International competiveness and innovation Essay

International competiveness and innovation - Essay Example Globalisation is considered to be one of the most important events of the modern civilisation. It has brought major developments in the human activities as well in the thought process. This has made their thought process more liberal and innovative. People are using their innovative mind as a tool for economic and social enhancement. Innovation is a common trait among scientists and entrepreneurs who use this trait to bring social, technological and economic developments. Innovation refers to the creation of new ideas, concepts, thoughts that can be further be used for growth and developments. Primarily, innovation is categorized into two major types i.e. radical and incremental. Radical innovation involves the performance improvements of product or services and incremental innovation results in bringing improvements in production process like efficiency, cost-effectiveness etc (Urabe, Child and Kagono, 1998, p.4). Innovation is one of the core features of modern society and technolo gical improvement is a major outcome of this feature that boosts the growth of an economy. The changing technological system has influenced the entire structure of an economy. Modern technological system has led to upgradating international trade and business causing enhancement of economic parameters. Moreover, with the technological developments, many new industries have been evolving to meet the latest of population. On the other hand, the existing organisations also aim to implement latest technologies for shaping their performance for gaining an upper hand and sustainable competitive advantage in the market. Constant technological innovation has become an important criterion for social and economic development and due to this, proper awareness among the entire population is inevitable. People have to realize the importance of basic sciences as it develops a foundation for being innovative, creative and productive. R&D programs are initiated by the organisations seeking technolo gical developments and performance enhancements. 2. Collaborations and Alliances The business environment of the modern world is characterised by highly turbulent phases. With the advent of globalisation firms are increasingly trying to reach out to new consumer markets. Collaboration and alliances are largely used as a tool by business organizations to enter new markets. This strategy has largely been used by the airlines industries to form mega consortiums so as to gain strategic advantage. An example in this regard is the airline industry which has used collaborations and alliances for research and development activities. The major players in the American and European airline market which are dominating the global aerospace industry have used collaborations to enhance the level of research and development activities. In spite of the advantages of a strategy of collaboration and alliances, ‘spillover’ effects are also associated with this strategy. The ‘spillove r’ effect has largely been observed in technology intensive industry segments like biotechnology. However, the analysis of literature reveals considerable difference in the nature of ‘spillover’ in the aerospace industry with patents and licensing being the most prominent difference between the two sets of industries. Difference in demand and supply dynamics also generates considerable differences. The main sources of ‘spillovers’

Finance Essay Example | Topics and Well Written Essays - 1500 words - 1

Finance - Essay Example investment in diversified portfolio like equity, bond, preference share, different securities etc in domestic as well as international stock market. A number of companies are attached with this investment process where the finance managers and the fund managers of the investment companies are responsible for the whole process of investment by taking into consideration the associated risk factor (Kimmel, 2008 p.145). Risk and Return In case of investment, risk is associated with the financial operation and transaction of securities and stocks (Correia, 2007 p.111). So, the risk of the financial operation is determined by calculating the difference between the expected return and the actual return of the stocks. On the other hand the return on the investment designates the total earnings of the investment. Here the return of the investment may be positive or negative. Rate of return is the fundamental expectation of the investors. If the portfolio manager decides to invest in the euro denominated bonds, the return on investment would be around 11.5%, whereas, the US denominated bonds would provide a return of around 9.9%. Thus there would be a difference in return when comparing these two bonds. Therefore, the portfolio manager should aim at maximizing the portfolio returns (wealth maximisation) by making the entire foreign bond allocation in euro denominated bonds, to fetch more returns for his investment. Frequent changes in the economic condition and currency value of US affects the US bonds. So, euro bonds hold a strong position than US bonds. Portfolio managers should also take into consideration that higher returns are associated with higher risks. However, the European currency in comparison to the US currency is quite stable in nature. Therefore, the euro-denominated bonds do not get much affected by the volatility in the market (Kieso, 2010 p.169). Portfolio Theory The main theme of the portfolio theory is to minimise the risk by allocating the financial securities into different portfolio i.e. by diversifying the portfolio. This theory is introduced by Harry Markowitz in 1952 to maximise the wealth of the investor by mitigating the risk. Hedging strategy is a part of portfolio theory and it involves with the reduction of risk of the investments domestically as well as international markets. But companies can invest in appropriate proportions in different stocks by framing proper hedging strategy. Mainly, there are two types of hedging strategies followed by the corporate sectors like financial hedging and operational heading. The financial heading strategy is mainly applied in the derivative instruments, foreign currency borrowings and loan related matters. However, operational hedging is applicable in the cases where investment is diversified internationally. Most of the investment companies invest in different countries to control the foreign exchange market and to maximise the return from investment. This is also a part of the portfolio strategy. Thus investing in a portfolio reduces the risk of investment as compared to the risk involved in 100% investment on a certain stock.