Financial Information for Business Decision Coursework

Financial Information for Business Decision - Coursework Example According to the report the company deals in third party land development and capital management. Nevertheless, it runs capital management trusts referred to as Hercules Unit Trust, the Pillar Retail Europark Fund and the Hercules Income Fund. The headquarters of the company is in London, at the Seymour Street. However, the business model adopted by the company is both risk aversive and opportunistic, which enables them to be in a position of attaining the long-term growth in her shareholder value. The major focuses of the company include: the maximization of equity returns, which is done via optimal financing and joint ventures; it aims at the creation of incomparable or excellent long-term ventures with strong covenants; it also focuses on the major assets in the office and retail sectors; as well as aiming to enhance the property returns via active development and management. In addition, we find that flexibility is imperative to high returns for the company that is both in terms of business financing and business organization. This will greatly enable them to take advantage or capitalize on the changes in the property market. From this study it is clear that whenever a business is started, we find that it either implicitly or explicitly adopts a specific business model, which defines the design of the creation of value, its delivery, as well as the capture of the mechanisms applied by the business enterprise. Nonetheless, the significance of a business model is its description of the way by which the business venture delivers value to its clients, attracts the clients to pay for value and also changes the payments to returns. Therefore, it reflects the presumption of the management as regards what is wanted by the clients, and the way a business can be in a position of meeting those needs in the best way possible, get reward for doing so and making a profit.

Challenging the Status Quo of Technology in Business Outline Essay Example for Free

Challenging the Status Quo of Technology in Business Outline Essay I. Introduction A. Getting in trouble as a teenager, led this innovative mind to reshape technological advances to better suit Business needs as society sees it today. B. Any Idea can be great; implementation of that idea takes careful planning and a smooth technological framework to seamlessly pull it off. C. Choosing to eschew the established ways most seek out their lives, Bill Gates chose to cultivate his interests, even by getting in trouble with a corporation at a young age while capitalizing on an error in a system, and pivot these ideas into a multi-billion dollar enterprise. See more: outline format for essay D. An active dedicated mind that sees inadequacies around them is the best way to fuel innovative changes to streamline a business need. Having the keen ability to identify holes in logic and process is an opportunity to identify the need for change from an improvement standpoint. E. A successful individual with a thirst for understanding of technology, and a desire to improve the ways that business can be protected, while being innovative in managing daily and long reaching business goals, has demonstrated ways to streamline efficiencies all while improving revenues, and decreasing overhead. This successful, driven and adaptable individual defined ways for businesses to thrive, all while ultimately making it less complicated for users of a product to perform certain work tasks, while staying better organized and documented. II. My program Technical Project Management A. I selected Technical Project Management, as it is Essential for Business, and is an in demand field. B. In two and a half years, I will have successfully obtained my Bachelor’s Degree, allowing me to fulfill my desire to participate in changing business climates, and help manage all aspects of project implementation with a strong understanding of all the skills required to manage projects from a technical standpoint. C. To be successful in the Technical Project Management field I will need to be able to effectively identify all aspects of a project from a management perspective, these skills are defined by Schiff (2013, January 15) as Highly Organized, and good multi-tasker, Have the ability to take charge and know how to lead, Be an effective communicator, Know How and When to Negotiate, Be Detail Oriented, Recognize and Solve Problems Quickly, Possess the necessary technical skills (Schiff, J 2013)* III. An effective leader demonstrates efficiencies of leadership by possessing core values of Honesty, Focus, Passion, and overall respect. A. An effective leader is defined by how they utilize a combination of nature and nurture is the obvious core element in the development of personality (Williams, 2005) * B. Positive leadership traits can be summarized with the following attributes: Williams (2005, June) defines positive leadership traits as: Personal consistency, Discipline and Integrity. Intolerance of mediocrity. A concern to build mutual trust. Focused passion for the business. Recognition of the critical importance of emotional intelligence in leadership. (Williams, 2005).* IV. William Henry Gates III ‘Bill Gates’ A. Wikipedia provides the following to describe Bill Gates:† William Henry Bill Gates III (born October 28, 1955) [2] is an American business magnate, investor, programmer, [3] inventor [4] and philanthropist. (Wikipedia 2013) * 1. Relevant formative details: in 1975 Gates, a sophomore attending Harvard University, had read a copy of Popular Electronics that demonstrated the Altair 8800. Gates contacted Micro Instrumentation and Telemetry Systems (MITS) the creators of the new microcomputer and informed them that he and others were working on developing software from a program BASIC which was designed for large computers, after creating the program and meeting with MITS executives resulted in a deal and this new adapted software would be included in the first microcomputers. It would be at this point that Gates would not return to Harvard to finish his degree, instead he partnered with Paul Allen and named their partnership Micro-Soft. The team would later drop the hyphen, and then three years later moved back home to Washington and established corporation paperwork in Bellevue, where Microsoft and Bill Gates would become the leader, and powerhouse of software development. Wikipedia 2013* 2. As Co- Founder, and Chairman of Microsoft, Currently Bill Gates is regarded as the single most successful business person in the PC industry for all his contributions to consumer ready personal computer products. Wikipedia documents that Time Magazine named Gates one of the 100 people who most influenced the 20th Century, as well as one of the 100 most influential people of 2004, 2005 and 2006 (Wikipedia 2013)* B. Your reasons for selecting this person 1. Bill Gates is a pioneer of technological office products which forever changes how businesses are able streamline efficient technologies. Bills quest for knowledge of how things worked, and how they could be improved started in his formative years while attending the Lakeside School in  Seattle Washington, where he took an interest in programming the new computer system the school had recently purchased. As a result of his expressed interest in this computer system he was excused from Math classes to peruse his interest. (Wikipedia 2013) * 2. I intend to utilize mainstream software as part of successful implementation for projects that I manage in technical in project management. I have a profound level of identifying things that do not work around me, and am constantly striving to question ways, and implement solutions that are going to streamline an efficiency. I Intend to utilize the products that Bill Gates has created for businesses, such as Microsoft Office Suite of Products, along with supplemental products such as Microsoft Project which are the most widely utilized programs in the currently among businesses. V. Your own leadership qualities and success traits: As a leader I am capable of showing those around me a better more efficient way to manage tasks, I intent to continue to broaden this knowledge and share with others. My success traits are that I am extremely personable, and easy to interact with. My overall personality is very outgoing and friendly making fast friends in any environment. I have strong values and morals, which are easily recognized upon meeting with me. These traits are essential when forming relationships in any structure, especially in business. A. My personal strengths that I am able to take and apply towards being a leader is having the Personality Type Assessment show me I am an ENFP The Inspirers personality. Per the assessment I am creative and industrious; I am easily able to find success in activities and projects that are of interest to myself, and I am great at motivating others as well as being organized, however I am not overly fond of routine. Additionally the MIS assessment showed me that I am stimulated in my multiple intelligences by Rhythmic, Visual, Interpersonal, Body/kinetic and Intrapersonal learning styles. (Sherfield, Moody 2011)* 1. These assessment showed me that I am a compassionate, outgoing emotionally connected, perceptive individual that works well in dynamics with others where external stimulations such as visual, rhythmic, Interpersonal, Body/kinetic, and Intrapersonal interactions suit me best. These align with my values of compassion, caring, honesty and Respect. By understanding how I work best, I am better able to be a leader by utilizing my strengths to help hone those skills. 2. I am able to be successful by focusing on my ability to be an outgoing and emotionally invested leader demonstrating that I am dynamic in how I can learn, lead and relate, therefore showing others dynamic ways of approaching related tasks, and embracing ideas. 3. I plan to employ my strengths by overall action. A person that is able to show and demonstrate excellent qualities will gain respect, and therefore earn the trust of those they are trying to lead. B. The areas of weakness that I possess are related to how I handle conflict. Per the conflict management assessment I realize that I have a very strong ability to try and resolve conflict, I do however have room for improvement. I need to work better at becoming adept at handling conflict so that I may do well with mediation, negotiation and anger management. That will in turn make me more approachable so that people may turn to me in times of need for advice about conflicts and possible resolutions. (Sherfield, Moody 2011) * 1. The positive changes you need to make in order to resolve weaknesses: I need to focus on managing spikes in my anger towards people that manage to irritate me when I am trying to help them learn something. I will undoubtedly gain a higher level of respect by treating others with respect instead of allowing myself to become agitated at the pace or aptitude of others. 2. Your plan for resolving these weaknesses: to focus on moments when I  feel myself become angered, and attempt to stop from speaking, or acting any further without first looking at the situation from a broader aspect, and seeing the potential areas for improvement. VI. Conclusion A. It is often the ones that get in trouble and challenge the status quo, that make the best innovators and leaders that shape our business to an ever growing and improving dynamic. Being a leader in this field takes courage, and a quest for the ever present Why. Those that challenge and ask why are often the ones that present new ideas to change our course as society. Strength and courage to continue challenging the status quo, and teaching others new ways is what defines a leader. B. I feel that Bill Gates is an unequivocal pioneer in the field of business technology. He challenged so much about what was out there, and had the courage in his vision to make great changes. Bill Gates created systems and programs that would further streamline how businesses are able to conduct their day to day activities by creating and packaging licensed products that are essential tools for any successful business. I look forward to learning more about these programs, and to employ them when I am working in my field of study. C. I plan to enroll in additional courses outside of the DeVry Degree Program that will provide me with additional training on Microsoft Suite of Applications specifically Microsoft SQL a server application that businesses utilize to extract data when executing systems testing requirements. References Schiff, J (2013 January 15). 7 Must-have Project Management Skills for IT Pros (1) Sherfield, M. Moody P. (2001) Cornerstone: Creating success through positive change, Sixth Edition. Boston, MA: Pearson. Williams, M. (2005, June). Leadership for leaders. London, GBR. Thorogood Publishing Wikipedia. Bill Gates Retrieved October 1, 2013 at: http://en.wikipedia.org/wiki/Bill_Gates

Reasons Behind Lehman Brothers Bankruptcy

Reasons Behind Lehman Brothers Bankruptcy Undoubtedly, the complexity and unpredictability of the external environment-market forces/stakeholders influenced the way and manner Lehmans CEO, Mr Richard Fuld behaved. He involved himself and his organization into unethical practices due to so many expectations on them. The market competition was getting very fierce, so he had to bend the rules in order to keep his organization profitable. Market complacency, weak financial regulations, lack of transparency and poor internal financial control policy led to the demise of Lehman Brothers. Mr Fuld adopted the omnipotent view of management but told the U.S House of Representatives Committee on Oversight and Government Reform that the collapse of his firm was totally out of his control-i.e. symbolic approach. This indicated a weak moral culture/development at the preconditional level. His ethical inclination indicated a utilitarian approach which involves decision making based on favorable anticipated outcomes. Clearly, the fall of Lehman Brothers was a preventable man-made disaster. He enshrined a very poor risk management culture in the organization by offering highly leveraged Mortgage Backed Securities. Even if Mr. Fuld felt the economic tides were beyond his control as he proclaims, he should have at least sold the company early enough the way Merrill Lynchs CEO smartly did. But his ego as well as poor management insight took a better part of him. Lehman never engaged in real Corporate Social Responsibility, rather what they did was philanthropy with ulterior motives in mind. They never issued a CSR report of any kind depicting lack of transparency and accountability. There is no denying the hard and bitter truth that we are experiencing a global financial recession with many a nation counting their losses. We are in fact going through possibly the worst global credit crisis since the Great Depression. Given that the world is flatter and with advancing technology, global financial markets are now integrated thus making an otherwise national financial market a global phenomenon. By a simple click of a button, billions of dollars can seamlessly traverse national boundaries at the speed of light. Sadly, this global financial meltdown originated in USA due to the widespread subprime mortgage defaults, economic recession is affecting all the major players of world economy. By September 2008, the credit crunch, which started around 2006, had alarmingly ballooned into Wall Streets biggest crisis since the Great Depression as hundreds of billions in mortgage-related investments went sour; mighty investment banks that once ruled high finance firmament crashed. In the midst of this conundrum, accusing fingers are been pointed at different quarters; some blame the regulatory authorities over complacency and blind-faith, while some blame the private and investment banks over greed, poor corporate governance/practises and investment decisions. The worst hit directly were the insurance companies, investment banks, Hedge Fund operators, Large Mortgage Lenders such as Lehman Brothers, Merrill Lynch, Bear Stearns, Fannie Mae, and Freddie Mac etc. The United States government has been battling to starve off what has surely snowballed into a global economic recession by acquiring national mortgage giants: Fannie Mae, Freddie Mac, AIG as well as midwiving Bear Stearns Cos Incs sale to JPMorgan Chase. Bank of America took over Merrill Lynch. While these bailouts were going-on, a blind eye was turned on the struggling fourth largest investment giant- Lehman Brothers. Consequently, the Lehman brothers filed for bankruptcy on September 15, 2008 as a result of the Fed refusing to bailout them out or at least backstop their toxic assets. 1.1 CASE ISSUES The case issues discussed are: The Internal and External Environment We shall evaluate how these environments interacted with Lehman Brothers. Managerial Ethics Reactions are bound to be elicited as organizations continue to interact with their environments. Hence we shall attempt to assess how Lehman Brothers behaved and reacted in accordance with ethical theories and standards. Corporate Social Responsibility Lehman Brothers Social Responsibilities as well as their attendant consequences shall be evaluated. PART A 2.0 THE INTERNAL AND EXTERNAL ENVIRONMENT OF LEHMAN BROTHERS 2.1 The External Environment: Organizations do not operate in a vacuum because they derive their ultimate existence from the environment. Environmental factors whether specific or broad-based, influences an organizations strategy for survival and profitability. Lehmans external environment consists of its stakeholders such as Mortgage financiers, Hedge Funds, Pension Funds, Government Regulators, Commercial Banks, Investors, Credit Rating Agencies, employees, Home Owners, Small and Large companies, etc. See figure below for a schematic diagram of Lehmans overall environment. Figure 1 GLOBAL ECONOMICS DEMOGRAPHICS POLITICAL/ LEGAL TECHNOLOGICAL SOCIOCULTURAL Suppliers Pressure Groups LEHMAN BROTHERS Customers Competitors How uncertain and complex is Lehman Brothers environment? Below is the Uncertainty matrix used to evaluate how the external environment affected Lehman Brothers. Figure 2 ENVIRONMENTAL UNCERTAINTY MATRIX Source: Robbins, Bergman, Coulter, Management 4e, 2006, Pearson Education, Australia Due to the type and nature of business, Lehman Brothers falls within the cell block 4: which connotes a dynamic and unpredictable environment characterised with many components and a high need for knowledge. Hence, Lehman stands the chance of been influenced by the external environment which may reduce the influence of its managerial decisions and interventions. Lehman Brothers broader environment as it affected their activities, behaviour and outcomes are discussed under the following sub-headings using the Political/Legal, Economical, Socio-cultural and Technological changes, PEST analysis: Political/Legal: Lehman Brothers which was formed some 158 years ago was initially involved in assisting large corporate firms such as Sears, Roebuck and F.W. Woolworth, etc raise capital to expand their businesses. During the 1930s, the Lehman Brothers diversified into strictly Securities business when the U. S government forced all financial institutions to choose between commercial banking and Securities. Lehmans portfolio deepened following the repeal of the Glass-Steagall Act in 1999, during the Clinton administration. The act prohibited banks from investing on Wall Street, thus shielding consumers from riskier transactions. Once that protection was abolished, Lehman was able to gamble; and it became among the largest issuers of Mortgage-Backed Securities making its share price to climb from its 1994 price of $5 to $86 in 2007. As a result of Lehmans desperate attempts to compete fiercely with its core rival, Morgan Stanley for market share, it employed several under-arm tactics that exposed it to several bitter brushes with the law amounting to multiple litigations (See appendix 1). This further hurt its corporate image by brewing fear, panic, distrust amongst its stakeholders resulting in it been abandoned during its time of need. Lehman would have been saved just as Fannie Mae, Freddie Mac, Bear Stearns and AIG under the current political climate, but there were outstanding issues involved e.g. the Federal Reserve picked out big holes created by the toxic assets in Lehmans balance sheet coupled with their refusal to come out clean to the public. Instead, Treasury and Federal Reserve bosses, Messrs Henry Paulson and Ben Bernanke respectively, preferred to save others because they felt that allowing these (Fannie Mae, Freddie Mac, Bear Stearns and AIG) to fail would have resulted in a cataclysmic cascade of events that will consume not only in the U. S economy but the Worlds. Moreover, Mr Paulson never believed it was right to use taxpayers money to save Lehman. Whether this was a right decision remains to be seen as the Lehmans bankruptcy has inevitably crippled global financial markets worldwide. Economic: The Macro and Micro-economic environment which Lehman Brothers operated played a vital role in its demise. Indeed, what basically happened to Lehman was typically a simple economic case of supply outstripping demand. After the terrorist attacks of September 11, 2001, the Fed greatly lowered interest rates in other to stimulate economic growth and prevent deep recession. Expectedly, the largest Wall Street firms began reacting to this Federal Reserve policy of extremely low rates at which money was borrowed by purchasing billions of dollars of subprime mortgage loans. These were most likely bought from nonbank mortgage companies, which borrowed money from companies like Lehman in order to make loans and quickly resell them to Wall Street. Bear Stearns and Lehman Brothers almost monopolised this market as other players like Merrill Lynch were late arrivals to the highly leveraged/risky subprime lending and securitizing business. Lehman offered bulk loans to nonbank lenders, also purchasing mortgage products and then turning them into Asset Backed Securities (ABS), and then selling these bonds to end investors basically made up of the insurance companies, Hedge Funds, Pension Funds, Local Governments and foreign banks. The Securities and Exchange Commission escalated the already worsening economic situation in 2004 by encouraging these investment banks through the relaxation of the pre-existing limits on leverage. Expectedly, the leverage ratios of the five largest independent investments banks hit the rooftop (Labaton, 2008). Lehmans greedy internal financial policy did not help matters at all, as it offered potentially dangerous leverage ratios as much as 30:1, asset-to-equity ratio (Table 6, see appendix 2). Given this scenario, any 3% drop in value of assets completely blows out the entire value of equity thus rendering the company bankrupt. Nevertheless, Lehman grew rapidly, playing a dominant role in the securitisation market and the leveraged lending businesses posting quarter after quarter of record earnings from 2004 to 2007. Even after the economy had recovered, the U.S Fed notoriously kept interest rates low which made mortgage payments even cheaper and affordable thus greatly reducing the likelihood of defaults to barest minimum. Therefore, demand for homes began to escalate, sending prices up. In addition, millions of homeowners seized the opportunity of rate drops to refinance their existing mortgages. As the industry became saturated (as virtually everybody now owned a home), coupled with the never-ending competitive rivalry among lenders, the quality of the mortgages went down resulting in the erosion of underwriting standards. For the fear of inflation due to excess liquidity in the markets, Fed started increasing interest rates which eventually made mortgages already owned, worth less than the amount for which they were initially purchased due to higher payments. This sent widespread panic across all stakeholders which to loss of confidence and trust in financial markets leading to mortgage defaults and subsequent foreclosures. With this ugly scenario playing out, coupled with the Lehmans increasing inability of meeting its debt obligations, investors lost confidence in its stocks resulting to bankruptcy with about $613 billion in debt. Socio-cultural: These are factors such as behaviours, beliefs, values, demographic trends as they affect organization. A majority of Lehmans workforce belong to the generation Y. Generation Y are generally lifestyle oriented, tech-savvy, ambitious, impatient, etc. Because they generally flock to where the money is, Lehmans top management continued to do everything in its power to retain its best brains. With the continuous availability of low interest funds, change in consumer taste became the norm. An individual who otherwise wouldnt have been able to afford a house now had access to owning more than one house. This made the public adopt the culture tending towards investment rather than consumerism which affected other real sectors of the economy. This change in consumer taste favoured Lehman initially because of increase in mortgage demands. Soon Lehman had no borrowers for its mortgage products because everybody now had a house; and with the increase in interest rates, foreclosures became appare nt because the real weak financial status of its borrowers became obvious. Technological: Advancement in technology played a very double-edged sword role at Lehman Brothers. It brought about drastic reduction in the cost of creating mortgages. The growth of the internet coupled with easier availability of information about potential borrowers by the simple click of the mouse button, encouraged it to rely more heavily on convenient sources of information, such as credit scores and ratings, rather than on the more labour intensive time tested methods. It also made searching for a new set of borrowers easier and less costly, mortgage offerings using bulk email sending tools. On the other hand, these innovations created what economists call an agency problem. Since the mortgage originator was no longer going to hold the mortgage to maturity, but rather was going to immediately sell it to a securities firm and collect its fees upfront, it did not have a strong inclination to conduct a thorough appraisal of the loan. 2.2 The Internal Environment The internal environment of any organization basically symbolizes its culture, personality, commonly shared values and beliefs (Robbins S., et al, 2006). Companies will react to same circumstances differently due to the differing cultures that distinguish them. Furthermore, an organizations internal strengths and weaknesses as well as opportunities and threat, SWOT can play a vital role in its success or failure. 2.2.1 Lehmans Culture Lehmans CEO, Mr Richard Fuld in my opinion is viewed as an omnipotent leader because he single-handedly turned the fortunes of the company around when he assumed office in 1994. He ran the organization like a warfront where he enshrined a very strong culture amongst his subjects. His colleagues even nicknamed him Gorilla because of his imposing stature on the firm as nobody not even outsiders dared challenge his ideas, policies and decisions. This behaviour was not unexpected because Lehman has had a long history of hostilities, in-fighting and coup de tat within its ranks which had cost it its independence in 1984. Since we already know that the internal environment of an organisation is all about its culture, behaviour and reaction as to how it sees the external environment. For the scope of this report, we may not dwell so much on the positive culture of Lehman rather we shall take a critical look at how its culture might have played a role directly or indirectly in its demise using the seven dimensions of culture. Usually, attention to details is very much of required skill financial institutions must possess. But due to the competitive landscape and greed on the part of senior management, ethical details were ignored regarding the type of mortgage loans that were issued. Background checks werent performed to determine the credit worthiness of its mortgage borrowers Innovation and Risk tolerance X High innovation/High risk tolerance culture as evidenced in their highly leveraged mortgage securities offering which came through several complex financial innovative packages Outcome orientation X -Outcomes/result-oriented culture that focuses more on results rather than how they were achieved. This attitude made it lose sight on the illiquidity of the market during the impending crisis because of blind greed Short term performance reward culture throughout the firm not minding if these loans would survive in the long term or not Stability X Very strong/stable culture of lets maintain the status quo which resulted in their inability to adapt to the current financial situations. People orientation X -Poor and ineffective communication culture from top management to the bottom. Senior execs never took feedbacks from employees in the field seriously While senior management compensated themselves with cash bonuses, other employees were issued bonuses mainly in stock options and bonds. Lack of recognition for outstanding performance especially if it came from a lower employee A culture of lack of transparency among the senior executives. They never communicated the true nature of their liquidity to their employees and other stakeholders Aggressiveness X Overly aggressive culture in which they tried to bully, manipulate and outsmart the market but got their fingers burnt. Team orientation X Non collaborative competitions which dampened employee morale. The atmosphere was like that of a collegiate, people formed cliques and cartels. There was teamwork, but competition was basically on a personal level because of rewards that may accrue from individual performance The above listed cultural adoptions by Lehman went a long way in tarnishing their image before its global stakeholders which made it difficult for it to be trusted and rescued when its state of insolvency became apparent. Table 2.0 2.2.2 SWOT Analysis of Lehman Brothers SWOT DESCRIPTION Strengths -Lehman has a robust financial base with liquidity in excess of $42 billion as at Aug., 2008 which is capable of withstanding severe financial stresses (Scott S., Tanya A., 2008). It also has a strong franchise across its core investment banking, trading, and investment management businesses. Cutting-edge IT infrastructure is one of Lehmans strengths which it exploited maximally in the acquisition of customers more efficiently (see PEST analysis). Strong knowledgeable and skilled workforce Strong culture which is one of team-work, collaboration and knowledge sharing as evidenced by the rotation of workers around departments at least every two years Weaknesses -Poor managerial decisions which led to the inability or otherwise outright refusal to see the financial dangers coming. -Poor risk management and internal controls which led to its finances being exposed to risk of been wiped out within days. Strong culture which resulted in sluggish adaptability to the changing financial situations within and without the organization. Opportunities -The U.S Federal Treasury kept interest rates low for prolonged periods which made mortgage acquisition/repayments even cheaper and affordable which increased the patronage that accrued to investment banks, Lehman Brothers inclusive. Securities and Exchange Commission relaxed limits of financial leverage which gifted Lehman with the opportunity to offer more highly leveraged mortgage backed securities to its investors. But these seeming good opportunities turned out to be a curse in disguise. Threats Stiff competition coming from Morgan Stanley, Goldman Sachs, and Merrill Lynch in the hunt for new mortgage clients leading to the drastic reduction in the quality of mortgage instruments issued. More and more leverage was issued in other to remain competitive and remain profitable. The worst threat came from the Federal government backed Fannie Mae and Freddie Mac which had exclusive access to government subsidy (very low interest rate loans) making them issue the lowest rate mortgages thereby dominating the mortgage market. This then forced other players to issue even lower rates in order to stay in business. -Short selling of its stocks by brokers on the floor of the exchange which made the value fall freely thereby escalating investor anxiety resulting in loss of confidence. Negative market sentiments concerning its likely collapse due the earlier collapse of Bear Stearns, bailouts of Freddie Mac and Fannie Mae. Summary of the SWOT Analysis No doubt, Lehman is an indeed very large bank. With its robust financial war chest, experienced/diverse workforce and cutting-edge IT/IS at its disposal, it still went under. Lehman failed to utilize its strengths/opportunities to strategic advantage. Stiff competition, financial regulation laxity as well as poor management made it issue highly leveraged risky Mortgage Backed Securities, MBS which eventually wiped out its liquidity due to massive defaults in mortgage repayments which came as a result of increased interest rates to checkmate rising inflation. PART B 3.0 MANAGERIAL ETHICS These are laid down standards of conducts or moral judgements used in the discharge of business. More importantly, it refers to the rules and principles that define right and wrong conduct. It is the ultimate duty of the manager to effectively communicate and implement ethical issues within an organization. Lehman Brothers adopted the utilitarian view of ethics, in which decisions were made based on outcomes and/or consequences. They concerned themselves with making enough profits to satisfy the greedy yearnings of the top few at the top hierarchy of management not minding if their activities were detrimental to the welfare of others. This was clearly seen in the way mind boggling bonuses was dished out to the CEO, Mr. Fuld and other top management executives. According to Mr. Fulds report to the Federal Committee on Oversight and Government Reform, over $30 million was paid to him as bonuses. He also claimed that during the fruitful years, 2004-2007, an astonishing $16 billion was disbursed as bonuses out of which he alone grossed over $260 million. Below is a table showing a list of variables as they affect Lehmans ability to behave the way it did. Table 3.0 3.1 Factors affecting Lehmans ethical behaviour Factors affecting Managerial Ethics Comments State of moral development (managers) Since the ethical behaviour of managers is the single most vital factor that influences employee decisions (Robbins S., et al, 2006), we shall focus on the state of moral development of Lehmans CEO, Mr Fuld R. He operated at the preconventional level since his actions (selling highly leveraged Mortgage Backed Securities at all cost) were hugely inclined to the rewards and bonuses he and his cronies would get. Personality/Values (ego strength/locus of control) Values which represent personal convictions of what is right and wrong (Robbins S., et al, 2006) go a long way in influencing ethical behaviour. Mr Fuld has a very strong personality (ego strength) always believing that whatever he does is the right thing. Even at the collapse of Lehman, he never accepted responsibility for his actions and/or inactions. When he was alerted about what financial crisis they were in, by an insider, he waved it off. He also believes he has the ultimate power to control both his destiny as well as that of others (internal locus of control) Organizational Culture/Design -For the fact that Mr. Fuld took Lehman from rag to riches, he was seen as a demigod who was above the law. Hence, he was not subject to the organizations code of ethics and conduct. The organizational design/structure adopted a Top-Bottom management style of leadership. It enshrined a strong master-subordinate relationship which stifled information and knowledge sharing as no employee dare alert top management on their wrongly adopted strategies Lehmans culture is such that encouraged risk taking and constant innovation which later proved to be its undoing. The emphasis on individual achievement above group/team achievement encouraged employees as well as management to go extra lengths even if its unethical to perform e.g. the more mortgage clients you get, the more your bonus and recognition which was further boosted by its culture of short-term performance appraisals. Issue Intensity Greatness of harm: Lehman brothers never believed their actions (highly leveraged MBS) would have deleterious effects on its overall stakeholders after all, it believed its investors had being hedged against dangers through the Credit Default Swaps, CDS being issued by American Insurance Group, AIG -Consensus of wrong: Nobody dared oppose Mr. Fulds decisions, the very few that did were summarily sacked. So there was no basis for consensus of wrong here. -Probability of harm: Lehman believed the probability of foreclosures was minimal because of the seemingly prolonged low interests rates which created a lot of liquidity in the economy Immediacy of consequences: Mr. Fuld in his opinion believed that even if theres an eventuality of foreclosures, economic downturn and/or write downs, it would be for a short while because historically crises does occur every few years and the markets would always heal itself -Proximity to victims: Lehman pushed its mortgage customers far off using its distanced subsidiary, Aurora Loan Services as the issuer of its mortgages. This, it used to distance itself from its customers. By so doing, most people never knew the subprime mortgages were being offered by Lehman in order to maintain a clean public image and avoid responsibility for any untoward adverse effects of its unethical actions -Concentration of effect: Lehman ignored how concentrated the effect of foreclosures that would arise from its subprime mortgage sales would have on the national as well as global economy. They failed to see the broader picture of a likely global economic downturn. That necessitated their continuous unethical/risky financial actions. Conclusion Mr. Fuld of Lehman Brothers acted unethically in most of his decisions From the complex interplay of several factors that affected Lehmans unethical behaviour in the table above, we shall take a closer look at some of the ethical issues faced at Lehman Brothers below with a view to comparing opposing views on their conducts. Table 4.0 Opposing arguments concerning Lehmans managerial ethical decisions. Ethical issues Arguments for Arguments against Sale of risky/highly leveraged Mortgage Backed Securities Small percentage appreciation in value can translate to explosive profits for its balance sheet and investors alike Little decrease in value potentially wipes out the entire credit of the company rendering it insolvent. It is unethical to use investors hard earned monies to venture into greedy and risky ventures under whatsoever guise. Constant financial products reengineering and innovation This creates potential attraction for new customers as well as retaining the existing ones Causes confusion as to the understanding of the potential risks these products- offers portends. Unscrupulous bulking or bundling of mortgages This otherwise smart strategy helps to dilute the toxic effect of under-performing mortgage securities by lumping them with the good ones thereby creating a positive appearance leading to AAA ratings by rating agencies This strategy deceived many investors by underplaying the actual value and safety of their stock holdings leading them to be taking by surprise when their stocks became worthless Generating mortgage demands; packaging them, and then reselling them back to Wall Street and the investing public for large profits when in reality, there werent real buyers for them This was a way to create profits out of nothing This is an unethical attempt to manipulate the natural forces of demand and supply. Hiding behind their phony subsidiary, Aurora Loan Services to propagate falsehood contributed to the housing market bubble burst when it became evident there was no more demand for these mortgages Underwriting loans to questionable lenders e.g. FAMCO, Delta Funding Corp., etc and assisting them in cheating borrowers thereby violating consumer protection laws (Graham R., 2008, see bibliography) NA This led to widespread erosion of global investor and public confidence in the company which further contributed in its bankruptcy. Mr Fulds non-equity incentives were astronomical exceeding the 85th percentile. Furthermore, his bonuses grossly exceeded the normal industry average of bonus= base salary x Two. Mr. Fulds bonuses were five times his base salary (Nell M., 2008, see bibliography) NA This compensation practice doesnt align in favour of shareholder interests PART C 4.0 CORPORATE SOCIAL RESPONSIBILTY This is a broad term which is used to describe an organizations business activities as it affects the well-being of its stakeholders- customers, investors, employees, communities and the environment within which it operates. It is the justifiable ethical standard for which all of an organizations operational activities are measured (Davidson, P. Griffin, R, 2005). Achieving financial success in a manner that honours ethical values and respect people, communities, and the local environment is what defines CSR. An effective CSR program is one that is not mainly based on philanthropy or goodwill but rather on creating productive relationships with stakeholders who represent various social, financial and environmental concerns. Lehman Brothers adopted the hand of management approach to CSR in which it strongly believes in the advancement of its corporate economic interests as well as the protection and enhancement of the quality of life of its stakeholders. The conscience and practise of an organizations management is often a subject of frequent debate globally. Is it compulsory that an organisation must protect and improve the welfare of its specific and remote stakeholders? Well, the scope of this report is not to argue in favour of or against this motion but to analyse where Lehman got it wrong as regards to CSR. Lehman engaged in several philanthropic (socially responsive) activities all over the world where they had their businesses. Lehmans CSR spanned through the economic and legal levels terminating at the ethical level. Lehman used its philanthropy to avoid legal actions both from the government and its stakeholders while making sure its activities stayed within the ambit of the law. It engaged in philanthropy (in a socially responsive way) in my opinion because it did what it did just to create more global awareness (Public Relations for financial gains) (economic CSR) as well as to fulfil the general expectations society members place on corporations (ethical CSR). See Bibliography (URL link) for comprehensive details of their charity works. Corporate Social Responsibility goes beyond just philanthropy. CSR means accountability towards a firms various stakeholders e.g.: shareholders, employees, customers, local and international communities, etc. Unfortunately, Lehman and Bear Stearns produced no CSR report of any s

Marketing and Politics :: Globalization, Culture, Informative

Global and Domestic Marketing Cultural: Globalization is an inevitable process, and so are the inevitable issues with different cultures. On the one hand, the world is becoming more homogeneous, and distinctions between national markets are not only fading but, for some products, will disappear altogether. This means that cultural difference is a global issue, not just the United States. On the other hand, the differences among nations, regions, and ethnic groups in terms of cultural factors are far from resolved. It is suggested that the claims for "a right to culture" by national states in recent years can be important criteria for trade policy making, intellectual property rights protection, and the resource for national interests. From a marketing point of view it is very important for marketers to realize the sensitivity of cultural differences. To be aware of and sensitive to the cultural differences is a major premise for the success of the marketplace. To determine the cultural understanding of market means that the professional should positively identify cultural factors that can be used to ease any marketing program. These factors may or may not exist in the targeted markets. One must also keep in mind that marketing can also influence culture. Such is the case in Mexico, where the United States has had such a cultural influence. Currently all the Jones in Mexico want to bye American product and mimic what Americans do. Promotion, for instance, is strongly influenced by the language. Product acceptance is affected by culturally based attitudes towards change. And distribution is influenced by social institutions, such as Versace.

Analysis of the Credit Card Industry in Turkey Essay

The current Turkish government is very pro western and secular, however its divided religious loyalties, issues surrounding Greek sovereignty rights and fundamentalist groups threaten the expected 5 year stability of this administration. Government involvement in banking The Turkish Government has a history of involvement in banking affairs which is of concern to international investors. The Turkish state owns and finances a number of its banks and provides artificial stability to the banking system through state funded initiatives. The Government has also tailored wages in line with inflation rates e. g. minimum wages rates. With recent IMF intervention the long term plan for Turkey is still not absolutely clear. EU Membership The Turkish Government is pro EU membership and this is potentially the biggest paradigm shift on the horizon for Turkey’s financial system, this factor is further dealt with as a key driver. Economic †¢ Interest Rates Low interest rates in Turkey fuel loan take-up and have caused increase in credit card issue. Historically higher interest rates led to more widespread loan default and meant that less switching occurred as consumers were â€Å"tied† to provider. Economic growth in Turkey, with higher levels of middle and upper income, urban dwelling professionals and better access to continuing education has undoubtedly increased credit card take-up. (This could also be construed as a social factor). †¢ Global financial crisis The effects of the global financial crisis will have a major effect on banking restrictions to lending and credit availability in Turkey. Turkey’s export markets will be likely affected by the ongoing crisis which has a major effect on GDP which in turn affects spending power. Social †¢ Higher standard of living Higher standards of living among consumers have a beneficial knock on effect for credit cards issuers. In Turkey 7. 5% of GDP is invested back into education thus consumers are more financial savvy. †¢ Urban/Rural Divide Urban dwellers have a much higher likelihood of credit card use given their potential for access of issue and probability of a regular wage earning role. As the economy develops Turks are increasingly moving off the land from poorly paying seasonal work to the cities that offer a better chance of regular income and personal development. Technology †¢ E –Commerce Worth in excess of 2 billion euro to the economy and with 16 million people accessing the internet E-Commerce is a huge growth area and potential distribution channel for the credit card industry. It is also a medium for information driven purchasing through advertising potential and its access is furthered through telephone technology integration. †¢ SMART Cards The security afforded to the credit card industry through use of SMART cards has a beneficial affect on usage through; 1. Increased level of merchants accepting the facility 2. Security for use in Internet Cafes (here large numbers access the internet) 3. Security of service has become a battleground for competition among issuers Coupled with the above technologies, the explosion in EPOS facilities mean more access to products and services through credit card use, homogenising the myriad of potential transactions and benefiting both consumer and merchant. ATM’s also have further facilities to enhance the benefits of using plastic such as bill pay, mobile kiosks etc. Legal †¢ Intervention of Government/Key official Institutions There have been widespread changes in the law in Turkey affecting the credit card industry such as; 1. Restriction on credit card limits . Illegality of altering terms without informing consumer 3. Increases in minimum payment required 4. The Central Bank’s lowering of the interest rate cap 5. Loosening of the frameworks around mergers and acquisitions All of these interventions alter the attractiveness of the market for the credit card industry, which was historically fraught with lack of reg ulation and anti-consumer practises. Identify the 4 KEY DRIVERS FACING THE CREDIT CARD SECTOR 1. Technological Advances 2. State Intervention in Financial Affairs 3. EU membership 4. Rural-Urban Migration Technological Advances The rapidly advancing technology in the field of mobile payment will have a lasting effect on the credit card industry. Companies that can stay ahead of the game with new technologies in security, risk management and will be best placed to benefit from increased A physical â€Å"credit card† is really only a vehicle to hold a magnetic strip containing coded information. In terms of technology this is already quite dated; †¢ Already systems are designed to â€Å"swipe† a card on a merchant’s mobile phone, this will allow for a myriad of services which will no longer require cash transaction e. g. street traders. Advances in retina scanning technology are also at an advanced level and it is envisaged that the future of mobile payments may be through facial recognition or retina scanning. †¢ Other technology such as what is used in â€Å"The Baja Beach Club in Barcelona† where they inject a rice-size â€Å"VeriChip† RFID device into the wrist or upper arm of its patrons whom pay by swiping their arm – adapted from http://www. creditcards. com/credit-card-news/credit-cards-of-the-distant-future State Intervention The level of further state intervention in Turkey’s financial affairs will be a key driver in Turkey’s future credit card success or decline. As we have seen, moves by the government to regulate the industry have impacted on the potential earnings of the banks through lowering interest rates. In turn this type of regulation has stabilised the markets and led to economic growth which impacts positively on numbers of consumers available to the sector. Whether the current â€Å"Republican Democracy† in Turkey will be in power going forward is obviously of importance to this argument. With elections due in 2011 the future of state intervention in banking affairs is unclear. EU Membership Turkey becoming a full member of the EU will be another key driver in the credit card industry. EU entry will mean the freeing of trade and access to a further 500 million consumers. It is most likely that Turkey would be a more attractive market for global companies, of interest here, financial organisations who would be attracted by the large numbers of â€Å"unbanked† consumers and those who see Turkey strategically as the gateway to Eastern markets. The credit card market would likely become much more competitive with new entrants who would most likely look to merge with/acquire existing indigenous banks. Rural-Urban Migration According to the case study the majority of people in the rural areas of Turkey tend not to be credit card users. As the economy improves larger numbers of rural people (especially male) will likely move towards the larger urban centres to participate in the industrial or service sectors. This in turn leads to greater numbers with the potential to use credit cards, in turn offering greater numbers of potential consumers to the sector. SECTION 2 – Porters 5 Forces 2. Use the five forces framework to identify the forces affecting the Turkish credit card sector a. Graphically illustrate the five forces (see overleaf) b. Draw conclusions from the 5 forces analysis to explain; 1. How attractive the sector is I consider the Turkish credit card sector to be an attractive market for a large multinational e. g. BNP or Barclays to enter. From my analysis I have concluded that consumers are fragmented and suppliers are concentrated. Rivalry is high, yet only among 4 suppliers, considering rivalry in an industry such as haulage this must be considered attractive. Capital requirements of entry are high, but not on the scale of industries such as mining might be. Economies of scale and experience exist, however for companies already in credit card markets in other countries by no means insurmountable. The threat of substitutes is relatively low as the credit card holds a relatively niche position. Product differentiation/loyalty is low among existing consumers; good offers would attract new business, as would strong internet presence. Turkey has; â€Å"40 percent of people who are bankable based on their socio-economic status and age in Turkey are still â€Å"unbanked,† having no accounts with any banks in Turkey â€Å" (www. mckinsey. om/clientservice/†¦ /Credit_Cards_in_Turkey. ashx) This data identifies a large section of the Turkish population who are potential consumers for a new entrant; therefore the market could potentially grow significantly for all players involved. 2. How the competitive forces are changing/may change The competitive forces are currently changing most notably in areas such as consumer access to inform ation. More widespread access and use of the internet will drive further competition in the market through portals such as comparison websites, industry reviews etc. This will ultimately increase bargaining power of consumers, leading to decreased profits for suppliers. EU accession would alter the competitive forces among the major players currently in the sector. Interest rates set by the ECB, participation in the single currency etc. would have a significant impact on the state financed banking institutions and would alter their relevance. One would suspect that in a free market system the Turkish government would relish the opportunity of divesting the burden to international organisations to increase competition. With increased market stability and better financial education, consumer’s use of substitutes may extend to less expensive forms of credit such as personal loans. Coupled with better economic conditions consumer’s use of debit cards may also increase; given that currently lower income workers struggle to maintain a balance sufficient to cover their living costs. 3. How the sector may change to reflect changing forces The credit card sector can move more of its marketing budget toward E-Marketing and target new and younger consumers through this medium. MBNA have used this marketing channel very successfully in the past. In order to combat increased uptake of personal loans and increased use of debit cards the credit card sector may look at collective lower interest rates, better offers through loyalty bonuses and customer kickbacks and better education of its customers as to how to better use their credit cards. In order for the credit card sector to prepare for increased competition post EU accession it may look to further differentiate its offerings to appeal to the Turkish people e. g. align the credit offering with cultural values or emotions. It might be necessary to offer further services aligned to credit cards such as life insurance to augment and differentiate the offering. 3. Scenario Planning Scenario 1 â€Å"Renewed Political/Terrorist Violence in Turkey† In recent years, terrorist bombings – some with significant numbers of casualties -have struck religious, political, and business targets in a variety of locations in Turkey. The potential remains throughout Turkey for violence and terrorist actions both by transnational and indigenous terrorist organizations such as PKK, . Revolutionary People’s Liberation Party/Front (DHKP/C) and AlQa’ida. Adapted from http://www. eubusiness. com/europe/turkey/invest) Given Turkey’s increasing dependence on foreign direct investment a return to more concerted campaign of political violence would spell disaster for the credit card industry. Large financial corporations, especially US owned would be deterred from entering the market, or potential ly pull out of the market thus decimating competition. Access to sources of international credit and lending would dry up therefore affecting consumer’s ability to purchase products and services on credit. Turkey’s export market would potentially be destroyed as Western nations would deter from transacting in case monies were being skimmed to fund further terrorist activity. This would further lower the GDP of the country affecting the spending power of consumers in turn negating the need for credit cards. Further knock on effects of violence include the loss of capital Governments have available to invest in its economy, on education and infrastructure. Government capital would have to be spent on further military and security projects. The tourism industry, a huge earner for Turkey would be decimated as travelers would fear the threat of violence. The black market economy would thrive under such conditions and regular banking functions would significantly cease with many consumers using cash/barter systems of attaining needs. With respect to the Credit card sector, this scenario would be highly detrimental to its future, as consumer confidence in the financial service sector would be decimated. The sector would have to pour vast resources into transaction security and marketing the brand safety and correct usage policies to consumers. Default numbers would likely increase due to instability and escalating interest rates. Scenario 2 â€Å"Turkey Gains Full EU Membership† â€Å"The EU is committed to supporting Turkey in its path for membership. The initial objective of EU financial support towards Turkey was the extension of an area of peace, stability and prosperity within and beyond Europe. Once the Union accepted Turkey as a candidate, financial assistance began to focus on supporting Turkey in its preparation for EU membership† http://www. eubusiness. com/europe/turkey/funding A study on the EU (http://europa. eu/rapid/pressReleasesAction. o) reported the following economic benefits of a country joining the EU; 1. An average of 2. 15% increase in GDP 2. Exchange rates for Turks travelling through Europe would be eliminated, as would the potential damaging effects exchange rate swings have on Turkish exports. I would assume that the credit card sector would become significantly more competitive in the light of EU membership therefore the sector would have to increase its marketing and branding spend, but would have a larger pool of consumers to choose from.

Short Run and Long Run

A2 Markets & Market Systems Short Run and Long Run Production|   | As part of our introduction to the theory of the firm, we first consider the nature of production of different goods and services in the short and long run. The concept of a production functionThe production function is a mathematical expression which relates the quantity of factor inputs to the quantity of outputs that result. We make use of three measures of production / productivity. * Total product is simply the total output that is generated from the factors of production employed by a business.In most manufacturing industries such as motor vehicles, freezers and DVD players, it is straightforward to measure the volume of production from labour and capital inputs that are used. But in many service or knowledge-based industries, where much of the output is â€Å"intangible† or perhaps weightless we find it harder to measure productivity * Average product is the total output divided by the number of units of the variable factor of production employed (e. g. utput per worker employed or output per unit of capital employed) * Marginal product is the change in total product when an additional unit of the variable factor of production is employed. For example marginal product would measure the change in output that comes from increasing the employment of labour by one person, or by adding one more machine to the production process in the short run. The Short Run Production FunctionThe short run is defined in economics as a period of time where at least one factor of production is assumed to be in fixed supply i. e. it cannot be changed.We normally assume that the quantity of capital inputs (e. g. plant and machinery) is fixed and that production can be altered by suppliers through changing the demand for variable inputs such as labour, components, raw materials and energy inputs. Often the amount of land available for production is also fixed. The time periods used in textbook economics are somewhat arbitrary because they differ from industry to industry. The short run for the electricity generation industry or the telecommunications sector varies from that appropriate for newspaper and magazine publishing and small-scale production of foodstuffs and beverages.Much depends on the time scale that permits a business to alter all of the inputs that it can bring to production. In the short run, the law of diminishing returns states that as we add more units of a variable input (i. e. labour or raw materials) to fixed amounts of land and capital, the change in total output will at first rise and then fall. Diminishing returns to labour occurs when marginal product of labour starts to fall. This means that total output will still be rising – but increasing at a decreasing rate as more workers are employed.As we shall see in the following numerical example, eventually a decline in marginal product leads to a fall in average product. What happens to marginal product is linked directly to the productivity of each extra worker employed. At low levels of labour input, the fixed factors of production – land and capital, tend to be under-utilised which means that each additional worker will have plenty of capital to use and, as a result, marginal product may rise.Beyond a certain point however, the fixed factors of production become scarcer and new workers will not have as much capital to work with so that the capital input becomes diluted among a larger workforce. As a result, the marginal productivity of each worker tends to fall – this is known as the principle of diminishing returns. An example of the concept of diminishing returns is shown below. We assume that there is a fixed supply of capital (e. g. 20 units) available in the production process to which extra units of labour are added from one person through to eleven. Initially the marginal product of labour is rising. * It peaks when the sixth worked is employed when the mar ginal product is 29. * Marginal product then starts to fall. Total output is still increasing as we add more labour, but at a slower rate. At this point the short run production demonstrates diminishing returns. The Law of Diminishing Returns | Capital Input| Labour Input| Total Output| Marginal Product| Average Product of Labour| 20| 1| 5|   | 5| 20| 2| 16| 11| 8| 20| 3| 30| 14| 10| 20| 4| 56| 26| 14| 20| 5| 85| 28| 17| 20| 6| 114| 29| 19| 20| 7| 140| 26| 20| 0| 8| 160| 20| 20| 20| 9| 171| 11| 19| 20| 10| 180| 9| 18| 20| 11| 187| 7| 17| Average product will continue to rise as long as the marginal product is greater than the average – for example when the seventh worker is added the marginal gain in output is 26 and this drags the average up from 19 to 20 units. Once marginal product is below the average as it is with the ninth worker employed (where marginal product is only 11) then the average will decline. This marginal-average relationship is important to understanding the nature of short run cost curves.It is worth going through this again to make sure that you understand it. Criticisms of the Law of Diminishing ReturnsHow realistic is this notion of diminishing returns? Surely ambitious and successful businesses do what they can to avoid such a problem emerging. It is now widely recognised that the effects of globalisation, and in particular the ability of trans-national corporations to source their factor inputs from more than one country and engage in rapid transfers of business technology and other information, makes the concept of diminishing returns less relevant in the real world of business.You may have read about the expansion of â€Å"out-sourcing† as a means for a business to cut their costs and make their production processes as flexible as possible. In many industries as a business expands, it is more likely to experience increasing returns. After all, why should a multinational business spend huge sums on expensive research and development and investment in capital machinery if a business cannot extract increasing returns and lower unit costs of production from these extra inputs? Long run production – returns to scaleIn the long run, all factors of production are variable.How the output of a business responds to a change in factor inputs is called returns to scale. * Increasing returns to scale occur when the % change in output > % change in inputs * Decreasing returns to scale occur when the % change in output < % change in inputs * Constant returns to scale occur when the % change in output = % change in inputs *    A numerical example of long run returns to scale| Units of Capital| Units of Labour| Total Output| % Change in Inputs| % Change in Output| Returns to Scale| 20| 150| 3000|   |   |   | 0| 300| 7500| 100| 150| Increasing| 60| 450| 12000| 50| 60| Increasing| 80| 600| 16000| 33| 33| Constant| 100| 750| 18000| 25| 13| Decreasing| In the example above, we increase the inputs of capital and labour by the same proportion each time. We then compare the % change in output that comes from a given % change in inputs. * In our example when we double the factor inputs from (150L + 20K) to (300L + 40K) then the percentage change in output is 150% – there are increasing returns to scale. In contrast, when the scale of production is changed from (600L + 80K0 to (750L + 100K) then the percentage change in output (13%) is less than the change in inputs (25%) implying a situation of decreasing returns to scale. As we shall see a later, the nature of the returns to scale affects the shape of a business’s long run average cost curve. The effect of an increase in labour productivity at all levels of employment Productivity may have been increased through the effects of technological change; improved incentives; better management or the effects of work-related training which boosts the skills of the employed labour force. |

Free Essays on Definition Of Proverty

take on more specific intentions. Indigence states a severely straitened circumstance as in assets. Penury makes a suggestion at a restricting or repressive scarcity of funds. Want and destitution allude to a profound poverty, which endanger one’s physical safety. The examples of so... Free Essays on Definition Of Proverty Free Essays on Definition Of Proverty In Webster’s Dictionary, poverty means â€Å"the state of one who lacks a usual or socially acceptable amount of money or material possessions†. Poverty by any means is devastating. The general definition of poverty is a â€Å"complete lack of something.† One can lack many things from social poise to spiritual guidance. Material means are only the tip of the iceberg. It is conceivable for a person to be poverty stricken and unaware of it. The cultural effects of poverty are socially, economically, spiritually, and mentally devastating to the general population. I was raised to believe poverty is not only materialistic. One can have everything and still be poor. Mental poverty is the complete lack of thought and formal education. Social poverty implies a complete lack of social encounters and refinement. Spiritual poverty implies a total indigence in the matters of spiritual guidance, divine faith, and fellowship of community. Economical poverty is a lack of material means needed for survival. Many dictionary definitions can be very misleading. They often lack the depth needed for understanding of vocabulary. American society often creates alternative meanings for many words in the English language. Poverty often has a social definition filled with barbarians. People often confused people of low financial resources with uncivilized savages. I personally find that social stigma to be alarming. One cannot judge someone by purely tangible possessions. People are more than just money, social status or political power. â€Å"Poverty may cover a range from extreme want of necessities to an absence of material comforts† (â€Å"Poverty†). Many words take on more specific intentions. Indigence states a severely straitened circumstance as in assets. Penury makes a suggestion at a restricting or repressive scarcity of funds. Want and destitution allude to a profound poverty, which endanger one’s physical safety. The examples of so...

An Insight to Small Business Professor Ramos Blog

An Insight to Small Business Small businesses are corporations, partnerships, and sole proprietorships that have less employees along with revenue because they are not the same size as a â€Å"regular† corporation that operates on a larger scale. Small businesses offer services such as convenient stores, small grocery stores, restaurants, bakeries, hairdressers, tradespeople such as carpenters and electricians, photographers, and some small-scale manufacturing such as toy manufacturing, being a smart phone accessory maker, or a plastic container manufacturer. Most small businesses are sole-proprietor operations meaning they provide low income for doing things like selling prepared hot food on the street. Small businesses can range from fifteen employees to no more than five thousand. According to Jason Nazar’s contributed statistics in Forbes, there are almost 28 million small businesses in the United States, with approximately 543,000 of these new businesses starting up each month. United States small businesses employee nearly 60 million people, which is nearly 40 percent of the private workforce, and they have generated over 65 percent of new jobs since 1995. Firms with fewer than one hundred employees actually hold a wide variety of the over all small business employment (see Figure 1 for the ratio between firm size to employment).   https://www.sba.gov/sites/default/files/March_April_2016_FINAL_508_compliant.pdf Aside from the small businesses that maintain full-time or part-time employees, there are businesses that employ nobody other than the owner themselves. A nonemployer business is one that has no paid employees, annual business receipts of $1,000 or more and must pay federal income taxes. Most nonemployers are self-employed individuals operating very small unincorporated businesses, depending on the owners source of capital (money). Nazar states that around 75 percent of all United States businesses are nonemployer businesses and that around 80 percent of these non-employee businesses reported less than $50,000 in receipts which is considered low income even though over 22 million are self-employed and can take in all revenue made. These statistics show that it can be extremely challenging to invest into your own small business venture, but sometimes the ambition does prove to pay off in the long run. Even though starting up your own small business may require a lot out of you physically and mentally, the financial cost of starting up is not as large as Americans make it out to be. The annual cost of starting up a small business can be as low as $3,000, however most home-based franchises cost $2,000 to $5,000 to start. If you’re someone who is interested in a career focused on web design or computer programming then you can even start your small business online, which can be most beneficial for networking connections through social media or running a website. According to eMarketer, an online digital marketer, there was a 24.8 percent increase in the annual Online Small Businesses, the global worldwide sales reached $2.304 trillion and online businesses accounted for 58.9 percent of those sales (Pilon). As online business continues to be a larger factor of the retail market around the world, getting your business ideas online can be a convenient way to network with people a round you and if you’re lucky all that you really need to get your business started is that first good connection. Online businesses are growing at double digit rates and you need to be able to capture the public’s attention and expose your latest online business ideas to encourage growth within your own business. If you have started a small business then I’m sure you have struggled with some sort of lack in cash flow which is a very common difficulty that business owners experience. In 2014,   220,000 establishments (small businesses) started in the United States and 205,000 exited the United States due to not having enough revenue (Nazar). Every business has its own financing needs; experts have some tips to help you figure out how much cash you will actually need to start your own small business. Entrepreneur Drew Gerber, who started a technology company, a publicity firm and a financial planning company, estimates that an entrepreneur will need six months’ worth of fixed costs just to start their own small business. Gerber instructs, â€Å"Have a plan to cover your expenses in the first month, Identify your customers before you open the door so you can have a way to start covering those expenses†. One of the main reasons most small businesses fail is that they simply run out of cash. Writing a business plan without basing your forecasts on reality often leads to an unfortunate, and often unnecessary, business failure. Without the benefit of experience or actual historical financials, it’s easy to overestimate a new company’s revenue and underestimate costs (McCahon). Twenty percent of small businesses fail in their first year, thirty percent of small businesses fail in their second year and fifty percent of small businesses fail after five years. Finally, thirty percent of all small businesses fail in their tenth year in business (Georgia McIntyre). There are many reasons why small businesses fail but a few things that tend to do harm are: Capital access (access to money), cash flow, lack of demand, and poor management. One of the major problems with small businesses is capital, as of 2015, seventy-three percent of small business owners weren’t able to access enough capital for their business ( https://www.fundera.com/blog/what-percentage-of-small-businesses-fail). This means that even if the money existed in a business account, a business owner cannot access it when needed for business operations, making it extremely challenging to run your business efficiently. California governmental agencies, small business organizations and state legislators come together every year to recognize that owning and starting your business is hard work. This annual event honors a few of the millions of small business that serve as â€Å"the economic engine of California†. Small businesses are engrained in California’s communities and economy contributing to 75 percent of California’s gross state product and over half of the states private sector jobs. â€Å"California Small Business Day† also allows business owners from across the state to connect with other business owners in an effort to learn from or gain insight from fellow entrepreneurs. According to a small-town and successful business owner, John Hackney, â€Å"This business can either make or break you, you have to be willing to sacrifice everything you have in order to start your own business.† He claims that the initial starting phase of your business will be one of the hardest periods of growth that you have to overcome through the entire process. Hackney also advises that if you plan your costs, don’t underestimate the expenses, and never forget that they can rise as the business grows, it’s easy to overlook costs when you’re thinking about the big picture, but you should always be very precise and thorough when planning for your fixed expenses. He also strongly believes that when your employees are appreciated and treated with respect, then you are sure to succeed in maintaining a loyal, hardworking staff. Ideals like these reveal why small businesses are so important and even endearing. We can come to the conclusion that even though starting your own business may seem to be one of the hardest things, it can also be equally as rewarding and beneficial.    California Small Business Association, â€Å"California Small Business Day 2018†, Business Wire (English). 06/19/2018, Article Retrieved from http://search.ebscohost.com/login.aspx?direct=truedb=bwhAN=bizwire.c85292394site=ehost-live Richard Schwinn: PhD, Research Economist, â€Å"2016 State Small Business Profiles Released with Fresh Design†, The Small Business Advocate: Office of Advocacy, Vol. 35, No. 3, March- April 2016 Retrieved from https://www.sba.gov/sites/default/files/March_April_2016_FINAL_508_compliant.pdf Jason Nazar, â€Å"16 Surprising Statistics About Small Businesses†, Small Business Administration Office of Advocacy, Sep 9, 2013 Retrieved from https://www.forbes.com/sites/jasonnazar/2013/09/09/16-surprising-statistics-about-small-businesses/#269ebc195ec8 â€Å"Small Business†, page issues Retrieved from https://en.m.wikipedia.org/wiki/Small_business Georgia McIntyre, â€Å"What is the Small Business Failure Rate?†, What Percentage of Small Businesses Fail? (And Other Need-to-Know Stats), August 29, 2018 Retrieved from   https://www.fundera.com/blog/what-percentage-of-small-businesses-fail Sammi Caramela, Startup Costs: How Much Cash Will You Need? April 12, 2018 https://www.businessnewsdaily.com/5-small-business-start-up-costs-options.html Cynthia McCahon, Founder and CEO of Business Plan Software, â€Å"One of the Many Reasons Small Businesses Fail is because They Simply Run Out of Cash.†, April 12 2018 https://www.businessnewsdaily.com/5-small-business-start-up-costs-options.html Drew Gerber, Entrepreneur, April 12 2018 https://www.businessnewsdaily.com/5-small-business-start-up-costs-options.html John Hackney. Business owner, The Lakefront Taproom. (August 2018). Personal reference. (909)336-8443 United States census, Nonemployer Statistics, â€Å"Nonemployer Definitions†, https://www.census.gov/epcd/nonemployer/view/define.html Annie Pilon, Small Business Trends, â€Å"50 Online Business Ideas†, July 5 2018, https://smallbiztrends.com/2016/11/online-business-ideas.html

Beaches

The beach is a beautiful natural shape. Each is different from the others. Some may be rocks, some are white sand, some are black, some are small, and some are big. I like all kinds of beaches. All the beaches I visited were unforgettable experiences, but one of them was particularly striking. When I was a junior, I went to a resort in Jamaica where there was a wonderful beach. This is a large beach with white sand beach and extraordinary palm trees. There is also a long and huge rocky row spreading in the Caribbean. Well, I have a beach with sand and water. The beach is made of sand, made of small rock. The beach absorbs heat from the sun. Skeet shooting is better than hunting, but still very few are shooting. Beach, beach, beach. I am thinking about the beach. If you wear a stud on the beach, you may break the shell. If I live on the beach it may have shells, but they will all be in the wreckage. I allow a bear to be at my beach, but only in the summer. They will step on the shell before I arrive, but I will never announce that it is open season. In winter, Jim Carrey stood on the beach. Can I take off the hair of Kate Winslet's eternal sunshine? I hope that someone can invent that memory. Do not forget that you are on the beach. understood. On my beach it is always sunny and there is no breeze. Because God's love does not feed bears. Let's think about a bit. A part of the idle is a shell. They are playing games on the beach. On the beach there are hundreds of shells, if not thousands. Most of the shells are indistinguishable from each other, and there is no one who really looks at the shell Loren captured during the immune attack. Why did Lauren not give Mike a completely random shell? Thus, she keeps the entire idle safe, Mike feels that he has the power of Lauren, and everyone will win I like beaches. This is not unusual. California people from Reading to most rivers of Riverside love the beach. We escape the sun and our daily lives at the beach. But there are 100 different ways to love the beach. Beach leader, beach sleeper, surfer, body border, parasailer, beach athlete, sand castle architect, kite flyer, kayak, treasure hunter, bird watcher, whale watcher, people observer, teenager, drinker, bonfire architect, Pit Master, Dog Walker Beaches The beach is a beautiful natural shape. Each is different from the others. Some may be rocks, some are white sand, some are black, some are small, and some are big. I like all kinds of beaches. All the beaches I visited were unforgettable experiences, but one of them was particularly striking. When I was a junior, I went to a resort in Jamaica where there was a wonderful beach. This is a large beach with white sand beach and extraordinary palm trees. There is also a long and huge rocky row spreading in the Caribbean. Well, I have a beach with sand and water. The beach is made of sand, made of small rock. The beach absorbs heat from the sun. Skeet shooting is better than hunting, but still very few are shooting. Beach, beach, beach. I am thinking about the beach. If you wear a stud on the beach, you may break the shell. If I live on the beach it may have shells, but they will all be in the wreckage. I allow a bear to be at my beach, but only in the summer. They will step on the shell before I arrive, but I will never announce that it is open season. In winter, Jim Carrey stood on the beach. Can I take off the hair of Kate Winslet's eternal sunshine? I hope that someone can invent that memory. Do not forget that you are on the beach. understood. On my beach it is always sunny and there is no breeze. Because God's love does not feed bears. Let's think about a bit. A part of the idle is a shell. They are playing games on the beach. On the beach there are hundreds of shells, if not thousands. Most of the shells are indistinguishable from each other, and there is no one who really looks at the shell Loren captured during the immune attack. Why did Lauren not give Mike a completely random shell? Thus, she keeps the entire idle safe, Mike feels that he has the power of Lauren, and everyone will win I like beaches. This is not unusual. California people from Reading to most rivers of Riverside love the beach. We escape the sun and our daily lives at the beach. But there are 100 different ways to love the beach. Beach leader, beach sleeper, surfer, body border, parasailer, beach athlete, sand castle architect, kite flyer, kayak, treasure hunter, bird watcher, whale watcher, people observer, teenager, drinker, bonfire architect, Pit Master, Dog Walker Beaches The beach is a beautiful natural shape. Each is different from the others. Some may be rocks, some are white sand, some are black, some are small, and some are big. I like all kinds of beaches. All the beaches I visited were unforgettable experiences, but one of them was particularly striking. When I was a junior, I went to a resort in Jamaica where there was a wonderful beach. This is a large beach with white sand beach and extraordinary palm trees. There is also a long and huge rocky row spreading in the Caribbean. Well, I have a beach with sand and water. The beach is made of sand, made of small rock. The beach absorbs heat from the sun. Skeet shooting is better than hunting, but still very few are shooting. Beach, beach, beach. I am thinking about the beach. If you wear a stud on the beach, you may break the shell. If I live on the beach it may have shells, but they will all be in the wreckage. I allow a bear to be at my beach, but only in the summer. They will step on the shell before I arrive, but I will never announce that it is open season. In winter, Jim Carrey stood on the beach. Can I take off the hair of Kate Winslet's eternal sunshine? I hope that someone can invent that memory. Do not forget that you are on the beach. understood. On my beach it is always sunny and there is no breeze. Because God's love does not feed bears. Let's think about a bit. A part of the idle is a shell. They are playing games on the beach. On the beach there are hundreds of shells, if not thousands. Most of the shells are indistinguishable from each other, and there is no one who really looks at the shell Loren captured during the immune attack. Why did Lauren not give Mike a completely random shell? Thus, she keeps the entire idle safe, Mike feels that he has the power of Lauren, and everyone will win I like beaches. This is not unusual. California people from Reading to most rivers of Riverside love the beach. We escape the sun and our daily lives at the beach. But there are 100 different ways to love the beach. Beach leader, beach sleeper, surfer, body border, parasailer, beach athlete, sand castle architect, kite flyer, kayak, treasure hunter, bird watcher, whale watcher, people observer, teenager, drinker, bonfire architect, Pit Master, Dog Walker

Economic Impact of the U.S. Fast Food Industry on the Global Economy Research Paper

Economic Impact of the U.S. Fast Food Industry on the Global Economy - Research Paper Example Fast foods contain a lot of fats and oils, which when accumulated in the body lead to related diseases like Obesity and diabetes. A research conducted by Currie Janet et al. of the National Bureau of Economic Research (Currie, 2009), on the effects of fast food restaurants on obesity and weight gain show that, the establishment of fast food restaurants has a diverse effect on the rise in obesity cases in the U.S. The research focused on 3 million children to compare school children who are 0.1 mile away from a location of a fast food restaurant, and others who are at 0.25 miles. The researchers put the children under observation for a period to compare on the rate of obesity cases. The researchers also conducted research on 3 million pregnant mothers observed to gauge their weight gain over a period (Currie, 2009). It showed that the growth in weight gain among pregnant mothers increased according to the distance form the fast food restaurant that is the weight gain was more to mothe rs who were near the restaurants as compared to those a bit far (Currie, 2009). The obesity rates observed were almost the same to the school children. The research shows that the availability of fast food restaurants affects the rate of obesity because of the low price on the foods which leads to high consumption. The varying distance between the school children bring almost the same effect on obesity because, the children who are a bit far from the restaurants are constraint to budget hence consume less compared to those near (Currie, 2009). The availability of the fast food restaurants has adverse effects on the health sector in U. S. as the state has to intervene on prevention. This affects the economy of the country as the government increases taxes to cater for... This paper stresses that the high growth in economic standards over the world calls for any possible means of easing life. The fast food industry has developed due to the ease of production of its products and its cheap price. The commitments that people have do not allow them to spend much of their time because they want to beat some deadlines. They do not have time to examine how healthy the food they eat is, and its consequences. The fast food industries started in the U. S according to Schlosser, but after the gradual growth, spread to other countries where they have too established a number of branches, for example, the McDonald’s. This report makes a conclusion that the effects these companies have on the economy of U. S occur in the other countries which have started these industries. Most contents of these foods are unhealthy, and have highly contributed to the rise in obesity and overweight problems which relate other diseases like diabetes which are expensive to treat. Treatment of these diseases becomes a burden to the economy of the world. Diseases like these affect the labor input of a country and this acts as a drawback to the economy. Although the establishment of fast food industries affected the economy of the world through the health sector, it has also positively affected the global economy through the provision of labor to employees, which is a boost to the tax department.

Servant Leadership in the Bible Dissertation Example | Topics and Well Written Essays - 1000 words

Servant Leadership in the Bible - Dissertation Example The Holy Quran also portrays the leader of the people as the servant who should work to satisfy the people rather than be the master commanding them. The religious connotation looks at leadership in this form as being a part of the self-actualization factor as noted in Maslow’s hierarchy of needs (Joseph & Winston, 2005). Â  Robert Greenleaf saw a servant leader as the person who acted as a servant first (Parris, & Peachey, 2013). The individual does not begin acting as a leader if deep within the urge to serve is absent (Gonzaga, 2005). The main idea should be to create new platforms that will make it easier to serve the people and make a conscious choice to administer as it appears based on the autonomy required for the growth of the individual’s satisfaction (Gardner, Cogliser, Davis, & Dickens, 2011). This test is administered in harder situations where the difficulty tests the leader’s ability to come up with better means of dealing with failures as well as the relationship between leaders and workers (Kernis, & Goldman, 2006). Greenleaf argues that the deep-seated need and desire to serve others provides the core need for one to be a servant. Servant leaders have the natural feeling that emanates from this desire (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008). It can be c reated by making conscious aspirations and sticking the core attributes that define the way this can happen without losing track of the benefits derived from such an action. Most of these benefits are intrinsic (van Dierendonck, 2011). Â  The paradoxical nature of servant and leadership is not to be missed. When Jesus was washing the disciple’s feet, they were apprehensive of this act (Kool &van Dierendonck, 2012). They wanted to be the ones doing the washing and not Jesus.

Evaluation Essay Example | Topics and Well Written Essays - 250 words - 1

Evaluation - Essay Example He also furthered his review by comparing this film with other works by the same director and by questioning the chemistry between the director and the screenwriter. The review was incredibly thorough and it covered a lot of aspects that many moviegoers would not pay attention to, such as the clashing of the director with the screenwriter. However, these are still vital in understanding why someone did or did not like a movie. The writer of the review is a good writer and was very excellent in his details. He did not leave a single thing out in his review and, as previously mentioned, even included behind-the-scenes details that most people do not notice. The writer was also right in his review. The review was not a simple one that stated that he did or did not like the movie, but was a lengthy, well-considered piece. His reasons for disliking the piece are true. The film lacked many aspects that could have made it even better. Furthermore, the writer actually gave reasons as to why he did not like, instead of just skirting around the fact that it was a bad movie. I agree with what the writer had to say, and it would be hard not to agree with th e honesty and detail that went into writing the

How Social Media Changed the Way people Communicate Essay

How Social Media Changed the Way people Communicate - Essay Example Papyrus helped in improving communication during the time as it could be moved from one place to another. Additionally, smoke signals were relied on during the prehistoric age. The smoke signals were popular among the American Indians (History World, n.d.). On the other hand, the sending of written message is thought to have begun on 6th century BC. Most of the government in this era relied on written content for communication. The Persians were the first to rely on written form of communication (History World, n.d.). On the later period, people focused on ways of improving the speed of the messenger. Such form of advance focused on developing excellent roads, fast riders and well-provisioned staging posts that were more accessible to freshmen and horses (History World, n.d). The effectiveness of communication was further improved by use of domesticated pigeons in the 11th century (History World, n.d.). Moreover, communication was quickly revived with the development of the printing press (History World, n.d.). The first publication were made in Germany in 15th century and then spread to the rest of the world. After this period, different printing press emerged in Switzerland, Venus, Paris, London, and Sweden (History World, n.d.). Consequently, the printing of books and pamphlets begun in these areas most of which were used in transmitting propaganda. Moreover, the printing press was followed by the advent of newspapers in the 17th century (History World, n.d.). The various disharmonies that were taking place in Europe made many people longing for information about the latest events (History World, n.d.). Consequently, the printers and publishers put more effort in ensuring people had the necessary information on time. The most published papers at the time were from Germany. Communication was rapidly improved in the 19th century. The invention in this era led to the development of letter, Penny post, and affordable post (Lambert, 2013). Moreover, there was the invention of telegraph, and this made it possible to send a message over a long distance in an efficient way. Furthermore, there as development of fax machine and telephone in 184 and 1876 (Lambert, 2013). Indeed, communication improved significantly in the 20th century. At this period, radios and televisions were developed and covered information during war (Lambert, 2013). Consequently, information was readily available. Later years saw the rise of telephone. In fact, this allowed making of calls and passing of commercial text through the mobile phone. In the 21st century, communication has been totally revolutionized. The transformation has taken place through the emergence of internet. Consequently, various forms of social sites have emerged such as Facebook, Twitter, MySpace, and email (Tuft University, 2013, p.1). Therefore, communication has been made easy and efficient. A reflection on different types of social media social media helps in highlighting ways in which communic ation has been changed; this occurs in terms of society interaction, awareness on various issues taking place in the world, control over people lives, increased transparency, increased avenues of communication, and change of ways of society communicate. Social Media Social media has provided a platform for interaction of people. â€Å"The social sites help people make, share, and/ or exchange information and ideas in virtual communities and networks†

An organisational case study Assignment Example | Topics and Well Written Essays - 1250 words

An organisational case study - Assignment Example Strategic formulation which is a key component of organizational entrepreneurship entails â€Å"the development of business mission, decisions both long term and short term objectives, and prioritizing strategies† (Karami, 2003). Dana (2004) notes that it is associated with deciding which resource is for what and in what amount, the process of entering international market or issues related to mergers with suppliers or sales agencies to diversify operations. Strategic formulation in business thus involves the perception of any strategy formulation process which has marked phases that are time-bound. Focus on Southwest Airlines This paper examines Southwest Airlines using SWOT Analysis in understanding its market penetration and product development strategic frameworks. It also draws the way forward for the airline to remain competitive. Bohm (2008) agrees that SWOT analysis has been used to evaluate and identify a number of areas in project formulation and Southwest is not an exception. The framework is used in mapping out the Strengths, Weaknesses, Opportunities and Threats. Indeed, it is used to formulate strategic plans and crafting solutions to control situations. All these predominantly follow an in-depth analysis of external environmental factors that affect the market and operations of Southwest Airlines (Bohm, 2008). ... outhwest Airlines One such is the organizational structure which focuses on the flow of information and responsiveness to client-related issues (Bohm, 2008). Southwest has often demonstrated quick response to client issues e.g. flight delays. Besides, the organizational organ gram is such that the pecking order is clear therefore the flow of information to those responsible in handling it is promptly facilitated for corrective action (Price, 2007; Mentges & Renga, 2010). Beyond this the strength in communication is further compounded by the fact that Southwest Airlines has an optimally utilized website. It was indeed one of the first airlines to have a fully fledged website to create widespread customer awareness on its services. However, one of the website’s weaknesses is that fares are not clearly outlined to enable customers make informed decisions just by the click of the mouse (Price, 2007). Regardless, it is reported that the airline has the largest pool of website visit s. It is also highly ranked with the best profitability record in the American market. The website also has a magazine that has caught the attention of many thereby bringing with it more customers (West, 2005; Joyner, 2006). In regards to the internet use Hoffman et al. (2001) believes that the company is on the right footing given that this is the information transformation age. The second way of examining internal analysis of strength and weaknesses is by looking into the organization’s planning. Daft (2008), states that the point is to examine the ‘feasible long and short term’ arrangement or map of action concerning for example the human resources. In this regards Southwest Airline is on top of its game. It also plans its flight operations well in advance and appropriately communicates