The Trust bank of Britain and Asia Essay Example | Topics and Well Written Essays - 1750 words

The Trust bank of Britain and Asia - Essay ExampleThe higher the level of uncertainty (with regards to future operations of the acquired entity) indicates that the company should go for alliance rather than acquisition and vice versa. From the type analysis, it is clear that TBBA has a strong history and culture. It is a trustworthy bank that enjoys a good regard as among its customers. though TBBA has a good holding on the retail banking tasks, it is new to commodity trading. Still, the bank has some(prenominal) opportunities in commodity trading especially when the economic crisis has considerably reduced the profit margins from the retail and coronation banking side. Richard Cheung, the new appointed chief executive officer of TBBA is now faced with two questions whether it should keep its commodity trading tenor of business or sell it off. In addition to this, if the bank decides to stay with this line of business, whether it is a good report to go for alliance or acquis ition. Analysis and Recommendations with regards to change off Commodity Trading Business Selling off a part of business is worthy when the gains are higher in liquidating than keeping that line of business. Van Horne (2002) stated that selling off a part of business to another firm is a right decision when the present value received by the selling company is higher than the pass judgment future returns by that business. Other reasons of ransackment highlighted by Kozami (2002) are persistent negative cash flows, high competition, or lack of resources. In the elusion of TBBA, none of the above reasons exists that makes it justifiable to divest commodity trading business. incomplete commodity trading business is giving negative outcomes, nor does the company lack resources for technological upgradation or to impersonate competition. This makes it irrational to sell off a line which is one of the most flourishing markets and has shown great say-so in Asian market of TBBA. Dives tment can be a quick fix for a newly appointed chief executive officer because he is not emotionally attached to the unit to be divested however, for a CEO emotionally attached to a unit it is rather a difficult decision (Kozami 2002). In case of Richard, he is a part of the organization before being appointed as a CEO and he is the one who has given a unified identity to TBBA and commodity trading unit is genuinely much a part of that identity. It is not that easy to sell it off rather it is more lucky to invest in it especially when future expected returns are higher. Another thing that opposes the decision to divest is that the future plans of TBBA include returning to its roots. There is a great opportunity for expansion in UK because of the pallid performance of rivals. TBBA is expert in areas where its rivals has failed to produce results that is lending to small firms and commodity trading business. Entering these lines entrust give TBBA a visible success in UK market. W orking on areas that can deliver square value to stakeholders can give a clear edge to TBBA in highly competitive and in arrears growing market of UK where it will be difficult to mark a huge footprint otherwise. Though selling off a business unit may lead to regain lost strategic focus (Decker 2008) however it is not a good option when the business line to be interchange off promises future gains (Van Horne 2002). Instead of selling off commodity business, it is a far better stem to make it work in UK market. TBBA can take advantage of its strong balance sheet to lead its commodity trading