the acquisition was a big blunder.The stock tanked 10. 5 per cent after the deal was announced and another 1. 6 per cent. Investors were worried about the financial risks of such a costly deal. But after successfully acquiring Corus, Tata Steel became the fifth largest producer of steel in the world, up from fifty-sixth position. There were many likely synergies between Tata Steel, the lowest-cost producer of steel in the world, and Corus, a large player with a significant presence in value-added steel segment and a strong distribution network in Europe.Among the benefits to Tata Steel was the fact that it would be able to supply semi-finished steel to Corus for finishing at its plants, which were located closer to the high-value markets. Managing the obstacles: Coping with a merger can create many problems, some of which are, i. Can make top managers spread their time too thinly and neglect their core business, spelling doom. ii. Potential difficulties seem trivial to managers caught up in the thrill of the big deal. iii. The chances for success are further hampered if the corporate cultures of the companies are very different. iv.The companies often focus too intently on cutting costs following mergers, while revenues, and ultimately, profits, suffer. Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business, thereby prompting nervous customers to flee. In view of the Tata- Corus acquisition, the main obstacles were, 1. The acquisition was not cheap for Tata. The price that they paid represents a very high 49% premium over the closing mid market share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share price over the twelve month period.Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. 2. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two – thirds of the deal has had to be financed through loans from major banks. 3. The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7 percen t on the Bombay stock market. 4.Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% annual interest cost). 5. Corus had existing interest debt charges of $400 million on an annual basis which implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. 6. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to some of the largest steel buyers. The acquisition would open new arkets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. CULTURAL DIFFERENCES There has been a great deal of suspicion on how well the two entities, Tata Steel and Corus would integrate post acquisition. This concern has been expressed since the culture and perspectives of the two companies and the people are s eemingly very different from each other. Ratan Tata however, has been confident that the post-acquisition management will not be too difficult as the two organizational cultures will be effectively integrated.Ratan Tata has said he is confident the two companies will have â€Å"a cultural fit and similar work practices. † Tata Corus has made developed some management structure to deal with the smooth operation of the two entities. It has also adopted several system integrations in both the entities to smoothen the transactions between the two entities. Tata Steel has formed a seven- member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group.Members of the integration committee from Tata Steel include Managing Director B Muthuraman, Deputy Managing Director (steel) T Mukherjee, and chief financial officer Kaushik Chatte rjee. The Corus group is represented in the committee by CEO Phillipe Varin, executive director(finance) David Lloyd, and division director (strip products) Rauke Henstra. The company has also created several Taskforce Teams to ensure integration of specific set of activities in the two entities for smoother transaction. For instance, the company has created a task force to integrate the UK/EU model in construction to the Indian market.To achieve, a taskforce comprising of following executives from both the entities was formed. Members from Corus Mr. Matthew Poole (Director Strategy Long Products Corus) Mr. Colin Ostler (GM Corus Construction Centre) Mr. Darayus Shroff (Corus International) Members from Tata Steel: Mr. Sangeeta Prasad (CSM South, Flat Products) Mr. Pritish Kumar Sen (Market Research Group) Mr. Rajeev Sahay (Head Planning & Scheduling, TGS) The scope of the taskforce will be to: 1. Ensure smooth market knowledge exchange between Tata Corus and Tata Bluescope and iden tify Knowledge gaps. . Complete mapping of construction sector for Indian market using external resource if necessary. 3. Understand key drivers for construction through knowledge gained from stakeholders of the construction community. 4. Map key competencies of Tata Corus against market drivers/ requirements. 5. Develop a five- year strategy. The reasons why cultural integration is a huge challenge are: 1. Corporate culture is an amalgamation of: National culture, Religious culture, and professional culture. These cultural dimensions are often invisible – but ever present & relevant. 2.Need to balance the local needs and the global needs during the post-acquisition period. These needs may be the local community demands, business demands, investor’s demands etc. 3. Need to meet the high expectations of the shareholders post-acquisition. Often times these acquisitions are financed through LBO or debt, and this needs good cash flows to sustain. In addition, the managemen t will be under pressure to show the benefits of acquisition as promised before the acquisition 4. Lack of Experience in dealing with a different culture. This applies equally to Indian & foreign company managers.Most managers lack the cross-cultural skills needed during the post-acquisition integration. POST ACQUISITION TATA †¢ Tata Steel has formed a seven-member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group. The acquisition by Tata amounted to a total of 608 pence per ordinary share or ? 6. 2 billion (US $12 billion) which was paid in cash. First of all, the general assumption is that the acquisition was not cheap for Tata.The price that they paid represents a very high 49% premium over the closing midmarket share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share p rice over the twelve month period. Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two-thirds of the deal has had to be financed through loans from major banks.The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7% on the Bombay stock market. Despite its four times smaller size and smaller capacity, Tata Steel’s operating profit for 2006, earning $840 million on sales of 5. 3 million tonnes, were very close in amount to those generated by Corus ($860 million in profits on sales of 18. 6 million tons). Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% †¢ †¢ †¢ †¢ †¢ †¢ annual interest cost). This amount combined with Corus’ existing interest debt charges of $400 million on an annual basis implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. The debate whether Tata Steel has overpaid for acquiring Corus is most likely to be certain, since just based on the numbers alone it turns out that at the end of the bidding conflict with CSN Tata ended up paying approximately 68% above the average price of Corus’ shares.Another pressing issue resulting for this deal that has created a dilemma between experts and analysts opinions is whether this acquisition for the right move for Tata Steel in the first place. The fact that Tata has managed to acquire a British steel maker that has been a symbol of Britain’s industrial power and at the same time its dominion over India has been perceived as quite ironic. Only time will show whether Tata wil l be able to truly benefit from the many expected synergies for the deal and not make the typical mistakes made in many large M&A deal during this beginning period.PART 4 OUTCOME OF THE MERGER – SUCCESS OR FAILURE Many financial analysts felt that Tata Steel overpaid for the Corus acquisition. Immediately after the acquisition announcement, Tata Steel‘s share price fell by 10. 7 percent to Rs. 463. 95 on the Bombay Stock Exchange. According to Martin Stanley, London based head of spread betting at the brokerage firm of GFT Global Markets, ? The consensus view seems to be that Tata have probably overpaid, but if further consolidation in this sector occurs going forward then this will look like very fair value? International Herald Tribune, 1/30/07). Additional concerns were raised about the debt liability of Tata Steel which borrowed more money to fund the acquisition. According to Standard & Poor‘s analyst Anushkant Taneja, ? The size of the Tata acquisition and t he potential cash outflow in Tata Steel‘s offer for Corus could have an adverse impact on its financial risk profile. Standard & Poor‘s rating service in India, Crisil, placed Tata Steel on the ? negative implications watch list after its Corus acquisition.The contention was that Tata Steel had overstretched itself due to execution risk and lack of experience by Indian companies in acquiring international businesses (Range, 2007, April 26). Moody‘s Investor Services downgraded Tata Steel‘s rating from Baa2 (investment grade) to Ba1 (speculative grade). The primary reason cited was Tata Steel‘s weakened balance sheet liquidity and financial profile resulting from its largely debt-funded acquisition of Corus. Moody‘s Senior V. P. Alan Greene stated Tata Steel‘s current high leverage constrains its financial strength and flexibility and ? he main challenge facing management is to de-risk the large capital structure while not neglecting existing operations and opportunities for rapid growth in Asia.? He further stated that ? Tata Steel‘s ambitious capacity expansion plan will lead to higher project execution risk over several years and materially elevate financial leverage unless it is deferred.? (Businessline, 2007, July 7). According to Sreesankar, head of research at Il&Fs investments in Mumbai, ? They (Tata Steel) wanted the company and they have got it. But we have to see how the finding happens and how the integration progresses.One distinction is that EBITDA (earning before income taxes and depreciation allowance) margins for Tatas are about 40 percent and for Corus is about 7 percent.? Clearly, the financial industry analysts were skeptical about the long-term financial viability of this acquisition. According to Shriram Iyer, head of research at Edelweiss in mumbai, ? †¦the time horizons of investors and of the company may not be aligned MANAGEMENT’S POINT OF VIEW This proposed acquisition repres ents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion.This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment. (Ratan Tata quoted in Financial Express; 2007, February 13) The Tata Steel board of directors approved the project to acquire Corus, as it was consistent with stated objectives of growth and globalization. Although Tata Steel ended up paying more for Corus than its original bid, its management felt that there were many favorable strategic and financial outcomes to be realized. To begin with, this acquisition would position the combined group as the fifth largest steel company in the world by production output.The new entity would have a meaningful market presence in both Europe (where Corus was a well established brand name) and Asia (where Tata was a well established brand name). Combining the low cost upstream production in India FINA NCIAL INDICATORS: KEY MILESTONES OF THE TATA CORUS DEAL September 20, 2006:-Corus Steel has decided to acquire a strategic partnership with a Company that is a low cost producer October 5, 2006:- The Indian steel giant, Tata Steel wants to fulfill its ambition to Expand its business further. October 6, 2006:- The initial offer from Tata Steel is considered to be too low both by Corus and analysts.October 17, 2006:- Tata Steel has kept its offer to 455p per share. October 18, 2006:- Tata still doesn’t react to Corus and its bid price remains the same. October 20, 2006:- Corus accepts terms of ? 4. 3 billion takeover bid from Tata Steel. October 23, 2006:- The Brazilian Steel Group CSN recruits a leading investment bank to offer advice on possible counter- offer to Tata Steel’s bid. October 27, 2006:- Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for its decision to accept an offer from Tata. November 3, 2006:- The Russian steel giant Severstal announc es officially that it will not make a bid for Corus.November 18, 2006:- The battle over Corus intensifies when Brazilian group CSN approached the board of the company with a bid of 475p per share. November 27, 2006:- The board of Corus decides that it is in the best interest of its will shareholders to give more time to CSN to satisfy the pre- conditions and decide whether it issue forward a formal offer December 18, 2006:- Within hours of Tata Steel increasing its original bid for Corus to500 pence per share, Brazil's CSN made its formal counter bid for Corus at 515 pence per share in cash, 3% more than Tata Steel's Offer.January 31, 2007:- Britain's Takeover Panel announces in an e- mailed statement that after an auction Tata Steel had agreed to offer Corus investors 608 pence per share in cash April 2, 2007:- Tata Steel manages to win the acquisition to CSN and has the full voting support form Corus’ shareholders CONCLUSION Steel prices, raw material supplies and interest costs on the $8-billion debt have been raised to fund the deal. Soon they may also have to deal with the sensitive issue of possible job There is no doubt that Tata has pulled off a coup — Corus makes nearly four times more steel than Tata Steel.Together, the combine becomes the fifth largest producer in the world and the second in Europe. But to make the most of the deal, Tata has to manage several variables including cuts in Corus’s manufacturing plants. There are also the usual sets of integration challenges that come with such large buyouts. The deal may be done, but the hard work is just beginning. In the run up to the auction, Tata had maintained a low profile despite CSN’s aggressive stance. They underestimated our firepower,† says Gandhi, who admits that even bankers to the transaction — ABN Amro and Deutsche Bank — were in the dark as to how far Ratan Tata was willing to go. The only blip, though, was the way the stock markets reacte d. Tata Steel has lost a billion dollars in market capitalization since it first announced its intention to buy Corus in October last year. (The BSE Sensex rose 18 per cent during the same period. ) The market perception is that the Tata Group paid too much for this acquisition.Several brokerage houses have pointed out that the deal implies a high enterprise value/ earnings before interest, taxes, depreciation and amortization (EV/EBITDA) multiple of 9 for Corus versus 4. 6 for Tata Steel. (L. N. Mittal paid 5. 8 times EBITDA for Arcelor. ) Ratan Tata disagrees: â€Å"We believe that, looking back in time, the price today will prove to be one that was worthwhile because the price of steel companies is likely to be even higher in the coming year. † But tying up the funding is the immediate priority. The Corus acquisition is being routed through a special purpose vehicle (SPV) called Tata Steel, UK. A similar structure was used for the Tetley buy in 2000. ) So far, the Tatas ha ve indicated that group holding company Tata Sons will pump in $4. 1 billion as equity into the SPV. The balance $8 billion will be raised by junk bonds and senior term loans (part of it has been tied up with banks like ABN Amro, Deutsche Bank and CSFB). These loans will be serviced out of Corus’s profits; Tata Steel need not repay this. This has effectively ring-fenced Tata Steel shareholders. Few will disagree. The Tata Steel managing director is likely to look for more acquisitions as he aims to increase the company’s total capacity to 100 mt by 2015.To reach that destination, a lot will depend on whether the group can make Corus fly. BIBILIOGRAPHY http://www. worldsteel. org/? action=programs=53 http://www. bseindia. com/bseplus/StockReach/AdvanceStockReach. aspx? scripcode=500470 http://www. motilaloswal. com/Research/ http://74. 125. 155. 132/scholar? q=cache:1p4SLlOZDcQJ:scholar. google. com/ +tata+corus+acquisition=en=2000 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1358681 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1431588 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1118306 http://www. nvestopedia. com/university/mergers/mergers1. asp#axzz1zwZQv0dz http://www. mergersandacquisitions. in/index. htm http://www. tatasteel. com/default. asp . http://www. equitymaster. com/detail. asp? date=11/13/2006=1=Tata-Steel-Corus-AWin-Win-Situation http://tejas-iimb. org/articles/04. php? print=true http://arunkottolli. blogspot. ca/2007/11/cultural-integration-post-m. html http://www. scribd. com/doc/22947163/Merger-of-Tata-Steel-and-Corus http://bcgindia. com http://www. worldsteel. org/ http://www. tatasteel. co. in http://www. tatasteel. com http://www. bseindia. com

The Prospect of Social Marketing Coursework Example | Topics and Well Written Essays - 5000 words

The Prospect of Social Marketing - Coursework Example Marketing scholars acknowledge that the fundamental objective of marketing is to affect behavior, regardless if that behavior is buying a McFries, flying Southwestern Airlines, practicing safe sex, or regularly having one’s child vaccinated. In each scenario, marketers establish programs to encourage these behaviors. Some programs, such that of the National High Blood Pressure Education Program of the United Airlines, are stable. Others, similar to numerous new breakfast cereal introductions, and some medical interventions are more temporary in existence.This assumption that marketing embodies a validated and potentially extremely powerful technology for encouraging socially favorable behaviors is the engine stimulating the development and growth of what might be termed as ‘the social marketing movement’ over the last two decades. This movement has constructed social marketing as a unique sub-discipline within the common area of academic marketing. Simultaneously, it has led to the embracing of technology by a broad range of private, public, and non-profit organizations. Social marketing is at present adequately established that it has received its approval and criticisms (Farmer 2002). For instance, Wallack (1990) claimed that social marketing is unusually costly and time consuming its framework which is characteristically individual-level falls short to eliminate the harmful environments that are the real sources of the behavior it is attempting to modify. Wallack (1990) put forth media support as the primarily cost-effective means to encourage essential social changes. He asserted that the success of social marketing remains incomplete.        In spite of the constructive skepticism of its opponents, social marketing is at present both expanding and widening its market saturation. Because of this, it is necessary for those who have a feeling of custodial obligation for the discipline to guarantee that this development and progress i s constructive. The challenges confronting the discipline rely on whether one is widening or expanding the application.  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  

Analyzing some of the traditional HRM FUNCTIONS AT nike (EX selection, Essay

Analyzing some of the traditional HRM FUNCTIONS AT nike (EX selection, training; evaluation & compensation) - Essay Example This objective of Nike reflects in its human resource management functions. The company has introduced the educational assistance programs because it is very important to have workers who are willing to learn and who show the interest to develop themselves. Hence, their recruitment policy is to consider only those employees who have an inclination to improve their skills and educational levels. After the recruitment and selection of employees with this kind of specific attitude, the next step of training and development is planned and implemented. The training and development of the workers is done by offering opportunities for general education purposes like, if workers want to learn to read, write and fill any gaps in their early childhood education. In another aspect the company also conducts seminars and workshops for supervisors in factories so that they improve their production and management skills. The main advantage of this policy to give improve the quality of human resourc e is to increase the value of human resources and to create a favorable learning environment in the company which is very essential to grow in the highly competitive globalised economy. The next aspect for discussion is the compensation. At Nike the wages of the twenty thousand employees are based on the qualifications and skills and the policies are designed so that all the hours worked (regular and overtime) are compensated. In addition to this the workers who have shown interest in improving their skills and who have completed any educational program are given promotions and their salaries and perks are increased. The company also has a detailed human resource information system to store all the information about the employees’ profile, education and training, performance. It can be accessed anywhere in the world by a certain group of

Significance and influences Literature review Example | Topics and Well Written Essays - 1000 words

Significance and influences - Literature review Example Branding therefor is not a modern business strategy although this is recently subjected into law, not only for regulation but also to institute intellectual property rights to all products introduced in the market (Interband, 2004). Branding is considered very significant for business leveraging. Products are advertised and purchased regularly by consumers using its brand as basis to determine good’s quality and services offered (Interband, 2004).Those brands that have gain significant figures of loyal consumers increased the value of good’s production. Quality clothes, milks, shoes, kitchen wares, appliances and the likes are often the most popular brands, thus, business managers handling these products enjoy high return of investment (Interband, 2004). With very good yield coupled with satisfactory business performance, share price can therefore be positively swayed. Branding commands discrimination of purchase. It also justifies increase of products’ prices us ing the presumption that these are all produced in accordance to quality standards. This experience is true to all pharmaceutical industry, in biotechnology, in liquor and other non-essential goods. At times due to inability of people to purchase these medicines, petitions and protest are done by government by threatening to overrule patents and permit local pharmaceuticals to produce desired medicines (Interband, 2004). Fearing that local competition will affect sales and profit, multinational-pharmaceutical will prefer to cooperate and concede with domestic market requests following negotiations to maintain their leverage and control in the market. Economists have made some guidelines to highlight the significance of branding. Design to protect its brand, trademark polices also include securing the logos, color, names and the features of packaging products, its smells, and even the music used in advertising it (Interband, 2004). Patent and copyright laws have been effective in pro tecting the producer’s universal rights over his products and the method of how these are marketed (Interband, 2004). As customer mostly prefer diversity of products and services that will cater their needs and expectation, companies want to engage in producing different products but are also in consideration to the interest, reputation, and values of its shareholders. Hence, companies work with innovation, accountability and social responsibility to maintain its brand image (Interband, 2004). They treat brand as both an asset and an investment for business sustainability (Interband, 2004). They correlate marketing products with business integrity and effectiveness. In case there is strong market competition, companies also delve at the opportunities of co-branding, franchising and licensing as profitable dealings to exploit their brands (Interband, 2004). A strong and strategic branding is derived from shareholders sense of values. Branding details are also defined by corpor ate business managers and is managed by brand marketers (Interband, 2004). It is often derived from an integrated component of the entire organization and is valued as an investment hence, assessed in financial terms. Nowadays, as branding becomes an international norm, brands can

BAE Automated Systems Research Paper Example | Topics and Well Written Essays - 2000 words - 1

BAE Automated Systems - Research Paper Example In this scenario, if any of the aspects is compromised or limited, the remaining parts of the project will also be affected. This paper presented an analysis of the Denver Airport project which involved the implementation of the Baggage Handling System. This project was initiated to automate the Airport baggage handling. However, all the way through project lifecycle this project suffered a wide variety of issues and problems. This research is aimed at analyzing those issues and aspects. The basic purpose of this paper is to outline some of the major issues and aspects that influenced the successful completion of this project. In this scenario, this research covers basic problems (management failure/problems) and their causes and fixation policy regarding Denver Airport project of Baggage Handling System. In addition, this paper will attempt to explore some of the fundamental aspects of effective project handling and management. The thought of initiating and effectively managing projects is long-term an objective of any project. This paper presents a detailed analysis of Airport Baggage Handling System project. All the way through the lifecycle of this project, it suffered a number of problems which happened because of ineffective management and planning of such new technology-based projects. In fact, the project of Denver International Airport’s Baggage Handling System is believed to be one of the biggest examples of less effective project management that led this project to failure and losses. Without a doubt, it was a new technology-based project which demanded more high-tech technology implementation and management. In this scenario, there was a greater need for the new technology-based support with more accurate and high-level bagging processing capabilities. Hence, in such a huge and critical project there was a dire need for high-level planning and management of issues and other aspects.

Cultural Industries Essay Example | Topics and Well Written Essays - 2500 words

Cultural Industries - Essay Example The element of creativity that has been present in the local planning structure and policies of such countries have led to the development of the cultural industries. The mangers and other business academicians have always recommended creativity for business prosperity. This creativity has culminated into success of cultural industries. Industries such as theater, television as well as software can be cited as examples of cultural industries (Hesmondhalgh, 2007, p.142). International Organizations like UNESCO have also adopted cultural policies like the Global Alliance for Cultural Diversity Initiative in 2004 in favor of these creative cities which have facilitated development of cultural industries. Establishment of schools and institutions focusing on the regions cultural music is also an instance of how cultural industries have grown over the years (Isar, 2009, p.281). Thus the sense of creativity and the region’s cultural practices has played a key role in establishing in dustries that focus on cultural regeneration. The current paper provides an access to the ways by which creative and cultural industries focusing on social and cultural regeneration have developed in some cities through various findings and case examples. Creativity existing within such creative cities has positively contributed to development of urbanization. Effective instruments and policy measures that have been undertaken in these cities solely concentrate on the region’s cultural practices existing within the society. ... Culture always has immense influence on consumption. These cities also tend to preserve the underlying duality existing between manufacturing and services (Pratt, 2008). Ways adopted for development of cultural industries In 2001the value of creative industries in United States has been computed as US $791.2 billion. Such a value amounts to 7.75 percent of the total GDP of the country. Employment level in these industries has also been quite high. These industries have hired about eight million people. People have been lured by the country’s culture and there has been a growing demand for the cultural products. These industries have exported and sold goods worth US $88.97 billion. The sales value has been greater than that computed for other industries such as chemicals, aircraft, electronics and automobile industries. For Australia too, the value computed I found to be as high as $A25 billion. The statistics speak itself for the emerging success of these creative industries. Creativity results in creating innovated products. Such innovations are essential for cultural industries as well as for other industries (Hartley, 2005, pp.1-2). Human intelligence and creativity have always proved beneficial for industrial development and thus has yielded the desired level of outcome. Moreover the other booming industries such as the information technology, financial services and the telecom industries are getting blurred with the capabilities of our imagination. They may also be thought of collapsing in the near future (Hartley, 2005, p.117). These creative industries which are developed out of culture and art are known to be more responsible towards the small scale enterprises and nonprofit organizations. This can be

Shareholder Value Essay Example | Topics and Well Written Essays - 2000 words

Shareholder Value - Essay Example Some strategic decisions (entering new markets, increasing sales capacity, etc.) need shareholder approval as these may require capital investments that affect profits, while most tactical marketing decisions (like advertisements, promotional campaigns, etc.) do not. Since shareholders are after increasing the value of their investment (Shareholder Value or SHV), they want higher profits. Since profits result from how much the business sells and spends to generate those sales, it seems logical that SHV is a good framework for evaluating marketing decisions. This paper in effect analyzes the reasoning that making good and correct marketing decisions would increase profits and SHV. Drucker (1955, p. 36) was among the first to argue that the purpose of a business is to create value for its owners by creating and keeping customers, and that marketing encompasses the entire business and must permeate all areas of the enterprise because it is what will create and keep customers. Since then, academics and practitioners from Levitt (1960) to the American Marketing Association (AMA) have linked the marketing function with the concept of value - both to the business owners and to its customers. AMA (2004) defined marketing as "an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships (customer value) in ways that benefit the organization and its stakeholders (shareholder value)." Marketing therefore links two areas where value is created: customer value that leads to shareholder value. Marketing is a complex activity that aims to satisfy people outside (customers) in order to satisfy the people inside (shareholders, managers, and employees) the business, and not the other way around. Since customers are satisfied if the business makes the right strategic and tactical marketing decisions, the customers buy what the business sells, and enough profits will come to keep everyone happy, at least in theory. Marketing decisions used to be simple and easy to make: find out what customers need, what price they are willing to pay for it, make the product, and sell it to them. Friedman (2004) argued that the age of mass production after the War was more about selling than marketing, but as the world became affluent and globalized, customer needs and wants became more sophisticated, business competition intensified, and meeting market needs became more scientific and complex and considered not only what customers want now but also what they would want in the future (Achrol, 1991). Thus, marketing decisions came to be classified as long-term (or strategic) and short-term (or tactical) depending on their impact on the business. Strategic marketing decisions took into account making an accurate (or close to it) prediction of what products would be demanded by customers in the future, and how much they are willing to pay for them, so that the business would not only decrease their profits and the rate at which profits are growing, but continue to compete and grow. Strategic marketing includes long-term decisions, aside from knowing what the present market would need and want in the future, about discovering new customers for present products, deciding on which new markets to enter, how much profits each market could generate and how much of that profit the

Annotated Bibliography and Structure Essay Example | Topics and Well Written Essays - 1250 words - 3

Annotated Bibliography and Structure - Essay Example Since, it has yielded to poverty in some states whereas the influential continue enriching themselves in the name of interdependence especially through trade. Philippe in this broadcasting addresses the issue of global insufficiency and other critical issues regarding anti globalization. This is a reliable source meant to support current global arguments regarding their perception towards globalization and its effects. This is especially in India where presently, local activists are against the idea of globalization, which is contrary to the US. Thomas in this article highlights three key misrepresented aspects, which the movements have habitually evaded. They include economic liberalization, traditional economic function erosion and undying aspect of capitalism, which are detrimental to the third world regions. The study unveils how the movement despite attaining full support from its member states, instead results to evading their grievances. Consequently, this worsens its members’ economical conditions. The source’s content is essential especially in supporting arguments regarding the movement’s flaws and selective merits enjoyed by its few states. The source encompasses researches meant to test claims by diverse economists and world leaders regarding the end of globalization. In this reference, both Held and McGrew term these claims as â€Å"premature† owing to numerous systems, which global states share besides disagreements concerning whether to continue with the present interdependence. This source is extremely essential, whereby its diverse researches regarding international economic systems will support continual existence of globalization. Since, it acts as a source of global unity and interdependence that enable less privileged states to stabilize their wealth. Popescu and Costache highlight the key anti globalization movement’s grievances and

Higher Education Essay Example for Free

Higher Education Essay Economic Crisis and Higher Education in the United States The 2008–2012 economic failure is considered by many economists and investors to be the worst financial crisis since the Great Depression of the 1930s. It results in the risk of total collapse from big financial firms, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis also plays a significant role in the crash of key businesses and collapse of housing market, results in the delayed unemployment. Higher education is a large and various venture in the United States, which has impacted by the economic recession in a number of ways, but these impacts have not been the same and vary depending on state and type of institution. Most higher education traditions started to be concerned about their financial problems due to economic recession. Their main source of revenue has been hurt by the downturn, and that those universities would need to make hard decisions about how to spend their money. In some states, a lot of institutions are in process of fund-raising programs to avoid delaying their supported campus building projects. Many of higher education university’s leaders have been considering and solving of two following questions: How is the economic downturn affecting institutions both public and private? What strategies are leaders implementing to guide their institutions? Unsuccessful budget strategies are the main reason that caused many institutions’ problems. Their top managers have not effectively managed their money. Fund-raising, government support, and earned income will also suffer in a poor economy. They are also experiencing revenue deficits due to lower state appropriations, endowment losses, or a reduction in donation. Furthermore, institutions difficulties in gaining access to funds invested in a major short-term investment fund. According to Ken Chabotar, author of The Economy and Higher Education, budget management is related to the most complicated set of relationships in higher education are among college costs, student tuition fees, financial aid, and enrollment. Quality plus financial aid and affordability are the issues that most colleges and universities worry how much economics will affect while thinking about to limit costs and prices. In the current economic situation, adults and recent high-school graduates are willing to study for two years at a community college make more financial sense than going straight to a more expensive campus. Community colleges as known as lower cost institutions are recognizing a rise in enrollment levels while small, independent colleges and universities result in a fall in enrollment. As a result, the economic crisis creates hardship not only for students in paying their tuition and also difficulties for higher education institutions to maintain their enrollment level, especially their budget and revenue. Additionally, many of well-known universities such as Harvard, Yale, and Princeton etc. are facing difficult financial problems due to cut of endowment and donation from investors and alumni. Well-endowed institutions have suffered losses up to a third of market value and 30% of donated money compelling budget cuts, wage freezes, and borrowing to support the operating budget rather than increase endowment spending. In the United States, there are a lot of campus relied on endowment too much. Many universities have been delayed on cash funding of appropriations from state and federal government. The top managers have to suspense almost half of capital projects and research in order to balance their institutions’ budget. Loss of enrollment and endowment in higher education increases the financial needs of university in order to afford their expenses and keep operation going.

Global Transportation and the Logistics Industry

Global Transportation and the Logistics Industry The Transportation Logistics sector spans a wide range of service offerings such as by air, road, rail, sea as well as related services such as warehousing, handling, and stevedoring. The extent of coverage includes value added services such as packaging, assembling, labelling etc. In addition to these, Transport Logistic providers undertake the management role of planning, administering and coordinating. Over the years, the sector has reshaped in manner where most players have a tendency to consolidate; resulting in larger, integrated groups operating in more than one of the Transport Logistics sub-services/sectors. As a result, the limits between the sub-services/sectors become more and more indistinct. The benefits of globalisation and business process outsourcing of logistics services generated double digit revenue growth in the industry in the early part of the 21st century. However the co-existence of other pressures, threats and limitations such as the economic downturn, and fuel price hike contribute to the dramatic changes faced by contenders in the sector. With privatisation and liberalisation, more complexities were introduced to the sector. In addition, trade routes are changing and networks have become increasingly complex as have the agreements between companies sharing resources. There have been several regulatory requirements which have changed substantially in the recent years. Due to more IT enabled interconnectivity in companies, it operates across national. Hence, issues pertaining to customs, tax compliance, accounting and governance have increased. Companies looking to build a sustainable business need to continuously offer value additions to its stakeholders. Therefore with the changing business models in the industry, many companies are evolving from forwarding and warehouse managing businesses to highly industrialised, IT driven supply chain providers; adopting a holistic approach in their service. Impact of the economic downturn Over the past years, the Transport Logistics industry has been profiting considerably from positive economic conditions and the demand for raw materials, capital and consumer products. Since 2008 though, the trade was suddenly faced with some of the most complex market conditions in history. A tightening global credit crisis and economic downturn that began in the U.S. quickly spread throughout the globe, impacting many organizations in nearly every aspect of the business. Changes in consumer buying patterns have led to less significant transport volumes, and shifts to less expensive delivery modes, with a sizeable impact on the express business. The volatile oil price coupled with a stronger focus on emission reduction has increased pressure on transportation companies, especially airlines, leading to a record in airline insolvencies. In addition, the economic recession places more fundamental challenges on the Transportation Logistics industry: consumer patterns and a general cur b of demand thereby causing a lower level of the flow of goods. Opportunities in the emerging markets For a countrys economy, in addition to the tourism sector, even the transportation sector is often viewed as an important indicator of growth. With the rise in commercial trade activities, the location of manufacturing facilities and distribution centres can have a major impact on the growth of a countrys transportation sector and transportation infrastructure. The relative location of these manufacturing facilities and distribution centres can dictate whether the country becomes a centre within a logistics network or a spoke in the wheel, serving in effect as a transit passage. Such matters are of particular importance to emerging economies where the transport and logistics infrastructure is making rapid development. Logistic providers are faced with clients who wish to source out of low-cost countries or access these new markets. They need to ensure that they can help their clients meet their objectives, understand the emerging markets environment, and expand their competencies and resources. These companies are at a crossroads in their development and have several strategic questions to consider. Should they expand or try new a niche? Should they move into an acquisition? Should they look at a stock-exchange float? Should they invest in IT/new technology? Should they look at optimising their cost base to counteract the trend towards smaller margins? How can they differentiate from competition by convincing customers that they add value to the business? About FedEx Corporation Introduction http://www.csustan.edu/manage/harris/case4.html Federal Express is an express transportation company, founded by Frederick W. Smith in 1973. During his college years, his intuition that the U.S. was becoming a service-oriented economy and needed a reliable, overnight delivery service company designed for dedicated transportation of packages and documents was the cornerstone of the companys existence today. He started Federal Express with over $80 million, making it the largest company of its time ever funded by venture capital. He found investors willing to contribute $40 million, used $8 million in family money, and received the rest from bank financing. Background Federal Express became successful due to the fact that they pioneered in advanced IT interventions ahead of its competition. They built a super-hub in Memphis, Tennessee, where all packages from the United States would be loaded and shipped out each night. Today, Federal Express has over 143,000 workers worldwide, and delivers more than 3 million express packages to 211 countries daily. One major change has affected Federal Express. In January of 1998, Federal Express the company re-launched as FDX Corporation. FDX Corporation now includes Federal Express, Roadway Packaging System (RPS), Viking Freight, Roberts Express, and Caliber Logistics. Even though FDX owns all these companies, Federal Express still remains independent. Federal Express CEO is currently Theodore Weise. FDXs strategy is to corroborate on selling and synergies for all FDX companies, but run operations separately and keep each companys strengths and markets separate. Therefore, some information will be about FDX, but most will be for Federal Express as its own company. FDX Corporate Subsidiaries All business units of FDX follow the corporate mission statement of the parent company. This synergy allows for growth. It also puts the entity in a position to acquire more companies whose operations are similar. Currently, these are the names and descriptions of the companies under FDX, other than Federal Express. 1. RPS: North Americas second-largest provider of ground small-package delivery. It also services 28 European countries and Puerto Rico. 2. Viking Freight: The premier brand name in less-than-truckload freight movements throughout the western United States. 3. Roberts Express: Engineer and execute time-specific, door-to-door surface and air-charter delivery solutions that solve special-handling challenges for FDX customers within North America and Europe. 4. Caliber Logistics: Develops and implements customized logistics solutions that help FDX customers manage costs, improve customer service and focus on their core business activities. In the Sales Breakdown for these FDX companies, Federal Express still accounts for 83 percent of total revenues. The next largest is RPS, bringing in 11 percent of FDXs total revenues. Strategic vision http://apps.shareholder.com/sec/viewerContent.aspx?companyid=FDXdocid=784953 FedEx Corporations vision is a world where goods and information move quickly and seamlessly. A world where businesses source raw materials and parts globally, then move high-value goods quickly between continents and across time zones. A world where global information and transportation networks can shrink time and distance, creating competitive advantages for customers. FedEx has experienced consistent growth in terms of net income in just about every year of its operation, which has meant three decades of growth. One of the companys greatest strengths is undoubtedly its business concept. No matter what the economy is doing, there will always be a need for package delivery of some sort by companies and individuals involved in nearly every industry. Even when times are tough and companies are seeking to save money, FedEx has less expensive delivery alternatives from which to choose. Of course, being the originator of the express delivery concept is also a key strength. FedEx became a household name before any of its competitors ever arrived on the scene, and thus has become synonymous with the idea of express package delivery in the minds of many, if not most, consumers. Visionary leadership (introduction to founder CEO) Fred Smith recognized the need for a reliable, overnight delivery service. Smith presented the idea in a Yale term paper in the 1960s, and received a C grade for his efforts. Between 1969 and 1971 Smith, however, secured $90 million ($40 million from investors, $8 million from his family, and $42 million in bank financing) to launch Federal Express as the then largest startup funded by venture capital. Federal Express began offering overnight and second-day delivery to 22 American cities in 1973. Today, The FedEx Express unit is one of the five subsidiary organizations that comprise Federal Express. The FedEx Express unit is the primary focus of this study. FedEx Express is the global market leader in express transportation. The firm moves an average of three million packages daily. FedEx Ground is a subsidiary of FedEx Express. FedEx Ground provides ground delivery of packages in North America. FedEx Freight is a less-than-truckload carrier. FedEx Freight operates throughout the United States. FedEx Freight has two operating subsidiaries à ¹ FedEx Freight East and FedEx Freight West. Access is what makes all forms of interaction and exchange possible between people, businesses and nations. Increases in Access boost opportunities and empower people with the ability and confidence to improve their current conditions and future prospects. Mission Statement The Mission Statement of FDX is to produce superior financial returns for stockholders, by providing high value-added logistics, transportation and related information services through focused operating companies. This mission statement shows that FDX has a clear focus. (1) The main focus is to bring returns to stockholders. (2) They will emphasize adding value above and beyond just their service of transporting an object from one place to another. (3) Their focus of operations will be logistics, transportation, and related information. This mission statement is focused enough to keep FDX from diversifying into for example, food products; yet vague enough to allow growth in all of those areas. Philosophy FDX and Federal Express, in particular hold a People-Service-Profit philosophy. The ‘People goal is the continuous improvement of managements leadership. The ‘Service standard is 100 percent customer satisfaction. The ‘Profit goal is much like any other companys goal, and is essential to long-term viability. This philosophy governs how FDX runs its business, and defines strategies. Customers Markets, Globalization and Services The scope of the Federal Express operation covers business-to-business, business-to-individual and individual-to-individual accounts. Federal Express markets include more than 200 countries where 90 percent of all the worlds revenues originate. Federal Express provides both document and freight deliveries as well as supporting services. Stemming from the visionary leadership of the CEO, the company follows market reach global footprint and a business strategy. Competitors Federal Express list of competitors include: United Parcel Service (UPS), Airborne Express, Emery Worldwide, BAX Global, DHL Worldwide, and United States Postal Service. Federal Express holds 46.5 percent, the largest portion, with UPS and Airborne Express as the largest competitors. As shown from the preceding information, Federal Express is clearly a large, strong, and growing express transportation company. Environment screening analysis This section will show the services Federal Express provides; its strengths and weaknesses as an organization; the opportunities and threats, current problems and issues faced. Services Federal Express provides delivery on documents and packages both domestically and internationally. Further, the company also provides supporting services. In the United States, Internationally Supporting Services Priority Overnight Priority interNet Ship Standard Overnight Economy Collect on Delivery Same Day Next Flight Location Service First Overnight First Dangerous Goods Service Express Freight Priority Freight Worldwide Logistics Weekend Shipping Economy Freight U.S. Government Shippers Alaska and Hawaii Airport to Airport International Government Guide S.W.O.T. Analysis Company Strengths and Resource Capabilities: Globalisation: Federal Express largely operates on a global scale. They operate in 211 countries. They provide services that appeal to most of the world. They have such a large market in which to operate which generates tremendous revenue for the business. Benefits of global economies of scale become available to players that operate in such a large playing field. Innovation: Federal Express took the first-mover advantage by identifying airplanes and trucks as a source and resource to gain business advantage. This helped them to remain the industry leader since 1973. Technology and Communication: Federal Express uses and continues to search for new technology. They allow spending of $1billion a year, 10% of total revenues on IT interventions such as integration. The companys commitment to introducing new customer centric service models through IT keeps customers from switching to other providers. Federal Express also has excellent communication with their customers. They use tracking devices on all shipments and customers can trace their shipment through many different avenues including a user-friendly Web site. Federal Express customers can feel assured that FedEx will always be on top of technology. Strategic Vision: Company CEO Frederick Smith built an industry leader, and sustained the title since 1973. The strategic vision of the company is cascaded through top managers who are in charge of the strategic direction of the business. First-Mover Advantage: The company has had first-mover advantage in several areas: (1) Being a global express transportation logistics company (2) Advanced IT interventions that attributed to the continued success of the company (3) Incorporating smaller business units with similar operations under its belt to synergize and control more of the market. Consolidating its resource capabilities at an optimized level has attributed greatly to its success. Strong Brand Image: In 1990, Federal Express became the first organization awarded the Malcolm Baldrige National Quality Award in the service category. Further, in 1994, the company was the first in global express transportation to obtain simultaneous system-wide ISO 9001 certification in international quality standards. Federal Express has also developed its own quality system that matches their customers standards. Company Weaknesses and Resource Deficiencies: Escalating prices: Federal Express prices are priced above its competitors. This can be a weakness if their customers do not perceive a difference between Federal Express and its competitors services. Labour Disputes with Pilots: Federal Express pilots have formed the FedEx Pilots Association. This organization demanded changes in the pilots salaries, retirement benefits, and suggested outsourcing some foreign flights instead of giving their own pilots the job. The pilots have a Web site where news is posted and any grievances are communicated. During the busy Christmas season in 1998, the pilots threatened to strike. Federal Express and the FedEx Pilots Association have developed a tentative agreement, which is published on the pilots Web site. However, the pilots do not believe this agreement fully meets their expectations. The pilot dispute is definitely an internal weakness for Federal Express, considering they have 3,500 pilots employed with them. The business operations would suffer if there were strikes. When UPS employees went on strike in 1997, Federal Express took the extra 800,000 shipments a day. If Federal Express employees went on strike, their competitors could gain an immediate advantage. The reason for running subsidiaries separately: FDX has deliberately chosen to keep its subsidiaries separate. According to FDXs 1998 Annual Report, CEO Frederick Smith states, Simply layering the unique resource and operating requirements of a time-definite, global, express-delivery network onto a day-definite, ground small-package network would surely result in diminished service quality and increased costs. Under the FDX umbrella, we will leverage our shared strengths while operating each delivery network independently, with each focused on its respective markets. Frederick Smith is confident this will be a strength, instead of a weakness. Company Opportunities: Expansion Globally: Federal Express can continue to expand its global footprint. Expansion Internally: Federal Express can continue to acquire more similar smaller business which could offer Federal Express leverage to expand into new technologies or areas in their industry. Run Subsidiaries Together: If FDX doesnt profit from running the subsidiaries separately, they can change to integrating their operations to achieve better synergies and economies of scale. Contracts with Large Corporations: To stay the industry leader, Federal Express should form contracts with companies who will add cost-saving or value-adding benefits to their services. Joint-Ventures: Federal Express can form joint ventures, such as already with Netscape and American Express, to enjoy the growth of integrating their customer bases. Expansion of e-commerce: Federal Express already has a major presence of shipping online. They should keep finding Internet companies to contract delivery of their products. Since the growth of e-commerce is rapid now, Federal Express could enjoy both profits and brand name recognition from this kind of expansion. Company Threats: Y2K Problem: If Federal Express communication and tracking systems arent actually Year 2000 ready, they will experience lost shipments, lost customers, and lost profits. This is a threat for every business, but a global company will be affected on a larger scale. Community Responsibility in the U.S.: Federal Express might be subject to community disapproval in expansion within the United States. Right now, Federal Express has plans to build a second super-hub in Greensboro, NC. The airport is supportive, but the citizens of the community are not. Federal Express has to decide whether the community support or building the centre is more important. Relations with Foreign Countries: Through Federal Express expansions globally, they are subject to laws and regulations of all foreign countries. There could be major problems in this area, stunting growth and raising costs. Already, Great Britain will not let Federal Express fly their own planes for shipments. Federal Express must either load their cargo on to British planes, or use ground transportation. This is very inefficient for Federal Express; however, it keeps competition out for British Air Transportation companies. Everywhere Federal Express goes, they are at risk for regulations that hinder their operations or efficiency. Economic and Political Conditions: Federal Express is subject to the entire worlds economic and political condition in the areas of fuel prices and supply, customer purchase of their services, and relations with foreign countries. As a global company, they are subject to much more risk than domestic companies. Current Problems and Issues Federal Express has several current issues and problems. Decisions about these issues will affect Federal Express profits and brand name in the future. Federal Express Pilots disputes with the company over their salary and compensation, retirement benefits, and Federal Express outsourcing some foreign flights. Federal Express spends only 13.17 percent of total operating expenses on their labor expense. The industry average is 14.81 percent. However, Federal Express main competitors spend 20 and 24 percent of total operating expenses on labor. This is why the pilots are voicing their disagreements, and demanding change. Fuel Price Fluctuation: Federal Express raised their prices and developed contracts with oil suppliers to cover fluctuating fuel costs and volatility of supply. Creation of super-hub in North Carolina: Federal Express does not have the communitys support. Alliance with Netscape: FDX created an alliance with Netscape in order to simplify the world of electronic commerce. FDX will offer delivery services on Netscapes Internet portal site. This will allow both companies to achieve mutual business targets that could not be achieved otherwise. Alliance with American Express: Federal Express offers a 10 to 20 percent discount on many delivery services to customers using an American Express Small Business Corporate Card. Federal Express offers many different services spanning the globe; this is why Federal Express has many strengths, and opportunities. However, Federal Express must also be concerned with their weaknesses and current problems. Industry Analysis Dominant Economic Characteristics Federal Express is in the Air Freight or Air Cargo Transportation Industry. This industry had sales of $34.2 billion in 1998. This industry is in the early maturity life cycle because entry is difficult, yet current competitors are still growing. Companies can realize economies of scale in this industry in marketing and purchasing. Services in this industry are essentially identical, with the exception being the value-added services. General Economic Conditions The current global economic crisis can affect this industry by stunting foreign expansion and reduced utilization of express shipping services. The current crisis in Kosovo may affect business for these companies if any countries they do business in feel the United States is wrong and want to boycott American-originating products and services. Porters 5-Forces Model Rivalry Among Competing Sellers: This is a strong force in this industry because the competitors use price cuts to compete, there is a low cost and ease to switching brands, and the companies in this industry diversify and acquire other companies for strategic growth and synergy. Competitive Force of Potential Entry: This is a weak force in this industry. Each company currently in the industry has strong brand images, leaving a harder job for new companies. The capital expenditures to start an express transportation company are large, and the companies currently are achieving economies of scale by going global. Any smaller company will not be able to achieve these right away, not allowing them to compete on prices. Another factor threatening potential entrants is trade tariffs and international regulations. Most companies currently in the industry have already established relations with foreign countries. New companies will have to prove themselves to foreign companies, suppliers, and customers. Competitive Pressures of Substitute Products: This is a weak to moderate force in this industry. Businesses and individuals that wish to ship cargo and packages can do it with other modes of transportation such as trucks, trains and boats. However, the customers that use air freight transportation usually desire convenience, speed, and low cost. Traditional transportation modes do not offer all three of these. Businesses and Individuals who want to ship documents can use e-mail, the Internet, and Facsimiles. However, these can take some time to scan and load, and then it is uncertain that your document will get to its destination. Power of Suppliers This is a strong force if the suppliers serve industries other than Air Freight. If a supplier only has accounts, or the majority of their accounts with these companies, they will not be able to control prices and supplies. Suppliers that are involved in this industry are: vehicle manufacturers, airplane manufacturers, fuel suppliers, labor, airports, and shipping materials manufacturers. Power of Buyers This is a moderate force in this industry because competition keeps prices similar among the companies. The only difference is companies, such as Federal Express who have value-added services that allow a higher price. Also, the buyers of the services in this industry are reactionary. They do not know the technology before it happens. They become dependent on the technology, service and speed offered by the companies in this industry and will pay for it. Industry Prospects and Overall Attractiveness A trend among Air Freight shippers is to use the Internet for communication with customers and even obtaining shipping contracts with companies selling on the Internet. This alliance with the fastest-growing industry will bring exponential growth to the Air Freight industry, above and beyond what they would normally have realized without this. This industry should remain attractive, with concentration on competition for market share, service differentiation, and brand image. Current Advertising has been aimed at being better than the competitor for different reasons. Performance Analysis FDX has an impressive performance record for example in 1998 they had revenues of $15.9 billion. We can also look at their Net Income for 1998, as well as for the last five years. This information is shown in 4 on Page 3 of the Appendix. As you can see, sales have been growing steadily for the past five years. Looking at the net income, though, it isnt that impressive. It even declined in 1997, from the rising fuel costs during that year. However, in 1998 it grew from $200,000 to $500,000. That could be from reduction in operating costs, or from the acquisition of the subsidiaries which had lower operating costs compared to Federal Express. The financial ratios for FDX compared to Airborne Express (ABF) are in Table 2 on Page 3 of the Appendix. Most of the ratios show Airborne Express in better financial condition than FDX. However, this can be explained through FDXs size as compared to Airborne Express. Airborne Express does not offer as many services or types of shipments as FDX, and it only has half the market share as FDX. Since UPS does not have air shipments, we could not benchmark FDX to them. Clearly though, FDX and Federal Express is the market leader in this industry, have outstanding sales, a healthy profit, and a safe amount of debt. A 5-Year analysis of Federal Express profitability and activity ratios is in s 5 and 6 on page 4 of the Appendix. These ratios over time show a steady increase, except for year 1997, where fuel costs hurt Federal Express deeply.TNT N.V. is an international express and mail delivery services company with headquarters in Hoofddorp, the Netherlands. In the Netherlands, TNT operates the national postal service under the name TNT Post. The group also offers postal services in eight other European countries, including the UK, Federal Express Five-Point Strategy Federal Express has five strategies that govern business tactics. These are to improve service levels, lower unit costs, establish international leadership and sustain profitability, get closer to the customer, and maintain the People-Service-Profit Philosophy. Major Strategic Issues FDX is focused on three primary growth strategies. A collaborative sales process that leverages their shared customer relationships, aggressive global marketing of the broad FDX portfolio to targeted prospective customers, and a strategic application of information systems to reduce costs and improve customer access and connectivity. Introduction to the business strategy Expanding Access Through Our Networks While the benefits and mechanisms of Access are too vast and complex to attribute to any one creator, FedEx is proud to have been the driving force behind many milestones and advances, beginning with overnight express delivery in 1973 from our hub in Memphis. At first connecting 25 U.S. cities — and today, 220 countries — express delivery was a historic breakthrough in Access, collapsing the time and distance between places and connecting people everywhere. Through our expanding networks, anyone shipping a package can now tap into unprecedented speed and worldwide reach. Shaping the Way the World Connects FedEx delivers systems and solutions, not just packages. In recent years, weve increased Access by moving information in the form of bits as close to its destination as possible before converting it into atoms. For example, when one customer planned to host a leadership seminar in New Delhi, FedEx Kinkos transferred tons of materials digitally to China, printed them in one day, and shipped them to India the next. With FedEx Office Print Online capability, any individual can do the same — printing documents remotely and having them delivered locally. Its one major new way FedEx is contributing to greater Access. Today, thanks in part to the Access provided by the internet and FedEx, its possible for a leading electronics company to synchronize its microchip factories in China to the pulse of global demand, flying the finished chips as needed to manufacturing lines in Shanghai, Seoul or Singapore. The chips are bound for laptops and phones that create personal connections in their own right, while the corresponding transformation of China into the worlds factory is expected to lift half a billion people out of poverty by 2020. New FedEx hubs in Guangzhou and Hangzhou will increase the global Access of homegrown Chinese companies and contribute to greater quality of life, while helping companies outside this market to navigate and grow their business here. Changing Whats Possible For 35 years, FedEx has been dedicated to changing whats possible and improving life for people everywhere by promoting greater Access. Every day around the world, we see first-hand how Access empowers people to improve their lives, their businesses and their communities. Because we see this power, we have a unique perspective on Access. Infrastructure/supply chain value chain FedEx has done several things with its value chain to develop new business. First they have always recognized the need to have technology and IT work to communicate the logistics that they run. They have developed internet technologies that work simply and efficiently to enable customers and sellers to use FedEx as a go between. This has enabled many companies to integrate FedEx technology into their own web sites for customers to use. However, up until January 19, 2000 the organization of Fe