Business & Commercial Knowledge – Page 4

CA Foundation Business & Commercial Knowledge Study Material – Finance, Stock and Commodity Markets Terminology

January 5, 2022June 5, 2018 by Prasanna

CA Foundation Business & Commercial Knowledge Study Material Chapter 6 Common Business Terminologies – Finance, Stock and Commodity Markets Terminology

Terminology or vocabulary means a set of basic terms or concepts used in a particular field or discipline. Each and every subject (e.g. Economics, Accountancy, Law, Medicine, Management, etc.) has its own terminology. Good understanding of the correct meaning of the terms used is essential to gain conceptual clarity. A student or professional working in the concerned profession cannot be efficient without understanding the terminology used in the concerned profession. A Chartered Accountant is excepted to know and understand the terminology used not only in finance and accounts but also in related areas such as marketing banking, administration, etc. This is because a Chartered Accountant comes across these terminologies in course of audit.

Finance, Stock and Commodity Markets Terminology

Above par: Price of a security quoted higher than its face value.
Absorption or acquisition: Takeover of a firm by another firm.
Accommodation bill: A bill of exchange drawn and accepted without receiving value in exchange. It is means of lending money.
Account: A record of transactions relating to one head e.g. debtors.
Accountancy: The held of knowledge containing principles and techniques used in preparing accounts. Account current: A running account summarizing business transactions during a given time period.
Accounting: The process of measuring, and recording transactions in the books of account.
Agent: (broker): One who buys and sells securities on behalf of his clients.
Amortize: To charge regular portion of an expenditure over a fixed time period. For example an expenditure of Rs. 50,000 may be amortized over five years, charging Rs. 10,000 per year in the account books. Also called write off.
Annuity: An equal amount paid at fixed intervals (e.g. every three months) for a specified period (e.g. twenty years).
Appreciation: Increase in the value of an asset e.g. shares purchased for Rs. 1 lakh may be Rs. 5 lakh now. There is an appreciation of Rs. 4 lakh.
Arbitrage: Simultaneous purchase and sale of a security/commodity in different markets to take advantage of price differences.
Asset: An economic resource expected to give benefit in future. It may be tangible (e.g. a machine) or intangible (e.g. a patents). Assets are of three types:
- Current Assets: The assets which are likely to convert into cash within a year e.g. book debts and stock of finished goods.
- Fixed Assets: The assets which generate revenue and last more than one year e.g. building, vehicles, machinery.
- Intangible Assets: Assets having no physical shape e.g. patents, trademarks and copy-rights.
Ask/Offer: The lowest price at which the owner is willing to sell his securities.
Audit: The careful review of financial records to verify their accuracy.
Auditor: The qualified Chartered Accountant authorised and appointed to conduct an audit.
Authorised capital: The amount of share capital with which a company is registered. It is mentioned in the company’s Memorandum of Association.

Backwardation: The charge paid big a bear speculator to a bill for postponement of settlement of a transaction.
Bad debts: The debts which are not recoverable and are written off as a loss.
Badla: Carry forward of a transaction from one settlement period to the next without any payment or delivery.
Balance of payments: A statement of all money flows in and out of a country.
Balance of trade: A statement of a country’s exports and imports during the year.
Balance sheet: A statement containing the assets, liabilities and capital of an organisation. It shows the financial position on a specific date.
Base price: A security’s price at the beginning of a trading day. It is used to determine the day’s lowest/highest price and the price range.
Basket trading: The facility which enables investors to buy/sell in one go all the 30 scripts of Sensex in proportion of their current weights in the Sensex.
Bear: A pessimist who expects prices to fall and sells quickly before the value of his holding declines. Bear market: A market situation when share price are continuously falling.
Beta: A measurement of the relationship between the price of a security and the price movement of the whole market.
Bid: The highest price a buyer is willing to pay for a share. It is the opposite of ask/offer.
Blue chip: Shares of a large, well established and financially sound company. It can provide high capital gains.
Bond: A long-term promissory note issued by a company or government. It shows the amount of the debt, rate of interest and the due date.
Bonus shares: A free allotment of shares out of accumulated reserves to the existing shareholders in proportion to their current holding.
Book closure: The period during which a company keeps its register of members closed for updating prior to payment of dividend or issue of new shares/debentures.
Book value: The value of an asset recorded in the books of account. It also means the difference between total assets and total liabilities.
Brokerage: The commission charged by brokers.
Break even point: The number of units that must be sold to generate revenue equal to total expenses. Sale above this point create a profit and sales below it create loss.
Budget: A detailed plan expressed in quantitative terms for a specific future period.
Bull: One who expects prices to rise and buys in anticipation.
Bull market: A market situation in which share prices continuously rise.
Business days: The days on which stock markets are open – Monday to Friday, excluding public holidays.
Business risk: The risk inherent in the operations of a firm which uses no debt.
Buyer: The trading member who has placed on order for the purchase of securities.

Call: The demand for payment by the company which has issued shares.
Call option: The right (not obligation) to buy a particular share at a specified price within the specified time period.
Capital budgeting: The process of planning expenditure on fixed assets.
Capital gain: The increase in the value of a security.
Capital market: The financial market for shares, debentures and long-term debt.
Closing price: The price of a security at the end of a trading day.
Commercial paper: Short term and unsecured promissory note issued by a large firm with an interest rate below the prime lending rate of commercial banks.
Commodity: Products used for commerce and traded on authorized commodity platforms.
Convertible security: A preference share, debenture, a bond that can be converted into equity shares at the option of the holder.
Consolidation: Business combination of two or more firms.
Credit period: The length of time for which credit is granted.
Creditor: The individual/organization who owes money on a particular date.

Debenture: An instrument acknowledging debt raised by a company/corporation.
Debtor: An individual/enterprise who owes money, shown as an asset in the balance sheet. Defensive stock: A stock that provides constant dividends even during economic down turn. Depreciation: An expense allowance made for wear and tear of an asset over its estimated useful life.
Derivatives: A security whose price is derived from one or more underlying assets such as shares, bonds, commodities, currencies, etc.
Diversification: Spreading the investment risk by purchasing shares of different companies operating in different sectors. Also used to refer to a company investing in several related or unrelated business.
Dividend: A part of the company’s earning paid to shareholders.
Devaluation: Reducing the value of a currency in relation to other currencies, decided by the government.
Disinvestment: Selling a part of the share holding of a public enterprise to private sector.

E-commerce: Doing business transactions over the internet.
Economic activity: Any activity undertaken to earn money.
Equity capital: Funds provided by holders of equity shares.
Equity: Equity capital, free reserves, retained earnings and preference capital.
Exchange rate: The rate at which one currency can be purchased for another currency. Ex-dividend: Shares on which dividend declared after their purchase is not payable.

Foreign company: A company incorporated outside India but having business operations in India.
Forward trading: Buying and selling without the intention of delivery and payment, aim is to earn from fluctuations in price.
Futures: The right to buy or sell at a future date and at the specified price.
Face value: The price at which a share/bond/debenture is issued. Also known as par value.
Financial instrument: A written document sharing an agreement or a transaction e.g. share, debenture, cheque, etc.
Financial intermediary: One who acts as a link between buyers and sellers of securities, e.g. share brokers, banks.

Goodwill: The estimated money value of a firm’s reputation.
Government bonds: A security issued by a government to raise debt.
Government company: A Company in which government owns 51 per cent or more of the share capital.

Hedge: A strategy used to minimise the risk and maximize the return on investment.
Holding period: The time period during which an individual/corporation holds/owns an asset. This period is considered while pledging the asset as collateral.

Income stock: A security that offers dividend higher than that on common stock. It has a solid record of dividend payments.
Index: A statistical measure of change in the security market/economy. It is usually calculated as a percentage change in the base value overtime.
Initial public offer (IPO): A company’s first issue of shares to general public.
Internet trading: Buying and selling securities over the internet. SEBI approved it in January 2000. Interim dividend: A dividend declared prior to the close of the financial year.

Joint venture: A partnership between two or more independent firms resulting in the creation of a third enterprise.
Journal: Datewise records of transactions, a book of original entry.

Lame duck: A speculator struggling to honour his commitment due to unexpected fluctuations in the price of a security on the stock market.
Lease: A legal right for the use of an asset.
Ledger: A book of account in which entries are posted from the Journal into various accounts. Lien: A legal claim to property until repayment of debt.
Limit order: An order to buy or sell a share at a specified price. It specifies the minimum price the seller is willing to accept or a maximum price the buyer is willing to pay.
Liquidation: Piecemeal sale of the assets of a division of the company.
Listed stock: The shares of a company that are eligible for trading on the stock exchange.

Margin trading: Buying securities on a stock exchange after keeping a deposit with the broker. Market capitalization: The total market value of a company’s out standing shares.
Minimum subscription: The minimum amount of share capital a company must receive in cash before making allotment of shares. It is equal to 90 per cent of issued capital.
Money market: Market for raising short-term funds.
Mutual funds: A pool of money managed by experts for investing in shares, debentures and other securities. .

Nominee director: A director nominated by the financial institution from which the company has raised a loan.

Odd lot: Shares less than the trading lot and held by a small investor.
One sided market: A market having only potential buyers or only potential sellers.
Out-of-the money (OTM): In case of call options, it means the share price is below the strike price. In case of put options, it means the share price is above the strike price.

Par value: The value of a share printed on the share certificate.
Portfolio: Various types of securities of different companies held by an investor.
Preliminary expenses: Expenses incurred for the formation of a company.
Pre-opening session: Time duration from 9.00 am to 9.15 a.m. during which order entry, modification and cancellation are done before the start of trading on stock exchange.
Price earning (PIE) ratio: The market price of a share divided by the earning per share. Prospectus: A document issued by a Company to sell shares/debentures to the general public.
Proxy: A written authority given by a member of a company to some one to attend the meeting on his/her benefit.

Right shares: Equity shares issued by a company to the existing shareholders in proportion to their current holding.

Securities: A transferable certificate of ownership of shares, debentures, etc.
Share: A part in the share capital of a company.
Stock: Fully paid shares of a company.
Strike price: The price at which the shareholder can buy (in case of call option) or sell (in case of put option) a security.
Stock split: Splitting one share into several shares to increase the availability of existing shares e.g., splitting a share with face value of 100 into 10 shares with face value of Rs. 10 each.

Thin market: A market with a few bids to buy or offer to sell, the prices in such market vary highly. Trading session: The time period during which the stock market is open for trading.

Underwriting: Guarantee to subscribe to an issue of shares in case public does not subscribe to it.

Working capital: The capital used in day-to-day business activities, also called circulating capital.

Yield: Percentage return on investment in case of shares it is calculated by dividing the annual dividend with the current price of the share.
Yield-to-call: The rate of return earned on a bond when it is called before the date of maturity.

Zero coupon bond: A bond sold at a discount below par but paid back at face value. No interest is payable on it.

CA Foundation Business & Commercial Knowledge Study Material – Foreign Direct Investment (FDI)

January 5, 2022May 28, 2018 by Prasanna

CA Foundation Business & Commercial Knowledge Study Material Chapter 4 Government Policies for Business – Foreign Direct Investment (FDI)

FOREIGN DIRECT INVESTMENT (FDI)

Meaning of FDI

Foreign Direct Investment means investment in a foreign country where the investor claims con¬trol over the investment in terms of actual power of management and effective decision-making. Foreign direct investment typically occurs in the form of setting up a subsidiary, starting a joint venture or acquiring a stake in an existing firm in a foreign country According to the Committee on Compilation of FDI in India (Oct 2002). FDI is “the process whereby residents of one country (the home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country). There are three main categories of FDI-equity capital, reinvested earnings, and lending of funds by a multinational to its affiliate.

When the investor makes only investment and does not retain control over the enterprise it is known as portfolio investment. The investor is interested only in return on his capital and does not want control over the use of the invested capital. Portfolio investment is for a short period and is influenced by short-term gains. On the other hand, foreign direct investment involves long-term commitment and cannot be easily liquidated. Therefore, long-term considerations like political stability, Government policy, industrial prospects, etc. influence it. Direct investors have direct responsibility for the promotion and management of the enterprise. But portfolio investors have no direct responsibility for promotion and management of the enterprise. Portfolio investment takes place through foreign institutional investors (FIIs) like mutual funds and through American Depository Receipts (ADRs) Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs). ADRs, GDRs and FCCBs are securities issued by Indian companies in the foreign markets to mobilise foreign capital.

Advantages of Foreign Direct Investment

Foreign direct investment offers the following benefits:

FDI increases the level of investment by supplementing domestic capital. The host country gets scarce capital resources from abroad. As a result, FDI contributes towards the development of infrastructure, industry and service sector in the host country. FDI helps to enhance business activity and raise the level of economic development.
FDI facilitates transfer of technology, machinery and equipment to the host country. Advanced foreign technology helps to reduce costs and improve quality of products and services. Local firms get the opportunity for technology upgradation.
FDI can create a managerial revolution in the host country through professional man-agement and employment of sophisticated techniques of organisation and management. Local firms get access to world class management and corporate practices.
FDI helps to boost employment and incomes in the host country through establish¬ment of new industries and development of ancillary industries. Higher production and income in turn increase the tax revenue of the Government. Material and human resources can be utilised optimally.
FDI can help the host country to increase its exports and reduce imports These add to the foreign exchange resources of the country and improve its balance of payments position. In fact, the Government of India announced economic liberalisation in July, 1991 due to foreign exchange crisis.
FDI may help to increase competition and break domestic monopolies in the host
country. It can overcome trade barriers like tariffs and quotas. FDI can make Indian industries globally competitive.
FDI offers benefits to the home country also. There is inflow of foreign currency in the form of dividend and interest. Exports of technology machinery and equipment help to enhance industrial activity and employment in the home country.
There is greater choice of products by consumers. Their standard of living is likely to improve due to better quality and wider choice.

Disadvantages of Foreign Direct Investment

Foreign direct investment has been criticised for the following reasons:

FDI tends to flow in the areas of high profits rather than in the priority sectors of the host country.
Considerable funds are repatriated from the host country in the form of royalty, fees, dividend, interest, etc. on FDI. Such outflows put pressure on the host country’s balance of payments. The cost of FDI is high.
FDI takes place mainly through multinational corporations. These corporations are large in size and have a wide resource base. They pose a threat to the domestic firms in the host country.
The technology brought in by the foreign investors may not be appropriate to the market size, resource base, stage of economic development and consumption needs of the host country. Excessive reliance on foreign technology may have an adverse effect on local initiative.
FDI poses a threat to the economic autonomy and political sovereignty of the host country. Some of the multinational corporations have destabilised governments in African countries. Excessive reliance on foreign technology may have an adverse effect on local initiative.
FDI can lead to adverse effects on domestic savings, and adverse terms of trade for the host country which offers special concessions to attract FDI, Some foreign investors pre-empt investment plans of domestic companies. They engage in unfair and unethical trade practices.
FDI may involve costs and risks for the home country. Employment opportunities may shrink and balance of payment position may suffer due to FDI.

Determinants of Foreign Direct Investment

The volume of FDI in a country depends on the following factors:

Natural Resources – Availability of natural resources in the host country is a major determinant of FDI. Most foreign investors seek an adequate, reliable and economical source of minerals and other materials. FDI tends to flow in countries which are rich in resources but lack capital, technical skills and infrastructure required for the exploitation of natural resources. Though their relative importance has declined, the availability of natural resources still continues to be an important determinant of FDI.
National Markets – The market size of a host country in absolute terms as well as in relation to the size and income of its population and market growth is another major determinant of FDI. Large markets can accommodate more firms and can help firms to achieve economies of large scale operations. Market access has been the main motive for investment by American companies in Europe and Asia.
Availability of Cheap Labour – The availability of low cost unskilled labour has been a major cause of FDI in countries like China and India, Low cost labour together with availability of cheap raw materials enable foreign investors to minimise costs of production and thereby increase profits.
Rate of Interest – Differences in the rate of interest prevailing in different countries stimulate foreign investment. Capital tends to move from a country with a low rate of interest to a country where it is higher. Foreign investment is also inspired by foreign exchange rates. Foreign capital is attracted to countries where the return on investment is higher.
Socio-Economic Conditions – Size of the population, infrastructural facilities and income level of a country influence direct foreign investment.
Political Situation – Political stability, legal framework, judicial system, relations with other countries and other political factors influence movements of capital from one country to another.
Government Policies – Policy towards foreign investment, foreign collaborations, foreign exchange control, remittances, and incentives (monetary, fiscal and others) offered to foreign investors exercise a significant influence on FDI in a country. For example, Export Processing Zones have been developed in India to attract FDI and to boost exports.

CA Foundation Business & Commercial Knowledge Study Material – Meaning of Privatization

January 5, 2022May 28, 2018 by Prasanna

CA Foundation Business & Commercial Knowledge Study Material Chapter 4 Government Policies for Business – Meaning of Privatization

Meaning of Privatization

Privatization means the transfer of ownership and/or management of an enterprise from the public sector to the private sector. It refers to the introduction of private control and ownership in public sector undertakings. According to the World Bank, “privatization is the transfer of State owned enterprises to the private sector by sale (full or partial) of going concerns or by sale of assets following their liquidation.” In the words of Barbara Lee and John Nellis “Privatization is the general process of involving the private sector in the ownership or operation of a State owned enterprise,”

There are several forms or methods of privatization such as:

Denationalization of a public enterprise by its complete sale to the private sector. For example, BALCO. was sold to Sterlite Industries.
Divestiture, i.e., the sale of equity in full or part of a public sector undertaking to private sector.
Transfer of management of a public sector enterprise to private sector through a management contract.
Joint venture, i.e., joint ownership of an enterprise by Government and private sector.
Leasing, Le., transferring the use of assets of a public sector unit to private bidders for a specified period.
Franchising of public sector services to designated private sector units.

Trends And Issues – Privatization In India

The process of privatization began in India mainly after the Industrial Policy of July 1991. Under this policy the number of industries reserved for the public sector was reduced from 17 to 2 – Railways and Atomic Energy. Shares of several public sector enterprises have been sold to mutual funds, workers and the public.

Impact of Privatization on Indian Economy

The main reason for privatization in India has been the poor performance of public sector units which results in wastage of national resources and burden on common man.

POSITIVE AND NEGATIVE EFFECTS OF PRIVATIZATION

Positive Effects

Expansion of market
Growth of independent money market
Free flow of resources
Advancements in technology
Equilibrium in balance of payments
Development of infrastructure
Higher living standards
International cooperation

Negative Effects

Cut-throat competition
Rise in monopoly
Increase in inequalities
Takeover of domestic firms
Removal of protection to domestic firms
Affect on national sovereignty

CA Foundation Business & Commercial Knowledge Study Material – Meaning of Liberalization

January 5, 2022May 28, 2018 by Prasanna

CA Foundation Business & Commercial Knowledge Study Material Chapter 4 Government Policies for Business – Meaning of Liberalization

India faced foreign exchange crises in 1990. Government of India adopted the policy of Liberalization, Privatization and Globalization (LPG) to overcome the crisis. Government controls on business and industry have since then been dismantled gradually. The process further gained momentum in 2014. Since then rules and regulations have been simplified to increase the ease of doing business. Goods and Services Tax (GST) is the latest step in this process.

Meaning of Liberalization

Liberalization of an economy means removing or relaxing Government controls and restrictions on economic activities. It is the process of liberating the economy from unnecessary controls and restrictions on trade, industry, banking system, etc. of the country. It involves abolition of those policies, rules and regulations which impede economic development.

Liberalization in India – Trends and Issues

The process of economic liberalization in India began primarily in 1991. The economic reforms are being implemented in two stages, namely (i) First Generation Reforms, and (ii) Second Generation Reforms. The main trends of liberalization in India are as follows:

1. Infrastructural Reforms:

Opening up of oil exploration and petroleum to foreign investment.
Power sector reforms.
Private sector participation in infrastructure development.
Decontrol of steel.
Telecom sector reforms.

2. Industrial Reforms:

Delicensing of industry.
Public sector undertakings allowed access to capital market.
Simplification of licensing procedures.

3. Fiscal Reforms:

Reduction in customs duty.
Five year tax holiday to enterprises in specified sectors.
Downsizing of some departments.
Reduction in personal and corporate taxes.
Simplified tax administration.
Introduction of Value Added Tax (VAT).

4. Capital and Money Market Reforms:

Clearing Corporation of India set up.
Introduction of Negotiated Dealing System.
Floating rate Government bonds re-introduced.
Trading in index options, and stock futures introduced.

5. External Sector Reforms:

Removal of import restrictions.
Liberalised Exchange Rate Management System (LERMS)
Liberalisation of NRI remittances.
Encouraging foreign tie-ups.
Automatic approval of foreign investment and foreign technology agreements to specified extent.

6. Banking Sector Reforms:

Reduction in CRR and SLR.
Introduction of capital adequacy norms.
Setting up of Debt Recovery Tribunals.
Issue of guidelines for entry to new private banks.
Setting up of IRDA.

Impact of Liberalization of Indian Economy

Liberalization has considerably expanded the scope of private sector in India. Private enterprises can now enter most of the industries. The competitive strength and industrial efficiency have improved. Business opportunities have increased and many Indian companies have established subsidiaries and joint ventures abroad. Liberalisation has also boosted foreign investment in India. Thus, liberalisation has led to radical changes in India’s business environment.

POSITIVE AND NEGATIVE EFFECTS OF LIBERALIZATION IN INDIA

Positive Effects

Increase in foreign investment
Decline in external debt
Rise in foreign exchange reserves
Increase in tax receipts
Increase in production
Technological advancement

Negative Effects

Decline in small scale sector
Increase in unemployment
Decrease in GDP rate

CA Foundation Business & Commercial Knowledge Study Material – An overview of Selected Global Companies

January 5, 2022May 28, 2018 by Prasanna

CA Foundation Business & Commercial Knowledge Study Material Chapter 3 Business Organizations – An overview of Selected Global Companies

1. AMERICAN EXPRESS

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Year of Incorporation : 1850
Head office : New York, USA
Chairman and CEO : Kenneth I. Chenault
Website : www.americanexpress.com

History : American express was founded in 1850 as an express mail business.
Philosophy : Vision : To be a leading provider of payment solutions worldwide.
Mission : To leverage our local and global expertise to be a leading provider of payment solutions by delivering high quality, innovative and world class products and services, while maintaining the highest standards of governance and ethics.
Business portfolio : American Express operates in both card and non-card segments.
Operations : American Express has 2300 offices in 175 countries across the world. It has several subsidiaries and employs over 56000 people. Its revenue in 2015-16 was US $ 32.119 billion. American Express set up its first office in India in 1921 at Kolkata. Since then it has become the leading banking and travel related services. It is considered a pioneer in’off-shoring processes to captive centres in India.
Developments : In 2016, American Express was ranked the 25th most valuable brand in the World. In 2017 it was ranked as the 17th most admired company worldwide.

2. APPLE

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Year of Incorporation : 1976
Head office : California, USA
Chief Executive : Tim Cook
Website : www.apple.com

History: Steve Jobs, Steve Wozniak and Ronald Wayne founded Apple Computer Inc. in January 1977 to develop and sell personal computers. In January 2007 it was renamed as Apple Inc. to reflect its shifted focus towards consumer electronics.
Philosophy: Vision: To produce high quality, low cost, easy to use products that incorporate high technology for the individuals.
Mission: To bring the best personal computing experience to students, educators, creative professionals and consumers around the world through innovative hardware, software and internet offerings.
Business portfolio: Apple operates in Mac, iPad, iPhone, Watch, TV and Music segments. It operates the online Apple Store. Its iTunes store is the world’s largest online music retailer.
Operations: Apple is the world’s largest information technology multinational. It is the world’s second largest mobile phone manufacturer. It maintains 478 retail stores in 17 countries. It has more than 120,000 employees and its revenue in 2015-16 was US $ 215.369 billion.
Developments: In August 2014 Apple acquired Beats Electronics. It was ranked 8th among Forbes World’s Biggest Public Companies in 2016. It ranked 9th in Fortune 500 Global Companies same year.

3. HP

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Year of Incorporation : 1939
Head office : California, USA
Chairman : Dion Weisler
Chief Executive : Dion Weisler
Website : www.hp.com

History: William Redington Hewlett and David Packard founded HP in 1939 in a car garage in Palo Alto to produce electronic test equipment.
Philosophy: To create technology that makes life better for everyone, every where every person, every organization and every community around the globe.
Business portfolio: Major product lines of HP include personal computing devices, enterprise and industry services, related storage devices, networking products. Software, Printers imaging products. It sells to households as well as to-organizations.
Operations: HP is a global information technology company. It develops and sells a wide variety of hardware, software and related products.
Developments: In 2015 HP split its PC and printers business from enterprise products and services business. It resulted into two companies. HP Inc. and Hewlett Packard Enterprise.

4. IBM CORPORATION

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Year of Incorporation : 1911
Head office : New York, USA
Chairman : Ginni Rometty
Chief Executive : Ginni Rometty
Website : www.ibm.com

History: On June 16, 1911 four Companies were amalgamated to form the Computing Tabulating Recording Company. It was renamed International Business Machines in 1924. Later on the name was changed as IBM corporation.
Philosophy: Vision: To be the first and foremost on any new enterprise data centre migration short-list.
Mission: To be the leader in innovation, development and manufacture of the industry’s most advanced information technologies, including computer systems, software storage systems and micro-electronics.
Business portfolio: IBM operates in both products (analytics, cloud, commerce, Internet of things, security mobile, security, industry solutions, etc.,) and services business consulting, technology, financing, training etc.,/segments.
Operations: IBM is a global technology company with operations in more than 170 countries. It is a major research organization holding the record for most patents. It has more than 380000 employees and its revenue in 2015-16 was US $ 79.20 billion. It has a subsidiary IBM India Pvt. Ltd. in India since 1992.
Development: IBM acquired Lombard in 2009, Sanovi Technology in 2016 and Agile 3 Solutions and Ravy Technologies in 2017. It is ranked 82nd in Fortune 500 global companies.

5. MICROSOFT CORPORATION

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Year of Incorporation : 1911
Head office : Washington, USA
Chairman : John Thompson
Chief Executive : Satya Nadella
Website : www.microsoft.com

History: Paul Allen and Bill Gates founded Microsoft on April 4,1975. It entered OS business in 1980. It rose to dominate the personal computing with MS-DOS. Since 1990 it has diversified.
Philosophy: Vision: To help individuals and businesses realize their full potential.
Mission: To be a global organization by providing products/services of value for the target market.
Business portfolio: Software and services, devices and Xbox, business developers and IT, for students and educations are the major segments for which Microsoft has products.
Operations: Microsoft is a multinational technology company. It is best known for its software products like Windows, Office, Internet Explorers and Edge Web browsers. It is the largest software maker in the world. It has more than 115000 employees and its revenue in 2015-16 was US $ 85.32 billion. Microsoft Corporation of India was set up 1990. It has six major business units.
Developments: Microsoft acquired Skype Technologies in 2011, mobile hardware division of Nokia in 2014 and Linked in 2016.

6. NESTLE

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Year of Incorporation : 1866
Head office : Vevey, Switzerland
Chairman : Peter Brabeck Letmathe
Chief Executive : Mark Schneider
Website : www.nestle.com

History: Henri Nestle founded Angloswiss Condensed Milk Company in 1866. In 1879, it merged with milk chocolate inventor Daniel Peter. In 1905 the company was renamed Nestle. It entered India in 1923.
Philosophy: To provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions from morning to night.
Business portfolio: Nestle has popular brands in bottled water, cereals, health, skincare, pet care, coffee, etc.
Operations: Nestle is a global food and drink company. It is the world’s largest food, nutrition, health and wellness company. It has 2000 plus brands across the globe. It operates 418 plants in 86 countries. Its products are available in 191 countries. It employs 3,35,000 people and its revenue was 89.8 billion Swiss Frank in 2015-16.
Developments: Nestle acquired San Pellegrino, Spillers Pet Foods, Ralston Purina, Chief America, Delta Ice cream, Hsu Fachi, Vitablo and Prometheus Laboratories. It ranked 66th in Fortune 500 and 33rd in Forbes 2000 companies in 2016. It has joint ventures with General Mills, Coca Cola Company, Lactalis and Colgat Palmolive.

7. WALMART

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Year of Incorporation : 1962
Head office : Arkansas, USA
Chairman : Greg Penner
Chief Executive : Dough Mcmillion
Website : www.walmartstores.com

History: Sam Walton founded Walmart in 1962. It was incorporated on October 31, 1969.
Philosophy: Vision: To be the best retailer in the hearts and minds of consumers and employees.
Mission: Saving people money so that they can live better, Tagline: Save money Live better.
Business portfolio: Walmart sells a wide range of products such as groceries, foods, fruits and vegetables, personal and house care, clothing’s, office supplies and general merchandise. It is organized into four divisions.
Operations: Walmart is a multinational that operates a chain of hyper markets, discount stores, grocery stores and online stores. It is world’s largest retailer. It has 11695 stores in 28 countries. It has more than 23,00,000 employees and its revenue was $ 485.87 billion in 2015-16. Walmart India has 21 stores which sell 5000 items in 9 States. It launched B2B e-commerce platform on July 1,2014.
Developments: Walmart acquired Moose Jaw and Bonobos, and jet.com. It is number 1 company in Fortune 500 list and was ranked 15th on Forbes Global list 2000.