Internation Business

FTSE Analysis

Utsab Gautam

Westcliff University

        BUS 630 International Business                

14th August, 2016

Professor Dr. Rajib Subba

Abstract

The main objective of this paper is to analyze the FTSE index of a leading companies in Europe. This paper also analyzes the investment index and gives a brief light on the risk analysis, countries analysis and industry analysis.

Keywords: FTSE, Europe, Risk, Countries, Industries, Investment, Index.

FTSE Analysis

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Country Analysis

There are altogether 10 companies from four different countries listed in FTSE index. These 10 companies are from 4 respective countries. 5 from United Kingdom, 3 from Switzerland, 1 from France and 1 from Germany respectively.

Swiss Economy

Swiss economy is the most innovative and competitive economy in the world. It is considered as one of the best economics in the world. Currently Swiss economy is placed at the 4th position in overall global economic ranking with the score of 81.0 in 2016. Swiss economy holds this better position because of their flexibility and institutional strengths that include zero corruption tolerance, strong protection of their country people and rights of their domestic and international industries etc. The main reason behind their sustainable economy is their liberal approach as this approach has turned out to become very efficient in context to their international trade and investment. In Switzerland they follow the free economy policy that emphasizes on open market and also follows all the rules and regulations strictly (Church, 1996). They treat both their local and international investors equally which helps in stabilizing the economy and attracting more investors. As we all know that Switzerland is also one of the members of European Free Trade Association and holds average tariff of Zero percent. From the above information we all know that Switzerland is the corruption free country and was ranked 5th In transparency international survey in the year 2014. In Switzerland the government has controlled their spending as a result there is a slight fall in their economy.

UK Economy

The economy of United Kingdom is growing fast day by day with positive growth in current years, and this trend is expected to continue for the next few years as well. The nation holds 2% inflation rate and it is expected that the rate will remain same. The main reason behind the positive growth in the nation’s economy is the secured domestic demand because of this their economic growth is in stable condition (Fouquet & Broadberry, 2015). Analyzing the recent trend of UK, we can see that their unemployment rate has fallen down massively and other wages has grown up. With the growth in their wage rate it is expected that the productivity rate is also likely to grow in this current year. Currently UK, economy is placed at the 10th position in overall global economic ranking with the score of 76.4 in 2016. Like Switzerland UK, also follows the free economy policy that emphasizes on open market and also follows all the rules and regulations strictly. Looking at the countries and companies, credit for their success goes to their governments. Because of their capability and potential to manage their economy the companies are experiencing the height of success. As we also know that both the countries have strong rules and regulations which has helped their economy to be stable and to grow at steady pace.

Risk Analysis

Risk is always associated with business. Every business in this world are associated with the possible risks. The companies that are listed with FTSE also holds some risks in it. In this competitive world market companies of both the countries are highly in competition with each other. To be competitive in the market the companies are making huge investment in their research and development program. As we all know that technologies also play a great role in competitive advantage, as a result companies listed in this index are updating their technologies as per the latest market trend and updating technologies has also been the major challenge for the companies as it is not so easy task to update the whole technology in a matter of time and holds a major risk (Coelho, Hutzler, Repetowicz, & Richmond, 2007). The shift in world economy has threaten the companies all around the world. World economy shifting from fossil fuels to renewal and sustainable energy and United States of America producing shale oil has caused major threat to oil and gas industries. As we all know that the world is currently dealing with price fluctuation of petroleum products day by day and that fluctuation has raised a big question about the future of oil industry. Politics plays a great role in sustainable economy of a country, change in governments, their rules and regulations cause major problem for the business houses. These problems are mostly faced by the developing nation rather than developed nation. I believe that every product produced by the companies has its alternative products which is the major risk for the companies, and that is the main reason why they are investing heavily on research and development program to remain competitive.

Industry Analysis

By analyzing the above index table, we can say that the Pharmaceuticals and Biotechnology industry has dominated the market and followed by other industries such as Food industry, Banks and Petroleum industries. All the industries are contributing a high amount of money in their economy. The food industry of which there are no any alternatives or substitutes generates amount in billions and has been continuously growing with an average of 2.5%. The main reason for its growth is that food industry never goes out of demand because it fulfills all human basic needs and without food no human can survive that is the main reason why food industry is growing with fast pace (Freeman, 2012). There are maximum numbers of big players in food industries and they should always focus on building trust and relationship with their customers because if they lose the trust amongst their customers then it is almost impossible to gain back that trust. Talking about pharmaceutical industry this industry has created millions of employment opportunities to the people. Talking about the pharmaceutical industry of Switzerland the industry has contributed 30% of total exports (Zeller, 2004). Now, how can we forget about the banking industry, it is that industry which has been growing in high rates. They are focusing on simplifying their products and business model so that each and every citizen of a country can use their product and service which helps them to sustain and grow their business. Other things being the same we cannot ignore the fact that the banking industry plays a vital role in booming the country’s economy as we all know that banking industries is the backbone of nations economy.