Development of Prostitution Essay Example | Topics and Well Written Essays - 1000 words

Development of Prostitution - Essay Example s â€Å"profession† vary greatly among those involved, the most common of which relate to poverty and destitution, although according to an unnamed Google-sponsored informative website (2010), other reasons such as a desire for drugs and/or alcohol, also exist. Despite its controversial nature, it is sometimes pondered whether its legalization would do greater harm than good. Thus, this article aims to discuss the pros and cons if ever prostitution were to be legalized, and to come up with a stand. Asia, America, Europe, wherever one goes, a very much active sex industry is sure to exist. Most industrialized nations have cities with their own red-light district, complete with clubs with neon signs, where those interested can experience a close encounter of the carnal kind. But regardless of where it occurs, prostitution is an issue worthy of note. Where it started, why it goes on, and why anyone would be drawn to it in the first place are just some questions people ask pertaining to this subject. An article by Iris Hickenbottom (2002) states that this particular trade dates back to ancient Mesopotamia, emerging in Victorian-era America in the middle of the 19th century. Public perception of the sex industry and of prostitutes in general varied greatly within this period, ranging from understanding and sympathy to indifference and finally to flat, outright rejection. While they had hitherto been thought of as life-draining demons in human guise, early feminists instead viewed them as victims of a male-dominated society – a viewpoint which slowly but surely altered the status of women all over. The same site goes on to note Dr. William Sanger, whose research on the topic was highly regarded due to being both accurate and detailed. Among the most important things he discovered was the general profile of a prostitute: they were said to mostly be in their late teens or early adulthood, and usually came from a background of poverty and illiteracy. Since at the time,

Powerful Poetry Essay Example for Free

Powerful Poetry Essay â€Å"Shall I compare thee to a summers day? Thou art more lovely and more temperate. † This line is from sonnet 18 and it is one of the best known of William Shakespeare’s 154 sonnets. William Shakespeare is the man who created beautiful poetry and he influenced people to create their own. In today’s modern day society, whether it’s widely read or not, poetry has the ability to be considerably moving and to truly touch people. Poetry is relevant and interesting in today’s society because it expresses a great array and depth of people’s feelings, it makes the reader connect with the poem, and it has a unique value. Also poetry is second-hand in music because in most hip-hop songs the words rhyme and create a rhyming couplet. Pursuing this further, poetry is a very powerful thing and it should be included in today’s up-to-date society. Unquestionably, all poems express feelings and emotions that the writer has dealt with throughout their life. Poetry expresses emotion in a form that delights the reader in one field and a feeling of sorrow in another. No other type of writing has the power or capability to arouse that much emotion other than poetry. Every living creature has feelings, but everything has its own way to express it. One way humans express their deepest feelings is through using their language to write and compose poetry. Reading poetry can help see through the eyes of the writer and see what they are experiencing. â€Å"This power rises from within, like the color of a flower which fades and changes as it is developed† (Shelley). This quote says that people have the ability to express themselves and that is very important in life. Poetry can make it easier to step into the shoes of someone else and learn about their personality. Without poetry, people would not be able to express their feelings and emotions and show people their real personality. Also poetry can help people by using it to release tension or stress that they need to get rid of. After a rough day at school, reading some poetry is a good way to get rid of the tension that is caused from problems such as taking a hard test or getting a lot of homework. Poetry helps soothe the mind and gives the mind a respite. Poetry uses the five senses to create a peaceful and pristine image using just words. One example that uses the five senses is, â€Å"All overgrown with azure moss and flowers/ So sweet, the sense faints picturing them† (Shelley). This quote uses the sense of sight because the image is so beautiful that your sense of sight faints. This style of writing can be very calming and comforting when read in a quite environment. Poetry is just like a car wash for the mind and soul; it freshens the soul and gives the mind a brand new start. Without poetry, there is one less way to get rid of stress and release tension. In addition to being used as a stress reliever, poetry is used to compose music. Just as in poetry, music also shares a basic element known as rhythm. In poetry there can be many different kinds of rhythm at the same time. Individual lines include unstressed and stressed syllables which is called a meter. There is also a rhythm between lines when metric patterns are repeated. In music, cadence is the beat of the music and the beats give the music its regular pattern. Poetry and music also display emotion and expression in their amazing works of art. Rap is made up of rhyme, rhythm, alliteration and many other poetic attributes. It is the most alike to poetry, however it is still music. Music without words is poetry, but not in the general state. Without poetry there would be no music because they are very similar and one can’t live without the other. Another reason why poetry is relevant is because it is much more entertaining to read compared to reading a book. Furthermore, poems are much more interesting to read instead of reading a long, boring book. Book plots and characters can be remembered for a limited period of time but poetry is one of the only forms of literary language that can be memorized. In the world of poetry, all of the rules that are applied to writing books are ignored and a piece of art is created that is completely unique. Poetry is such a short form of writing that the reader can think about the poem for hours without having their nose buried in a book. Poetry uses three ideas that are important to the text; mindful imagery, emotions, and language. Without these three things, poems would not have descriptions that use the five senses to create an image and people would lose interest in reading it. On the other hand, some people believe that poetry is irrelevant and this is why they are wrong. Some people might say that poetry is irrelevant and it is a waste of time. They might say that poetry is irrelevant because they believe it is boring to read and there is more people writing poetry than there is appreciating it. Poetry is relevant because it is much shorter and easier to read compared to reading a book. Poetry is very exciting to read because it expresses the feelings of the writer and puts the reader in the writer’s shoes. Poetry is enjoyable to read if you can understand and comprehend what is happening in the poem. Reading poetry is a surrogate form of reading and it is read by many people. Therefore, poetry is relevant and important in today’s society and should be respected more. In short, poetry is very relevant in today’s fast-paced, technological society for many reasons. Poetry is a way to let people express their emotions and show what their personality is like. Reading poetry is a salutary method to reduce stress and can relax the brain when it is overloaded with too many problems. Also poetry is a way to create a rhythm and there would be no music without poetry. Lastly poetry is much more entertaining to read compared to reading a long, boring book. Poetry is an aberration because it is much better than the standard. If poetry was never taught again in schools we would most importantly lose a vital language from our past. Poetry is only as relevant as the message of the poem, depending on how well it has been written. Works Cited Shelley, Percy Bysshe. Ode to the West Wind. Mcdougal Littell Literature. Evanston: Mcdougal Littell, 2008. 850-52. Print. Shelley, Percy Bysshe. A Defense of Poetry. Mcdougal Littell Literature. Evanston: Mcdougal Littell, 2008. 857. Print.

The Importance Of Capital Gearing Finance Essay

The Importance Of Capital Gearing Finance Essay Financing and investment are two major decision areas for a company. In the financial decision, the company concerns with determining the best capital structure. There are only two ways that a business can raise money debt or equity. With the right option, the business can minimize its cost and maximize company value. Bos and Fetherston (1993) described that determining debt and equity is an important financial decision faced by companies. The relationship between debt and equity is considered as capital gearing. Hence, in this report, the gearing ratio and its influence to WACC, company value and shareholder wealth will be assessed through the two major theories. Capital Gearing Capital gearing is a term describing the relationship between debt funding and equity funding in a company (Financial Management, 2007). The simplest formula for gearing ratio = (%) For example, ABC Ltd has  £1,000 of debt and  £2,500 of total assets. Thus, capital gearing of this company is: = 40% According to NGFL Wales Business Studies (2009), a company with high gearing is the one who has most of the funding coming from borrowing. It leads to reduced profits available to shareholders because of the increase in interest rate. Moreover, if interest rate increases, the financial costs of business will also go up, thereby total costs of business will rise. However, if a company has a high gearing, it is not really a bad thing. The company may need more money for their expansion activities, taking the opportunity to invest by borrowing at low rates. By using capital from borrowing, the company can take advantage of tax shields. A company with low gearing is the one who has most of the funding coming from investment of shareholders. It proves that the company is developing through reinvestment of profits, minimizing risk (NGFL Wales Business Studies, 2009). For example, in 2009, Apple Inc had Total debt/equity also known as gearing ratio at 0% (ADVFN, 2010). However, low gearing may indicate that the company is not aggressive enough to survive, and may not be seeking opportunities for growth (Pham, 2009). Thus, according to Accounting for Management (n.d.), the importance level of capital gearing is subject to various views. Effects upon WACC, company value and shareholder wealth Debt and equity Debt and equity are the two major sources of funds for a company. So, using of debt and equity proportions are the measurement tools for capital structure. (Glen and Pinto, 1998) In fact, cost of debt is generally less expensive than cost of equity. Nemethy (2010) provided two major reasons for that. Firstly, debt is a secured loan, which may be seized by the lender when the borrower cannot payment their loans. Meanwhile, equity is an unsecured loan because the shareholder cannot seize anything, they only have the right to vote at a shareholders meeting. Thus, an unsecured loan has to a higher interest rate than a secured loan. In other words, cost of equity is expensive than cost of debt. Secondly, Nemethy (2010) said that when the company issues debt in the form of bonds, they pay interest out to their investors, this interest has to be deducted by taxation. It is also called the debt tax shield. Conversely, when the company issues equity, they pay out dividends. These dividends represent corporate income, and they are subject to double taxation: one time by corporation and another time by shareholders. Thereby, the cost of debt is less than the cost of equity. With the two major reasons above, virtually all companies prefer to use debt than equity. However, the increase of debt leads to the increase of risks because when the company borrows money, they would be dependent on the lenders. UoS (2007) stated that a highly geared company may also experience difficulties in attracting fund from investors, who are not attracted by the risks involved in a high-geared company. At that time, the market price of the companys shares will fall. So, the company should choose debt or equity, and the influence of capital gearing to WACC, company value and shareholder wealth. We will assess this problem based on the two theories. The traditional view Modigliani and Miller The traditional view The traditional view of capital structure theory, based on observation and intuition, suggests that an optimum capital structure exists (Cornelius, 2002). In other words, the capital structure of a company has effected on the cost of capital. The more debt in the capital structure of a company, the lower of WACC is. The weighted-average cost of capital (WACC) represents the overall cost of capital for a company, incorporating the costs of equity, debt and preference share capital, weighted according to the proportion of each source of finance within the business (Cornelius, 2002). The formula to calculate WACC: WACC = [ x ] + [ x ] For example, a company has an issued share capital of 1,000 ordinary  £1 shares. The company wants to buy two machines with the price of a machine as  £1,000. As mentioned above, cost of debt is generally less expensive than cost of equity, so, we can assume that cost of debt = 15% and cost of equity = 20%. To buy two machines, the company needs to have  £1,000 for the second machine. There are two options for the company. Option 1: Issuing share (ungeared company) It means that the company will have 2,000 shares in total with  £1 per share. â‚ ¬Ã‚ ¢ Total equity = 2,000 x  £1 =  £2,000 = Total assets = 0% = 20% x = 20% Option 2: Borrowing (geared company) In this option, the company has  £1,000 from initial issuing shares and  £1,000 from borrowing with 15% of interest. â‚ ¬Ã‚ ¢ Total debt = Total equity =  £1,000 Total assets = Total debt + Total equity = 1,000 + 1,000 =  £2,000 = = 0.5 or 50% = [15% x ] + [20% x ] = 0.075 + 0.1 = 0.175 or 17.5% It is clear that when the gearing capital of a company increases, its WACC will decrease. According to Watson and Head (2006), the market value of a company is equal to the present value of its future cash flows discounted by its WACC. Market value of a company = Thus, when WACC of the company decreases, assuming that other factors are constant, the market value of the company increases, in other words, the company value and shareholder wealth increase. The traditional view is usually represented as follows. According to UoS (2007), from all equity financing, WACC first declines because debt financing is cheaper. At higher level of debt (beyond X), cost of equity increases because of higher risks out weights the advantage of cheaper debt financing. Hence after X, the WACC will rise. X will be the optimal debt ratio, where the company will minimize its cost of capital and the company value is maximized. In conclusion, gearing capital is very important because it effects to WACC, company value and shareholder wealth of a company. Modigliani and Miller view In 1958, American academics France Modigliani and Merton Miller (MM), presented a radically different view of capital structure theory. They demonstrated that two companies with identical investments would have the same value, regardless of their gearing capital (Cornelius, 2002). As a result, there is no optimal capital structure for a company. MMs propositions can be presented as follows. MMs proposition (without tax) UoS (2007, p.274) argued that with the same size and the same level of business risks of two companies: one company was ungeared company, another one was geared company. The value of an ungeared company equals value of equity in an identical geared company plus value of borrowings in an identical geared company. Therefore, the only factors that influence the value of a company are risk and return. Returns required by shareholders as reward for risk, , will increase at a constant rate as gearing increases due to the perceived increased financial risk. The rising would exactly offset the benefit of the additional cheaper debt in order for the WACC to remain constant. Lenders have security for their debt so they will not feel at risk whatever the level of gearing; therefore, is constant (ACCA F9 Financial Management: Study Text, 2009). This can be shown as a graph. The WACC, the total value of the company and shareholder wealth are constant and unaffected by gearing levels. No optimal capital structure exists. For instance, there are two companies with the same size and the same level of business risk: one company was ungeared company, another one was geared company. One machine got back  £200 profit yearly. The data of the two companies as follows. Ungeared Company Geared Company Share capital  £1,000  £1,000 Debt  £1,000 Machines 1 2 EPS at  £200 profit level 0.20p 0.25p If the investor in an ungeared company borrows  £1,000 at 15% interest, after buying the second machine, that company has the profit =  £200 x 2 =  £400. â‚ ¬Ã‚ ¢ EPS = = 0.4 p After receiving dividends from ungeared company, that investor has to pay interest for the lender with 15% interest per  £1. Hence, the actual return that investor can receive = 0.4 [15% x 1] = 0.25 p. This is the same return as that expected by shareholder in geared company and it had been created entirely by the ungeared shareholder. Therefore, in this proposition, capital gearing does not effect to the WACC, company value and shareholder wealth. MMs proposition (with tax) Because interest is tax-deductible, the use of debt finance gives rise to a tax saving (Cornelius, 2002). In 1963, MM developed a second version to take account of taxation. MM argued that the value of a geared company was the value of ungeared company plus the present value of any tax shield generated by using debt finance. = + T With:: The value of geared company : The value of ungeared company : The market value of debt T: Corporate tax rate With tax, MM view can be represented as below. According to ACCA F9FM (2009, p.1111), remains constant whatever the level of gearing. Likely as MMs proposition without tax, increases as gearing levels increase to reflect additional perceived financial risk. Because interest on debt is tax-deductible, WACC will fall when gearing increases. And: = x [1 ] = + (1 T) ( ) : cost of equity in an ungeared company : cost of equity in a geared company : cost of debt , : market value of debt and equity in the geared company T: corporate tax rate For example, considering two companies, one ungeared and another geared, both of the same size and level of business risk. Ungeared Company Geared Company  £  £ EBIT 1,000 1,000 Interest (200) PBT 1,000 800 Corporation Tax @25% (250) (200) Dividends 750 600 Returns to the investors Equity 750 600 Debt 200 750 800 Suppose that the business risk of the two companies requires a return of 10% and the return required by the debt holders in geared company is 5%, locking at the table above, tax relief on debt interest (also known as tax shield) in geared company = 800 750 =  £50 For ungeared company Market value of ungeared company will be the market value of equity. It will be the dividend capitalized at the equity holders required rate of return. = 750/0.1 =  £7,500 = 10% For geared company Market value of the equity of geared company is determined by the equity shareholders analysis of their net operating income into its constituent parts and the capitalization of those elements at appropriate rates = [ ] = ] =  £4,500 Market value of debt is determined by the debt holders capitalizing their interest at their required rate of return. = =  £4,000 â‚ ¬Ã‚ ¢ Total market value of geared company = 4,500 + 4,000 =  £8,500 According to MMs proposition with tax, it has: = + T = 7,500 + (4,000 x 25%) =  £8,500 Cost of equity in a geared company: = = = 13.33% = 5% x (1 25%) = 3.75% â‚ ¬Ã‚ ¢ = 13.33% x + 3.75% x = 8.82% According to MMs proposition: = x [1 ] = 10% x [1 ] = 8.82% And = + (1 T) ( ) = 10% + (1 25%) (10% 5%) (4,000/4,500) = 13.33% as per the dividend valuation model above. Thus, under MM theory with tax, there is an optimal gearing level at 100% debt in the capital structure. This is not true in practice because companies do not gear up to 100%. In his research, Cornelius (2002) argued that, in the real world, companies do not raise their gearing ratios to such extreme levels because the high levels of gearing may lead to higher risk of liquidation. Hence, for this proposition, there is no optimal gearing structure, in other words, WACC, company value and shareholder wealth do not depend on the level of capital gearing. The drawback of the two theories According to UoS (2007), both of the two theories may seem to be based on unrealistic assumptions. For traditional view, they ignored taxation, companies have complete choice between debt equity finance, and can change this decision quickly and without cost. It is impossible in the real world. The company could change their decision but it has cost and not quickly. For MM, it was built with assumptions that no transaction costs and individuals or corporations can borrow money at the same rate. In fact, individuals and companies cannot borrow at the same rate, since companies usually have a higher credit rating. Therefore, personal debt usually costs more than corporate debt and is riskier. Moreover, the theory does not mention the issue of bankruptcy costs and other agency costs, as well as personal income tax. Conclusion In conclusion, according to traditional view, gearing capital is very important because the changing of gear may lead to changes of WACC as well as company value and shareholder wealth. If gearing capital increases, WACC will fall. It leads to the increase of profits, in other words, company value will increases. Theoretically, there is an optimal capital structure, in which, the company will minimize its cost of capital and the company value is maximized. In fact, it hasnt found an optimal capital structure yet. Conversely, based on MM theory, it argued that the two companies with the same size and the same level of business risk would have the same value. It does not depend on their gearing. In other words, the level of capital gearing is not quite important for WACC, company value and shareholder wealth. Part B: Explain then critically compare and contrast two investment appraisal techniques indicating their merits and limitations in aiding the sound financial management of a company Introduction Nowadays, investing is very important for a company to survive. According to UoS (2007, p.63) an investment involves the outflow of cash at a point in time in order to obtain benefits in the future. Companies make these investment decisions in order to increase the value of the firm and maximizing shareholders wealth. However, funds are limited, thereby, companies cannot invest in all projects, they must choose between alternative investments. There are four commonly techniques for appraising capital investment projects. Payback Accounting rate of return (ARR) Net present value (NPV) also known as Discounted Cash Flow or DCF Internal rate of return (IRR) also known as Discounted Cash Flow technique In this report, we will look at payback and NPV as two investment appraisal techniques to find out how they can inform future projects, their merits and limitations, and which technique the company would prefer. Explanation of two investment appraisal techniques Payback Payback is the number of years required to recover the original cash flow outlay investment in a project (Brealey, Myers and Marcus, 2001). If the cash flows are constant, the formula is: Payback period = If the cash flows are not constant, the calculation must be in cumulative form. The payback is a commonly used method of evaluating investment proposals. Among alternative investments, the company should decide to invest in the project which payback period is shorter, in other words, this is a project which can recover the initial investment quicker (Ross et al., 2007). For example, ABC Ltd has two projects A and B which cash flows as follows. Year Cash flows from Project A ( £) Cash flows from Project B ( £) 0 (100,000) (100,000) 1 10,000 20,000 2 30,000 20,000 3 40,000 30,000 4 20,000 20,000 5 30,000 50,000 Using cumulative form, we have: Year Cash flows from Project A ( £) Cumulative ( £) Cash flows from Project B ( £) Cumulative ( £) 0 (100,000) (100,000) 1 10,000 (90,000) 20,000 (80,000) 2 30,000 (60,000) 20,000 (60,000) 3 40,000 (20,000) 30,000 (30,000) 4 20,000 0 20,000 (10,000) 5 30,000 30,000 50,000 40,000 It is clearly that after 4 years, project A has recovered all original investment and it will begin making the profit for the company from the firth year, so payback period of project A is 4 years. As for project B, after 5 years, the original investment has recovered and it also generates  £40,000 of profits, so the payback period of this project is: Payback period of project B = 4 + = 4.2 years Thus, following the rule of payback period method, ABC Ltd should invest into project A because payback period of project A is shorter than project B. It means that the company can recover the original investment quicker if they decide to invest into project A. Net present value (NPV) Based on Professional Management Education (2010), The net present value (NPV) method is the classic economic method of evaluating the investment proposals. It is discounted cash flow technique that explicitly recognizes the time value of money. It correctly postulates that cash flows arising at different time periods differ in value and are comparable only when their equivalents present values are found out. The formula to calculate NPV is: NPV = Initial Investment + = Initial Investment + With r is the rate of interest It should be made clear that the acceptance rule using the net present value (NPV) method is to accept the investment project if NPV is positive, to reject it if NPV is negative and consider accepting the project when NPV is zero. For instance, using the same data with example above, in additional, the original proposal of ABC Ltd uses a discount rate of 10%. Using discounted cash flow technique to the present value, we have: Year Cash flows from Project A ( £) Present value ( £) Cash flows from Project B ( £) Present value ( £) 0 (100,000) (100,000) (100,000) (100,000) 1 10,000 9,091 20,000 18,182 2 30,000 24,793 20,000 16,529 3 40,000 30,052 30,000 22,539 4 20,000 13,660 20,000 13,660 5 30,000 18,628 50,000 31,046 NPV NPV (A) = -3,776 NPV (B) = 1,956 > 0 Because NPV of project A is negative and that of project B is positive, in accordance with the acceptance rule, ABC Ltd should choose project B to invest because this project will bring more profits. Analyzing of two investment appraisal techniques Compare and contrast In every company, payback period and NPV are very important to evaluate the value of a proposed project before investing on it. Both of two investment appraisal techniques can measure the sustainability and value of long-term projects. From that, the company can make sound financial decisions. (DifferenceBetween.net, 2010) Regarding calculate technique, payback period is used to calculate a period within which the initial investment of a project is recovered (UoS, 2007). It is equal to the initial net investment divided by annual expected cash flows. For example, a company wants to invest  £10,000 in a new project and they expect to have annual cash flows of  £2,000, so the payback period of this project will be = 10,000/2,000 = 5 years. The shorter the payback period, the better investment is. A long payback period means that the investment will be locked up for a long time, thereby this project is relatively ineffective. Meanwhile, net present value (NPV) uses the time value of money to appraise long-term projects. According to UoS (2007), NPV uses the opportunity cost of capital to discount the flows of cash in and out, over the life of a project to give their value at the present day. NPV method focuses on the present value (PV) because NPV equates to the sum of present values of individual cash flows. For example, a project invests  £1,000 and it will bring cash flows of  £2,000 in the next year, so PV of  £2,000 = 2000/(1+0.1) =  £1,818 with discount rate of 10%. Thus, the NPV of this project = -1000 + 1,818 =  £818. When choosing between alternative investments, NPV can help to define the project with highest present value, and also apply the acceptance rule of NPV, if NPV>0 accept the investment, if NPV Ross et al. (2007) stated that NPV method removes the time element in weighing alternative investment, while payback period focuses on the time required to recover the initial investment. From that, payback period method does not assess the time value of cash, inflation, financial risks, etc. as opposed to NPV, which measures the investments profitability. In addition, although payback period method indicates the acceptable period of investment, it does not take into account what will happen after the payback period and their impact on total incomes of this project. But it is contrary to NPV. Thereby, NPV will provide better decisions than payback when the company makes capital investments. In fact, companies use more often NPV than payback period method. Merits and limitations Merits The most significant merit of payback period is that it is simple to understand and easy to calculate than other appraisal investment techniques (UoS, 2007). Comparing with NPV method, payback method uses fewer costs and less analysts time than NPV. For this method, an investor can have more favorable short term effects on earnings per share by setting up a shorter standard payback period. Professional Management Education (2010) believed that payback period can control investment risks because the longer it takes to recover the initial investment, the more uncertainties there will be during the recovery period. In addition, payback method focuses on the time to recover of the initial investment, so it gives an insight into the liquidity of the project. The shorter payback period, the higher liquidity is. On the other hand, Brealey et al. (2001) stated that NPV is more accurate and efficient as it uses cash flow, not earnings and results in investment decisions that add value. By discounting the flows, NPV can create the comparison between alternative investments, and then, making right capital decisions. NPV method is always consistent with the long-term objective of the shareholder value maximization. We can say that this is the greatest merit of this method. Limitations Payback Consider XYZ Ltd with two projects A and B. It has the same three years payback period, whose flows are as follows. Year Cash flows from Project A ( £) Cumulative ( £) Cash flows from Project B ( £) Cumulative ( £) 0 (100,000) (100,000) (100,000) (100,000) 1 20,000 (80,000) 50,000 (50,000) 2 30,000 (50,000) 30,000 (20,000) 3 50,000 0 20,000 0 4 30,000 30,000 100,000 100,000 Payback Period (Year) 3 3 Ross et al. (2007) stated that the first limitation of payback method is the timing of cash flows within the payback period. Looking at the table above, from year 1 to year 3, the cash flows of project A increase from  £20,000 to  £50,000, while the cash flows of project B decrease from  £50,000 to  £20,000. Because the large cash flow of  £50,000 comes earlier with project B, its NPV must be higher. However, as mentioned above, the payback periods of the two projects are identical. Thus, the problem with the payback period is that it does not consider the timing of the cash flows within payback period. It also shows that the payback method is inferior to NPV because NPV method discounts the cash flows properly. The second limitation is payment after the payback period (Ross et al., 2007). Lets consider projects A and B in the same three years payback period, project B is clearly preferred because it has a cash flow of  £100,000 in the fourth year. Thus, a problem here is that payback method ignores all cash flows occurring after the payback period. For the short-term orientation of the payback method, some valuable long-term projects may be rejected. NPV method does not encounter this problem because this method uses all the cash flows of the project. Because of the first two limitations, the payback method cannot maximize shareholders wealth. According to UoS (2007), the payback period method ignores inflation and discriminates against large capital-intensive infrastructure projects with long times, because it only focuses on the earliest time to recover the initial investment. Net present value (NPV) NPV is the true measure of an investments profitability. But, in practice, it still has some problems. The first limitation of NPV method is cash flow estimation (Professional Management Education, 2010). The NPV method is easy to use if forecasted cash flows are known. However, it is quite difficult to obtain the estimates of cash flows due to uncertainty. The second limitation of NPV is unrealistic assumptions (UoS, 2007). Under NPV method, there is a single market rate of interest for both borrowing lending and an individual can borrow or lend any amount of money at that rate. It is unrealistic, in practice, the interest rate for borrowing and lending is different and everyone has to follow the interest rate for each kind. For example, for Vietnam market in 2011, the interest rate for borrowing at 9% and for lending at 17% per year (Trading Economics, 2012). NPV also ignores transaction costs or taxes. Conclusion In a survey carried out by Graham and Harvey (2001), it was found that 74.9% of respondent companies use net present value (NPV) and 56.7% use payback period method when they appraise the investment projects. It means that in fact, NPV method is used more than payback period method. Techniques % Always or Almost Always Internal Rate of Return (IRR) 75.6 Net present value (NPV) 74.9 Payback period 56.7 Accounting rate of return 30.3 Source: Graham and Harvey, The theory and practice of corporate finance: Evidence from the Field, Journal of Financial Economics 60 (2001), based on a survey of 392 CFOs According to the survey of Graham Harvey (2001) and Sandahl (2003), payback period method is often used in small size companies. The major reason for this can be that payback period method is more simple, cheaper and easier to calculate. Small companies are only interested in the shortest time to recover initial investment because they often lack the source for fund. Moreover, the complexity of the other investment appraisal methods is always a barrier for the small company. However, net present value (NPV) is often used in medium and large size companies (Graham and Harvey, 2001). The major reason for this can be that these companies are interested in the profitability and time value of money than the payback period. They have the source of funds and consider maximizing shareholders wealth as their long-term objective.

Management Policy :: essays research papers

OPERATION AND OPERATIONS MANAGEMENT All organizations have operations.† A manufacturing company may conduct operations in a foundry, mill, or factory. Our interest is in the management of operations, or operations management (OM), including the usual management cycle of planning, implementing, and monitoring/controlling. The driving force for OM must be an overriding goal of continually improving service to customers, where customer means the next process as well as the final, external user.  § Since there is an operation element in every function of the enterprise, all people in all jobs in every department of the organization should team up for improvement of there own operations management elements. Teaming Up with Customers What happens when suppliers and customer are disconnected? Consider design work, for example. Whether we speak of goods or services, time- and distance separation in the supplier-customer connection invites trouble. Question: â€Å"What’s your Job?† Question: â€Å"But isn’t your job to serve the customer?† In grocery stores, where the supplier-relationship is immediate, the operations manager system is hard pressed to maintain a customer focus. The customer is the next process, or where the work goes next. A buyer’s customer is the associate in the department to whom the purchased item goes; a cost accountant’s customer is the manager who uses the accounting operations-where the design will be produced or the service provided. It is also clear that throughout the organization, people not only have customers, they are customers. Let’s turn our attention to what customers want. A Short List of Basic Customer Wants The requirement is a recipient’s or customer’s view of a good or service. A close partnership with the customer’s actual requirements. A close partnership with the customer helps create good specifications, increasing the supplier’s ability to f ulfill the customer’s needs. What else do customers want? Customers have six requirements of their providers: High levels of quality. High levels of service. Low costs. OPERATIONS STRATEGY An organizational commitment with wide ranging effects, such as continuing improvement in meeting customer needs, is called a strategy. Strategy itself is necessary because of competition, and successful strategy ensures that company strengths match customer requirements. Integrated Business Strategy To accomplish its aims, the business team must plan strategy in all four-line functions. A comprehensive strategic business plan deals with issues affecting the whole organization: employees, markets, location, line of products and services, customers, capital and financing, profitability, competition, public image and so forth. Management Policy :: essays research papers OPERATION AND OPERATIONS MANAGEMENT All organizations have operations.† A manufacturing company may conduct operations in a foundry, mill, or factory. Our interest is in the management of operations, or operations management (OM), including the usual management cycle of planning, implementing, and monitoring/controlling. The driving force for OM must be an overriding goal of continually improving service to customers, where customer means the next process as well as the final, external user.  § Since there is an operation element in every function of the enterprise, all people in all jobs in every department of the organization should team up for improvement of there own operations management elements. Teaming Up with Customers What happens when suppliers and customer are disconnected? Consider design work, for example. Whether we speak of goods or services, time- and distance separation in the supplier-customer connection invites trouble. Question: â€Å"What’s your Job?† Question: â€Å"But isn’t your job to serve the customer?† In grocery stores, where the supplier-relationship is immediate, the operations manager system is hard pressed to maintain a customer focus. The customer is the next process, or where the work goes next. A buyer’s customer is the associate in the department to whom the purchased item goes; a cost accountant’s customer is the manager who uses the accounting operations-where the design will be produced or the service provided. It is also clear that throughout the organization, people not only have customers, they are customers. Let’s turn our attention to what customers want. A Short List of Basic Customer Wants The requirement is a recipient’s or customer’s view of a good or service. A close partnership with the customer’s actual requirements. A close partnership with the customer helps create good specifications, increasing the supplier’s ability to f ulfill the customer’s needs. What else do customers want? Customers have six requirements of their providers: High levels of quality. High levels of service. Low costs. OPERATIONS STRATEGY An organizational commitment with wide ranging effects, such as continuing improvement in meeting customer needs, is called a strategy. Strategy itself is necessary because of competition, and successful strategy ensures that company strengths match customer requirements. Integrated Business Strategy To accomplish its aims, the business team must plan strategy in all four-line functions. A comprehensive strategic business plan deals with issues affecting the whole organization: employees, markets, location, line of products and services, customers, capital and financing, profitability, competition, public image and so forth.

B2C site compared to B2Bsite

Companies and individual entrepreneurs involved in e-commerce are operating in three-dimensional environment comprised with ethical, legal and regulatory norms and policies. Failure to comply with these norms may trigger various consequences for business or individual – from forfeiture of merchant account issued by banking institution to lack of customers aware of company’s incompliance or unethical conduct.From the critical perspective, due to the fact that Internet and e-commerce tools enable merchants and companies to adjust online environment on their sites, online companies can utilize this ability to manage ethical, legal and regulatory procedures concerning both customers and businesses (Schneider, 2004). Ethical conduct and procedures are especially important in the B2B framework because businesses selling to other businesses treat their customers more as partners and rely on reciprocal information sharing for developing mutually beneficial partnerships.Because the relationship is more extensive, every time there is an exchange of information or data, it must be meticulously tracked and labeled as general business or confidential as appropriate. B2B businesses must prevent unauthorized access to customer information on their Web sites, and protect the privacy of their customers / partners both technically and legally. Businesses such as Adobe software, many of whose customers are other businesses, accomplish this by having customized pages for each partner which are accessible only through login/password combinations issued by Adobe.In the B2C framework, ethics are important in that they establish and promote the credibility of the business to its online customers. B2C merchants, therefore, also must safeguard their customers’ information, but without the level of customization offered by B2B businesses (Schneider, 2004). For instance, Amazon. com requires a username and password each time a site visitor asks for any type of custome r account information, but they do not offer customized pricing for each customer as a B2B site would.Legal norms and compliance procedures such as liability, contract validity and jurisdiction are equally important in both B2B and B2C frameworks, but they are slightly different because of the varying needs of B2B versus B2C customers. For instance, in the B2B framework the use of multiple networks and trading partners as well as various contacts within trading partner organizations make the documentation of responsibility challenging.Here the use of online enterprise software that tracks activity by individual user through the issuance of multiple usernames and passwords both among different partners and within a partner organization can alleviate this difficulty. Large printers such as Fry Communications, for instance, which print for several different publishers, solve this problem through issuing multiple usernames and passwords under each different publisher’s online acc ount.This allows multiple editors, production mangers and artists to submit work and check the progress of their particular publication at Fry’s various facilities simply by logging in under their companies’ accounts using their individual usernames and passwords. In B2C business relationships, international laws often come into play because of the wide reach that the internet creates. The Internet has few regulations, and its operation is largely left to the free will of the market.It is, therefore, incumbent upon businesses to self regulate their behavior on the internet. One of the better known Internet regulations is the CAN-SPAM Act of 2003 which sets up requirements for businesses that send commercial email, lays out penalties for spammers and companies whose products are advertised in spam, and grants consumers the right to demand that businesses stop spamming them (FTC. gov, 2005).Commercial emails are generally the domain of B2C businesses which usually comply with the terms of the law through posting a compliance statement on their commercial emails and websites, as well making it easy for consumers to remove themselves from the companies’ email databases. There are also gambling laws and laws like the Federal Telecommunications Act and the Computer Decency Act and other laws on child pornography, all of which concern B2C businesses. Similar to ethics, the appropriate behaviors for participants are typically laid out in regulations developed by trade associations, commercial standard groups and the professions.On B2B sites ethics are regulated by mutual formal agreements signed by all partners, while on B2C sites these ethics are governed by user agreements and privacy policies which users must agree to comply with as a condition for using the merchant’s Web site. References Schneider, G. , (2004). Electronic commerce: The second wave (5th ed. ). Boston, MA: Thomson Learning FTC. gov, (2006). Facts for Business. Available at Retrieved Feb 4, 2006

Business Aspects in Banking and Insuarance

Present Scenario of insurance in business The liberalization, privatization and globalization policies of the nation along with the revolution in the field of Information Technology and communication have been advantageous for the insurance sector in India. ? Entry of private players and foreign collaborations: It was on the recommendation of the Malhotra Committee that private players were allowed to enter into the insurance market. Today there are almost 22 players who have entered the Indian insurance market besides the giant Life Insurance Corporation of India (LIC).Another major development that has taken in the field of general insurance is the de-linking of the 4 subsidiaries of the General Insurance Corporation of India (viz. Oriental Insurance Company Ltd. , New India Assurance Company Ltd. , National Insurance Company Ltd. and United India Insurance Company Ltd) from the parent company. ? Marketing strategies and approaches: The entry of private players and their foreign pa rtners has given domestic players a tough time, because the opening up of the sector has not brought in only foreign players, but also professional techniques and technologies.The present scene in India is such that everyone is trying to put in the best efforts. One can see strategies being more for survival than growth. But the most important gift of privatization is the introduction of customer-oriented services. Utmost care is being taken to maximize customer satisfaction. Insurance Sector Today: Opportunities and Challenges Opportunities As compared to the Western countries, where they have already reached a stage of saturation, India can exploit some golden opportunities in the following fields. 1. Mass MarketingIndia is a highly populated country and would continue to be so in the near future. New players may tend to favour the â€Å"creamy† layer of the urban population. But, in doing so, they may well miss a large chunk of the insurable population. A strong case in po int is the current business composition of the dominant market leader – the Life Insurance Corporation of India. The lion's share of its new business comes from the rural and semi-rural markets. In a country of 1 billion people, mass marketing is always a profitable and cost-effective option for gaining market share.The rural sector is a perfect case for mass marketing. Competition in rural areas tends to be â€Å"kinder and gentler† than that in urban areas, which can easily be termed cutthroat. Identifying the right agents to harness the full potential of the vibrant and dynamic rural markets will be imperative. Rural insurance should be looked upon as an opportunity and not an obligation. A smaller bundle of innovative products in sync with rural needs and perceptions, and an efficient delivery system are the two aspects that have to be developed in order to penetrate the rural markets. 2. Job OpportunitiesJob opportunities are likely to increase manifold. The liber alization of the insurance sector promises several new job opportunities for those who are equipped with degrees in finance. Finance professionals who had witnessed a slump in the job market would be much relieved. There will be demand for marketing specialists, finance experts and human resource professionals. Apart from this, there will be high demand for professionals in streams like underwriting and claims management, and actuarial sciences. 3. Inflow of Funds There could be a huge inflow of funds into the country.Given the industry's huge requirement of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign capital. A rise in the equity share of foreign partners to 49 percent will act as a boost to them. 4. Reinsurance Huge capacity is likely to be created in the area of reinsurance. Apart from pure reinsurance activities, which involves providing insurance protection, there will be a revolution in service-related fields like training, seminars, workshops, know-how transfer regarding risk assessment and rating, risk inspections, risk management and devising new policy overs, etc. 5. Marketing Strategies Also, with more players in the market, there will be significant increase in advertising, brand building, and this will benefit whole lot of ancillary industries. A substantial shift is likely to take place in the distribution of insurance in India. Many of these changes will echo international trends. Worldwide, insurance products move along a continuum from pure service products to pure commodity products. Initially, insurance is seen as a complex product with a high advice and service component.Buyers prefer a face-to-face interaction and place a high premium on brand names and reliability. As products become simpler and awareness increases, they become off-the-shelf, commodity products. Sellers move to remote channels such as the telephone or direct mail. Various intermediaries, not necessarily insurance compan ies, sell insurance. In some countries like Netherlands and Japan, insurance is marketed using the Post Office's distribution channels. At this point, buyers look for low price.Brand loyalty could shift from the insurer to the seller. 6. Bancassurance In other markets, notably Europe, this has resulted in bank assurance: banks entering the insurance business. The Netherlands led with financial services firms providing an entire range of products including bank accounts, motor, home and life insurance, and pensions. Other European markets have followed suit. In France, over half of all life insurance sales are made through banks. In the UK, almost 95% of banks and building societies are distributing insurance products today.In India too, banks hope to maximize expensive existing networks by selling a range of products. Many bankers have shown an inclination to enter the insurance market by leveraging their strengths in the areas of brand image, distribution network, face to face cont act with the clients and telemarketing coupled with advanced information technology systems. Insurers in India should also explore distribution through non-financial organizations. For example, insurance for consumer items such as refrigerators can be offered at the point of sale. 7. Information TechnologyWorldwide interest in E-commerce and India's predominant position in Information Technology and software development are also likely to be major factors in the marketing of insurance products in the immediate future. The number of Internet account is increasing and the trend has already been set by some of the leading insurers and insurance brokers worldwide. Challenges If one has opportunities, one has to face challenges; it is like two sides of the same coin. No doubt India has a lot of opportunities coming her way, but there are a few challenges and threats as well.The four main challenges facing the industry are product innovation, distribution, customer service, and investment s. Unit-linked personal insurance products might find greater acceptability with rising customer awareness about customized, personalized and flexible products. Flexible products and new technology will play a crucial role in reducing the cost and, therefore, the price of insurance products. Finding niche markets, having the right product mix through add-on benefits and riders, effective branding of products and services and product differentiation will be some of the challenges faced by new companies. . Technology In today's highly competitive financial services environment, effective organizations will employ technology in a strategic way so to achieve a competitive edge. Technology will play an increasing role in aiding design and administering of products, as well in efforts to build life-long customer relationships. At the same time, investment in technology will only help as long as firms find the right people: people with the right attitude, values, and ethics, commitment to excellence, and focus on customer service.The critical success factor is a top-down emphasis on exceeding customer expectations with quality people, excellent products, and legendary service. As has been seen in other financial services, the entry of private players ensures that the customer will be the beneficiary in the long run. It will also result in enlarging the market and extending the reach of insurance across the country. 2. Competition Thus, apart from the normal issues facing any new company, many new Indian private insurance players will need to cope with the challenges of working with a joint venture partner.They will be competing with large and well-entrenched government-owned players. They have to overcome regulatory hurdles, change the attitude of new recruits and satisfy some very high customer expectations. Also, the players will have to consider the Indian market as a long-term investment, and maintain clear-cut objectives and constant monitoring at all levels. Co nclusion ? Nationalized players will continue to hold strong market share positions: Over the past three years, around 40 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged anticipatory alliances.The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent years, we can safely conclude that nationalized players will continue to hold strong market share positions, but there will be enough business for entry to be profitable. ? Recognizing the potential market Opening up the sector will certainly mean new products, better packaging and improved customer service. Both new and existing players will have to explore new distribution and marketing channels.Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. Recognizing the potential, in th e past three years, the nationalized insurers have already begun to target niches like pensions, women or children. ? Facing competition and challenges Competition will surely cause the market to grow beyond current rates, create a bigger â€Å"pie,† and offer additional consumer choices through the introduction of new products, services, and price options.Yet, at the same time, public and private sector companies will be working together to ensure healthy growth and development of the sector. Challenges such as developing a common industry code of conduct, contributing to a common catastrophe reserve fund, and chalking out agreements between insurers to settle claims to the benefit of the consumer will require concerted effort from both sectors. Objectives of Insurance: 1. Risk Sharing: insurance is mechanism adopted to share the losses that might occur to an individual or his family on the happening of a specified event.The event may be death of earning member of the family in case of life insurance, marine perils in marine insurance and other certain events in miscellaneous insurance. The loss arised from thee events if insured are shared by all the insured in the form of premium. Thus, risk is transferred from one individual to a group. 2. Co-operative Device: Insurance is a cooperative device under which a group of persons who agree to share the financial loss may be brought together voluntarily or through publicity or through solicitation of the agents.An insurer would be unable to compensate all the losses from his own capital. Therefore, by insuring a large number of persons, he is able to pay the amount of loss. Like all other cooperative devices there is no compulsion on anybody to purchase the insurance policy. 3. Saving: Insurance is a saving device, particularly the life insurance. The claim is certain in case of life insurance, while it is not certain in general insurance. Therefore, life insurance is considered as saving because; the insu red party gets the sum assured plus bonus at time of maturity.Therefore, life insurance is considered as a savings device. 4. Economic Security: Insurance provides economic security for such losses arising out of happening of insured event such as personal accident. Insurance is a protection against uncertainties of life. It provides monetary compensation for losses suffered due to happening of uncertain events, insured under the policy of insurance. Insurance is a shelter against financial losses arising out of occurrence of an anticipated accident. Thus, it provides economic security to the family of insured person or his property. 5.Economic Development: One of the most important factors contributing to the process of economic development is the capital formation. The relation ship between capital formation and insurance services in both the developed and developing economies of the world has been quite prominent and noteworthy. The savings from the household sector constitute th e major proportions of the total savings in the country. The household savings constitute physical and financial. The insurance is a financial savings. As the economy progresses and attains maturity, progressively larger proportion of savings is invested in the financial assets like insurance. . Capital formation: Capital formation is the increase in capital stock of a country consisting of plant, machinery, equipments, tools, factory buildings, raw materials etc. Capital has always been regarded as a means of increasing production, in the economy and thereby contributing to the future stream of income to the economy as a whole.The process of capital formation envisages real savings, channelising savings and the act of investment. Insurance service acts as a tool to mobilize savings and indulge in direct investment. Principles of Insurance ) Utmost Good Faith: It means a positive duty to disclose accurately and fully all the facts material to the risk being proposed, whether request ed or not. Every circumstance is material whish would influence the judgement of a prudent insurer in fixing the premium or determining to accept the risk. The breach of utmost good faith arises due to misrepresentation or non-disclosure. Insurance is a contract, and each party can examine the item or service, which is the subject matter of the contract. Therefore, the proposer (the one taking the policy) should disclose accurate information as asked by the insurance company, e. . facts relating to age, health, habits, and personal history. If any information is considered to be fraudulent, then the contract is null and void. Under Sec 45 of the Insurance Act, 1938, the insurance company can cancel a policy up until 2 years, but not after after the policy is signed on the grounds of inaccurate or false statement. 2) Insurable Interest: Insurable interest is the legal right of the insurer, arising out of a financial relationship recognized under law between the insured and the subjec t matter of insurance.The interest in the subject matter of a contract of insurance provides the insured person with the right to enforce the contract. All risks are not insurable. In order to be insurable, the risk must be capable of financial measurement. Insurable interest is said to exist when the person insuring stands to lose, if the event insured against occurs. E. g. a person has insurable interest in his own life. Husband and wife have an insurable interest in each other. The main objective of insurable interest is to prevent people from wagering or gambling on the lives of the others. An insurance company cannot issue a policy without insurable interest.In case of non-life insurance, the existence of insurable interest is:- a) Ownership of a property or asset like a car, flat, etc. clearly establishes insurable interest in the property. b) An employer has an insurable interest in the employees working with him in good health. c) A bank has an insurable interest in the loya lty and integrity of its cashiers and managers. d) A businessman has an insurable interest in the stock of goods, vehicles, furniture and machinery. e) A vehicle owner has an insurable interest even in an unknown third party, who may be potentially injured in any accident involved with the vehicle. ) Indemnity: The basic purpose of insurance is to compensate loss and not to allow profit from insurance contract. The insurance company pays compensation to the insured party only in case of loss due to some perils. If there is no such loss, no compensation is to be paid. According to the principle of indemnity, the actual loss incurred by the insured party is to be compensated by the insurance company, as per the terms and conditions laid down in the policy. For this purpose, the insured has to make a claim to the insurance company within a specified period after the occurrence of certain event.The insured party should not make a profit from any insurance contract. The object of insuran ce is to restore the financial position of the insured. 4) Subrogation: Subrogation means the automatic transfer of rights and remedies of the insured to the insurer upon the insured having received the benefits of insurance. For example, a company has insured a car. If the car meets with an accident which damages the car beyond repair, and the company pays full value of insurance to the person for the car, the company has full right to take away the damaged car. The person has no rights left on the car.The principle of subrogation arises from the basic principle of indemnity. When the insurer indemnifies the insured to the extent to his loss and not more than that, the salvaged property goes towards reducing the loss of the insurer. 5) Contribution: The principle of contribution applies when the insured has taken more than one insurance policy for the same risk from more than one insurance company. In case of loss or damage is incurred and if the insured gets benefits from all the insurance companies, the insured will get more profit than his actual loss.The principle on indemnity will not be followed in such a case and it will be against the law of insurance. Therefore, insurance contracts include the principle of contribution expressly. The principle of contribution works in a manner where each insurer pays only that proportion of the risk, as is represented by proportion off the sum assured to the overall sums assured by the different insurers. Whenever, the principle of contribution applies, the insurers make the insured responsible to file the claims in the correct proportion with the insurers. E. g. , A person takes a policy for Rs. 0000, Rs. 100000, and Rs. 150000 for the same thing. He will claim the insurance in the ration of 1/6, 1/3, and ? respectively. 6)Nature of contract-It is the fundamental principle of insurance required for a valid contract. A contract of insurance comes into existence when therte is an offer or proposal ; acceptance of the same by other. It has to satisfy all essential elements of a simple contract. To insurance contract to be valid one must be competent enough ; with sound mind. Premium is yhe consideration that must be given for the commencement of insurance contract.The object of the contrct should be lawful. 7) Risk must attach-It is essential for a valid contract of insurance. A contract of insurance can be enforced only if the risk is being attached. Premium is the consideration of the risk by the insurance companies. If there is no risk in the subject matter there should be no premium. 8)Mitigation of loss-It is applied in valid insurance contract. In the event of some mishap to the insured property ,the insured must make necessary effort to safeguard his remaining property ; minimize the loss as much as possible. ) Terms of policy- An insurance policy is for a specific period or time often the nature of risk against which insurance is sought determines the period or the life of the policy. a c ontract of fire insurance is normally for a period of one year. The primary functions of insurance include the following: Provide Protection – The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.Collective bearing of risk – Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk – Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty – Insurance is a devic e, which helps to change from uncertainty to certainty.Insurance is device whereby the uncertain risks may be made more certain. The secondary functions of insurance include the following: Prevention of Losses – Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured.Small capital to cover larger risks – Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries – Insurance provides development opportunity to those larger industries having more risks in their settin g up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. The other functions of insurance include the following:Means of savings and investment – Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign exchange – Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free trade – Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.IRDA The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. IRDA is the admi nistrative agency of Government of India for insurance sector supervision and development. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is â€Å"to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority. The Authority is a ten member team consisting of (a)  Ã‚  Ã‚   a Chairman; (b)  Ã‚  Ã‚   five whole-time members; (c)  Ã‚  Ã‚   four part-time members, They are all appointed by the government of India. [pic]The law of India has following expectations from IRDA:- 1) To protect the interest of and secure fair treatment to policyholders. ) To bring about sp eedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy. 3) To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. 4) To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard. ) To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. 6) To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. 7) To take action where such standards are inadequate or ineffectively enforced. 8 ) To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.Slow Growth Of Insurance Business In India 1) Volatile market The people in India who invest their money in the volatile market of India see the upper layer of the insurance industry and say that one can think positive about this sector, but the index chart showing the recent growth figures are having different story to tell. 2) Security downfall in insurance sector Many in India consider the insurance sector as the secured one but the recent downfall in the premium income of private and public life insurance and eneral insurance companies clears this myth. The figures that came out in the light, regarding the premium income of insurance industry clearly show that Insurance in India is not recession proof. Downfall started from the life insurance sector of India where the major and most trusted companies have not recorded much impressive premium income. 3) Mixed results of growth and downfall of insurance business The insurance industry of India is not only witnessing this decline in life insurance sector but is also looking south with its general insurance biz.The recent data shows the slow negative growth of the general insurance industry in India with both public and private companies giving out mixed results. In the first quarter of the current fiscal where the public sector general insurance companies like United India, New India Assurance and Oriental Insurance have recorded the growth of 14%, 7% and 10% respectively, while PSU National Insurance has resulted in the negative growth of 2%. 4) Low penetration of general insuranceThe penetration of general insurance in India remains low on account of low consumer preference, largely untapped rural markets and constrained distribution channels, one of the biggest constraints facing the general insurance business is the lack of reach beyond the cities. With the pri vatization of the Indian insurance sector in 2000, competing among the insurance players has increased manifold ; each insurance player is coming up with innovative channels ; insurance products to meet the needs of different people. Thus, it is clear that the face of life insurance is changing.But with the changes come a host of challenges ; it is only the credible player with a long term vision ; a robust business strategy that will survive. According to the latest figures released by the Insurance Regulatory and Development Authority (IRDA), of the total 22 life insurance companies, only nine companies managed to mop up new business premium, most of them being smaller companies. Among major players, only Reliance Life and SBI Life managed to get more business and witnessed a growth of 6. 88 and 0. 89 per cent respectively.At present there are 22 life insurance companies in India, including the State-run Life Insurance Corporation Swiss Re, the largest reinsurance company, has sai d that insurance in the emerging markets is expected to grow at a slower pace in 2008 and 2009, but its longer term growth prospects remain positive. In India growth of new business in life insurance fell from 145. 7% in 2006 to 9. 6% in 2007. Annual growth is likely to drop from the 2002 to 2007 levels of 11. 4% in life and 10. 6% in non-life to 7-10% in life and 3-8% in non-life between 2008 and 2013, said the company its latest Sigma report.Growth in the life market slowed from 18% to 14% in 2007. Speaking of private general insurance companies, some big players like Reliance General Insurance and Tata AIG General Insurance have witnessed the negative growth. The other players in the same category like Bajaj Allianz General and ICICI Lombard Insurance have reported the southward growth of 13 and 21 percent respectively in the June quarter. Lack of good insurance advisors. Reasons for Slow Growth 1. Slackness in the economy and the markets has put the brakes on the high speed grow th of private life insurance companies. 2.Life insurance companies have slowed down recruitment due to tardy growth in the new business and focus on cost-cutting 3. Ineffective distribution networks 4. Delay in settlement of claims – lengthy procedures 5. Fraud cases : Fraudulent and dishonest claims are a major problem for the insurance industry. An example of life insurance fraud is the John Darwin disappearance case, an ongoing investigation into the faked death of British former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was thought to have died in a canoeing accident.Darwin was reported as â€Å"missing† after failing to report to work following a canoeing trip on March 21, 2002. He reappeared on December 1, 2007, claiming to have no memory of the past five years. Reasons for Slow Growth (contd) 1) Poor marketing strategies: India is a developing nation and is new to all these marketing strategies if compared at international standards. Keeping in mind the poor literacy rate of the country, there should be such strategies prepared which not only target the urban areas but also tap and concentrate on the rural areas for basic and vital insurance policies. ) Low consumer awareness: Due to lack of awareness, yet, nearly 80% of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This, itself is an indicator that growth potential for insurance sector is immense, however, it is slow, one reason being lack of awareness.In order to spread awareness, the insurance companies should have differences in approach for rural and urban areas as per the lifestyle, literacy of people. For eg : crops insurance, house insurance for people in rural areas and farmers with low sources of in come should be made aware of in a less complex manner. 3) Lack of competition: public and private insurance companies more or less offer policies with similar terms and conditions. Hence, differentiation lacks which leads to less competition in the insurance sector. ) Government monopoly: there are private and public insurance companies in the insurance sector. However, the government provides financial aid and encouragement only to its own public institutions. Evidently, the government will only support and favor its own agencies. There is concentration of power and due to this there can’t be an overall and fair development in the insurance sector.5) Inefficiency in management: there is a lot of scope and potential for growth in the insurance sector if men, material and money are managed in the best manner. All sections of society should be tackled in an organized anner with suitable strategies so that the objectives of insurance are materialized. 6) Liquidity crunch: due to reasons such as recession, liquidity has dried-up in the economy and hence people are hesitant concerning long-term investments such as insurance. Only when the liquidity situation eases, will the people become comfortable with locking in money for insurance as it is a long-term commitment and requires payment at regular intervals on a quarterly or yearly basis. 7) Financial malpractices: due to inefficiency and lack of verification there are financial malpractices.For eg: car insurance, the insurer may claim more than the actual damage of his car and give other causes for the accident when it is probably his fault. Such practices are illegal. FUTURE PROSPECTS OF INSURANCE IN INDIA With a huge population base and large untapped market, insurance Industry is a big opportunity area in India for national as well as Foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% Annually. Life insurance market ha s propelled the Indian lifeInsurance agents into the ‘top 10 country list' in terms of Membership to the Million Dollar Round Table (MDRT) — an Exclusive club for the highest performing life insurance Agents. Total life insurance premium in India is projected to grow Rs 1,230,000 Crores by 2010-11. — Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11. A major study on the Indian insurance sector by consultancy firm McKinsey & Co says less than a third of the life insurance agents meet minimum raining and sales standards set by their companies. It said the life insurance market could easily double to $100 billion in five years Entitled India Insurance 2012: Fortune Favours the Bold, it estimates that higher per capita income will be the key driver of higher demand for insurance products. By 2012, Indian household will be paying premium of up to Rs 4,100 from the current Rs 1,300 India’s ratio of life insurance premium to its GDP is around 4% against 6-9% in the developed world. But, the report claims it could rise to 6. % by 2012, in tandem with the country's demographic profile By 2012, almost 40% of the urban population is likely to have some form of life insurance cover, while in rural areas too it could touch 35%. Current levels are 30% and 25%, respectively FUTURE PROSPECTS OF INSURANCE IN INDIA (CONTD.. ) Insurance 10 years back in India basically was popular only for Life and to some extent for cover against Fire with only players like LIC,GIC etc. and this was one of the contributing factors for the growth of insurance being slow in India.This scenario changed with the entry of private players in the market. With competition came more innovation which ultimately is benefiting this industry in general. Latest 2 examples of innovations are agricultural/crop insurance and wedding Insurance. Bajaj Allianz Insurance has plans for protection against any losses in wedding preparations. The prospect that Insurance industry in India has a bright future can also be believed as not only big corporate houses like Reliance, Tatas and Birlas have stepped in this sector but also big banks like ICICI, SBI, HDFC are a part of it.This is a very positive indication for this sector with also more foreign players trying to come to India. India has an ever increasing population which just increases more and more market for the insurance industry. With more terror attacks and man made calamities and increasing natural calamities like rain deluge, draught, earthquakes etc. there is an increasing feeling of insecurity which is exactly what this industry thrives on. Hence, Insurance has very bright prospects in India. [pic]

Show, Dont Tell Tips and Examples of The Golden Rule

Show, Dont Tell Tips and Examples of The Golden Rule Show, Don't Tell: Tips and Examples of The Golden Rule Show, don’t tell is one of the most frequently given pieces of advice among writers. But just like â€Å"write what you know† and â€Å"write every day,† it can be difficult to follow - especially if you don’t really know what it means! Luckily, we’re here to show you exactly what this involves. We'll explain the various benefits of â€Å"showing† in writing, and provide plenty of helpful examples. Show, don't tell: it's a rule for a reason. Let us SHOW you why! 'Show, Don’t Tell': A Quick DefinitionShow, don’t tell is a writing technique in which story and characters are related through sensory details and actions rather than exposition. It fosters a style of writing that’s more immersive for the reader, allowing them to â€Å"be in the room† with the characters.In his most commonly repeated quoted, Chekhov said, â€Å"Don’t tell me the moon is shining. Show me the glint of light on broken glass."In short: showing illustrates, while telling merely states. Here’s a quick example of showing versus telling: Showing: As his mother switched off the light and left the room, Michael tensed. He huddled under the covers, gripped the sheets, and held his breath as the wind brushed past the curtain. Telling: Michael was terribly afraid of the dark.In the â€Å"showing† example, rather than merely saying that Michael is afraid of the dark, we’ve put him in a situation where his experience of that fear takes center stage. The reader can deduce the same information they’d get from the â€Å"telling† example but in a much more compelling way. The Benefits of 'Show, Don't Tell'Showing also helps develop characters in a way that isn't just listing their traits. For instance, rather than telling your readers that â€Å"Gina was selfish and immature,† you could show this side of her by writing a scene where she whines about how everyone forgot her half-birthday. Or if you have a character who’s extremely determined, show her actually persisting through something - don’t just say â€Å"she was persistent.†Overall, when done right, showing draws readers into the narrative with truly immersive description. It contributes to story development but also leaves certain things up to the reader’s interpretation, which is much more interesting than making everything explicit. (Though of course, you can still use language to alter their perception).The bottom line: telling might be quicker, and it’s certainly necessary to have some telling in every story (more on that later), but showing should almost always be your prime strategy.All right, that’s enough theory for now! Let’s talk about how you can show, not tell, in your own work. Here are five key tips on how to show rather than tell in a story4 Practical 'Show, Don’t Tell' TipsLet's start with one of the most important aspects of storytelling...Tip #1. Create a sense of settingOne of the best ways to show rather than tell is to create a sense of setting. You can do this by writing about how characters perceive and interact with their surroundings, weaving plenty of sensory details and occasional action into the scene. This is a particularly good way to lend immediacy to your story, as the reader should be able to imagine themselves in that very setting. Telling: I walked through the forest. It was already Fall and I was getting cold. Showing: The dry orange leaves crunched under my feet as I pulled the collar up on my coat.Tip #2. Use dialogue to show characterIn addition to setting, you can also use dialogue to demonstrate story elements beyond the surface conversation. A character’s speech will tell the reader a lot about them, especially when they’re first being introduced.Do they use long sentences and polysyllabic words or do they prefer short, punchy replies? Are there likely to use slang and call an authority figure â€Å"dude† or â€Å"fam† or will they address them respectfully as â€Å"Mr. So-and-So†?Tip #3. If in doubt, always describe actionâ€Å"Telling† almost always grinds your narrative momentum to a halt. Imagine having to describe the setting every time your characters enter a new space - any pace you had built in your chapter would be destroyed. However, it’s still important to evoke the setting and put your scene in context. And that’s w here showing action comes in handy.Let’s say you start your scene with your character walking through St Mark’s Square in Venice. Instead of describing the pigeons, the tourists and the layout of the space, you can evoke it through action: He was late. St Mark’s clocktower had struck one and Enzo found himself pushing against the tide of tourists milling towards the cafes lining the Piazza San Marco. A clump of pigeons scattered in front of him.Through action, you’re able to describe the setting of the scene while also maintaining your story’s forward motion.Tip #4. Use strong details, but don’t overdo itStrong, vivid details are crucial to the process of showing. However, that doesn’t mean you should include too many details, especially those that are overly embellished. This kind of excessively ornate language can be just as bad as â€Å"telling† language that’s too basic, as it may cause the reader to lose interest in your super-dense prose. Too much detail: The statue felt rough, its aged facade caked with dust and grime as I weighed it in my hand, observing its jagged curves and Fanta-colored hue. Just right: It was heavier than it looked. Some of the orange facade crumbled in my hand as I picked it up.Strike the right balance by alternating between simple and complex sentences and ideas, and different types of sensory detail, so the reader doesn’t get overloaded on one type.'Show, Don’t Tell' ExamplesTo break down this technique even further, here are a few additional "show, don't tell" examples of authors showing rather than telling in their writing. If you want to analyze even more examples of this tactic, just crack open the nearest novel! Pretty much every work of fiction involves showing, and observing the tactics of successful authors is one of the best ways to learn for yourself.Example #1. The Handmaid’s Tale by Margaret AtwoodI once had a garden. I can remember the smell of the turned earth, the plump shapes of bulbs held in the hands, fullness, the dry rustle of seeds through the fingers. Time could pass more swiftly that way. Sometimes the Comm ander’s Wife has a chair brought out, and just sits in it, in her garden. From a distance it looks like peace.This passage uses various senses (smell, touch, and sound) to recreate the atmosphere of Offred’s old garden, romanticizing the act of gardening to show that she misses those days. It also connects that peaceful past time to the present day, implying that many people no longer feel at peace, including the Commander’s Wife.Example #2. It by Stephen KingIn this early scene, young Georgie is running after his toy boat as he is unwittingly being lured by a malevolent force.Now here he was, chasing his boat down the left of Witcham Street. He was running fast but the water was running faster and his boat was pulling ahead. He heard a deepening roar and saw that fifty yards farther down the hill the water in the gutter was cascading into a storm drain that was still open. It was a long dark semi-circle cut into the curbing, and as Georgie watched, a stripped b ranch, its bark as dark and glistening as sealskin, shot into the storm drain’s maw.King renders the fast-running rivulets of a rainy day by having Georgie run alongside them, unable to keep up. Then he sees the storm drain, which King aptly calls a â€Å"maw† (a spot-on metaphor), and its threat is heightened by the sound of its â€Å"deepening roar† and the fact that it swallows an entire branch. Needless to say, poor Georgie’s boat doesn’t stand a chance. You gotta admit, that's a pretty cute pig. (Image: Paramount)Example #6. Oliver Twist by Charles DickensIn this extract, Oliver has arrived in London for the very first time.A dirtier or more wretched place he had never seen. The street was very narrow and muddy, and the air was impregnated with filthy odours. There were a good many small shops; but the only stock in trade appeared to be heaps of children, who, even at that time of night, were crawling in and out at the doors, or screaming from the inside. The sole places that seemed to prosper amid the general blight of the place, were the public-houses†¦ Oliver was just considering whether he hadn't better run away, when they reached the bottom of the hill.Oliver’s initial impression of London hits us like a train: you can almost taste the filthy air and hear the children screaming for yourself. And if London’s extreme depravity wasn’t already evident enough from the description, you can tell from Oliverâ €™s reaction that it must be pretty bad - for context, he’s just walked 30+ miles to reach London, and this is the first thing that’s really fazed him.Of course, Dickens might have just written, â€Å"Oliver reached London. It was dirty and crowded.† But while this more or less summarizes the above passage, it completely loses the visceral sense of setting and Oliver’s feelings toward that setting. Without these details, the description would be totally generic.Example #7. Fahrenheit 451 by Ray BradburyIn this scene, Montag, a â€Å"fireman† tasked with destroying books, hears his boss’s voice in his head, describing the burning of pages.He could hear Beatty's voice. â€Å"Sit down, Montag. Watch. Delicately, like the petals of a flower. Light the first page, light the second page. Each becomes a black butterfly. Beautiful, eh? Light the third page from the second and so on, chainsmoking, chapter by chapter, all the silly things the wo rds mean, all the false promises, all the second-hand notions and time-worn philosophies.†This excellent use of metaphor (taken from our list of 97 metaphors in literature and pop culture) compares the pages of burnt books to â€Å"black butterflies†: an eerie image that, fittingly enough, burns itself into our brains. Though no book-burning actually occurs at this moment (Montag is merely imagining it), the reader can still vividly see what it would look like. We shudder at the contrast between the innocent, petal-like pages and the monstrous, destructive fire. Indeed, this is the pinnacle of showing - it really drives home how powerful figurative language can be.Example #8. White Teeth by Zadie SmithArchie scrabbling up the stairs, as usual cursing and blinding, wilting under the weight of boxes that Clara could carry two, three at a time without effort; Clara taking a break, squinting in the warm May sunshine, trying to get her bearings. She peeled down to a little purple vest and leaned against her front gate. What kind of a place was this? That was the thing, you see, you couldn’t be sure.The stream-of-consciousness style here evokes the rushed chaos of moving house. Also, the juxtaposed descriptions of Archie and Clara (him â€Å"scrabbling, cursing, blinding, and wilting† while she calmly assesses the situation) show how different they are - a disparity which will only grow over the course of the book.Is telling ever acceptable?Of course, sometimes you have no other choice but to do a bit of â€Å"telling† in a story. Yes, it’s a narrative shortcut, but sometimes shortcuts are necessary - especially when you’re trying to explain something quickly, with no fanfare or immersive evocation for readers. Writers often â€Å"tell† at the beginning of a story to get the exposition across, or after a â€Å"big reveal† where certain details just need to be clearly stated. The important thing is bala nce; as long as you don’t have too much of either telling or showing, you should be fine.Finally, remember that there are no hard-and-fast rules for writing. If you’re worried that you’re telling too much and not showing enough, but your writing still flows well and engages readers, don’t feel obligated to change it! And as Jim Thomas says in the video above: â€Å"In the arts, rules are more like friendly suggestions. This is especially useful to remember when you’re creating your first or second draft - you’re going to ‘tell’ and that’s okay. You’re still figuring out what your story is about.†So whether you’re more inclined to show or to tell, just know that with practice, you’ll find the exact style that works for you. And when that happens, you’ll show everyone (sorry, we couldn’t resist!) what you’re made of as a writer.Do you struggle to show, not tell? Leave any qu estions, concerns, or tips in the comments below!

Brands and Marketing Communications

Brands and Marketing Communications Introduction Although the telecommunications industry is growing, it is also fiercely competitive. Before competition ruled the market, telecommunications service providers paid very little attention to customers needs. Today, however, customers have become more educated and more demanding as well.Advertising We will write a custom essay sample on Brands and Marketing Communications specifically for you for only $16.05 $11/page Learn More In a global economy increasingly characterized by service industries shaped by technology, customers are impatient for services customized to their individual needs and expect them to be offered at lower prices with each new rollout. Customer centered marketing, once a differentiation tactic for the telecommunications providers, has become a survival strategy (Strouse 2004, p. 4). Due to the fierce competition that is prevalent in today’s telecommunications industry, many firms in the industry are forced to spend a l ot of time planning how best to market products and services. This paper examines some of the strategies that have been used by competing firms to increase visibility and grow profits. Specifically, the paper will focus on how marketing communications can help to support and maintain brands. Integrated Marketing Communications Integrated Marketing Communications (IMC) is a marketing approach in which a firm brings different marketing modes together in a unified operation. Although the implementation of IMC may be quite demanding, this is nothing when compared to the expected returns. Generally, IMC helps to successfully move customers through the various stages of their buying process and increases profits through increased effectiveness. By using IMC effectively, it is possible for a firm to maintain its brand, consolidate its image, and bond a customer for life. The use of a unified message often leads to a greater impact than separate messages.Advertising Looking for essa y on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More At another level, research suggests that images shared across advertising and direct mail campaigns boost advertising awareness and, simultaneously, increase response to the mailshot (Smith et al. 1999). IMC can also boost sales by stretching messages across both communication tools and business functions to create more awareness for customers to become aroused and, ultimately, buy a product or a service on a repeat basis. Carefully linked messages help buyers by providing them with timely reminders, relevant information and, where necessary, special offers which move them more comfortably through the stages of their buying process, reducing the misery of choice in a complex and busy world. Using IMC also increases the reliability of any marketing strategy and helps to clear any doubts in the mind of the consumer regarding the firm’s brand. Little effort is the refore spent by the consumer when making brand comparisons. When IMC is used, there is also the possibility of saving costs since some aspects of the marketing communication may be shared by different modes. The firm can also reduce extra charges by using a single agent. But even with several agencies, time can also be saved in meetings, whether strategic, tactical or just briefings, which bring all the disciplines together. As well as fusing bright minds into synergistic sparks, multi disciplinary meetings reduce repetition which in turn reduces workloads and subsequent stress levels. Lastly, the internal benefits of integrated marketing communications should not be forgotten. Integration can continue beyond communications to all the other elements of the marketing mix decisions such as product decisions, price decisions, and place decisions, so that the customer is presented with a complete, comprehensive and consistent pattern. In turn, the marketing mix decisions will be better integrated with the other business functions (Smith et al. 1999).Advertising We will write a custom essay sample on Brands and Marketing Communications specifically for you for only $16.05 $11/page Learn More Disintegrated communications, on the other hand, send disjointed messages which dilute message impact and sometimes confuse, frustrate and arguably arouse anxiety in some customers. In contrast, integrated communications present a reasoned sense of order. Customer relations are also reinforced by the use of regular images and messages that are relevant and useful. Situational Analysis A situational analysis is usually carried out to gain an understanding of the operational environment. Activities may include undertaking strengths, weaknesses, opportunities, and threats (SWOT), Political, Economic, Social, Technological, Environmental, and Legal (PESTEL) analysis or Porter’s five forces model of competitive structure. SWOT Analysis SWOT analysis for a firm in the telecommunications industry may include a number of strengths, weaknesses, opportunities, and threats. The SWOT analysis is best represented by figure 1. Figure 1: SWOT Matrix (Sahaf 2008, p. 31) It is obvious that for any firm to make the best use of its capabilities and market position it would attempt to maximize its strengths and opportunities and minimize its weaknesses and threats, SWOT analysis as demonstrated by figure 1 can offer four conceptually distinct alternate segments to the firm. These alternative segments are: Maximize-maximize (SO), Minimize-maximize (WO), Maximize-minimize (ST), and Minimize-minimize (WT) PESTEL Analysis This covers an analysis of current and potential influences from political pressures. Changes in laws and regulations as well as a country’s political conditions must also be examined thoroughly. Economically, it is also important to consider both local and global issues such as declines. Socially, a firm may need to a nalyze how different changes in the society will affect the market condition.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Technologically, it is necessary to consider how the emergence of new technology in the industry will affect the firm’s performance. Legal issues are concerned with the effect of both national and world legislation. Finally, an environmental analysis will focus on local, national, and world environmental issues. This is demonstrated by figure 2. Figure 2: The environment facing the marketing manager (Sahaf 2008, p. 35) The external environment that consists of forces from economic, technological, legal-political, competitive, and socio-cultural has far reaching implications on the working and performance of the organization. The study of the environment is thus a prerequisite for the success of any strategy. Porter’s Five Forces Model of Competitive Structure This is a useful framework for analyzing the nature and identity of competition in a given industry (Sahaf 2008, p. 62). To determine the state of the competition in a market, Porter argued that managers need to identify the structure of the market in terms of five basic competitive forces. These forces are shown in figure 2. Figure 3: Porter’s Five Forces of Competition (Sahaf 2008, p. 63) These forces not only have a greater impact on the profit potential, but also on the relative market power of competitors in an industry. The study of these forces would help a marketer to determine the attractiveness of the industry and the prospects for earning a return on his investment. Consumer Analysis Under consumer analysis, the marketing managers should be concerned with issues of segmentation, targeting, positioning and analysis of the existing competition. As can be seen from figure 2, the marketing microenvironment is composed of forces close to the company that affect its ability to serve customers, including company strengths and weaknesses, as well as company suppliers, and competitors. The macro environment is composed of the larger political, legal, economic, socio-cultural, and technological forces that influence the microenvironment. To manage the growth and prosperity of a firm in a dynamic marketing environment, managers need to study such elements within the environment that can influence a firm’s response to the environmental opportunities and threats (Peattie Peters 1978). Since such forces have a direct influence, or an effect on the marketing efforts, managers need to assess the forces in order to match their firm’s and marketing environment. Environmental study enables the managers to identify, evaluate and respond to the environmental forces that may influence their marketing decisions. Marketing Objectives and Marketing Communications Objectives In coming up with marketing objectives and marketing communications objectives, it is necessary for the marketing manager to consider relevant factual data that was obtained during the situation analysis stage. He or she should interpret their meaning and consequences for the firm’s product line in terms of opportunities that were identified. Goals should then be set in terms of what the firm wants to achieve during the current planning period. When coming up with the goals, it is important for the marketing manager to ensure that they are specific, measurable, realistic, achievable, and time bound. The marketing manager needs to generate assumptions and projections about future conditions and trends with regard to the economy, technology, and socio-cultural and political aspects such as legislation and taxes (Dalgic 1998, p. 53). It is imperative for the marketing communications objectives to consider how the communications mix can be used to strengthen the firm’s brand and market position. The Marketing Mix The marketing mix is a blend of the four variables or strategy elements to fit the needs and preferences of a specific target market. Each strategy is a variable in the mix. A specific combination of these variables determines the success of the ma rketing efforts. The mix also consists of everything the firm can do to increase the demand for its products. The 4Ps are product, price, place, and promotion and are briefly explained as follows. Product Product refers to anything that is capable of or can be offered to satisfy a need or want. It is essential for the firm to have a clear description of the product in a social marketing campaign at different levels. Price Price refers to the amount the customer has to pay in order to acquire a product or service. It is often aimed at minimizing costs by maximizing incentives to reward desired behavior or to discourage undesirable behaviors. By offering prices that are competitive, the firm will be able to retain its customers for a very long time and attract new ones. Place Generally, place refers to the point of sale. Strategies related to the system or channel management need to be provided to ensure that they will be as convenient and pleasant as possible for the customer to enga ge in the targeted behavior and access related products and services. Promotion Promotion refers to all the activities undertaken to make the product or service known to and preferred among the user and trade. Information on product benefits and features, fair price and easy accessibility require effective and efficient communications to bring goods and services to the target audience and inspire action. Marketers should resort to these tools to create, communicate, and deliver values for their targeted behaviors. Although the 4Ps can be thought of as being independent, they are not isolated and are used as determinants to influence the dependent variables; the behaviors of the target market. It is the synergy of the 4Ps that makes a truly social marketing campaign possible. Implementation A plan for monitoring and evaluating a social marketing campaign is needed before the final budget and implementation plans are made. It needs to be referred back to the goals established for the campaign. Monitoring is a measurement conducted sometime after the launch of a new campaign, but before its completion. It is conducted to determine if midcourse corrections are needed to ensure that marketing goals are realized. Recommendations and Conclusion To survive in the present business environment that is often characterized by very stiff competition, it pays to spend time and plan effectively how the firm’s goods and services will reach the consumers. There is need for the firm to carry out a thorough situational analysis as well as a consumer analysis. SWOT and PESTEL analysis are two approaches that may be used to assess the firm’s capability and to understand the operating environment. The marketing managers may also make use of Porter’s five forces model of competitive structure to understand the environment. By gaining a good understanding of the operating environment and the existing competition, the firm will be in a better position to devise a plan that will help it realize its objectives. Eventually, the firm will be able to maintain its brand and strengthen its position in the market. Reference List Dalgic, T 1998, ‘Dissemination of Market Orientation in Europe: A Conceptual and Historical Evaluation’, International Marketing Review, 15 (1): 45 – 60. Peattie, K Peters, L 1997, ‘The Marketing Mix in the Third of Computing’, Marketing Intelligence Planning, 15 (3): 142 – 50. Sahaf, MA 2008, Strategic Marketing: Making Decisions for Strategic Advantage, PHI Learning Pvt. Limited, New Delhi. Smith, PR, Pulford, A, Berry, C, Smith, PR. 1999, Strategic Marketing Communications: New Ways to Build and Integrate Communications with Disk, Kogan Page Publishers, London. Strouse, KG 2004, Customer-Centered Telecommunications Services Marketing, Artech House, Norwood, MA.