Summer

Internship 2017
Report

1
“Analysing the opportunities for EY from Chinese Investments in
the Caribbean Islands”

A SUMMER PROJECT STUDY SUBMITTED IN PARTIAL

FULFILLMENT

FOR THE REQUIREMENT OF THE TWO YEAR

POST GRADUATE DIPLOMA IN MANAGEMENT (2016-18)

BY

Akshay Talwar

138/2016

LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT,

DELHI
JUNE, 2017

2
Certificate of Approval

3
 Acknowledgement

I would like to express my profound gratitude to all those who have been instrumental in the
preparation of my project report. To start with, I would like to thank EY Knowledge for
providing me the chance to undertake this internship.

I wish to place on records, my deep sense of gratitude and sincere appreciation to my company
guide Mr. Syed Faizi Abidi, who suggested and helped me prepare the frame work of the
project. I would also like to thank him for his continuous support, advice and encouragement,
without which this report could never have been completed.

I am deeply grateful, to my faculty guide Prof. Shivani Bali for her invaluable suggestions,
comments, feedback and support throughout the internship. She served as a beckon of light.
Her patience and faith in my abilities always boosted my confidence.

Regards,

Akshay Talwar

4
 Table of Contents

Certificate of Approval 3

Acknowledgement 4

Executive Summary 6

Chapter 1 Project 1 7-8

 Objectives
 Methodology
Project 2
 Objectives
 Methodology

Chapter 2 Introduction 9-13

Industry Overview

Company Overview

Chapter 3 Review of Literature 14

Chapter 4 Projects Undertaken 15-57

 Project 1
 Project 2
 Other Projects

Chapter 5 Key Learnings 58

Chapter 6 References 59

5
Executive Summary

Finance being an essential pillar of any organization, requires comprehensive research and
analysis of competitor firms, clients and various economies in which the organization has
operations. Since several different sectors are there under an economy, which together
contribute towards growth and development, detailed knowledge and in-depth research about
them is important to address to key issues and look for insights. Knowledge department in an
organization, with its articles, blogs, presentations, reports etc., is the functional hand of other
departments and contributes by keeping them updated about current scenarios and providing
key deliverables for business maintenance and development.

In today’s world FDI is something that is important for each developing country. Most
countries are looking for development with the help of FDI. Caribbean Islands is one such
place where FDI flows in massive amount. One of the top investor in various countries of the
Caribbean Islands is the China. China has over the past decade invested massively in the
Caribbean countries. In some countries, it also comprises of more than 50% FDI.

EY being a global firm is present in Caribbean Islands as well. EY wants to expand its presence
in the Caribbean and because of which it is looking for new horizons and Chinese companies
seem to be one route of doing it.

This report provides a detailed view of how the FDI in the Caribbean countries has been over
the years, how has China invested in the Caribbean countries, which are the major sectors for
investment and based on it, what all opportunities does EY have for expanding its presence in
the Caribbean.

6
1.1) Project 1
1.1.1) Objectives`

 To analyse the Chinese FDI in the Caribbean Islands.

 To understand how EY can expand its presence in the Caribbean Islands by using China
as an indirect source of investment.

 To recommend EY about the opportunities available to expand its presence in the

Caribbean Islands.

1.1.2) Methodology

Research methodology adopted for the undermentioned projects was Secondary Research, as
no primary research projects are carried out at EYK. A qualitative analysis of various reports,
articles, and newsletters was carried out to draw out inferences and prepare deliverables as per
the requirements of the projects. The primary framework was to summarise the findings from
the Secondary research carried out and then analyse them, to provide insights.

Secondary Sources of Information

1. Websites of Chinese government.

2. Statistics and reports by UNCTAD, Inter-American Development Bank, ECLAC etc.
3. Research papers, PowerPoint presentations and PDF files by HBR, Mckinsey etc.
4. Official websites of various Caribbean countries.
5. EY database – Factiva, OneSource, Globalsource
6. Past EY database.
7. Related articles and newsletters from various websites.

7
1.2) Project 2

1.2.1) Objective

The objective of the project was to conduct a research on the business models and the
organization structure of the firms namely – Apple, Amazon. Facebook & Google and present
the findings to the client.

1.2.2) Methodology

Research methodology adopted for the undermentioned projects was Secondary Research, as
no primary research projects are carried out at EYK. A qualitative analysis of various reports,
articles, and newsletters was carried out to draw out inferences and prepare deliverables as per
the requirements of the projects. The primary framework was to summarise the findings from
the Secondary research carried out and provide them to the client.

Secondary Sources of Information

1. Websites of Facebook, Apple, Google & Amazon.

2. Research papers, PowerPoint presentations and PDF files by HBR, Mckinsey etc.
3. EY database – Factiva
4. Related articles and newsletters from various websites.

8
2. Introduction

Foreign direct investment (FDI) is an investment made by a company or individual in one

country in business interests in another country, in the form of either establishing business
operations or acquiring business assets in the other country, such as ownership or controlling
interest in a foreign company. Following a surge in foreign investment in 2015, global FDI
flows fell 2 per cent, to $1.75 trillion, amid weak economic growth. A fall in inflows to
developing economies was partly offset by modest growth in developed countries and a
sizeable increase in transition economies. Thus, developed economies accounted for a growing
share of global FDI inflows in 2016, absorbing 59 per cent of the total. A modest recovery in
global FDI flows is forecast for 2017, although flows are expected to remain well below their
peak of 2007. A combined upturn of economic growth in major regions and improved corporate
profits will boost business confidence, and consequently MNEs’ appetite to invest. A cyclical
uptick in manufacturing and trade is expected to result in faster growth in developed countries,
while a likely strengthening of commodity prices should underpin a recovery in developing
economies in 2017. Thus, global FDI flows are expected to increase by about 5 per cent in
2017 to almost $1.8 trillion.

The Caribbean receives some of the highest levels of Foreign Direct Investment (FDI) in the
world. In the recent past, FDI flows have been particularly volatile, with the financial crisis in
2008 greatly reducing FDI flows to the Caribbean, although they have recovered somewhat
recently. One of the distinctive features of Caribbean FDI flows is that they appear to be
relatively unprofitable, with FDI income significantly lower than in Latin America. This is
possibly due to the sectoral pattern of FDI, which in most Caribbean economies is heavily
slanted towards services, particularly tourism. In a small number of economies, natural
resources play an important role, which requires relatively large capital outlays and is thus
responsible for a large share of investment. While the United States used to be the most
important investor in the region, nowadays other players, such as Canada and China, are also
taking a keen interest.

9
Industry Overview

Management consulting is the practice of helping organizations to improve their performance,

operating primarily through the analysis of existing organizational problems. It also involves
the development of detailed plan of action for improvement. Organizations may draw upon the
services of management consultants for several reasons, including gaining external (and
presumably objective) advice and access to the consultants' specialized expertise’s a result of
their exposure to, and relationships with numerous organizations, consulting firms are typically
aware of industry "practices”. They may also provide organizational change management
assistance, development of coaching skills, process analysis, technology implementation,
strategy development, or operational improvement services. Consultants can function as
bridges for information and knowledge, and that external consultants can provide these
bridging services more economically than client firms themselves. Big Four audit firms
(Deloitte, KPMG, PwC, Ernst & Young) have been investing significantly into the strategy
consulting market since 2010.Deloitte has been named as the largest consulting term for five
years running as per Gartner's annual consulting report.

The Indian consulting industry has also started expanding, not only in terms of size, but also in
terms of the service offerings. The consulting industry has witnessed a considerable increase
in the number of newcomers in this field exploring all the industries. Over the period, specialist
consulting advice is being sought by clients in India which has opened the opportunity for
several specialist organizations to draw on their specialist knowledge base and resources to
meet the demand for specialist consulting services. The major strengths of Indian consulting
organizations include professional competence, low cost structure, diverse capabilities, high
adaptability and quick learning capability of Indian consultants.

In India Management consulting is estimated to be a Rs. 22,000 crore industry (Source:

Assocham) which is growing at a CAGR of 30%. The industry is diverse, consisting of a wide
variety of organizations, including global strategy firms, consulting arms of technology firms
(such as IBM and Accenture) and the big-four accounting firms (such as PwC and KPMG),
and a host of niche consulting firms (including Universal Consulting, Avalon Consulting, and
Oliver Wyman).

Historically, the Indian consulting industry was dominated by a demand for basic services such
as market research, supply chain optimization, information technology implementation, and

10
financial restructuring (including equity and debt funding). However, as the Indian economy
opened to foreign competition and with Indian corporations venturing into international
markets, with deregulation, and the rise of the value-conscious middle- and lower-income
customers (also known as the bottom-of-pyramid or BOP markets), firms have begun to realize
the opportunity cost to the firm because of poor strategy. Therefore, the demand for high-end
strategy consulting has begun attracting global strategy consulting firms to India

Company Overview

Ernst & Young (trading as EY) is a multinational professional services firm headquartered
in London, United Kingdom. It is one of the "Big Four" audit firms and is one of the largest
professional services firm in the world. The firm dates to 19th century where the founding
members Arthur Young and Alwin C Ernst, started their individual business. The current firm
was formed by a merger of Ernst & Whinney and Arthur Young & Co. in 1989. It was known
as Ernst & Young until 2013, when it underwent a rebranding to EY. The acronym "EY" was
already an informal name for the firm prior to its official adoption. With 728 offices in 150
countries employing over 2 Lac employees and an annual turnover US $ 28.7 billion (2015),
an increase of 11.6% in local currency terms — the fastest revenue growth since 2008. EY
offers Services such as Assurance, Tax Advisory, Consulting, Financial Advisory and Legal.

To ensure efficient and effective business, EY has organized its legal entities into 28 similarly
sized business units, called Regions, in terms of both people and revenues. These Regions,
almost all of which are purposely not single countries, are grouped into four geographic Areas:

 Americas
 Asia-Pacific
 Europe, Middle East, India and Africa
 Japan

EY has four main service lines and their revenues in 2015:

 Assurance (US$11.3b): comprises Financial Audit (core assurance), Financial Accounting

Advisory Services, Fraud Investigation & Dispute Services, and Climate Change &
Sustainability Services.

11
 Tax (US$7.5b): includes Transfer Pricing, International Tax Services, Business Tax
Compliance, Human Capital, Customs, Indirect Tax, Tax Accounting & Risk Advisory
Services and Transaction.
 Advisory (US$7.3b): consisting of four subservice lines: Actuarial, IT Risk and Assurance,
Risk, and Performance Improvement.
 Transaction Advisory Services (TAS) (US$2.5b): deals with companies' capital agenda –
preserving, optimizing, investing and raising capital.

EY is committed to building a better working world, which is their current vision, and they
say that, “The insights and quality services we deliver help build trust and confidence in the
capital markets and in economies the world over. We develop outstanding leaders who work
together to deliver on our promise to all our stakeholders. In so doing, we play a critical role
in building a better working world for our people, for our clients and for our communities.”

In 2015 EY was recognized by 94,000 business students in Universum’s annual survey as one
of the top 3 most attractive employers in the world, for the third year running. In a survey of
their employees, 84% of them said they were proud to work at EY, which is a best-in-class
result for the consulting sector. Around the world EY member firms have also been recognized
by:

 Great Place to Work’s World’s Top 25 Best Multinational Workplaces, for the second
time — the only one of the Big 4 to be listed.
 FORTUNE magazine as a great place to work for 17 years in a row.
 India’s World HRD Congress as dream employer of the year, and several others.

Amongst the main service lines, mentioned above, there are several other major departments
in EY India and other global offices which are under the head, Global Talent Hub (GTH), like
EY Knowledge, Quality and Risk Management, SL Support etc. to help create quality
deliverables and offer various services within EY and its subsidiaries.

About EY Knowledge

The collective intelligence of more than 200,000 professionals around the world is one of the
key assets of EY - and it grows every day as they see, learn and do more. When this intelligence

12
is applied to various challenges, EY services get driven by fresh, actionable insights and the
power of a truly connected organization. To make this happen, EY formally collect, package
and share the vast experiences of their people as well as the latest news, trends and regulations
in your industry, operating geographies and the greater market.

Thus, EY Knowledge is a global team of professionals working to help the other teams
understand their client’s business environments, win work and deepen relationships with their
clients. The company use knowledge, such as news, research, analysis, benchmarks and work
products, to:

 Create a deeper understanding of your operating environment, opportunities,

developments and threats; let us tell you something you don’t already know.
 Using proven approaches and methodologies allows us to respond quickly and
relevantly to your challenges, however common or unique.
 Internal networks and communities connect our teams around the world to share
experiences, trends and approaches in real time.
 Globally consistent platforms mean your team can access the same insights and tools
anytime, anywhere.

13
3. Review of Literature

James X. Zhan in World Investment Report (2017) mentions that after a strong rise in 2015,
global FDI flows lost growth momentum in 2016, showing that the road to recovery remains
bumpy. FDI inflows decreased by 2 per cent to $1.75 trillion, amid weak economic growth and
significant policy risks, as perceived by multinational enterprises (MNEs). Flows to developing
economies were especially hard hit, with a decline of 14 per cent to $646 billion. FDI remains
the largest and most constant external source of finance for developing economies – compared
with portfolio investments, remittances and official development assistance.

Richard L. Bernal (2016): Potential & Prospects of Chinese FDI in Caribbean examines that
Caribbean Island countries have now become a place of investment for most countries. The
flows of Foreign Direct Investment (FDI) into the Caribbean sub region in 2014 to total $6.027
billion dollars. The percentage of Foreign Direct Investment as a proportion of Gross Domestic
Product (GDP) is relatively high in the Caribbean compared with other regions of the world,
the study indicates. On average, these flows represent 4% of the sub region’s GDP, and more
than 10% in some of its economies. Tourism is the sector that receives the most FDI in countries
such as Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Saint Kitts
and Nevis, Saint Lucia and Saint Vincent and the Grenadines, while in other nations natural
resources predominate (Guyana, Suriname and Trinidad and Tobago). In Haiti and Jamaica
FDI is principally aimed at the transportation and telecommunications sector. China has
recently become the third largest source of foreign direct investment (FDI) in the world and is
a major source of development aid for developing countries, including those in the Caribbean.
The capital flows it provides have taken the form of loans to governments to finance
infrastructure projects and to expand production of oil and other raw materials. There have
been indications of interest in further investment in the Caribbean from Chinese enterprises
and entrepreneurs. This is driven by both state policy, which seeks to more actively integrate
China into the global economy, and enterprise-level interests by both state and private
enterprises. Caribbean governments have generally been receptive to prospective incoming
FDI. The factors influencing the emergence of Chinese FDI in the Caribbean include: the
ongoing learning process by both investors and the governments of host countries;
transnational ethnic business networks; the local business environment; and the policies of
Caribbean governments.

14
4. Projects Undertaken

4.1 Project 1

“Analysing the opportunities for EY from Chinese Investments in the

Caribbean Islands”

4.1.1 Economic Overview

The Caribbean is a region that consists of the Caribbean Sea, its islands (some surrounded by
the Caribbean Sea and some bordering both the Caribbean Sea and the North Atlantic Ocean)
and the surrounding coasts. The region is southeast of the Gulf of Mexico and the North
American mainland, east of Central America, and north of South America.

Situated largely on the Caribbean Plate, the region comprises more than 700
islands, islets, reefs and cays. These islands generally form island arcs that delineate the
eastern and northern edges of the Caribbean Sea. The Caribbean islands, consisting of
the Greater Antilles on the north and the Lesser Antilles on the south and east (including
the Leeward Antilles), are part of the somewhat larger West Indies grouping, which also
includes the Lucayan Archipelago (comprising the Bahamas and Turks and Caicos Islands)
north of the Greater Antilles and Caribbean Sea. In a wider sense, the mainland countries
of Belize, Guyana, Suriname and French Guiana are often included due to their political and
cultural ties with the region.

15
 4.1.2 Top Economies of Caribbean

Secluded from the hustle and bustle of the busy cities of the world, the Caribbean is known as
one of the world's top vacation destinations. With as many as 40 million residents and 20 island
nations, the Caribbean is comprised of some of the world's most dynamic economies.

 Trinidad and Tobago

In addition to being the wealthiest country in the Caribbean region, the twin island nation of
Trinidad and Tobago has one of the highest per capita Gross Domestic Product (GDP) in the
entire Western Hemisphere, coming third after the United States and Canada. The Republic is
a high-income economy by the World Bank. This means that the country’s Gross National
Product (GNP) per capita is more than $12,735. In 2011, the Organization for Economic Co-
operation and Development (OECD) removed Trinidad and Tobago from its list of developing
countries.

Per the CIA World Factbook, Trinidad and Tobago’s GDP was $28.87 billion in 2014. The real
GDP growth rate for that year was 0.8%, which was down from 1.7% realized in 2013. Unlike
most economies in the Caribbean, Trinidad’s main revenue source is not tourism. Instead, the
country’s economy is highly dependent on petrochemical and liquefied natural
gas exports because of their large oil and natural gas reserves. As a member of the Caribbean
Community (CARICOM), Trinidad benefits from trade alliances among other Caribbean
states.

Although Trinidad and Tobago remain the Caribbean’s strongest economy, the country has
been dealing with economic issues in recent times. During the island’s 2015 fiscal year,
Trinidad and Tobago reported four consecutive quarters of negative GDP growth. This led to
an announcement by local Central Bank in early December 2015 stating the country was
officially in a recession. The recession has come because of the fall in international energy
prices. Trinidad and Tobago uses a floating exchange rate regime and as of Jan. 11, 2016,
one United States Dollar (USD) could have been exchanged from $6.43 Trinidad and Tobago
Dollars (TTD).

16
  Jamaica
Up until recently, Jamaica was mostly known for its reggae music, crystal clear beaches, and
distinct accent. However, the Caribbean island’s financial industry recently made headlines
when Bloomberg reported that the Jamaica Stock Exchange (JSE) was the world’s best
performing stock market for 2015. While the Standard and Poor’s 500 Index (S&P
500) reported negative returns in 2015, the JSE market index rose by 97%. This came because
of foreign acquisitions and a recovering economy.

The Jamaican economy is heavily reliant upon export revenues from its agriculture and mining
industries. Per a January 2015 report published by the U.S. Geological Survey (USGS),
Jamaica owned the world's fifth largest bauxite reserves in 2014. The report also revealed that
the island with a population of 2.8 million was the world's eighth largest producer of bauxite
for that same year. Other Jamaican exports include alcoholic preps for beverages, cassava, raw
sugar, and raw coffee beans. In fact, the Jamaican Blue Mountain Coffee is one of the world’s
most popular types of coffee.

Like Trinidad and Tobago, Jamaica is a member of, CARICOM, a common market in the
Caribbean. A heavily indebted nation, Jamaica’s economy has been slowly bouncing back from
a recession. For the third year in a row, the island reported positive economic growth. In 2015,
Jamaica’s GDP was estimated to have increased by 1.4%. This can be considered a fairly good
improvement in the economy as the island’s 30-year average economic growth is less than
1%. In recent times, the Government of Jamaica has been working on economic reforms that
have gained support from the International Monetary Fund (IMF), World Bank, and the Inter-
American Development Bank

 Dominican Republic
In addition to possessing the ninth largest economy in Latin America, the Dominican Republic
has the largest GDP among the different nations that make up the Caribbean. In 2014, the
Dominican Republic reported an economic growth rate of 7.3%, an increase from 4.8% realized
in 2013, as well as GDP of $64.14 billion. Strong trading relationships and large remittance
payments helped to contribute to the expansion of the island's economy. In fact, remittances
serve as the island’s third largest source of foreign exchange.

17
In addition to being the Caribbean’s second largest producer and exporter of sugarcane, the
Dominican Republic exports cigars, sugar cane, refined petroleum and bananas. The island’s
list of key trading partners includes the United States, China, and Haiti.

18
 4.1.3 FDI in Caribbean Country-Wise

Total FDI in Caribbean Countries

3000
2545.5
2397.6
2500

2000
FDI ($mn)

1500

1000

500
117.8 135.5 149.2
28.7 0 15.2 13.2 15 19.4 15.7 1.4
0

Country

19
4.1.4 China’s FDI in Caribbean

China has recently become the third largest source of foreign direct investment (FDI)
in the world and is a major source of development aid for developing countries,
including those in the Caribbean. The capital flows it provides have taken the form of
loans to governments to finance infrastructure projects and to expand production of oil
and other raw materials. There have been indications of interest in further investment
in the Caribbean from Chinese enterprises and entrepreneurs. This is driven by both
state policy, which seeks to more actively integrate China into the global economy, and
enterprise-level interests by both state and private enterprises. Caribbean governments
have generally been receptive to prospective incoming FDI. The factors influencing
the emergence of Chinese FDI in the Caribbean include: the ongoing learning process
by both investors and the governments of host countries; the performance of vanguard
companies; transnational ethnic business networks; the local business environment; and
the policies of Caribbean governments.

20
 China's FDI in Caribbean Countries
120 111.9

100
79.7
80
FDI ($mn)

60

36.2
40

20 14.5
6.3 5 8.5
0.35 1.1 3.9
0 0 0
0

Country

4.1.5 SECTORWISE FDI IN CARIBBEAN

Sector-wise FDI % in Caribbean

15%
32%
13%

22%
18%

Tourism Transportation Natural Resources Telecommunications Others

Source: EY Database

21
The Caribbean consists of several groups of economies, each with its own economic story
reflecting its strengths and weaknesses. There are some sectoral trends that are common to the
whole sub region. For many economies, the tourism sector is the largest earner of foreign
exchange and the primary destination for investment. The second most important sector is
natural resources. In some economies, particularly Belize, Guyana, Suriname and Trinidad and
Tobago, natural resources (in the form of agriculture, mining or oil and gas exploration) are
the most important attractors of FDI, while in others (the Dominican Republic and Jamaica)
the natural resources sector plays an important but less dominant role. The third category is
export-oriented FDI. This is not a single sector, but includes both export-oriented
manufacturing and various export-oriented services, such as offshore education and business
process outsourcing (BPO). The final category is market-seeking FDI. This also encompasses
various sectors, mostly in services (banking, retail, energy) but also in small-scale
manufacturing.

Natural resources are particularly important in Guyana and Trinidad and Tobago, but play a
smaller role in the other economies. Only in the Dominican Republic does manufacturing
account for a large proportion of FDI, while transport and communications are particularly
important in Haiti and Jamaica. In recent years, these countries have received large investment

22
4.1.6 Countries in which EY is present in Caribbean Islands

 Barbados
 Cayman Islands
 Virgin Islands
 Dominica
 Dominican
Republic
 Grenada
 Saint Lucia
 Jamaica
 Saint Vincent &
Grenadines
 Suriname
 Trinidad &
Tobago

4.1.7 Countries where EY is not present, however, China is present

 Guyana
 Belize
 Haiti
 Antigua & Barbuda

4.1.8 Countries where both are not present

 Curacao
 Netherlands Antilles
 St. Kitts & Levis

23
4.1.9 Analysis

 Multiple Chinese companies have made investment in Caribbean in the past decade.
Not all companies have gained from their investment. After thoroughly analysing a list
of companies and comparing their pre & post FDI revenues, a list of companies had
been prepared where EY could invest to expand its presence in the Caribbean Islands.
Due to confidentiality of data only some firms can be listed in the report.

1.) China State Construction Engineering Corporation Limited

China Construction is China’s largest construction and real estate conglomerate and
biggest building work contractor. It is the largest transnational construction company
in the developing countries and the top home builder in the world, taking the long lead
of China’s international contracting business.

CSCEC invested $890 mn in Bahamas in 2014 in the Tourism Sector.

CSCEC Revenue over the years

600

512
500

386
400
$mn

300

200
139

100

0
2015 2016 2017
Year

CAGR – 54.44%
Source: EY Database

24
2.) China Investment Corporation

Headquartered in Beijing, China Investment Corporation (CIC) was founded on 29

September 2007 as a wholly state-owned company incorporated in accord with China's
Company Law, with registered capital of $200 billion. The company was established
as a vehicle to diversify China's foreign exchange holdings and seek maximum returns
for its shareholder within acceptable risk tolerance.
CIC invested $850 mn in Trinidad & Tobago in 2011 in the Energy (Natural Gas) sector
in 2011.

CIC Revenue over the years

700
616
600
502
500
413
400
324
$mn

300

200 168

89
100

0
2012 2013 2014 2015 2016 2017
Year

CAGR - 38.05%
Source: EY Database

25
3.) China Harbour Engineering Company

China Harbour Engineering Company Ltd. (CHEC) is a subsidiary of China

Communications Construction Company Ltd (CCCC), one of the Global Fortune
500 companies. CHEC has been developing and operating the oversea business on behalf
of CCCC. Currently, CHEC has more than 60 oversea branch offices or subsidiaries serving
clients in over 80 countries around the world.

CHEC invested $600 mn in Jamaica in Transport & Tourism in 2014.

CHEC Revenue over the years

400
339
350

300

250
211
$mn

200

150
103
100

50

0
2015 2016 2017
Year

CAGR – 48.75%

Source: EY Database

26
4.) Yida International Investment Group
Yida International Investment Group (“Yida Group”) was founded in 2011. Its
headquarters is in western Beijing. It is a diversified international investment company
focusing on a diversity of industries and sectors. Its investment platform includes
residential and commercial real estate, horse industry, metal and mining and others.

Yida International Investment Group invested $1bn in Antigua in the year 2015 in the
Tourism sector. The investment includes construction of five luxury hotels, 1,300
residential units, a casino, a golf course and marina.

YidaTurnover over the years

300
268

250

200
$mn

150 136

100

50

0
2016 2017
Year

CAGR – 40.38%
Source: EY Database

27
  Countries where Chinese companies have invested, however, EY has no
presence.

Total vs China's FDI

300
255
250 225.2

200
$mn

150
117.8

100

50 28.7
15 8
0.35 6.3
0
Guyana Belize Haiti Antigua & Berbuda
Country

Total FDI China's FDI


Source: ECLAC & Government of People’s Republic of China

As it can be seen from the above bar graph that substantial part of FDI in Guyana, Haiti and
Antigua & Barbuda come from China. This opens opportunities for EY to make its presence in
the above-mentioned countries.

28
  FDI in Caribbean countries where neither EY nor Chinese Companies have
invested

FDI Figures
140
130

120

100

80 73
$mn

60

40

20 16

0
Netherlands Antilles Curacao St. Kettis & Levis
Country

Source: UNCTAD

The above-mentioned countries have considerable amount of FDI from worldwide. There are
various investment opportunities in these countries which are mentioned in the suggestions.
EY can take advantage of these opportunities.

29
4.1.10 Suggestions

Based on the research and the findings, some of the suggestions are: -

 EY can tap 21 companies out of the total 72 that were identified. Due to confidentiality of
data only 4 companies have been mentioned.

 Yida International Investment Group

 China State Construction Engineering Corporation Limited
 China Investment Corporation
 China Harbour Engineering Company

EY can expand its presence in Caribbean by investing in these companies as the

investments by these companies in the Caribbean countries have proved beneficial over the
years & the financials of the companies are also in line. Based on the CAGRs of each
investment, the investments made by these companies are giving positive returns over the
years.

 Countries where Chinese companies have invested, however, EY has no presence.

Total vs China's FDI

300
255
250 225.2

200
$mn

150 117.8
100
50 28.7
15 8 6.3
0.35
0
Guyana Belize Haiti Antigua & Berbuda
Country

Total FDI China's FDI

30
 As it can be seen from the above bar graph that substantial part of FDI in Guyana, Haiti
and Antigua & Barbuda come from China. This opens opportunities for EY to make its
presence in the above-mentioned companies.

 There are few countries where neither Chinese companies nor EY is present. They are as
follows:

 Curacao

Investment Opportunity: Curacao Logistics Knowledge Center

The motive of the project is to establish the only comprehensive Logistics Knowledge center in the region
to create logistic knowledge workers, conduct research and improve cross border logistics services within
the region.

Source: CAIPA

Investment Required: 1,011,601 USD (280,899 USD available locally)

 St. Kitts

Investment Opportunity: Whitegate Development

Whitegate Development area, extending from Newton Ground to Belle Vue, has been identified by the
Government of St. Kitts and Nevis as a prime location for future economic growth and development.

Source: Investstkitts

 Netherlands Antilles

Investment Opportunity: Open Cast Chrome Mining Opportunity

An investment on a debt funding model for a new open cast chrome mine.

Investment Required: SAR 50mn

Source: Factiva

31
4.2 PROJECT 2 (Other Projects)

“Business Models & Organization Structure of Apple, Amazon, Google &

Facebook”

4.2.1 Findings

 Apple Inc.
Apple's Lines of Business
The company divides its own product lines into iPhone, iPad, Mac, iPod, iTunes,
Software, and Services, and Accessories. The three lines of business: Computing
Hardware & Software, Mobile Devices, and the iTunes Store.

Computing Hardware & Software

Apple's longest running line of business is that of computer hardware and software. The
company has always believed that hardware is only as useful as its software, and the
importance of full software and hardware integration cannot be underestimated. This
dedication to owning the full integrated product has allowed Apple to focus on quality
and usability, at the cost of market share with its Mac line of products.

Macs are sold through the mass market retail channel with Apple employing three
different business models. First, Apple acts as wholesaler to a small group of retailers that
are authorized Mac retailers. Second, Apple applies the manufacturer direct model by
selling Macs direct to consumers through its website. Finally, Apple takes on the role
of traditional retailer itself by selling Macs through its own bricks-and-mortar retail
stores.

Mobile Devices
The company's signature in the post-1996 era is its development of mobile devices and its
dominance of the cell phone and tablet industries. Beginning with the iPod music player,
Apple has steadily focused on ease of use, quality construction, and customer experience
32
to develop its hardware, software, and cloud service integration into a powerful mobile
platform. The iPod evolved into the iPhone by incorporating cellular technology and the
app store, which evolved into the iPad product line.

The company's approach to selling mobile devices is similar to that of its computer
business. Apple sells iPhones and iPads through the traditional retail channel, through
partners and through its own retail and web channels A final component of the mobile
device product line is the recurring revenue coming in from the app store, which is a
variation of the razors & blades business model.

iTunes Store
Originally launched in support of the iPod, the iTunes store has become the primary e-
commerce engine for media consumption on Apple devices. As the company's products,
have expanded beyond music, so has the iTunes store, moving from music to video to
apps, and books.

The iTunes store enables several innovative digital business models for Apple as well as
its developer community. From Apple's perspective, everything sold through the store is
sold at a simple mark-up of about 30%, so Apple itself is benefiting as a cost-plus
retailer. Recurring revenue comes in with the razors & blades model. App developers
can use the iTunes store pricing model to employ the freemium as well as razors &
blades models to entice customers with free or low cost apps, earning future revenue
through in-app purchases.

33
Business Model Canvas

 Key Partners
 Manufacturers
 App store developers
 Cellular Service providers
 Music, television & movie industries

 Key Activities
 Design
 Software Development
 Manufacturing
 Quality Control

 Key Sources
 Human
 Physical
 Intellectual

 Value Propositions
 Design
 Performance
 Brand/Status
 Convenience/Usability

 Customer Relationship
 Self service
 Personal assistance

 Channels
 Apple retail stores
 Apple.com
 Other retailers
34
 Customer Segments
 Mass Market
 Multi-sided platforms

 Cost Structure
 Cost driven
 Economies of scale

 Revenue Streams
 Sale of Products
 Media sales
 Rental & subscription fees

ORGANIZATION STRUCTURE

Function
Based

Organization
structure

Product Spoke &

Wheel
Based Hierarchy

 Spoke-and-Wheel Hierarchy. A bird’s-eye view of Apple’s organizational structure

shows considerable hierarchy. In the past, everything went through Steve Jobs’ office.

35
 Jobs made all the major decisions. However, under Tim Cook’s leadership, this
hierarchy in Apple’s organizational structure has slightly changed. There is now more
collaboration among different parts of the company, such as software teams and
hardware teams. Apple’s vice presidents have more autonomy, which was almost
absent under Jobs. Thus, the company’s organizational structure is now less stiff, but
still has a spoke-and-wheel hierarchy where Tim Cook is at the center.
 Function-Based Grouping. The upper tier of Apple’s organizational structure has
function-based grouping, which is an element derived from the functional type of
organizational structure. Each senior vice president who reports to Tim Cook handles a
business function. For example, Apple has an SVP for industrial design, an SVP for
marketing, and another SVP for retail. In this aspect of the organizational structure,
Apple’s top leaders address business needs in terms of function areas.
 Product-Based Grouping. The lower tier of Apple’s organizational structure has
product-based grouping, which is an element derived from the divisional type of
organizational structure. Below the senior vice presidents, there are many vice
presidents for different outputs or products. For example, Apple has a VP for iOS apps,
a VP for iPad, and another VP for consumer apps. This aspect of the organizational
structure enables Apple to address specific products or product components.

36
 SWOT ANALYSIS

Strength Weakness
Strong brand image Limited distribution network
High profit margins High selling prices
Effective innovation process Sales limited mainly to high-end market

SWOT
ANALYSIS
Threat
Oppurtunity
Aggressive competition
Distribution network expansion
Imitation
Rising demand for tablets and
smartphones Rising labor cost in countries where
Apple plants are located
Creation of new product lines

 Strengths

 Strong brand image

 High profit margins
 Effective innovation process

Apple is one of the most valuable and strongest brands in the world. Apple maintains its premium
pricing strategy, which comes with high profit margins. This is a major strength because it creates
flexibility for the firm to adjust prices while ensuring significant profits. Also, Apple is known for rapid
innovation based on the company’s intensive growth strategies. Rapid innovation enables the firm to
keep abreast with the latest technologies to ensure competitive advantage. Based on this dimension of
Apple’s SWOT analysis, the company’s strengths are difficult to compete with, thereby supporting the
firm’s continued leadership in the industry.

 Weaknesses

 Limited distribution network

 Sales limited mainly to high-end market

37
Apple has a limited distribution network because of the company’s policy of exclusivity. For instance,
the company carefully selects authorized sellers of its products. In addition, because of the premium
pricing strategy, Apple has the weakness of having most of its sales revenues from the high-end market.
This market is composed of customers from the middle and upper classes. Customers from the lower
class, which represents most buyers in the global market, are unable to purchase Apple products because
of the relatively high prices.

 Opportunities

 Distribution network expansion

 Rising demand for tablets and smartphones
 Creation of new product lines

Apple can expand its distribution network. Such opportunity directly relates to the weakness of the
limited distribution network of the company. An expanded distribution network can help the firm
reach more customers in the global market. Also, Apple has the opportunity to explore new product
lines. Its current product lines are highly successful. Through further innovation, Apple can
introduce new product lines, like what the firm has already done with the Apple Watch. Developing
new product lines can support the company’s growth.

 Threats

 Aggressive competition
 Imitation
 Rising labor cost in countries where Apple plants are located

Tough competition in the industry is partly because of the aggressiveness of firms. Apple competes
with firms like Samsung, which also uses rapid innovation. Because of the aggressive behaviors of
competing firms, it is necessary to have strong fundamentals for maintaining competitive advantage. In
addition, Apple faces the threat of imitation. This threat is significant because of the large number of
firms that can easily imitate Apple’s products. Some local and regional firms could partially imitate
Apple’s product design. Moreover, rising labor costs in Apple plants, such as in China, can reduce profit
margins or push selling prices even higher. The company’s performance could suffer because of
aggressive competition and imitation of product design. Thus, Apple must take appropriate action to
prevent or overcome these threats.

38
 Amazon

Lines of Business
The company itself defines its lines of business in terms of product sales, service sales,
fulfilment, publishing, digital content subscriptions, advertising.

Amazon's lines of businesses: 1) online retail, 2) internet services, and 3) the Kindle
ecosystem.

Online Retail
The online retail line of business includes those products sold by Amazon as a
traditional retailer, most commonly as a low-cost retailer. Amazon claims to have
"Earth's Biggest Selection" of products available through its family of websites, sold at
the lowest cost at a small profit. The company started as an online book seller, rapidly
expanding into music and movies, and ultimately into electronics and household
goods.

Amazon doesn't stock everything that is sold through its website. Another part of its
retail strategy is to serve as the channel for other retailers to sell their products and
taking a cut of every purchase. Amazon maintains its status as a destination website,
but does not have to maintain inventory on slower-selling products. This strategy has
made Amazon a leading long-tail retailer, expanding its available selection without a
corresponding increase in overhead costs.

Amazon introduced the sale of used products through its seller marketplace. Originally
developed to compete with eBay, the seller marketplace provides another retail
revenue stream for the company without the need to stock products in its warehouses.
Advertising and shipping are handled exclusively by sellers, with Amazon taking a cut
of every sale simply for providing the channel.

Internet Services
Amazon's internet services cannot easily be discussed as a standalone line of business
because it is deeply intertwined with both its retail business and the Kindle ecosystem.
From the consumer perspective, Amazon has begun to provide services like Amazon
39
Prime, which provides free two-day shipping on retail purchases, on-demand video
streaming, and free access to the Kindle library, all for an annual fee.
Unknown to most Amazon customers, however, are the other internet services
provided by Amazon, referred to as AWS (Amazon Web Services). Originally
developed as a side business, Amazon decided to lease out its own server space to
other companies and individuals. While not a core part of the company's strategy,
Amazon found itself managing many servers and internet services, and it was a small
effort to manage those services for others.

Kindle Ecosystem
Amazon has expanded its business into manufacturing and distributing the family of
Kindle tablets. Originally designed as an electronic book reader (supplementing its
online book seller business), the Kindle has become a fully functional tablet and media
device. With the Kindle, Amazon serves as both manufacturer and traditional retailer.

While the company does not admit as much, it is assumed that the Kindle devices are
sold at a loss, which would more correctly put this line of business into the razors &
blades category of business model. By selling the hardware at a loss, Amazon is
betting that customers will purchase enough electronic books, games, and videos to
justify the initial loss.

40
Business Model Canvas

 Key Partners
 Suppliers and manufacturers
 Network of sellers

 Key Activities
 Merchandising
 Production & Design

 Key Resources
 Physical: Warehouses
 Human: Web & Application development
 Intellectual: Kindle Platform

 Value Propositions
 Price
 Convenience

 Customer Relationship
 Self Service
 Automated Service

 Customer Segments
 Mass Market

 Cost Structure
 Cost Driven
 Economies of scale

 Revenue Streams
 Retail Sales
 E-books & contents
 Commission on reseller sales
 Prime monthly subscriptions

41
 ORGANIZATION STRUCTURE

Global
Function-
Based Groups

Organization
Structure

Global Geographic
Hierarchy Divisions

 Global Function-Based Groups. Function-based groups are the strongest

characteristic of Amazon’s organizational structure. Each major business function has
a dedicated group or team, along with a senior manager. The strategic objective in
having this structural characteristic is to enable Amazon.com to facilitate successful e-
commerce operations management throughout the entire organization. The following
are the major function-based groups in Amazon’s organizational structure:

1.) Office of the CEO

2.) Business Development
3.) Amazon Web Services (AWS)
4.) Finance
5.) International Consumer Business
6.) Accounting
7.) Consumer Business
8.) Legal and Secretariat

42
 Global Hierarchy. Hierarchy is a traditional organizational structural characteristic. In
the case of Amazon.com Inc., such characteristic is expressed in terms of a global
system of vertical lines of command and authority that influence the online retail firm.
For example, senior managers’ directives are applied throughout the organization,
affecting all relevant offices of the company worldwide. The strategic objective of this
feature of the corporate structure is to facilitate managerial control of Amazon’s entire
organization.
 Geographic Divisions. Amazon’s organizational structure also involves geographic
divisions. In this structural characteristic, groups are based on geographic regions and
related business goals. For example, Amazon.com Inc. uses geographic divisions to
make it easier to manage the e-commerce business based on economic conditions of
certain regions. The strategic objective in having this characteristic of the
organizational structure is to enable the company to address issues or concerns relevant
to each geographic region, considering differences among regional markets. Amazon
has a simple approach for this structural feature, involving the following geographic
divisions in its operations:

1.) North America

2.) International

43
 SWOT ANALYSIS

Strengths Weaknesses
Strong background Shrinking margins
Customer centric Tax Avoidance issue
Efficient delivery network High Debt
GLOCAL strategy Product flops

SWOT ANALYSIS
Oppurtunities
Threats
Backward Integration
Low entry barriers of the industry
Global Expansion
Government regulations
Acquisitions
Local competition
Opening physical stores outside U.S

 Strengths

 Strong background: Built on its early successes with books, Amazon now has product
categories that include electronics, toys, games, home and kitchen, and much more.
Amazon has evolved as a global E-commerce giant in the last 2 decades.
 Customer centric: Company’s robust CRM has created customer centric processes in
order to carefully record data on customer’s buying behavior. This enables them to offer
individual items, related items or bundle them as an offer, based upon preferences
demonstrated through purchases or items visited. Also, the company claims that 55%
of their customers are repeat buyers resulting in low cost of acquisition of new buyers.
 Efficient delivery network: With its strategic partners, Amazon has created a deep &
structured distribution network to make the product available even at remote locations.
It also has free of cost delivery charges in certain geographies.
 GLOCAL strategy: By using the strategy of “Go global & act local”, Amazon can
fight with domestic E-commerce companies through absorbing & by partnering with
supply chain companies. The branding too is done as per local taste.

For example – In India, Amazon is currently using the “Aur Dikhao” campaign to
encourage users to browse more of their products.
44
 Weaknesses

 Shrinking margins: Due to extensive delivery network & price wars Amazons
margins are shrinking, which is resulting in even losses. In India, Amazon had a loss of
$359 crores in the year 2013-14.
 Tax Avoidance issue: Amazon has attracted negative publicity on account of Tax
Avoidance in countries like U.S & UK. Most of its revenue is generated from these
well-established markets.
 High Debt: In many developing nations Amazon is still struggling to make the business
profitable thereby affecting the overall profitability of the group resulting into High
debt.
 Product flops – Amazon launched the fire phone in the US which was a big flop. At
the same time, Kindle fire did not pick up as strongly as Kindle did. Thus, there were
several product flops which caused a dent in Amazon’s deep pockets.

 Opportunities

 Backward Integration: Amazon can come up with its In-house brands in different
product categories. They can also differentiate their offering. This will help them make
profits in highly competitive E-commerce market.
 Global Expansion: Expansion mainly in Asian & developing economies will help
Amazon because those are the markets with low competition in E-commerce industries
& are not saturated like developed economies.
 Acquisitions: By acquiring E-commerce companies it can decrease the competition
level & also can use the specialized capacity of the other company.
 Opening physical stores outside U.S: By doing this Amazon can help the customers
to engage with the brand, resulting in increase in repeat purchases & increase in loyal
customer base.

45
 Threats

 Low entry barriers of the industry: Low entry barriers affect the current player’s
business as more & more company means tough competition, price wars, shrinking
margins & losses resulting into questioning the sustainability of the players.
 Government regulations: Not having clarity on the issues related to FDI in multi brand
retail, has been a big hurdle in the success of the E-commerce players in many
developing nations.
 Local competition – India has snapdeal and Flipkart who are local E commerce
retailers and are taking away majority of the market. Similarly, there are many local
players who take bites from the market share thereby making it hard for a big player
like Amazon to make profits.

46
 GOOGLE

Google business model is Polyhedral i.e. everybody sees a different face of the
company:

 Users: They see free searches, free email, free maps, free browser, etc. and pay for
some premium services like advanced email and google earth features, cloud
services, payment services, etc.

 Companies: They see website space where to put their ads taking advantage of
geolocation, segmentation (specially in Youtube and Google+), etc.

 Developers: They see a way to monetize their knowledge by means of Android apps.

 Offline: Google is lately it is trying to move outside the Web with autonomous cars,
working humanoid robots.

ORGANIZATION STRUCTURE

Function
Based

Organization
Structure

Product Based Flatness

47
Google has a cross-functional organizational structure, which is technically a matrix
organizational structure with a considerable degree of flatness. Thus, the company’s
organizational structure has three main characteristics:

 Function-based definition
 Product-based definition
 Flatness
Google uses function as basis for grouping employees. For example, the company has a Sales
Operations team, an Engineering & Design Team, and a Product Management Team, among
others. The firm also uses products as basis for grouping employees. For example, the company
groups employees for developing Nexus devices. The firm also groups employees for its Fiber
business. In addition, the firm’s organizational structure has considerable flatness. A flat
organizational structure means that Google’s employees, teams or groups can bypass middle
management and report directly to CEO Larry Page. Employees can also meet and share
information across teams.

48
 SWOT ANALYSIS

Strengths Weaknesses
Market Leader in Search Engines Excessive Reliance on Secrecy
Ability to Generate User Traffic Falling Ad Rates
Revenue from Advertising and Display Overdependence on Advertising
Introduction of Android and Mobile Lack of Compatibility with next
Technologies generation devices
SWOT
ANALYSIS
Oppurtunities
Android Operating System Threats
Diversification into non-Ad Business Competition from Facebook
Models
Mobile Computing
Google Glasses and Google Play
Cloud Computing

 Strengths

 Market Leader in Search Engines

It is the undisputed leader in search engines. Google has more than 65% of the market
share for internet searches and the competitors do not even come close to anywhere that
Google does.

 Ability to Generate User Traffic

Google is a household brand in the world, its ability to drive internet user traffic is
commendable. Google averages more than 1.2 Billion hits a month in terms of the
unique searches that users perform on the site. This gives it an unrivalled and
unparalleled edge over its competitors in the market.

49
 Revenue from Advertising and Display

Its revenue model wherein it garners humungous profits through partnerships with third
party sites has held the company in good stead as far as its ability to mop up resources
and increase both its top-line as well as bottom-line is concerned. This is another key
strength of the company that has helped it scale greater heights.

 Introduction of Android and Mobile Technologies

Adoption of Android and Mobile technologies has resulted in it becoming a direct

competitor of Apple as far as these devices, and operating systems are concerned.

 Weaknesses

 Excessive Reliance on Secrecy

Google does not reveal its algorithm for searches or even its basic formula as far as
internet searches are concerned leading to many experts slamming the company for
being opaque and hiding behind the veneer of secrecy. However, in recent years,
Google has taken steps to redress this by providing a bare bones version of its unique
search engine algorithm.

 Falling Ad Rates

In recent years and especially in 2013, the company has faced declining revenues from
ads and thus, the profitability of the company has taken a hit. This is partly due to the
ongoing global economic slowdown and partly because of competitors snapping at its
heels in a more aggressive manner. Indeed, Apple has already taken steps to garner
search engine revenues in its devices and hence, Google must be cognizant of the
challenges that lie ahead.

 Overdependence on Advertising

Google’s business model relies heavily on advertising and the numbers reveal that it
gets more than 85% of its revenues from ads alone. This means that any potential dip
in revenues would cost the company a lot. Google must devise a more robust business

50
 model that embraces e-commerce and mobile commerce along with its current business
model that is based on ad revenues alone.

 Opportunities

 Android Operating System

The Android OS (Operating System) has resulted in its becoming a direct competitor
to Apple and Samsung. This is an opportunity for Google to expand its market share in
mobile phones.

 Diversification into non-Ad Business Models

It can diversify into non-ad revenues if it must remain profitable and current indications
are that it is adapting itself to different sources of revenue.

 Threats

 Competition from Facebook

The advent of Social Media has seriously threatened Google’s dominance in the internet
world and the company must pull an ace to deal with the increasing features available
on Facebook and Twitter.

 Mobile Computing

Another threat to Google is from the emerging area of mobile computing that threatens
to pass the company by as newer companies seize the opportunity to ramp up their
mobile computing presence.

51
  FACEBOOK

Facebook has a USER DRIVEN Business Model. The entire business model of Facebook is
free of data mining. The entire revenue line depends on the self-serve ads being circulated
within the timelines of users scrolling through the infinite vertical scroll.

Organization Structure

Corporate
Function-
Based Teams

Organization
Structure

Geographic Product-
Based
Divisions Divisions

 Corporate Function-Based Teams. Facebook Inc. maintains corporate teams based

on their business functions in managing the operational activities throughout the
organizational structure. This structural characteristic is based on the various needs of
the online social media business, such as Research and Development (R&D). Because
this is a matrix organizational structure, some function-based teams have blurred
boundaries with geographic or product-based divisions in the company. A Facebook
senior manager or executive heads each team. The following are the main corporate
function-based teams in Facebook’s organizational structure:

1.) Office of the CEO

52
2.) Finance
3.) Operations
4.) Platform Partnerships for France and Benelux
5.) Product
6.) Research and Development
7.) Privacy
8.) S. Public Policy
9.) Marketing Communications for the Central & Eastern Europe, Middle East, & Africa
Region
10.) Travel and Auto for the MENA Region
11.) Middle East, Africa and Pakistan
12.) Greater China Creative Shop
13.) E-Commerce, Retail, & Online Services for Middle East, North Africa, and
Pakistan
14.) India & Online Operations India
15.) Technology & Engineering
16.) Security
17.) Legal
18.) Global Marketing
19.) Global Creative Strategy

 Geographic Divisions. Regional divisions are another feature of Facebook’s

organizational structure. Geographic location is a determinant of this structural
characteristic. Facebook uses these divisions considering the differences in social
networking and online advertising market dynamics. This characteristic of the
organizational structure also addresses differences among the behaviors of people and
advertisers in using Facebook’s social networking website. For instance, Latin
American advertisers tend to use the company’s social media services differently,
compared to European advertisers. Human resources are also managed regionally.
Some of these geographic divisions share resources and managers with function-based
teams because of Facebook’s matrix structure. Even with these geographic divisions in
its organizational structure, Facebook does not have senior corporate officers for each
region. Instead, regional management teams are used. Facebook Inc.’s organizational
structure includes the following geographic divisions:

53
1.) North America
2.) Latin America
3.) Europe, Middle East & Africa
4.) Asia & South Pacific

 Product-Based Divisions. Facebook Inc. employs product-based divisions in its

organizational structure. This structural feature involves corporate or global teams that
manage the operational activities pertaining to specific products of the organization.
Such global or corporate scope is a consequence of the digital and online nature of
Facebook’s social media business. While most of the company’s operational activities
are focused on its social networking website, potential expansion and diversification
are also considered. Facebook is headed toward adding more product-based divisions
into its organizational structure, as new products or ventures are added to the business.
Facebook’s organizational structure includes the following main product-based
divisions:

1.) Facebook Messenger

2.) Mobile Products

54
 SWOT ANALYSIS

Weaknesses
Strengths
Easily imitable products and services
Strong brand image
Negative impacts of online advertising on
Large consumer base with externalities
user experience
High revenues
Low diversification of business

SWOT
ANALYSIS
Oppurtunities Threats
Business diversification Imitation
Product innovation Cybercrime
Market penetration and development Market saturation

 Strengths

 Strong brand image

 Large consumer base with externalities
 High revenues

Facebook’s social networking website’s popularity comes along with a strong brand image.
The company has developed its business as a reliable social media service provider. In relation,
Facebook Inc.’s large consumer base is a strength that brings along several beneficial
externalities: The large number of users or members makes Facebook’s social networking
website more attractive to potential new members, more attractive to advertisers, and more
difficult for new social media companies to compete with. Moreover, with its high revenues,
the company has the financial capacity for research and development (R&D) investments for
new products, and investments in new business ventures.

 Weaknesses

 Easily imitable products and services

 Negative impacts of online advertising on user experience

55
  Low diversification of business

Facebook’s social networking website and related services are easily imitable in terms of basic
features and functions. For example, other companies can develop their social networking
websites to directly compete against Facebook Inc. Also, while the company earns through
online advertising, this earnings mechanism is also a weakness because users could perceive
the advertisements as a nuisance in their social media experience. Facebook also suffers from
a low level of business diversification, which maximizes market risk exposure. This is so
because the clear majority of the company’s earnings are generated through its social
networking website and related mobile apps.

 Opportunities

 Business diversification
 Product innovation
 Market penetration and development

Facebook Inc. could diversify outside its core social media and advertising business. However,
further diversification can boost Facebook’s business risk reduction. Another opportunity is for
the organization to innovate more products that are complementary to its social networking
website and mobile apps. Market penetration and development can increase membership and
revenues, in line with Facebook’s generic and intensive growth strategies.

 Threats

 Imitation
 Cybercrime
 Market saturation

Imitation is one of the major threats in the business, considering that other firms could develop
social networking websites and mobile apps like that of Facebook. Also, with increasing
membership, Facebook Inc. now experiences high risks of cybercrime, which threatens to
reduce the attractiveness of the company’s social media services. Moreover, as the organization
becomes more popular, it increasingly contributes to market saturation that could lead to a
future business stagnation.

56
4.3 Other Projects Undertaken

 Phase 1 & Phase 2 Acquisitions Profiles

Prepared client ready company profile decks of companies offering High Net Worth services
in Atlanta, Philadelphia, New York & Connecticut.

Objective: EY wanted to expand its presence in the field of HNW offerings in the above
mentioned geographical areas. Accordingly, companies had to be identified and their profiles
had to be delivered.

 Machine Learning & Natural Language Processing

A thorough research in the field of Machine Learning and Natural Language Processing had to
be done to prepare a deck for the current scenario in the field and the current market share and
future of the field.

Objective: EY’s client wanted to enter the business of Machine Learning & Natural Language
Processing.

 Dependent Eligibility Verification Services

EY wanted to enter the DEVS. A list of companies along with the company profiles had to be
prepared which EY could tap for entering this field.

 Effect of aging population on taxation globally

Objective: A write up based on thorough secondary research had to be prepared on the impact
of ageing population on taxation worldwide.

 Global Tax Guides

Objective: To prepare a deck on EY’s Business Tax practice and Legal practice with respect to
its competitors.

57
5. Key Learnings

 To deliver key ideas and analysis in forms of presentations and reports to generate
substantial impact on the clients and provide fresh insights.
 To create an effective research methodology and have a 360-degree outlook towards a
project or topic.
 The projects that I worked on ranged on a wide spectrum and thus I gained knowledge
about fields that were priory unknown.
 Creating quality deliverables and aligning them as per the client needs.
 Managing complex assignments under strict deadlines with a team of analysts.
 Quality over Quantity. It is important to meet deadlines but it is even more essential for
the work to reflect the quality it is supposed to have.

58
References

 Report on Potential & Prospects of Chinese FDI in Caribbean, (2016). Retrieved from

https://publications.iadb.org/bitstream/handle/11319/7977/Chinese-Foreign-Direct-
Investment-in-the-Caribbean-Potential-and-Prospects.pdf?sequence=1

 Report on Foreign Direct Investment in Latin America and the Caribbean, Economic
Commission for Latin America and the Caribbean (ECLAC), (2015). Retrieved from

http://repositorio.cepal.org/bitstream/handle/11362/38215/S1500534_en.pdf?sequence
=4&isAllowed=y

 Report on The Significance of Foreign Direct Investment to Caribbean Development,

(2008). Retrieved from

http://www.ccmfuwi.org/files/publications/misc/roland_craigwell/foreigninvestmentw
ithronnie.pdf

 UNCTAD World Investment Report, (2017), Retrieved from

http://unctad.org/en/PublicationsLibrary/wir2017_en.pdf

 2014 Caribbean Economic Review & Outlook for 2015 - Caribbean Development
Bank, (2014). Retrieved from

http://www.caribank.org/uploads/2015/02/CDB-2014-Caribbean-Economic-Review-
and-Outlook-for-2015.pdf

 January 2016: The Profits of Paradise., (2016, January). Retrieved from

http://www.investopedia.com/articles/investing/011916/profits-paradise-top-4-
economies-caribbean.asp

59
60