Business Jargons

Benefits of a growing business

Business expansion has potential benefits and drawbacks. Some owners are reluctant to take the risk of growing the business and opt to stay small.
As a business grows it gains two major advantages over its smaller rivals. Large firms have more influence over market price. They're big enough to be price setters.

Large firms also often enjoy economies of scale. This means that a business has lower unit costs because of its large size. They can buy raw materials cheaply in bulk and also spread the high cost of marketing campaigns and overheads across larger sales.
For example, if a large firm can produce a given type of sunglasses for £20 while it costs its smaller rival an average of £30, then the larger firm has a £10 per unit cost advantage. Larger firms can charge lower prices or enjoy a higher profit margin.
Economies of scale are a major source of competitive advantage for large firms.

Methods of expansion

A business can grow in size through:
Horizontal integration is when two companies at the same stage of the production process merge or take over each other.
If Ford Motor Company merged with Toyota Motor Company that would be an example of Horizontal Integration.

Vertical integration occurs when firms at different stages of the production process merge together. There are two types called:

• Forward vertical integration
• Backward vertical integration

In this example we are using the Ford Motor Company.
Forward vertical integration is when Ford buy out or merge with their customers, which in this case could be a car showroom (eg Arnold Clark).
Backward vertical integration would be when a company like Ford buy out or merge with their suppliers. Suppliers to a major automobile manufacturer could be car electrics, glassmakers or in this example a rubber plantation which is used to make tyres for the car wheels.
Diversification or conglomerate integration is when firms in different, unrelated markets merge. This would be the equivalent of Ford and Nokia combining.
A merger is when two companies decide to join together, like for example when Halifax and Bank of Scotland combined to form HBOS.
A takeover is more hostile. This is when a company (usually a larger one) buys out a rival. Kraft Foods bought out Cadbury's in early 2010 for £12 billion.
A demerger occurs when a firm divides or breaks into more than one company. Cable & Wireless, the famous UK communications firm will demerge into Cable & Wireless Worldwide plc and Cable & Wireless Communications plc, the new name for Cable & Wireless International.
Divestment is when a company sells off an asset to raise finances. In 2003, Stagecoach, the Scottish bus operator, sold off its Coach USA operations in Texas for £18 million.
Outsourcing is when a company hires another business to do some work for them. Many firms outsource cleaning or IT operations to smaller, more specialist companies.

From BBC Higher Bitesize

Top companies: Most profitable

Top companies: Most profitable

Rank ▾ Company 500 Rank 2011 $ (millions) 1 Exxon Mobil 1 41,060.0 2 Chevron 3 26,895.0 3 Apple 17 25,922.0 4 Microsoft 37 23,150.0 5 Ford Motor 9 20,213.0 6 J.P. Morgan Chase & Co. 16 18,976.0 7 American International Group 33 17,798.0 8 Wells Fargo 26 15,869.0 9 International Business Machines 19 15,855.0 10 Wal-Mart Stores 2 15,699.0 11 General Electric 6 14,151.0 12 Intel 51 12,942.0 13 ConocoPhillips 4 12,436.0 14 Procter & Gamble 27 11,797.0 15 Citigroup 20 11,067.0 16 Berkshire Hathaway 7 10,254.0 17 Pfizer 40 10,009.0 18 Google 73 9,737.0 19 Johnson & Johnson 42 9,672.0 20 General Motors 5 9,190.0 21 Philip Morris International 99 8,591.0 22 Coca-Cola 59 8,572.0 23 Oracle 82 8,547.0 24 Hewlett-Packard 10 7,074.0 25 MetLife 34 6,981.0 26 Occidental Petroleum 122 6,771.0 27 Cisco Systems 64 6,490.0 28 PepsiCo 41 6,443.0 29 Merck 57 6,272.0 30 McDonald's 107 5,503.1 31 UnitedHealth Group 22 5,142.0 32 United Technologies 48 4,979.0 33 American Express 95 4,935.0 34 Caterpillar 46 4,928.0 35 U.S. Bancorp 132 4,872.0 36 Walt Disney 66 4,807.0 37 Abbott Laboratories 71 4,728.4 38 Devon Energy 232 4,704.0 39 Apache 154 4,584.0 40 Freeport-McMoRan Copper & Gold 135 4,560.0 41 Goldman Sachs Group 80 4,442.0 42 Eli Lilly 119 4,347.7 43 3M 102 4,283.0 44 Qualcomm 178 4,260.0 45 Comcast 49 4,160.0 46 Morgan Stanley 68 4,110.0 47 Boeing 39 4,018.0 48 AT&T 11 3,944.0 49 Home Depot 35 3,883.0 50 United Parcel Service 52 3,804.0 Issue date: May 21, 2012 http://money.cnn.com/magazines/fortune/fortune500/2012/performers/companies/profits/

Consulting, Research & Advisory Firms

Mgmt Consulting Firms 

Mckinsey - mgmt consulting

Bain & Company - mgmt consulting
Boston Consulting Group - mgmt consulting
Arthur D Little
AT Kearney


Market Research & Advisory
Gartner - It research & advisory
Forrester - Independant technology and market research
Frost & Sullivan - Customer-dependant market research and analysis


Big Four - Professional Services

Audit, tax, consulting, enterprise risk, M&A and financial advisory services 

(called Professional services)

Deloitte
PWc
Ernst & Young
KPMG


Big Three -  Credit Rating Agency
Standard & Poor
Moody's
Fitch

Port sector review

http://pmindia.gov.in/press-details.php?nodeid=1423
The communication from the PMO on the Public-Private partnership initiatives for the country's ports is glad news. As noted, the security clearance from the Ministries of Defence, Home and Envrionment has been the major bottleneck for such initiatives like dredging towards increasing the port capacity. I would like to highlight the need for having a defined Response Level Agreement for every ministry for such clearances that affect such large scale projects. We need to categorize the type of clearances and their priority level and set a response time for every Ministry. I would assume the PMO headed by the Prime Minster will review such administrative bottlenecks by having regular meetings with the concerned ministries. I would assume the government already has such governance structure with the steering committee in place to oversee the Projects. We have to review the governance structure at all levels and come up with new processes and methodologies to remove the unwanted bottlenecks/delays/red-tapism and make the roles(not the persons) responsible for the delays. Such a revamp of governance is the need of the hour to achieve faster processing of administrative tasks and better governance

Q1: 2010-11

2010 has been a very important year for all the Enterprises around the world. Almost all the developed countries in the world have been reeling under worst economic crisis. And 2009 is the peak of all for all the western countries. As you know, Greece, Spain and Portugal have already gone bankrupt. The US economy is believed to be slipping into double dip depression since the last 2 months June and July have shown steady decline in the growth in all sectors predominantly the manufacturing. Ironically the automobile sales for the last 2 months have been pretty good for the companies based out of US but most of sales for them has come from developing countries like China. The first quarter(Apr - June) for this financial year of 2010-11 is good one for all the India based Software companies. TCS, Infy, Wipro, HCL and Tech Mahindra have shown a impressive results. Among them TCS proved it's mettle by showing a whooping Rs.1900 Crores of Profit After Tax. A broad based growth has helped them sustain the march in the league of Five. Congratulations TCS!!!

India to grow at 6.5 per cent in 2010, says IMF

The World Economic Outlook a twice-yearly publication from International Monetary Fund syas that India's economic growth rate will advance to 6.5 per cent in 2010 on the back of robust domestic demand and rising private investment.

The outlook also says that “India's growth is expected to accelerate to 6.5 per cent in 2010 from 5.33 per cent in 2009, on the back of strong domestic demand.” It added, "In particular, the normalisation of financial conditions is expected to support a rebound of private investment, sustaining demand even as the fiscal stimulus wanes." The fact that the demestic demand is going to increase and the private investment is going to grow is a positive indication of economic recovery. I don't have much idea about the piece "Fiscal Stimlus" may be I think I will refer and explain in it my next blog.

The IMF added that economic recovery in Asia is faster than the elsewhere and that it is projected to grow by 5.75 per cent during 2010 compared to 1.25 per cent predicted for the G-7 economies. It said that China and India are bouncing back more quickly that the western world.

Fuelling turbulence

A. Ranganathan

In the 1970s, when oil prices shot up ten-fold, it was considered ‘black gold’. The fortunes of several countries with large reserves of oil soared. However, this black gold is turning the bottom-line of the aviation industry a deep red.

Some airlines have resorted to flying at slower speeds to get more miles per kilolitre while others have opted to keep some of their aircraft on the ground. Fuel is a major component in the direct operating cost of an airline. The more it costs, the deeper the hole it burns in an airline’s balance-sheet.

Modern jets use the concept of ‘cost index’ in their flight management computer system to work out the optimum performance of an aircraft. When getting the maximum mileage is the priority a low cost index is used.

A high cost index is used when fuel cost is cheap and other criteria outweigh the cost of the fuel. Airlines that own their aircraft would prefer to use the lowest cost index to maximise the distance covered with minimum fuel while airlines with leased aircraft would opt to go in for higher speeds.

Why is the operating cost high in India? The following are some of the reasons that contribute to increased fuel consumption:

Outdated and inefficient air traffic control system

Unlimited congestion at terminal area

High ground time with engines running

Inadequate maintenance schedules

Improper flight procedures

Overloading

Starting with the last factor, overloading is a bane of all airlines. The fuel burn calculations are based on weight and the prevailing atmospheric conditions. The greater the weight, the lower the altitude an aircraft flies at. The overzealousness to sell tickets at ridiculously low rates is adding to this problem.

Greater weight

Every ten passengers on board means an additional tonne in total weight. This, in turn, increases the fuel burn. Passengers are also the guilty party in the overload factor. Hand baggage, which is supposed to weigh a maximum of 10 kg, often weighs more than 20 kg. Ground staff often turn a blind eye to this violation, except with some airlines.

A disciplined flight crew can contribute immensely to fuel conservation. Unfortunately, discipline and professionalism is in short supply in India. When flights are conducted with managed speeds, as calculated by the flight management computer, one can expect minimum fuel burn.

However, there is a tendency among some of the flight crew to distrust the computer Air traffic control procedures in India leave a lot of room for improvement. The air distance from one city to another, particularly in the metro routes, is often increased by a large factor because of the ATC. When congestion is anticipated, aircraft should be advised well in advance.

Instead of sequencing the aircraft in a holding pattern, where each aircraft knows the position of the others and also its number in the landing sequence, the radar controlling resorts to what is called ‘tactical radar vectoring’. This results in a large increase in air miles.


More air-miles

Often, while approaching the Delhi airport, aircraft are sent on a northerly heading for a good 35-50 kilometres before turning east or west (depending on the runway in use) for another 75-90 km, before turning back towards the airport.

This additional distance of over 150 miles is a common occurrence in Delhi or Mumbai. The aircraft fuel consumption increases due to this and this is an excess that can be avoided by using proper procedures.

In a holding pattern, an aircraft will fly at what is called the ‘best clean speed’, giving the minimum fuel burn and drag. In the tactical radar vectoring scenario, aircrafts are often asked to reduce to low speed which require the use of flaps, increasing the drag and fuel burn in turn.

The sooner India switches over to the RNAV/RNP (Area Navigation/Required Navigation performance) procedures, the better for lowering fuel consumption. These procedures are satellite based and are independent of all ground based aids.

Airlines should consider rescheduling their flights. It is better to fly a higher load factor at the optimum cruise altitude than to fly at lower cruise altitudes.

At present, with so many airlines departing around the same time and in the same direction, many of them get slotted into altitudes that are well below the optimum. This results in higher fuel burn. Cheap tickets may make for a high load factor but they give very low yield. This goes against all norms of economics at the present level of fuel cost.

The time spent on ground with engines running is an area that ATC should optimise.

The authorities have to work out a procedure whereby an aircraft should be able to depart within a maximum of 10 minutes of taxiing.

With the onset of the monsoons and fuel on board becoming critical, it is in everyone’s interest that slot times are staggered and not bunched. Somebody has to act; if not, they will go under.

(The author is an airline pilot with 35 years experience.)

Market Capitalization - Definition

Market Capitalization

The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

Frequently referred to as "market cap".

If a company has 35 million shares outstanding, each with a market value of $100, the company's market capitalization is $3.5 billion (35,000,000 x $100 per share).

The stocks of large, medium and small companies are referred to as large-cap, mid-cap, and small-cap, respectively. Investment professionals differ on their exact definitions, but the current approximate categories of market capitalization are:

Large Cap: $10 billion plus
Mid Cap: $2 billion to $10 billion
Small Cap: Less than $2 billion

TCS tops in the Best employeers

TCS retained the top slot in the top 20 best employers in India

Chennai Metro Aerial View

This is the aerial view of Chennai(Madras), India. The city with a population of 7.06 milion is the fourth largest city in India. Besides being the "Detroit of India", Chennai also hosts handful of IT biggies like TCS, Infosys, Wipro, EDS, CTS, HCL, etc., For the FY 05-06 The total IT exports from the state of Tamil Nadu to which Chennai is the capital is RS 13500 Crores....