Global Finance

Features of Bretton Woods

• Fixed Exchange Rates
• Elimination of exchange restrictions
• Currency convertibility
• Development of mulilateral system of international payments

Fixed Vs Floating

Pros of Floating

• Monetary policy autonomy
• Symmetry
• Exchange rates as automatic stabilisers

Cons of Floating

• Discipline
• Destabilizing speculation and money market disturbances
• Injury to international trade and investment
• Uncoordinated economic policies
• Illusion of autonomy

Factors affecting exchange rate

• Interest rate
• Inflation rate
• Current account deficit
• Public debt
• Political stability
• Economy
• Terms of trade

Criteria for eligibility for EURO

• Inflation - 1.5% avg lowest 3 nationsbudget deficit - 3% of GDP, national debt - 60% of GDP; 
• long-term interest rate - 2% avg lowest 3 nations
• no currency devaluation prior 2 yrs
• budget deficit 3% even after member

Benefits of credit rating

• To issuers
• Disclosure and transparency
• Independent peer comparison
• Enhances T&C of borrowings
• Enhances access to new sources of funds
• To investors
• Benchmark of risk premium
• Information and reference point
• Simple global measure of credit risk
• Assist in portfolio monitoring

3 units of credit rating

• Issuer credit rating
• Issue rating
• Bank loan rating

Info required for Credit Rating

• Organisation structure
• Senior management background
• 5 years of financials
• Projections for 3 years
• List of bank lines available and usage
• Financial documents
• Descriptive data relating to operations
• Summary of corporate strategy
• Perceptions of risks and opportunities

Entrepreneurship

Re-engineering Corporate Thinking (Innovation)

• Set explicit goals
• Create a system of feedback
• Emphasize individual responsibilities
• Give reward based on results
• Do not punish failure

Corporate Entrepreneurship Process

• Strategic Renewal
• Innovation
• Corporate Venturing

Steps of corporate entrepreneurial strategy

• Develop vision
• Encourage innovation
• Structuring for an intrapreneurial climate
• Developing managers
• Developing venture teams

Qualities of opportunities

• Attractive
• Timely
• Durable
• Value addition

Ways to identify opportunity

• Observing trends
• Economic
• Social
• Technological
• Political
• Solving problems
• Finding gaps

Recognizing opportunities

• Experience
• Cognitive factors
• Social networks
• Creativity

Generating Creative Ideas

• Preparation
• Incubation
• Insight
• Evaluation
• Elaboration

Importance of business model

• ongoing extension of feasibility analysis
• how all elements fit together
• why network of business participants wiling to work together
• articulates company's core logic

Components of an effective business model

• Core strategy
• Business mission
• Product/market scope
• Differentiation
• Strategic resources
• Core competencies
• Strategic Assets
• Partnership network
• Suppliers
• Partners
• Other key relationships
• Customer interface
• Target customer
• Fulfillment and support
• Pricing structure

Venture Team

• Founders
• Key employees
• BOD
• Management team
• Board of advisers
• Lenders and investors
• Other professionals

Industry Analysis

• Environmental trends
• Economic
• Social
• Technological
• Political
• Regulatory
• Porters Five Competitive Forces Model
• Threat of new entrants
• Rivalry among existing firms
• Threat of substitutes
• Bargaining power of suppliers
• Bargaining power of buyers

Competitor Analysis - Sources of competitive intelligence

• trade shows
• purchase competitor product
• competitors' website
• email alerts
• industry related news
• talk to customers

Internal growth strategies

• new product development
• other product related strategies
• international expansion

Advantage	Disadvantage
Incremental growth	Slow growth
Maximum control	Develop new resources
Preserve org culture	Failure difficult to recoup
Encourage intrapreneurship	Industry capacity
Promote from within

External growth strategies

• mergers and acquisition
• licensing
• franchising
• strategic alliance and JV

Advantage	Disadvantage
Reduce competition	Management incompatible
Access to proprietary products	Clash of culture
Access to new products	Operational problems
Access to new market	Business complexity
Access to established brand	Loss of flexibility
Economies of scale	Antitrust implication
Diversification of risk

Venture capitalist's evaluation process

• Initial screening
• Evaluation of business plan
• Oral presentation
• Final evaluation

Bankers' Anagram

• Character
• Ability
• Management
• Purpose
• Amount
• Repayment
• Insurance

Organisation Development

Characteristics of OD
·         Planned
·         Long term
·         System wide
·         Top management
·         Empowerment process
·         Focus
·         Learning process
·         Problem solving
·         Collaborative culture
·         Team work
·         Consultant facilitator
·         Behavioral intervention
·         Action research

Benefits of OD
·         System wide change
·         Greater motivation
·         Increased productivity
·         Higher job satisfaction
·         Improved team work
·         Better resolution of conflict
·         Reduced absenteeism
·         Lower turnover
·         Increased willingness to change
·         Better quality of work life
·         Creation of learning individuals
·         Commitment to objectives

History of OD
·         1950 laboratory training
·         1950 action research and survey feedback
·         1960-70 normative approach
·         1960-70 quality of work life
·         1970-80 strategic change

OD Values
·         Humanistic Values
·         Optimistic View
·         Democratic Values
Plus OCTAPACE

OD objectives and goals
·         Organizational effectiveness
·         Employee well being
·         Conflict management
·         Collaboration
·         Environmental adaptation
·         System wide change

Steps in OD
·         Anticipate need for change
·         Diagnosis
·         Data collection
·         Feedback and confrontation
·         Action planning
·         Intervention

OD practitioner
·         Internal External
·         Specialists in specific fields
·         Managers

Skills of OD practitioner
·         Diagnostic ability
·         Knowledge of behavioral science
·         Empathy
·         Knowledge of theories and methods of OD
·         Goal setting ability
·         Problem solving ability
·         Ability to perform self assessment
·         Ability to see things objectively
·         Imagination
·         Flexibility, honest, and trust

Entering into an OD relationship
·         Clarifying organizational issues
·         Defining relevant client
·         Selecting OD practitioner

Elements in proposal form
·         Goals of proposed effort
·         Outline of action plan
·         List of roles and responsibilities
·         Recommended intervention
·         Proposed fees and expenses

Practitioner client relationship mode
·         Apathetic mode
·         Gamesmanship mode
·         Charismatic mode
·         Consensus mode

OD practitioner style
·         Stabilizer style
·         Cheer leader style
·         Analyser style
·         Persuader style
·         Pathfinder styler

Importance of Diagnosis
It is the process of understanding how organization is currently functioning and provides the information necessary for the proper intervention in the organization. It properly points the organization and the OD practitioner toward a set of appropriate intervention that will improve organization effectiveness.

Models of diagnosing organization
·         Open system model
·         Analytical model
·         Emergent group behavior model
·         Management practitioner model
·         Socio technical system model
·         Cause maps and social network analysis model
·         Force field analysis model

Types of change
·         Incremental change
·         Strategic change
·         Transformational change

Lewin’s Force field analysis model
·         Unfreezing
·         Movement
·         Refreezing

Strategies for change (OD intervention strategies)
·         Structural change strategy
·         Technological change strategy
·         Behavioral change strategy

Qualification to be an OD intervention
·         Should be planned
·         Follow sequential process
·         Should be long term
·         Should aim at whole organization
·         Should start from top
·         Based on behavioral science

Career life planning intervention
·         Prepare list of career life goals
·         Reality testing, prioritizing and conflicting goals
·         List of important accomplishments
·         Compare list 1 and 2
·         POA

Reasons for stress
·         Technological change
·         Downsizing
·         Reorganization
·         Competition
·         Lack of participation
·         Empowerment
·         Conflict
·         Supervisor
·         Time
·         Violence

Stress management
·         Wellness programs
·         Relaxation techniques
·         Career life planning
·         Stress management training
·         Seminars on job burnouts

Goals of team development
·         Identify objective and set priorities
·         Examine the team’s content or task performance
·         Analyze the group process
·         Improve communication
·         Decrease unhealthy competition
·         Work more effectively
·         Respect

Categories of team interaction
·         Simple
·         Complex
·         Problem

Problems of work teams
·         Goals
·         Members needs
·         Norms
·         Homogeneous members
·         Decision making
·         Size

Role negotiation
·         Contract setting
·         Issue diagnosis
·         Role negotiation
·         Written role negotiation agreement

Intergroup operating problems
·         Sub optimization
·         Inter group competition
·         Power imbalance
·         Role conflict
·         Personality conflict

Managing conflict
·         Avoiding
·         Obliging
·         Dominating
·         Compromising
·         Integrating

Conflict OD intervention
·         Third party intervention
·         Organization mirror
·         Intergroup team building

System wide intervention
·         Survey research and feedback
·         The learning organization
·         Reengineering
·         The system 4 approach
·         High performance system
·         Grid organization development
·         Third wave organization

Change Strategies (transformation)
·         Participative evolution
·         Charismatic transformation
·         Forced evolution
·         Dictatorial transformation

Goodwill Valuation Methods

i.Average Profit Method = Future Maintainable Profit X No. of yrs              purchased

ii.Super Profit Method = (FMP – NRR X Capital Employed) X No. of yrs purchased

  = Super Profit X NYP

iii.Capitalisation Method = Super Profit

                                                       NRR

*Use closing capital employed

iv.Capitalisation of Super Profit Method = Super Profit

                                                                                    NRR

*Use average capital employed

v.Annuity Method = Super Prft/FMP X P.V. of annuity factor