Friday, August 27, 2010

Cadbury Schweppes.................... Beverages on Block

On June 19, 2007, Cadbury Schweppes, the world’s largest confectionery company and the makers of popular Dairy Milk chocolate,in a significant yet surprising development, announced its decision to separate its American confectionery and beverage businesses to concentrate more on it confectionery business. The move assumes significance as earlier, in March 2007, the confectionery major had stated that it would either sell or demerger its Americas Beverages, which owns brands such as Dr Pepper,7Up,Sunkist, Snapple, and Hawaiian Punch. However, executives at the London-headquartered firm stressed that it was not a surprise move as the confectionery giant-as stated by Ken Hanna, Cadbury Schweppes’ CFO – had “been working on the possible separation of beverage for at least a couple of years”. Such explanations in the media by some investors that the British giant might itself be up for sale. Some investors even speculated that Cadbury’s decision might have been influenced by the US activist investor, Nelson Pletz, who recently acquired close to 3% stake in the British major.

The transport and General Workers’ Union (T&G), which has some 2,000 of Cadbury’s 3,500 UK workforce as its members, has expressed concern about Pletz’s intentions.”Cadbury is iconic British brand and a very successful company which does not need the attention of Pletz”, said Brain Revell, T&G National Organizer for food and agriculture. He termed Pletz’s intervention in Heniz as “a ruthless pursuit of profit for share holder”.He added, “Cadbury, with its Quaker background, has been an enormous success for all its stakeholders and shareholders as well as its workforce.

Thursday, August 19, 2010

Japanese real estate boom or a bubble

The US sub prime crisis in several ways is reminiscent of the property bubble that took place in Japan in the 1980s. The two events, though separated by almost about two decades, share several striking similarities. Both bubbles were inflated by heavy speculation which, in turn, was fueled by a combination of easy availability of finance and an explosion in new, complex financial products. At its dizzying height, property prices in Tokyo’s Imperial Palace valued more than the entire land in Florida. During the 1980s, Japan’s economy experienced rapid surge in asset prices, increase in money supply and credit, and an expansion of economic activity. What further led to the emergence and expansion of bubble were factors like protracted monetary easing, taxation and regulation biased toward accelerating the rise in land prices, progress of financial deregulation and aggressive behavior of financial institution. During the bubble period , Japan implemented policies that facilitated easy credit Japan and organized large trades through loans from banks. The most famous economic bubble lasted from 1986 to 1990 and it has taken Japan over a decade now it recover from that crisis, although banks are still grapping to clean their balance sheets while land prices are on a journey down south.

While such atrocious valuations may be missing from the US real estate scene, the fact is that the US housing prices kept pace with and even outpaced inflation consistently till 2005.

Between 2000 and 2005, the housing pieces in the US leapt up from about 5% to close to triple the digit. The mortgage lenders dearly with many of them, including Citigroup and Merrill Lynch, writing off billions of dollar question is there any lesson to be drawn from the Japanese assets bubble?

Friday, August 13, 2010

China become the largest technology exporter of the world

China was once viewed by the world a manufacturer of low quality and low priced products such as toys, apparel and textiles. However ,this perception is no longer valid.

It is rapidly emerging as a world class producer of advanced technology products, including semiconductors, fiber optics, pharmaceutical, etc. China’s incredible economic growth has been achieved mostly by its trade and export supremacy. Low manufacturing costs, abundant technically-skilled labor and thriving consumer market have pushed China towards becoming a global manufacturing hub.Its ‘global path’ has stretched significantly. It is now the world’s largest producer of the mobile phone,PCs,and cameras.The huge domestic market is attracting mammonth hi-tech firms worldwide,which have found a ninch in China. The country is in the process of becoming a technology superpower soon.For instance,though a meager 8% of Chinese have access to the internate , this equates 100 million people online, second only to the US. China replaced America as the world largest technology exporter.

Nonetheless, China has long way to go before it could catch up with the US on the technology front. The gap between both the countries in terms of progress in high-technology. The dragon is slowly gearing upto challenge the American dominance in the technology world.The main problem with the Chinese electronic sector is that most of the branded producer facing the problem from duplicate items with low quality.Suppose a black berry device which is a branded company provide new feature and gadget in there new model,the feature model with same name available in China with low prices,this will hamper goodwill of the company.

Thursday, August 5, 2010

Food prices vs biofuel

The food prices across the globe hit a record high,and show the signs that they will go on rising this year too as well as in future .In fact ,expert are says that year of cheap food over and the world economy has get used to it .The reason behind the spurt in food prices is certainly not bad harvest,but turning too many foodgrain into fuel.More over the increasing in demand of the biomass energy is also diverting agricultural production away from food crops,leading to mass starvation in poor countries.
The skyrocketing oil prices are driving the demand for biofuels. The increasing demand of biofuels indicate that the prices of the basic staples food such as corn is no longer based on its requirement as a food ,but also a fuel.Accordingly the food market is under going a major change,and there is an unexpected rise in the prices of food grain such as wheat,corn,maize and soybeans around the world.

Biofuels are commercial crops and here the return are much higher than the tradition food crops.
Regular cultivation of the food grain also reduce the productivity of the field so production of the biofuels also help to get achieve the recycle of the food grains.

Western countries are highest suppliers of food grain the world market.Canada,US and Australia are the main source.Asian countries produce huge food grain but most part of the production consumed by themselves.So, very low portion go to the world market which not affect the world trade of the food grain.
It is the problem for all countries so it is important to think on this to get the solution.