Strategic Business Management and Planning of IKEA

Strategic Business Management and Planning of IKEA IKEA has its roots in Smaland, historically one of Swedens poorest regions, so hard work and economizing with resources have always been a part of its heritage. The influence can be seen in products and value-system. Based on deep knowledge of peoples lives at home, IKEA offers good quality, durable and functional home furnishing products for everyday life today. IKEA continues to learn from, and develop with co-workers, customers, suppliers and other partners in 41 countries. The policy is to make out a lot out of very little. Since it was founded IKEA has always had the concern for people and the environment. The IKEA vision to create a better everyday life for the many people puts this concern at the heart of the business. IKEA has responded to the publics rising concern for sustainability in its choice of product range, suppliers, stores and communication. It has also spotted business potential in providing sustainable solutions. Contents Table of Contents Introduction IKEA is an internationally known home furnishing retailer with fully integrated supply chain including its own industrial groups Swedwood Swedspan. The IKEA Group directly or indirectly also owns retail centres, always with an IKEA store as a unique anchor tenant. It has grown rapidly since it was founded in 1943. Today it is the worlds largest retailer, recognized for its Scandinavian style. The majority of IKEAs furniture is flat pack, ready to be assembled by the consumer. This allows reduction in costs and packaging. IKEA stores include restaurants and cafes serving typical Swedish food. They also have small food shops selling Swedish groceries, everything from the famous meatballs to jam. The IKEA group works in four basic areas: range strategy product development, production, supply and retail. Low prices are one of the cornerstones of the IKEA concept and help to make customers want to buy from IKEA. This low strategy is coupled with a wide range of well designed, functional products. IKEAs products cater from every lifestyle and life stage of its customers, who come from all age groups and types of households. This has become the vital feature when the retail sector is depressed, as it increases IKEAs potential market. Why IKEA? Walking into an IKEA is like walking into a whole new world, its a wildly different experience when I visited the IKEA store for the first time. Its an incredible value for money. IKEA offers a tremendous bargain to the savvy buyer you just have to pick wisely. Many of IKEAs product ranges are component based, meaning that the parts and pieces that make up the whole are sold separately, so lots of flexibility. Low price, but not at any price is IKEAs motto when it comes to social environmental responsibility. IKEA works toward using the least amount of resources possible and as many renewable and recyclable material as possible in their products. While price is a prime consideration neither safety nor quality are compromised in the pursuit of a low price. One of the fundamental reasons that IKEA is able to sell for less is that they expect and require you to do part of the work yourself. The IKEA group has developed an environmental policy to ensure that the company and its co-workers take environmental responsibility for all activities conducted within its business. Marketing Strategy Your partner in better living. We do our part, you do yours. Together we save money. Internet, T.V., Newspapers, magazines. Catalog being the main marketing instrument. IKEAs success is based on principal marketing strategies that remain the same throughout the world, which include a catalogue that is printed in 17 languages and the use of the colors of the Swedish flag blue and yellow in IKEA logo. This is combined with an emphasis on customer freedom and choice with regard to buying and taking home products, and low prices intend to create a sale mentality amongst customers. This aggressive price strategy coupled with a wide product range catering for every potential lifestyle and life stage of a consumer, can best summarize the companys recipe for success. General Marketing Strategy To describe IKEAs marketing strategy it is necessary to start with its business concept as formulated in IKEAs mission (IKEA 12 Jan 2009).IKEA offers a wide range of well designed, functional home furnishing products at prices so low that as many people as possible can afford. The key words in the business mission, address several marketing aspects and the marketing strategy can be seen to emanate from it. One central theme is the alleged standardized approach of IKEA: IKEAs guiding principle is to work in the same way in every country within which it operates. SWOT Analysis IKEAs goals of sustainability and environmental design are central to its business strategy. It has launched a new sustainability plan to take the company through to 2015. This will combine social, environmental and economic issues. IKEA uses SWOT analysis to help it reach its objectives. This is a strategic planning tool. It helps the business to focus on key issues. SWOT is the first stage of planning and looks at the strengths, weaknesses, opportunities and threats involved in a project or business venture. Strength and weaknesses are internal aspects. This means they are within the control of the business. They may refer to aspects of marketing, finance, manufacturing or organization. Opportunities and threats are external factors. This means that they are outside the control of the business. These may include the environment, the economic situation, social changes or technological advances, such as the internet. (Johnson, 2005) Strengths Every company needs to analyze its strengths so that the company can overcome its shortcomings and can increase its profits. IKEA attracts key consumer groups as it is a strong global brand. It promises good quality and price. It offers wide range of well designed, functional products at low prices. It is important to have good relations between suppliers, retailers and customers. Ikeas adopt strategic schemes of work based on relationship marketing which aspire to make better customer devotion and long term relationship with suppliers. Here the Porters Five Forces (Appendix 2) model can be applied. In relation to buyer power in the company IKEA seeks to enhance customer loyalty and make good relations with existing customers while aiming at winning new customers also and tying them into long term relationships with companies. To result this IKEA provides nursing rooms and playgrounds for parents to make sure that the children have positive experience at the outlets and offering home delivery. It also provides a hotline for customers who have troubles with the assembly or missing parts. According to Five Forces Model of Porter (Appendix 2), the substitute products are matter of searching for other products which can perform the same function as the product of the industry. While furniture cannot be the substituted product by the majority of people. Therefore IKEA has the nature of supplying them and the manner in which products or services can be supplied, have become highly substitutable with technological developments. IKEA organizes the furniture in its store in such a way that the customers would not need to try on the furniture to see if they fit and look good in their rooms and computer imaging could allow the creation of virtual rooms. By this the suitability of purchasing of products also increases. The emergence on e-shopping method is another example that IKEA applied and will continuously shape traditional furniture retailers competitive positions in the market. Such strategies have yet remained underutilized and such substitutes have yet become part of t heir competitive strategies. Weakness IKEA has to grant its weaknesses so as to improve and manage them. This will help to set its objectives and developing new strategies. The size and scale of its global business can be one of its weaknesses. It could make it hard to control standards and quality. In some countries, they do not execute the legislation to control working condition, where IKEA products are made. This shows a weak link in IKEAs supply chain, disturbing consumer views of IKEAs products. IKEA needs to balance between the low costs and good quality products. It doesnt differentiate itself and its products with other competitors. It believes that there is nothing to compromise between good quality products and low prices. It must keep good quality relations with the customers and the stakeholders about its environmental actions. To enable business to communicate with different target audiences IKEA produces publications in print and online (eg People and the Environment) and carries out major TV and radio cam paigns. It operates in a highly competitive industry, characterized by small family-run businesses producing low cost which include other low priced furniture producers characterized by designs that are expensive which results in small-scale production for the local market. Besides this, a few large retailers such as Nova, Courts and Furniture mall enjoying economies of scale to compete effectively as they are producing affordable products. It can be seen that the competition of rivals is intense with IKEA and Porters Five Forces can be applied. It has seen that there are the differences of opinion concerning product offerings and positioning. Opportunities Every business take an advantage of opportunities that arise uses its strengths. IKEA believes that resulting in good conducts even in a price sensitive market it should conduct environmentally focused business. As the company states that the customers live more suitable life at home as there is a true business potential for IKEA in providing solutions to them. IKEA is recycling and reusing the used products and is developing effective solutions for customers to support them, aiming at producing new IKEA products with recycled materials. IKEA has some of the opportunities that take advantage of through its sustainability agenda are- increasing demands of greener products, increasing demand for low priced products. The customers may switch from more expensive stores to IKEA by seeing the trends in current financial climate. IKEA gives online tips and suggestions for sustainable life at home. To be open with all its stakeholders IKEA builds trust with its consumers, co-workers, key opi nion farmers and press through good communication. It organizes programmes to reduce its use of water. IKEA also focuses on developing social responsibility; here IKEA applied Corporate Social Responsibility Strategy, its policy includes support for charities such as World Wide Fund, UNICEF and Save the Children. IKEAs relationships are redefined by IWAY policies and practices with suppliers with more effective way. The actions of IKEA in response to the crises of 1995 were very appropriate as the company made a realization that it would be in their best interest to think long term instead of short term. Threats IKEA can use a particular strength in defending against threats in the market. If a company is aware of its threats it can plan to counteract them. By applying PESTEL Framework (Appendix 3), IKEA has threats in social factors. IKEA gives suggestions to the customers for more sustainable life by online. Because of this the customers would reduce their impact on the environment although it saves money. IKEA is large enough to enjoy economies of scale. This lowers average costs in the long run through, for example, effective use of technology or employing expert managers. Economies of scale also give a business a competitive perimeter if cost savings are then conceded on to customers in the figure of lower prices. For the smaller companies entering into the market this puts up high Barriers to Entry (Appendix 2). Economic factors, part of PESTEL Framework (Appendix 3), can also be applied here as in tough times IKEA create an appeal amongst its customers as it provides low prices. When the retail sector is depressed it is better to low cost as much as possible. Consumers come with limited financial resources because of the IKEAs pricing strategy. Its products will also demand to those with higher budgets through good quality and design. The company must make sure that it is always recognized in the future as having lowest cost on the market. Communication plays an important role here. There is an overall threat to the performance of the business in UK and American markets due to global depression there is over rising of living costs and depleting disposable income. Conclusion With hundreds of stores across the world IKEA is a well known global brand. It must charge its external and competitive environment in order to improve performance. By this it can reveal the key opportunities and the threats it can deal with. IKEAs passion combines design, economical use of resources, low prices and responsibility for people and the environment. IKEA tries to go ahead of profitability and reputation. It develops a sustainable business (Appendix 1). This will make an enhanced daily life for its customers. IKEA has exposed a business truth- being sustainable and accountable is not just good for customers and the planet; it is also excellent for business. A steady development of the IKEA retail business appears to be the focus for the company in the near future, with strategies unlikely to include aggressive expansion into new areas, but rather building and developing in old. (The United Kingdom, 2005). However development of e-commerce some changes may be seen. As IKEA is already assured that its products are of good quality and craftsmanship, the consumers may prefer to but its products through Internet. IKEA has also adopted an insistent expansion-based strategy more than the last few years, although the flaw of the external consumer market means that sales growth in excess of the next few years should remain relatively reserved.

Literature: Spanish Language Essay

Philippine literature is the literature associated with the Philippines and includes the legends of prehistory, and the colonial legacy of the Philippines. Most of the notable literature of the Philippines was written during the Spanish period and the first half of the 20th century in Spanish language. Philippine literature is written inSpanish, English, Tagalog, and/or other native Philippine languages. ————————————————- Classical literature in Spanish (19th Century) On December 1, 1846, La Esperanza, the first daily newspaper, was published in the country. Other early newspapers were La Estrella (1847), Diario de Manila (1848) and Boletin Oficial de Filipinas (1852). The first provincial newspaper was El Eco de Vigan (1884), which was issued in Ilocos. In Cebu City â€Å"El Boletà ­n de Cebà ºÃ¢â‚¬  (The Bulletin of Cebu), was published in 1890. On 1863, the Spanish government introduced a system of free public education that had an important effect on the ability of the population to read in Spanish and further in the rise of an educated class called the Ilustrado (meaning, well-informed). Spanish became the social language of urban places and the true lingua franca of the archipelago. A good number of Spanish newspapers were published until the end of the 1940s, the most influential of them being El Renacimiento, printed in Manila by members of the Guerrero de Ermita family. Some members of the ilustrado group, while residing or studying in Spain, decided to start a literary production in Spanish with the aim of serving the autonomy and/or independence projects. Members of this group included Pedro Alejandro Paterno, who wrote the novel Nà ­nay (first novel written by a Filipino); the Philippine national hero, Josà © Rizal, who wrote excellent poetry and two famous novels in Spanish: Noli Me Tangere (Touch Me Not), and El Filibusterismo. A potent tool in promoting Filipino nationalism in Spanish was the foundation of La Solidaridad (more fondly called La Sol by the members of the propaganda  movement) in 15 February 1885. With the help of this organ, Filipino national heroes like Josà © Rizal, Graciano Lopez Jaena, Marcelo H. del Pilar, etc. were able to voice out their sentiments. Poetry and metrical romances * Ladino Poems – Were natives of first Tagalog versifiers who saw print: highly literate in both Spanish and the vernacular. * Corridos – Were widely read during the Spanish period that filled the populace’s need for entertainment as well as edifying reading matter in their leisure moments. * Awit – like corridos, these were also widely read during the Spanish period as entertaining, edifying, reading manner in their leisure time. It is also a fabrication of the writers imagination although the characters and the setting may be European. The structure is rendered dodecasyllabic quatrains. Prose The prose works of the Spanish Period consisted mostly of didatic pieces and translations of religious writings in foreign languages. [edit]Dramas [edit]Religious drama * The Panunuluyan– Literally, seeking entrance, the Tagalog version of the Mexican Las Posadas. Held on the eve of Christmas, it dramatizes Joseph’s and Mary’s search for Bethlehem. * Cenaculo – Was the dramatization of the passion and death of Jesus Christ. * Salubong – An Easter play that dramatizes the meeting of the Risen Christ and His Mother. * Moriones – Refers to the participants dressed roman soldiers, their identities hidden behind colorful, sometimes grotesque, wooden masks. * The Santacruzan – Performed during the month of May which have the devotion for the Holy Cross. It depicts St. Elena’s search for the cross on which Christ died. * Pangangaluwa – An interesting socio-religious practice on All Saint’s Day which literally means for The Soul. Secular dramas These were generally held during the nine nights of vigil and prayers after someone’s death, on the first death anniversary when the family members put away their mourning clothes. * The Karagatan – comes from the legendary  practice of testing the mettle of young men vying for a maiden’s hand. The maiden’s ring would be dropped into sea and whoever retrieves it would have the girl’s hand in marriage. * The Duplo – A forerunner of the balagtasan. The performances consist of two teams; One composed of young women called Dupleras or Belyakas; and the other, of young men called Dupleros orBelyakos. * The Comedia – It is about a courtly love between, a prince and a princess of different religions. It is about a Christian-Muslim relationship. * ————————————————- Modern literature (20th and 21st century) The greatest portion of Spanish literature was written during the American period, most often as an expression of pro-Hispanic nationalism, by those who had been educated in Spanish or had lived in the Spanish-speaking society of the big cities, and whose principles entered in conflict with the American cultural trends. Such period of Spanish literary production—i.e., between the independence of Spain in 1898 and well ahead into the decade of the 1940s—is known as Edad de Oro del Castellano en Filipinas. Some prominent writers of this era were Wenceslao Retana and Claro Mayo Recto, both in drama and essay; Antonio M. Abad and Guillermo Gomez Wyndham, in the narrative; Fernando Marà ­a Guerrero and Manuel Bernabà ©, both in poetry. The predominant literary style was the so-called â€Å"Modernismo†, a mixture of elements from the French Parnassien and Symboliste schools, as promoted by some Latin American and Peninsular Spanish writers (e.g. the Nicaraguan Rubà ©n Darà ­o, the Mexican Amado Nervo, the Spaniard Francisco Villaespesa, and the Peruvian Josà © Santos Chocano as major models).

Modern Tragic Hero Essay - 1304 Words

Death of a Salesman, considered as Author Millers most accomplished and successful plays, features the life of Willy Loman, a delusional salesman with a grandiose plan to live the American dream. As a result to the tragic events of Willy Loman’s life starting with his father’s abandonment, and ending with his suicide, Willy Loman never lives the life he has always dreamed. Although, arguably discredited as a tragic hero, Willy Loman attains the qualities essential to credit him as a tragic hero of modern times. Whether or not Willy Loman is a tragic hero in Death of a Salesman’s has been a subject of controversy since the play’s first production. Traditional Aristotelian perception of a tragedy asserts that a tragic hero†¦show more content†¦The abandonment left Willy with no one to direct him towards the right path, this is evident when Willy states, â€Å"dad left when I was such a baby and I never had a chance to talk to him and well I stil l feel kind of temporary about myself† (act 1). Willy struggles with unanswered questions about his father, and in turn, he looks to his imaginary brother Ben for answers to his questions. Predisposed to abandonment Willy Loman had no one to show him how to be a good father, and for Willy staying by his family’s side, and raising his kids is a heroic quality. Willy had misguided conceptions, and failed aspirations, which ironically gave his sons an example of how not to live life. Willy’s son Biff realized his father’s deluded interpretation of attaining happiness, and rejected making the same mistakes. Willy never had an influence to guide him through his choices. When his brother Ben Visits him he is eager to know if he is raising his kids the right way, and he shows very noble qualities when he takes the responsibility for his son’s failures even though he never had a father figure to provide an example of how he should raise them. Counter to t he previous claim, Willy did in fact abandon his family not once but twice. The first time occurred during his affair with the woman in Boston the second when he committed suicide. However, the woman in Boston contributes to the idea of Willy Loman as a tragic hero. Aristotle’s view of a tragic heroShow MoreRelatedDeath of a Salesman-Is Willy a Modern Tragic Hero?2271 Words   |  10 PagesAttention, attention must be paid to such a man. In which parts of the play can Willy Loman be considered great, and where does he seem a low man. Do you agree that he is truly a modern tragic figure? Death of a Salesman is a play that has come to redefine the concept of modern tragedy. 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The acquiring of Bank of Rajasthan by ICICI - Free Essay Example

Sample details Pages: 7 Words: 2179 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? 3.1 DEAL STRUCTURE The acquiring of Bank of Rajasthan by ICICI was a no cash deal. The deal was valued at Rs.3041 Cr. Each share of Bank of Rajasthan was valued at Rs.189/- giving a premium of around Rs.90 per share. Table no. 3.1 showing Deal valuation Particulars Swap Ratio Outstanding Shares(Cr.) Price before announcement Market Cap Deal Value(Cr.) ICICI 25 111 889.35 99921 3042 BANK OF RAJASTHAN 118 16 99.5 1527 Interpretation- Don’t waste time! Our writers will create an original "The acquiring of Bank of Rajasthan by ICICI" essay for you Create order The deal was done by stock swap. It was thought to be 1:3, but later the swap ratio was decided at 25:118 as mentioned; means 25 shares of ICICI for 118 shares of Bank of Rajasthan. The swap ratio was at around 90% premium over the market pricing of Bank of Rajasthan. As the deal was a no-cash deal , ICICI had to dilute 3% equity for the deal. The net worth of Bank of Rajasthan at the time of merger was estimated to be around Rs 760 Cr. and that of ICICI Bank Rs 5,17,000 Cr.. In the quarter ending Dec 2009, Bank of Rajasthan reported a loss of Rs 44 Cr. on an income of Rs 373 Crores. So, ICICI Bank had to take in these losses too. 3.1.1 Multiples Method Value based on comparable P/B The table gives P/B ratio of some banks which can be compared with the BANK OF RAJASTHAN( I have excluded some high profile banks like HDFC, ICICI, Axis Bank etc) Table no. 3.2 showing P/B ratio of BoR acquisition Bank P/B Ratio Dhanalakshmi Bank Ltd 2.2 Karur Vysya Bank Ltd 2.0 City Union Bank Ltd 1.9 ING Vysya Bank Ltd 1.7 Development Credit Bank Ltd 1.4 United Western Bank Ltd 1.2 Jammu and Kashmir Bank Ltd 1.2 South Indian Bank Ltd 1.2 Federal Bank Ltd 1.1 Karnataka Bank Ltd 1.1 Interpretation- The average price to book ratio comes to be around 1.5. Using the ratio and book value of 1048.8 Cr. value of BANK OF RAJASTHAN = 1.5 x 1048.8 = 1573 Cr.. The deal value of more than 3000 Cr. is quite costly in this regard which values BANK OF RAJASTHAN at almost double the current value. 3.1.2 CALCUATION OF INCOME PER BRANCH Table 3.3 showing income per branch Total deposits(in Crs) 15187 CDR 74.20% spread on money they can lent 3.50% Spread on money they canà ¢Ã¢â€š ¬Ã¢â€ž ¢t lent -2.05% Money which they can lent (15187*CDR) 11268.75 Money which they canà ¢Ã¢â€š ¬Ã¢â€ž ¢t lent (15187*(1-CDR)) 3918.246 Number of branches 463 Income on money they can lent 0.85185 Income on money they canà ¢Ã¢â€š ¬Ã¢â€ž ¢t lent -0.17348 Total Income Income on money they can lent = = 0.85185 Income on money they canà ¢Ã¢â€š ¬Ã¢â€ž ¢t lent == (-0.173486) Total Income = 0.85185+ (-0.173486) = 0.678364 Interpretation- Even if they would have gone natural growth and built all the branches, it would have cost them a mere Rs 1911 Cr. which is way below the valuation that they paid to acquire bank of Rajasthan. Thus the deal is absolutely overpriced and it would have resulted in some value destruction for the ICICI shareholders. 3.2 RATIO ANALYSIS PROFITABILITY RATIO OPERATING PROFIT MARGIN NET PROFIT MARGIN These ratios measure the ability of the firm to generate profits. These ratios are of interest to investors who would like to invest in the most profitable companies around. OPERATING PROFIT MARGIN Operating profit OPERATING MARGIN RATIO = X 100 Sales ICICI BANK Table 3.4 showing Operating profit of ICICI Bank Year 2006-07 2007-08 2008-09 Operating Margin (%) 28.87 26 26.22 Graph 3.1 showing Operating profit of ICICI Bank Significance: This ratio establishes the relationship between total operating expenses to sales. It shows the operating efficiency of the firm. When the operating ratio is less it indicates higher operating profit and vice versa. Interpretation: The Operating profit margin has decreased from 28.87% in 2006 to 26% in 2007.It increased in 2008 to 26.22 % . The average pre merger ratio is 27.03%. This indicates that the operating margin is not stable. BANK OF RAJASTHAN Table 3.5 showing Operating profit of BoR Year 2006-7 2007-8 2008-9 Operating Margin (%) 28.84 21.18 21.12 Graph 3.2 showing Operating Profit of BoR Interpretation: The Operating profit margin of BoR has decreased from 28.84% in 2006 to 21.18% in 2007.It decreased slightly in 2008 to 21.12 % . The average pre merger ratio is 23.71%. This indicates that the operating margin is not stable. NET PROFIT MARGIN PROFIT AFTER TAX NET PROFIT MARGIN RATIO = SALES ICICI BANK Table 3.6 showing Net Profit Margin of ICICI Bank Year 2006-07 2007-08 2008-09 Net Profit Margin (%) 10.81 10.51 9.74 Graph 3.3 showing Net Profit of ICICI Bank Significance: This ratio is an indicator of operational efficiency or in-efficiency. Higher the ratio better is the operational efficiency. Interpretation: The Net profit margin has decreased from 10.81% in 2006 to 10.51% in 2007.It decreased in 2008 to 9.74 % . The average pre merger ratio is 10.35%. This indicates that the net profit margin is not stable but the rate is acceptable. BANK OF RAJSTHAN Table 3.7 showing Net Profit Margin of BoR Year 2006-07 2007-08 2008-09 Net Profit Margin (%) 12.96 9.75 7.81 Graph 3.4 showing Net Profit of BoR Interpretation: The Net profit margin has decreased from 12.56% in 2006 to 9.75% in 2007.It decreased in 2008 to 7.81 % . The average pre merger ratio is 10.04%. This indicates that the net profit margin is not stable. RETURN ON INVESTMENT Earnings- Initial Investment x 100 ROI = Initial Investment ICICI BANK Table 3.8 showing ROI of ICICI Bank Year 2006-07 2007-08 2008-09 Return On Investment (%) 82.46 62.34 56.72 Graph 3.5 showing ROI of ICICI Bank Interpretation: The ratio has been 82.46% in the year 2006, decreasing to 62.34% in 2007.Then, decreasing to 56.72% in 2008. The average rate is 67.17% which is very good for a company. BANK OF RAJASTHAN Table 3.9 showing ROI of BoR Year 2006-07 2007-08 2008-09 Return On Investment (%) 140.81 173 185.2 Graph 3.6 showing ROI of BoR Interpretation: The ratio has been 140.81% in the year 2006, increasing to 173% in 2007.Then, further increasing to 185.2% in 2008. The average rate is166.44% which is excellent for a company. SOLVENCY RATIO DEBT EQUITY RATIO This ratio throws light on the long-term solvency of the firm reflecting its capability to assure the long period creditors with regards to payment of interests and loan repayment of principal on maturity at due dates. DEBT EQUITY RATIO DEBT DEBT-EQUITY RATIO = EQUITY ICICI BANK Table 3.10 showing Debt Equity Ratio of ICICI Bank Year 2006-07 2007-08 2008-09 Debt Equity Ratio 9.5 5.27 4.42 Graph 3.7 showing Debt Equity Ratio of ICICI Bank Significance: It shows the relative claims of creditors and owners against the assets of the firm .It also indicates the relative proportions o debt and equity in financial the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s assets. Interpretation: This ratio has been declined over the years from 9.50 to 4.42. The pre merger average comes out to be 6.39. BANK OF RAJASTHAN Table 3.11 showing Debt Equity Ratio of BoR Year 2006-07 2007-08 2008-09 Debt Equity Ratio 25.37 26.15 23.6 Graph 3.8 showing Debt Equity Ratio of BoR Interpretation: This ratio has almost constant. It increased in 2007 to 26.15 and again fell to 23.6 in 2008. The average is 25.04 which is quite stable. EPS Earning Per Share is defined as ratio of profit after tax to the number of ordinary shares i.e. Net Profit after tax and preference dividend EPS = - Number of ordinary shares So, when the income on equity (EPS) of a particular company increases the position of the company is considered to be favorable. On the other hand, if the rate of return to equity hare holder falls, or if the interest bearing securities get a big share into hearing of the firm, then the position of the company will be unfavorable. ICICI BANK Table 3.12 showing EPS of ICICI Bank Year 2006-07 2007-08 2008-09 EPS 34.59 37.37 33.76 Graph 3.9 showing EPS of ICICI Bank Interpretation: The EPS of ICICI Bank increased in 2007 from 34.59 to 37.37 and again fell to 33.76. it could mean that the shareholders had retained some profits to make the company stronger. BANK OF RAJASTHAN Table 3.13 showing EPS of BoR Year 2006-07 2007-08 2008-09 EPS 10.28 8.57 7.3 Graph 3.10 showing EPS of BoR Interpretation: The EPS of BoR decreased in 2007 from 10.28 to 8.57and again fell 7.3. It could mean that the shareholders had retained some profits to make the company stronger with an average of 8.72. DIVIDEND PAYOUT RATIO This is also known as payout ratio. It calculates the association between the earnings belonging to ordinary shareholder and the dividend paid to them. In other words Dividend Payout Ratio shows the percentage share of the net profits after tax and preference bonus is paid out as dividend to equity shareholders. It can be calculated by dividing the total bonus paid to the owners by the total profits / earnings available to them. Alternatively it can be found out by dividing the bonus per ordinary share by the EPS. Thus, Total dividend paid to equity holders Dividend Payout Ratio = ____________________________________ Earnings available to equity share holders ICICI BANK Table 3.14 showing Dividend Pay out Ratio of ICICI Bank Year 2006-07 2007-08 2008-09 Dividend Payout Ratio 28.91 29.43 32.58 Graph 3.11 showing Dividend Payout Ratio of ICICI Bank Interpretation: The average dividend payout ratio turned out to be 30.31%. It has increased over time from 28.91% to 29.43% and finally to 32.58%. BANK OF RAJASTHAN Table 3.15 showing Dividend Payout Ratio of BoR Year 2006-07 2007-08 2008-09 Dividend Payout Ratio 19.45 5.83 2.74 Graph 3.12 showing Dividend Payout Ratio of BoR. Interpretation: The dividend payout ratio has decreased over time for BoR from 19.45% to 2.74% in 2008-09. It is not a good sign as the shareholders are not getting enough dividends. OVERALL RATIO: Graph 3.13 showing Pre and Post Merger Ratios Interpretation- The above graph shows the position of ICICI Bank and BANK OF RAJASTHAN during pre and post merger period. The acquisition raised share value to new heights and making ICICI Bank more stronger. POST MERGER RATIOS OF ICICI BANK: Table 3.16 showing Post Merger Ratios of ICICI Bank Ratio Post Merger Period 2010-11 Average Operating profit ratio 24.81 24.81 Net profit ratio 15.91 15.91 Return on investment 42.97 42.97 earnings per share 44.73 44.73 Dividend Payout Ratio 31.29 31.29 Debt Equity ratio 4.1 4.1 Graph 3.14 showing Post Merger Ratio of ICICI Bank Interpretation- The above table shows the post merger ratios of ICICI bank. The merger has benefitted the company and it looks to be more stronger compared to its pre merger scenario. 3.3 T Test: H0 : There is no considerable difference between pre and post merger financial performance. H1 : There is a considerable difference between pre and post merger financial performance. Highlight: The company from Indian Banking sector was merged with a stake of 100 %. OPERATING PROFIT RATIO OF ICICI BANK Table 3.17 showing T test of Operating profit of ICICI Bank Period N Mean Sd t Result Premerger 3 27.03 1.597 1.204 NS Post merger 1 24.81 0 Graph 3.15 showing Pre and Post Merger Operating Ratio of ICICI Bank Interpretation- The operating profit ratio of ICICI Bank before merger was 27.03. After mergering, it was decreased to 24.81. The test of difference of mean was found to be non significant as t=1.204 lt; tab= 2.920 at 5% level of significance. The hypothesis taken that there is considerable difference between pre and post merger financial performance is proved to be accepted. NET PROFIT RATIO OF ICICI BANK Table 3.18 showing T test of Net profit of ICICI Bank Period N Mean Sd t Result Premerger 3 10.35 0.552 -8.719 S Post merger 1 15.91 0 Graph 3.16 showing Pre and Post Merger Net Profit Ratio of ICICI Bank Interpretation- The net profit ratio of ICICI Bank before merger was 10.35. After merging, it was increased to 15.910. The test of difference of mean was found to be significant as t=8.719 lt; tab= 2.920 at 5% level of significance. The hypothesis taken that there is considerable difference between pre and post merger financial performance is proved to be rejected. EPS OF ICICI BANK Table 3.19 showing T test of EPS of ICICI Bank Period N Mean Sd t Result Premerger 3 35.24 1.891 -4.347 S Post merger 1 44.73 0 Graph 3.17 showing Pre and Post Merger EPS of ICICI Bank Interpretation- The earning per share of ICICI Bank before merger was 35.240. After mergering, it was increased to 44.73. The test of difference of means was found to be significant as t=4.347 lt; tab= 2.920 at 5% level of significance. The hypothesis taken Mergers in Indian Corporate Sector in general resulted in value addition to shareholders is rejected. ROI OF ICICI BANK Table 3.20 showing T test of ROI of ICICI Bank Period N Mean Sd t Result Premerger 3 67.17 13.534 1.549 NS Post merger 1 42.97 0 Graph 3.18 showing Pre and Post Merger ROI of ICICI Bank Interpretation- ROI of ICICI Bank before merger was 67.17. After merging, it was decreased to 42.97. The test of difference of mean was found to be non significant as t=1.549 lt; tab= 2.920 at 5% level of significance. The hypothesis taken Mergers in Indian Corporate Sector in general resulted in value addition to shareholders is accepted. DIVIDEND PAYOUT RATIO OF ICICI BANK Table 3.21 showing T test of Dividend Payout Ratio of ICICI Bank Period N Mean Sd t Result Premerger 3 30.31 1.986 -0.429 NS Post merger 1 31.29 0 Graph 3.19 showing Pre and Post Merger Dividend Payout Ratio of ICICI Bank Interpretation- The dividend payout ratio of ICICI Bank before merger was 30.30 After merging, it was slightly increased to 31.29. The test of difference of mean was found to be non significant as t=0.429 lt; tab= 2.920 at 5% level of significance. Hence the hypothesis taken that Mergers in Indian Corporate sector in General resulted in value addition to shareholders is accepted. DEBT EQUITY RATIO OF ICICI BANK Table 3.22 showing T test of Debt Equity Ratio of ICICI Bank Period N Mean Sd t Result Premerger 3 6.39 2.721 0.731 NS Post merger 1 4.1 0 Graph 3.20 showing Pre and Post Merger Debt Equity Ratio of ICICI Bank Interpretation- The debt equity ratio of ICICI Bank before merger was 6.39. After merging, it was decreased to 4.10. The test of difference of mean was found to be non significant as t=0.731 lt; tab= 2.920 at 5% level of significance. Hence the hypothesis taken that There is considerable difference between pre and post merger financial performance is accepted.