Category Archives: Business Strategy

Aerospace, Business Strategy, Outsourcing, Project Management, Software

British Airways Outsourcing ba.com

http://www.telegraph.co.uk/telegraph/multimedia/archive/01008/british-airways-46_1008478c.jpgTroubled economic times can bring all kinds of new projects. British Airways, bellweather of UK economy to a good extent, wants to outsource the operations for its flagship ba.com website as part of a major cost-cutting exercise.

It is estimated that ba.com takes about £30 million per year to run, and that BA is looking to save a big chunk here. BA Travel Booking and Servicing functions of ba.com – a major part of the ecommerce programme for BA’s online platform – will be outsourced to a third party under proposals being evaluated currently.

BA already uses third party vendors to for online FAQ service and payment system. Now even more will be outsourced, or maybe even sold, depending on how the proposals come. This blog post has more info.

5 Questions, Business Strategy, Capital Markets, Finance, MyOrbit Blogs, Start-ups, Venture Capital

5 Questions on Venture Capital Funding

In this post, we will answer 5 Questions on Venture Capital Investment, that we have seen from early stage companies seeking Venture Capital funding. The above video also expresses similar views.

Q1: How does Venture capital work?

Answer: Venture capital is the term used for unsecured equity funding by specialist investment firms (often focusing on a few sectors) in return for a part of the equity in the company being funded. Venture capital investments carry considerable risk because they are unsecured and it is estimates that only 1 in 10 early stage companies generates good profits.

Q2: How much equity stake do VCs usually take?

Answer: The most common equity stakes taken seem to be in the range of 20-50%, which ensure that if the company succeeds, then the VC makes a good return. Over 50% equity investment by any one VC is rare because the risk increases significantly.

Q3. What do a VC expect in return for the equity funding.

Answer: Because only a few ventures actually become profitable, a venture capital company looks for a high return (a compound return of 25% or more) on each plan, largely generated by growth in the share value of the invested company through increasing brand name and also increasing sales. Most VCs also seek a representation on the company’s board, though it is not a guarantee of producing success from the venture. A good VC would be a partner with the entrepreneur. So personal dynamics are very important. VCs help with raising additional money and financial strategy and also executive team strengthening.


Q4: How much time does it take to raise venture capital?

Answer: It takes about 6 months. Raising capital will take longer than you imagine. Plan for 6 months, and think beyond initial funding. Set realistic milestones, and keep planning for future capital. Learn from others, including other business owners and investors. If you are looking for funding, you have to be patient. For every VC who invests in your venture, there will be 10 VCs who would say no to you.


Q5: How should we approach the business plan writing?

Answer: When it comes business plans, you need a crisp 1-2 page executive summary and it must show a good story of what you want to achieve and what resources you have and what you are looking for. The more you precisely know your Haves and Have Nots, the better your business plan. So don’t get trapped in a 50 business plan that’s full of all kinds of data and it never completes itself.

A long business plan is not a good idea if the same message can be expressed in a couple of pages. Don’t confuse number of pages with clarity of thoughts. Go ahead with a business plan that’s brief and present a coherent logic that interests to the VC. Be honest on things you don’t know. Investors appreciate people who are transparent.

If you are looking to write a business plan, then use this website: BusinessPlan247.com

Business Strategy, Capital Markets, Market News, MyOrbit Blogs, People

US and Global Financial Crisis – Views & Updates

Like most of you, we have been watching the developments for the last few weeks, as MyOrbit spans worldwide with a link into the global markets. This post puts our thoughts and updates for you.

Background:

Financial institutions have been struggling to meet the mandates of bad loans, and the global markets have been showing the effects.

Banks are allowed to lend about 10 times the capital they have on deposit (called CAR: capital adequacy ratio), but multiple banks seem to have not-confirmed to this requirement, and in effect lending much more than their safe limits. Losses on mortgage-related securities have depleted bank capital. Those securities had collapsed with falling home prices, along with increasing defaults and foreclosures.

Now the common annual-deadline-abiding taxpayer of the US will be paying for the lack of accountability by Wall Street Banks, and to an extent the Financial Heads in the US government.

While the US legislation passed a bailout package of $700 bn with good intentions (following great effort by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke)…but the what, when, where, how- are still not clear.

If so much of US tax payer’s money has to be used to rescue poor performing banks…and there’s a reason why they are poor performing …because they gave $500k to $1 million mortagages to almost everyone who asked in 2005-2007 without much due diligence (we heard about NYC road-side pirated DVD sellers getting $500k mortgages!)

And the tax contribution from the people who received those bumper mortagages probably don’t add up more than a few billion dollars, which leaves the majority of common tax payers holding the $700 bn bill….for a lunch they never had!

Initially, the plan was to buy distressed securities of the banks to help clean-up the Balance sheets of the Banks– but that did not sound good. Why should the Govt buy toxic securities which will only cause loss and give nothing much in return?

Updates:

Henry Paulson’s earlier life as an investment banker is now playing a key role in how the bailout solution is shaping up.

Most Republicans and Democrats in the US legislation agree on taking equity stakes in financial institutions, because if government money is going to be used, taxpayers should at least get the chance eventually to profit from the investment.

So the US legislation is now following the approach used by European govts — and will fund the recapitalization. Thankfully, the focus of Paulson’s initial plan — of buying distressed mortgage-related securities to improve banks’ balance sheets and make it easier for them to lend again — is not being shifted to buying equity/holding position in the distressed banks and FIs.

The latest approach of buying equity stake in distressed banks and FIs is a much better option for the taxpayer funds. At least there is an upside if/when some of the distressed banks and FIs do well, the Govt would gain from appreciation of its equity stake. In that sense, the Govt is taking the role of a mega-investment-banker by underwrtiting the securities of these banks and FIs.

Advertising, Business Strategy, Innovation, Market News, MyOrbit Blogs, New Media

Success Story of Wall Street Journal Online

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At one time, newspapers were incredibly influential in terms of their ability to shape opinion. This is not the case anymore. The main reason for this is the fact that online news sources are providing serious competition to the traditional print press. This has led to a significant decline in newspaper circulations.

However, a small number of print newspapers like the Wall Street Journal have not only survived the online storm; they have done extraordinarily well despite the competition. The newspaper still boasts two million readers a day. Even more impressive, however, is the fact that the paper has transitioned quite well into the online medium. Its online subscriber numbers are staggering as the paper has close to one million members. These are truly amazing numbers and it leads many people to wonder the secret of the Wall Street Journal’s success.

Part of the reason is that although the newspaper is named after a particular street in New York City, the subject matter of the paper is international in scope. There are financial markets all over the world. People involved in these markets require an influx of news on the subject of banking, finance, and the economy.

Whether it is the financial district of modern London or the black Wall Street of 1920’s Oklahoma, people all over the world have required financial news. The Wall Street Journal provided for that need. As a result, it has been reaping the rewards since its inception in an earlier century.

Of course, the ability for the Journal to stay relevant ties in with the foresight to create an online presence. This is no minor feat. Had it not effectively developed a credible online subscription service it would have lost ground to more visionary start ups. Yes, the Journal could have gotten into the game at a later date but this would have been seen as a “follow the leader” tactic and not one of innovation. The New York Times learned this lesson when its late start into online news subscription services never caught on.

How ahead of the game was the newspaper in this regard? Well, the website debuted in 1996. (URL: WallStreetJoural.com) The internet was making its first expansion into people’s homes during this time period. They were well ahead of the curve since it immediately jumped into the fray. Yes, several newspapers had websites but they were sparse and did not truly embody the look and feel of a new media dynamo. The Wall Street Journal Online did and it set the foundation for the future growth that it would soon experience.

Part of the reason for this is that they understood the trends media communications were being directed. Since the Wall Street Journal lived in a realm of dollars and cents, it understood that the future of news would be found in online subscriptions. Traditional newspapers were simply too mired in tradition to grasp this concept. As such, they fell behind while the Wall Street Journal embraced change and rode it to significant new media success.

This is an article written by one of our Wall Street experts of the Wall Street Gemzies page. This Gemzies page is an Online Wall Street Community where fellow experts can share, rate and find websites, videos photos, books and the latest news. We have got some great content on the Wall Street Bull, Black Wall Street and the Wall Street Journal. We invite you to join our Wall Street Gemzies. Article by Marcel_Van_Brienen.

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A few thoughts by MyOrbit: 

The  Wall Street Journal has maintained a prime position in the free market economy, and whether you agree with their views or differ, it is a fact that their view reaches a few million business/financial professionals, and hence has the ability to make tremendous positive or negative influence on any topic they touch.

That said, the online medium, including blogs and websites like ours, are playing an increasingly important role in providing the raw material/ stories that ultimately appear on the pages of Wall Street Journal. The advances in online media have made it possible to get noticed rapidly. For example, Many reporters regularly pick stories from the top social bookmarking sites like Digg and Stumble-Upon.

These are interesting times, and Wall Street Journal surely has made itself comfortable in the online space, which in way, ensures its survival and leadership position in the coming years.

5 Questions, Biotech, Business Strategy, Innovation

The Business Strategy of Genetically Engineered/Modified Seeds

Genetically modified seeds can give higher farm yield but they come at a high price because the real cost of the seeds comes from the sustained dependency of the farmer on the seed company. In fact, for the control it gets on the farmers, the seed company could even give the seeds for free.

So the business strategy is very similar to how the printer companies like HP can actually afford to give the printers free, because the actual money comes from the printer cartridge sale.

The main difference is that seeds are much more important for a country’s economy, especially for a country like India with a large base of farmers who depend completely on agricultural income. It is also believed that most domestic seed companies in India are controlled or influenced by the multinational seed company.

A company like Monsanto is just doing its business. They have made investments in R&D and want profits like any other business. The solution lies in having more educated farmers who can make informed decisions about when to use Genetically Engineered/Modified Seeds and when to stick to organic seeds.