Quarterly periodical of International Business Society @ SIMSR

2. Foreword
Dear Readers,
It gives me immense pleasure to bring to you the third issue of e-Globuzz, Jul-Sep'10. We hope you liked
our previous issue of Jan-Mar'10.
There are those who envision, and then there are those who work to make the vision a reality. We are
proud to say that we have a team which does both. We would like to thank all those who were involved in
taking this issue to the completion stage.
Our next issue is planned in Oct '10, which we trust will be even more insightful as we try and evolve
with every issue of ours. In future we plan to evolve by bringing in greater participation from the
corporate executives, industry experts, alumni & faculty. We look forward to hearing from our readers.
Please do send us your feedback at simsr.ibs@gmail.com.
We have dedicated this issue to late Prof. C. K. Prahalad whose books & articles have been a guiding
light for us and hence some of these articles and books have been referred to in this issue.
For everyone in the SIMSR family, Late Prof. C. K. Prahalad was a great source of inspiration; a role
model and an outstanding academician for whom we always had and will continue to have profound
respect and admiration. We were shocked at the news of his untimely passing away in April 2010. We
were looking forward to reading many more of his books and articles in respected international journals.
Some of us at SIMSR, the students and the faculty had the privilege to listen to his insightful speech in
January 2010 when he addressed a packed auditorium at the seventh Nani A Palkhivala Memorial
Lecture in Mumbai. Little did we realize that for us it would be his last lecture, and we would not get the
privilege to hear him again But late Prof. C. K. Prahalad lives on in our minds and in our hearts. We will
fondly continue to read again his various articles and books, which will continue to inspire us and guide
us in our quest for achieving academic & professional excellence.
Another great quality of Late Prof. C. K. Prahalad which we greatly admire is his humility which he had
inspite of his truly exceptional professional achievements as a leading & globally respected author and
consultant to several leading multinational enterprises. His humility is evident in the Preface of his book
-authored with Prof. Gary Hamel of London Business School.
ranging from Kenneth Andrews, Igor Ansoff, Peter Drucker & Henry Mintzberg to Michael Porter &
Kenichi Ohmae- all of whose works on strategy are eagerly read by SIMSR students, alumni & faculty.
The International Business Society (IBS@SIMSR) pays its humble tribute to late Prof. C. K. Prahalad,
Paul and Ruth McCracken Distinguished University Professor, Ross School of Business, University of
Michigan, USA.
Prof. C. P. Joshi
Faculty Mentor-IBS@SIMSR
Course Coordinator- PGDM-IB

3. COVER STORY:
6 Team
BOTTOM OF THE PYRAMID
How Sustainable is your
e Globuzz
Business?
01 Company In Focus: APPLE Faculty Mentor
04 Sector in Focus: Global Automobile Industry Prof. C P Joshi
06 Cover Story: BOTTOM OF THE PYRAMID
How Sustainable is Your Business?
Editors
08 Country in Focus: SOUTH AFRICA
Vikash Kumar Singh
10 Academic fraud in China
Anchal Sachan
11 Report on Economic Freedom Network Asia
Conference 2009
Designers
13 International Marketing: COCA COLA scores a
winner Parul Shrivastava
Rachit Goel
15 International Finance: Global Banking Scenario
17 Interview with Mr ROHIT PANDYA, Dy. General
Manager, Buyer and Country Underwriting, ECGC,
Circulation
Mumbai. Astha Pasricha
19 Debate: - Will the European Union Sustain? Celia Madona Vincent
21 Did you know these terms?
22 Book Review: COMPETING FOR THE FUTURE All the views expressed in
24 Crossword #03 the magazine reflect the
personal opinions and
views of the authors and
do not reflect the
.

4. APPLe COMPANY IN FOCUS
INTRODUCTION
Apple Inc. (previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics,
computer software, and personal computers. The company's best-known hardware products include the Macintosh computers, the
iPod, the iPhone and the iPad.
Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was previously named Apple
Computer, Inc. for its first 30 years, but removed the word "Computer" on January 9, 2007, to reflect the company's on-going
expansion into the consumer electronics market in addition to its traditional focus on personal computers.
Focused Differentiation Strategy
Earlier Apple followed a Focused Differentiation Strategy because
It was catering to a narrow market niche with unique needs
It adopted a premium pricing strategy to target high-end consumers and business market
Broad Differentiation Strategy
Now Apple has now moved towards Broad Differentiation Strategy after the introduction of i-phones and i-pods
It now offers a broad range of products to a larger number of consumers
Gives value to customers by differentiation
STRATEGIES FOR INNOVATION
following steps explain the techniques it uses for innovation.
e - GlobuzZ, Volume I, Issue III July September2010 Page | 1

5. Think Different
Apple maintains an introspective, self-contained operating style that is capable of confounding competitors and shaking up entire
industries. For example, Nokia, once considered the undisputed leader in mobile phones, never anticipated that a single product from
a computer maker might throw its ascendancy into question.
think differently about itself that keeps Apple at the head of the pack.
Build your fortress - Create the infrastructure needed for innovation
Size and sprawl are formidable challenges that most companies manage, either by splintering into disorganized, undisciplined
communities or by locking employees into tight, stifling bureaucracies. Apple tends toward the latter, but it does so in a unique way
ion with
secrecy is a double-edged sword, however: It gives Apple a vital element of surprise in the marketplace
Cultivate your elite - Empower your most valuable employees to do amazing work
, new products are often seen in their complete form by only a small group of top
executives. This, too, works as a strength for Apple: Instead of a sprawling bureaucracy that new products have to be pushed through,
knit group that has a hand in almost every important decision the company makes.
Short-term, cyclical, or competitive pressures do not overwhelm an effective strategy at Apple. It cancels, releases, and updates
products at its own speed, seemingly irrespective of market conditions or competitive pressure. The iPod and iPhone, iconic products
both, each began as rumors that Apple seemed determined to quash.
Clone your own Steve jobs - If you put a tyrannical perfectionist in charge, institutionalize his thinking
k, for
example, worked well as acting CEO during the first half of 2009, when Jobs was on sick leave. The most iconic Apple laptop, the
original PowerBook, was released in 1991, after Jobs had been absent for six years.
As per the financial statements of Apple for 2009, 70% of its revenue is contributed by hand-held equipments. Hence further analysis
of the company is based on the smart phones industry.
STRATEGIC GROUP
smart phones have been positioned as premium products with narrow product lines.
KEY SUCCESS FACTORS
As per experts smartphones seems to be a part of a difficult
industry as part of it is fashion & part of it is technology. Based
on this observation Apple has pursued following factors
relentlessly to gain the numerouno position in its respective
strategic group
Technology
Internet driven force It has immensely
helped Apple drive its sales to target
leisure time on internet (2009 NASSCOM
survey). Hence it becomes imperative for
Apple to have a good internet driven sales
force.
e - GlobuzZ, Volume I, Issue III July September2010 Page | 2

6. Replacing communication
technology Smartphones have
changed the way people
communicate & manage their daily
offer a lot more value to customers
rather than just being a
communication device
Next Generation experience -
Although 3G is newest kid on the
technology block but the talks of 4G
are already on. Hence its all about
embracing new technology &
innovating with evolving technology
& consumer needs.
Marketing
Brand name Apple is a well-
known& respected brand in the
market. It has trust of its loyal
customer base which has been built
over years.
Market segmentation Apple marketing philosophy takes its roots from proper market segmentation. It is based
on this market segmentation only that they have a very narrow product line positioned in premium category.
Skill & Capability
Value Addition test ability is to add value to customer in a faster, more convenient & less expensive
ways then the available options.
Design & Innovation Expertise This capability of Apple lets them innovate at a regular basis and present &
design those innovations in a package which adds value to customer at an affordable price.
Distribution
Strong Network Apple has a vast network of wholesalers, distributors & dealers. They have deep reach in the
market which enables them to make their innovations available to markets in a short span of time.
Fast introduction & application of services The vast distribution network, working with internet as its
backbone, helps apple to even put its services faster in the market than the competitors.
STRATEGIC RECOMMENDATIONS
To encounter certain threats like entry of corporate giants like Google, increasing competition and bargaining power of buyers,
following are some strategic recommendations for Apple.
Diversification: To explore new markets and focus more on developing markets like India and China.
Innovation: Apple should focus on innovation of national products; products adapted to the needs of developing nations.
Expansion: Apple should look at opportunities for mergers and acquisitions across the globe to enhance their distribution and
manufacturing capabilities.
Hitesh Gandhi
Priyanka Singhal
PGDM IB (09-11)
e - GlobuzZ, Volume I, Issue III July September2010 Page | 3

7. Global AUTOMOBILE INDUSTRY
Sector in Focus
Current Global Scenario dŽLJŽƚĂ ĂƐ ƚŚĞ :ĂƉĂŶĞƐĞ ŐŝĂŶƚ ƌĞĞůƐ ĨƌŽŵ Ă ƐƚƌŝŶŐ ŽĨ ƌĞĐĞŶƚ ŐĂƐ
ƉĞĚĂů ƌĞĐĂůůƐ ĂƐ ǁĞůů ĂƐ ŝƚƐ ůĂƚĞƐƚ ďƌĂŬĞ ƌĞĐĂůů ŽŶ WƌŝƵƐ ŚLJďƌŝĚƐ͘
dŚĞ ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ŝŶĚƵƐƚƌLJ ŚĂƐ ďĞĞŶ ĚĞĞƉůLJ ŝŵƉĂĐƚĞĚ ďLJ ƚŚĞ sŽůŬƐǁĂŐĞŶ ' ;stͿ ŝƐ ŚŽƉŝŶŐ ƚŚĂƚ dŽLJŽƚĂ͛Ɛ ƌĞĐĞŶƚ ŶĞŐĂƚŝǀĞ
ĞĐŽŶŽŵŝĐ ƐůŽǁĚŽǁŶ ǁŝƚŚ ƉƌŽďůĞŵƐ ƐƵĐŚ ĂƐ ƉƌŽĚƵĐƚŝŽŶ ƉƵďůŝĐŝƚLJ ǁŝůů ŐŝǀĞ ŝƚƐ ƐĂůĞƐ Ă ƉƵƐŚ͘
ŽǀĞƌĐĂƉĂĐŝƚLJ͕ ŚŝŐŚ ŝŶǀĞŶƚŽƌLJ ĂŶĚ ůŽǁ ƉƌŽĨŝƚĂďŝůŝƚLJ͘ ^ŚƌŝŶŬŝŶŐ
ĐŽŶƐƵŵƉƚŝŽŶ ĂŶĚ ůŽǁ ĐƌĞĚŝƚ ĂǀĂŝůĂďŝůŝƚLJ ĂƌĞ ƉƵƐŚŝŶŐ ĚŽǁŶ ŐůŽďĂů /ŶƚĞƌŶĂƚŝŽŶĂů Ăƌ ƐĂůĞƐ KƵƚůŽŽŬ
ĂƵƚŽŵŽƚŝǀĞ ƐĂůĞƐ͕ ǁŚŝĐŚ ĂƌĞ ĞdžƉĞĐƚĞĚ ƚŽ ĐŽŶƚƌĂĐƚ Ăƚ Ă ĐŽŵƉŽƵŶĚ 'ůŽďĂů ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ
ĂŶŶƵĂů ŐƌŽǁƚŚ ƌĂƚĞ ; 'ZͿ ŽĨ ĂƌŽƵŶĚ ŵŝŶƵƐ ϱ ƉĞƌ ĐĞŶƚ ďĞƚǁĞĞŶ ^ĂůĞƐ;ŝŶ ;ĨͿ
ŵŝůůŝŽŶƐͿ
ϮϬϬϳ ĂŶĚ ϮϬϭϬ͘ ,ŽǁĞǀĞƌ͕ ŝƚ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ũƵŵƉ ďĂĐŬ ƚŽ ƐĂůĞƐ
ĂŶĂĚĂ ϭ͘ϲϰ ϭ͘ϰϲ ϭ͘ϱϯ
ŐƌŽǁƚŚ ǁŝƚŚ ƌŝƐŝŶŐ ŐůŽďĂů ĞĐŽŶŽŵŝĐ ƌĞĐŽǀĞƌLJ͕ ƌĞƐƚŽƌĞĚ ĐŽŶƐƵŵĞƌ
hŶŝƚĞĚ ^ƚĂƚĞƐ ϭϯ͘ϭϵ ϭϬ͘ϰ ϭϭ͘ϱ
ĐŽŶĨŝĚĞŶĐĞ ĂŶĚ ŝŶĐƌĞĂƐŝŶŐ ĚĞŵĂŶĚ ĨŽƌ ƐŵĂůůĞƌ ĂŶĚ ĨƵĞůͲĞĨĨŝĐŝĞŶƚ
DĞdžŝĐŽ ϭ͘ϬϮ Ϭ͘ϴϮ Ϭ͘ϴϱ
ĐĂƌƐ͕ ĞƐƉĞĐŝĂůůLJ ŝŶ ĞŵĞƌŐŝŶŐ ŵĂƌŬĞƚƐ͘
EŽƌƚŚ ŵĞƌŝĐĂ ϭϱ͘ϴϱ ϭϮ͘ϲϴ ϭϯ͘ϴϴ
/ŵƉƌŽǀĞŵĞŶƚ ŝŶ ĐƌĞĚŝƚ ĂǀĂŝůĂďŝůŝƚLJ ĂŶĚ ŝŶĐƌĞĂƐĞ ŝŶ ĐŽŶƐƵŵĞƌ
^ŽƵƚŚ ŵĞƌŝĐĂ ϯ͘ϳ ϯ͘ϵϮ ϰ͘Ϯϴ
ĐŽŶĨŝĚĞŶĐĞ͕ ĐĂƚĂůLJnjĞĚ ďLJ ŐŽǀĞƌŶŵĞŶƚ ƐƚŝŵƵůƵƐ ƉĂĐŬĂŐĞƐ ĂƌŽƵŶĚ
ƚŚĞ ǁŽƌůĚ ĂŶĚ ŐƌŽǁŝŶŐ ĚĞŵĂŶĚ ŝŶ ƌĂnjŝů͕ ZƵƐƐŝĂ͕ /ŶĚŝĂ ĂŶĚ ŚŝŶĂ
tĞƐƚĞƌŶ ƵƌŽƉĞ ϭϯ͘ϱϰ ϭϯ͘ϲϮ ϭϮ͘Ϯϲ
;Z/Ϳ ĂŶĚ ĞŵĞƌŐŝŶŐ ĞĐŽŶŽŵŝĞƐ ǁŝůů ŚĞůƉ ĂŝĚ ƚŚĞ ƌĞĐŽǀĞƌLJ ŽĨ ƚŚĞ
ĂƐƚĞƌŶ ƵƌŽƉĞ ϰ͘Ϭϭ ϯ͘Ϭϭ ϯ͘ϭϲ
ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ŵĂƌŬĞƚ͕Ζ ŶŽƚĞƐ ƚŚĞ ĂŶĂůLJƐƚ ŽĨ ƚŚŝƐ ƌĞƐĞĂƌĐŚ͘
^ŵĂůů͕ ĂĨĨŽƌĚĂďůĞ ĂŶĚ ĐůĞĂŶ ĐĂƌƐ ĂƌĞ ŐŽŝŶŐ ƚŽ ďĞ ŵĞŐĂ ƚƌĞŶĚƐ ŝŶ ŚŝŶĂ ϱ͘Ϭϰ ϳ͘ϯϭ ϴ͘ϳϳ
ƚŚĞ ĂƵƚŽ ŝŶĚƵƐƚƌLJ ŝŶ ƚŚĞ ŶĞdžƚ ĨŝǀĞ LJĞĂƌƐ͕ ĐŽŵƉƌŝƐŝŶŐ ŵŽƌĞ ƚŚĂŶ Ϯϱ /ŶĚŝĂ ϭ͘Ϯ ϭ͘ϰϲ ϭ͘ϳϮ
ƉĞƌ ĐĞŶƚ ŽĨ ŐůŽďĂů ǀĞŚŝĐůĞ ƐĂůĞƐ͕ ŽŶ ƚŚĞ ďĂĐŬ ŽĨ Ă ƉƌĞƐƐŝŶŐ ŶĞĞĚ ƚŽ ƐŝĂ ϭϱ͘Ϭϳ ϭϳ͘ϲϴ ϮϬ͘ϯϵ
ŝŶĐƌĞĂƐĞ ĨƵĞů ĞĨĨŝĐŝĞŶĐLJ ĂŶĚ ĚĞĐƌĞĂƐĞ ĞŵŝƐƐŝŽŶƐ͘
/ƚ ĂŶŶŽƵŶĐĞĚ ƚŚĂƚ ďLJ ϮϬϭϴ ŝƚ ŚŽƉĞƐ ƚŽ ƉƌŽĚƵĐĞ ϭϬ ŵŝůůŝŽŶ ŶĞǁ
ǀĞŚŝĐůĞƐ ĂŶĚ ĂĐŚŝĞǀĞ Ă ƌĞƚƵƌŶ ŽĨ ŵŽƌĞ ƚŚĂŶ ϭϲ ƉĞƌĐĞŶƚ ŽĨ ŝƚƐ
India has emerged as an outsourcing hub ŝŶǀĞƐƚŵĞŶƚ͘ dŚĞ ĐŽŵƉĂŶLJ ŝƐ ƉƵƐŚŝŶŐ ĨŽƌ Ă ϱ ƉĞƌĐĞŶƚ ƉƌŽĨŝƚ ŵĂƌŐŝŶ
ƚŚŝƐ LJĞĂƌ͕ ǁŚŝĐŚ ĚŽĞƐ ŶŽƚ LJĞƚ ŝŶĐůƵĚĞ ƚŚĞ WŽƌƐĐŚĞ ƉƌŽĚƵĐƚŝŽŶ͕ ĂƐ
for auto parts for international ŝƚ ǁŝůů ŶŽƚ ďĞ ŝŶƚĞŐƌĂƚĞĚ ǁŝƚŚŝŶ st ƵŶƚŝů ϮϬϭϭ͘ ͞tŝƚŚ ƚŚĞ
companies such as Ford, General Motors, ŝŵƉůĞŵĞŶƚĂƚŝŽŶ ŽĨ ͚^ƚƌĂƚĞŐLJ ϮϬϭϴ͕͛ ƚŚĞ sŽůŬƐǁĂŐĞŶ 'ƌŽƵƉ ŝƐ
ƐĞĞŬŝŶŐ ŐůŽďĂů ĞĐŽŶŽŵŝĐ ĂŶĚ ĞŶǀŝƌŽŶŵĞŶƚĂů ůĞĂĚĞƌƐŚŝƉ ŝŶ ƚŚĞ
Daimler Chrysler, Fiat, Volkswagen and
ĂƵƚŽŵŽƚŝǀĞ ŝŶĚƵƐƚƌLJ ďLJ ϮϬϭϴ͕͟ st ƐĂŝĚ ŝŶ Ă ƉƵďůŝƐŚĞĚ ĞďƌƵĂƌLJ
Toyota ƐƚĂƚĞŵĞŶƚ ƚŽ ŝŶǀĞƐƚŽƌƐ͘
dŽLJŽƚĂ ĞƐƚŝŵĂƚĞĚ ƚŚĂƚ ƚŚĞ ĐŽƐƚ ŽĨ ƚŚĞ ƌĞĐĂůů ǁŽƵůĚ ƐŚĂǀĞ ŽĨĨ
'ůŽďĂů DĂƌŬĞƚ 'ƌŽǁƚŚ ƌŽƵŐŚůLJ Ψϭ͘ϭ ďŝůůŝŽŶ ŽĨ ŝƚƐ ŝŶĐŽŵĞ ƚŚŝƐ LJĞĂƌ͘ dŚĞ ƌĞĐĂůů ĂĨĨĞĐƚĞĚ
ƐĂůĞƐ͕ ǁŝƚŚ Ă ϭϲ ƉĞƌĐĞŶƚ ĚĞĐůŝŶĞ ŽĨ ƐĂůĞƐ ďLJ ƚŚĞ ĞŶĚ ŽĨ :ĂŶƵĂƌLJ͕
dŚĞ ŵĂƌŬĞƚ ŝƐ ƐŚŽǁŝŶŐ ƌĞĐŽǀĞƌŝŶŐ ƐŝŐŶƐ ĂŶĚ ŐůŽďĂů ƐĂůĞƐ ĂƌĞ ŐŽŝŶŐ ǁŚŝůĞ 'D͛Ɛ ƐĂůĞƐ ŝŶĐƌĞĂƐĞĚ ďLJ ϭϱ ƉĞƌĐĞŶƚ ĚƵƌŝŶŐ ƚŚĞ ƐĂŵĞ ƉĞƌŝŽĚ͘
ƚŽ ŝŶĐƌĞĂƐĞ ŝŶ ŶĞĂƌ ĨƵƚƵƌĞ͘ /ŶĚŝĂ ŝƐ ƐĞĞŶ ĂƐ Ă ƌŝƐŝŶŐ ƐƚĂƌ ŝŶ ƐŝĂ WƌĞĚŝĐƚŝŽŶƐ ĂƌĞ ƚŚĂƚ ŐůŽďĂů ƐĂůĞƐ ǁŝůů ŶŽƚ ƐƚĂŐŶĂƚĞ ĂŶLJ ĨƵƌƚŚĞƌ ĂŶĚ
ǁŝƚŚ ƌĞƐƉĞĐƚ ƚŽ ĂƵƚŽ ƐĂůĞƐ͕ ŵĂŝŶůLJ ĚƵĞ ƚŽ ĚŽŵĞƐƚŝĐ ĚĞŵĂŶĚ͕ ĂŶĚ ϮϬϭϬ ǁŝůů ďĞ Ă ŵŽĚĞƐƚůLJ ďĞƚƚĞƌ LJĞĂƌ͘
ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ŝŶĐƌĞĂƐĞ ŽƵƚƉƵƚ ĂŶĚ ƐĂůĞƐ ďLJ ƌŽƵŐŚůLJ ϴ ƉĞƌĐĞŶƚ͘
sĞŚŝĐůĞ ƐĂůĞƐ ŝŶ ^ŽƵƚŚ ŽƌĞĂ͕ ŚĂǀŝŶŐ ƚĂŬĞŶ Ă ŶŽƐĞĚŝǀĞ ŽĨ Ϯϰ 'ůŽďĂů DĂƌŬĞƚ WŽƚĞŶƚŝĂů
ƉĞƌĐĞŶƚ ůĂƐƚ LJĞĂƌ ĚĞƐƉŝƚĞ ƚĂdž ďƌĞĂŬƐ ŝŶ ƚŚĞ ůŽĐĂů ŵĂƌŬĞƚ͕ ŝƐ
ĞdžƉĞĐƚĞĚ ƚŽ ƐŚŽǁ Ă ŵĂƌŐŝŶĂů ŝŶĐƌĞĂƐĞ ŽĨ ϱ ƉĞƌĐĞŶƚ͘ 'ůŽďĂůůLJ͕ /Ŷ Ă ƌĞĐĞŶƚ ƐƵƌǀĞLJ ĐŽŶĚƵĐƚĞĚ ďLJ WD' /ŶƚĞƌŶĂƚŝŽŶĂů ŝŶ
ĂƵƚŽŵĂŬĞƌƐ ĂƌĞ ĂƚƚĞŵƉƚŝŶŐ ƚŽ ǁƌĞƐƚůĞ ŵĂƌŬĞƚ ƐŚĂƌĞ ĂǁĂLJ ĨƌŽŵ ^ĞƉƚĞŵďĞƌ ϮϬϬϵ͗ ϮϬϬ ƌĞƐƉŽŶĚĞŶƚƐ ĨƌŽŵ Ϯϰ ĐŽƵŶƚƌŝĞƐ ŝŶĐůƵĚŝŶŐ
ĞͲ 'ůŽďƵnj sŽůƵŵĞ /͕ /ƐƐƵĞ /// :ƵůLJ ^ĞƉƚĞŵďĞƌϮϬϭϬ WĂŐĞ ͮ ϰ

8. ŵĞƌŝĐĂ͕ ƐŝĂ WĂĐŝĨŝĐ͕ ƵƌŽƉĞ͕ ĨƌŝĐĂ ĂŶĚ DŝĚĚůĞ Ă ƚŽŽŬ ƉĂƌƚ ŝŶ
ĂƐƚ dŚĞ /ŶĚŝĂŶ ĂƵƚŽŵŽďŝůĞ ŝŶĚƵƐƚƌLJ ŵĂŶƵĨĂĐƚƵƌĞƐ ŽǀĞƌ ϭϭ ŵŝůůŝŽŶ
ƚŚĞ ƐƵƌǀĞLJ͘ dŚĞ ƌĞƐƉŽŶĚĞŶƚƐ ŝŶĐůƵĚĞĚ K͕ WƌĞƐŝĚĞŶƚ ŚĂŝƌŵĂŶ͕
WƌĞƐŝĚĞŶƚ͕ ǀĞŚŝĐůĞƐ Ă LJĞĂƌ͕ ĞŵƉůŽLJŝŶŐ ŵŽƌĞ ƚŚĂŶ ƚŚƌĞĞ ŵŝůůŝŽŶ ƉĞŽƉůĞ͘ dŚĞ
ŽƵŶƚƌLJ ʹůĞǀĞů džĞĐƵƚŝǀĞ͕ ƵƐŝŶĞƐƐ hŶŝƚ ,ĞĂĚ͕ ƵŶĐƚŝŽŶĂů ŚĞĂ ŽĨ
ŚĞĂĚ ŝŶĚƵƐƚƌLJ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ŐƌŽǁ ƚŽ h^Ψ ϰϬ ŝůůŝŽŶ ďLJ ϮϬϭϱ͘ LJ ƚŚĞ
Ϯ
ĚŝĨĨĞƌĞŶƚ ĂƵƚŽ ĐŽŵƉĂŶŝĞƐ ĂƐ ǁĞůů ĂƐ dŝĞƌͲϭ ĂŶĚ dŝĞƌͲϮ ƐƵƉƉůŝĞƌƐ͘ LJĞĂƌ ϮϬϭϲ ƚŚĞ ŝŶĚƵƐƚƌLJ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ĐŽŶƚƌŝďƵƚĞ ϭϬй ŽĨ ƚŚĞ
ϭϬ
dŚĞŝƌ ƌĞƐƉŽŶƐĞ ĨŽƌ ƚŚĞ ĐŽƵŶƚƌLJ ĂƚƚƌĂĐƚŝǀĞŶĞƐƐ ŝŶ ĂƵ ŝŶĚƵƐƚƌLJ
ĂƵƚŽ ŶĂƚŝŽŶ͛Ɛ 'W͘ dŚĞ ƐƵĐĐĞƐƐĨƵů ůĂƵŶĐŚ ŽĨ dĂƚĂ EĂŶŽ͕ ƚŚĞ ĐŚĞĂƉĞƐƚ
ĐŚĞĂƉĞƐ
ŝŶĚŝĐĂƚĞĚ ƐŝĂ WĂĐŝĨŝĐ ƌĞŐŝŽŶ ƚŽ ďĞ ƚŚĞ ŵŽƐƚ ĂƚƚƌĂĐƚŝǀĞ ŽĨ Ăůů͘ ĐĂƌ ŝŶ ƚŚĞ ǁŽƌůĚ͕ ŚĂƐ ŐŽƚ ŝŶƐƚĂŶƚ ƌĞĐŽŐŶŝƚŝŽŶ ŝŶ ƚŚĞ ĂƵƚŽŵŽďŝůĞ
ƚŚ
ŝŶĚƵƐƚƌLJ ĂĐƌŽƐƐ ƚŚĞ ŐůŽďĞ͘ /ƚ ŚĞƌĂůĚĞĚ ƚŚĞ ĐŽŵŝŶŐ ƚŽ ĂŐĞ ŽĨ ƚŚĞ
ƚ
/ŶĚŝĂŶ ƵƚŽŵŽďŝůĞ /ŶĚƵƐƚƌLJ Ăƚ ƚŚĞ 'ůŽďĂů ůĞǀĞů͘
^ƵũĂLJ ^ĂdžĞŶĂ
DŝƚƵů ͘ ^ŚĂŚ
W'D / ;ϬϵͲϭϭͿ
ƵƌŽƉĞĂŶ ĐŽŶŽŵLJ
DĂƉƉŝŶŐ ƚŚĞ hΖƐ Ğďƚ͕ :ŽďƐ ĂŶĚ 'ƌŽǁƚŚ
tŽƌƌŝĞƐ
dŚĞƌĞ ĂƌĞ ĨĞĂƌƐ ƚŚĂƚ 'ƌĞĞĐĞΖƐ ĚĞďƚ ĐƌŝƐŝƐ ǁŝůů ŚĂǀĞ ƐŝŵŝůĂƌ ĞƉŝƐŽĚĞƐ ĞůƐĞǁŚĞƌĞ
ĞůƐ
ŝŶ ƚŚĞ ĞƵƌŽ njŽŶĞ Ͳ ŶŽƚĂďůLJ ŝŶ WŽƌƚƵŐĂů ĂŶĚ ^ƉĂŝŶ͘ dŚĞƐĞ ĐŽƵŶƚƌŝĞƐ ŚĂǀĞ ƐĞŶƚ
ƐŽǀĞƌĞŝŐŶͲďŽŶĚ LJŝĞůĚƐ ĨŽƌ ƐĞǀĞƌĂů ƐŽƵƚŚĞƌŶ ƵƌŽƉĞĂŶ ĐŽƵŶƚƌŝĞƐ ĚƌŝĨƚŝŶŐ ŚŝŐŚĞƌ͕
ĂŶĚ ŚĂǀĞ ĨƵĞůůĞĚ ĨĞĂƌƐ ĂďŽƵƚ ƚŚĞ ĞdžƉŽƐƵƌĞ ŽĨ ƵƌŽƉĞΖƐ ďĂŶŬƐ ƚŽ ŝŶĚĞďƚĞĚ
ƵƌŽƉĞ
ŐŽǀĞƌŶŵĞŶƚƐ͘ ƚƚĞŵƉƚƐ ƚŽ ƌĞŝŶ ŝŶ ƚŚĞ ƉƵďůŝĐ ĨŝŶĂŶĐĞƐ ŵĂLJ ĐĂůŵ ďŽŶĚ ŵĂƌŬĞƚƐ
ĨŝŶĂŶĐĞ
ďƵƚ ƚŚĞLJ ĂůƐŽ ƌŝƐŬ ǁĞĂŬĞŶŝŶŐ ŐƌŽǁƚŚ͕ ǁŚŝĐŚ ŵĂŬĞƐ ůŝĨĞ ŵŽƌĞ ĚŝĨĨŝĐƵůƚ ĨŽƌ
ůŝ
ϭ͘ ŽŵƉĂŶŝĞƐ ŝŶ ŵĞƌŝĐĂ ĂƌĞ ŽƉƚŝŵŝƐƚŝĐ ŽŶ ĞĐŽŶŽŵŝĐ
ĞdžƉŽƌƚĞƌƐ ŝŶ ƉůĂĐĞƐ ůŝŬĞ ŚŝŶĂ ĂŶĚ ŵĞƌŝĐĂ͕ ĂŶĚ ƐƉĞůůƐ ƚƌŽƵďůĞ ŽĨ Ă ĚŝĨĨĞƌĞŶƚ
ƐƉĞ
ĞĐŽŶŽŵLJ ŐƌŽǁƚŚ
ŬŝŶĚ ĨŽƌ ƚŚĞ ďĂŶŬƐ͘ /Ŷ ϮϬϬϵ ŽŶůLJ WŽůĂŶĚ ŽĨ ƚŚĞ Ϯϳ ĐŽƵŶƚƌŝĞƐ ŝŶ ƚŚĞ ƵƌŽƉĞĂŶ
ƵƌŽƉĞĂ
Ϯ͘ :ĂƉĂŶ ŝƐ ƌĂƚĞĚ ůŽǁĞƐƚ ŐƌŽǁƚŚ ŵĂƌŬĞƚ ďLJ D ĐŽƵŶƚƌŝĞƐ
ϯ͘ ƌŽĂĚ ƌĞŐŝŽŶĂů ĐŽŶƐĞŶƐƵƐ ŚŝŐŚ ĂƐƚĞƌŶ ƵƌŽƉĞ ĂŶĚ Ɛ
ƐŝĂŶ hŶŝŽŶ ŵĂŶĂŐĞĚ ƚŽ ƌĞĐŽƌĚ ƉŽƐŝƚŝǀĞ ŐƌŽǁƚŚ͘ ůƚŚŽƵŐŚ ŵĂŶLJ ĐŽƵŶƚƌŝĞƐ ŚĂǀĞ ŶŽǁ
ŵ
ŐƌŽǁƚŚ ƌĞƚƵƌŶĞĚ ƚŽ ŐƌŽǁƚŚ͕ ŝƚ ŝƐ ŐĞŶĞƌĂůůLJ ĂŶĂĞŵŝĐ͘ /Ŷ ŵĂŶLJ ĐŽƵŶƚƌŝĞƐ ƵŶĞŵƉůŽLJŵĞŶƚ
ŵĂŶ
ƌĂƚĞƐ ŚĂǀĞ ŶŽƚ ƌŝƐĞŶ ĂƐ ŵƵĐŚ ĂƐ ŽŶĞ ŵŝŐŚƚ ĞdžƉĞĐƚ ŐŝǀĞŶ ƚŚĞ ĚĞƉƚŚ ŽĨ ƚŚĞ
/E/ ʹ dŚĞ ZŽĂĚ ŚĞĂĚ ĐƌŝƐŝƐͶƚŚĞƌĞ ĂƌĞ ƚŝŵĞƐ ǁŚĞŶ ŵĂŬŝŶŐ ŝƚ ŚĂƌĚ ƚŽ ĨŝƌĞ ƉĞŽƉůĞ ŚĂƐ ƐŽŵĞ
ĂĚǀĂŶƚĂŐĞƐ͘ Ƶƚ ƚŚĞ ĨůŝƉƐŝĚĞ ŽĨ ůĂďŽƵƌͲŵĂƌŬĞƚ ƌŝŐŝĚŝƚLJ ŝƐ ƚŚĂƚ ƚŚĞ
/ŶĚŝĂ ŝƐ ĞŵĞƌŐŝŶŐ ĂƐ ŽŶĞ ŽĨ ƚŚĞ ŬĞLJ ŵĂƌŬĞƚ ĨŽƌ ĂƵƚŽ
ĂƵƚŽŵŽďŝůĞƐ ĂŶĚ
ƵŶĞŵƉůŽLJŵĞŶƚ ƌĂƚĞ ŵĂLJ ďĞ ΗƐƚŝĐŬLJΗ͕ ďĞĐĂƵƐĞ ĨŝƌŵƐ ŚĂǀĞ ůĞƐƐ ŶĞĞĚ ƚŽ ŚŝƌĞ ĂƐ
ŚĂ
ĂƵƚŽ ĐŽŵƉŽŶĞŶƚƐ ĐĞŶƚĞƌ ĂŶĚ ŝƐ ĞdžƉĞĐƚĞĚ ƚŽ ƉůĂLJ Ă ƐŝƐŝŐŶŝĨŝĐĂŶƚ ƌŽůĞ
ƌĞĐŽǀĞƌLJ ƚĂŬĞƐ ŚŽůĚ͘ dŚĂƚ ǁŝůů ŬĞĞƉ ĚĞŵĂŶĚ ŐƌŽǁƚŚ ƐƵďĚƵĞĚ͘
ŝŶ ŐůŽďĂů ĂƵƚŽŵŽƚŝǀĞ ƐƵƉƉůLJ ĐŚĂŝŶ ŝŶ ƚŚĞ ŶĞĂƌ ĨƵƚƵƌĞ͘ /ŶĚŝĂ ŚĂƐ
ĞŵĞƌŐĞĚ ĂƐ ĂŶ ŽƵƚƐŽƵƌĐŝŶŐ ŚƵď ĨŽƌ ĂƵƚŽ ƉĂƌƚƐ ĨŽƌ ŝŶ ŝŶƚĞƌŶĂƚŝŽŶĂů
DĞĚŝŽĐƌĞ ŐƌŽǁƚŚ ƌĂƚĞƐ ĂƌĞ ŵŽƌĞ ŽĨ Ă ƉƌŽďůĞŵ ĨŽƌ ƐŽŵĞ ĐŽƵŶƚƌŝĞƐ ƚŚĂŶ ŽƚŚĞƌƐ͘
ƐŽŵ
ĐŽŵƉĂŶŝĞƐ ƐƵĐŚ ĂƐ ŽƌĚ͕ 'ĞŶĞƌĂů DŽƚŽƌƐ͕ ĂŝŵůĞƌ Śƌ ŚƌLJƐůĞƌ͕ ŝĂƚ͕
dŚĞLJ ƐƉĞůů ƉĂƌƚŝĐƵůĂƌ ƚƌŽƵďůĞ ĨŽƌ ƚŚŽƐĞ ƚŚĂƚ ŚĂǀĞ ŚŝŐŚ ůĞǀĞůƐ ŽĨ ĚĞďƚ ĂŶĚ ƚŚĂƚ ĚŽ
Ś
sŽůŬƐǁĂŐĞŶ ĂŶĚ dŽLJŽƚĂ͘ ƵƌŝŶŐ ƚŚĞ LJĞĂƌ ϮϬϬϴͲϬϵ͕ ƚŚĞ ƚƵƌŶŽǀĞƌ
ĂŶĚ ĞdžƉŽƌƚ ĨŽƌ ĂƵƚŽ ĐŽŵƉŽŶĞŶƚ ŝŶĚƵƐƚƌLJ ǁĂƐ ƌĞĐŽƌĚĞĚ Ăƚ h^Ψ ŶŽƚ ŚĂǀĞ ƚŚĞ ŽƉƚŝŽŶ ƚŽ ĚĞǀĂůƵĞ ƚŚĞŝƌ ĐƵƌƌĞŶĐŝĞƐ͘ dŚĂƚ ĞdžƉůĂŝŶƐ ǁŚLJ 'ƌĞĞĐĞ ǁĂƐ
dŚ
ϭϱ͘ϴϱ ŝůůŝŽŶ ĂŶĚ h^Ψ ϯ͘ϭϭ ŝůůŝŽŶ ƌĞƐƉĞĐƚŝǀĞůLJ͘ ĨŝƌƐƚ ƚŽ ůŽƐĞ ƚŚĞ ĐŽŶĨŝĚĞŶĐĞ ŽĨ ƚŚĞ ŵĂƌŬĞƚƐ͗ ǁŝƚŚ Ă ƉƵďůŝĐͲĚĞďƚͲƚŽͲ'W ƌĂƚŝŽ ŽĨ
ϭϭϱй ĂŶĚ Ă ďƵĚŐĞƚ ĚĞĨŝĐŝƚ ŽĨ ϭϯ͘ϲй ŝŶ ϮϬϬϵ͕ ŝƚ ǁĂƐ ƚŚĞ ĞƵƌŽ njŽŶĞΖƐ ŽƵƚůŝĞƌ
dŚĞ /ŶĚŝĂŶ ĂƵƚŽ ŝŶĚƵƐƚƌLJ ŝƐ ůŝŬĞůLJ ƚŽ ƐĞĞ Ă ŐƌŽǁƚŚ ŽĨ ϭϬͲϭϮ ƉĞƌĐĞŶƚ ĐŽƵŶƚƌLJ͘ KƚŚĞƌ ĐŽƵŶƚƌŝĞƐ ĂƌĞ ŶŽǁ ƐĐƌĂŵďůŝŶŐ ƚŽ ĂǀŽŝĚ 'ƌĞĞĐĞΖƐ ĨĂƚĞ͘ /ƌĞůĂŶĚ͕
ĂǀŽŝ
ŝŶ ƐĂůĞƐ ŝŶ ϮϬϭϬ͕ ĂĐĐŽƌĚŝŶŐ ƚŽ Ă ƌĞƉŽƌƚ ďLJ ŐůŽďĂů ƌĂƚŝŶŐ Ĩŝƌŵ͕ ŝƚĐŚ͘ ĂŶŽƚŚĞƌ ŚĞĂǀŝůLJ ŝŶĚĞďƚĞĚ ĞƵƌŽͲnjŽŶĞ ŵĞŵďĞƌ͕ ĞŵďĂƌŬĞĚ ŽŶ ĂƵƐƚĞƌŝƚLJ ĞĂƌůLJ͖
^ŽŵĞ ŽĨ ƚŚĞ ŬĞLJ ŐƌŽǁƚŚ ĚƌŝǀĞƌƐ ŽĨ ƚŚĞ ŝŶĚƵƐƚƌLJ ĂƌĞ͗ WŽƌƚƵŐĂů ĂŶĚ ^ƉĂŝŶ͕ ǁŚŽƐĞ ƉƌŽďůĞŵƐ ƐƚĞŵ ĂƐ ŵƵĐŚ ĨƌŽŵ ůĞǀĞůƐ ŽĨ ĞdžƚĞƌŶĂů ĂŶĚ
ĨƌŽ
ƉƌŝǀĂƚĞ ĚĞďƚ ĂƐ ĨƌŽŵ ŐŽǀĞƌŶŵĞŶƚ ďŽƌƌŽǁŝŶŐ͕ ŚĂǀĞ ŚĂĚ ƚŚĞŝƌ ŚĂŶĚƐ ĨŽƌĐĞĚ͘ ^ƚŝůů
• ZŝƐŝŶŐ ŝŶĚƵƐƚƌŝĂů ŽƵƚƉƵƚ
ŽƚŚĞƌƐ ĂƌĞ ƉƌƵŶŝŶŐ ďĞĨŽƌĞ ƚŚĞ ŵĂƌŬĞƚƐ ĞdžĞƌƚ ƌĞĂů ƉƌĞƐƐƵƌĞ͗ ƌŝƚĂŝŶΖƐ ĚĞďƚ ŚĂƐ
• ZŝƐŝŶŐ ƉĞƌ ĐĂƉŝƚĂ ŝŶĐŽŵĞ
ƚŚĞ ůŽŶŐĞƐƚ ŵĂƚƵƌŝƚLJ ŽĨ ĂŶLJ h ŵĞŵďĞƌ ďƵƚ ŝƚ ŝƐ Ɛƚŝůů ĂŝŵŝŶŐ ƚŽ ŐĞƚ ŝƚƐ ĨŝŶĂŶĐĞƐ
Ɛƚŝ
• ZŝƐŝŶŐ ŵŝĚĚůĞ ĐůĂƐƐ
ŝŶ ŽƌĚĞƌ ǁŝƚŚŝŶ ĨŽƵƌ ƐĂǀĂŐĞ LJĞĂƌƐ͘
• hƌďĂŶŝnjĂƚŝŽŶ
ďŚŝƐŚĞŬ DŽĚĂŬ
• ZŝƐŝŶŐ ŝƐƉŽƐĂďůĞ ŝŶĐŽŵĞ
W'D / ;ϬϵͲϭϭͿ
• ĂƐLJ ĨŝŶĂŶĐĞ ƐĐŚĞŵĞƐ
• ZŽďƵƐƚ ĂŶĚ ǁŽƌůĚ ĐůĂƐƐ ƉƌŽĚƵĐƚŝŽŶ
ĞͲ 'ůŽďƵnj sŽůƵŵĞ /͕ /ƐƐƵĞ /// :ƵůLJ ^ĞƉƚĞŵďĞƌϮϬϭϬ
ϮϬϭϬ WĂŐĞ ͮ ϱ

9. COVER STORY
A tribute to Late Prof. C. K. Prahalad
Bottom of the
Pyramid
How Sustainable is your Business?
Did we know that a company could make a bigger
profit by focusing on the market segment consisting poor.
of people who earn less than $2 per day?
Financially sustainable and integrated
BOP business lines are the pinnacle of
growing market is at the bottom and not the top of
the fortune pyramid? truly sustainable and strategic
Corporate Social Responsibility
Were we aware that nine countries including China,
India, Brazil, Mexico, Russia, Indonesia, Turkey, The real fortune being sought is the simultaneous
South Africa, and Thailand collectively have a GDP accomplishment of a trifecta of goals corporate
of $12.5 trillion, larger than the GDP of Japan, profit, relevant and sustainable social impact and
Germany, France, Italy, and the UK combined? local poverty alleviation. The impending questions
are:
C.K. I. Securing Internal Support: How can companies
Prahalad gather data affordably in order to make a
compelling business case and develop accurate
projections?
know-how, and investment capacity, we are unable II. Testing on a Budget: How can we run pilot
to make even a minor contribution to the problem of programs at an affordable cost with low-margin
business models?
This profound question stares at you only to leave
you answerless. In 2002, The Fortune at the Bottom III. Patience: How can we balance corporate
of the Pyramid ushered in a new level of pressures for profitability with commitments for
consciousness in international business strategy. impact in the community?
Although the idea of doing good and doing well was
already well established, the anecdotal case by C.K. IV. The challenge of growth: How can we scale while
Prahalad and Stuart Hart that the four billion people adapting the product composition and its delivery
each living on less than US$2 a day (the bottom of mechanisms to the needs of each local community?
held the
potential for immense profit captured popular The assumption that the poor need to seen as a
imagination. Multi-national companies (MNEs) market, but one different from the conventional
around the world launched initiatives to adapt and perception ofa market, has some immediate
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 6

10. COVER STORY
A tribute to Late Prof. C. K. Prahalad
consequences all of the traditional business
concepts are applicable but each and every one of
those concepts needs to be applied from a distinct
perspective.
What results is a practical example of the
applicationof innovative thinking and innovation to
an intractable problem How to cater to the more
than 4-billion humans who do not form part of the
target market of the organizations that are driven by
conventional assumptions about products, services,
value and needs.
Professor Prahalad demonstrated that the process of
poor can provide substantial returns to create real
partnerships and innovations for established
participatory, bottom-up initiative
companies.
To a great extent, financially sustainable and
Thus Top of the Pyramid Approach may just lead to
integrated BOP business lines are the pinnacle of
Sustainability BUT Bottom of the Pyramid leads to
truly sustainable and strategic Corporate Social
Sustainable Development
Responsibility. Answering the questions at the
bottom of the pyramid may be the key to ushering in
What is required is to undertake an analysis of the
a new era of capitalism which generates profit,
current BOP paradigm to support the development
offers wealth-creation opportunities for the poor,
of a sustainable, participatory multi-stakeholder
spreads products to reduce sickness and spreads
approach.
education around the world welcoming billions of
-nationals towards SME people to participate in a more inclusive, sustainable
global economy. The thousands of little fires lit by
corporations, entrepreneurs, academics,
governments and non-profits may yet become a
blaze that will change the world.
development
Vikash Singh
PGDM IB (09-11)
The Wellness Wave: International HRM
Dhara Shah (MMS- HR 09-11)
Workplace Wellness established its foothold in the West long back. The trend is now finally catching up in India. With the rapid growth of the IT and ITeS sectors,
the rest of the industries.
A 2009 study conducted by Right Management, a Manpower Company, suggests that wellness is an extremely powerful element that can play a significant role in
employee engagement, organizational productivity, talent retention, and creativity and innovation. It is imperative that wellness should be incorporated in the
organizational effectiveness framework to realize real business gains.
it is important to note that an
organization can position Wellness very effectively as an int
its influence going well beyond the boundaries of just physical and psychological health will translate into better organizational effectiveness. Wellness needs to be
looked at as an umbrella of various initiatives and offerings.
Redefining wellness as a concept that offers more than just health to the employees is the way forward for all the organizations.
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 7

11. COUNTRY IN FOCUS
SOUTH AFRICA
The Republic of South Africa is a country located at the country with its products.
southern tip of Africa, with a 2,798 kilometers coastlineon
the Atlantic and Indian Ocean. The official currency is Rand. Political System
The country is divided into nine provinces with the four main
regions of commerce being in the Western Cape (Cape Town),
African National Congress, with Mr. Nelson Mandela as
Eastern Cape (Port Elizabeth and East London), KwaZulu-Natal
president, was elected with an overwhelming majority. The
(Durban) and Gauteng (Johannesburg).
South African government comprises as the national,
Industries provincial and local spheres of government which are
distinctive, inter-dependent and inter-related. The legislative
South Africa is rich in mineral resources, has a well-developed authorities, executive authorities and judicial authorities are
all separate from one another.
minerals. It has a broad-based industrial manufacturing centre,
making it the largest and most industrially developed economy Social Issues
in
The education system and teaching methodology are not yet
modern. The number of graduates is quite less. There is a
trading nations. Agriculture is an important component of the
critical shortage of low cost housing. Crime rates are high
economy and the country is a net exporter of food.
though the government has implemented National Crime
Investing Climate Prevention Strategy. HIV/AIDS is one of the greatest
challenges for both the Government and the businesses.
The South African economy is predominantly based on free
market principles, with some areas of state control. There is a IPR
long history of foreign investment in South Africa, with heavy
South Africa has tight Intellectual Property laws though the
involvement by British, German and American interests. As the
enforcement is not stringent. The review of South Africa's IPR
leading economy in Africa, with a well-developed
regime reveals a rather mixed picture of the state of IPR
infrastructure and established trade links with the rest of the
protection in South Africa. The approval of South African
continent, South Africa is a suitable base for generating
Reserve Bank is necessary for the export of any
investment and trade with the rest of Africa, particularly in the
technology/intellectual property. In South Africa, the
sub-Saharan region. Except in the banking, insurance and
intellectual property division of CIPRO, the Companies and
broadcasting industries, there are no restrictions on foreign
Intellectual Property Registration Office, is responsible for the
ownership of local companies and businesses.
registration of patents, trademarks, designs and copyright.
There are initiatives in place for the empowerment of black
persons (i.e. Black, Colored and Indian persons). These include
increasing ownership of companies by black persons and other
With a well-developed
forms of empowerment through employment equity and infrastructure and established
preferential procurement.
trade links with the rest of the
Economy continent, South Africa is a
The country has an excellent physical infrastructure in terms of suitable base for generating
roadways, railways, power distribution etc. South African
industry is able to produce most of the requirements of
investment and trade with the
Southern Africa. The market is, however, small in comparison rest of Africa, particularly in the
to European and US standards and in many instances a single
enterprise is capable of satisfying the entire needs of the
sub-Saharan region.
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12. Foreign relationships The government has made it clear that foreign investment is
welcome in South Africa, and investor-friendly policies support
One of the leading voices in the African continent, South Africa the public pronouncements. SouthAfrica has a world-
has been involved in a series of initiatives at both political and class,progressive legal framework. Other factors like
economic level to promote and advance African interests and unemployment, weak health care sector etc. notwithstanding,
peace in Africa. South Africa is a founder member of the New South Africa appears to offer a lot to potential investors and
Par a business ventures.
member of several international organizations such as United
Nations, the Commonwealth and the Non-Aligned Movement
and has established diplomatic relations with over 150
nations. In recent years, South Africa has also developed
strong relations with markets in the rest of Africa, Asia and
Latin America. South Africa is also part of IBSA, a trilateral
developmental initiative between India, Brazil and South
Africa, to promote South-South cooperation and exchange.
Culture
South Africa is a mix of different cultures representing every
level of an extremely stratified community. Apart from the
Afrikaners, most of the white South Africans are of British
descent. But most of the traits of a heterogeneous culture
were ignored, destroyed or trivialized during the years of the
apartheid. In a society where a person could be imprisoned for
just owning a politically incorrect piece of art like a painting, all
the serious works of art were forced underground and the MAP : South Africa
galleries and theaters were filled with bland works of art.
South Africans have been referred to as the 'rainbow nation', a
title which epitomizes the country's cultural diversity. The
population of South Africa is one of the most complex and
diverse in the world. Of the 45 million South Africans, nearly
31 million are black, 5 million white, 3 million colored and one
million Indian. The population density is 32.9 people per km.
Parvathi Ramanandan
Conclusion
Aditi Gupta
PGDM IB (09-11)
As an investment destination, South Africa has enormous
potential due to the unique mix of highly developed first class
economic infrastructure with a vibrant emerging market
economy. It is also one of the most advanced and productive
economies in Africa. After adopting democracy in 1994, South
Africa has been undergoing rapid structural transformation
with the implementation of macro-economic policies aimed at
promoting domestic competitiveness, growth and
employment and increasing the economy's outward
orientation. Not only is South Africa in itself an important
emerging market, it is also a key for accessing other sub-
Saharan markets. Key economic reforms have given rise to a
high level of macro-economic stability.
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13. Academic Fraud in China
Thus reward can come without academic rigour and senior
the need to foster innovation. He makes a strong case: scientists, who are rarely punished for fraud, set a wrong
sustaining economic growth and competitiveness requires example for juniors.
China to go beyond mere labour-driven manufacturing and
into the knowledge-based business of discoveries, inventions The implications of widespread academic misconduct could
and other advances. be great. Denis Fred Simon of Penn State University argues
overall credibility of the entire scientific enterprise in China-
well-earned reputation for pervasive academic and scientific and unfortunately feeds negatively into the related concerns
misconduct. Scholars, both Chinese and western, say that about the safety of Chinese products and the integrity of
fraud remains rampant and misconduct ranges from falsified
data to fibs about degrees, cheating on tests and extensive
plagiarism. In practical terms foreign scientists may be deterred from
China, as they worry about getting caught up in scandals.
The most notable recent case centres on Tang Jun, a Early this year, after it was found that 70 papers on crystal
celebrity executive, a self-made man and author of a popular structures submitted to an international journal by Chinese
book, My Success Can Be Replicated . He was recently scientists had been fabricated, the Lancet medical journal
accused of falsely claiming that he had a doctorate from the
prestigious California Institute of Technology. He responded
that his publisher had erred and in fact his degree is from suggested, had failed to get to the root of why some Chinese
another, much less swanky, California school. scientists lie.
Other cases involve accusations of plagiarism against well- Another direct cost may be felt by Chinese students looking
known Chinese scholars which have provoked the for college places abroad. Admissions officials are suspicious
authorities to talk of investigating. A western scholar of near-perfect scores on standardised tests and glowing
recounts how a social-science project was jeopardized recommendations from professors, which are common to
recently when data collection was contracted out to a many applications from China. The risk is that genuinely
Chinese company whose researchers simply filled out the qualified students are turned away because of general
survey forms themselves.
integration with the outside world may help. As more
Such lapses of integrity are not unique to China, but poor academicians earn degrees abroad and go back to posts in
peer-review mechanisms, misguided incentives and a lack of China, informal networks are created that help outsiders
checks on academic behaviour all allow fraud to be more check on the quality of applicants. That is a small innovation,
common. China may be susceptible, suggests Dr Cong Cao, a but perhaps one that will benefit China.
specialist of Chinese Sociology at the State University of New
York, because academics expect to advance according to the Abhishek Modak
number, not the quality, of their published works. PGDM IB (09-11)
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 10

14. Report on Economic Freedom Network Asia Conference 2009
Siam Reap, Cambodia
In 2009, I bagged an opportunity to present a view from SEN, Deputy Prime Minister and Minister of Economy and
India in the historical city of Siam Reap in Cambodia to a Finance (representing H.E Somdech Akka Moha Sena padei
distinguished and diverse gathering. The conference
Techo HUN SEN,Prime Minister of the Kingdom of Cambodia).
discussed the ongoing financial and economic crisis and ways
to tackle it. The theme unearthed many more sub-themes H.E. Chhon stated in his opening address that In a broad and
when considered through the pris global term, the Rule of Law is threatened worldwide from
conference, economists, corporate professionals,
four directions: (i) by the lumpen proletariat for their
policymakers, lawyers, newsmakers, grassroots-workers,
philosophers, thinkers, educationists reflected and expressed ignorance, despair and poverty, (ii) by the lumpen aristocracy
their views on the latest global debacle. The congregation of for their arrogance and their insatiable greed as revealed by
130 academicians and practitioners from 18 countries
the cataclysmic crisis of international finance, (iii) by the
enriched the conversations on the broad theme.
deadly terrorism fuelled by ideological extremism and (iv) by
Cambodia as a Setting for the Conference: the organized crimes.
Cambodia was aptly chosen as the host The Rule of Law relates to the economy
country representing the case of a conflict- through its power to protect property
ravaged nation trying to get on the way to rights, enforce contracts, ensure fair
economic recovery amidst the backdrop of competition, and mobilize and disburse
the economic shake-out in the western, financial capital.
develope Key Points of Discussion:
economy grew at an average of 11.1
percent during 2004-2007, after its transparent system) is preferred as
accession to WTO in 2004) opposed which is
Conference took place in the once- glorious city of the Angkor arbitrary, opaque and mainly for political ends).
Wat (the famous temple complex built by King Suryavarman II
th
in 12 century, which still is magnificent as a ruin). part and parcel of progress especially in a capitalist
economies. Therefore instead of lamenting the
Overall Experience of the Conference: The two-day
recessionary phase, the focal points should be on
conference featured keynote addresses from internationally
finding ways of cushioning the impact of the
renowned experts, as well as a series of themed panel
recession.
streams, presentations and exhibitions. The conference
Free Market Economy may not be the perfect market
structure but is the best alternative
up with their own agenda thanks to the Open Space
An inward-looking response to the economic crisis
Technology.
will delay recovery and can deepen recession.
Proceedings in Brief
Thanks to globalization, the recovery signs have
The Conference was officially opened by H.E. Keat Chhon, appeared quickly, as compared to earlier crises
e - GlobuzZ, Volume I, Issue III July September2010 Page | 11

15. Ad-hoc bailouts
crisis? Undervaluation of currencies in Asia
Causes of the Financial and Economic Crisis: Though the sub- Proposed Solutions:
prime crisis initiated the domino effect, there were other
1) Immediate Measures:
factors that contributed to the spread of the crisis. As
Curtail deficit spending
discussed in the conference a few of them are enumerated
Reduce the role of politics in policy formation
below:
2) Medium Term Measures:
Central bank interventions International understanding/cooperation towards
Too much regulation or too much freedom? reducing barriers
Nature of rules and regulations: Community Define the Lender of Last Resort function of the central
Reinvestment Act, Basel II bank
Misleading statistics and ineffective risk assessment Risk-based Pricing of Deposit Insurance Premium
tools 3) Long- Term Measure:
Irresponsible credit rating agencies Moving towards Decentralization of Money and Free
Savvy Financial marketers who created fancy financial Banking System
products Yavnika Khanna
Poor corporate governance PGDM Marketing (09-11)
CROSS WORD SOLUTION # 02
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16. Coca Cola Scores a Winner
C o a C o a S c re a W i nn r
c l o s e
INTERNATIONAL MARKETING
different sports. Sports act as a common platform to bring together people from different walks of life.
Marketers wait impatiently for opportunities
events. Such strategies or sports events for promotion of brands have been used since time immemorial.
Recently the Football World Cup was held at South Africa. Hoards of brands promoted their product and some
even launched products during FIFA. Coca Cola has a formal association with FIFA since 1974 and an official
sponsorship of FIFA World Cup that began in 1978. Coca-Cola has had stadium advertising at every FIFA
World Cup since 1950. Five additional sponsors for FIFA 2010 were Budweiser, Castrol, MTN, McDonalds and
Continental. Each of these deals have cost them more than $ 100 million only for the event. Mahindra Satyam
was designed the official IT partner at FIFA.
From September 2009 to
greatest prize was embarked
on its biggest ever global
tour in 86 countries including
every nation in Africa as part
of the FIFA World Cup
But Coca Cola went a step ahead and came up with several promotional activities tailor made for FIFA. It has
formal association with FIFA since 1974 and an official sponsorship of FIFA World Cup that began in 1978.
The FIFA World Cup Trophy Tour by Coca-Cola
had embarked on its biggest ever global tour
to 86 countries including every nation in Africa as part of the FIFA World Cup Trophy Tour by Coca-Cola. Free
tickets to the Trophy Tour were made available to consumers via Coca-Cola promotions in countries on the
route.
At events in each city, fans had souvenir photos taken of them with the trophy, viewed a 3-D movie showcasing
moments of the FIFA World Cup, participated in interactive displays and enjoyed other entertainment. This tour
save fans around the globe a chance to experience the excitement and pageantry of football no matter where
they lived. So this made the consumer feel that Coca Cola brings happiness to their doorstep, against all odds.
Coca Cola recorded the Coca Cola 2010 FIFA World C Flag Coca-
with Somalian hip- . This track was the music element throughout the FIFA World cup
campaign. It was featured in all TV commercials, played during promoted
online and more.

17. Coca-Cola Celebration Award
Coca Cola interactive marketing strategies
included the recognizing of
goal. This grabbed attention of the fans as for the
first time ever they got a chance to vote for the
eventual winner online.
Coca Cola also came up with a CSR activity. For
every goal scored and celebrated with a dance it
made an additional donation to th
Water for School effort that helps provides
schools access to safe drinking water.
Advertising
Coca-Cola created three commercials as part of the campaign the
story of how Roger Milla inspired footballers to celebrate goals in an African- an
way around the globe.
-
Coca-Cola produced a 60-minute documentary which unfolds
catches up with 2010 FIFA World Cup players as they plan their
Africa inspired celebrations for the tournament.
Commemorative Packaging
Coca Cola also came up with special packaging that celebrated the 2010 FIFA World Cup with dynamic
graphics and football imagery.
Coca-Cola Football Camp
250 teenagers from around the world gathered at a special football camp hosted by Coca-Cola in Pretoria, South
Africa during the FIFA World Cup tournament. The camp encouraged young people to remain active through
sports and also included training, skills demonstrations, celebrity coaches and a tournament.
Coca-Cola Flag bearers
Coca-Cola also gave young football fans around the world the once-in-a-lifetime opportunity to be official flag
bearers and lead the teams out on to the pitch before 2010 FIFA World Cup games.
Conclusion
Coca-cola, by showing the world how to celebrate the World Cup, has also showed the management gurus and
other companies how to market a brand by riding on the glory of a much loved event. It made a mark and was
the defining brand of this World Cup, even though other brands like Pepsi tried to ambush its position. The
multi frontal, multi platform and multimedia based approach of Coca-C marketing campaign ensured that
the audiences around the world over were left with the memory of celebrating the world cup with little drops of
joy.
Shilpi Tayal
Celia Madona Vincent
PGDM IB (09-11)

18. Global Banking Scenario
INTERNATIONAL FINANCE
Introduction The United States has the most banks in the world in terms of
institutions (7,085 at the end of 2008) and their branches
A bank is a financial intermediary that accepts deposits and
(82,000). As of Nov 2009, China's top 4 banks have in excess of
channels those deposits into lending activities, either directly or
67,000 branches (ICBC: 18000+, BOC: 12000+, CCB:
through capital markets. A bank connects customers with
13000+, ABC: 24000+) with an additional 140 smaller banks
capital deficits to customers with capital surpluses. Banking is
with an undetermined number of branches. Japan had 129
generally a highly regulated industry, and government
banks and 12,000 branches. In 2004, Germany, France, and Italy
restrictions on financial activities by banks have varied over
each had more than 30,000 branches more than double of the
time and location. The current set of global bank capital
15,000 branches in the UK.
standards is called Basel II. In some countries such as Germany,
banks have historically owned major stakes in industrial What is Banking today?
corporations while in other countries such as the United
The current banking scenario is greatly different from the past.
States banks are prohibited from owning non-financial
Only 15 to 20 years ago, most Western banks generated 90% of
companies. In Japan, banks are usually the nexus of a cross-
revenue from interest income. Now this percentage has fallen
share holding entity known as The Keiretsu. The oldest bank
to 60%, sometimes as low as 40%. The concept of banking is
still in existence is Monte dei Paschi di Siena, headquartered
being modified and the traditional barriers among financial
in Siena, Italy, which has been operating continuously since
service sub industries (retail banking, private banking,
1472.
investment banking, asset management, insurance, etc.) are
Size of Global Banking Industry
vanished.
Assets of the largest 1,000 banks in the world grew by 6.8% in
the 2008/2009 financial year to a record $96.4 trillion while Global Banking
profits declined by 85% to $115bn. Growth in assets in adverse The common trends resulted in pace of dramatic change for
market conditions was largely a result of recapitalization. EU banking are:
banks held the largest share of the total, 56% in 2008/2009, The focus of banking is shifting from transaction
down from 61% in the previous year. Asian banks' share management towards sales of financial products.
increased from 12% to 14% during the year, while the share of Barriers to entry for the retail banking segment are
US banks increased from 11% to 13%. Fee revenue generated being lowered.
by global investment banking totaled $66.3bn in 2009, up 12% The growing variety of delivery channels for banking
on the previous year. enables new entrants to thrive.
Factors affecting Global Banking Scenario
The technological breakthrough caused by the
Despite the improvement
eruption of e-banking and e-finance.
to banks' balance sheets,
Worldwide consolidation and consequent
several factors raise
restructuring.
doubts about the Increasing competition in terms of both markets and
sustainability of banks products.
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19. INTERNATIONAL FINANCE
The Bank of England has cut interest rates to a record
A slowing population growth and increasing average low of 1% -the lowest level in its 315-year history
life expectancy and per capita income. The US Congress passed a stimulus package worth $
The growing importance of a clear strategic intent in 838 billion, aimed at creating millions
the banking industry. of new jobs and steering the economy out of the
New competitors are entering the financial service recession.
business. China announced a huge economic stimulus package of
Consolidation : Consolidations take place for the an estimated $586 billion.
following reasons: Japan announced $100bn to curb recession.
o To take advantage of economies of scale. Germany announced $63bn
e.g.:-the merger between the Swiss banks UBS Conclusion
and SBC creating one of the largest banks in
Despite the improvement to banks' balance sheets, several
the
factors raise doubts about the sustainability of bank profits,
o To have access to distribution channels.
the BIS (The Bank for International Settlements) said. Banks like
o To widen the range of products that the bank
UBS (UBSN.VX), Morgan Stanley (MS.N) and Goldman Sachs
can offer both actual and potential clients.
(GS.N) posted strong earnings in the first three months of this
e.g.:-between Citibank and Travelers, has
year thanks to trading income. A number of countries had to
originated Citigroup
bail out banks at the height of the crisis to prevent the financial
Highlights of Global Crisis
system from collapsing.
In October 2007 major failures start to appear in the
Also not all crisis-related losses may be exposed yet as less
bank has announced losses $3.4bn from investments stringent and less timely reporting requirements for banks in
linked to sub-prime. Europe had made it more difficult to gauge future write downs.
Following, American banking giant Citigroup posted a More write downs could be expected due to falling commercial
sub-prime loss of $40bn. property prices, it said.
US investment bank Merrill Lynch revealed a $7.9bn Losses on European bank balance sheets are expected to
disclosure to bad debt. mount over the next few years, the BIS said. Anecdotal
After failing to search for a potential buyer, Lehman evidence suggests that some banks have taken to rolling over
Brothers becoming the first major US investment bank existing loans rather than inducing foreclosures, thus delaying
to collapse since beginning of the credit crisis. loss recognition. The BIS also said that many banks in Europe
and elsewhere were overly reliant on US dollar swaps.
Aftermath of Global Crisis European and other banks had an estimated $7 trillion in
IMF warns that world economy development could dollar-denominated assets on their books, much of them with
decline to its lowest point ever since World War II to long-dated maturities.
just 0.5% this year. So, the world's banks are still not out of the woods despite
In USA the interest rate has been cut hugely by the recent multi-billion profits as write downs on loans loom and
Federal Reserve from the 5.25% to 0.25%. funding pressures remain high.
In UK pound was at a 23-year low against the dollar. Shalu Goyal
PGDM IB (09-11)
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20. Excerpts of talk of
Mr. RohitPandya- Dy. General Manager-
QA
Mr. Rohit Pandya joined ECGC in 1982 in the Risk
Buyer Country Underwriting,ECGC,
Mumbai with Sukhmani and Vikash of
PGDM IB (09-11)
medium/long term projects has happened In India a similar
Management Division and then moved to the role of deputy prospect is visualised as the economy matures.
General Manager - Buyer Country Underwriting and is
continuing in the position since then. He has over 28 years of Q. How do you evaluate the risk for Credit Insurance Products
experience in the field and has been involved in numerous provided by ECGC?
International assignments.
A. We, at ECGC, follows a system of risk assessment wherein 3
dimensions or perspectives are analysed:
Q. Tell us something about your background and the career path a. Indian Exporters-
over these years. IECD Code, membership of promotion Council, holding bank
account, pan card and assessment of capability of exporter to
A. As far as my academic background is concerned, I did my execute the order or sustain himself in the International arena.
Hons. in Economics and then a Post-Graduation in Sociology. I
also completed my Masters in Business Management from b. Overseas Buyers- in terms of financial Non-Financial
Bombay University and then went on to complete my diploma in factors. Reports from 13 agencies to get credit information on
Foreign Trade from IIFT. the buyers are accessed. In addition ECGC Experience with the
buy
My professional career started when I joined ECGC in 1982 in account.
the Risk Management Division as well performed other
functions in the Corporation and then I moved recently to the c. Country - in terms of Objective Score Methodology with 7 fold
role of Deputy General Manager Buyer Country classification as A1, A2, B1, B2, C, D countries the political risks
Underwriting and am continuing in this division since then. associated with a country is assessed.
Q. You have been associated with ECGC for past 28 years. What Q. What competitive advantage does ECGC have over its
changes have you seen in the International Trade environment competitors viz a viz private insurance players in the market?
over your tenure?
A. ECGC has a unique competitive advantage of being a
A. There has been significant change in the International trade Government supported ECA which expands its role and scope. It
environment especially in the last few years. Earlier there was has a record of over three lakh buyers to depend upon while
precious demand for Credit insurance and very little awareness underwriting the buyer risks. The area of Indemnifying bank,
about the same. The trend has changed in terms of increased which comprises of 2/3rd
awareness and demand for credit insurance because of transition Support are the areas which have been introduced by ECGC and
of Indian exports from traditional markets to non-traditional not by any other global or Indian player and similar models are
markets and traditional commodities giving way to new now being replicated abroad. It has a strong hold in the credit
commodities .Also there has been an addition of a large number insurance business which affirms its position as the major body
of new buyers. On the country level perspective, in the last few in Export insurance sector.
years the the
Q. In case of European countries like Portugal, Italy, Greece
large and well-known companies going bust in developed and Spain that are on the brink of sovereign defaults, some
markets. Underwriting process has also undergone a change in private sector general insurers like ICICI Lombard General
this view. About six years ago a more liberalized approach was Insurance Company Ltd and Bajaj Allianz General Insurance
introduced, because the Corporation was showing operating Company Ltd. have begun tightening risk premiums to these
surplus in its schemes. The premiums rates were last revised in
2003 but the classification have been constantly revised and have
taken a totally new dimension post meltdown era. A.
Instead we deal with such cases by putting a restriction on the
In the Global credit insurance market in advanced countries the buyers in such countries. For example, in UAE we have
Short Term businesses are now on a decline and movement to discontinued Single Buyer covers and only offer Umbrella Cover
e - GlobuzZ, Volume I, Issue III July September 2010 Page | 17

21. SCJFHDKJFDFDF
QA
products to have a good spread of the risk. Also if the situation so A. There is vast potential in such tools which are a result of the
warrants we re-classify a country which directly or indirectly has collaborative effort between the two institutions. There has been
an impact on the premium rates. increasing role of ECGC in the International Trade environment
and that has led to great synchronization with other
Q. ECGC has reclassified the credit-worthiness of 237 countries organizations like EXIM bank particularly in areas of Line of
in April 2010 by reviewing all the countries using its CRRM
model which includes forecasting as a parameter. Could you
please give some insight on the measures? Q. ECGC Provides Overseas Investment Insurance to Indian
companies investing in joint ventures abroad in the form of
A. ECGC has a regular process of reviewing its rating equity or loan. Are there any specific sectors which are covered
methodology. For example, Cuba lately has been revised for its under this scheme?
ranking and is now upgraded in the ratings after initiatives from
Indian government to develop trade relations with Cuba were A. ECGC Overseas Investment Insurance provides cover to all
declared. ECGC has high level exposures, monitoring and the sectors and has an equal focus on all of them. The major risk
reviewing systems in place and is constantly keeping pace with covers include Expropriation Risk War Risk, Transfer Delay
the changing environment. risk etc.
Similarly, ECGC is quite bullish on Iran but as of now has Q. What major challenges has ECGC been facing in the
restricted exposures to Iraq. International trade environment lately?
A. Some of the challenges have been related to the high claim
insurance in the last couple of years; heavy loss in markets like
US, UK, UAE, Italy Germany; losses in commodities like
Strategy is the key to Gems Jewellery etc. The global meltdown and the
consequences of squeeze in credit lines and pile up in inventories
integrate all the has affected the credit insurance requests sought which has
increased both in size and frequency. There is a noticeable
techniques you learn in increase apart from delinquencies, requests for rescheduling and
elongated terms of payment.
management. A Three- Q. What leverage, in your opinion, does a course specializing in
International Business provide what competencies should a
fold dimension of Focus, student of International business develop to be Industry ready in
the International Business environment?
Knowledge base and A. I would term a management course in international Business
as an MBA PLUS. Strategy is the key to integrate all the
Skills development is techniques you learn in management. Implementation is
achieved through a thorough understanding of the International
required for competitive strategy that should be put in place for the company to succeed
in the global market. As for the competencies, having a three-
advantage to be gained fold dimension is required: a Global Focus on the International
Scenari
through MBA in IB. the borders of the country, Skill adaptability flexibility are the
most sought after competency areas. These should be well
coupled with having an international outlook, developing the
ability to assimilate different cultures, developing negotiation
skills lingua franca will ensure that the student is well
equipped to add value to the becoming a major player in
Q. EXIM Bank in association with ECGC has planned new
International business.
credit tools (partially structured buyer's credit where exporters
will bear the subsidy) where government or multilateral lines of
credit are not available and ECGC will grant the political risk in
such cases. How much of market value do you see in such tools?
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22. DEBATE: WILL EUROPEAN UNION SUSTAIN?
The Euro zone has a choice to make, which is, to either integrate or disintegrate. Greater integration has been chosen as
more financially disciplined nations of the European Union bailed out the PIIGS (Portugal, Ireland, Italy, Greece and Spain)
whose excessive spending and serious indebtedness have threatened the stability of the world's number two reserve
currency; the Euro.
The decision to make EU effectively a monitory union, tying its member countries into a joint currency and interest rate
decisions, while allowing them to retain control over national budgets and taxes, has left the fractured grouping at a
crossroads where in the members can either come together and stand by each other to tackle the problems or choose to fall
apart driven by self-interests of the country. So the major question arises whether the EU will sustain as a union or
disintegrate.
from any of those countries failed the tests.
POINT
2nd largest reserve currency. Failure of EU would mean
Inspite of the dark cloud surrounding the European Union
and the world over; inspite of so many articles being fall of Euro which will also endanger the other major
written about European Union and predictions of torrid stakeholders around the world who maintain their part
times ahead; there is still lot of hope about its reserve in Euro. These include countries like Russia and
sustainability in the future. china. Hence there would be a huge pressure from around
the world for EU to remain integrated. Even if the need
The Greek and the economic crisis have done no good to
arises IMF would step in to rescue.
it. Nearly $1 trillion bailout package was declared
from dragging under other weak economies Portugal,
Spain, Ireland and Italy that are all vulnerable. It comes in
the form of loans, debt guarantees, and additional cash to
the money markets. The risk of contagion has already
been mitigated through this bailout package. There are
some reason
Firstly, EU banks have survived the stress test. The tests
have found that 91 banks in 20 European countries could
deteriorating economic and financial environment. But
only 7 banks flunked the tests, coming up short a
Market reactions are muted, likely indicating that neither
the worst fears nor greatest hopes were realized. The euro
seesawed in New York trading, eventually gaining ground
against the dollar. The Dow Jones Industrial Average What we are talking about here is one fifth of the World
dropped shortly after test results were announced around be ignored by rest of the
world. Disintegration just on the basis of some financial
noon Eastern Daylight Time, but ended the day up 102
jitters is unlikely. Austerity measures employed across EU
points, to 10424.62. U.S.-listed shares of some big
would bring down the debt level. European Union was
European banks followed the same trajectory. thought to be strict about its clauses of treaty, but it has
already softened on the no bail out clause. And even the
Bank supervisors throughout Europe hailed the test results deadline of 2012 would most probably extend. All in all
as affirming the stability of the continent's banking Disintegration of EU is a very unlikely scenario.
system. Market confidence in Europe's banks has since
improved somewhat, partly due to optimism that a round Swastik Dasgupta
of stress testing, which last year helped ease the U.S.
banking crisis, would work similar wonders in Europe. PGDM IB (09-11)
Despite worries about the health of the French, Irish,
Italian and Portuguese economies and banks, no bank
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