panies 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 gov-

ernment.

Provision regarding imple-

mentation of advance pricing

agreement to be introduced

in finance bill 2012. Micro

Finance Institution bill 2012,

pension fund regulatory and

development authority bill

2 0 1 1 , b a nk i n g l a w s

(amendment) bill 2011 and

insurance laws (amendment)

bill 2008 to be moved in the

session of the parliament are

positive for the financial sec-

tor, recapitalization of PSUs

bank is expected 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 invest-

ment, including bank depos-

its. Micro finance institutions

bill, which will supersede

state government laws, will

provide a big boost to the

struggling micro finance in-

dustry.

Cont…..on Page 4

aggressive policies like disin-

vestment 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

government‟s introduction of

new schemes. Some subsi-

dies, while being inevitable,

may become undesirable if

they compromise the micro-

economics fundamental of

economy. Endeavour to keep

central subsidies under 2

percent of GDP in 2012-13.

Over next 3 year, to be fur-

ther brought down 1.75 per-

cent of GDP. A recommen-

dation of task force headed

b y S r i N A N D A N

NILEKANI, a mobile-based

fertilizer management system

has been designed to provide

end to end information on

movement of fertilizers and

subsidies.

FOREIGN DIRECT IN-

VESTMENT 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 opportu-

nities but it is a capital ori-

ented industry because of

technology and infrastruc-

ture, is now more open and

have options, Aviation com-

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 junc-

ture where economy is re-

covering, 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 consid-

ered by Government. All and

all mixture of expenditure

and collection, attracting

more investor and make IN-

DIA accessible as an invest-

ing destination is of prime

concern.

The Government is planning

to recover and correct the

fiscal deficit situation in

Fy13 by implementing sev-

eral revenue augmentation

measures, mainly tax reve-

nue and expected to end the

year with fiscal deficit at

5.1%. The increase in excise

and service tax and some

Health of Budget.

Inside this issue:

The IPL Business is Here to Stay.

2

The Eclectic Paradigm. 3

Do You Know?? 3

Quote for the Month. 4

April 2012

Volume 1, Issue 10 Mi`bytes

BUSINESS LETTER Masters of International Business

Centre for management Studies

Jamia Millia Islamia University

It's said – 'IPL to Cricket is what Page 3 to Journalism' A harmless hilarity and money-minting ma-

chine. 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 limited-overs 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 mid-

sized 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 busi-ness of sport is hardly quantifiable in the regular sense of more established ways of running com-merce. 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. 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 hap-pened 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 micro-phones 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.

THE IPL BUSINESS IS HERE TO STAY.

“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.”

Mi`bytes Page 2

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 en-

abled them to reduce the transaction cost through the internalization process. Internalization advan-

tages arise because of the exploitation of technology and the location and other advantages accru-

ing 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 oc-

cur 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 con-

trol over technology and its coordination with the host country resources would promote R&D ef-

forts, 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 com-

petitive 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 para-

digm 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 trans-

actions.

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 ”

THE ECLECTIC PARADIGM.

Volume 1, Issue 10 Page 3

We‟ve 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 .

Hewlett Packard – The coin toss.

DO YOU KNOW??

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”.

Cont...from page 1

The budget has introduced

several measures such as

lowering the rate for with-

holding tax on interest pay-

ment on three year ECBs for

funding infrastructure pro-

jects and encouraging public

private partnership in road

construction project by al-

lowing ECBs for capital ex-

penditure on the maintenance

and operations of toll sys-

tems for road and highways.

Power sector is another sec-

tor 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 80-

1A benefits until FY13.Other

positive announcement for

the power sector including

tax free bonds for financing

the power sector, allowing

ECBs for part financing ru-

pee 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.

By-Mohammad Furquan

1st Year MIB , JMI.

Health of Budget.

E-mail: 2006.samik@gmail.com,

mohammadfurquan1985@gmail.com

Phone: 8860223083, 9716926240

CMS, MIB

EDITOR-IN-CHIEF:

Prof. SAYED WAJID ALI

STUDENT EDITORS:

MOHAMMAD FURQUAN.

NAMITA DHAMANI.

SAMIK SARKAR.

For Previous Editions Pleases Visit http://www.slideshare.net/mibytes/documents

Quote For the Month

“Success is a lousy teacher. It seduces

smart people into thinking they can't

lose.”

-Bill Gates