Economics Project Sem3

8/2/2019 Economics Project Sem3

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ECONOMICS

PROJECT

PD301

MADEBY

Sampurn Rattan Jain 10503864

Shubham Gulati 10503866

Ayush Datta 10503884

Akshay Bansal 10503878

Rishi Bharadwaj 10503869

BATCH B11


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Acknowledgement

We would like to extend our sincere thanks to all those

people who helped us in accomplishing our project. We owe

our project success to all faculty members, especially Mrs.

KANUPRIYA MISHRA BAKHRU, for providing us

wonderful opportunity and guidance. This project provided

us a platform to increase our knowledge and empowered us

with a better understanding of concepts in the real world

scenario.


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INDEX

S.NO CONTENTS PAGENO.

1. Introduction 5

2. Major Competitors of CSC 7

3. IBM Global Services 7

4. HP Enterprise Services 7

5. Accenture 8

6. Ingram Micro Inc 8

7. Various Forecasting Tools 9

8. Trend Projection Method 9

9. Trend Projection for Sales 9

10. Trend Projection for Profit 12

11. Eurozone Crisis (MacroEconomics)

16

12. Bibliography 22


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INTRODUCTION

Organization:ComputerSciencesCorporation(CSC)

Department:MarketingandSales

ObjectiveoftheProject:

To collect the data of last 10 years sales and profit and analyze the marketing

strategies followed by CSC and forecast the sales for next year/quarter/month by

studying the present sales and using effective forecasting tools.

AboutCSC:

TYPE: PRIVATE MNCFOUNDED: 1959HEADQUATERS: FALLS CHURCH, VIRGINIAINDUSTRY: INFORMATION TECHNOLOGY & PROFESSIONALSERVICESPRODUCTS: IT & BUSINESS PROCESS OUTSOURCINGOWNER:VAN B. HONEYCUTT, CHAIRMAN AND CEO OF CSC

Computer Sciences Corporation provides information technology (IT) and businessprocess outsourcing, and IT and professional services to the commercial andgovernment markets. The company's outsourcing services include the operation ofcustomer's technology infrastructure, including systems analysis, applicationsdevelopment, network operations, desktop computing, and data centermanagement.


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Geographically, CSC has major operations throughout North America, Europe and

the Asia-Pacific region, including India.Exploiting new technologies, CSC has developed an entirely new approach to

business change that clients are using to achieve and sustain transformationbenefits. To bring the full power of CSCs transformation capabilities to market,they formed Global Transformation Solutions (GTS), the industrys very firstglobal organization to develop and deliver business transformation solutions toclients worldwide. CSC is now more focused on the highest-value segments of ourmarket applications, business processes and business transformation.


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MAJORCOMPETITORSOFCSC

IBMGlobalServices

International Business Machines (NYSE: IBM) is a leading global technology firmthat offers a variety of products and services in the information technology

industry. Their current businesses consist of 5 major divisions: Global TechnologyServices segment; a Global Business Services segment; a Software segment; aSystems and Technology segment; and a Global Financing segment. IBM lost its

position as the number one IT company to Hewlett-Packard in terms of annualrevenue.

Although IBM lost its first place rank to Hewlett-Packard in terms of revenue,IBM is a far more profitable business than Hewlett-Packard. There are severalunderlying factors that contribute to IBM's high profitability. One of the reasonsfor the increase has been upper management's active effort towards divesting from

cyclical and commoditizing businesses, while concentrating on the higher valueservices and software sectors.

HPEnterpriseServices

Hewlett-Packard (NYSE: HPQ) is a diversified technology company that hasreached several key milestones in recent years. In 2010, revenue was $126 billion.

The drivers of HP's recent success have been two-pronged. The company hasundergone significant cost cutting measures. At the same time, the company hasfocused on driving growth in key areas such as software and services. Softwareand services are generally much higher margin than hardware. IBM, whichgenerates most revenues from services, realizes operating profits nearly twice ashigh as either HP or Dell. This transition continued with HP's acquisition of

business network producer Electronic Data Systems (EDS) in August 2008. In2009, HP completed its acquisition of Palm for $1 billion, or $5.70 per share,giving HP a foothold into the smartphone market.


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Accenture

Accenture (NYSE: ACN) is a management and technology consulting firm. Inaddition to consulting clients on a range of management, operational andtechnological issues, Accenture also provides its clients with outsourcing services.Accenture has operations in over 49 countries with 200,000employees.http://www.wikinvest.com/wiki/ACCENTURE _note0 Accenture has expanded its

business to include a large number of employees in rapidly developing, low-costnations. Accenture employs around 50,000 employees in India, China and thePhilippines with plans to triple the number within next 3 years. These employeeswork for significantly less pay than the company's U.S. workforce, allowing

Accenture to profitably provide low cost outsourcing services. However, in recentyears, the firm has faced increasing competition from Indian firms specializing insystems integration and outsourcing. In addition to competing with Accenture forclients, these firms compete with Accenture for employees. As a result the salariesof skilled employees in India have risen rapidly over the last 5 years. In the face ofincreasing competition, Accenture will find it challenging to continue to grow itsemployee base in India.

IngramMicroInc

Ingram Micro Inc. (NYSE:IM) is the world's largest wholesale distributor ofcomputer hardware and software by net revenue. The company is a middle man

between computer hardware / software companies and retail stores, which cater tothe end-user. The business of transporting and distributing high tech electronicgoods is extremely competitive. Distributors, such as Ingram, have no way todifferentiate their products except through price.

The company's focus makes it vulnerable to slowdowns in PC sales. For instance,

in 2002 when demand for computers dropped, Ingram lost $275 million. Given theweak economic climate in 2009, the domestic spending mood has had a significantimpact on demand for computer products - which in turn impacts demand for IM'sdistribution services. As a result, total revenues for Ingram Micro have declinedfrom $34.4 billion in 2008 to $29.5 billion in 2009.

Ingram Micro is the only major electronics distributor to have significantoperations in Asia. The personal computer market in Asia has been growing much


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more rapidly than in the United States recently. As a result, Ingram Micro may bebetter positioned to capture this increase in demand.

VARIOUSFORECASTINGTOOLS

TrendProjectionMethod

Projecting the past trend by fitting line to the data Constant Rate of Change St =So+bt

where- St value of time series to be forecasted for period t- So estimated value of time series in the base period- b is the absolute amount of growth per period- t time period for which series is to be forecasted

CalculationforSALES

Trend Projection for Sales

Year S(Sales) t t2 S*t Forecasted - S

01-02 $11.43 B 1 1 11.43 $11.69 B

02-03 $11.35 B 2 4 22.70 $11.81 B

03-04 $14.77 B 3 9 44.31 $11.93 B

04-05 $14.06 B 4 16 56.24 $12.05 B05-06 $14.62 B 5 25 73.10 $12.17 B

06-07 $14.86 B 6 36 89.16 $12.29 B

07-08 $16.50 B 7 49 115.50 $12.41 B

08-09 $16.74 B 8 64 133.92 $12.53 B

09-10 $16.13 B 9 81 145.17 $12.65 B

10-11 $16.04 B 10 100 160.40 $12.77 B


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S=$146.5 t=55 t2=385 S*t=851

.93

11-12 $12.89 B

d=nt2(t)

2

d=10*385-3025d=825

So=[(S)( t2)( t)( S*t)]/d

So=(146.50*385 55*851.93)/825So=11.57

b=[nS*t(t)( S)]/d

b=(8519.3 8057.5)/825b=0.12

St=So+bt

S10=$12.77 BS11=$12.89 B


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St=11.57+0.12t

EXPLANATION:


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Using the above values, we have forecasted the value of sales for the year 2011-2012, which gives the sales to be increasing. We used the method of trend

projection sales.

CalculationforPROFIT

Trend Projection for Profit

Year S(Profit) t t2 S*t Forecasted S

01-02 $2.20 B 1 1 2.20 $2.33B

02-03 $2.33 B 2 4 4.66 $2.47B

03-04 $2.82 B 3 9 8.46 $2.61B

04-05 $2.84 B 4 16 11.36 $2.75B

05-06 $2.99 B 5 25 14.95 $2.89B

06-07 $3.13 B 6 36 18.78 $3.03B

07-08 $3.44 B 7 49 24.08 $3.17B

08-09 $3.56 B 8 64 28.48 $3.31B

09-10 $3.39 B 9 81 30.51 $3.45B10-11 $3.18 B 10 100 31.80 $3.59B

S=29.88 t=55 t2=385 S*t=176.28

11-12 $3.73 B


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d=nt2(t)

2

d=10*385-3025d=825

So=[(S)( t2)( t)( S*t)]/d

So=(29.88*385 55*176.28)/825So=2.19

b=[nS*t(t)( S)]/d

b=(10*176.28-55*29.88)/825b=0.14

St=So+bt


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S10=$3.59 BS11=$3.73 B

St=2.19+0.14t

EXPLANATION:

Using the above values, we have forecasted the value of profit for the year 2011-2012, which gives the profit to be increasing. We used the method of trend

projection profit.


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EuropeansovereigndebtcrisisA sovereign default is a failure by the government of a sovereign state to pay backits debt in full.

If potential lenders or bond purchasers begin to suspect that a government may failto pay back its debt, they may demand a high interest rate in compensation for therisk of default. A dramatic rise in the interest rate faced by a government due tofear that it will fail to honor its debt is sometimes called a sovereign debt crisis.Governments may be especially vulnerable to a sovereign debt crisis when theyrely on financing through short-term bonds, since this creates a situation ofmaturity mismatch between their short-term bond financing and the long-termasset value of their tax base.

Governments in sovereign default may face severe pressure from lendingcountries. In the most extreme cases, a creditor nation may declare war on a debtor


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nation for failing to pay back debt. For example, Britain routinely invadedcountries that failed to repay foreign debts, invading Egypt in 1882 and Istanbul in

the wake of Turkey's 1876 default. A government which defaults may also beexcluded from further credit and some of its overseas assets may be seized (e.g.Chile's copper mines were seized by U.S. companies in 1977) and it may face

political pressurefrom its own domestic bondholders to pay back its debt.Therefore governments rarely default on the entire value of their debt. Instead, theyoften enter into negotiations with their bondholders to agree on a delay or partialreduction of their debt payment, which is often called a debt restructuring or'haircut'.

The International Monetary Fund often assists in sovereign debt restructurings. To

ensure that funds will be available to pay the remaining part of the sovereign debt,it often makes its loans conditional on austerity measures within the country, suchas tax increases or reductions in public sector jobs and services. A recent exampleis the Greek bailout agreement of May 2010.

EuropesCondition:

From late 2009, fears of a sovereign debt crisis developed among investorsconcerning some European states, intensifying in early 2010. This includedEurozone members Greece, Ireland, Italy, Spain and Portugal. In the EU,especially in countries where sovereign debts have increased sharply owing to

bank bailouts, a crisis of confidence has emerged with the widening of riskinsurance on credit default swaps between these countries and other EU members,most importantly Germany.

While the sovereign debt increases have been most pronounced in only a fewEurozone countries, they have become a perceived problem for the area as a whole.

In May 2011, Greek public debt gained prominence as a matter of concern. TheGreek people generally reject the austerity measures, and have expressed theirdissatisfaction through angry street protests. In late June 2011, Greece'sgovernment proposed additional spending cuts worth 28bn Euros (25bn) over fiveyears. The next 12 billion Euros from the Eurozone bail-out package will bereleased when the proposal is passed, without which Greece would have had todefault on loan repayments due in mid-July.


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Concern about rising government debt levels across the globe together with a waveof downgrading of European government debt created alarm in financial markets.

On 9 May 2010, Europe's Finance Ministers approved a rescue package worth750 Billion aimed at ensuring financial stability across Europe by creating theEuropean Financial Stability Facility (EFSF).

On 2 May 2010, the Eurozone countries and the International Monetary Fundagreed to a 110 billion loan for Greece, conditional on the implementation ofharsh austerity measures. The Greek bail-out was followed by a 85 billion rescue

package for Ireland in November, a 78 billion bail-out for Portugal in May 2011,then continuing efforts to meet the continuing crisis in Greece and other countries.

In October 2011, Eurozone leaders meeting in Brussels agreed on a package ofmeasures designed to prevent the collapse of member economies due to theirspiraling debt. This included a proposal to write off 50% of Greek debt owed to

private creditors, increasing the EFSF to about 1 trillion and requiring Europeanbanks to achieve 9% capitalization. As of November 2011, the same Eurozoneleaders that extended the package to save the Eurozone have extended anultimatum toward Greece. Both Sarkozy of France and Merkel of Germany havemade it public that both of their governments have reached the end of their

patience with the beleaguered Greek economy intensifying the Eurozone Crisis.

Causes:

Past instances of sovereign default have tended to occur under some or all of thefollowing circumstances.

A reversal of global capital flows Unwise lending Excessive foreign debts A poor credit history Unproductive lending Rollover risk Weak revenues Rising interest rates


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GREECE:

Large public deficits are one of the features that have marked the Greek socialmodel since the restoration of democracy in 1974.Ssuccessive Greek governmentshave, among other things, customarily run large deficits to finance public sector

jobs, pensions, and other social benefits. Since 1993 the ratio of debt to GDP hasremained above 100%.

Initially currency devaluation helped finance the borrowing. After the introduction

of the euro in Jan 2001, Greece was initially able to borrow due to the lowerinterest rates government bonds could command. The late-2000s financial crisisthat began in 2007 had a particularly large effect on Greece. Two of the country'slargest industries are tourism and shipping, and both were badly affected by thedownturn with revenues falling 15% in 2009.

To keep within the monetary union guidelines, the government of Greece hadmisreported the country's official economic statistics. In the beginning of 2010, itwas discovered that Greece had paid Goldman Sachs and other banks hundreds of


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millions of dollars in fees since 2001 for arranging transactions that hid the actuallevel of borrowing. The purpose of these deals made by several successive Greek

governments was to enable them to continue spending while hiding the actualdeficit from the EU. Greek government debt was estimated at 216 billion inJanuary2010.

Ireland:

The Irish sovereign debt crisis was not based on government over-spending, butfrom the state guaranteeing the six main Irish-based banks who had financed a

property bubble. In 2008 the Finance Minister issued a one-year guarantee to the

banks' depositors and bond-holders. He renewed it for another year in September2009 soon after the launch of the National Asset Management Agency, a bodydesigned to remove bad loans from the six banks.

A mysterious "Golden Circle" of ten businessmen is being investigated over sharesthey purchased in Anglo Irish Bank, using loans from the bank, in 2008. TheAnglo Irish Bank Corporation Act 2009 was passed to nationalize Anglo IrishBank. President then signed the bill confirming the bank's nationalization.

In April 2010, following a marked increase in Irish 2-year bond yields, Ireland's

NTMA state debt agency said that it had "no major refinancing obligations" in2010. Its requirement for 20 billion in 2010 was matched by a 23 billion cash

balance. The NTMA tested the market and sold a 1.5 billion issue that was threetimes oversubscribed.

By September 2010 the banks could not raise finance and the bank guarantee wasrenewed for a third year.


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Portugal:

Portuguese Republic governments have encouraged over-expenditure and

investment bubbles through unclear public-private partnerships and funding ofnumerous ineffective and unnecessary external consultancy and advisory ofcommittees and firms. This inflated top management and head officer bonuses andwages. Persistent and lasting recruitment policies boosted the number of redundant

public servants. Risky credit, public debt creation, and European structural andcohesion funds were mismanaged across almost four decades. The Prime Minister'scabinet was not able to forecast or prevent this in 2005, and later it was incapableof doing anything to improve the situation when the country was on the verge of

bankruptcy by 2011.

Spain:

Shortly after the announcement of the EU's new "emergency fund" for Eurozonecountries in early May 2010, Spain's government announced new austeritymeasures designed to further reduce the country's budget deficit. The socialistgovernment had hoped to avoid such deep cuts, but weak economic growth as wellas domestic and international pressure forced the government to expand on cutsalready announced in January. As one of the largest Eurozone economies the


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condition of Spain's economy is of particular concern to international observers,and faced pressure from the United States, the IMF, other European countries and

the European Commission to cut its deficit more aggressively.

Reformandrecovery

In March 2011 a new reform of the Stability and Growth Pact was initiated, aimingat straightening the rules by adopting an automatic procedure for imposing of

penalties in case of breaches of either the deficit or the debt rules.

Subsequently, the proposed European treasury was implemented as the temporaryEuropean Financial Stability Facility, which will function until the permanentEuropean Stability Mechanism is established following ratification of its treaty. InJuly 2011, it was agreed during the EU summit that the EFSF will be given more

powers to intervene in the secondary markets, thus dramatically socializing risk inthe Eurozone, which ends the crisis.


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BIBLIOGRAPHY

We referred to various websites and books while making this project.Some of them are listed below:

www.wikinvest.comwww.google.co.inwww.wikipedia.org/wiki/Linear_regressionThe Economic TimesManagerial Economic Dominic Salvatore

MADEBYSampurn Rattan Jain 10503864

Shubham Gulati 10503866

AyushDutta 10503884

AkshayBansal 10503878

Rishi Bharadwaj 10503869

BATCH B11

Economics Project Sem3

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