Volume 1, Issue 10 April 2012 Masters of International Business Centre for management Studies Jamia Millia Islamia University

Mi`bytes BUSINESS LETTER

Health of Budget.
A GDP growth in 2012-13 expected to be 7.6 percent, twelfth five year plan to be launched with the aim of FASTER, SUSTAINABLE AND MORE INCLUSIVE GROWTH. And at this juncture where economy is recovering, inflation is also low from last fiscal, there is good sign of recovery in core sectors, a balance policy and more options for industry is needed to cope up with global slowdown. A balance between expenditure and collections is a need for fight against deficit .GST network to be set up in August, 2012 with more transparent tax system. Proposal to allow FDI of upto 49% by foreign airlines is still being considered by Government. All and all mixture of expenditure and collection, attracting more investor and make INDIA accessible as an investing destination is of prime concern. The Government is planning to recover and correct the fiscal deficit situation in Fy13 by implementing several revenue augmentation measures, mainly tax revenue and expected to end the year with fiscal deficit at 5.1%. The increase in excise and service tax and some aggressive policies like disinvestment of PSUs could be helping hand to fill the pocket of government. But subsidies and rise in crude oil price more and less creating the same problem which may affect the future plans of governments introduction of new schemes. Some subsidies, while being inevitable, may become undesirable if they compromise the microeconomics fundamental of economy. Endeavour to keep central subsidies under 2 percent of GDP in 2012-13. Over next 3 year, to be further brought down 1.75 percent of GDP. A recommendation of task force headed by Sri NANDAN NILEKANI, a mobile-based fertilizer management system has been designed to provide end to end information on movement of fertilizers and subsidies. FOREIGN DIRECT INVESTMENT which is now more open for sectors like retail. Beside that aviation which is most loss oriented (we have examples) industry. Is also has his own opportunities but it is a capital oriented industry because of technology and infrastructure, is now more open and have options, Aviation companies have been allowed to raise money through ECBs for their working capital and proposal to allowed FDI UP TO 49% by foreign airlines is still being considered by government. Provision regarding implementation of advance pricing agreement to be introduced in finance bill 2012. Micro Finance Institution bill 2012, pension fund regulatory and development authority bill 2011, banking laws (amendment) bill 2011 and insurance laws (amendment) bill 2008 to be moved in the session of the parliament are positive for the financial sector, recapitalization of PSUs ba nk is expe cted to strengthen credit growth, while specific measures such as the increase in custom duty on the gold imports is likely to channelize higher savings into financial investment, including bank deposits. Micro finance institutions bill, which will supersede state government laws, will provide a big boost to the struggling micro finance industry.

Inside this issue:

The IPL Business is Here to Stay. The Eclectic Paradigm. Do You Know?? Quote for the Month. 2 3 3 4

Cont..on Page 4

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Mi`bytes

THE IPL BUSINESS IS HERE TO STAY.

It's said 'IPL to Cricket is what Page 3 to Journalism' A harmless hilarity and money-minting machine. All eyes focused on flow of money into few pockets. Then again the ultimate goal of every business is to make money and the IPL business model is here to stay. Cricket and Bolly Wood, two fascinations of Indians mingled themselves into IPL-T20. Glamour and Game into a cocktail, a meet called Globalization of Cricket Culture. It is not the critics who count. Some of their views on the premier league may be very negative but the fact remains that the IPL is here to stay as a successful business model. It's time to examine the issue in some detail since IPL 5, the first of 10 in the initial series, has got off the ground. While varied opinions are part and parcel of the game, what's happening is that it is becoming fashionable to knock the IPL for all the ills that beset the national team in the disastrous season. The attitude of the players who prioritise the league in their career plans may have clouded the issue. But why blame the league for being such a valuable asset as to impel cricketers to monetize it to make and secure their lives? There may be issues of temperament brought on by over exposure to limitedovers cricket. There may even be technical issues because of the peculiar demands of the shortest format that forces batsmen to improvise all the time. Leaving aside the players' attitude and problems, an examination of the league that is going into a fifth season would reveal that it is in reasonable shape as a business. In which other business would a midsized investment have promised to bring such valuations in four years as to fetch a reported firm offer of Rs 1,000 crore to one team last season and another investment proposition said to be Rs 900 crores for a 90 percent ownership of one of nine teams at the beginning of IPL 5? The valuation of the league by brand consultancies can be viewed with some suspicion since the business of sport is hardly quantifiable in the regular sense of more established ways of running commerce. If international consultancies do value the IPL at an estimated $3.67 billion - down from an earlier $4.13 billion of 2010 - then the league must be said to be doing alright. The downward revision last year was understandable after all the shenanigans surrounding the Kochi Tuskers that finally dropped out.

The TRP of IPL in the 4th week was 4.6, whereas in this week its TRP dropped to 4.5, but the show has still maintained the top position in the TRP chart.

It can be argued that television audience figures show a declining trend estimated to be as much as 29 percent. Viewer fatigue, which may have been the primary cause, is an accepted reason why this happened because of the peculiar scheduling last season when IPL 4 began just days after a World Cup that was played mainly in India. And yet the broadcaster is estimated to have made a profit close to $200 million dollars in IPL 4 despite the mind boggling TV rights fees paid as a yearly fraction of a near $2 billion 10-year deal. To deride the league for some innovations is silly because these innovations were there in some form or the other much earlier. Dugouts, in American pro sport style, are by no means an IPL invention. Players were sitting in dugouts in cricket in 2003 in England. Cheerleaders are not an IPL invention. Pom-pom girls have been known to grace the game in New Zealand and Australia for at least 30 years; so too pop shows at intermissions, music over the tannoy, etc. Players speaking into microphones embedded in their clothing to converse with commentators is not an IPL innovation - it was tried out in festival cricket Down Under 20 years ago. It is a different issue that cricket was Bollywoodised to make an impact in the founding of the league. Here lies the spark of genius that brought together cricket, Indian big business and filmy glamour to make 'Indian cricketainment' that brought in the big television bucks. Why would anyone professing a love for the game have a grouse about something that did a whole lot of good to cricket even as it raised the profile of the international cricketer? Critics have pounced upon dropping TRPs, declining in-arena attendance and slow booking of ad slots on TV as factors that would affect the league. All this before a ball was bowled in IPL 5. Even if they were all true, these are normal vicissitudes affecting all businesses, including sport, which have learnt to deal with them over time. Life is never a smooth run from start to finish for anyone, far less so for businesses. And sport cannot insure itself against dips, much less counter them just for a few critics who tend to believe their negativity is the only way to go. Businesses don't bend every time there is bad news. They learn to deal with it. And doomsday pundits predicted the death of cricket long before the IPL was born but the game goes on. Samik Sarkar, 1st Year MIB,JMI.

Volume 1, Issue 10

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THE ECLECTIC PARADIGM.

The eclectic paradigm was developed by John Dunning in 1979 as an attempt to synthesize the other FDI approaches based on the company specific advantages, internalization advantages and country specific advantages. As it is a synthesis of some of the foreign investment theories, it does not qualify to be a separate theory itself. International Business : Role and Processes The main purpose of the eclectic paradigm is to provide an analytical framework to the analyst so that he could choose the most suitable approach for the investigation that he intends to undertake. For example, the transaction cost approach may be most relevant for the investigations relating to the hierarchical coordination of the different stages of the production process. An MNE adopts both backward and forward integrations in this case. The eclectic paradigm assumes that the MNEs possess ownership advantages from their intangible assets in the form of technology. This has enabled them to reduce the transaction cost through the internalization process. Internalization advantages arise because of the exploitation of technology and the location and other advantages accruing in the host country. Although, the ownership advantages may be transferred to the host country though the licensing arrangements; yet certain advantages are such that non-transferable benefits from them would occur only if they are managed within the MNEs themselves. Such advantages are organizational and entrepreneurial capabilities of the managers of the international firms, their experience of foreign markets, their political contacts and long-term business agreements with other enterprises. The control over technology and its coordination with the host country resources would promote R&D efforts, which can lead to the rapid growth of internationalization of the world economy. The MNEs follow different approaches for reaping the ownership advantages. Some adopt the competitive approach for competing in the international markets, while others pursue the monopolistic approach. According to the competitive approach, the MNEs develop their competitiveness for a place in the foreign countries. In the case of monopolistic approach the ownership advantages arise from the monopolistic competition where the firms sell differentiated products. The eclectic paradigm provides merely a comprehensive framework. It does not specifically highlight the advantages of competitiveness in the foreign countries. It also does not take into account any single FDI theory on priority basis. It points out the circumstances which the investigator should take into account in deciding which FDI theory would suit his needs. The relevance of the eclectic paradigm lies in its application to the simultaneous, operation of the market imperfection approach and the transaction cost approach. The former theory helps in identifying the benefits enjoyed by the MNEs due to the imperfections in the foreign countries, and the latter is helpful in the reduction of the cost of transactions. By-Ibrahim Badar 1st year MIB , JMI.

The main purpose of the

eclectic paradigm is to provide an analytical framework to the analyst so that he could choose the most suitable approach for the investigation

DO YOU KNOW??

Hewlett Packard The coin toss.

Weve seen coin toss at the start of sports games. But deciding the name of a company through a coin flip? That is how HP got its name. Bill Hewlett and Dave Packard tossed a coin to decide whether the company would be called Hewlett-Packard or Packard-Hewlett .

Google The Back Rub .

Did you know that the search engine you use frequently was once named backrub? Google was created in 1996 under the name "BackRub". Moreover, the Google name change in 1998 came as a spelling mistake of the word googol.

CMS, MIB

E-mail: 2006.samik@gmail.com, mohammadfurquan1985@gmail.com Phone: 8860223083, 9716926240

Quote For the Month Success is a lousy teacher. It seduces smart people into thinking they can't lose.
-Bill Gates

Health of Budget.
EDITOR-IN-CHIEF: Prof. SAYED WAJID ALI Cont...from page 1 The budget has introduced several measures such as lowering the rate for withholding tax on interest payment on three year ECBs for funding infrastructure projects and encouraging public private partnership in road construction project by allowing ECBs for capital expenditure on the maintenance and operations of toll systems for road and highways. Power sector is another sector that grabbed the attention, fuel shortage, elevated price of imported coal and poor financial situation are some common problems which this sector is facing. The major announcement including waiving off basic custom duty on coal import until FY14 and extension of 801A benefits until FY13.Other positive announcement for the power sector including tax free bonds for financing the power sector, allowing ECBs for part financing rupee debts of the existing power projects and reduction of withholding tax on the interest payment on ECBs from 20% to 5%. Increase in cess from current level, 43737 cr rupee for petroleum subsidies have been provided for FY13 (would be insufficient if rise in crude oil price). Rise in cess and volatile crude oil market can put oil companies in trouble and more subsidies can directly cut the pocket of government.

STUDENT EDITORS: MOHAMMAD FURQUAN. NAMITA DHAMANI. SAMIK SARKAR.

By-Mohammad Furquan 1st Year MIB , JMI.

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