#20600370 Entry 7

Retailers in tobacco price probe

http://news.bbc.co.uk/1/hi/business/7367126.stm

It has been estimated by Office of Fair Trading ( OFT) that have been engaged in unlawful practices for retail prices for tobacco.
OFT charges eleven companies to in swapping information for future pricing.

Since 2000 and 2003 the understanding between tobacco firms and retailers limited the retailers' ability to estimate their price independently. There was an illegal indirect proposal of future retail prices between competitors as well. Retail price coordination is illegal and has some restriction by law- says the OFT who has been building up the case for five years secretly. The OFT says that if the evidence for such illegal action, the named tobacco companies would be fined up to ten million turnover. "If we find evidence of anti-competitive activity, we are prepared to use the appropriate powers to punish the companies involved and to deter other businesses from taking part in such behaviour," says OFT chief executive John Fingleton.

Meanwhile, tobacco companies and retailers deny any kind of activity that harms the interest of consumers. "takes compliance with competition law very seriously and rejects any suggestion that it has acted in any way contrary to the interests of consumers," said Imperial Tobacco.

My own reflection: This is such an ethical issue. In the case the OFT really finds the evidence of illegal action, the reputation of companies will get spoiled and they would loose their consumers' trust. I think that would harm the companies more than any 10% fine.

Reference: http://news.bbc.co.uk/2/hi/business/7366348.stm

20500198 entry #7

Nowadays, a lot of company makes their money from abroad market. Here is a good case. The Mumbai-based Tata consultancy Services is more "American" than New York-based IBM. Tata consultancy Services collected 51% of its revenues in North America last quarter, while 65% of IBM's were overseas. Current company need to focus on abroad market. In this world, the whole market of the world is the target martet to company. If the company only focus on the domestic market, it lose a great deal of opportunities. The korean market is very small. We need to enlarge the market to whole world.

from: http://www.businessweek.com/magazine/content/08_18/b4082000234598.htm?chan=globalbiz_asia+index+page_top+stories

20400512 Entry 7

Coca-Cola Enterprises earnings tumble
The bottling company says profit fell 47% on higher commodity costs despite a 7% rise in revenue; results miss expectations.

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Coca-cola as stated in the headline had a rise in revenues but a decrease in profit. In the article, it states the fact that the sales in North America hasn't been that good and it is "flat" on the scale. Although it has risen in Europe, most of the consumption of Coke is done in North America and if North America does not sell than I would think that naturally profit would decrease. Also in the article it states that the increase in prices of other assets has led to the downfall of profit. When i read this article I would say there is really nothing that Coca-cola could do in order to increase their profit other than to hope that overseas sales go up rapidly. They coudl only wait for the other prices to go down. Even with R&D, I do not think a solution could be made up.

20400512 Entry 6

Microsoft gives rosy outlook

Software giant tops earnings forecasts, offers upbeat guidance for 2009 and no news on Yahoo bid; stock falls after-hours.

____________________________________________________________________

Microsoft the "big" computer market has given unexpected results and surprised all analysts. Reading this article it got me to thinking about how I could relate it with Markstrat. Afterall, how business runs is all up to the board of directors and the decisions they make. In the the beginning of the article it talks about the selling of software and Xbox consoles. To my remembrance, Microsoft does a lot of advertising to sell their products and it is also sort of a given that many users use Microsoft.

Since we are constantly doing Markstrat right now, the lesson I got from this article is that advertising is really key in selling any products in the market.

20300244 Entry 7

Samsung Electronics Co., the world`s largest maker of flat-screen televisions, yesterday unveiled a "smarter" television set which it says offers a glimpse of TVs of the future.
"The Pavv Bordeaux 750 is a key product that combines Samsung`s TV and semiconductor technologies," said Kevin Lee, an executive at Samsung`s digital media business unit.
"On top of regular TV functions, the new set contains content, and can play multimedia content stored in portable memory devices or desktop computers," he told reporters in Seoul.
"We believe that televisions will become much more than what they are now, delivering a whole different kind of multimedia experience to our everyday lives," Lee said.
According to Samsung, the new product has three distinctive features. The "Contents Library" offers customers a selection of pre-loaded tips and information, ranging from 30-minute yoga exercises, English education programs for children and recipes. It can be updated and expanded via www.pavv.co.kr
Customers can also watch videos on YouTube, a popular U.S. website for user-created content, as well as access real-time information on stocks, weather and news through the TV`s Power InfoLink function.
Users can watch multimedia content stored on USB memory sticks or link the TV to a desktop computer to view data.
The new model boasts the same design features as the previous Samsung TV models, branded Crystal Rose in Korea, Touch of Color in the United States and Crystal Design in Europe.
The product will be launched in the United States later this week, with a locally adjusted Contents Library, and in Europe later this month.
Prices are set at about 2.7 million won ($2,715) for a 40-inch model and 3.5 million won for a 46-inch one.
By Lee Sun-young
(milaya@heraldm.com)

----------------------------------------------------
Thought

Samsung offers new type of TV set. They said that they will offer glimpse of the future. They said their new TV will provide a whole different kind of experience. And I believe it is only a start. We will see super multimedia which will enable us to have future experience. Making good product is still important, and advertising that product is still important. However, in my opinion, it is most important to create consumer experience with product. Consumers do not want to buy ‘just product’. They would go to buy other companies good if theirs have more contents and special customer service and all that. Creating customer focused experience is one of the key to success in business.

20500198 entry #6

The strategy of conglomerate faced saturated market and matuarity period.

-Ford posted a $100 million profit for the first quarter, largely on new hit cars and strong sales outside the U.S.

Ford is very old and very big company. We can call it as conglomerate. The market of ford in U.S.A, that is a car market, is saturated and is in the matuarity period. There has been the strategies of Ford that overcome this situation. First, they cut the cost. They employ lower labor and close the factory with decreasing of market share. Next one is that they segment their coustomer and focus on their star product. That were SUV and Truck. They do focus on these market, and they can earn a lot of money from these. And last strategy is that they make new market. Because the car market of U.S.A already in the maturarity period, they turn their face to other market, Europe, South America, and Asia. Especially markets of South America and Asia are in the rapid growth period. So from now on, they can get more money from these market than now. I think they do great job. Their strategies have been appropriate and have worked great. I think Ford can recover their top position of car market in the world soon.

from: http://www.businessweek.com/lifestyle/content/apr2008/bw20080424_757866.htm

20653023 Entry # 7

We live in the era of the Internet and hi-technology. And I think all of us got at least once marketing e-mail as inevitable part of subscription.
Below is article with 100 words wich shoulnd NOT use in "good" marketing e-mail subject line.
Read them and compare with what at times arrives into your e-mail box.
It would be very interesting to get similar artice in Korean from well know Korean e-marketer just to see differences in opinion.
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The Seven Dirty Words You Can't Say in Email Subject Lines (Plus 100 Others You Shouldn't Use, Either)by Jordan Ayan
If you've ever heard George Carlin's famous "Seven Dirty Words" (http://en.wikipedia.org/wiki/Seven_dirty_words) you can't say on TV, you can safely avoid using all seven in your subject lines. They will definitely get you blocked.
Here is a list of 100 more that you should avoid using as well:
Top 100 words NOT to use in your subject lines:
100% free
50% off
act now
all words that relate to sex or pornography
all words that related to cures or medication
amazing
anything that looks like you are YELLING
apply now
as seen
as seen on Oprah
as seen on TV
avoid
be your own boss
buy
call now
cash bonus
cialis
click here
collect
compare
consolidate
contains $$$
contains word "ad"
credit
Dear Friend
discount
don't delete
double your anything
double your income
e.x.t.r.a. Punctuation
earn
earn $
earn extra cash
easy terms
eliminate debt
extra income
fast cash
financial freedom
for only
for you
FREE
free
free access
free gift
free info
free instant
free offer
free samples!
friend
g a p p y t e x t
get
get out of debt
hello
herbal
hidden
home based
hot
information you requested
instant
levitra
life insurance
limited time
loans
lose
lose weight
lower your mortgage rate
lowest insurance rates
make money
medicine
mortgage
multi level marketing
notspam
now only
numerical digits at the end
offer
online degree
online marketing
online pharmacy
only
open
opportunity
promised you
refinance
removes
reverses
satisfaction
search engine listings
serious cash
starting with a dollar amount
stop or stops
teen
undisclosed recipient
valium
vicodin
winner
work from home
xanax
your family
Your own
You're a winner!
Jordan Ayan is the CEO of SubscriberMail (www.subscribermail.com), an email marketing services and technology provider.

20300244 Entry 6

Chicken sales plummet amid avian flu scare

Chicken sales have dropped following reports of the latest bird flu outbreak early this month, leading retailers said yesterday.
"Demand for chicken has been declining with the bird flu outbreaks, and news of it spreading has made consumers feel uneasy about eating chicken, driving more people to shun it altogether," said Park Tae-hoon, a spokesman for E-Mart, the country's leading discount store chain.
E-Mart said chicken sales dropped 15 percent between April 1 and 15 compared to a year ago, with sales just over the past weekend plunging by about 30 percent.
Lotte Mart, the third-largest discounter, saw chicken sales fall 14 percent from April 8 to 14 compared to a year ago. Homeplus, the second-largest discount store chain, had sales fall 4.7 percent between April 7 and 13. Over the past weekend, however, sales dropped 11.2 percent year-on-year, the discounter said.
"We believe the further decline during the weekend is a result of dampened consumer sentiment following the news that the bird flu is spreading," said Shana Lee, speaking for Homeplus.
The Ministry of Food and Agriculture yesterday announced seven new suspected cases of the avian flu, or H5N1 virus, reported in the southwestern part of the country. News of the virus spreading has stirred criticism against government efforts to contain the disease.
On Wednesday, the ministry heightened the nationwide alert to "orange," the second highest level of risk. Most bird flu cases have been reported in the Jeolla provinces.
The leading discounters say the drop in chicken demand is not detrimental to their overall sales performance, since the product accounts for a small share of all the items they sell. They also say the impact of the latest bird flu outbreaks on poultry sales is still minor compared to previous experiences when demand had dropped by 50 percent.
"The impact on sales so far has been less compared to the outbreaks in previous years," said E-Mart's Park.
Retailers also attribute the less dramatic reaction of consumers to greater awareness from past cases, which generated reports that bird-flu-infected poultry is safe to consume if it is cooked above 75 degrees Celsius.
Still, at high-end department stores like Lotte Department Store, where less volume of poultry is sold, chicken sales are "next-to-nothing," said Koo Sae-hee, a Lotte Department Store spokeswoman.
Consumers like Hyun Su-sun, a working woman and housewife in her mid-40s, would also prefer to play it safe.
"I feel uneasy about eating chicken, because you can never be too safe when it comes to food safety and all the uncertainty about viruses," Hyun said.
"Even if experts say it's safe to eat chicken well-cooked, I prefer not to take the risk, especially when animals like birds are difficult to contain since they fly and can quickly spread diseases," she added.
Hyun said the recent spate of controversies in the food industry triggered by Nongshim's fried shrimp chips, with a reported case of a mouse head found in a package by a consumer, and a knife blade discovered in a can of tuna manufactured by Dongwon F&B, could also sap consumer appetite.
"It is ultimately up to the consumer to buy a product or not," said Hyun.
By Yoo Soh-jung , Korea Herald

My thoughts
When something unexpected thing which is also negative to your business happens, you will have difficult time. Or, even, you may have bankruptcy. So it is crucial to think a head about the difficulties that possibly you can have. If very new and difficult problem happens to your company you may not know what to do. However, if you have a problem which already had taken place in your company or the other companies you should know how to react or you should already have your preparation for that. In this case of bird flu, it already happened past. If you were excellent business person you should have manual for when bird flu happens now. It is because that as the world goes more complicated we would have more unexpected things happening to our business. Have integrity in your business, especially for your company’s uncertain, undefined and unexpected risks.

Entry # 20600370

http://russiatoday.ru/business/news/23597/video

EU battles for its energy independence

As prices on energy resources surge, the EU tries to find ways to decrease dependence on Russia by building a pipeline which bypass Russia. One alternative can be direct supply from Turkmenistan that has promised to deliver 10 billion cubic meters of gas to the EU annually from 2009.

Right now Turkmenistan signed a long-term contracts with Russia and Iran on a natural gas supply. All coutry's gas, up to 50 billion cubic metres, is imported by Russia. Also Turkmenistan is building a gas pipeline to China.

The question is how Turkmenistan is going to meet these new commitments.

In view of the recent news, Russian state-owned company Gazprom plans to participate in a multi-billion dollar project to pipe Nigerian gas to Europe across the Sahara.

Underlining these two articles we can see that it would be very difficult for EU to gain independence unless it starts participating in projects with Russia or building its own pipes.

20653023 Entry # 6

Merrill Lynch posted another quarterly loss as the brokerage house continued to suffer from subprime mortgages crisis.
Since last year Merrill lost $1.96 billion, or $2.19 a share (compare a year-ago profit of $2.11 billion, or $2.26 a share). Main reason of the loss of the brokerage house is new write downs of $6.6 billion.
Combined with the loss Merrill Lynch said it would cut an additional 4,000 jobs by the end of the year. The cuts would come from the company's capital markets and trading divisions, not support staff and financial advisers. The firm currently has 63,100 employees.
Merrill is considered by most on Wall Street to be one of the biggest victims of the subprime mortgage crisis beside investment bank Bear Stearns.
In November Merril ousted its chief executive Stan O'Neal.
Thain said in interviews over the past two months that Merrill’s massive positions in subprime mortgages and other complicate instruments had deteriorated.
The write downs were widely expected by most analysts.
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Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories and total client assets of approximately $1.6 trillion. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies, with more than $1trillion in assets under management. For more information on Merrill Lynch, please visit http://www.ml.com/
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Merrill Lynch to write down further $6-8 billion: report
TOKYO/NEW YORK (Reuters) - Investment bank Merrill Lynch & Co (MER.N: Quote, Profile, Research) will announce $6 billion to $8 billion of asset write-downs in its first quarter results on Thursday, the Wall Street Journal reported on Wednesday, citing a person familiar with the matter.
The latest write-downs would increase total debt losses since October to more than $30 billion, the paper said. The setbacks will contribute to a third straight quarterly net loss at Merrill, the longest losing streak in its 94-year history.
Merrill Lynch spokeswoman Jessica Oppenheim declined to comment.
Investors have been bracing for more bad news from big U.S. banks reporting their first-quarter results this week as the housing market collapse and credit market turmoil has taken a big toll on their balance sheets.
On average, analysts who cover Merrill have told clients they expect $6 billion to $8 billion of write-downs.
"In this environment, anything is plausible," Sandler O'Neill + Partners analyst Jeff Harte said.
The real key to Merrill's actual results will be what steps the firm has taken to reduce its exposure to risky assets going forward.
"It's how much is written down. If the losses are bigger and it's because they reduced exposure, that may not be so bad," Harte said. "The actual earnings number is less relevant than the health of underlying business."
The Wall Street Journal also reported that Merrill is preparing to slash 10 to 15 percent of jobs in some struggling business areas, such as bond financing.
Such cuts, too, are not totally unexpected. Rival banks such as UBS, Morgan Stanley, Goldman Sachs and Lehman Brothers have laid off employees, and recruiters expect the current slump will lead to new rounds of layoffs.
Currency traders in Asia said the article on Merrill caused a slight dip in the U.S. dollar against the yen but that the reaction was muted because investors had been expecting more such write-downs.
JPMorgan Chase (JPM.N: Quote, Profile, Research), which is taking over hard-hit investment bank Bear Stearns (BSC.N: Quote, Profile, Research), on Wednesday reported more than $5 billion of loan losses and asset write-downs. Regional bank Wells Fargo (WFC.N: Quote, Profile, Research) also reported lower quarterly results Wednesday.
Earlier in the week Wachovia (WB.N: Quote, Profile, Research), the number four U.S. bank, posted a surprise first-quarter loss as losses from its mortgage portfolio worsened. It also cut its dividend and raised $7 billion of capital.
(Reporting by Eric Burroughs in Tokyo and Joe Giannone in New York; additional reporting by Olesya Dmitracova in London, editing by Will Waterman and Dave Zimmerman)

Referrences:
http://www.ml.com/index.asp?id=7695_7696_8149_88278_95339_96026&ML.grp=HL
http://www.reuters.com/article/businessNews/idUST23375520080416?feedType=RSS&feedName=businessNews&pageNumber=2&virtualBrandChannel=0

20300244 Entry #5

Shares of LG Display Co. tumbled yesterday as worries over what analysts described as sapping earnings momentum overshadowed the company's better-than-expected performance in the first quarter.
Shares closed at 43,900 won ($45), down 4.98 percent, from a day earlier, against the KOPSI's 0.85 percent gain.
LG Display, formerly LG.Philips LCD, reported Thursday a record quarterly operating profit of 869 billion won during the January-March period. Sales stood at 4.04 trillion won.
Although the results were better than expected, some analysts cast doubt over future earnings, saying that a slowing U.S. economy and a price war among TV makers could hurt the market position of LG Display's key clients such as LG Electronics Co. and Philips and Vizio.
Goldman Sachs lowered its 12-month price target on the world's second-largest LCD maker by 2.5 percent to 52,000 won. BNP Paribas said in a report that earnings momentum will sag next quarter.
Analysts worry that the global LCD market could face a supply glut next year, bringing down panel prices. LG Display is scheduled to begin next year mass production at its factory in Paju, Gyeonggi Province, where the so-called eighth-generation production line is to be installed.
Despite the dim prospects, CEO Kwon Young-soo offered a positive outlook for the company and the global LCD industry, saying that the extent of the feared supply glut would not be as grave as some expect.
"Liquid crystal displays are becoming increasingly popular in more electronic devices other than TVs and computer monitors," Kwon said. LCD panels are widely used in TVs, computer monitors and some IT gadgets. The trend is creating new demand for LCDs."
He also said the demand for small-sized panels is growing steadily, as customers choose flat screen TVs over bulky tubes, even in the low-cost small-size TV segment.
Kwon said it is likely that operation of the advanced production line in Paju will start in January or February, one or two months earlier than planned.
By Lee Sun-young, Korean Herald
------------------------------------------------------
My thoughts,
Should I believe the company or the analyst? In the journal there are two different views for the same problem. One is positive and another one is negative. They are predictions on the LCD sales. Both have supporting facts for their claim. However, there will be only one claim that is correct at the time they predicted. By the way, when we want to invest for this company, we as a normal people are lack of information. And we don’t want to just cast a coin to choose the right decision. On this journal, we don’t have 100% sure opinion. So my claim is that you should have business knowledge and your own decision making process to make your good decision even you have a lot of money and hired some good investors for you. Because there will be a time that you need to choose your decision from many good analysts.

20400512 Entry 5

Samsung boss 'may quit' due to allegations

Source: http://edition.cnn.com/2008/BUSINESS/04/11/skorea.samsung.ap/index.html

This has been an issue for the following couple of weeks. SAMSUNG a big company in our country is now facing problems as being charged with allegations for bribery.

The president Lee Gun-Hee has been questioned about the many allegations. After the questioning he threw out a claim in considering the mananagment and structural changes.

It's amazing to see how scary the inside of a company can be. Just one slip of the tongue and the next time you could be facing prosecuters.

This article led me to rethink that no matter how well a business is running the "insides" are what is the most important. Having a corrupted system can lead to many problems and troubles. Although having trust is important you can never trust anyone too much in the business world.

The mixation of Cultures and Internet is very good business item. Here is a good example. CEO of this company took a nitch of Hindi in the U.S.A. The music site of Hindi culture satisfied them who haven't found the site of their culture-they couldn't download their music before this site. It sponge all people of Hindi in the U.S.A and also the indian people. They are finding this site althogh the company doesn't advertise. There are a lot of chances similar with this thing, from mixture of cultures and internet.

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From South Asia to iTunes

Anjula Acharia-Bath made sure she was in the right place at the right time. The co-founder and CEO of online entertainment portal DesiHits had heard nothing but no from Apple (AAPL) after repeatedly pitching a sales partnership. She didn't lose heart. Instead, she happened to hit connection paydirt while dining at her regular hangout, Tamerine, a Vietnamese restaurant that's a hot spot for Silicon Valley venture capitalists. In January, 2006, she overheard two diners talking about Guy Kawasaki, a former Apple executive turned venture capitalist, as if they knew him well. Acharia-Bath introduced herself and asked how she could get a better reception from Apple. One of those diners, Barry Weinman, co-founder of Allegis Capital, soon introduced her to his contacts at Apple.

Today, DesiHits, which is moving from Santa Clara, Calif., to New York City, sells Indian music from Bollywood hits to Bhangra classics, remixed with rap and pop, via iTunes, Apple's online music store. DesiHits podcasts are available on iTunes as well. And on DesiHits' Web site, visitors can find entertainment news, interviews, and other original content aimed at Desis, the Hindi term for the 20 million or so South Asians living around the world, including 1.9 million in the U.S., according to a 2004 U.S. Census count. In recent months, it has also become a destination for well-known American rappers such as LL Cool J, 50 Cent, and Lupe Fiasco to promote their music.

Like most Web startups, the site's strategy is first to build an audience, then use those numbers to lure advertisers. In the meantime, the site is making money from downloads. Acharia-Bath says traffic is up as well, with almost 1 million unique visits to the site in February, 2008, up from about 800,000 the previous month. That may not be a staggeringly high number, but it beats long-established MTVIndia.com.

Speaking to an Identity
The idea for a music site grew out of Ranj Bath's podcasting hobby. Bath, who is Acharia-Bath's husband and co-founder, had deejayed mixes of Indian and pop music at parties since his days at the University of Westminster in London. After the couple, both children of Indian-born parents who moved to Britain, relocated to California, they scoured entertainment magazines and Web sites but found little sign of fusion culture, that hybrid of Western and South Asian music popular with their generation. Says Bath: "We saw that other Desis were struggling to find online sites that spoke to their identities." Bath, 38, then a marketing manager for Intel (INTC), and Acharia-Bath, 36, a former headhunter for Forsyth Group Executive Venture Search, decided to launch DesiHits in their spare time with about $35,000 in savings.

At first, the site was no more than a podcast series on hip Indian music. As it gained popularity, the couple enlisted Arun Sandhu, 28, a friend who had worked at Star TV and Bravo, to produce original content. In 2006, Acharia-Bath was introduced to Draper Fisher Jurvetson, a venture capital firm known for its early-stage investments in Web businesses Skype (EBAY) and Baidu (BIDU), asking for more than she thought she would get: $1 million. No problem. The couple quit their jobs and assembled an unpaid advisory board from industries other than music and entertainment, hoping to tap into expertise that will help them develop an advertising model and other revenue streams.

Previous attempts to reach the niche have foundered, notes Mira Kamdar, a senior fellow at the World Policy Institute, a Washington think tank with a global bent. "MTVDesi was canceled despite lots of the same hype DesiHits has," says Kamdar. And Columbia University marketing professor Gita Johar says the group is highly fragmented: "I would argue that not all Desis are the audience, as there are many subsegments and cultures within the South Asian population."

One way around those potential potholes may be to attract a broader Indian audience. Right now, about 29% of desihits.com traffic is from India, according to page-view tracker Alexa. Bath says DesiHits isn't marketing directly to Indians, but he is confident the site will engage them—as well as listeners not of South Asian descent—as the site becomes more well known. Says Bath: "They're finding us."

20653023 Entry # 5

As we discussed on our classes business does not operate in vacuum and environmental factors are crucial for one to survive.
I think we are witnesses of so-called “third oil crisis” which has a lot of not rosy consequences.
Speaking macroeconomics language such exogenous variables as high jet fuel price, high cost of leasing and buying planes, and the credit crunch affect airline industry and led to bankruptcy of four companies since March 31: Aloha Airgourp, ATA Airlines, Skybus Airlines (all in the United States), and now Oasis Hong Kong Airlines which went into liquidation Wednesday.
Provisionally all procedure will be held under KPMG (global network of professional firms providing Audit, Tax, and Advisory services).
Oasis Hong Kong Airlines tried to create its own blue ocean within industry seeking a niche among travelers who dread very long flights in economy class but have been reluctant to pay $6,300 for a round -trip in business class. They were proud of its on-time performance and also offered more legroom in economy and business class than other budget carriers and even some premium carriers.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Oasis Hong Kong Airlines goes bankrupt

Oasis Hong Kong Airlines, a long-distance budget carrier that tried to offer premium service and spacious seats at low prices, suddenly went into liquidation Wednesday and canceled all flights, the fourth budget carrier to halt operations in the past week and a half.
The bankruptcy filing by Oasis stranded thousands of passengers in Hong Kong, London and Vancouver, British Columbia. Many of the would-be passengers stuck in Hong Kong are children trying to return to British boarding schools after going home for the spring break.
High jet fuel prices have taken a heavy toll on the airline industry and particularly on budget carriers trying to compete on price with low profit margins. The other three to shut down since March 31, all in the United States, are Aloha Airgroup, ATA Airlines and Skybus Airlines.
The spate of bankruptcies threatens to undermine travelers' confidence in budget carriers. But airline industry experts say that Oasis's business model of punctual, top-notch service and lots of legroom at discount prices made it especially vulnerable to high oil prices.
For other budget carriers, the lesson of Oasis's demise is that, "they have to pack more seats and more passengers into their aircraft," said Derek Sadubin, the chief operating officer of the Center for Asia Pacific Aviation, a consulting company in Sydney.
While established airlines are also feeling the brunt of high fuel prices, budget carrier start-ups have proved more vulnerable because they must struggle during the current international credit crunch to borrow money to cover any operating losses.
The shutdown of Oasis "does remind us that it is an extremely precarious business when there are so many external factors outside the control of airline management, one being jet fuel prices and another being the credit crunch," said Martin Craigs, the president of the Aerospace Forum Asia, a trade association in Hong Kong representing aviation equipment suppliers, including Airbus and Boeing.
Yet another problem for start-ups like Oasis is that the cost of leasing or buying planes has stayed high, even as economic weakness in the United States and elsewhere has started to hurt demand for air travel. Asian and Mideast carriers are actively expanding and ordering hundreds of planes, leaving Boeing and Airbus with long backlogs of orders.
Stephen Miller, the chief executive of Oasis, said at a brief news conference Wednesday that the carrier still hoped to find an investor to buy its operations. But Eva Cheng, the Hong Kong secretary for transport and housing, said that the company had made a voluntary filing for liquidation Wednesday only after lengthy negotiations with a possible investor broke down Tuesday.
Cheng said that the cessation of service by Oasis was particularly troubling because it came at a time when many flights on other carriers are already fully booked - including for children, some traveling without adults, who are trying to return to school in Britain.
Cheng urged other carriers to give priority on nonstop flights to children holding Oasis tickets. An estimated 40,000 young people from Hong Kong, a former British colony, attend schools in Britain, the bulk of them in elementary schools, junior high and high school, but some in university as well.
Virtually all civil servants in Hong Kong, regardless of national heritage, are still eligible for a taxable government allowance that covers more than half the cost of sending children to boarding school in Britain.
Cathay Pacific Airways, the dominant airline in Hong Kong with at least a third of the market, announced Wednesday that it would add an extra flight to London on Friday and another Sunday with priority for schoolchildren. The airline also said that holders of tickets for Oasis flights in the next two weeks would be eligible to buy one-way economy class tickets from Hong Kong to London or Vancouver - the two routes formerly operated by Oasis - for 2,500 Hong Kong dollars, or $320.
Raymond and Priscilla Lee, a wealthy Hong Kong real estate couple also active in philanthropic causes, started Oasis in October, 2006. The private equity arm of Value Partners Group, a large Hong Kong asset management company with $6 billion under management, bought $30 million in convertible bonds from Oasis to help finance its growth.
Cheah Cheng Hye, the chairman and chief investment officer of Value Partners, said Wednesday that the company had several layers of guarantees on the bonds and had a "very reasonable chance" of recovering its money, and that the company's well-known funds would not be affected because they did not hold stakes in the private equity unit.
Value Partners' risk from the Oasis investment is insignificant to the overall company because its investments are diverse, Cheah added in an interview, explaining that, "it's like running a hotel with 100 or 200 rooms - sometimes a guest will check out without paying the bill."
The High Court in Hong Kong appointed KPMG as the provisional liquidators of Oasis. The airline's ticket holders will be among its creditors.
Oasis had superb on-time performance - it boasted that every flight to and from London was on time in February. It also offered more legroom in economy and business class than other budget carriers and even some premium carriers.
In business class, Oasis put up to 60 inches, or 150 centimeters, between each seatback, compared with 38 inches on some budget carriers, and in economy class it put 32 inches, compared with 31 inches on many carriers.
Oasis operated roomy four Boeing 747-400s with twin aisles on its nearly 13-hour flights from Hong Kong to London and Vancouver. But the planes also have four engines, which gulped fuel at a time when crude oil is over $100 a barrel.
Oasis was an unusual hybrid of the new all-business class airlines now appearing over the Atlantic and the very inexpensive economy class carriers now spreading around the world. Oasis allocated 22 percent of its seats to business class and charged as little as a third of Cathay's prices, seeking a niche among travelers who dread very long flights in economy class but have been reluctant to pay $6,300 for a round -trip in business class.
But many corporations have contracts with Cathay for their employees, while expense-account travelers have tended to prefer Cathay for its frequent flyer plan, Sadubin said. On an Oasis flight from London to Hong Kong last Friday, economy class was full but there were just two passengers in one of the aircraft's three sections of business class.

Entry # 20600370

Chinese workers flood into Russia

It was very difficult to imagine Korea using foreign workers 20 years ago. Nowadays, it is vital for the majority of small-sized and mid-sized companies to use the cheap labor force of migrant workers to survive in the highly competitive world.
The same pattern is observed in Russia which is being flooded by Chinese workers. The reason is that business owners want to hire foreign workers because they can work long hours and for little money.
Along with the advantage of using low-paid workforce, there are many issues that should be thoroughly mulled over, such as inability to collect tax, capital outflow, legislation problems, and so on.

Entry 20600370

The fuel prise is getting more and more expensive and is not likely to get any cheaper in nearest time. The raise of fuel price strongly influences American aircompanies. To adjust to continious oil price raise many of them have to make some changes services they provide.

In case of Northwest few changes appeared. Northwest raised prices for international flights and cut domestic schedule by 5 percent.
Significant changes appeared in such airlines as ATA or Aloha Airlines. Because of fuel price two companies had to shut down and Champion Air is about to stop flying by May 31. Some companies have to freeze hiring new pilots.

Because of the high fuel price aircompanies fear that the demand will go down therefore it will lead to attempts to save money by "cost reductions, productivity improvements and revenue enhancements." "every effort will be made to achieve these reductions through attrition," the airline said. Airlines said they will not seek for pay cuts.

20500198 entry #4

People worried about the recession of U.S.A. If it is real, it affect to whole economy of all of the world. Until now, the U.S.A is affecting a lot to whole world. It's because the financial power. I think the korean government also have to strongly improve a financial industry. Now there is increase of unemployment rate in U.S.A. The reason is that there is a crisis in financial industry especially caused from 'subprime mortgage'. It affect to the whole industy of U.S.A. And the unemployment rate is proving that. It's a chance to us. Using the difficulty of great big world wide bank, small banks of korea have to go forward to worldwide market. It will be chance to our banks. We should catch it to get the power of finance in the world.

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Employers slashed 80,000 jobs in March

Employers worried about recession slashed 80,000 jobs in March, the most in five years and the third straight month of losses.

At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be contracting. The new snapshot of the job market, released by the Labor Department Friday, underscored the damage that a trio of crises --in the housing, credit and financial sectors -- has inflicted on companies, jobseekers and the economy as a whole.

The unemployment rate was the highest since September 2005, when significant job losses followed the devastating blows of Gulf Coast hurricanes.

Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses. That overwhelmed gains elsewhere, including in education and health care, leisure and hospitality as well as in government.

The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs and the unemployment rate to rise to 5 percent.

The 5.1 percent rate is relatively modest by historical standards, but was nonetheless the highest in more 2 1/2 years.

Job cuts in both January and February turned out to be even deeper. Employers got rid of 76,000 in each month. The elimination of 80,000 jobs in March was the most since March 2003, when the labor market was still struggling to recover from the 2001 recession.

The economy is suffering the effects of a housing collapse, a credit crunch and a financial system in turmoil. That's causing people and businesses to hunker down, crimping spending, capital investment and hiring. Those things in turn further weaken the economy in what has become a vicious cycle.

For the first time, Federal Reserve Chairman Ben Bernanke acknowledged Wednesday that the country could be heading toward a recession, saying federal policymakers are "fighting against the wind" in combating it. Many other economists and the public believe the recession already has arrived.

Economists define a recession as two consecutive quarters of negative growth.

Bernanke wouldn't tip his hand about the Fed's next move. However, many economists believe the central bank will lower interest rates again when they meet later this month.

The Fed has taken a number of extraordinary actions recently -- slashing interest rates, providing financial backing to JP Morgan's takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions are ultimately aimed at limiting damage to the national economy.

With a public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans even as they engage in a political blame game.

With the pace of hiring slowing down, the number of unemployed people increased to 7.8 million in March; workers with jobs saw only modest wage gains at the same time.

Average hourly earnings for jobholders rose to $17.86 in March, a 0.3 percent increase from the previous month. That matched economists' forecasts. Over the past 12 months, wages grew 3.6 percent. With lofty energy and food prices, workers may feel like their paychecks are shrinking.

Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month.

Bernanke, however, has said he is hopeful the economy will improve in the second half of this year, helped by the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses, as well as the Fed's rate reductions.

Still, even Bernanke predicted this week that the unemployment rate would rise in the months ahead. Some analysts say it could climb to 5.5 percent or higher by year's end.

20300244 entry 4

FTAs help cushion inflation risks (Korean Herald)

While steep commodity prices and record-high oil costs fan inflationary pressures around the globe, free trade agreements can be a boon - rather than a blight - regardless of their controversies.

Countries with FTAs under negotiation or yet to be ratified may want to accelerate the process, because such trade pacts can cushion consumers from rising costs, experts say.

"Free trade agreements definitely do have a cushion effect on consumer prices and can provide stabilization," said Hong Seung-in, senior deputy director of the FTA Negotiation Coordination Division at Seoul's Trade Ministry, in a telephone interview. "Tariffs are removed in free trade, so this means consumers can buy goods without this extra burden."

Although it depends on the category, Hong said that under an FTA the prices of some goods could drop by 12 percent. Korea's average import tariff rate with the United States, for instance, is 7 percent.

In the case of the Korea-U.S. FTA, both sides agreed to remove tariffs on 94 percent of manufactured goods within three years once the accord takes effect, while duties on all goods would be removed in 10 years.

Consumer prices of imported goods from the United States are projected to drop between 6.1 percent and 6.2 percent, according to Lee Hang-koo, an economist at the Korea Institute for Industrial Economics and Trade. He expects a trade pact with the European Union to generate the same effect, although negotiations are still underway.

Comparatively, agricultural imports make up about 10 percent of imports from the United States. Due to the sensitive nature of agricultural goods, most tariffs are to be phased out throughout an average span of 10 years.

With Korea dependent on imports for most of its grain needs, Lee expects free trade to ease the shocks of global inflation as well. Rice, the nation's staple food, has also been exempt from FTAs.

According to Lee Jung-hwan, chief economist of GS&J, a private think tank, agricultural tariffs are significant, with some as high as 700 percent. The lowest is about 2 percent, while the average ranges between 20 percent and 40 percent for products like fruits and livestock.

Lee of GS&J, however, said an FTA would have little relief on grain import prices. The duty on wheat is 3 percent, and duties on corn and grains used for fertilizer are merely 1 percent.

The price of beans, on the other hand, can drop as much as 81 percent.

Free-trade partners can also help each other drive down prices while providing competitive goods, said Lee, the economist at the Korea Institute for Industrial Economics and Trade.

"If the Korea-U.S. FTA is ratified, tariff elimination could boost the competitiveness of Korean brands, for instance, against cheaper Chinese goods flooding into the world's largest consumer market," the trade expert explained. He emphasized the favorable prospects for Asia's fourth-largest economy, which has been recording a decline in U.S.-bound exports.

"For a country like ours that depends on exports to drive the economy, an FTA is very important," Lee told The Korea Herald.

Seoul is also keen on securing free-trade deals with as many strategic partners as possible, which would open up the country more to adopt international standards, take it up to par with advanced countries, and also strengthen its global competitiveness. The country is currently negotiating a deal with Canada, while preparing to begin discussions with China and resume talks with Japan.

Free-trade partners, however, need to be wary of some opposing factors.

Hong warned that the cost-saving impact also depends on the exchange rate. A weaker domestic currency means having to pay more for imports.

He also cautioned that countries more sensitive to inflation and high oil costs would have to raise the prices of their goods.

"This means that if our trading partner can't cope with inflationary pressures, the cost burden would naturally be reflected in the final marketing product," Hong said.

But Lee of KIET offered a more uplifting view.

"Producers are constantly pressured to find cost-effective ways of production with rising raw material costs, which ultimately means competitive prices for consumers," Lee said.


By Yoo Soh-jung


(sohjung@heraldm.com)

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My Thoughts,

FTA has been praised by many of econmists. However it has been suffered much in the reallity. FTA between Korea and U.S. is still not copleted. Although it seems that we as koreans have advantages from it, it is not so easy to say we should do this in the public. Since it has both good and bad sides. When I first learn Economics in the class the very first chapter claimed that the better standard of living means better economy. Even though I would agree with some part it is not just like that.
This article is one of a good example. For it says it's good to have FTA, they didn't talk about the people's impact who might loose their job or their wealth. FTA finally could better-off for the county's economy but it could be good or bad to a person who lives in this community. so my opinion would be this. We need to approch this case with political approch. Polititions need to come up with this issue and make people to understand or make consensus among the people.

20400512 Entry 4

The underemployment rate is rising
Don't be fooled by the relatively low 4.8% unemployment rate. Other measures, such as the number of people only working part-time, are a sign of recession.
Source: http://money.cnn.com/2008/04/02/news/economy/jobs_outlook/index.htm?cnn=yes

This article discussed the topic of unemployment as suggested in the title. Now they are viewing the rise of unemployment rate as recession. Nowadays, rather than full-time jobs more part-time jobs are offered in the markets.

It's kind of ironic how job unemployment can be looked at as a recession. It seems like it's almost saying that the market is slowing looking workers like customers and the company are facing problems.

Do cases like this such as job declines need r&d? I suppose all areas that the company deals with needs r&d but just how much time should be spent upon the employment staff? But then without employees the company wouldn't be able to run.

I think that the markets need to start developing more ideas in how to bring in more workers or stop cutting workers.

20653023 Entry # 4

Business nowadays needs to go globally in order to survive. I see business as a live organism. Without moves it dies.

And as we studied on previous lessons environmental factors such as economics and political regulation play significant role in defining strategic moves in business. With less strict regulations toward business and enough investment in their pockets Indian business appeared on global market making acquisitions abroad.

Several years ago a lot of international business rushed to China opening there their factories. But with restricitve Chinese policies nowadays a lot of them looking for best opportunities in other rapidly developing markets. One of them is India. So not only India seeks for opportunity to invest in foreign business but foreigners look for investing their money into India as well.

Economical law that Capital doesn't flow to poor countries works right now for India's benefit.

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With Jaguar and Land Rover in hand, India

strides onto the global stage

The Associated PressSunday, March 30, 2008
To understand India's economic rise, look to its cars.
The iconic Indian automobile of a generation ago was the Ambassador, a noisy, boxy clunker that was ubiquitous despite its ungainly 1950s style.
Compare that to the newest Indian-owned line of cars, the famously sleek and sophisticated Jaguar, which Tata Motors, India's biggest auto company, purchased Wednesday, along with Land Rover, in a landmark US$2.3 billion deal.
The vehicle upgrade could be a metaphor for the transformation the entire country has gone through in recent years, as the so-called "License Raj" — the stifling state-run socialist system widely blamed for shackling India's economy — came to an end, giving rise to a new middle-class whose appetite for consumption has reshaped India and spurred a national economic boom.
Now, Indian companies are taking that money and shopping overseas for acquisitions as part of a strategy meant to announce India's arrival on the global stage, break into new markets and keep the profits rolling in.
"It's a matter of survival," said Ashutosh Goel, an analyst with the brokerage firm Edelweiss Capital. "To succeed and thrive you have to be a serious global player and not only focused on the domestic market. You can't remain a purely Indian player."
Nearly all the leading corporations here — including Reliance Industries Ltd. and outsourcing company Wipro Ltd. — are looking overseas, and news of Indian acquisitions of brands from Europe, the United States, Asia and Africa has become common.
Many see the newfound assertiveness as a reflection of the general feeling in India that the once-stagnant underachiever now belongs among the international elite.
"Indian companies have been in the mood for overseas purchases for a few years now and that coincides with the boom in the economy and the general feel-good factor here," said Anjana Menon, an editor at Mint, a leading Indian business newspaper.
At the same time, the robust economy and looser regulations have attracted widespread foreign investment, increasing competition here and forcing Indian companies to expand overseas to seek sales, analysts said.
Beyond Tata Motors, the crowded car market includes the Maruti Suzuki Ltd. — majority owned by Japanese automaker Suzuki Motors Corp. — South Korea's Hyundai Motor Ltd., Japan's Honda Motor Co. and U.S. automakers Ford Motor Co. and General Motors Corp.
International companies are interested in more than selling just cars, however. Coca-Cola Co., which was booted out of India in the 1970s to make way for the local brand Thums-Up, came back in 1993, after the economy opened to foreign investment, and now owns the former rival. In gleaming new malls across India, customers can choose between German washing machines, Korean air conditioners and Japanese televisions.
Tata Group, the country's oldest and largest conglomerate, is the most striking example of an Indian company on an acquisition spree. With roughly 100 companies in everything from salt to software, it has led the charge that has made India an international player.
The group has emerged from its own economic doldrums with high-profile moves like the purchase of British steelmaker Corus Group for US$13 billion, as well as tea, hotel and automobile companies.
Tata's acquisitions have sparked an outpouring of national pride.
"The Empire Strikes Back!" was one of many headlines Thursday that trumpeted the purchase of Jaguar and Land Rover, brands founded in Britain, India's former colonial power.
The economic rise can be traced back to 1991, when India began shifting toward a market economy. The boom was led by the outsourcing and technology sectors, which forged a connection between Indian companies and overseas markets.
The new opportunities gave rise to an educated and ambitious middle class, which has lustily embraced consumer culture.
"The middle class Indian from a decade ago was more of a saver and he's a spender now," said Menon. "There's a generational shift and there's more money in people's wallets and they're freer to spend."
Companies like Tata have reaped giant profits that freed them to pursue acquisitions. In five years through March 2007, Tata's annual group sales more than doubled to US$29 billion, not including Corus Group. The capitalization of its 27 listed companies rose six-fold, to US$78 billion.
"Bankers are looking where they can put their money and (Tata is) a sure thing, they're not even a bet," said Tarun Das of the Confederation of Indian Industry.
Tata announced the Land Rover and Jaguar acquisition with very little fanfare, apparently anticipating anti-India backlash. In a sign of how the times have changed, Indian companies that once lobbied the government for protection against foreign competition now find themselves battling protectionist sentiments abroad.
Tata is paying Ford with a 15-month, US$3 billion loan but expects to replace that financing with a mix of equity and debt during the next several months, said C. Ramakrishnan, Tata's chief financial officer.
Some analysts are skeptical about how the luxury brands will fit into Tata's portfolio and whether going into debt to pay for the deal makes sense amidst fears of a global recession.
But many of Tata's big-ticket acquisitions were derided initially and went on to be praised by analysts. It's other purchases include Britain's Tetley Tea, Boston's Ritz Carlton Hotel, Eight O'Clock Coffee, Glaceau flavored waters and South Korea's Daewoo Commercial Vehicle Co.
Other corporations looking overseas include the Aditya Birla Group, which has bought companies in cement, metals, telecommunication and textiles. Last year, Reliance Industries bought Malaysia's leading polyester producer, Hualon Corp, while Wipro bought New Jersey-based Infocrossing Inc.
"Every large and small Indian company is looking at overseas corporations," said analyst Goel.