IILM Undergraduate Business School

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EXPERIENCE-OF-IILM-BBA-GLOBAL-STUDY-PROGRAM

EXPERIENCE OF IILM BBA GLOBAL STUDY PROGRAM

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EXPERIENCE OF GLOBAL STUDY PROGRAM
(STUTTGART, GERMANY)
By : Ritansha Rampal and Tejasva Ahuja, SBS Stage 2, IILM UBS

The study abroad program is designed to further develop and expand our intercultural and language competencies, and enhance and deepen our professional knowledge in an international context.

IILM BBA Global Study Program-Benz

Being a student of BBA program at IILM comes with the advantage of the Global Study Program. This Program spread over three weeks gives the students an opportunity to travel to Germany and complete a module at International School of Management, Germany (ISM), IILM’s partner business school. The students go abroad at the end of the first year of their SBS Swiss Business School Degree course at IILM Campus. In fact, we had the choice to go to Stuttgart or Dortmund Germany or Seneca in Canada, and we had opted for Stuttgart.

IILM BBA Global Study Program-Porsche2

Stuttgart and its surrounding area form one of the largest commercial capitals in Europe. The campus is just a few minutes on foot from south of the city centre and is easy to reach using public transport. The ISM Stuttgart Campus easily accommodated our batch and we had all the resources required for presentations and project work on request. We also had options available for lunch right next to our Campus.Ms. Vanessa,coordinator of the Global Study Program representing ISM, was also our mentor in Germany. She answered all the queries about the city, cuisine and travel plans. Ms. Vanessa also organized a city tour for all the students. The tour was conducted in a bus and we were shown the most popular landmarks and historical sites of the city with a narrative.

IILM BBA Global Study Program-Porsche3

Talking about classes, our sessions were conducted by Professor Björn Röeber who taught us Strategic Management and Professor Qeis Kamran who taught us Entrepreneurial Innovation.The teaching methodology included lecture practices which is an effective way to present new information orally. Both our professors were highly interactive and made us participate in group discussions. We found that they used to actively engage the group for discussion on a particular subject and they also shared case studies which were designed to evaluate how we processed information, solved problems and reacted to new and surprising situations, as well as how we worked within a team.

IILM BBA Global Study Program-Porsche1

We also had the opportunity of three Company Visits. The industrial visits were organised for the Porsche Museum, Bosch and Daimler. It is noteworthy to mention that the automobile industry is one of the leading industries at the global level and we got the chance to visit these Companies.

Talking about our experience during the visits, at Bosch, we got to know the technical side of how their business operates and at Daimler, we got to understand the production side of the business as well. In Porsche Museum, we were shown the evolution of the cars too. We liked the fact that we were introduced to their methods of acquiring customers.

We want to mention that it’s important that we have a realistic approach when we go for the study abroad program as it involves doing things that we do not normally do while at home. For example, laundry, groceries, making our beds. And so, here were times when we also felt a little homesick because this was our first college trip too. But at the same time, we also got to learn a lot from our experiences. Our teachers, peers and the ISM mentor were helpful in making things easy for us.

IILM BBA Global Study Program-Bosch

Lastly, we thoroughly enjoyed attending our classes, company visits and most specially one another’s company. It was great to know that we all had the ability to independently handle various situations and to figure out things on our own instead of having them done for us by someone else.

ISM-Dortmund-Campus-Tour

ISM Dortmund Campus Tour, City Tour and Company Visit

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There’s a big world beyond the IILM campus, and a student can experience it through the golden opportunity given by IILM Undergraduate Business School as Global Study Program. In order to be a responsible leader in today’s time students need to have first-hand experience of cultures, organizations, and business practices around the world. In order to cater to this requirement IILM’s global offerings encompass a mandatory 3 week global study program.

This program was organized for our stage 2 students of 2016 – 19 batches. Based on the preferences, students were taken to International School of Management, at Dortmund, Germany. The entire program was sponsored by IILM and the partner school except that the students had to bear extra expenditures like food, travelling etc.

On the 6th of August 2017, 35 students collectively from both Lodhi Road and Gurgaon campus boarded flight for Dortmund, Germany along with two faculty members. While the travel itself, the students were handed over the ISD sim cards so that they can make calls to their parents and inform them about their safe arrival at Dortmund. In addition with this the students were also explained about the rules and regulations to be followed at the hostel. Each and every student was provided on the same day with a train/bus card to travel nearby location for free of cost. The students were also provided with a unique identity card in order to seek entry into International School of Management, Hamburg, Germany.

This three weeks program was a blend of two modules, industry visits and cultural immersions. A highlight of this interesting curriculum is here.

1. Strategic Management: Prof. Qeis Kamran

The course covered the basics of strategic management, key elements, current trends in strategy, strategy thinking styles, the role of resources and knowledge, branding, decision making, organizational politics, international and collaborative strategies, strategy and innovation. Module also introduced Prof. Kamran’s six forces model which challenged Porter’s five forces. This module was delivered through lectures, case study and visit to Google. The students appreciated the delivery of the course.

Industrial and Cultural Visits in Germany
Dortmund City Tour :
Learning Outcome: The students were informed and explained about the Dortmund city’s heritage and culture.

Feedback : Liked and appreciated by the student

DASA Company Visit

Overall the students had a great 360 degree experience in terms of classroom learning, industry visits, cultural immersions, hostel lifestyle, traveling using public transport etc.

IILM-At-Google

Google Headquarter Visit in Toronto, Canada

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On August 16, the IILM UBS Batch 3 of BBA in Entrepreneurship (2016-19) traveled to the world’s second most business-competitive global city, the home of the Toronto Maple Leaves, and tourist attraction CN Tower. Students spent the weekend visiting some of the most reputable companies in the world and participating in a community service project. The evening began with an introduction to Google’s mission and values, and a tour of Google Toronto’s new offices. Google’s two key workplace values are healthy lifestyles and environmental friendliness, said a Google representative, which was evident in the design of the office: from the polished concrete floors to the inexpensive timber stand walling to the galvanized steel wall frames, and reclaimed seats from the old Montreal Forum.

Meeting rooms were named after cities and parks in Eastern and Western Canada, with a shower room (for employees needing to shower after bicycling to work) named “Niagara Falls.” Google has also partnered with Bullfrog for its energy needs in order to create a net zero carbon footprints, the girls were told.

The trip brought together a diverse group of individuals, both within the Seneca College and at the companies they visited. Students spoke with knowledgeable professionals from these global businesses, toured the facilities, and learned firsthand it’s like to work for a global professional services firm. Later the students were given a chance to ask numerous questions regarding “How Digital Marketing can help their Business grow”. A pizza supper and a presentation on Google’s products concluded the evening.

Learning Outcome: The students were able to relate the concepts learnt in the classroom. They learnt about the various strategies adopted by Google. This visit was a part of the module Strategic Management. A pre and post briefing reinforced the concepts delivered.

Feedback: Well appreciated by the students.

A Visit to Toyota manufacturing plant in Cambridge (Canada) to Witness Kaizen at Work

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IILM BBA in Entrepreneurship (2016-19) Batch 3 Students visited Toyota manufacturing plant in Cambridge (Canada) on 17th of August 2017 as a part of 3 weeks’ Global Study Program. The group to this unmemorable company visit consisted of IILM BBA students along with me. This factory tour of Toyota Motor Manufacturing Canada is unmemorable as it gave us an opportunity to witness Kaizen at work, a concept constantly popping up in the field of business management.

Nothing can be more fascinating and intriguing than seeing how things we use are made! This company visit and the guided tour takes you into the heart of the Toyota Plant. And you are immediately transported to a world of efficiency where the Team Toyota and robots build the cars. Sorry that there are no photos, as electronic devices are not permitted on the tour.

The leading reason tourists access the Cambridge visitor & information centre isn’t to tour the city’s historic downtowns or play in its famous parks – it’s to visit Toyota and see where hundreds of thousands of cars are made.

The Toyota plant has practiced Kaizen “change for the better” since the plant came into existence. Known for rapid, continuous, improvement, Kaizen has been practiced in many locations across the globe. We find so many case studies on it in the field of management studies. The plant also employs “in time” assembly as nothing is built unless it has been ordered. As a result, no spare vehicles sitting around for speculative selling.

We also witnessed how the production process at Toyota involves zero wastage where the scrap in minimized and again utilized in the process.

It was an amazing experience for the whole group of IILM BBA students to witness the robots populate the welding lines. We even saw the famous Godzilla robot(s) that pick up assemblies and move them from one level of the factory to an upper level.

All in all, it was an amazing and edifying company visit. The IILM UBS Global Study Program was conceived to benefit the budding entrepreneurs and managers to immerse themselves in another culture as well as experience the challenges and opportunities facing organizations around the globe. During such tours as the visit to the Toyota manufacturing plant in Cambridge, students meet leading executives and gain first-hand experience of concepts and practices like Kaizen. Such tours also extend global awareness and enhance the international perspective of IILM BBA students.

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Behind the Scenes with Bosch in Germany with IILM Global Study Program

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The IILM BBA (2016-19) Batch 1 students visit BOSCH plant and R&D centres in Stuttgart, Germany on 2nd August 2017. The IILM BBA students were treated to an up-close view of the Robert Bosch Corporation that few get to experience.

IILM Blog Image
In an endeavor to provide world class exposure to its students, IILM Undergraduate School of Business makes it mandatory for its students to be a part of its Global Study Program. The IILM Global Study Program takes the form of a study tour of a 3week to one of its partner universities in Canada or in Europe.

The IILM UBS Global Study Program was conceived to benefit the budding entrepreneurs and managers to immerse themselves in another culture as well as experience the challenges and opportunities facing organizations around the globe. It also extends global awareness and enhances the international perspective of IILM BBA students. During such tours, students meet leading executives and government officials while visiting businesses, industries, and cultural sites.

A visit to the Bosch World Wide Headquarters building in Stuttgart The company visit began with a thorough tour of the Bosch World Wide Headquarters building in Stuttgart, Germany. Very much like the gigantic Bosch corporate entity and identity itself, it was hard to judge how big the place was – with its office tower just disappearing into the low clouds behind the German countryside.

Once inside, our IILM BBA group got a better idea of the scope of things. The Bosch Group of companies has well over 350 subsidiaries and regional companies in 60+ countries and gives employment to nearly 300,000 people. Power tools make up 16% of Bosch business, while the automotive industry is responsible for 60% of its business. Appliances and countless industrial and energy related products make up the rest.

bosch

During our tour of some of the best corporate research and advanced engineering labs including that of Bosch, we were exposed to some of the latest developments in “smart” materials, photovoltaics, and Lithium-ion battery technologies. We can’t be more specific than that, but suffice it to claim that things move pretty fast at Bosch – the Bosch corporate research department files an average of 12 patents a day.

To conclude, the trip to the Bosch World Wide Headquarters building in Stuttgart didn’t disappoint the group! It was amazing to visit and get the first-hand experience of the business and functioning of this corporate giant.

BBA in Entrepreneurship and the Significance of Digital Marketing Module

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This is an era of the digital, and your customers have become smarter and are engaging in various tasks on different digital devices including purchasing as well. So, the management professionals and entrepreneurs have to go digital as well.


Digital marketing holds huge promise for BBA Entrepreneurship students. It promises to prepare them for a new wave of marketing roles in different firms, as well as equipping them to explore new avenues in family business management and new entrepreneurial ventures. As technology continues to drive business in the 21st century, mastery of digital marketing operations and techniques is a prerequisite for success. IILM BBA in Entrepreneurship prepares students for this huge opportunity and makes sure that its graduates start thinking Digital.


On August 10, 2017, we had the commencement of two-day Digital Marketing Class at Seneca College, Toronto for the Batch 3 of BBA in Entrepreneurship (2016-19) as a part of 3 weeks Global Study Program. 19 students were in the batch to attend to the class given by Prof Greg Locke. The workshop mapped the current scenario in the digital media ecosystem, the challenges businesses face, areas where entrepreneurs and management professionals get stuck up and the way ahead.


It was a two-day module – in which our student participants got an overview of fundamentals of Digital Marketing and how they can leverage Digital Marketing effectively for their business or brand. The module had sessions on Display Advertising, Search Advertising, Social Media Marketing and Mobile Marketing along with Analytics/how Digital Marketing activities can be measured.


This digital marketing class was a comprehensive program in online marketing and analytics. It was a two-day program that combined pedagogy using lectures, case studies, hands -on exercises, assignments and practical. The training class very well equipped the participants to understand the nuances of digital marketing and prepared them to make appropriate marketing strategies using all forms of digital media. The class left the participants capable of understanding the key elements of online marketing in creating an effective digital marketing strategy for businesses.

IILM BBA Study Tour to Stuttgart, Home of the Mercedes-Benz Headquarters

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An IILM Undergraduate Business School leader steps out to explore what lies beyond the familiar, to develop a well-rounded perspective. It is with this aim that as a part of unique BBA curriculum the college takes its students for Global Study Program every year to provide them an experience which is unmatched, in terms of global exposure and lateral thinking.

The IILM BBA students tour Canada or Europe as a part of its Global Study Program to avail of the unique opportunity to study in a global environment and learn holistically. During the BBA study tour, our students visit industries to understand the functioning of the units and also experience the local festivities of the area.

This year we visited the Mercedes-Benz Headquarters in Stuttgart, Germany on 3rd August, 2017, as a part of our Global Study Program. The gigantic and ultramodern Mercedes Benz Headquarters in Stuttgart-Untertürkheim displays a huge collection of historic vehicles owned by the world’s oldest automobile manufacturer. In addition to cars, the headquarters also displays trucks, buses, experimental vehicles, and racing cars built by Mercedes Benz. I was leading the group with one of my colleagues Ms. Nidhi Piplani.


Germany in general and Stuttgart in particular are synonymous with the purr of meticulously engineered motors and the sheen of polished chrome. Audi, BMW, Mercedes-Benz, Porsche, and Volkswagen all popped up on the world map from this central European country, and Stuttgart may very claim the honour of being the origin of two such highly regarded automobile manufacturers. Car enthusiasts certainly covet the opportunity to spend some time in the cutting edge state to feast on the sight of the enviable, antique vehicle collections on display at the world renowned Mercedes-Benz Headquarters and Porsche Museum. We visited both, Mercedes-Benz Headquarters and Porsche Museum.


Almost three times the size of the famous Porsche Museum, the Mercedes-Benz Headquarters majestically spotlights the 125 years of magnificent automotive history throughout its nine intertwining levels. The building design was inspired by the form of a DNA double helix; its layout mind-bogglingly twists. With well over 1500 exhibits and 160 vehicles on display, visitors to the building are transported back in time as they slowly spiral their way through galleries highlighting the world’s very first motorized vehicles. Then they move to the bottom level of the renowned building where the contemporary Mercedes-Benz awaits its recognition.


Overall, the industry visit to the Mercedes-Benz Headquarters as a part of our this year’s Global Study Program gave us an opportunity to actually see and experience for ourselves the application of the theory which we study in the classroom. This tour enriched the students and the faculty member who felt that it was a lifetime experience. This is what makes IILM UBS a top BBA college with a remarkable difference!

IILM Global Study Program and a Visit to the Porsche Museum in Stuttgart

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Just to give you a brief background, in its endeavors to provide world class exposure to its students, IILM Undergraduate School of Business makes it mandatory for its students to be a part of its Global Study Program. The IILM Global Study Program takes the form of a study tour of 3 weeks to one of its partner universities in Canada or Europe.

The IILM UBS Global Study Program is so designed as to benefit the budding entrepreneurs and managers to immerse themselves in another culture, experience the challenges and opportunities facing organizations around the globe. It also extends global awareness and enhances the international perspective of IILM BBA students. During such tours, students meet leading executives and government officials while visiting businesses, industries, and cultural sites.

This year we visited Porsche Museum in Stuttgart, Germany on 9th August 2017, as a part of our Global Study Program. Porsche’s museum in Stuttgart, Germany is the world’s largest museum of science and technology, for which people are continually jealous of everyone that has the opportunity to visit it. I was leading the group with one of my colleagues Ms. Anisha Rani.

You will really be impressed if you are standing in front of the grand Porsche Museum in Stuttgart-Zuffenhausen. The gigantic building of the museum is amazing and looks so light, almost like floating in the air. The museum building is resting on only three V-shaped pillars. The contemporary design of the largest science and technology museum continues in the building. In a plain and elegant surrounding, the development of the Porsche brand and the sleek sports cars are illustrated.

The entire reason for visiting Stuttgart was to visit the Porsche Museum along with the Mercedes-Benz Headquarters. Porsche best exemplifies good design values, which was obvious there, and which the IILM BBA group members appreciated. We found that the car company has an unbeatable lineup of vehicles that was achieved through an approach that’s very much different from that of Apple. The science and technology Museum is designed by Delugan Meissl and is situated near the company’s headquarters. The museum is executed meticulously and tells a mesmerizing story using great graphic design and installations.

Simplicity and the conviction of constant evolution are probably the strongest traits of Porsche as a world-class brand. This is what really strikes you move through the Porsche museum.

 

To conclude, the trip to the coveted Porsche museum didn’t disappoint the group! The Porsche museum tour took us through its prestigious racing history, the evolution of the Porsche brand, and its technological achievements that have revolutionized automotive industry today. Many of us in the IILM BBA group had a great time playing with the engine sound effect machine and looking at the cars but few even found enjoyment in the detailed descriptions of Porsche’s development of the tip-tropic automatic gear system and their weight reduced fuel pumps.

With a mind filled with great memories and edifying experience, bidding adieu to the Porsche Museum, at-least probably till next year!

Changing Leadership Competencies in the VUCA world

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In the recent years, the world has continued to undergo a series of transformational shifts. As we know technology has made momentous changes throughout the world, leading to great benefits and adding challenges. Let’s face it, our lives, both at work and at home, are in a constant state of flux. The looming question before us is-“how can we manage effectively in this constantly changing, dynamic situation?” The words of Charles Darwin seem to resonate more poignantly than ever: “It’s not the strongest of the species that survives, or the most intelligent, but rather the one most adaptable to change”. The VUCA environment as we know it. VUCA is an acronym that recently found its way into the business lexicon. It originally derives from the military vocabulary in the 1990’s and reflects volatility, uncertainty, complexity, and ambiguity of general conditions and situations that we all find ourselves in. VUCA seems to be an apt description of our constantly evolving world.

So how does VUCA manifest itself in our lives? Volatility is nothing but the nature, speed, volume, magnitude and the dynamics of change. Gone are the days when leaders and managers would have the luxury of time to plan for the next change. Today the change is here, even before we realize it. Things change unpredictably, suddenly, extremely, especially for the worse. Change is now seen as way of life and we need to constantly adapt and innovate. As Alvin Toffler correctly quotes “The illiterate of the 21st century will not be those who cannot read or write, but those who cannot learn, unlearn and relearn”. Uncertainty is the lack of predictability of issues and events and gets reflected in all areas of individual and social life. It’s the lack of predictability which leads to chaos and anxiety. Complexity of the confounding issues and the chaos that surrounds us. The complexity of the VUCA world is evident. The past, present and future are perceived with confusion, but at the same time are extremely interconnected. This can lead to an inability to be decisive because we find ourselves overwhelmed with both information and choice. Clarity is no longer a commodity that can be easily gained. Ambiguity is the haziness of reality. Today, every decision presents a series of ambiguous dilemmas. Situations and events are open to more than one interpretation, and the meaning can be understood in different ways. This can not only create confusion, but even conflict. Thus, sometimes it may get very hard to make the ‘right decision’.

Since VUCA seems to be the new normal, how can leaders today manage this transition and be more effective? The leadership process needs to undergo a 360-degree change. Therefore, what organizations need today is Leadership Agility and Cognitive Readiness.  The leadership today is a contextual and a temporal process of constant learning and practice. Cognitive readiness is the mental, emotional and interpersonal preparedness for uncertainty and risk and the ability most required by leaders in today’s’ context.

Leaders are therefore required to adapt and change from context to context and it becomes imperative for the organizations today to understand and grasp the new meaning and usage of the word leadership. There is a clear distinction between developing leaders and developing leadership. To be successful in this VUCA world, the leaders cannot afford to lead and guide people, the way it was done a decade ago. Today the leader needs to ‘walk the talk’. Today, most organizations are in a constant state of flux, undergoing radical changes, the leader behavior also needs to undergo a transformation. Some of the successful organizations rely on the following strategies. First, the leader should provide guidance and direction to teams across time zones, cultures and organizational barriers. Second, invest in talent and help nourish talented workers by giving them opportunities to grow and progress, developing a high performance organization is more imperative today than it ever was. Third, closely related to the second, is to invest in people, create a work environment which is engaging and that will foster commitment. Last, but not the least, all stakeholders in the organization (customers, employees and employers) need to be the part of the organization growth curve.

Change is inevitable in organizations and is at a critical tipping point, the increased pace of change in today’s global environment has created even more problems for leaders struggling to help their organizations adapt. Therefore, simply managing change is not sufficient. Successful change, therefore, requires leadership. Change or Perish is the new mantra in this VUCA world……

An Introduction to Structured Products

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Structured products are securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the Issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows. They are a combination of a traditional investment in financial assets (like equities, currencies, bonds, commodities, or funds) and one or more derived instruments that are prearranged into one securitized instrument. These products are created to meet specific needs of investors that cannot be met from the standard exchange traded financial instruments available in the public equity, debt or derivative markets. They may be used as a substitute to a direct investment, as instruments of speculation, or as a part of an asset allocation process to reduce risk exposure of an existing portfolio or asset.

Types of Structured Products

Based on the review conducted by Office of Compliance Inspections and Examinations, USA structured products are issued and offered in five basic categories with varying payouts and risks. The most basic category has been referred to as partial or full “principal protected” notes. Such notes typically have returns linked to broad-based equity market indices, such as the S&P 500, and Nasdaq. Principal protected structured products with full protection tend to have the lowest yields, due to their principal protection component. These instruments might have maturities of five years or more, but they usually have a duration of 6 months to 2 years.

Enhanced-income notes – typically pays a higher coupon base and has capped returns tied to the value/performance of the underlying asset and may include at least some level of “principal protection.” The underlying assets for enhanced income notes typically include single stocks, baskets of stocks, and indices. Enhanced-income notes with indices as the underlying reference are typically coupled with increased principal protection and have longer maturities and lower yields than others. These instruments typically have maturities of 5 years or less with the majority having maturities of 1.5-2 years.

Another category, performance/market participation notes are linked to underlying assets such as gold, or investment strategies, such as long-short strategies, that are not otherwise easily accessed by small investors.

Still another category of structured products are the leveraged/enhanced participation notes that offer a leveraged upside. The notes may pay a return two to three times the return on the underlying, usually with a cap on the return and no principal protection.

The fifth category, these basic structures are often added and/or adjusted with each  other to form other numerous varieties, most notably reverse convertible notes. Reverse convertibles linked to a single entity are the riskiest products available to retail investors. In essence investors are, purchasing a security with the sale of a put option embedded in it. The payout of a typical equity-linked reverse convertible note is a high-level interest rate plus a return of principal at maturity if the equity increases in value during the life of the note. In case, if the underlying equity declines below a set trigger price at any time during the life of the note or if the equity closes below the initial level on the valuation date, instead of receiving the principal at maturity, the customer/investor will have “put” to him by the issuer a predetermined number of depreciated shares whose value on the date of maturity is less than the principal amount – while still receiving the coupon payments over the life of the note.

Risks associated with Structured Products

Any investment in a structured product does not provide an investor any right to the underlying asset. Additionally, there are substantial risks involved in a structured product that an investor must be aware of. In the following sections we discuss these risks.

Issuer Risk

Issuer risk or credit risk denotes the adverse effects of a fall in the issuer’s financial condition on the repayment value of the structured product and/or its price in the secondary market. In the event of the insolvency of the issuer, repayment may not be made at the end of the term – which implies the total loss of the capital invested.

Guarantor Risk (Credit Risk)

The guarantor will assume responsibility for paying all or part of the redemption price if the issuer is unable to do so. However participation of a guarantor does not make investing in capital protection products risk-free. For even the guarantors may also become insolvent and therefore be unable to meet their obligations. Investors always have to bear this risk.

Market Risk

Market risk means the risk of a loss that investors bear due to adverse changes in the value of the underlying. This may be triggered by a variety of causes, such as changes in relevant market variables (volatility, interest rates, equity-index levels etc) geopolitical events, lack of market transparency, particular imbalances between the supply of the underlying and the demand for it. An adverse change in the price of the underlying may also be caused by transactions conducted by the issuer in the course of its business activity.

Currency Risk

Currency risk refers to the adverse effects of fluctuations in exchange rates on the repayment value of the product and/or its price in the secondary market. The investor may be exposed to currency risk if the product is based on an underlying in a currency other than the issue currency, or the issue currency is different from the investment currency underlying the investor’s portfolio.

Liquidity Risk

Liquidity risk denotes the possibility that the investor may not be able to dispose of a structured product at any given time or at a reasonable market price because no binding prices are quoted for it. Additionally, demand supply imbalance in the secondary market of the underlying may lead to a bid-ask spread that may even result in the failure to sell the structured product (secondary market risk).

Commodity Risk

Investments in commodities may be subject to temporary illiquidity or larger price fluctuations compared to normal investments. This may result in a partial or total loss for the investor. Additionally lack of standardization may lead to an information deficit regarding the quality of a commodity. This can entail an increased risk for the investor. In case of physical settlement, it can be very expensive or even impossible to acquire the commodities to be delivered.

Emerging Market Risk

Emerging market risk refers to the possibility of a loss arising out of political instability, a weak economy, and/or relatively unpredictable financial markets and economic growth patterns. Insufficient or a lack of market supervision can further lead to a situation where investors cannot, or cannot easily, assert their legal rights. Moreover, legal systems that are not adequately regulated by government institutions can lead to substantial legal uncertainty. As emerging markets are more volatile, investors may suffer temporary, partial or total losses.

Structured products in India

Prudential ICICI in association with Deutsche Bank introduced India’s first capital-protected constant proportion portfolio insurance (CPPI) product for Indian investors, christened the Principal Protected Portfolio (PPP). In terms of market share, evidence suggests that capital guaranteed instruments are the most popular in Indian markets accounting for 83% of the market share. The most recent issue of such an instrument by Edelweiss Capital, ICICI Securities and IIFL Wealth Management is a form of secured non-convertible debenture (NCD) with a 18-month lock-in but investors get an option to sell before this period as the instruments are listed on exchanges. The product aims to benefit investors from the monetary easing expected from the RBI in the near term.

However, more exotic structures account for a miniscule part of the total market, possibly reflective of the emerging market risks that (global and domestic) investors face while investing in India.