Case 1

The relationship between Italian automotive major Fiat SpA and India’s Tata Motors to tap the Indian market started with a distribution and service alliance in 2005. This later went on to become a 50:50 industrial Joint Venture (named Fiat India Automobiles Limited) in 2007. Both the companies agreed to a joint distribution network, a back-end support system, and co-manufacturing of products including engine and technology sharing at Fiat’s facility at Ranjangaon in Maharashtra.

While the industrial JV was yet to break even by 2012, the distribution arrangement too failed to live up to expectations and both Fiat and Tata Motors suffered losses. After witnessing a fall in the sales of Fiat branded cars and accumulating huge losses in the JV, Fiat announced that it would exit the joint-branded dealership agreement with Tata Motors. The company decided to go it alone after it sensed the step-motherly treatment faced by prospective Fiat car buyers at the Tata-Fiat showrooms. However, the break up of the JV was only at the dealership level.

1. What type of business restructuring is the above case based on? Please define the type in detail. (3 marks)

2. What were the reasons for which this restructuring to take place? (4 marks)3. When and why did this not work? And which company decided to go separate? (3 marks)4. What is your opinion about Fiats decision to go ahead alone? (3 marks)

Case 2

This case is about the split between the Hero Group and Honda Motor Company. Hero Honda Motors Ltd. (Hero Honda), a joint venture between Hero Cycles of India and Honda of Japan, came into existence in 1984 as a motorcycle and scooter manufacturer in India. In 2001, Hero Honda became the largest two wheeler manufacturing company in India with over a million units produced as well as the 'World's number one' company in terms of the unit volume sales for the calendar year. The technology for manufacturing the bikes was provided by Honda whereas Hero was strong in its distribution and service network spread across the country. In August 1999, Honda Motor Company announced the setting up of Honda Motorcycle and Scooter India (HMSI) for making scooters and later motorcycles as well. After this, the stock of Hero Honda fell by 30%. Subsequently, HMSI started producing motorcycles, competing directly with Hero Honda. Hero felt that its ambition to go international was being hampered by the joint venture. Both the companies decided to end the joint venture and signed their parting agreement on December 16, 2010. With the split, the erstwhile partners became competitors. Both the companies have several opportunities ahead of them and are likely to face challenges to gain and consolidate their position in the Indian two wheeler market.

1. What are the benefits and problems of both companies? (4 marks)2. Discuss whether the decision of both companies to split Hero Honda was correct. (5 marks)3. Analyze the impact of this split on consumers and competitors.(4 Marks)

Case 3

stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds. Stock exchanges often function as "continuous auction" markets, with buyers and sellers consummating transactions at a central location, such as the floor of the exchange.[2]

To be able to trade a security on a certain stock exchange, it must be listed there. Usually, there is a central location at least for record keeping, but trade is increasingly less linked to such a physical place, as modern markets use electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is restricted to brokers who are members of the exchange. In recent years, various other trading venues, such as electronic communication networks, alternative trading systems and "dark pools" have taken much of the trading activity away from traditional stock exchanges.[3]

The initial public offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets are driven by various factors that, as in all free markets, affect the price of stocks (see stock valuation).

There is usually no obligation for stock to be issued via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading may be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global securities market.

Table 1

Rank Exchange Economy1 New York Stock Exchange United States2 NASDAQ United States

3[6] London Stock Exchange Group United Kingdom Italy

4 Japan Exchange Group – Tokyo Japan5 Shanghai Stock Exchange China6 Hong Kong Stock Exchange Hong Kong7 Euronext European Union8 Shenzhen Stock Exchange China9 TMX Group Canada10 Deutsche Börse Germany11 Bombay Stock Exchange India12 National Stock Exchange of India India13 SIX Swiss Exchange Switzerland14 Australian Securities Exchange Australia15 Korea Exchange South Korea

16 OMX Nordic Exchange Northern Europe, Armenia

17 JSE Limited South Africa18 BME Spanish Exchanges Spain19 Taiwan Stock Exchange Taiwan20 BM&F Bovespa Brazil

Major stock exchanges

Major stock exchanges (top 20 by market capitalization) of issued shares of domestic companies, as of 31 January 2015 (Monthly reports, World Federation of Exchanges)

Rank Exchange Economy HeadquartersMarket

cap(USD bn)

Monthly trade

volume(USD bn)

Time zone Δ DSTOpen(local)

Close(local)

Lunch(local)

1New York Stock Exchange

United States

New York 19,223 1,520 EST/EDT −5Mar–Nov

09:30 16:00 No

2 NASDAQ United

StatesNew York 6,831 1,183 EST/EDT −5

Mar–Nov

09:30 16:00 No

3[6]

London Stock Exchange Group

United Kingdom

ItalyLondon 6,187 165 GMT/BST +0

Mar–Oct

08:00 16:30 No

Rank Exchange Economy HeadquartersMarket

cap(USD bn)

Monthly trade

volume(USD bn)

Time zone Δ DSTOpen(local)

Close(local)

Lunch(local)

4

Japan Exchange Group – Tokyo

Japan Tokyo 4,485 402 JST +9 09:00 15:0011:30–12:30

5Shanghai Stock Exchange

China Shanghai 3,986 1,278 CST +8 09:30 15:0011:30–13:00

6

Hong Kong Stock Exchange

Hong Kong

Hong Kong 3,325 155 HKT +8 09:15 16:0012:00–13:00

7 Euronext Europea

n Union

AmsterdamBrusselsLisbonLondonParis

3,321 184 CET/CEST +1Mar–Oct

09:00 17:30 No

8Shenzhen Stock Exchange

China Shenzhen 2,285 800 CST +8 09:30 15:0011:30–13:00

9TMX Group

Canada Toronto 1,939 120 EST/EDT −5Mar–Nov

09:30 16:00 No

10Deutsche Börse

Germany

Frankfurt 1,762 142 CET/CEST +1Mar–Oct

08:00 (Eurex)08:00 (floor)09:00 (Xetra)

22:00 (Eurex)20:00 (floor)17:30 (Xetra)

No

11Bombay Stock Exchange

India Mumbai 1,682 11.8 IST +5.5 09:15 15:30 No

12 National Stock Exchange

India Mumbai 1,642 62.2 IST +5.5 09:15 15:30 No

Rank Exchange Economy HeadquartersMarket

cap(USD bn)

Monthly trade

volume(USD bn)

Time zone Δ DSTOpen(local)

Close(local)

Lunch(local)

of India

13SIX Swiss Exchange

Switzerland

Zurich 1,516 126 CET/CEST +1Mar–Oct

09:00 17:30 No

14Australian Securities Exchange

Australia

Sydney 1,272 55.8 AEST/AEDT +10Oct–Apr

09:50 16:12 No

15Korea Exchange

South Korea

Seoul 1,251 136 KST +9 09:00 15:00 No

16OMX Nordic Exchange

Northern Europe, Armenia

Stockholm 1,212 63.2 various

17JSE Limited

South Africa

Johannesburg 951 27.6 CAT +2 09:00 17:00 No

18BME Spanish Exchanges

Spain Madrid 942 94.0 CET/CEST +1Mar–Oct

09:00 17:30 No

19Taiwan Stock Exchange

Taiwan Taipei 861 54.3 CST +8 09:00 13:30 No

20BM&F Bovespa

Brazil São Paulo 824 51.1 BRT/BRST −3Oct–Feb

10:00 17:30 No