Industries

“Citibank, a member of Citi, commenced operations in Singapore in 1902. Citi was known as Citigroup when Citicorp and Travelers merged in 1998 and adopted the trademark of the red umbrella. The Citi franchise is deeply embedded in the financial sector and the local community, with a long-term commitment to its customers and the country. With a presence in more than 100 countries” (CitiBank 2008), Citigroup is a leader in the financial services sector and a choice partner of corporations, consumers and high net worth individuals.

To remain a leading force, Citibank recognizes the importance of excellent recruitment and selection processes. Singapore is also a key centre of excellence for Citi in Asia and a strategic hub for regional management, marketing, operations and technology expertise, serving the transactional needs of Citi in more than 60 countries. Citi is Singapore’s largest banking employer, with some 8,500 employees. Fulyana Orsborn, HR director at Citibank, outlines her company’s retention strategies, “The right hiring strategy has a significant impact on staff retention.

At Citibank, staff attraction and retention are extremely important and we have a well-developed framework for ensuring the right people join and stay with us. Citibank is a huge financial institution offering outstanding career opportunities and mobility – factors that certainly assist us to attract high volumes of interested candidates. However, by selecting the right people who not only bring the right skill set but who also fit within our culture and shared beliefs ensures a harmonious working environment where staff are more likely to stay” (Human Capital Magazine – Australia 2008).

CitiBank has a strong organisational focus on providing an attractive working environment and the initiatives in place to sustain this are numerous. CitiBank ensures new starters are rapidly assimilated through a structured program with their manager. CitiBank does this by “providing individual staff development plans, by ensuring clarity regarding what is expected” (Human Capital Magazine – Australia 2008).

Their managers are educated and trained to provide mentoring and goal-setting for their employees. Citibank’s initiatives are constantly evolving and developing. A regular Voice of Employee surveys is conducted to gain feedback from staff to ensure things are on track and to identify areas for improvement. CitiBank also fosters a culture of collaboration between managers and subordinates to further extract feedback and suggestions and provide an excellent benefits program.

Citibank is committed to developing staff and they see it is a critical aspect of their staff retention strategy, it is done through “individual staff development plans that provide the framework for focusing on career growth and career progression through talent identification and development” (Human Capital Magazine – Australia 2008). Individual plans set in place a framework for goal-setting and may include steps for achievement through formalised education, mentoring by senior colleagues, courses, classroom training, E-learning and networking events.

“For many staff members, career development forms a major reason to stay in an organisation” (Institute of Policy Studies 2008). Citibank also has the Management Association program (MA program), a formalised program for high-performing and achievement-driven individuals. This program provides an invaluable opportunity to fast-track careers by giving management associates experience across the business areas, courses, and guidance from senior mentors. “Best Practices” in CitiBank

The bank’s strategy has always been to “attract the best talent by leveraging on its strong brand name, meritocratic practices and the opportunities it offers as a diverse and global organisation” (CitiBank 2008). Cost effectiveness and the incorporation of best practices are also rigorously pursued in the recruitment process. The selection process includes a vigilant screening for competencies, skills, experience and integrity before an offer is made.

“Supervision and management have much to do with employee satisfaction and retention rates” (Arthur 2001). Several studies are cited that address the importance of developing strong relationships with employees and creating a work environment that demonstrates the value of employees and an environment characterized by good communication, recognition for good performance, including employees in on matters that impact them, providing opportunities to grow and learn, and offering work that both matters and is challenging.

When an employee feels that their basic needs are not being met, they begin the process of leaving the organization, and some will stay physically on the job even though they are emotionally absent. Lawler (2008) identified the following reasons employees leave: unmet job expectations, poor job fit, lack of coaching and feedback on performance, lack of professional development and promotional opportunities, not feeling valued or recognized, workplace stress due to job demands and work-life balance conflict, and lack of trust and belief in senior leadership.

Good supervision and management skills can do a great deal to correct these problems. Employing a coaching model with employees, keeping employees informed, striving to allow employees to participate in the decision-making process, and being friendly and professional with employees are just some of the behaviours that are recommended “Talent building over the years has allowed Citigroup to rely significantly on internal channels to fill key positions” (CitiBank 2008).

Its Talent Inventory Review (TIR) process is one of the most successful sources of recruitment for executive as well as managerial positions as candidates have proven fit with the Bank’s corporate culture. The purpose of TIR is to “assess the current performance and future capabilities of the company’s leadership team” (CitiBank 2008). It assesses the individual’s personal profile, including qualifications, experiences and career interest, and designs a development plan for each high potential staff.

Through disciplined and consistent practice over the years, it has become a robust succession-planning tool built on a comprehensive talent inventory database. The process is also helpful in determining the leadership team’s readiness to compete in the marketplace by examining the performance and growth potential of individuals and integrating this information across the diverse functions and businesses of Citigroup. It also highlights the “staffing and development actions needed to build and maintain a world-class leadership team” (CitiBank 2008).

From the staff’s perspective, it provides them with a vehicle to assess their performance, professional skills and development needs against their long-term career objectives. Talent attraction practices Activities conducted to attract talent occur first in the recruitment process and are the most crucial for determining recruitment and staffing success. The maximum value of a recruiting cycle is fixed once the applicant pool is established. According to Harriot et al. (2008), to attract the best, companies need to stand out from the rest by incorporating the best practices.

Research and insight analysis of several companies known to have a rich inventory of talents shed light on how they win this war on talent by leveraging their employer branding practices. Progressively, companies are lamenting the lack of suitable candidates to fill open positions. The war for talent is not new and will continue to be so given the characteristic of an increasingly complex and competitive landscape. Johnson (2002) suggests, winning the war for talent, organisations must be aggressive in establishing their corporate brand.

While many may know the benefits that an “employer of choice” can bring; from attracting high calibre job applicants to having attrition rate well below that of competitors, not many actually know how to go about positioning themselves to be one. “The main ingredient of a strong employer brand may be in its value proposition, but what is equally important is the consistency in their talent quest approach” (BNet Business Network 2008). Companies with superior value propositions have a compelling answer to why talents flock to them. A strong employee value proposition translates into a stronger pull on talents.

Companies with a winning employee value proposition (refer to Figure 1) understand what motivates talents and put it into practice. Great companies send a clear and consistent message that talents are valued before and after hire. As a company’s brand is owned by the public, consistency in the way it is portrayed to the public is critical to the healthy development and maintenance of it. Publicity is yet another attraction best practice in the industry. Even if one’s company is yet an “employer of choice”, that should not stop one from reacting to the onslaught of competition.

“By identifying one’s strongest selling point and getting the word out about it is a lot more useful than many traditional recruitment methods like participation in job fairs and advertising” (Axelford et al. 2002). Some of the most coveted practices that could be publicised include “flexible work arrangement, organisation’s support for innovations, promotional opportunities and prospects to learn and grow and lastly how performance is recognised and rewarded” (Harvard Business School 2006). Lastly, the industry should invest in innovative recruitment methods in order to attract a larger pool of talent.

As more and more organisations realise the value of a good hire, the need to look beyond traditional ways of sourcing surfaces. The lack of reach to the passive group of applicants inherent in traditional ways of recruiting is one factor that prompts organisations to tap into innovative sources for recruitment. “E-recruitment is one innovative method of recruitment that its use has been on the rise. E-recruitment is more than posting advertisements on the Internet” (McMilllan 2008). It is about leveraging a wide range of web-based technologies.

Perfil de la Compania Mead Johnson Nutrition. Mead Johnson Nutrition es, segun se describen a si mismos en su pagina web, un lider global en la nutricion de neonatos y ninos. Son mejor conocidos por sus familias de productos Enfamil® y Enfalac® de alimentacion infantil, asi como por sus productos regionales Enfagrow®, Enfapro®, Enfakid®, EnfaSchool®, y Sustagen® en Asia, y Choco Milk® y Cal-C-Tose® en Mexico y America Latina. Sus ventas a 31 de Diciembre, 2007 han sido de aproximadamente $2. billones, destacando los siguientes puntos: Lideres globales en ventas de formula infantil, basado en ventas retail. Lideres en US, basado en el share del mercado estadounidense. Lideres en el mercado asiatico, la region de mayor crecimiento en la industria de la alimentacion pediatrica, en ventas de formula infantil, basado en ventas retail. La venta de la formula infantil represento un 67. 2% y un 69. 4% de las ventas totales en los nueve primeros meses de 2008 y en el ano 2007 respectivamente. draw:frame} Durante los ultimos anos han lanzado al mercado continuos productos innovadores, por ejemplo: La fabricacion y distribucion se gestiona mediante la cadena de logistica totalmente integrada. Initial Public Offering El 10 de Febrero de 2009, Mead Johnson Nutrition Company anuncio el pricing de su salida a bolsa en $24. 00 por accion. El tamano de la oferta fue incrementado de los iniciales 25 millones de acciones a 30. Segun un comunicado de Bristol Meyers Squibb el dia de salida de la IPO: ‘Con su propia accion publica en trading, Mead Johnson va a ser mucho mas capaz de acelerar su crecimiento.

Esta oferta tambien permite a Bristol Meyers Squibb fortalecer su estructura de capital, asi como incrementar el enfoque en el portfolio de negocio de BioPharma, logrando aun otro punto de la estrategia en el negocio de la Sanidad que anunciamos hace poco mas de un ano. Nuestra direccion esta de acuerdo en que esta IPO es una fantastica noticia para los empleados de ambas companias. ’ En lineas generales, los terminos de la Oferta Publica Inicial fueron: Distribucion por subscriptores.

Entre los Global Joint Bookrunners y los demas subscriptores, la distribucion de acciones fue la siguiente: {draw:frame} Distribucion Geografica y por Inversor Aunque los datos oficiales no se han hecho publicos, diferentes fuentes nos pueden dar una idea de la evolucion geografica y del reparto por inversores entre tramo institucional y el retailer. En primer lugar observamos que el Greenshoe se ejercio en su totalidad, y que la oferta inicial de 25 millones de acciones fue ampliada con posterioridad a 30 millones, podemos suponer que la demanda institucional fue solida.

Sin embargo, sin datos mas solidos todo lo que podemos hacer al respecto es especular. Respecto a la distribucion geografica nos encontramos ante un escenario muy similar. Se sabe por fuentes cercanas a la empresa que el roadshow estuvo repartido entre Estados Unidos (siete dias) y Europa (dos dias), y que sin embargo, segun fuentes del Wall Street Journal (articulo de Heidi N. Moore), casi la mitad de los ingresos vienen del mercado europeo, donde la demanda de titulos fue alta.

Spinning industry of Pakistan is one of the oldest and well organized manufacturing industries of Pakistan. At the time of Partition, there were two big mills in Pakistan. However, in 2009, there are more than 450 spinning mills and nearly 12 million spindles are installed in Pakistan. These mills are providing yarn to local industry and have a significant share in international yarn trade. Furthermore, this sector has contributed a lot for the promotion of textile education and training in Pakistan.

Government of Pakistan imposed education tax on the mills for National Textile University, formally National College of Textile Engineering Faisal Abad. In addition, All Pakistan Textile Mills Association (APTMA) made a generous contribution to establish Textile Institute Pakistan in Karachi (APTMA 2008). Spinning industry is capital intensive in nature and needs a huge investment to put a mill into function. Furthermore, there is a need of continuous support of banks for the regular supply of fibers. APTMA annul report of 2008 depicts that spinning industry is in crises.

Nearly 20% mills have been closed down their functions and are facing crises. It is a serious matter since this sector is one of the sectors who have a significant share in employment, GDP and capitalization. If something happens wrong with this sector, it would be absurd for the economy of Pakistan. Financial Ratios and Spinning Mills of Pakistan One can have a deep idea about the future of firms from its financial ratios. These ratios are derived from the financial statements provided by the firms. This report is an effort to have an idea about the current problems and financial health of the mills.

Considering these ratios, one can develop an idea about the future of this sector. We did not find any combined report on the financial position of mills. This is an effort to give a comprehensive view of this sector. Significance and Implication of Financial Ratios: A Literature Review Financial Ratios are derived from financial reports of the firms. There is certain objectivity behind calculating the ratios. These ratios indicate financial health and strength of the firms. There is a long list of financial ratios. Sometimes, such long list can create some sort of confusion.

The user needs to array all available ratios and then has to group them under various heads. Such exercise can help user to earmark the useful ratios (Gombola and Edward, 1983). There is a logical connectivity among these groups since they are derived from the same source. Classification and selection of useful ratios depends upon the objectives as well as the business dynamics. This classification is based on the natural and instinct nature of the ratios. Chen and Shimerda (1981) have discussed the significance of financial ratios in evaluating the performance and financial position of the firms.

They concluded that such ratios also helped people to predict the bankruptcy of firms up to 90%. It shows that ratios demonstrate picture of the firm and one can anticipate the future of the firms. Rapid changes in business has forced business world to develop functional and practical financial ratios of the organization. There are many usages of these ratio but primarily these ratios are used for prediction purpose (Gupta and Huffier 1972). Beaver (1966) points out that ratio analysis is in use since the beginning of the nineteenth century and initially current ratio was common.

This ratio was used primarily for the evaluation of creditworthiness. However by the end of the century there are numerous ratios commonly under use. Beaver further states that useful of ratios is mainly linked with the objectivity if the study. Ratios are widely used in real business world and people rely on these ratios. These ratios are quite important for investor, lenders etc. On the other hand, academic world is moving away from this traditional concept and demands to develop a multivariate discriminatory model. Particularly, to predict the bankruptcy.

Altman (1968) writing about this idea developed a model which has given 95 % accurate results. Above debate is quite valid and needs a serious discussion. This debate reveals that there is a serious difference of opinion between academic world and real business world. Nevertheless, one thing is common that both agree that the ratios are quite useful for the prediction of future. The main difference is how one uses these ratios. This paper is an effort to assess the current financial health of a sector, which is very much important for the economy of Pakistan.

We prefer to apply traditional method to measure financial ratios. However we believe that for prediction of solvency, such limited knowledge is quite meager and needs in depth information to have a reliable result. There are certain issues while selecting and comparing the ratios. Literature is full of such discussions that selection of ratios needs a careful consideration keeping in mind the objectivity of the study. Chen and Shimerda (1981) discussed the issue regarding selection of useful ratios. They have tried to help people in selecting the useful by analyzing the empirical studies.

Their conclusion tells that there is no constant and set rule which may be useful in selecting the ratios. In our view such selection is of subjective nature and biased towards the nature and objectivity of the researchers. Financial ratios are derived for certain application. There is an emerging trend in transforming these ratios into a meaningful predicting model by using advance statistical techniques. Application of statistical techniques are providing useful results but accuracy and usefulness of these results are under question (Deakin 1976).

Application of statistical techniques depends upon some assumptions. As described by Deakin, it is not possible in all cases that such techniques can be used to predict the future of the firms. Statistics in its nature relies on the assumptions and it provides the probability of the outcome. Keeping this limitation Deakin does not support to use advance statistical tools rather prefers traditional use of ratios to assess financial health of the firms. Gupta and Huffier elaborate two main problems related to study of the ratios when these are used at macro level or for a cluster.

One is related to data validity and second selection of standards which can be used as benchmark. Without having any standard it would be highly difficult to comment on the number derived through financial analysis. Furthermore, current nature of business world requires to develop standards on a continuous basis to accommodate the rapid changes. We believe that there is also a third problem associated with these ratios and that is the acceptability of these standards. It is not like the measuring unit of a length or volume which is acceptable throughout the world.

Today, Dinners & Dinners LLC, an organic fitness and nutrition company launched by serial entrepreneurs and identical twin brothers Eugene and Vincent Dinners, announced that they will be hosting a seminar and product launch on September 27th at Columbia University on 16th and Broadway at 1 pm eastern standard time.

Of the company’s recent launch, Dinners & Dinners CEO Eugene Dinners said, “We wanted to launch a company that could genuinely help people by providing them with accurate information about health and fitness while also creating a first-of-kind disruptive product line that is proven effective, CEO-friendly, non-GEM, and USDA certified organic. The majority of the fitness industry is inundated with inaccurate misleading information and unhealthy artificial products that do more harm than good. D&D will change that. We are committed to helping people improve their lives by empowering them with the truth about fitness and nutrition.

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Introduction The global insurance industry seems to have escaped the worst of the financial crisis in comparison to other financial institutions. Day to day business has been relatively unaffected but the area that gave the most cause for concern has arisen from exposures to risky financial instruments. “The Reactions Magazine’s Global Insurance Conference 2009” was held in Swissotel, Zurich, Switzerland. At this conference the financial services industry tried to re set itself following the worst crisis for years. (www. euromoneyseminars. com). Insurance is an established industry.

Like other companies insurance is facing increased competition from global players. It has been difficult for insurers to accomplish profitable growth, so they need to improve this. They will need to adopt new advanced approaches to expand their distribution networks. This essay is divided into two sections. The first talks about the types of risks that are present in the global insurance industry. I will take each of these points and discuss them in detail: growth, governance and risk management, market reporting, mergers and acquisitions, human capital and lastly compliance and regulation.

The second section looks at the opportunities that are available to the global insurance industry within the next twelve to twenty – four months. They include: disaster modelling, disaster planning, managing the industry’s reputation, grow globally, innovative products and delivery and Focus on readdressing product and distribution strategies. The insurance industry is always looking for new opportunities in different services and geographies. To take advantage of these opportunities insurance companies need to re-examine their strategies and be prepared to drive basic changes in the way they work. The primary function of insurance is to act as a risk transfer mechanism. The basic principle of insurance is that the losses of the few are paid by the many. Its underlying purpose is to provide protection against the risk of financial loss, thus giving peace of mind to the policyholders. ” (www. peerpapers. com) Challenges are getting bigger for insurers as an increase in pressure for bigger profit margins. This means taking a hard look at reducing costs and top line revenue growth. Making a profit is due to the ability to accurately assess risk and look after customer relationships over time in order to get financial success.

I am going to look at the following six challenges. 1. 1 Growth After a spell of cost cutting and readjustment, insurers are again moving up a gear and trying to strive for managed growth. While growth is valued by investors, it is hard to find in the fairly mature insurance industry. To be successful in the future companies will need to create and design new products and services, cross – sell more effectively, strengthen their ties with brokers and agents and avail of any opportunities presented by emerging markets such as China and India. (www. pwc. com).

Further demand for pensions and health insurance is likely to rise in the Western world as the population ages and lives to enjoy a longer retirement. Costs will remain critical however to meet the ever exacting demands of today’s customers is liable to be the main point of contention. There are new openings from the increasing wealth of customers in new markets e. g. China. As their insurance industry is one of the fastest growing in the world with GDP at 3. 2% and the end of December 2008, they stand far behind the global average of insurance industry which stands at 7%. www. lloyds. com) Saturation of insurance markets in the developed world has made the Indian market more attractive for international insurers according to “Booming Insurance Market in India (2008-2011)”. This is due to its huge population base and large untapped market. (www. newsblaze. com) 1. 2 Governance and Risk Management Natural calamities are another challenge facing the industry. Global warming has caused a change in weather patterns which have caused a shift in the underlying probability of insured loss by storms, floods, wind and heatwaves.

Natural disasters like hurricanes Katrina and Rita whose losses amounted to $61. 5 billion (www. duncansadviceonmmoney. vox. com) These disasters posed some very serious problems for the insurance industry as they are faced by difficult and uncertain financial burdens because of this this has shown the importance of quality data and calibration of model outputs, effective validation and also the experience and initiation of the underwriter. Structures will have to be put in place to tackle the threat of climate change.

The development of Enterprise Risk Management (ERM) capabilities help to protect insurers from damages to their reputation and provide a platform for strengthening governance, decision making and compliance with regulations. Pricewaterhouse- Coopeus (ERM for the insurance industry) revealed that many insurers have difficulty implementing and enforcing ERM in the face of containing data, systems and governance challenges. Also found in this study were examples of how resourceful and efficient management and helping to overcome these hurdles and bring greater insight to the insurers ERM missions. www. pwc. com) 1. 3 Market Reporting Insurers are facing a major overhaul of market reporting. This contains the launch of the market Casistent Embedded Value Principle, a planned move to a finalised IFRS level for insurance contracts and the increased risk and capital management disclosure foreseen by EU Solvency II “Scheduled for implementation in 2012, it is a new regulatory regime designed to provide a principles-based supervisory framework for European insurers and reinsures.

Solvency II is a risk-based system and is being built to meet the challenges of rapidly developing financial markets. It will also bring an increased level of transparency and harmonisation to the sector“. (www. towersperrin. com). These changes are likely to set a model for global disclosure for others to follow in relation to risk. The key elements , include the possible adoption of IFRS(International Financial Reporting Standards) in the US form 2014. Implementation of Solvency II and IFRS reporting will be demanding.

The good news is that corresponding timings and basis of valuation could open up cost – savings in areas like data, modelling and reconciliation. These changes help to increase stakeholder confidence by enabling insurers to show a single view of their business that shows more clearly how it is run on the inside. A survey by (IFRS 2007) insurance states that companies will need to provide more risk information and explanation to meet the exacting expectations that have come about from market events. (www. pwc. com) 1. 4 Mergers and Acquisitions Although funding is a challenge from time to time.

Mergers and Acquisitions is vital for business to expand complementary earnings streams, realise opportunities for cost saving synergies and reinforce their existence in fast increasing emerging markets. Emerging markets are underinsured and these present potential business for the insurance market. Within ten years China is expected to become a leader in the global insurance market, while India is set to double its digits in the growth rate. However, due to cultural conflicts and protectionism could stop growth in economies. In the near future, the insurance industry is liable to be a very active period for mergers and acquisitions.

US insurance companies attractive evaluation will make it easier for insurers in the EU to infiltrate the US market. (www. pwc. com) 1. 5 Human Capital All organisations in the world realise the importance of people in the conduct of their business therefore the trend of classifying their employees as assets. The human resource management school of thought tends to focus on the enrichment of the knowledgeable worker in terms of its theory. Human resource planning should be part of the total resource planning equal to planning devoted to capital development and materials and equipment purposes.

Many insurers are facing an skills shortage in their workforce. Training and development of staff is now on the agenda as a rule in all organisations. Improved productivity is expected to result in trained and motivated workers. The employee training programs are intended to provide them with more knowledge and skills so they can do their job to the best of their ability. Training is a visible pay-off and is seen immediately whereas development is future- orientated.. Lessons are being learnt on a continuous basis in the requirement of human capital in the new economy in comparison to the old economic labour force. M Morley et al 2004). This investment in recruitment and career development lags behind other financial sectors. They look at short term fixes rather than looking at the long term prospects. However, looking to the future demographic shifts accelerating globalisation look set to change the shape of the labour market and make it more difficult to attract and retain good people. (www. pwc. com) 1. 6 Compliance and Regulation Growing regulatory demands are bringing increased problems to insurers. Solvency II is included to require a critical check of capital and risk management along with sustaining information and documentation.

The EU Reinsurance Directive gives a standard system of regulation and mutual recognition across Europe. This includes an ease of the regulatory limitations on securitisation which could give way for a large increase in risk transfer to the capital markets. Also they give a new definition of reinsurance that will prevent several contracts. Insurers are also facing a ceiling on regulatory changes including anti-money laundering and harder conditions on consumer protection. A key challenge is to know how to include these requirements into “business as usual”. Enterprise wide risk management can assist in providing ways to do so.

They can help by giving a greater understanding of the trade off between reward and risk which will result in a brighter capital allocation. (www. pwc. com) As I have discussed in the challenges previously opportunities in the next twelve to twenty-four months can be found by global expansion adopting the latest technologies to give better service delivery and provide services to meet the exacting requirements of the next generation of retirees. The insurance industry is in the process of undergoing transformation as a result of the following three factors : sector specific, macro and operational.

Increased regulation requirements outsourcing, globalisation, new distribution channels, more modern IT systems and climate change are adding to the increased volatility in the insurance industry today and they are now positioning themselves to be successful in the future that requires many changes in the way they do their business. China is one of the fastest growing insurance industries in the globe. “China Insurance sector forecast 2013” is the outcome of much research and in – depth study of the insurance market in China. Between 2009 and 2013 it is expected to grow CAGR of 28% – 30%.

Chinas insurance industry is already out of the financial crisis and is expected to make great headway in the coming years. In 2008, the industry grew in the fastest pace since 2002, due to the rising insurance awareness level and government support. Insurance products which include life, health, and personal accidents accounts for the majority of growth. Property insurance products are also growing rapidly and are basically divided into two segments “motor and commercial property insurance”. Non life insurance products i. e. that is product liability, credit and marine insurance etc.

These will decide the long term viability of the non- life insurance market. 2. 1 Disaster Modelling The tragic impact of the Asian Tsunami, as well as the worst Japanese typoon in 2004 was the year of improbable disasters. As a result, this forces us to look at how we prepare for such risks. Hurricane forecasting began in the 1980’s, forecasters have tried for many decades despite being unsuccessful to deliver accurate predictions, and landfall activities. Scientists of tropical storm risk in London announced that they had developed a new model which represents a major step forward.. (www. lloyds. om) Insurers also use models developed by companies e. g. Air Worldwide Corporation to predict the damages caused by storms so that insurers can forecast the payouts to be made. (www. informationweek. com). This reminds us of the importance of investing in scientific research to help our understanding of risk and its impact 2. 2 Disaster Planning Insurance and disaster planning are closely related as they both deal with the risk of the disaster happening and the after math. Due to the upward trend of catastrophe events we see the need for robust and effective disaster planning for the future.

Part of the solution must be insurance markets and their regulators working together sharing their respective knowledge and expertise. By doing this, we can be sure that response procedures are well tested and run as smooth as possible for when the next disaster strikes. In terms of claim handling, lessons can be learnt. The shortage of adjustors on the ground and the mishandling of claims by some shows how important the relationship between the insurer, the adjustor and the regulator is. As the frequency and cost of disasters goes upwards it will be very important to have a relationship based on trust and flexibility. (www. lloyds. om) 2. 3 Managing the Industry’s reputation Improving transparency and disclosure are two issues which are needed to manage and improve the industries reputation that has been rocked by high profile developments. For instance in the USA the New York State Attorney Generals investigation sparked very close scrutiny of the commercial insurance market. In the minds of customers, commentators and regulators the financial service industry has been left with a very poor image, after the recent investigations. These investigations highlighted the lack of transparency and accountability that are expected of a 21st century business environment.

These issues can no longer be ignored. In a survey, by Lloyds of a hundred underwriters, one third admitted that the industries reputation is tarnished. Transparency and disclosure as well as good communication appears to be the answer to those outside the industry globally. Basically more time communicating and building bridges with consumers, economic leaders and world politicians initially means less problems down the line. (www. lloyds. com) 2. 4 Grow Globally Sales in new markets or by new acquisitions insurance companies need to grow globally more than ever before.

Growth in the European and American market is slowing down while growth in India and China is increasing. The aging population presents insurers with a dilemma. The industry has great difficulty in attracting and retaining talent than other sectors of the financial services industry.. This situation is going to get worse as there are more retirees and fewer graduates moving into the top jobs. There is also a loss of graduates to banking and other financial institutions. Concern is expressed about the career path from insurance company hire to insurance agent.

If this problem is not addressed the industry’s sale force would diminish. By moving into the European and American markets, insurers can grow a less risky strategy rather than expanding into new product lines. Those who do go overseas have to look at the various business lines in different markets. Chinas middle class and aging population with long term care and security needed make it a very viable option for foreign insurance companies. By 2010 China will be a major player on the insurance market. The same is also said of India. (www. rmislab. com) 2. 5 Innovate Products and delivery

Innovation is seen as the main driver of profit over the next three and five years both in delivery and product innovation. By building relationships with customers moving them for example form car insurance to other insurances as they become asset rich. By providing better service and delivery insurers can strengthen their customer base. Technology can strengthen relationships with intermediaries which helps them run more efficiently and reduce their running costs. Insurers must look to cut cost they can do this by cost reduction initiatives like outsourcing and use of shared services, rationalizing product portfolios .

Companies need original approaches and to continue to invest in this very complicated environment. (www. rmislab. com). “In 2007, AXA Equitable Life Insurance Co introduced a variety of enhancements to its variable annuities including an expanded choice of “living benefits” and the upbundling of optional income and death benefits” (www. deloitte. com) 2. 6 Focus on readdressing product and Distribution Strategies As the economy continues to even out, insurers need to evaluate their decisions and distribution channels.

These decisions are vital in assisting insurers rebuild capital as well as positioning themselves for future growth. (www. ey. com). Insurance companies that sell directly through call centres, internet and direct mail have been performing better and this is due to lower costs because of their economies of scale and strong internet capabilities. Compared to independent insurance agents who lack these advantages have been put under pressure they require support and further development. Insurers need to find ways to work more effectively across product lines e. . give a customer packages that reward him/her for being a good driver. (www. deloitte. com) Conclusion In my findings I have found that the insurance industry has survived the financial crisis much better in comparison to the banking sector. This is due to its strong focus on risk management and long term prospects. Even though capital markets have decreased downwards their insurance assets, insurers are optimistic about the future and some are expecting an improvement in prospects in mergers and acquisition over the next twelve to twenty – four months.

The global insurance industry faces many challenges but despite these that they are being faced with the majority of insurers must move into fast growing markets i. e. India and China or find new innovative ways to get more businesses out of slower growing developed markets. China with its huge population is an obvious choice while the latter options include diversification, new products and speciality products. Insurers need to improve their risk management especially in the areas of disaster modelling and managing the industries reputation as it is vital to have a tarnished free reputation.

Finally insurers need to work effectively and efficiently to develop and market a range of products aimed at older customers. In this intensely competitive market, employers will need to develop an excellent human resource management capable of responding to business needs and the workforce expectations. They will need to be able to identify and realise opportunities for career development prospects and other key areas of their employment. (www. pwc. com) With this knowledge insurers will be able to position their business models to optimize investment returns and control operations using the most effective and efficient methods available.

Introduction The cigarette industry is highly controversial. While facing increasing regulations worldwide, it persistently presents large profits for its main players, posing an interesting paradox. Since the sass’s the worldwide consumption of cigarettes has been increasing, yet at a slower rate in the recent decades (Appendix 1), reflecting the negative growth in sales among developed nations (Gauguin et al. , 2003). Concerned about public health, governments worldwide have been fighting consumption since the sass’s through increasing taxation and tightening regulations. Rumination, and only 27 countries have tax rates higher than 75% of the retail price. After the widespread policies of banning smoking from public spaces and having health warnings on the packages, EX. countries are soon expected to follow Australia in adopting plain packaging. The comparison of two fundamentally different market environments in Italy and Saudi Arabia yields vital information on the challenges the cigarette industry faces and the strategic orientation its main players should take.

The results of this analysis will be applied in the last part in order to formulate a comprehensive strategy recommendation for a particular company operating in Saudi Arabia. 2. Evaluating the market attractiveness in Italy and Saudi Arabia 2. 1 . General market characteristics Appendix 2 summaries important general market characteristics of Italy and Saudi Arabia. It is worthwhile highlighting that despite Italy being the more populated, more developed and richer country, the population in Saudi Arabia is younger and faster growing and annual income per capita too is increasing at a faster pace.

In addition, Appendix 2 reveals that smoking prevalence is increasing in Saudi Arabia, however, unevenly distributed between men and women. Moreover, the relative price f cigarettes to average household income which should have a significant impact on the consumption of cigarettes (Guiding, 2003) differs dramatically in both countries. In fact, real prices of cigarettes in the Middle East have almost halved, whereas in the EX. they increased by 9,2% (Appendix 3). 2. 2. Five forces analysis Italy and Saudi Arabia Internal Rivalry With Heralded indices of 3307 for Italy and 3700 for Saudi Arabia, both markets are highly concentrated oligopolies dominated by the same four companies (Graphic 1). MIMI is – with over half of each market’s sales – the leader in volume shares, followed y BAT with less than half of Mi’s shares. Interestingly, JETS and TIGHT occupy positions 3 and 4 in Italy but switch roles in Saudi Arabia.

Due too production ban in Saudi Arabia and take-oversee in Italy, there are no local brands in either market. Graphic 1: Source: Remuneration International 2012 In the multi-stage scenario, the saturation of the markets discourages from price wars since there is no further volume to be generated, instead companies in this highly concentrated industry engage in careful cooperative pricing to exploit current demand without destroying profits (Italian Antitrust Authority, 2003).

Table 1: MI stands for Philip Morris International BAT stands for British American Tobacco TIT stands for Japan Tobacco International 4 ITS stands for Imperial Tobacco Group Table 2: The most striking difference regarding internal rivalry in the two countries is the adverse development of industry growth. Despite still being the bigger market (graph), Italy decreases at a rate of 1,4% annually. The cigarette industry in Saudi Arabia on the contrary grew by 28% in five years and forecasts of 38% volume growth until 201 5 suggest its role as rising star (Remuneration International 2012).

Increasing price-elasticity, especially in Europe, countervails historically high brand loyalty of Italians and could leave internal competition more fierce than before (Gallus et al. , 2006). Combined with increasing smoking restrictions as well as marketing regulations, this could, in the future, endanger cooperative pricing in favor of cutting prices in order to steal less loyal customers from competitors in a shrinking overall market. Therefore, despite minor differences, internal competition in both markets can presently be considered low, however with the prospect of a attention increase in Italy due to the described developments.

Entrants Threat of entry, determined by attractiveness to enter the market and barriers to doing so, is substantially different between the two countries. While Italy’s high taxation (57% of retail price), its downward sloping demand for cigarettes, strict smoking restrictions and regulations on marketing, as well as the increasingly old population shed doubt on the market’s long-term attractiveness (WHO, 2010), Saudi Arabia can score with the opposite development and an attractive target population characterized by low average age, increasing incomes and less general health wariness (Remuneration International 2012).

The superior scope of actions possible to companies operating in this market makes entry into the Saudi Arabian cigarette market more desirable in the long run. However, there are comparably high structural barriers to entry in both markets. Cigarette companies generally require high volumes to operate on efficient scales (van Limit, 2002). Highly automatic production processes require fairly heavy upfront costs and the trend away from auctioning towards direct contracting with farmers favors established relationships of incumbent firms with particular farmers (Hull 002: Tobacco in Transition).

The limited possibilities of marketing new products are particularly for the Italian market as can be seen from Yokes, an Italian cigarette company successfully operating in Korea that fails to properly penetrate its local market (Yokes, 2012). Saudi Arabia, in contrast, potentially faces a more serious 5 threat of entry by the Chinese Honing Group, the biggest cigarette company in volume terms which is trying to enter the Middle Eastern market (Hadley, 2011).

Being one of the largest manufacturers globally, it is most likely to overcome many of he mentioned barriers due to the already established infrastructure and the internal capital market to subsidize heavy marketing. Overall, the superior attractiveness of the Saudi Arabian market combined with the relatively easier entry leaves threat by entry higher than in Italy. Supplier Power Regarding threat by suppliers, such as farmers, situations in Italy and Saudi Arabia differ largely.

Due to the fact that cigarette companies operating in Saudi Arabia import their cigarettes, there are no direct influences of suppliers on the Saudi Arabian cigarette market in particular. Since Italy, however, does still produce cigarettes (World Tobacco, 2008), it faces potential threats by suppliers. The supply side of the cigarette industry is characterized by low concentration, which makes coordination against the few cigarette giants difficult.

Farmers are lacking possibilities to differentiate their products and instead of threatening with forward integration they are increasingly confronted with backwards integration by big cigarette companies. The before- mentioned shift from “auctioning” as the primary supply channel to direct contracting results in a decreased power of farmers. Around 80% of all transactions are negotiated directly between a cigarette company and particular farmers, determining price and quality criteria in advance and leaving farmers with all risks and little to no negotiation power (Hull 2002).

Furthermore, practices by tobacco Ones, such as Mi’s Good Agricultural Practices, which determine mandatory criteria for suppliers (e. G. No child labor) additionally diminish supplier power (MI, 2012). In general, it can be concluded that supplier power is negligible and neither an issue in Saudi Arabia nor significantly in Italy. Buyer Power The distribution channels of cigarettes are remarkably different in Italy and Saudi Arabia. In Saudi Arabia various channels coexist.

Supermarkets/hypermarkets and small grocery stores (mainly independent: e. G. Backslash) each sell around 40% of total cigarette volumes and leave the rest of the shares to various other players, such as tobacco specialists, bars, hotels and restaurants (Remuneration International 2012). Italy, in contrast, requires possession of a 6 license to sell cigarettes, which essentially leaves the market with a single distribution channel of privately-owned Tobacconist shops. This diminishes the market.

The fact that – unlike in Saudi Arabia cigarettes are essentially the only products sold by Tobacconists further decreases their power, because it creates a potential hold-up situation for the cigarette giants once the specific investment into being a Tobacconist has been made (Bespeak et al. , 2010). In Saudi Arabia, retailers have a slightly higher power over cigarette companies engaging in relationships with them for mutual understanding of each other’s strategies and to discover potential cooperation areas (BAT, 2012).

This “privilege” would be unimaginable for small Italian Tobacconists and could thus be interpreted as a means to tie powerful buyers to one’s own business and establishing relationship-specific investments on both sides (lock-in). To sum up, distribution is not a threat to industry profits in either country. Buyer power in Italy is very low, whereas in Saudi Arabia the distribution system and the presence of big retailers allows for some negotiating possibilities.

However, this phenomenon has not been documented and the potential power of buyers in Saudi Arabia is cleverly turned into an advantage by the cigarette companies which not only try to benefit from relationships with retailers but also exploit the power of distribution channels in terms of marketing. Substitutes Both countries are characterized by large substitute consumption. Whereas in Italy the high cross-price elasticity between cigarettes and RYO tobacco makes this the primary alternative to cigarettes, RYO only plays a negligible role in Saudi Arabia.

Instead, Aisha tobacco is by far the dominant category in volume terms in Saudi Arabia (Remuneration International 2012). The unmatched popularity of Aisha Table 3: tobacco is based on its traditional unction and social acceptance as less harmful (Remuneration International 2012). Saudi start smoking Aisha at earlier age paving the way impressive growth rates such as 24% in only five years International 2012). The market is dominated by many small local companies and brand establishment is said to be difficult.

This 7 suggests that prospects of entry by big cigarette companies into this market do not suggest high profitability. Whereas RYO is actually luring away consumers from cigarette consumption in Italy, Aisha tobacco in Saudi Arabia is not a reason for smokers to quit and substitute cigarettes. Therefore, this particular substitute threat is to be taken seriously but it could even be converted into an opportunity for cigarette companies to learn and expand the overall market by attracting Aisha smokers.

Although occupying only about of the amount of cigarettes consumed annually, cigars’ substituting function has to be taken into account too due to two facts: their unprecedented growth of 53% in only five years and their inferior affection by regulation (Remuneration International, 2012). Increasing incomes and the tendency to demonstrate status with luxury accessories have given cigars as a humbly of wealth and power an impressive upswing.

Taken all together, the threat by substitutes can be estimated high in both countries. However, the opportunity offered by the Aisha market as well as the monopoly-like situation of tobacco in the ‘relaxation-market’ (alcohol is forbidden) partly offset this effect, leaving threat by substitutes in Saudi Arabia medium. 2. 3 Final evaluation In order to provide a more sophisticated industry evaluation, a regression analysis revealing the true drivers of cigarette consumption would have been necessary.

However, since its complexity would have surpassed the scope of this project and because we found other interesting empirical studies with validated results (Gauguin, 2003), we have focused on descriptive statistics as well as the five forces and SOOT analysis to compare the market attractiveness. Using the example of Italy and Saudi Arabia, we have highlighted the differences in the cigarette industry today among industrialized and developing countries.

The five forces and SOOT analysis generating solid cash flow for the cigarette industry, its prospects for the future are unclear or negative. Tougher regulation, increasing price sensitivity of consumers and the emergence of tobacco-related substitutes all put pressure on industry profits in Italy. Saudi Arabia, on the other hand, not only shows population growth, but also solidly increasing smoking prevalence.

Moreover, neither the risk awareness towards smoking, nor current regulations is as strict as in the Western world which leaves some flexibility for firms to work on increasing their sales in the future. 8 4. Strategy recommendation for British American Tobacco in Saudi Arabia In an industry where disruptive innovation is impossible and where prices are stable, achieving a competitive advantage is very difficult. Identifying the most critical challenges and opportunities is paramount in building a competitive edge based on the business areas firms do have an impact on.

The mid-term strategy recommendation for BAT, the second largest player in the Saudi Arabian market, outlined below is directed at dealing with the increasingly tough regulation, promoting change from Aisha tobacco to cigarettes and positioning particular cigarette brands to match the local customers’ needs. In order to identify areas in which competitive advantage can be built and sustained, we have analyses BAT’s value chain with all its “primary activities” and “supporting activities” (Porter, 1985).

Since logistics and operations are part of a complex global supply chain that has Just been reconfigured with a focus on maximizing operating efficiencies, it is not detailed in our analysis (Godsend et al. , 2010). However, we would like to emphasize that having a general cost advantage over competitors is crucial in gaining a competitive advantage in the first place as the theory of indifference curves ND trade-offs between price and quality suggests (Bespeak et al. , 2010).

Building on that superior cost structure, we recommend that BAT in Saudi Arabia focus on activities in the field of Human Resources as well as Marketing and Sales as this is where they can make a country-specific difference and gain a competitive edge. Securing highly driven people that are familiar with both the global cigarette business, but also know the specifics of the local market, is essential, yet is doesn’t represent a sustainable competitive advantage, since talented staff could be lured way by competitors.

Basic economic theory suggests that besides the mere size of operations and subsequent economies of scale, learning economies are another source for reducing the average costs of business (Bespeak et al. , 2010). As learning economies are deeply rooted in a firm’s Human Resources, we have selected this secondary activity as a focus area. BAT needs to exploit its learning economies and path-dependent knowledge by, for instance, transferring valuable experiences made in dealing with anti-smoking regulation in industrialized nations to Saudi Arabia.

The degree to which BAT can exploit its Human Resources and knowledge management presents an opportunity for building a sustainable competitive advantage. The second activity that allows BAT to sustainable differentiate its operations from competitors is Marketing and Sales. When applying the ROB, we could conclude that the actual resources needed to produce cigarettes do not vary greatly between the major players in the industry, however, the category where all firms differ is the brands they sell.

We advise BAT to (re)position three of their few immobile resources, TTS renowned brands (Dunghill, Lucky Strike and Earthman), in order to tackle the challenges and opportunities mentioned earlier. Thanks to the diverse brand portfolio of BAT, we can apply two of the three generic strategies “differentiation” and “cost leadership” described by Porter without being “stuck in the middle” (Porter, 1980).

Finally, while showing its dynamic capabilities, BAT needs to find the right balance between exploiting existing and developing new capabilities on both the product and resource level in order to master the challenges of the coming years (Heartfelt, 1984). Due to the perception of cigarettes as luxury products and the overall importance of prestige in the Saudi Arabian society, we recommend BAT to follow a “differentiation strategy’ for Dunghill and Lucky Strike.

More precisely, Dunghill should be promoted as the classy market brand and should increasingly target the untapped market for female smokers by featuring an extra light version with a feminine touch. In general, packaging needs to live up to the high standards of consumers and their tendencies towards luxury goods whereas particularly Saudi women are extremely conscious of heir attire and the aesthetics of the few visible accessories they can reveal (NY Times, 2006).

Being the first cigarette company to actively target the female market would present BAT with a first mover advantage which can build a competitive advantage over the next decades. Responding to socioeconomic trends (Remuneration International 2012), the brand Lucky Strike needs to be positioned as the young and Western cigarette brand for the Saudi Arabian generation Y with creative packaging and promotions which can be executed online or in trendy locations.

Targeting this customer group is crucial in two ways – future cigarette sales largely depend on this demographic and convincing young Arabs to smoke cigarettes instead of Aisha tobacco is a major milestone in fighting the most influential substitute. Anticipating increasing price sensitivity of demand and being able to fight potential entrants, we recommend a “cost leadership strategy’ for Earthman. This brand would offer “more for less”: selling in big packs at the same price as 18 sticks packs of the standard cigarette brands.

This strategy has already proven successful in the I-J and could help to lure some customers 10 onto smoking cigarettes instead of Aisha tobacco (Miller, 1993). Nevertheless, we would like to stress that price wars do not work in industries where tit-for-tat like pricing adjustments do nothing but destroy profit margins and customers don’t actually switch brands. In fact, rice cutting only works for entirely new customers as 5.

Conclusion Even though tobacco companies are among the most profitable businesses in the world, growth in cigarette sales is slowing down resulting in a probable increase of rivalry in the industry in the long run as well as pressure on profits. As our analysis suggests, the cigarette industry in Italy might have already seen its best times and might face increased rivalry in the coming decades. However, we also saw that the many opportunities a developing market such as Saudi Arabia offers are yet to be fully exploited by the big tobacco companies.

Applying basic economic theory and concepts such as Porter’s value chain and the ROB, we formulated a mid-term strategy recommendation for BAT in Saudi Arabia. We identified Human Resources and Marketing and Sales as key areas to build future competitive advantage. Exploiting the learning economies of its human resources next to a brand re)positioning targeting the major demographic trends will give BAT a competitive edge in the coming years.

Rationale of the Study Investment Banking is an American synonym of merchant banking. Investment banks provide advice on mergers and acquisitions and are involved in financing industrial corporations through buying shares and selling them in relatively small lots to investors. In the Bangladesh context, merchant banking includes all institutions that combine the functions of both development banking and investment banking. Investment banks act as intermediaries between issuers and investors. The issuer sells securities to investment bankers who in turn sell the securities to investors.

The investment banks own the securities until they are resold. For firms seeking to raise long-term funds, investment banks provide assistance through a number of functions including underwriting, marketing of securities, corporate finance, sale and brokerage, asset management and research. In underwriting, investment banks can protect themselves by forming a syndicate, which allows them to diversify the risk. One investment bank acts as the managing underwriter that oversees the underwriting activities of all members of the syndicate.

In the process of marketing, securities are typically sold through a selling group consisting of the sales division of the underwriting syndicate and selected retail brokerage houses. Another significant development in investment banking is the ‘instantiated stock offering’, in which, the corporation distributes the entire stock issue directly to institutional investors rather than syndicating them through a retail distribution network to individual investors. In Bangladesh, Merchant Banks should perform all functions of Investment Bank and gain efficiency in primary market making process. 1. 2 Objective (s)

Primary objective of this report is to submit this report as course requirement. Secondary objectives of this report are: To know the competitive structure of Merchant Banking Industry in Bangladesh. To know about the process of Issue Management Analysis, Underwriting Activities analysis and Portfolio Management Analysis etc. 2 1. 3 Limitation To complete this report following limitations are prominent: Limited Published data about Merchant Banks Few access to Price Sensitive Information Inadequate information about Issues in Dacha Stock Exchange (DES) & Securities & Competitive Structure of Merchant Banking

Industry in Bangladesh By wares 1 5 Investment banks act as intermediaries between issuers and investors. The Issuer brokerage, asset management and research. In underwriting, Investment banks can development in Investment banking Is the ‘unselected stock offering’, In which, the corporation distributes the entire stock Issue directly to Institutional Investors rather than syndicating them through a retail distribution network to Individual Investors. In gain efficiency In primary market making process. Primary objective of this report Is to submit this report as course requirement.

To know the competitive structure of Merchant Banking Industry In Bangladesh. To know about the process of Issue Management Analysis, Underwriting Activities 1. 3 Limitation To complete this report following Limitations are prominent: Limited Published data Few access to Price Sensitive Information Inadequate Information about Issues In Dacha Stock Exchange (DES) & Securities & 1. 4 Structure of the Report This report is done in compliance with the Merchant Banker and Portfolio Manager Regulation 1996 applicable in Bangladesh and other related rules. Chapter-2 highlights the methodology.

A brief review of capital Market of Bangladesh is illustrated in Chapter 3. In Chapter 4, Merchant Banking Industry of Bangladesh is illustrated. Legal Framework for Merchant Banking Industry is given in Chapter-5. The Main part of the report is given in chapter 6. It is illustrated with the help of Issue Management Analysis, Underwriting Analysis and Portfolio Management Analysis. Key Findings is given in Chapter 7 and it is followed by Conclusion and Policy Implications. 3 Chapter – 2 Methodology 4 This part comprises of the following heads: a. Data Source To complete this report, data are primarily collected from the DES Library, SEC

Reading Room and AAA Consultants & Financial Advisers Ltd. In which I have completed my Internship. Besides this, Vive collected data from website of different companies from 19942011. B. Variables Merchant Banking comprises of 4 activities basically. Of them Issue Management is practiced widely in Bangladesh. For Issue management Analysis Market Share as a % of Total Issue, Market Share as a % of Total Issued Amount, Timing Option, Diversification of Issues etc are the key variables. For Underwriting analysis underwriting amount, Underwritten shares, Commission etc are key variables. For

Portfolio Management activities total managed portfolio, fees earned etc are used as key variables in this report. C. Analytical Approach To complete this report, First of all Issue Management Analysis is illustrated with the help of Market Share as a % of Total Issues; Market Share as a % of Total Issued Amount, Timing Option and Diversification of Shares. For Underwriting Activities Underwritten amount is used as the parameter. Portfolio Management analysis is done with the help of total managed portfolio, fees earned etc. Chapter – 3 A Brief Review of Capital Market of Bangladesh 6 3.

Securities & Exchange Commission In a market economy securities market is a vehicle through which surplus fund is invested in alternative investment opportunities. Robust capital market plays a pivotal for industrialization and economic development of a country. For increasing the depth and breadth of the markets attracting investors is important. This happens only when investors are confident that the securities market is transparent and efficient. The Securities & Exchange Commission (SEC) was established on June 8, 1993 as capital market regulator in Bangladesh through the Securities & Exchange Commission Act, 1993 (Act 1 5 of 1993).

The commission ensures compliance of capital market related laws, rules and regulations etc. By the intermediaries and persons and institutions related with capital market. Basic laws of the capital market are as follows: a. Securities Act, 1920 b. Securities & Exchange Ordinance, 1969 c. Securities & Exchange Commission Act, 1993 d. Depository Act, 1999 3. 2 Dacha Stock Exchange The Dacha Stock Exchange was established in 1954 but its commercial operation started in 1956. Due to nationalization policy trading activities of DES remained suspended during the post liberation period and resumed again in 1976.

DES is a self-regulatory not for profit organization. As a self-regulatory organization DES supervises the functions of listed companies. Administration of DES is run be the Dacha Stock Exchange (Board and Administration) Regulations 2000. The board of directors consists of 24 members, 12 directors are elected by direct votes of DES members and 12 directors are nominated by the elected members from non-DES members with the approval of the commission. The Chief Executive Officer (CEO) of DES is also a non-voting Director. DES hires the CEO of DES which requires Commission’s approval.

The CEO conducts the daily affairs of DES. Now, there are 234 members in DES of which 194 members are registered by the SEC for conducting securities business. According to the rules every member must be a corporate body. Transaction and transfer of most of the securities listed on DES are now executed in electronic form. At present DES its on-line trading activities into the divisional and district towns of the country. 7 The major functions are: – Providing the screen based automated trading of listed Securities. – Settlement of trading.

As per Settlement of Transaction Regulations) – Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42) – Market Administration & Control. – Market Surveillance. – Publication of Monthly Review. – Monitoring the activities of listed companies. (As per Listing Regulations). – Investors grievance Cell (Disposal of complaint bye laws 1997). – Investors Protection Fund (As per investor protection fund Regulations 1999) – Announcement of Price sensitive or other information about listed companies through online. 3.