"Domination of same industrial sectors in different region suffering from shockresults in co-movement of their stock markets”. Demand bottlenecks of anyparticular category of industrial product are expected to results in similar equityprice movement associated with that product in different countries.2.1.4 Core area of the business in London stock exchange group The basic objective of the London stock exchange group can be redefined in thefollowing manner I.Driving the efficiency of the firm through the execution of new and low costhigh performance based technology. To develop streamlined managementteam that are continued to strive hard for cost reduction and building clientrelationship.II. Leveraging the existing assest in the new direction is another focus area ofdevelopment for the London stock exchange group. Pursuing the organicgrowth throughdifferent assest group may increaseassest value inequities, derivatives , and fixed income etcIII. Developing the opportunities is one of the key components that need to beaddressed through joint ventures, partnership and acquisitions. Organisationshould maximize its financial efficiency in the global level through economyof scale and economy of scope.16 2.2 Competitive base and environmental challengesIt has been seen that the economic, competitive and regulatory affairs undergo avarious change over the last few years. The most important factor is how theorganisation like London stock exchange is responding to that change. Theorganisation itself has under a lot of change to react with the momentum of themarket and opportunities waiting ahead. As a group London stock exchange has arange of products that set them apart from their competitors. Most importantly theyare extraordinary strong in their international brand. The specialty of the Londonstock exchange is they are having wide range of product which they used to deliverto the wide range brokers and intermediaries present all across the world. After themerger of Borsa Italiana LSE has able to diversified their portfolio beyond equitiesto the derivatives and fixed income trading. Merger has allowed keeping theposition of the stock exchange to keep the post trading service alive in the mind ofthe customer. Further it also assists to preserve the market identities. Beside theirstrong brand image and the core assest the LSE has carefully investigated theoperating condition of the market in a fast changing environmental condition. LSEperiodically process those dynamic changes in the market that are mostlycharacterized by the robust competition and a number of potential regulatorychanges. To maintain with the market dynamic LSE used to maintain a strategythat is execution able as well as enable them to thrive in the evolving marketwhere they operate (Cuddington & Urzua, 2009).17 2.3 Strategy Galati and Melick (2003) mentioned that LSE (London stock exchange) focus on thefundamental corporate philosophy that is truly client centric. The biggest challengesLSE used to face in the present situation is to understand the breadth, diversity aswell as the changing need of the customer. The customer composition is keep onchanging therefore to cater the organisation product for fulfilling these everchanging needs is not an easy task. Therefore LSE fundamental strategy was towork as a neutral, efficient and profitable provider of the core capital marketinfrastructure to the share holder. So it is imperative to discuss the presence ofneed of right kind of share holder who will allow to grow the business successfully.In the broader aspect these strategy has three dimensions which can becharacterized as follows –? Leveraging the present assest group, ? Developing the new opportunities of the business ? Getting into the shape for managing the future challenges of the business.Organisation for future development and growth has certain plan likeexecution of both inorganic and organic growth mechanism which willprobably derive through joint venture, strategic alliance and mergers andacquisition.The strategic imperatives that organisation is facing down the line can be broadlyclassified into the following categories like 18 2.3.1 Driving efficiency of the firm Granger (2006) highlighted that identifying and establishing further efficiency forthe future growth is always constant priority for the London exchange group.Considering few ongoing problems like drop in the value traded in the capitalmarket through a combination of lower assest prices, increased competition andlower capital commitment from bank instigate the organisation to think laterally.Organisation has driving to escalate its operational efficiency through reducing thecost base in the three largest areas like people, technology and property. Since lastfew years Organisation is making certain changes to streamline the managementdecision making process. Baillie and Bollerslev (2009) emphasised that during suchprocess organisation has maneuvered few difficult decision by reducing theoperation workforce at the tune of 12%, which reduces the cost level by around£11 million. The changes are definitely a bit quixotic and irreversible in nature.However the way staff responded to the entire incident illustrate the quality andmerit of the people. The smaller base of operational unit assists to improve theirposition on the property by releasing and subletting of another floor in PaternosterSquare headquarters. Meanwhile they have delivered adequate thrust in Millan HQ.This expected to be enabled them to come at par with the other branches in termsof facilities within the next few years. Management team has restructured theirposition by incorporating and strengthened their position by addition of newdirector post trade, new chief information officer and chief millennium IT (Anagnouet.at., 2009).19 2.3.2 Building scale for future course of actionBranson et al. (2009) described that LSE has made serious effort to reviewtechnological requirement. It has purchased one of the innovative softwaredevelopment firm based at Sri Lanka.Further a high performance scalable tradingplatform is provided to the staff for cash equity markets. Organisation need to scaleup its efficiency and respond to the regulatory changes with adequate ease so thatcan cater the need of their global customer. To escalate its scale of operationorganisation has launch retail bond market in UK. Through millennium IT system ithas entered both the Italian and the UK equity trading platform. Further migrationis executed to the UK and Italian derivative trading area also to encourage volume.2.3.3 Increasing the scope of the firmChen et al. (2010) described that in terms of increasing the shape of the operationunit, organisation has increased the scope of activity across different region. Theactivities that are given top priority are listed below ? Product development ? Post trading operationin terms of order routing and information services?Overall enhancement of speed in the trading functionality.In this process LDE has able to reduce their functionality time to cater the productin the market and at the same time able to initiate customer relationshipmanagement process for the long term growth. Therefore majority of the shareholder will get a message that the platform is neutral, time efficient and technology20 based. The biggest impediment to work in close contact with the client in such acompetitive market is because of the sign of unpredictability .All the marketdemand, taste and preference level of the customer normally changes at rapidspeed. Therefore it is high time to expose the customer in a multiple assest classes.Organisation should develop new techniques and procedures to incentivize theprocedure and new services to cater the customer need. With the help of dark andpan European Lit offerings plus trading of US equities through Turquoisein thecoming year it has able to increase its scope of operation to the diversified globalcustomer (Hull, 2010).2.3.4 Extending the customer reach.After acquiring Turquoise and Millennium IT in the past year organisation not onlyhas enhanced its assest base at the same time but at the same able to improve thecustomer reach. Through Turquoise LSE as an organisation has able to establishits pan –European foot print that enhances its growth potential for the future.Meanwhile LSE has able to broaden its international prospect through MillenniumIT. This allow to enhancing its overall growth prospect as well as customer reach interms of technology. As a result of this the organisation will able deepen andbroaden the business and strategic relationship with the different customer acrossthe world.LSE as an organisation focus on how to become a global player in the market.Hence forth they intend to build up a significant presence in other time horizons.Therefore it can be assumed that the basic objective of the organisation can be21 achieved by building significant partnership with the customer and harnessing inorganic growth within the industry. Right at this stage it is quite difficult for theorganisation to outline any specific prospect but definitely down the lineorganisation is expected to explore those inorganic opportunities which will beexpected to meet the strategic and financial objective of the firm. Organisationshould pursue its plan so that it can deliver adequate benefit to the share holderand clients vigorously with clear discipline. The basic objective of the organisation isto form global capital markets relationships through Millennium IT. Turquoise hereprovides the client partner relationship to provide better service in future (Levineet.al., 2008).2.4 Area of operation – Segmentation Review Table no-1 [Total income of LSE]Total income£mCapital market Cash equity trading in UK 101.8Cash equity trading in Italy 31.7Derivative trading 19.5Fixed income trading 29.3Annual fees 35.5Admission fees 3422 Other capital markets 35.9Post tradeClearing 33.4Net income through CCP business 16.2Settlement 21.1Custody and others 45.5Information and technologyserviceReal time data 103.7Other information 65.6Technology 47.3OthersSource of other revenue 8.1628.6Total(Source: J. Jackwerth, M. Rubinstein., 2007, p 1611)2.4.1 Capital market London stock exchangegroup?s capital market division basically facilitates differentorganisation in raising of capital in terms debt and equity-together with theprovision ofliquidity secondary markets for the trading of those and other securitymarkets. In the past year it has been seen that LSE has helped other companies to23 "