Corporate

Finance
 History of Business

• Agrarian society or Neolithic

Revolution
– The Neolithic Revolution was the transition
from hunting and gathering to agriculture, as
first adopted by various independent
prehistoric human societies.
• Barter
– Barter is a type of trade where goods or
services are exchanged for a certain amount of
other goods or services, i.e. there is no money
involved in the transaction.
• Trade
– Trade is believed to have taken place
throughout much of recorded human history.
There is evidence of the exchange of obsidian
and flint during the Stone Age
• Industrial revolution
– The Industrial Revolution was the major
technological, socioeconomic and cultural
change in the late 18th and early 19th century
resulting from the replacement of an economy
based on manual labor to one dominated by
industry and machine manufacture
Industrial Revolution

A Watt steam engine in Madrid

• The Industrial Revolution was the
major technological, socioeconomic
and cultural change in late 18th and
early 19th century that began in
Britain and spread throughout the
world. During that time, an economy
based on manual labour was
replaced by one dominated by
industry and the manufacture of
machinery.
The period of time covered by
the Industrial Revolution
• Varies with different historians.
• Eric Hobsbawm held that it 'broke
out' in the 1780s and wasn't fully felt
until the 1830s or 1840s
• T.S. Ashton held that it occurred
roughly between 1760 and 1830 (in
effect the reigns of George III, The
Regency, and George IV)
• The first Industrial Revolution
merged into the Second Industrial
Revolution around 1850,
– when technological and economic
progress gained momentum with the
development of steam-powered ships
and railways,
– and later in the nineteenth century with
the internal combustion engine and
electrical power generation.
 The causes of the Industrial
Revolution
• complex and remain a topic for debate,
– some historians seeing the Revolution as an
outgrowth of social and institutional changes
brought by the end of feudalism in Britain after
the English Civil War in the 17th century.
– As national border controls became more
effective, the spread of disease was lessened,
therefore preventing the epidemics common in
previous times.
– The percentage of children who lived past
infancy rose significantly, leading to a larger
workforce.
• The presence of a large domestic
market should also be considered an
important catalyst of the Industrial
Revolution, particularly explaining
why it occurred in Britain. In other
nations, such as France, markets
were split up by local regions, which
often imposed tolls and tariffs on
goods traded amongst them
• In India, the noted historian Rajni Palme
Dutt has been quoted as saying, "The
capital to finance the Industrial Revolution
in India instead went into financing the
Industrial Revolution in England." In direct
contrast to China, India was split up into
many different kingdoms all fighting for
supremacy, with the three major ones
being the Marathas, Sikhs and the
Mughals. In addition, the economy was
highly dependent on two sectors--
agriculture of subsistence and cotton, and
technical innovation was non-existent. The
vast amounts of wealth were stored away
in palace treasuries, and as such, were
easily moved to England
• The stable political situation in
Britain from around 1688, and British
society's greater receptiveness to
change (when compared with other
European countries) can also be said
to be factors favouring the Industrial
Revolution.
• Post industrial Era
– A post-industrial society is a proposed name
for an economy that has undergone a specific
series of changes in structure after a process
of industrialization. Such societies are often
marked by:
– A rapid increase in the size of the service
sector, as opposed to manufacturing,
– An increase in the amount of information
technology, often leading to an "information
age".
 History of Corporations
• Corporations have been present in
some forms as far back as Ancient
Rome. Although devoid of some of
the core characteristics by which
corporations are known today, they
nonetheless were enterprises,
sanctioned by the state, with a form
of shareholders who invested money
for a specific purpose.
• First corporations were created in
Europe as not-for-profit entities to
build institutions, such as hospitals and
universities, for the public good.
• In the 17th century making money
became a major focus for corporations.
 British East India Company
• The British East India Company, sometimes
referred to as "John Company", was a joint-
stock company of investors, which was granted a
Royal Charter by Elizabeth I on December 31,
1600, with the intent to favour trade privileges in
India. The Royal Charter effectively gave the
newly created Honourable East India Company a
21 year monopoly on all trade in the East Indies.
The Company transformed from a commercial
trading venture to one which virtually ruled India
as it acquired auxiliary governmental and military
functions, until the Company's dissolution in
1858.
CORPORATE FINANCE AND
THE FINANCIAL MANAGER
• The major decisions faced by financial
managers are:
1.Managing the balance sheet equation
• Assets = Liabilities + Capital
 Colonialism
• Colonialism is the extension of a nation's
sovereignty over territory and people
outside its own boundaries, often to
facilitate economic domination over their
resources, labor, and markets. The term
also refers to a set of beliefs used to
legitimize or promote this system, especially
the belief that the mores of the colonizer are
superior to those of the colonized.
 Corporate Colonialism
• Corporate colonialism relates to the
involvement of corporate bodies in the practice of
colonialism or imperialism. Economic incentives
to colonise have long existed, and the structures
and methods of state colonialism have not always
prevailed.
• In many cases the Victorian dictum that trade
follows the flag has played out in reverse form.
• The Viking appropriation and settlement of areas
such as Varangian Rus‘( they were Scandinavians
who traveled eastwards, mainly from Jutland and
Sweden. Promoting trade, piracy and mercenary
militarism)
• may appear to modern eyes as colonization at
the behest of small bodies of freebooters: a
takeover by the crew of a trading ship rather
than an exercise in statecraft.
• Later in the Middle Ages, the Hansa(The
Hanseatic League consisted of an alliance of
trading cities that established and maintained a
trade monopoly over the Baltic Sea and most of
Northern Europe for a time in the later Middle
Ages and the Early Modern period, between the
13th and 17th centuries.)
controlled a
colonial empire dotted around the
shores of the Baltic and the North
Seas. Its trade-based structure and
its insignificant-in-area holdings
belied its influence.
• In the age of exploration a corporation often
became the favored vessel for trading activity:
merchant adventurers clubbed together to profit.
Some of them gained theoretical monopolies
from nascent states.
• While the Muscovy Company (was a trading company
chartered in 1555. It was the first major English joint-stock
trading company, the precursor of the type of business that
would soon flourish in England, and became closely
associated with such famous names as Henry Hudson and
William Baffin. The Muscovy Company had a monopoly on
trade between England and Muscovy until 1698 and it
survived until the Russian Revolution of 1917. ) and the
Levant Company in Elizabethan England failed to
parlay their charters into colonial empires
• The British East India Company and
the Hudson's Bay Company
succeeded spectacularly in acquiring
vast wealth and territories, taking
over the government of India and of
much of Canada over the centuries.
The Dutch East India Company (The
Dutch East India Company (Vereenigde
Oostindische Compagnie or VOC in Dutch,
literally "United East Indies Company“ was
established on March 20, 1602, when the
Estates-General of the Netherlands
granted it a monopoly to carry out colonial
activities in Asia. It was the first
multinational corporation in the world and
it was the first company to issue stocks
• The company established its
headquarters in Batavia on Java
(now Jakarta, Indonesia). Other
colonial outposts were also
established in the East Indies what
later became Indonesia, such as on
the Spice Islands (Moluccas), which
include the Banda Islands where the
VOC forcibly maintained a monopoly
over nutmeg and mace. Methods
used to maintain the monopoly
included the violent suppression of
the native population, not stopping
short of extortion and mass murder.
and the French East India Company
rivaled them in scope and profit in an
age before their holdings underwent
nationalisation.
• Colonisation with an emphasis on settlement also
often took on a corporate tinge. In North America
the Virginia Companies, the Massachusetts Bay
Company and its predecessors exemplify the
process; the two New Zealand Companies played
a major role in setting up New Zealand.
• While state colonialism predominated in the later
19th century, a return to corporate foreign
activity did occur. German colonies in Togoland,
Samoa, South-West Africa and New Guinea had
corporate commercial roots, while the equivalent
German-dominated areas in East Africa and
China owed more to political motives.
• The twentieth century saw the era of
the banana republics, whereby
corporations such as United Fruit
dominated the economies and
sometimes the politics of parts of
Latin America. Oil companies such as
BP and Royal Dutch Shell held
influence in "key" areas such as
parts of Iran and of Nigeria, despite
the preservation of fictional
independence.
• The activities of Halliburton in
21st century Iraq.
• Halliburton is the only company
mentioned by Osama bin Laden
in an April 2004 tape in which he
claims that "this is a war [in
Iraq] that is benefiting major
companies with billions of
dollars." may compare with this
pattern.
• Various degrees of inter-relationship may
pertain between corporate colonisers and
their home governments. The protection
of trade, the interests of monopoly and
mercantilism, and the role of plausible
deniability (Plausible denial involves the
creation of power structures and chains of
command loose and informal enough to be
denied if necessary. The idea was that the
CIA could be given controversial
instructions by powerful figures—up to
and including the President himself—but
that the existence and true source of
those instructions could be denied if
necessary; if, for example, an operation
went disastrously wrong and it was
necessary for the administration to
disclaim responsibility.)
• may all play their part. National defence,
cultural outreach and the evangelisation
(For many groups, a church planter is
called an evangelist. Sometimes, the
regular minister of a church is called an
evangelist in a way that other groups
would typically use the term pastor(A pastor
is the head minister or priest of a Christian church . ) of
the benighted may not appear on
corporate balance sheets, but still may
impel and inspire directors and officials.
 Source:
http:www.wikipedia.org/wik
i/Corporate_colonialism
• Of the world's 100 largest
economic entities, 51 are now
corporations and 49 are
countries.
• compiled by Sarah Anderson and
John Cavanagh of the of the Institute
for Policy Studies in their Report on
the Top 200 corporations released in
December 2000
• 1UnitedStates 8,708,870.002
• Japan 4,395,083.003
• Germany 2,081,202.004
• France 1,410,262.005
• United Kingdom 1,373,612.006
• Italy 1,149,958.007
• China 1,149,814.008
• Brazil 760,345.009
• Canada 612,049.0010
• Spain 562,245.0011
• Mexico 474,951.0012
• India 459,765.0013
• Korea Rep. 406,940.0014
• Australia 389,691.0015
• Netherlands 384,766.0016
• Russian Federation 375,345.0017
• Argentina 281,942.0018
• Switzerland 260,299.0019
• Belgium 245,706.0020
• Sweden 226,388.0021
• Austria 208,949.0022
• Turkey 188,374.00
 Of the world's 100 largest economic
entities, 51 are now corporations and
49 are countries.

List of some of the corporations with their ranks

23 General Motors 176,558.00

24 Denmark 174,363.00
25 Wal-Mart 166,809.00
26 Exxon Mobil 163,881.00
27 Ford Motor 162,558.00
28 DaimlerChrysler 159,985.70
• 28 DaimlerChrysler159,985.70
• 29 Poland154,146.00
• 30 Norway145,449.00
• 31 Indonesia140,964.00
• 32 South Africa131,127.00
• 33 SaudiArabia128,892.00
• 34 Finland126,130.00
• 35 Greece123,934.00
• 36 Thailand123,887
37 Mitsui 118,555.20

38 Mitsubishi 117,765.60

39 Toyota Motor 115,670.90

40 General Electric 111,630.00

41 Itochu 109,068.90

42 Portugal 107,716.00

43 Royal Dutch/Shell 105,366.00

• 44Venezuela103,918.0045Iran, Islamic
rep.101,073.0046Israel99,068.0047Sumitomo9
5,701.6048Nippon Tel & Tel93,591.7049Egypt,
Arab
Republic92,413.0050Marubeni91,807.4051Colo
mbia88,596.0052AXA87,645.7053IBM87,548.00
54Singapore84,945.0055Ireland84,861.0056BP
Amoco83,556.0057Citigroup82,005.0058Volks
wagen80,072.7059Nippon Life
Insurance78,515.1060Philippines75,350.0061Si
emens75,337.0062Malaysia74,634.0063Allianz
74,178.2064Hitachi71,858.5065Chile71,092
• 66Matsushita Electric Ind.65,555.6067Nissho
Iwai65,393.2068ING
Group62,492.4069AT&T62,391.0070Philip
Morris61,751.0071Sony60,052.7072Pakistan59,880.0073
Deutsche
Bank58,585.1074Boeing57,993.0075Peru57,318.0076Cze
ch Republic56,379.0077Dai-Ichi Mutual Life
Ins.55,104.7078Honda Motor54,773.5079Assicurazioni
Generali53,723.2080Nissan Motor53,679.9081New
Zealand53,622.0082E.On52,227.7083Toshiba51,634.908
4Bank of
America51,392.0085Fiat51,331.7086Nestle49,694.1087
SBC Communications49,489.0088Credit
Suisse49,362.0089Hungary
 90 Hewlett-Packard 48,253.00
91 Fujitsu 47,195.90
92 Algeria 47,015.00
93 Metro 46,663.60
94 Sumitomo Life Insur. 46,445.10
95 Bangladesh 45,779.00
96 Tokyo Electric Power 45,727.70
97 Kroger 45,351.60
98 Total Fina Elf 44,990.30
99 NEC 44,828.00
100 State Farm Insurance 44,637.20
• Of the world's 100 largest economic entities, 51
are now corporations and 49 are countries;
• The world's top 200 corporations account for over
a quarter of economic activity on the globe while
employing less than one percent of its workforce.
• According to a study, "The Seattle protestors
expressed their anger at institutions like the WTO
for elevating the interests of large corporations
over everyone else. We analyzed just how
powerful the world's biggest firms are and our
findings are staggering
 Contributions of Top
Corporations
• This is not to deny that these firms
may influence our lives in many
other ways. Particularly in rich
nations, it is difficult to go through a
day without direct contact with many
of these companies, whether you are
watching a movie, shopping in a
super-market, driving a car, or
depositing a check.
• Nevertheless, given their extreme levels of
economic and political power, it is
important to take a hard look at whether
these corporate giants are indeed
upholding their end of the social compact.
The corporations themselves, when
lobbying for policies to lift barriers to trade
and investment, have promised that they
will lead not only to improved consumer
goods and services but also to significant
job creation and an overall improvement
in social welfare.
• It seems only fair that the public
should be able to expect—at a
minimum—that these colossal firms
be major providers of employment
opportunities and that they bear
their share of the tax burden.