OBJECTIVES
As a person with knowledge of the Australian share market, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how the Australian share market is thought up, formulated and then operated. The author hopes to have an in-depth understanding as to how the efficiency of the Australian share market enables the country and its economy to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon, i.e. innovation and diversity. Innovation was discussed with regard to the Australian share market where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
EXECUTIVE BRIEF
This essay utilized the Australian share market to review its present operations and how it dealt with critical situations. From the analysis, key trends in the Australian share market were then identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess the Australian share market with regard to its suitability to critical situations, during which the internal capabilities of the Australian share market in relation to its strategy being followed was determined also. An overall analysis of the performance and effectiveness of Australian share market was also conducted to assess and compare its capabilities with those of others. Gaps in the capabilities and economic environment of Australian share market were then identified.
Finally, several choices of strategies to improve the efficiency of Australian share market as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
OVERVIEW OF THE AUSTRALIAN SHARE MARKET
The Australian share market is one of the most commonly explored areas by Australian companies to invest their money and gain substantial profit in the long run. Because of the existence of the Australian share market, the Australian businesses are able to expand in lieu of the huge capital they are able to obtain through active participation in the market. Also, the liquidity that the Australian share market has is attractive enough to encourage national and international investors to also participate and sell securities.
The existence of the Australian share market emphasizes the price of shares as an integral part of its economic activity. The increase in the share prices of the Australian share market, for example, is always related to the symmetrical increase in the economic activities. The share prices in the Australian share market also have a direct influence in the financial resources of Australian families as well as their buying powers as consumers. As a result, the Central Bank of Australia acts as a monitoring and evaluation arm of the Australian economy in the sense that it has the ability to control the Australian share market and facilitate the proper functioning of its systems.
The occurrences of exchanges are also a familiar scenario in the Australian share market. This gives a mode of security to investors in the Australian share market that they can immediately receive their payment upon selling stocks. The consistent efficient operations the Australian share market boosts the overall economic development of Australia because of the fact that the Australian share market is able to facilitate the manufacturing of goods and services as well as give substantial sources of employment.
Is the Australian Share market efficient?
The Australian share market’s abolition of fixed commission of brokers and allowing trading companies to have their own dealers in the market ( 1999) could lessen the incentive for them to study the markets. Controlling opportunistic behavior and its accompanying adverse impacts, brokers’ motivation tool, through commissions to perform better to find a company that really needs capital or one that really has surplus of it, diminished. The abolishment could hinder efforts to seek markets in a broader spectrum, as their transaction costs like communication and travel costs cannot be redeemed, that in effect will limit the flow of capital in the stock market. Commission serves as their starting point to get involve in a vast, and now international, market. The option to work in a company as personal broker could also impede their opportunity to drift to a larger and complex market. The limitation of the search is attached to the needs of one company to sell or buy securities, so, transaction tends to be stimulated unidirectional.
The separation of large and small issuers of securities made it easy for the Australian share market to distinguish the needy in relative matters. If an inexperienced investor has a surplus or savings in a relatively smaller amount, it can be assumed that he values this amount. To prevent transaction costs like accountant or analyst fees, he can simply invest as the companies there is easier to evaluate in terms of future prospects. Unlike large companies whose operations are more complex and vast, this type of investor that would invest here would demonstrate huge risks because of ambiguity. The distinction transforms new and inexperienced investors to be efficient capital providers.
The information services of the Australian share market and their media relations department have the capability to transmit trade data happening in the electronic platforms and trade floors via electronic devices. The advantages of technology in operations of the stock exchange enhance motivation from investors to join the trade due to absence of expensive transaction costs like transportation and time. This is significant to wealthy people who are usually characterized by old age and traveling from a distance can disincentive them to invest. However, this type of investors can be caught to false hopes and loose money because of too much reliance to stock prices undermining the background of the firm they extended their investment. The capital should go to those companies who are capable to use them in a profitable manner. In return, they can bear fruits for their investors. This cycle if uphold can accelerate economic activity.
The business mindedness of Board of Directors of the Australian share market could emphasize the importance of profiting rather that of economic equilibrium. Most of them have private enterprise backgrounds, including the Chairman, which can undermine the government’s role in neutralizing business activities rather limited to profit-driven decisions and strategies. They have marketing arm to allure international investors and capital seekers to get involve in the local trade. In the lens of national interest, there are two implications; namely, capital will flow to finance local businesses and capital will get out of the borders. The oblique intervention of the government in the Australian share market activities could result to unequal distribution of capital that could adversely affect the local investment seekers.
In the international view, however, the potential of capital to flow in the hands of the Australian share market are maximized while transaction cost is minimized. The rich will crawl in the doors of the poor for the latter to benefit from the surplus of the former. The constraint though is that trading firms who are small and needs the capital of larger firms or rich individuals should be listed. Investors may not be attracted by the category since brokers can easily manipulate the stock price. Assurance should be provided first by the company to investors before transactions may ensue. In the opposite manner, large firms who are listed in the Australian share market would receive the greater amount of investment from wealthy investors because of the lower risks of failure of its operations, hence, greater amount of return. Capital could concentrate to this category favoring the stricter policies confronted by companies under this listing.
Australian Share Market is efficient bec. Of the Lack of Fraud in Trading
The available services of the Australian share market create certain nets to prevent existence of fraud in the trading. They can provide information about the trend, history and other pertinent data for a speculating investor and issuer. It is unlikely that it will risk its corporate reputation and history for just certain amounts of money. Thus, if participants would want to support their decision with safer means, the Australian share market can give it to them. These services also are performed by its employees who undergo training and enjoy benefits. This human resource factor tightens the entrance for fraud to be performed by its brokers, analysts and other sponsors.
The Australian share market is a market that due to large capitalization of traders, brokers do not have the tools to manipulate the prices of securities substantially. Because of this, the Australian share market could be a possible and rational place for opportunistic behavior to ensue. The complexity of trading, due to its internationalization, result for markets to trade disregarding analysis or hiring brokers who often regarded as a hope for correct and factual analysis. Since speculation is one of the main mechanisms for investors to trade, studying the nature of the destination of investment is likely to be passed to brokers. The wealthier the investor, the busier it is to observe the bout-by-bout trading. As a result, the Australian share market is an ideal dwelling for ghastly brokers to do their thing, unguarded.
In the Australian share market, the buyers are gaining through absorption of risks (while the initial sellers of assets get-off from such risks.) However, buyers may have enormous risk exposures and may cause its finance to exhaust to a certain level. Because of this, it may re-sell its old contract for a higher price through some form of marketing and “sales talk”. At this point, information about the old contract can be extended manipulatively to involve alluring future gains from the assets. This act is likely to accelerate and becomes more exposed to fraud if the buyer conceives that his original contract phases loss. Since the Australian share market confirms it has a strong market base, these opportunistic dealers would select victims from the large pool especially international investors.
Though electronic trading is a significant development to modern securities market, the power and speed of technology can also be used in fraudulent means ( 2001). The information from the internet and chat rooms can mislead investors and can loose money in an instant by using their credit cards to upload the payment. The Australian share market has a website where important information about the trading is posted. As a result, investors would tend to rely much of their decision making through the internet, perhaps, undermining the information in daily broadsheets due to speed and comprehensiveness of net data. However, scams and misleading information has its ways to be posted and allure investors. The web-based approach and seemingly corroborating stance of the Australian share market to technology, thus, motivate investors to accept data regardless of authenticity.
For the international capital seekers, they can enter the Australian share market through with less pressure to show who they really are in home countries. They can restructure their identities to become good performing and “hot” companies in the eyes of the local investors. They can deploy shares through the control of their brokers wherein collusion to exercise investor fraud could arise. They can distribute laundered money and the Australian share market could also serve as refuge for foreign kingpins who would want to avoid local restrictions to become rich. They can cloth themselves to be small even they are capable to raise huge amount of capital. These companies can list their names the market to start their fraudulent acts towards unwitting investors. The hands-off position of the Australian government to the operations of the business is a huge incentive for fraud to occur.
CONCLUSIONThe results of the analysis carried out on the Australian share market indicated very significant factors that point towards its high level of efficiency, even amidst the threats of unrest. Therefore, we could conclude that the operations of the Australian share market could still be expected to improve faster than average.
The review of the Australian share market’s capabilities and resources revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the investors in the Australian share market.
The analysis among the Australian share market environment as well as its operations and capabilities revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the Australian share market.
Also, the investors have to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
REFERENCES
Book
Periodicals
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