Strategic alliance formations have increased dramatically over the past decade and, in many U.S. and E.U. industries, alliances are now a central strategic component and a core offensive and/or defensive competitive weapon. Strategic alliances have shifted the fundamental competitive paradigm in many domestic and international markets from traditional firm-to-firm competition to more alliance-based, network-vs.-network competition
Merger - the creation of a new company by joining two separate companies in order to enhance the financial and operational strengths of both organizations. Disney-Pixar created successful movies: “WALL-E,” “Up,” and “Bolt.” Pixar needed money Disney liked their image.
Daimler Benz/Chrysler merger
They had different corporate culture. In 1998, Mercedes-Benz manufacturer Daimler Benz merged with U.S. auto maker Chrysler to create Daimler Chrysler for $37 billion. The logic was obvious: create a trans-Atlantic car-making powerhouse that would dominate the markets. But by 2007, Daimler Benz sold Chrysler to one firm, which specializes in restructuring troubled companies, for a mere $7 billion.
Takeover –is the purchase ( HYPERLINK "http://www.investorwords.com/7453/acquirer.html" acquiring control) of one company (the target) by another (the acquirer, or bidder) by HYPERLINK "http://www.investorwords.com/4725/stock.html" stock HYPERLINK "http://www.investorwords.com/3952/purchase.html" purchase or HYPERLINK "http://www.investorwords.com/1797/exchange.html" exchange.Takeover bids can either be friendly or hostile. In a friendly takeover the acquiring firm negotiates with the targeted company, and common agreement is reached in an amiable atmosphere for subsequent approval by shareholders. Sometimes a company's management will defend against unwanted hostile takeovers by using several controversial strategies including the poison pill, crown-jewel defense, golden parachute(offer lucrative benefits to the current top executives^ stock options bonuses liberal severance pay it can cost an acquiring firm a lot of money), and others.
Acquisition - when one company buys another one or part of another one. Acquisitions can be either friendly or hostile.
There is no tangible difference between an acquisition and a takeover; both words can be used interchangeably - the only difference is that each word carries a slightly different connotation. Typically, takeover is used to reference a hostile takeover where the company being acquired is resisting. In contrast, acquisition is frequently used to describe more friendly acquisitions, or used in conjunction with the word merger, where both companies are willing to join together.
An acquisition or takeover occurs when one company purchases another. Companies perform acquisitions for various reasons: they may be seeking to achieve economies of scale, greater market share, increased synergy, cost reductions or for many other reasons. The acquiring company would usually proceed with the corporate action by offering to purchase the shares from the shareholders of the target company. Often, a cash offer is made but sometimes the acquiring company may offer to trade its own shares in exchange for the target company's shares. Also, the difference between mergers and takeovers/acquisitions are that mergers involve two companies of roughly equal size that have decided to combine together to take advantage of expected advantages of a being larger company.
A strategic alliance is an alliance formed as part of a plan with important aims. It is a cooperative arrangement between two or more companies that have decided to pool resources, investment and risks to undertake a specific, mutually beneficial project. In a strategic alliance, each company maintains its autonomy while gaining a new opportunity. The formation of strategic alliances has been seen as a response to globalization and increasing uncertainty and complexity in the business environment. A strategic alliance can help a company develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities.
For example, an oil and natural gas company might form a strategic alliance with a research laboratory to develop more commercially viable recovery processes. A clothing retailer might form a strategic alliance with a single clothing manufacturer to ensure consistent quality and sizing.
Different forms of Strategic Alliances
Strategic Alliances can take different forms, occur within an industry or between actors in different industries, and can range from simple agreements to mergers or equity joint ventures.
Some types of strategic alliances include:
Horizontal strategic alliances, which are formed by firms that are active in the same business area. That means that the partners in the alliance used to be competitors and work together In order to improve their position in the market and improve market power compared to other competitors. Research &Development collaborations of enterprises in high-tech markets are typical Horizontal Alliances.
Vertical strategic alliances, which describe the collaboration between a company and it´s upstream and downstream partners in the Supply Chain, that means a partnership between a company it´s suppliers and distributors. Vertical Alliances aim at intensifying and improving these relationships and to enlarge the company´s network to be able to offer lower prices. Especially suppliers get involved in product design and distribution decisions. An example would be the close relation between car manufacturers and their suppliers.
Intersectional alliances are partnerships where the involved firms are neither connected by a vertical chain, nor work in the same business area, which means that they normally would not get in touch with each other and have totally different markets and know-how.
Joint ventures, in which two or more companies decide to form a new company. This new company is then a separate legal entity. The forming companies invest equity and resources in general, like know-how. These new firms can be formed for a finite time, like for a certain project or for a lasting long-term business relationship, while control, revenues and risks are shared according to their capital contribution.
Equity alliances, which are formed when one company acquires equity stake of another company and vice versa. These shareholdings make the company stakeholders and shareholders of each other. The acquired share of a company is a minor equity share, so that decision power remains at the respective companies. This is also called cross-shareholding and leads to complex network structures, especially when several companies are involved. Companies which are connected this way share profits and common goals, which leads to the fact that the will to competition between these firms is reduced. In addition this makes take-overs by other companies more difficult.
Non-equity strategic alliances, which cover a wide field of possible cooperation between companies. This can range from close relations between customer and supplier, to outsourcing of certain corporate tasks or licensing, to vast networks in R&D. This cooperation can either be an informal alliance which is not contractually designated, which appears mostly among smaller enterprises, or the alliance can be set by a contract.
Starbucks and Pepsico got together to create coffee-flavoured drink. Starbucks wanted to get into the bottled drinks market and Pepsico was interested in creating an innovative product they met their strategic goals.
Strategic alliances have many advantages: they require little immediate financial commitment; they allow companies to put their toes into new markets before they get soaked; and they offer a quiet retreat should a venture not work out as the partners had hoped. However, going into something knowing that it is (literally) not a big deal, and that there is a face-saving exit route, may not be the best way to make those charged with running it hungry for success.
The most popular use for alliances is as a means to try out a foreign market. Not surprisingly, therefore, there are more alliances in Europe and Asia (where there are more foreign markets nearby) than in the United States. In some cases, alliances are used by companies because other means of entering a market are closed to them. Hence there have been many in the airline industry, where governments are sensitive about domestic carriers falling into foreign hands.When a company has built strategic business alliance with other partners, they are preparing the enjoy of the following benefits/advantages. (especially for foreign partners)1. They gain better access to attractive country market from host country’s government to import and market products locally2. Take advantage of partner’s local market knowledge and working relationships with key government officials in host country. It is very important to get working relationship with local government officials, (social capitals).3. Capture economies of scale in production and/or marketing, when they operate together, they can use the same machine or equipment to produce products and use the same marketing channel for both products.4. Fill gaps in technical expertise or knowledge of local market; they will learn technical knowledge from each other.5. Share distribution facilities and dealer networks, they can use the same agent or retailers to reduce the logistic cost and penetrate the market more easily, they can use the put-together technical and financial resources to attack the rivals.6. Direct combined competitive energies toward defeating mutual rivals7. Useful way to gain agreement on important technical standards, it is easier to set up a standard for the products with a joint effort.8. Can reduce the cost and more efficient to penetrate the market by doing the followings:
a. Joint research effortsb. Technology-sharingc. Joint use of production and distribution facilitiesd. Marketing/promoting one another’s products.Is everything perfect for building partnership? Of course not! Everything comes with its own pros and cons.Here are the drawback/disadvantages of partnership:1. Overcoming language and cultural barriers2. Dealing with diverse or conflicting operating practices3. Time consuming for managers in terms of communication, trust-building, and coordination costs4. Mistrust when collaborating in competitively sensitive areas5. Clash of egos and company cultures6. Dealing with conflicting objectives, strategies, corporate values, and ethical standards7. Becoming too dependent on another firm for essential expertise over the long-term
Managing a project
4 stepsPlanning ExecutionControllingClosingPlanning or designThe main purpose is to plan time, cost and resources adequately to estimate the work needed and to effectively manage risk during project execution. As with the Initiation process group, a failure to adequately plan greatly reduces the project's chances of successfully accomplishing its goals.ExecutingExecuting consists of the processes used to complete the work defined in the project plan to accomplish the project's requirements. Execution process involves coordinating people and resources, as well as integrating and performing the activities of the project in accordance with the project management plan. The deliverables are produced as outputs from the processes performed as defined in the project management plan and other frameworks that might be applicable to the type of project at hand.Controllingcontrolling consists of those processes performed to observe project execution so that potential problems can be identified in a timely manner and corrective action can be taken, when necessary, to control the execution of the project. The key benefit is that project performance is observed and measured regularly to identify variances from the project management plan.ClosingClosing includes the formal acceptance of the project and the ending thereof. Administrative activities include the archiving of the files and documenting lessons learned.
TeamworkingTeamwork is group of individuals who are working together to achieve a common goal.In teams, people work interdependently and they know they can accomplish goals by mutual help. Moreover they trust each other, and share their knowledge. Teamwork involves more people, ideas, resources and energy than an individual would have. There is always a team behind every successful organization. In a team, people usually work with particular roles for different members of the team.The team roles are specific and interdependent:1. Team leader - he may or may not be part of the managerial staff. The leader is responsible for providing resources required by the team to carry out their tasks, for reminding the team what result the company expects of them and finally for creating an environment that helps them to get work done. 2. Team facilitator – establishes the ground rules and makes sure that they are respected. His role is to make sure that decision-making is not dominated by strong personalities in the team.3. Team recorder – he is responsible for writing down key points, ideas and decisions at meetings. Recording ideas is important and the recorded text should be as close to the actual words used as possible.4. Timekeeper – is monitoring how long the team is taking to accomplish its tasks and is providing the team with regular information on how well or poorly they use their time.5. Team members – should be enthusiastic and commited to the team’s goals and be willing to share knowledge, respect the opinions, etc. The team members know the strengths and weaknesses and they understand how to work with each other. Team working skills are essential in almost every job and sector: Collaboration, commitment, cooperation, creativity, flexibility, group decision-making, honesty, leadership, multitasking, negotiating, opinion exchange, problem solving, relationship building, responsibilityInstead of motivating a single individual there is need to focus on building strong team members, the attitude of them, how to train the members, a constant appreciation, provision of equal promotions, etc .Every organization gives more importance to team work because they know this is the key to success. An increasing number of companies are using teams to respond quickly to changing conditions of an environment . Achieving flexibility and innovation requires teamwork. None of is as smart as all of us.
Information management (IM) is the collection and management of information from one or more sources and the distribution of that information to one or more audiences. This sometimes involves those who have a stake in, or a right to that information. Management means the organization of and control over the planning, structure and organization, controlling, processing, evaluating and reporting of information activities in order to meet client objectives and to enable corporate functions in the delivery of information.
Throughout the 1970s this was largely limited to files, file maintenance, and the life cycle management of paper-based files, other media and records. With the proliferation of information technology starting in the 1970s, the job of information management took on a new light, and also began to include the field of data maintenance. No longer was information management a simple job that could be performed by almost anyone. An understanding of the technology involved, and the theory behind it became necessary. As information storage shifted to electronic means, this became more and more difficult. By the late 1990s when information was regularly disseminated across computer networks and by other electronic means, network managers, in a sense, became information managers. Those individuals found themselves tasked with increasingly complex tasks, hardware and software. With the latest tools available, information management has become a powerful resource and a large expense, as well as risk, for many organizations.
The consequences of poorly managed data can be significant. Consider the following examples:
Financial losses: Your organization's headquarters are flooded unexpectedly. Your backup system is outdated, and, as a result, you lose months of data, worth millions of dollars to your organization.
Litigation risk: Hackers access your customer database, which includes addresses and credit card numbers. These customers are now at risk of identity theft, and they decide to sue you for violation of their privacy.
Excess data storage costs: Your organization has no process for data cleansing – replacing or deleting inaccurate, incomplete, or outdated information. Consequently, your data storage costs and IT resource needs double each year.
Inefficient workflow processes: Your team members can't find the information that they need to do their work, because each department has its own database, and none of these systems communicate with one another.
Negative press/publicity: One of your team members loses their laptop, which contains information about a well-known client. As a result, your organization receives negative media coverage and you lose a number of clients.
Put simply, when you can't get your hands on the information you need, or when the information you have isn't protected appropriately, you can miss opportunities, your performance drops, your projects and customers suffer, and you lose competitive advantage.
If effective data and information management is important within your industry, then it should be given serious, long-term attention from everyone from the CEO and CIO down to the newest employee on the team.
Keep in mind that overhauling an existing system or syncing all of the databases in an organization can be an enormous, costly, and difficult project that can take months or years to implement – this may make it impractical, particularly if other projects will deliver a bigger business benefit.
However, you can take other steps to improve data management for your team, and for your organization.
1. Identify frustrations
Start by listing the frustrations, bottlenecks, and inefficiencies that you experience regularly with information and data availability. Next, ask your team members to describe their frustrations regarding data and information. Lack of access or inefficiencies may be affecting their work in ways that you are not aware of. Once you have a list of current issues, perform a Root Cause Analysis to trace each issue to its origin. This analysis can help you determine whether these problems, errors, or inefficiencies are the result of technical, maintenance, or human issues.
2. Review Security
The frustrations that you listed above could be a result of valid data security measures. For example, most organizations restrict access to personal information, such as employee salaries and vacation schedules, customer credit card data, or sensitive sales and financial data – clearly, you need to think carefully about who can access this information.
Start by conducting a Risk Analysis to identify any data security issues. Talk to other departments within the organization – particularly accounts, internal audit, compliance, and legal – to see if there are any issues that you need to be aware of.
3. Streamline Processes and Systems
Talk to your IT department about the problems, inefficiencies, and security points that you have identified. They might be able to fix some of these issues, or they might be able to suggest new ways to access the data that you need. At a minimum, letting IT staff members know about your frustrations gives them important feedback that they can consider during system upgrades and redesigns.
Your IT department might have a list of best practices and guidelines that you can use to streamline information, avoid duplication, protect sensitive data, and use existing systems more efficiently.
Talk to your team members about steps that they can take to improve their own data and information management. Do they have files or software that they are no longer using that can be deleted? Are they taking unnecessary risks with sensitive information? Do they keep files and folders organized, well-maintained, and up-to-date?
Think about the steps that you can take to improve data "housekeeping." Routinely going through your files and deleting old, inaccurate, or incomplete documents and programs can help reduce data storage costs for your organization; it's also a smart way to manage your electronic files. There may also be a central database that you could update, so that others in your organization can access your department's information.
4. Create Business Cases for Systems Improvements
For some organizations, data and information management may not be a high priority, and, for some, it may not seem relevant at all. If data management isn't as high a priority as it should be within your organization, you might have trouble getting buy-in for your proposed improvements.
Brainstorm the ways that improving data and information management could benefit your organization. If appropriate, write a business case outlining these ideas and proposals, and explain how your proposed systems improvements will help the organization and eliminate the consequences of poorly managed data.
According to a survey by a consulting agency Capgemini, nearly two-thirds of managers believe poor information management is hurting productivity by 29 per cent.
Nearly half of executives surveyed said a failure to deal with information lead to financial losses and increased operational costs, as well. One of the problems is the vast - and increasing - body of information now available. Some 36 per cent said the amount of data now available had doubled in the past five years, leading to respondents struggling to get a clear, singular picture.
Surprisingly, the issue isn't just technology. Nine out of ten of the top barriers to information exploitation weren't related to systems, but policies, skills and culture. Indeed, battling the issue will require improving staff training, treating information as a corporate asset, and leading information culture from the top.
A great example of a data-driven corporate culture is Google. Google is a company in which fact-based decision-making is part of the DNA and where Googlers speak the language of data as part of their culture. In Google the aim is that all decisions are based on data, analytics and scientific experimentation.
In companies data should be collected to provide answers to the most important questions and unless you are clear about the questions you need to answer, data is pretty useless.
In Google today, the aim is to start with questions and be very clear about the information needs at the outset. There are thousands of great examples of how Google applies this thinking but let’s look at a great case example from their HR department.
Within their global HR function, Google has created a People Analytics Department that supports the organisation with making HR decisions with data. One question Google wanted to have an answer to was: Do managers actually matter? This is a question Google has been wrestling with from the outset, where its founders were questioning the contribution managers make. At some point they actually got rid of all managers and made everyone an individual contributor, which didn’t really work and managers were brought back in.
To start with, I’d like to say that the rapid pace of technological development is affecting every day aspect of our personal and professional lives. New and more innovative consumer electronics products are making our lives more comfortable and entertaining. The possibility of uploading on and downloading from the internet has changed forever the way we work and view the world. Nanotechnology is a new growth market, which promises to bring lighter, smaller, more portable technological devices. But the most deeply changed field due to technological development is undoubtedly the field of mobile communications.The technological development does not complicate our life, but instead it makes our life much simpler in many circumstances. While there are plenty examples of this, the way that e-commerce has changed our life may be the best to describe it. In the past we had to travel long distances to stores in multiple locations in order to purchase the items we wanted. Today online shopping has made it possible for us to sit at home and buy almost everything we want just in a few clicks. There are other examples such as tele-conferences which bring people from different parts of the world together, and software like Skype and Facetime which allow users in different places to communicate “face-to-face”. In fact, the goal of technological development is to simplify people’s life instead of complicating it. On the other hand, although I agree that sometimes it is a good idea to live without some technology for a while, it is not a solution to get the simpler life people want. It is not rare to see people who choose to get away from the online social network for some time. Their feedbacks are generally positive but eventually they all come back because simply living without the technology is not the solution. It is not hard to imagine that if we give up technology development and innovation human societies will move backwards rather than forward. In conclusion, it seems to me that the purpose of technology is not to make life complex, but quite the opposite, to solve problems in our life and make life easier. Therefore, giving up technology is not the way to have a simpler life. Instead, we should push forward technology innovation and make technology more user-friendly.
Advertising is a means of communication between an organization and its target audience using space or time purchase in the media (TV, radio, magazines, newspapers, websites, billboards, etc.). Business generally use the services of advertising agencies to create advertising campaigns that use combinations of commercials, posters, print adverts or internet pop-ups in order to publicize their products or services and persuade consumers to buy. Increasingly, advertisers are using other forms of promotion such as in-store displays, product placement and product demonstrations to draw attention to what they want to sell.
Advertising as a management tool
In general meaning, advertising is used to encourage, persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group) to take or continue to take some action. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common.
In Latin, ad vertere means "to turn toward"
The purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful.
Modern advertising was created with the innovative techniques introduced with tobacco advertising in the 1920s, most significantly with the campaigns of Edward Bernays, which is often considered the founder of modern, Madison Avenue advertising.
In 2010, spending on advertising was estimated at $143 billion in the United States and $467 billion worldwide
Touching upon the history of advertisement, it’s not much worth it to mention Egyptian papyrus as the first known type of commercial messages. After that the first adds started to appear in London newspapers in 18th century.
The first huge advertising campaign was launched in the 19th century by Pears Soap company (which after that became first world-known brand). Mail-order advertising, newspaper columns started to become a part of a day-to-day culture in developed countries.
Advertising increased dramatically in the United States in the 20th century. The invention of mass marketing designed to influence the population's economic behavior on a larger scale speeded up the development process.
Advertising appeared on the radio since 1920s, on commercial TV since 50s, on cable since 80s and, finally, on the Internet since 90s.
Types of advertising and advertising techniques
Commercial advertising media can include:
street furniture components,
printed flyers and rack cards,
cinema and television adverts,
mobile telephone screens,
magazines and newspapers,
Any place an "identified" sponsor pays to deliver their message through a medium is advertising.
Advertising techniques include:
Repetition (which is a simple yet effective technique used to build identity awareness and customer memory)
Advertising that promotes specific features or makes claims about what a product or service can do for the potential customers provides successful results by informing, educating and developing expectations in the buyer
Associating a product or company with a famous person, catchy jingle, desirable state of being or powerful emotion creates a strong psychological connection in the customer.
The bandwagon technique sells a product or service by convincing the customer that others are using it and they should join the crowd.
Coupons, sweepstakes, games with prizes and gifts with purchases create excitement, and participation encourages customers to build a relationship with the sponsoring product or service.
The television commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices television networks charge for commercial airtime during popular events. The annual Super Bowl football game in the United States is known as the most prominent advertising event on television, The average cost of a single thirty-second television spot during this game reached US$3.5 million in 2012.
The marketing mix has been a key concept to advertising.
The marketing mix consists of four basic elements called the four P's. Product is the first P representing the actual product. Price represents the process of determining the value of a product. Place represents the variables of getting the product to the consumer such as distribution channels, market coverage and movement organization. The last P stands for Promotion which is the process of reaching the target market and convincing them to buy the product
An advertising manager
An advertising manager is someone who plans and directs the promotional and advertising campaigns of companies in order to generate interest in a product or service. They work with art directors, sales agents, and financial staff members in order to develop and execute these campaigns, and will often act as liaisons between agencies and clients.
An advertising campaign is a series of advertisement messages that share a single idea and theme. Advertising campaigns appear in different media across a specific time frame of frequent flyers points.
Here we can give several good examples of successful advertising campaigns:
The Coca-cola Company
The Cocal-cola company always amazed the whole world by choosing the most vivid, attractive, catchy advertising techniques and being the first in this field. Having “bought” all consumer’s Christmas and New Year Eve associations, having dyed Santa in red, having sent their drink in the outer-space, it still continues to give us a buzz by launching even more attractive ad campaimgs, for instance, the latest, campaign of personalizing (sticking a name on) each bottle of coke.
Land Rover (Intelligent business example)
Having given Massai mane to the new car concept – Freelander Massai, the famous British car manufacturer used the actual peoples of Massai tribe in Afrika in their campaing – by positioning them in a form a that new concept. That actually apllied to the qualities of that tribe – strength, and fearlessness.
One can but mention advertising wars between BMW and Mercedes. Both companies, competing on the same markets, have repeatedly launched the same competing campaigns, praising their own cars and explicitly denouncing the rival ones.
Brand is a type of product manufactured by a particular company under a particular name.
A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed. A brand name is the name of the distinctive product, service, or concept. Branding is the process of creating and disseminating the brand name. Branding can be applied to the entire corporate identity as well as to individual product and service names.
Brands are usually protected from use by others by securing a trademark or service mark from an authorized agency, usually a government agency. Before applying for a trademark or service mark, you need to establish that someone else hasn't already obtained one for your name. Although you can do the searching yourself, it is common to hire a law firm that specializes in doing trademark searches and managing the application process, which, in the United States, takes about a year. Once you've learned that no one else is using it, you can begin to use your brand name as a trademark simply by stating it is a trademark (using the " TM " where it first appears in a publication or Web site). After you receive the trademark, you can use the registered (?) symbol after your trademark.
Brands are often expressed in the form of logos , graphic representations of the brand. In computers, a recent example of widespread brand application was the "Intel Inside" label provided to manufacturers that use Intel's microchips.
A company's brands and the public's awareness of them is often used as a factor in evaluating a company. Corporations sometimes hire market research firms to study public recognition of brand names as well as attitudes toward the brands.
The challenge of keeping brands strong is one of the most important objective.
Reputation of a brand, like a human reputation, is something of great value. Many companies have given in temptation to do something for short-term profit and reduced the quality of their products or stretched their brands unwisely. They then spend years trying to repair the damage. There have been many examples of brands that have been damaged by strategic errors, for example Levi’s with its unsuccessful move into suits.
Without question, brands are more important then ever before. More companies now consist essentially of intangible assets as patents plus the value of their brands. Companies that build strong brands have big advantages over competitors. They allow companies to increase their revenues and margins.
According to investopedia.com investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Wikipedia.com provides us with another definition: investment is time, energy, or matter spent in the hope of future benefits actualized within a specified date or time frame. Investment has different meanings in economics and finance. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense. On the other hand, in finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. In this sense investments include the purchase of bonds, stocks or real estate property. But this is traditional finance investments. They are to be contrasted with alternative investments. An alternative investment is an investment in asset classes other than stocks and bonds. The term includes tangible assets such as precious metals, art, wine, antiques, coins, stamps and some financial assets such as distressed securities, hedge funds, venture capital, financial derivatives and others. Alternative investments are often used as a tool to reduce overall investment risk through diversification.
Speaking about world of business, most ventures start as investments by entrepreneurs, who hope to make financial gains or returns on investment (ROI). As businesses grow, they invest in their own projects in order to increase profits and dividends for shareholders. Some businesses such as insurance companies and investment banks employ professional fund managers to oversee investment portfolios of different types of shares and bonds on the global stock market as their main profit-making activity. Nevertheless, not only legal entities involved in the process of investment. It’s also very popular among common citizens. Lots of people all over the world are brokers, stock market investors and traders. Among the most famous investors are Jessie Livermore, who was known as the great bear of Wall Street, and Warren Buffett, who is considered to be the greatest investor ever. They gathered their wealth thanks to investment activity.
Investment banks are institutions of great importance in the world of investing. Traditionally, the role of the investment banker has been to help corporate clients by providing independent and objective financial advice. Corporations might require the banks’ expertise in order to raise capital on the bond markets, to help float a business on the stock market, or to consult, facilitate and possibly finance mergers and acquisitions.
So an investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities (or both). An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).Unlike commercial banks and retail banks, investment banks do not take deposits.
The two main lines of business in investment banking are called the sell side and the buy side. The "sell side" involves trading securities for cash or for other securities (e.g. facilitating transactions, market-making), or the promotion of securities (e.g. underwriting, research, etc.). The "buy side" involves the provision of advice to institutions concerned with buying investment services. Private equity funds, mutual funds, life insurance companies, unit trusts, and hedge funds are the most common types of buy side entities.
To my mind, the greatest and most famous investment bank is Goldman Sachs. Over its 145-year history, Goldman Sachs has earned a reputation for seeking out the best and brightest ideas to help push the company to the forefront of global finance. Goldman Sachs commands nearly $1 trillion in assets, putting in long hours to make deals and make money. It’s quintessential Wall Street.
So since the middle of XX century, investment has been a vital part of economic reality. People and legal entities invest in order to raise their money often to invest again and again.