Consequences of Lehman Brothers Bankruptcy Research Paper

Consequences of Lehman Brothers Bankruptcy - Research Paper Example (Mian et al, 2008). Another source of captive demand was the money market funds. This boosted their yields since they were required to hold only the high rated securities. The managers that funded these securities knew well what gamble they were playing with these funds but could not resist the temptations and benefit it came with them. The managers also hoped that if any shock arose from these funds, their immediate competitors would also face the same consequences which would result in a reduced reputational cost and this may result in the government interference and may end up supporting these companies through incentives and lowering of taxation. The problem was even strict and severe in the short bond funds. In contrast to the market funds, short bonds fund are not restricted to the types of gadgets they can own. Generally the regulation relies greatly on credit- rating agencies procedures of risks without understanding the incentive created on the regulatory game system. As sta ted, (Morris and Shin, 2002) in circumstances where there are numerous equilibrium, an increase in public information does not necessarily to enhance welfare since it can direct to unproductive bank runs. (Diamond and Dybvig 1983 ). Lack of transparency The other major problem that contributed to the downfall to bankruptcy of the Lehman Brother company was the lack of transparency in big markets. In the last ten years the market for acclaimed default swaps grew uncontrolled from almost zero to 44 trillion, which was more than the of the us stock market in twice the number. Generally the levels of these contracts were very low and did not exist... This paper aims to summarize economic repercussions of the Lehman Brothers bankruptcy, that essentially marked the beginning of the global financial crisis. Many companies around the world are affected by bankruptcy at a certain time in their financial year. When a company is declared bankrupt, it can no longer invest in the stock exchange. The government declares the company insolvent. An example of such company is the Lehman Brothers, a housing and real estate company that went into bankruptcy in 2008. Regulatory constraints brought about the inflation demand for products thus seeing Fannie Mae and Freddie Mac getting the approval of investing in these securities. Another source of captive demand was the money market funds. This boosted their yields since they were required to hold only the high rated securities. The managers that funded these securities knew well what gamble they were playing with these funds but could not resist the temptations. The managers also hoped that if any shock arose from these funds, their immediate competitors would also face the same consequences. The effect that accrues from a company being declared as bankrupt is huge. Businesses and companies should ensure that they adopt proper measures that will make them stay healthy and avoid being insolvent. They should do this by getting involved and seeking support from the government especially if the business is new in the market. The business should also encourage investors from foreign and local to invest in them.

Accounting for human behavior Essay Example for Free

Accounting for human behavior Essay In order to survive and interact with the other members of the society, it is crucial for us to understand what the other people are thinking about and what the underlying factors that contribute to their behavior are. In our daily life, people are continuously interpreting and explaining others behavior, sometimes even without aware of it themselves. How does this knowledge of interpreting the others come about? And is it a reliable method?Most people are using common sense explanation to interpret human behavior, while social scientists will explain our world by social science theories. What are they? And which one can give a more reliable and accurate account for human behavior?Common Sense Explanations are formed basing on individuals past experiences or were passed down from the last generations. It is the most basic and simple form of knowledge that helps us to survive. For instance, people understand that it will be hurt when a ball is throwing at them and in result, they will run away from it. We use the common sense to perceive the world we are living in. It is unimaginable if a person does not possess any common sense at all. See more: Old Age Problem essay Social Science Theories, like the theories in natural science, are derived from scientific methods. They are either induced or deduced from different task or experiment. But since the subject matter in social sciences is completely different from that of natural science, observation, survey and interview which sometimes involves a control group, are the methodology used to test the experimental hypotheses, instead of using laboratory experiments. Hence, social science theories are backed up by empirical studies and data, and therefore should be more widely applicable, objective and reliability to explain human behavior. Unlike social science theories, common sense is held by everyone. Therefore, people can draw on this knowledge immediately when they want to analysis behavior of the others and giving a faster response to the situation. However, the strength of common sense is also its greatest weakness. In many cases, common sense explanation cannot give us a satisfactory answer because it has oversimplified the circumstance. For instance, it is a general belief that the more violent movies a child watches, the more aggressive he will be. People may neglect other factors,  such as family backgrounds, in contributing to childrens aggressive behavior, which had proved to be an equally crucial by many social scientists. In addition, human behaviors are complex as well as unique to each individual. Different culture, race, living environment and family history will lead to the formation of different behaviors. Similarly, common sense explanation varies in different culture, society and individual, and therefore, actually is not the same to everyone in our society. How can a foreigner understand all the traditional attitudes and values of a Chinese? Likewise, it is not easy for us to comprehend all the behaviors of the foreigners. As a result, there will be bias if we rely on common sense explanation as it is too generalized and oversimplified without really investigating the underlying factors behind the scene. In contrast, social sciences theories can supplement the weakness of common sense explanation as each theory is based on a numbers of hypotheses which in turn will be tested, though the methodology used is somewhat different from that of natural science. In other words, social science theories are more reliable and valid than that of common sense explanations. Moreover, social science theories are more widely applicable as they are derived from a great numbers of data which are collected from different channels and people. Some people may argue that some social sciences theories are similar to our common sense explanations, for which is a coincident that we cannot deny since many hypotheses are formed with the basis of common sense assumptions. People can use common sense to explain or judge most things we encounter in our daily life. However, when we come to analyze more complicated matters, such as human behaviors, common sense explanation alone would be insufficient. In these circumstances, social science theories, which have been undergoing empirical researches and experiments, are more reliable. We cannot ignore the importance of common sense since it is a basic knowledge that people possessed, whereas social science theories may not be  known to most people. And in many cases common sense is the foundation of many hypotheses, and thus is the origin of a theory. But it is crucial to note that when people want to have an in-depth, comparatively reliable and valid explanation, social science theories should be employed. REFERENCE Roth (1990), Introduction to Psychology, United Kingdom: The Open University. Gross (1992), Psychology: The Science of Mind and Behaviour, p.19-23, London: Hodder Stoughton

Deborah Tannens Cant We Talk Essay examples -- Deborah Tannen Cant

Deborah Tannen's Can't We Talk Deborah Tannen’s case study entitled â€Å"Can’t We Talk?† is the most relevant reading that I have ever done for any class. It relates to a problem that every person regardless of age, race or sex, will have to face many times in his or her lifetime. The problem is that men and women communicate differently and these differences can often lead to conflict. This case study is very informative because it helps to clarify the thought process of each sex. That said this reading leaves the reader somewhat unfulfilled because Tannen does not offer a solution to the problem. In Tannen’s first section, status vs. support, Tannen states that women view talking as a way to receive support, whereas men are always trying to gain the upper hand while talking. Tannen and her husband had jobs in different cities. When people would comment on her situation Tannen would accept their support of her difficult situation. Her husband, on the other hand, would feel threatened and felt compelled to refuse their support and point out the good in the situation. Due to societal influences men are often expected to be tough and therefore they feel threatened more easily. Because they feel threatened more easily they tend to go on the offensive more during conversation. Women are expected to be more sensitive and therefore they seek support. The section entitled advice vs. understanding is very closely related to status vs. support. In this section a woman has a deformed breast, due to a previous bout with cancer, and expresses her distress to her husband. H er husband responds that she could have plastic surgery to correct the deformity. She became quite upset at the thought of another surgery. Because of t... ...roblems of inter sex communication. She does a superb job of pointing out how each sex reacts to each situation and why, but does not even propose a solution. Now that I have read this case study I feel as though I am prepared to offer a solution although I am not sure how viable it is. The recurring themes of Tannen’s case study are that men are expected to be tough and women are expected to seek support. These themes seem to be the root of the conflict between the sexes, so I would propose that each sex should do their best to break away from these expectations. Men should strive to be more open and less concerned about preserving a macho image whereas women should strive to be less dependent on the approval of others. While my proposed solution would not completely abolish miscommunication between the sexes, it would be a large step in the right direction.

Lab Report: Specific Heat :: essays research papers

Introduction The porpoise of these is to determine the Specific Heat. Also known as Heat Capacity, the specific heat is the amount of the Heat Per Unit mass required to raise the temperature by one degree Celsius. The relationship between heat and temperature changed is usually expected in the form shown. The relationship does not apply if a phase change is encountered because the heat added or removed during a phase change does not change the temperature. Q = cn^T The molar specific heats of most solids at room temperature and above are nearly constant, in agreement with the Law of Dulong and Petit. At lower temperatures the specific heats drop as quantum processes become significant. The Einstein-Debye model of specific heat describes the low temperature behavior. The metal samples are:  · Copper (CU)  · Aluminum (Al)  · Zinc (ZN)  · Tin (Sn)  · Lead (Pb)  · Steal/iron (Fe)  · Brass (an alloy of Zn and Cu) PROCEDURE: 1. In a Styrofoam cup, record the temperature of the 200 ml of cold water. This is 200 g of water, as the density of water is 1 g/ml. 2. Obtain a sample of metal that has been immersed in boiling water and place it in the cup of water. 3. Wait until the temperature no longer rises (thermal equilibrium), and record the temperature increase. 4. Discard the water and measure the mass of the metal. 5. Repeat the above for each metal. CALCULATIONS: 1. H=mc^T=(200g/1)(1cal/goc)(2oc/a)=400cal C=H/m^T=400cal/(128g)(20c)=1.5625cal/goc 2. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(20.1g)(2oc)=400cal/40.2 goc=9.95cal/ goc 3. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(53.9g)(20c)=37.38cal/ goc 4. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(65.3g)(20c)=3.06 cal/ goc 5. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(70.5)(20c)=400cal/141goc=2.83 cal/ goc 6. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(70.1g)( 20c)= 2.83 cal/ goc 7. H=mc^T=(200g/1)(1cal/goc)(2oc/1)=400cal C=H/m^T=400cal/(50g)(20c)=4 cal/goc RESULTS: Type of Metal Experimental  © of Metal Actual  © of Metal CU 400cal 1.5625cal/goc Al 400cal 9.95cal/ goc ZN 400cal 37.38cal/ goc Sn 400cal 3.06 cal/ goc Pb 400cal 2.83 cal/ goc Fe 400cal 2.83 cal/ goc Brass 400cal 4 cal/goc

The Bermuda Triangle Evidence and use of research

Trever Wack D Block Mrs. Griffin FCA’s 1. MLA documentation/works cited 2. THESIS STATEMENT 3. Evidence and use of research There is a place, it’s said where small boats, huge ships, and even powerful military vessels sail out into calm, clear weather†¦Ã¢â‚¬ ¦and then just vanish†¦. without a trace (Lexington 1). This is the dreaded Bermuda triangle also referred to as the devil’s triangle (Bermuda Triangle 1). It is located off the southeastern coast of the United States in the Atlantic Ocean. The three points that create the triangle are Miami Florida, Bermuda, and San Juan Puerto Rico.It covers roughly 500,000 square miles (Obringer 1). Here, off the coast of Florida, is a vacation paradise: Clear water, white beaches, and warm weather, but legends warn this tropical beauty conceals a deadly secret. This unknown something, snatches people from the surface of the world, and vaporizes them as they were never here in the first place. There are few ideas as chilling as the thought that sometimes, in some places, for no reason, people simply disappear without a trace (Lexington 1).The Bermuda triangle is a well-known conspiracy resulting in the disappearance of flight 19, testimonies of the survivors, and known possible theories. The Bermuda triangle is well known today because of the disappearance of six Navy planes and their crew was on December 5, 1945 (Berlitz 21). The first five planes that disappeared, apparently simultaneously, were on a routine training mission with a flight plan designed to follow a triangular flight pattern. The pattern started at Naval Air Station at Fort Lauderdale, Florida. Then 160 miles to the east, 40 miles to the north, and then southwest back to their base (Berlitz 21).No incident before or since has been more remarkable than this total disappearance of an entire training mission, along with the giant rescue plane, a Martin Mariner with a crew of 13, which inexplicably vanished during rescue operat ions (Berlitz 21-22). Flight 19 contained five officer pilots and nine enlisted crewmembers. The planes were navy Grumman TBM-3 avenger torpedo bombers, and each carried enough fuel to enable it to cruise over 1000 miles (Berlitz 22). The weather that day was said to be clear and sunny, and according to planes that flew earlier that day, this was ideal flying conditions.The flight time calculated for this specific mission was two hours. The planes started taking off at 2 PM and by 2:10 PM they were all airborne (Berlitz 22). In command was Lieut. Charles Taylor, with over 2500 hours of flying time, who led the planes to where they would make their practice runs on a so called â€Å"target hulk† (Berlitz 22). Both pilots and crews were experienced airmen and there was no reason to expect anything other than usual nature to happen during this mission of. But something did happen†¦. and with a vengeance (Berlitz 22).At around 3:30 PM flight 19 could no longer hear messages from the tower, but the tower could hear conversations between the planes. Some of these messages referred to possible fuel shortages, references to 75 mile per hour winds, references to being lost, and the unnerving observation that every Gyro and magnetic compass in all the planes were off – â€Å"going crazy,† as it was reported at the time –each showing a different reading (Berlitz 23). At this time the personnel of the base were in an understandable uproar as news spread that flight 19 had encountered an emergency.Rescue crafts where dispatched, the rescue team consisted of a crew of thirteen aboard a Martin Mariner flying boat patrol plane, from the banana river naval air station. Minutes after the Martin Mariner the tower received a message from Lieut. Come, one of the officers of the Martin Mariner, dispatched to the general area where flight 19 was presumed to be, that there were strong winds above 6,000 feet. This, however, was the last message receive d from the plane (Berlitz 24). There was an immediate message sent out to other rescue vessels stating that six planes instead of five are now missing.The Martin Mariner had disappeared as well. The original and search, initiated on the day of disappearance, was suspended because of darkness, although Coast Guard vessel continued to look for survivors during the night. The following day, Thursday, December 6th, 1945, would be one of history’s most intensive search efforts ever recorded. The search effort involved 240 planes and 67 additional planes from the aircraft carrier Solomons, 4 destroyers, several submarines, 18 Coast Guard vessels, and Royal Navy units in the Bahamas, along with hundreds of private planes, yachts, and boats (Berlitz 24-25).Unfortunately despite all the rescue efforts, nothing was found of either flight 19 or the Martin Mariner. Although there have been many disappearances after flight 19 and the Martin Mariner, there are only few that are as signific ant as the disappearance of flight 19. January 29, 1948: Star Tiger, four engine Tudor IV, lost radio contact 380 miles northeast of Bermuda, plane lost with 31 passengers and crew. January 17, 1949: Star Ariel, sister ship of the Star Tiger, London to Santiago, Chile, via Bermuda and Jamaica, radio communications lost 380 miles south-southwest of Bermuda on course to Kingston.Airplanes are not only thing that had disappeared in the Bermuda triangle, major ships and disappeared as well. On March 4, 1918: U. S. Navy supply ship U. S. S . Cyclops, 500 feet, 19,000 tons displacement, sailed March 4 from Barbados to Norfolk with 309 aboard, no bad weather, no radio messages, no wreckage ever found. These are some of the most known disappearances in the Bermuda triangle, but what about people who have experienced strange occurrences in the Bermuda triangle and still survived to tell their tale?In his book â€Å"invisible horizons†, Vincent Gaddis devotes a section to the Bermuda t riangle. Vincent recalls acquiring a letter from an ex-airman, named Dick Stern, containing surprising information. Mr. Stern indicated in his letter that towards the cessation of 1944 he was on a flight going to Italy. The flight consisted of a group of seven bombers, about 300 miles off Bermuda, his plane suddenly experienced such violent and destructive turbulence they are obligated to return to the Amalgamated States.When this transpired the weather was clear, but due to the critically damaging turbulence the plane turned over and pitched so violently that the crew was thrown to the ceiling. The plane suddenly lost altitude to a point where it was virtually coerced into the ocean (Berlitz 65). When Mr. Stern returned to base he described that there was only one other plane left who had returned to the base safely out of seven when they originally left. There had been no radio contact with the other planes and no trace of anything left from the disappearance was found (Berlitz 66 ).Some years after Mr. Stern and his wife were on a flight from Bermuda to Nassau, when, by coincidence, Mrs. Stern was talking about the previous incident, and suddenly the plane lost altitude quickly and the plane shook violently. The food that they were eating flew to the ceiling. The plane perpetuated to elevate and fall for a quarter of an hour (Berlitz 66). This occurrence may be an example of clear air turbulence, which if rigorous or continued, would possibly cause some planes to be ripped apart and scattered all over the sea.In any case Dick Stern has the distinction of having encountered the same arbitrary and powerful force transpire twice at virtually the same place in the triangle†¦. and lived to tell about it (Berlitz 66). But how is the Bermuda triangle consuming so many ships and planes? The following five conceptions are considered myths because they're not supported by much scientific proof. Some people have speculated that sea monsters live in this particular area of the ocean and are just waiting for sailors and pilots to come by so they can seize their next victim.Maybe all of those people who have vanished are actually living in a third dimension that people can't even imagine (The Bermuda Triangle 1). An antediluvian philosopher, Plato, told about a lost continent called Atlantis. The story of Atlantis describes a beautiful continent that was ahead of its time and that sadly and mysteriously vanished or got swallowed up by the ocean. No one knows if the story of the lost continent is true but it has been linked to the mystery of the Bermuda Triangle. Some believe that Atlantis is right below The Triangle.People believe that if you make your way to deep below the oceans surface you would find the missing continent of Atlantis. But how does this explain the disappearing boats and planes? Does the continent just suction them under? Or are travelers going there intentionally on an endeavor to find Atlantis (The Bermuda Triangle 2)? The Bermuda Triangle is one of only two areas in the world where true north and magnetic north are the same. True north is considered the North Pole and magnetic north is a little different. This is because of magnetic fields in our atmosphere that pull compass readings a little bit away from true north.Because the two north’s line up in the Bermuda Triangle, magnetic compasses go crazy when they're utilized in this area. It could cause ship captains and pilots to get lost—perhaps forever (The Bermuda Triangle 2). The Bermuda Triangle is located in a very tumultuous and stormy area. Most Atlantic tropical storms and hurricanes pass through the perfidious triangle. Many ships that have vanished in the area have vanished just before an immensely colossal storm when the waters are especially dangerous and hard to navigate (The Bermuda Triangle 2).Imagine being a sailor and heading through the Bermuda Triangle – what an adventure! People may never know the truth about t his weird and abstrusely cryptic environment but it's pretty cool to contemplate the possibilities! The Bermuda triangle is a well-known conspiracy resulting in the evaporation of flight 19, statements from the survivors, and known possible theories. The Bermuda triangle is a mysterious place where flight 19 vanished and to this day we have no plausible reason of why. Not only did flight 19 disappear, many others have vanished without a trace or explanation.There are not many survivors today, but they are the lucky ones, the ones that are here to tell their tale. Most of the tales told will all have the same basic plot. That plot is that they fly, or sail, into clear weather, loose radio connectivity†¦and vanish. A lot of people have come up with some crazy explanations of why the Bermuda triangle snatches boats or planes. Some of these reasons are not plausible at all though! Some think that there is super nature controlling all, but who knows? Is there a Bermuda triangle? Or is it just a made up spoofed conspiracy?Works Cited â€Å"Bermuda Triangle. † Man, Myth & Magic, The Illustrated Encyclopedia of Mythology, Religion and the Unknown. 1974. Lexton, Daniel. â€Å"The Bermuda Triangle. † Skeptic 1. 2003. 96B. elibrary. Web. 30 Apr. 2012. Obringer, Lee Ann. â€Å"How the Bermuda Triangle Works. † 02 Aug 2006. Howstuffworks. com. Snow, Edward Rowe. â€Å"Supernatural Mysteries and Other Tales. † New York: Dodd, Mead and Company, 1974. Print. â€Å"The Bermuda Triangle: Exploring the Mystery of this Underwater Wonder. † Kidsworld Magazine. Spring 2011: pi 1. General One File. Web. 10 May 2012.

Questions Essays

Questions Essays Questions Essay Questions Essay Question 1. You are a recently appointed Sales Manager for a manufacturer of small engines. The company has grown rapidly over recent years, but its profit margins have been declining and this is one of the key issues that you have been hired to address.After three months on the job, you have become aware that the company’s nine salespeople are focused on closing as many deals as possible regardless of whether they provide good solutions for customers. In addition, salespeople are discounting so much that your company’s margins are continuing to decrease. Clearly, your position as Sales Manager may be in trouble if this continues, plus your personal bonus is based upon achieving profit margin objectives.When you have discussed this with the salespeople, they indicate that in the past they have been encouraged to focus on sales volume and not the profitability of deals.Some changes are required otherwise the profitability targets of the organisati on and your personal bonus will not be achieved. What steps do you undertake to resolve the situation and why do you undertake those steps?It is important for the Sales people to be able to have clear goals so that they may correspondingly direct their behaviour towards the achievement of these targets. If they have been accustomed to believing that they will have maximum pay-offs in increasing their sales volume, then they will continue to act as if this strategy will yield them maximum benefit. The first step I will do is to hold a general assembly which will focus on this change of mindset. I will clarify with them that it is profitability and not merely sales volume that will give both them and the whole unit maximum yield. This is consistent with the essence of expectancy theory.Expectancy theory supports the contention that people choose the behaviour they believe will maximize their payoff.   It states that people look at various actions and choose the one they believe is m ost likely to lead to the rewards they want the most. This theory has been tested extensively. It has been found that expectancy theory can do an excellent job of predicting occupational choice and job satisfaction and a moderately good job of predicting effort on the job.   Expectancy theory implies that the anticipation of rewards is important as well as the perceived contingency between the behaviours desired by the organisation and the desired rewards.   The theory also implies that since different people desire different rewards, organisations should try to match rewards with what employees want (Weathersby, 1998). In other words, if the sales people realise that they will have more reward if they focus on profitability, then they will work towards this changed goal. What is important is to be able to effectively clarify what the goal is, why it was changed, and why it is crucial to achieve it.This change in mindset among the sales people may also be perceived as a change i n the vision and its clarification. It is important for me as a Sales Manager to have a clearly defined vision, both on the task and people sides of the business. This speaks of the effectiveness of their leadership, which is both people-oriented than task-oriented. All leaders have the capacity to create a compelling vision, one that takes people to a new place, and the ability to translate that vision into reality. Modern leadership literature frequently characterises the leader as the vision holder, the keeper of the dream, or the person who has a vision of the organisations purpose. If the Sales team is one in achieving a profitability target and they know the specific objectives that they have to hit to contribute to this overall goal, then I would be more confident that the overall goal of the team would be achieved.;Personal vision includes my personal aspirations for the organisation and acts as the impetus for the my actions that will link organisational and future vision. My vision needs to be shared by those who will be involved in its realization. Setting of a profitability target for the sales team is just one manifestation of visionary leadership, where a clear goal is identified – but I also have the responsibility to link this to more strategic organisational thrusts.;Question 2. You are the Sales Manager of an electrical goods distributor whose main customer base is electrical retailers. One of your most successful salespeople struggles to submit the weekly written reports that you require from all of your salespeople. This salesperson never submits the reports on time, you usually have to repeatedly request them and when they are submitted they don’t contain the customer information or sales activity information that you want. This also makes it difficult to keep these customer records up to date in the company’s CRM system and limits the ability of sales support staff to help manage these relationships. The rest of the s alesforce submit these reports, in hard or soft copy, on time and without complaint.What do you do about this issue and why?The first thing I will do as a Sales Manager is to hold a performance discussion with my salesman because of this poor work habit of delayed report submission. During the discussion, I would clearly state why we are holding the session and its importance. I would then allow him to express concerns about why he is always not punctual in churning out his reports. I will try as much as possible to still maintain his self-esteem despite the correction, and also to listen attentively to his concerns. At the end of the session, we should have concurred on the best course of action to be able to resolve the problem. We will then set a work plan, specifying who will do what and by when.The clarity of a goal is important – it needs to be specific, measurable, attainable, realistic and time-bound. I should ensure that the goal of report submission comply with thes e criteria of well-defined goals / objectives. Moreover, I should also be able to show the linkage of this positive behaviour of goal submission to reward. If no such linkage is made, the salesman may not be motivated in attaining the goal set out for him. According to goals setting theories, employees set goals and those organisations can influence work behaviour by influencing these goals.   The major concepts in the theory are intentions, performance standards, goal acceptance, and the effort expended.   These concepts are assumed to be the motivation.   Participation in goal setting should increase commitment and acceptance.   Individual goal setting should be more effective than group goals because it is the impact of goals on intentions that is important.   In goal-setting theory the crucial factor is the goal.   Tests of the theory show that using goals leads to higher performance than situations without goals, and that difficult goals lead to better performance t han easy ones (Maczynski ; Koopman, 2000).   Although participation in goal setting may increase satisfaction, it does not always lead to higher performance.Second, I will also ensure that continuous monitoring and feedback transpires after we hold the performance discussion. I will coach him further if necessary until he is able to correct his poor work habit. A feedback system can be a form of reinforcement system and a motivational factor for management in promoting positive behaviour among employees. Following Skinner’s reinforcement theory, I can use the feedback system as a form of motivational lever in shaping my salesman’s behaviour and in helping him aim for higher goals. I can also provide incentives for positive behaviour.;It is important to provide feedback to the salesman to assess his or her strengths and weaknesses so that further training can be implemented. Although this feedback and training should be an ongoing process, the semi-annual evaluation m ight be the best time to formally discuss his performance, but performance coaching sessions across the performance period is encouraged.;Question 4. If you pay a sales person enough money you will have a well motivated sales person. Do you agree? Explain your reasons.While pay is an important consideration for most workers, there are more important considerations that affect an employees’ intention to stay with the organisation and to work optimally. My salesmen’s   intrinsic motivation will cause them to exhibit organisational commitment even as he realizes that the pay offered by the company is not necessarily the most competitive.   While this is the case, tt is important to ensure that their pay is equitable – while it is not the highest in the industry – since this is intricately related to the my salesmen’s sense of job satisfaction.I should also ensure that the rewards given to my sales people are equitably given. Equity theory suggests that motivated behaviour is a form of exchange in which individuals employ an internal balance sheet in determining what to do.   It predicts that people will choose the alternative they perceive as fair.   In other words, my sales people should find that those who contributed more to goal attainment are also rewarded as much. That is, reward is a function of performance or merit.I realise that motivating workers well in these times of change demands a balanced combination of emotional and intellectual levers. Any manager should learn to use and combine as many needs, factors, modes of reinforcement, and outputs into their message as may be necessary to motivate their employees (Legge, 2005). As Sales Manager, I can become a good motivator by knowing two things well: first, which tool or level of motivation will work for each and every employee, and second, how to motivate and communicate effectively with the use of positive reinforcement. On the part of my company, management practices which can serve as effective reinforcers include self-esteem work shops, flexible work arrangements, customized benefits packages, individual and team performance-based reward systems, among others. Each employee is different thus their motivating factors vary from one and other. My task should be to locate motivational factors of each individual or group in order to develop a motivational environment. This will assist the me in creating a better working environment enhancing productivity and job satisfaction.;Leaders and managers like myself are the ones that provide motivation and vision to any organisational undertaking. I should posses the capabilities, abilities, and skills of a leader in order to create a motivating, working environment. Only in having such effective and motivational leadership can the organisation be assured of a healthy, sustainable, and committed workforce.Word Count: 402ReferencesLegge, K. (2005). Human resource management: Rhetorics and realitie s. Anniversary edition. Basingstoke: MacMillan.Maczynski, J. ; Koopman, P. (2000). Culture and leadership profiles in Europe: Some results from the GLOBE study. In Koslowsky, M. ; Stashevsky, S. (eds.), Work values and organisational behaviour toward the new millennium. London: Macmillan.Weathersby, G. B. (1998). Leadership at every level. Management Review, 87(6), 5.

Religious Conflict in England essays

Religious Conflict in England essays Religious Conflict in England During the Tudor and Stuart Monarchs Religious turmoil has existed in England for centuries. A specific time in British history during which religious conflict reached its height was during the Tudor and Stuart dynasties from the late fifteenth century to the early eighteenth century. In fifteen seventeen Martin Luther opened the door for personal biblical interpretation through his defiance of the Roman Catholic Church in his ninety-five theses, which resulted in his banishment from the church by the Pope. Along with Luther's rebellion against, the church many countrymen (including many members of parliament) began to notice the poor education of their own Catholic clergymen. The Catholic Church in England was crying out for reform. England officially changed their religion during Henry VIII's rule. This demanding monarch wanted a son, something his wife, Catherine of Aragon, could not provide for him. Upon learning of his wife's inability to bear children, he wanted a divorce, yet had difficulty gaining papal approval. To cater to his own interest, Henry VIII changed England's religion from Catholicism to Anglican, making himself the head of the church, giving him the authority to his own divorce to Catherine. Many laws were passed during the Tudor rule that threatened papal supremacy and shaped the new Protestant religion emerging in England at this time (early 1500's). Among these was the Act of Appeals, which granted the Archbishop of Canterbury power over the pope in England to settle theological disputes. The last English ties with the Roman Catholic Church were severed when Henry VIII's refusal to repent of his divorce from Catherine and disputable marriage to Anne Bolyn. Excommunicated from the Roman Catholic Church, Henry VIII appointed himself as head of the Church of England. Religion in England was now ruled under royal sovereignty. Although the Church of Engl...

How to Find the Lyra Constellation

How to Find the Lyra Constellation The nighttime skies of the northern hemisphere summer and southern hemisphere winter feature a tiny constellation called Lyra, the Harp. Located next to Cygnus the Swan, Lyra has a long history and harbors a few fascinating surprises for stargazers. Finding Lyra To locate Lyra, look for Cygnus. Its right next door. Lyra looks like a small lopsided box or a parallelogram in the sky. Its also not far from the constellation Hercules, a hero honored by the Greeks in their pantheon of myths and legends. The Myth of Lyra The name Lyra comes from the Greek myth of Orpheus, a musician. Lyra represents his lyre, made by the god Hermes. Orpheus lyre produced such beautiful music that it brought inanimate objects to life and charmed the legendary sirens. Orpheus married Eurydice, but she was killed by a snakebite, and Orpheus had to follow her to the underworld to get her back. Hades, the god of the underworld, said he could have her back as long as he didnt look at her as they left his realm. Unfortunately, Orpheus couldnt help but look, and Eurydice was lost forever. Orpheus spent the rest of his life in grief, playing his lyre. After he died, his lyre was placed in the sky as a tribute to his music and the loss of his wife. The constellation Lyra, one of the 48 constellations of antiquity, represents that lyre. The Stars of Lyra The IAU official constellation outline of Lyra. This also shows the location of two deep-sky objects observers can search out. IAU/Sky Telescope.   Constellation Lyra has only five main stars in its main figure, but the full constellation with all its boundaries contains many more. The brightest star is called Vega, or alphaLyrae. Its one of the three stars in the Summer Triangle, along with Deneb (in Cygnus) and Altair (in Aquila). Vega, the fifth-brightest star in the nighttime sky, is an A-type star that appears to have a ring of dust around it. At 450 million years old, Vega is considered a young star. It was once our North Pole star about 14,000 years ago and will be again about the year 13,727. The Summer Triangle and the constellations that lend their stars to it. Carolyn Collins Petersen Other interesting stars in Lyra include ÃŽ µ Lyrae, which is a double-double star, meaning that each of its two stars is a double star, as well. ÃŽ ² Lyrae (the second-brightest star in the constellation) is a binary star with two members that orbit so closely that occasionally material from one star spills over to other. That causes the stars to brighten as they do their orbital dance together.  Deep-sky Objects in Lyra Lyra has a few interesting deep-sky objects. The first is called M57, or the Ring Nebula. Its a planetary nebula, the remains of a sun-like star that died and expelled its material out to space to form what looks like a ring. Actually, the cloud of star-atmosphere material is more like a sphere, but from our point of view on Earth, it looks more like a ring. This object is easiest to spot with good binoculars or a telescope.   The Ring Nebula as seen by Hubble Space Telescope, with a white dwarf at the heart of the Ring Nebula. This is a Hubble Space Telescope image. Through binoculars or a small telescope, the ring looks like a small greyish-green oval. NASA/ESA/STScI. The other object in Lyra is the globular star cluster M56. It, too, can be seen with binoculars or telescope. For observers with a good telescope, Lyra also contains a galaxy called NGC 6745. Its more than 200 million light-years away, and scientists think it collided with another galaxy in the distant past.   Scientific Findings in Lyra The constellation Lyra is home to stars with planets that orbit them. Theres a Jupiter-mass planet circling an orange star called HD 177830.  Other stars nearby also have planets, including one called TrES-1b. It was discovered crossing the field of view between Earth and its parent star (called a transit discovery), and theres some thought the star might be somewhat like Earth. Astronomers will have to do more follow-up observations to determine what kind of planet it really is. Such planetary discoveries are part of the Kepler Telescopes mission to find stars with exoplanets. It stared at this region of the sky for years, searching for worlds among the stars of the constellations Lyra, Cygnus, and Draco.

Compare and contrast economic policies adopted by Alexander II Essay

Compare and contrast economic policies adopted by Alexander II (1855-81) and Alexander III (1881-94) - Essay Example The Russian society was facing a heap of troubles at the time related to social injustice and high levels of poverty. His first major reform came a year after taking control of Russia in 1856 in the aftermath of the Treaty of Paris (Nsspress). A social system that had great economic implications called the selfdom was abolished by Alexander II following the treaty but it took him five years to officially accomplish the task due to resistance. Finally in 1861 the Edict of Emancipation abolished Serfdom. The serfdom was a labor system that created the lowest feudal class which was attached to a piece of land by a lord and required to perform labor in return for legal or customary rights (Freedictionary, 208). The noble concept of Alexander II became an economic opportunity for his regime which instead of giving the former serfs the land they hard for, Alexander II took away land from them landowners and gave that land to the former serfs in exchange for monthly payments to pay off the land to him and his government at extremely high interest rates. Despite the negative implication for the poor peasants of having to pay for the new land the move essential create a redistribution of 1/3 of privately own land by the rich into the hands of the poor (Beyondbooks, 2007). The money help Alexander finance a variety of military conflicts such as the war with Poland in the 1860’s. The fiscal move created greater poverty among the peasant population which unable to pay off the monthly land payment to the government. One major reform that helped the economy in the long run even though its effects were not really beneficiary for the citizens during his reign was judicial reform. Any economy system needs a solid foundation to help built economic activity since a legal platform protects merchants, creates stability for business activity and attracts investors into a region. Alexander II brought to Russia European based legal

David mamet Essay Example | Topics and Well Written Essays - 1000 words

David mamet - Essay Example Some of the writings that are believed to have been influenced by the turmoil in Mamet’s childhood include the play The Old Neighborhood, which is about childhood abuse and resentment, and The Cryptogram, which is about a young boy whose parents separated (â€Å"David Mamet,† Theater Database). His interests in theater began when he was just a teenager. It was at Hull House Theater and at Second City, the famous and rich Chicago improvisational sites at the time, where Mamet worked and gained influence in his language and style of writing. It was also at this time that Mamet’s stepfather inflicted physical and psychological abuse on the Mamet family and thus the theater became for Mamet a sort of catharsis and one way by which he could forget domestic problems (â€Å"Notable Playwrights†). As a young boy, Mamet also acted in television shows and this was made possible by the director of broadcasting for the Chicago Board of Rabbis who happened to be his uncle (â€Å"Notable Playwrights†). After majoring in theater and literature in Goddard College in Vermont, he started getting famous. In fact, his first play Camel was written as a college thesis requirement at graduation and was staged in 1968. The mid-1970’s was, nevertheless, the best time of his career for it was during this time that he was able to write the most number of theatrical masterpieces, among which were the plays Sexual Perversity in Chicago and American Buffalo. Overall, Mamet has written more than 30 plays, numerous sketches, poems, essays, children’s plays, a number of Chekov’s adaptations, a book about directing a film, and over a dozen screenplays (â€Å"Notable Playwrights†). In fact, every piece of work by David Mamet was an achievement, except perhaps for the screenplay for The Postman Always Rings Twice, which was considered his â€Å"least successful effort† (â€Å"David Mamet Biography†). Among his

Anthropological Perspective on Education Reform in Chicago Research Paper

Anthropological Perspective on Education Reform in Chicago - Research Paper Example The Chicago School Reform Act of 1988 has been a clear example of the efforts of legislators in USA to identify educational systems that can be feasible, in terms of the resources available, and that ensure equality and quality in education. The above Reform Act has introduced a unique scheme, the Local School Councils (LSCs). This scheme aimed to ensure that student learning is kept at high levels in all public schools in Chicago. In practice, it has been proved that the achievement of the above target is related to many challenges. One of the key weaknesses of LSCs has been its failure to secure the participation of parents in critical educational decisions. Of course, it has been proved that not all parents are ready or willingness to support such initiatives. Still, it seems that the high majority of parents would be ready to participate in innovative schemes, such as the parental networks, for improving their cooperation with their children in regard to the learning process. The review of the literature published in this field has proved that the involvement of parents in parental networks would highly improve the performance of LSCs. At the same time, parental networks would help parents to participate more actively in the learning process, a fact that would make this process more attractive to children. As a result, the parental networks could support the increase of responsiveness of children to learning, either in the short or the long term. 1. Introduction Education in Chicago is provided under the control of the Chicago Board of Education (CBE). The above organization, which was first established in 1840 (CBE 2012), has ‘the responsibility for the governance, organizational and financial oversight of public education in Chicago’ (CBE 2012). Education in Chicago has passed a strong crisis. In 1987, the region’s public schools were considered ‘as the worst across the nation’ (CBE 2012). Today, the public schools of Chic ago are considered as a model of innovation, a fact related to the Chicago School Reform Act of 1988/89 (CBE 2012). For many years, education in Chicago public schools had been problematic. The Chicago School Reform Act of 1988 has introduced in order to help towards the decentralization of Chicago’s school, a strategy that was expected to support the improvement of Chicago’s educational system (Soltero 2009, p.58). The increase of participation of parents in the local educational system and the enhancement of the power of the major to participate in the decisions related to Chicago’s public schools were two important features of the Reform Act (Soltero 2009, p.58). The provision of equal rights to children of different racial and economic background has been one of the priorities of the Chicago School Reform. The Reform has been based on the rules of ‘1988 Chicago School Reform Act’ (Koval et al. 2006, p.249). The Reform has been initiated so that two key issues are addressed: a) ‘equality and quality in education are secured’ (Koval et al. 2006, p.249), b) the current market needs for appropriately educated professionals are fully covered (Koval et al. 2006, p.249). The establishment of the Local School Councils (LSCs) was considered as a strategy that could educators to achieve the above goals. Through these Councils ‘

Employee relations and engagement Assignment Example | Topics and Well Written Essays - 1750 words

Employee relations and engagement - Assignment Example stly, the LOU/IS (Leisure Operatives Union for the Industrial Services) demanded several policies and strategies for the welfare of the employees involved in the amusement industry. Then we inquired the organisational management in order to gain the insight on existing situation and effects of the collective change (Bates and Weighart, 2014). We took a 5 minute break before the Cowells management responded in the negotiation process. Cowells management provided with their own set of proposals that will aid them in increasing their employee engagement and negotiation strategies. Then Leisure Operatives Union for the Industrial Services enquired their queries to the organisational members. The negotiation process included a break of 5 minutes. Finally, the collective bargaining process among the two parties Cowells and Leisure Operatives Union for the Industrial Services will be continued until suspension. Moreover, total three recesses were offered to the parties during the negotiation meeting. I observed that the group working continued till any sort of further collective bargaining or negotiation process (Crump, 2011). On the contrary, I observed that no such bargaining or consultation communications are observed among the two sides. I have observed that second week meeting reached to the agreement. Mainly, our negotiation process will be aimed to increase the efficiency of employee engagement and employee relation policies in the Cowells amusement firm. Cowells provides amusement service in the Northern segment with the help of the M25. Natural attractions of the surroundings are increasing competition for the Cowells (Berens, 2013). We conducted the negotiation or collective bargaining process in order to maintain smooth transition. Our negotiation process included certain consideration for the virtual authenticity and knowledge and skill development in maintaining talent base of the firm. In addition, I observed that the Cowells have higher capital liability

Strategic HRM(Human Resource management) can be utilised as a Assignment

Strategic HRM(Human Resource management) can be utilised as a competitive advantage today - Assignment Example They must show how the role of HR can be maximized to make an organization successful. Strategic HRM is defined by its role in addressing two crucial needs in an organization- delivering strategic forecasts on the business by making it possible for the organization to source, evaluate and motivate employees in an increasingly dynamic business environment, and providing administrative services that are consistent, cost-effective and responsive to every department within the organization (Regis 2008, p.5). This depicts the evolution of the HR function where an employee has to go beyond the traditional job description. HRM should hence be involved in creation of business strategies because the function of employees is paramount within an organization; for this reason, HR professionals are referred to as strategic business partners. Strategic HRM is important since it facilitates reinforcement of an organizational culture, encourages commitment among employees and promotes a willingness among employees to act flexibly so as to bring about achievement of an organization’s goals that will in turn help it realize excellence. Alternatively, strategic HRM can be defined as all the activities that affect behavior of individuals within an organization, in their efforts to put together and implement its strategic needs. This entails creating a pattern within an organization, thus it is said to facilitate reinforcement of an organizational culture, where employees are informed and part of long-term strategic planning of attaining the organization’s goals and vision. The fundamental aim of strategic HRM is to create strategic capability in employees by ensuring they are skilled, committed and strongly motivated (Armstrong & Bacon 2003, pp.41-42). Strategic HRM is seen as being different across various organizations although certain themes stand out and these are summarized by the fact it imposes a cultural change defined by changes in attitudes, behaviours and values (Wright& McMahan 2011, p.94). Analysis of advantages realized by corporations that practice Strategic HRM for competitive advantage Gaining competitive advantage may either be by being a differentiator or a low-cost leader. It includes decisions, relationships, resources and capabilities that allow an organization to take advantage of opportunities in the market while avoiding threats to its desired position. A corporation that practices strategic HRM whether it is a low-cost leader or differentiator, is able to have continuous innovation, highly skilled and competent workforce making it possible to quickly and efficiently meet customer’s needs and preempt its customer’s moves. Breaking it down, two advantages that a corporation can attain as a result of instituting strategic HRM for competitive advantage include consolidating extensive technologies

Employee relations and engagement Assignment Example | Topics and Well Written Essays - 1750 words

Employee relations and engagement - Assignment Example stly, the LOU/IS (Leisure Operatives Union for the Industrial Services) demanded several policies and strategies for the welfare of the employees involved in the amusement industry. Then we inquired the organisational management in order to gain the insight on existing situation and effects of the collective change (Bates and Weighart, 2014). We took a 5 minute break before the Cowells management responded in the negotiation process. Cowells management provided with their own set of proposals that will aid them in increasing their employee engagement and negotiation strategies. Then Leisure Operatives Union for the Industrial Services enquired their queries to the organisational members. The negotiation process included a break of 5 minutes. Finally, the collective bargaining process among the two parties Cowells and Leisure Operatives Union for the Industrial Services will be continued until suspension. Moreover, total three recesses were offered to the parties during the negotiation meeting. I observed that the group working continued till any sort of further collective bargaining or negotiation process (Crump, 2011). On the contrary, I observed that no such bargaining or consultation communications are observed among the two sides. I have observed that second week meeting reached to the agreement. Mainly, our negotiation process will be aimed to increase the efficiency of employee engagement and employee relation policies in the Cowells amusement firm. Cowells provides amusement service in the Northern segment with the help of the M25. Natural attractions of the surroundings are increasing competition for the Cowells (Berens, 2013). We conducted the negotiation or collective bargaining process in order to maintain smooth transition. Our negotiation process included certain consideration for the virtual authenticity and knowledge and skill development in maintaining talent base of the firm. In addition, I observed that the Cowells have higher capital liability

Repoliticalization of Accounting Standard Setting Assignment

Repoliticalization of Accounting Standard Setting - Assignment Example Some researchers have claimed that the drive behind financial systems is accounting policy-makers and the forces in the market. The affair has been much on the adoption or rejection of fair value principle. EU rejected IAS 39’s proposal of fair value principle. In addition, it put conditions on the extent to which the asset factor can be realized. It led to the amendment of the IAS 39 and IRFS 7. The EU and G20 have on more than one occasion discussed financial institutions and regulations on monetary policies. They have given guidance on securities valuation (BENGTSSON, Elias, 2011). Moreover, they proposed being a supervisory body or that the IASB should be constantly supervised in its activities. Opinion Political influence on financial in my view is not a bad agenda but their negative influence. The institution is no longer at ease to perform its functions with the profession required. On the other hand, the EU declined the adoption of IFRS 9 after the financial crisis, leaving the world amazed about the political forces behind financial institutions. IAS 39 was established under political pressure and went further to affect its operation when mistrust arose between the EU and US financial institutions. The political drive wheel should be to facilitate the growth of financial institutions and not curtail their operations.

Social Media Essay Example for Free

Social Media Essay Social media today is one of the most advanced platforms for companies to market their product instantaneously and to a large audience with just a click of a button. With the current technological boon the world is undergoing, social media has definitely taken the front seat and helped an array of organisations from different fields to become some of the world’s leading profitable organisations. Social media marketing (SMM) is a form of Internet marketing that utilizes social networking websites such as Facebook, twitter, instagram etc. as a marketing tool to advertise and market their products to the general public. This essay will focus on the different uses that social media websites have to cater to marketing with reference to a multinational, e-business company called amazon. Since the internet is such a large market with a colossal number of social networking sites, it is important for organisations to plan before they venture into a marketing campaign on what exactly they need to achieve.. see more:social networks and our young generation. speech Amazon has now dominated the world of e commerce and online retailing with an immense competitive advantage by engaging customer satisfaction and planning a genuine marketing strategy. A large proportion of amazon’s marketing is on social media websites which is an appropriate place to find a large target audience to its website. Some of the companies’ key motives and strategy on social media marketing are discussed below. Firstly, amazon has established a clear cut goal of marketing online to increase brand awareness by promoting and advertising with sales offer to its target group on social networking arenas. Secondly the company has figured on what types of social media platforms they need to market their website on. Some of its primary marketing campaign takes place on sites such as Facebook, YouTube, twitter and Instagram, which are largely driven and operated by a young population who are more likely to shop online. Also its has engulfed and adapted strategies such as engage potential customers, prioritize the brand, measure the outcome, listen to feedback and control and develop its image. Social media has gained so much attention today, with a large population hooked onto social networking sites. This has given a massive opportunity for entities to market their products on these sites to a large audience with  sometimes at no cost to post online. amazon is a pioneer in social media marketing with its active involvement in advertising and promoting its business online. from directly emailing existing customers about sale offers to posting about its products on their facebook fanpage, it definitely has a large and active social media marketing involvement.

Marketing Essays Starbucks Coffee

Marketing Essays Starbucks Coffee Starbucks Coffee Starbucks Coffee company is headquartered in Seattle, Washington. It began in 1971 with just one retail store at Seattles historic Pike Place Market. Now it has become the leading brand and retailer in the world. Starbucks went public on June 26, 1992. The main aim of Starbucks is to become the leading brand and retailer of finest coffee in each of its target markets nationally and internationally by selling the best quality coffee and related products, and by providing high class customer service. Starbucks purchases and roasts a high quality whole bean coffees to sell them with fresh, rich-brewed espresso beverages, different varieties of pastries and coffee related accessories and equipments (www.starbucks.com). Moreover Starbucks also sells coffee and tea products strategically through other channels such as supermarkets and non traditional retail channels such as United Airlines, Marriott International, Barnes Noble bookstores and Department stores. More than quality coffee, Starbucks features a variety of hand-crafted beverages, pastries and in some markets, a selection of sandwiches and salads. Starbucks merchandise includes exclusive espresso machines and coffee brewers, unique confections and other items related to coffee and tea. Some of the Starbucks products are as follows; Beverages: Brewed coffees, Italian-style espresso, cold blended beverages, roasted whole bean coffees, tea products, fruit juice, sodas, and coffee liqueur. Food: Sandwich, Salads, pastries and ice creams Non food items: Mugs, Travel tumblers, coffeemakers, coffee grinders, storage containers, compact discs, games, seasonal novelty items, Starbucks card, media bar. Starbuckss main mission is to be a global company. In order to achieve this it needs, the development strategy that Starbucks implemented to adapt with variety market and local need are: joint ventures, licenses and company owned operation. The total number of Starbucks stores are 15,011 which are operated and 3,891 are licensed operation in US which are spread out in 50 states. For the international location, Starbucks’ store can be found in 44 countries outside of the United States and 1,049 stores are company owned operated in Australia, Canada, China, Germany, Singapore, Thailand and the U.K. and 6,506 are joint ventures and licensed operation. Internationally Starbucks opened their stores in the following countries; Starbucks open in Tokyo, Japan. Nowadays, there are more than 700 retails shops in Japan. Furthermore, Starbucks also open in Hawaii and Singapore. Starbucks open in Philippines Starbucks open in U.K., Taiwan, Thailand, New Zealand and Malaysia. Starbucks open in Beijing, Kuwait, South Korea and Lebanon. Starbucks open in United Arab Emirates, Shanghai, Australia, Qatar, Saudi Arabia and Bahrain. Starbucks open in Switzerland and Austria. Starbucks open in Oman, Germany, Spain, Mexico, Puerto Rico, Southern China, Macao and Shenzhen, Greece and Indonesia. Starbucks open in Turkey, Peru, Chile and Cyprus. Expansion to France The latest expansion in Jordan 5 Ps for Starbucks Coffee Company Starbucks is not just a good cup of fresh coffee, but a better quality product, excellent customer service and better understanding of coffee culture. Starbucks has so far achieved unpredictable achievements in coffee chain industry. Now we will go through the strategies of 5 Ps, price, product, place, promotion and people. Price: The Starbucks prices continuously matches with its competitors competitively represents Starbucks an attractive combination of features, high quality, excellent service and other attractive attributes. Product: Starbucks is known very well in the market due to its high quality coffee, care in selection and expertise in roast. It purchases coffees that have been grown and processed which meets strict environmental, economical, social and quality standards, which is suitable appropriate for the market and the customers. Starbucks establishes its longer lasting and more profitable competitive advantages by broadly differentiating its coffee and coffee related products depending upon its competence and innovation. Place: The decisions of Starbucks about where to site its stores depends on reaching its potential customers and providing better service to its existing customers. Its stores are typically clustered in high-traffic, high visibility locations. When it opens a new store near an established Starbucks, it is generally intended to relieve long customer lines and improve service. It takes more than just location to be successful. Attracting customers to Starbucks happens by providing high-quality coffee as well as creating inviting, comfortable places located in convenient location. The store expansion strategy for Starbucks is by entering new markets wherever the opportunity exists to become the leading specialty coffee retailer. Its current location totals 8,505 worldwide by the year 2007. Promotion: There is not much conventional advertising because Starbucks found that there is too much competition for consumers attention in TV, radio and print media. Starbucks usually picks one or two charities or events that reach the community it serves. This will inspire people inside and outside the company and reinforce the companys value and image. For instance, after September 11, stores in New York, Washington D.C and Pennsylvania brewed coffee free of cost for relief workers. People: One of the strategy of Starbucks is to believe that the Company is in the people development business as well as in the coffee business. As stated in its mission Provide a great work environment and treat each other with respect and dignity, Starbucks realizes that one of the most important resources contributing to success is their employees or partners as referred by the Company. Starbucks is attempting to imbed its values in the Company culture. They use these values to give employees a sense of meaning to their work even if it is just pouring a cup of coffee. The coffee chain provides medical, dental and vision coverage to all employees, even including part-timers. The part- time partners are also eligible for the companys stock program. The purpose is to instill in its partners a sense of purpose, commitment, loyalty and enthusiasm. Expectedly, what Starbucks benefits are the reduced recruiting and training costs. Get help with your essay from our expert essay writers ‘PESTLE’ Analysis for Starbucks Coffee Company Political: High taxation imposed on farmers in those countries producing the coffee bean will usually mean Starbucks pay a higher price for the coffee they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer. Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country’s government imposes a tariff it not only results in an efficiency loss for Starbucks but large income transfers can become inconsistent with equity. This extra charge can turn a bargain into a rip-off. Also, since 9/11, trade relations have been adversely affected between the USA and some other countries. Starbucks should thoroughly investigate the political stability of any country they plan to expand to. Changes in government can lead to changes in taxation and legislation. The American elections may have an effect on Starbucks as new legislation or new or existing government may bring in taxes. Also, those countries in political turmoil or civil war (e.g. Zimbabwe at present) should be approached with great caution when considering new ventures. The international economy must be brought into consideration as it can affect Starbucks’ sales and markets. The aftermath of 9/11 was an example of an economic downturn that affected the world market. A reduction in licensing and permit costs in those countries producing the coffee bean for Starbucks would lower production costs for farmers. This saving would in turn be passed on to the purchaser. Economic: A rise in interest rates means investment and expansion plans are put off resulting in falling sales for Starbucks and their suppliers. Also mortgage repayments rise so consumers have less disposable income to spend on luxury products such as coffee. Low interest rates will have the opposite effect of it. If growth is low in the nation of location of Starbucks then sales may also fall. Consumer incomes tend to fall in periods of negative growth leaving less disposable income. Consumer confidence in products can also fall if the economic situation is bad. Competitive pricing from competitors can start a price war for Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market. Globalisation of the coffee market has meant farmers of the bean now earn less money than they used to. This can result in a decrease of people willing to do it for a living, which will mean a decrease in coffee produced, resulting in a drop in Starbucks supply levels and probably profits. Starbucks are affected by exchange rates when dealing with international trade. If the value of the currency falls in the country of a coffee supplier this enables Starbucks to get more for their $ or  £ when importing the goods to their country. This saving can be passed along to the customer. Exchange rates are forever changing throughout the world in today’s market. Social: Where income is distributed is another factor that Starbucks should look at as this also demonstrates the ideal place to aim their marketing or to locate their stores. Coffee is more of a luxury product so it is those people/places with the most amount of disposable income to spend that should be targeted the most intensely. Starbucks would not want to locate to an area where the local population have a poor attitude to work. Recruitment would be difficult, training arduous, and staff turnover would be high. Attitudes to work are important in other ways. Transport needs to the premises must be considered for both staff and customers. Easy access is vital to ensure there is no excuse for staff to arrive late or for customers not to visit. Research shows the average age of the population is getting older and birth rates are stagnating. Starbucks is presently aiming it’s product at young people but maybe these views will change in the long-term as the market proportion for young people diminishes. The most profitable way forward may be to widen their target market despite the risk of alienating present customers. Technological: Developments in the technology of coffee making machines and the computers that Starbucks use to run their cash registers will enable their staff to work more quickly and efficiently. This will result in customers being served quicker and create the potential to serve more customers in a day. In the short-term, Starbucks must identify the most efficient software upgrades to use to keep up with the competition. This applies to the improving the accessibility of their website (www.starbucks.com) and also improving the speed and quality of the service provided on the shop floor. As a multi-national business empire, Starbucks has the budget and the resources to have a cutting-edge RD department. The website is very accessible, the facilities are state of the art but more importantly new ideas are consistently being tried in terms of a constantly updating menu. The rate of technological change in the current world market is high, much higher than, say, thirty years ago. Much of this is down to the Internet and the speed with which information can be communicated around the globe. Starbucks will need to invest heavily just to stand still in their ever expanding and developing market, and even more so to try to stay ahead of competitors. Legal: Starbucks need to be aware of the trade laws in the various countries they occupy and do business with. They need to ensure they are not in violation of e.g., religious laws. Also, certain countries impose a tariff that has to be paid when goods are imported/exported so this must be taken into account. Each country has varying employment laws. Some may have a Sabbath day, some may have a limit on the number of hours an employee may work per week, and all will have varying levels of minimum wage. Starbucks should consider these factors when deciding on relocation. Starbucks may have to abide by local planning regulations when building shops or altering purchased sites, as certain areas of land may be protected or unsuitable. All matters would be addressed by the local government. Environmental: Starbucks customers create a lot of waste as they often leave the shop with their cup of coffee and then dispose of it in the street. The packaging for this cup must be carefully considered to make it as biologically degradable as possible. Certain other materials can be very harmful to the natural environment. Planning permission may not be granted if Starbucks wish to build in an area that could be harmful to the environment. The land may be protected. Starbucks need to carefully consider the methods in which they dispose of their waste as there are strict laws in most countries to ensure a firm trading in their country disposes of the waste that is created in their business in a specific and efficient way. Starbucks should be aware of the physical and influential power of groups such as Greenpeace and Friends of the Earth. Find out how our expert essay writers can help you with your work ‘SWOT’ Analysis for Starbucks Coffee Company Strength: Strong brand name and image The reputation of brand name and image of Starbucks allow brand recognition and consumer retention. Therefore, the expanding of stores to other countries is more proficient and easier. Healthy financial performance The financial performance of company has positive aspects. The revenues of Starbucks in 2007 were $9.411 billion, growing at about 30 percent. The exponential growth in revenue and profit creates the strong financial statement and reliability to shareholders. High-skilled management team Starbucks has highly skilled and professional Chief executive officers (CEOs), for example, Howard Schultz, Orin Smith and Howard Behar. These lead to the rapid and stable growth of Starbucks. High technology Starbucks brings the technology to use in the stores in order to attract more customers. For instance, there are high-speed internet, website and prepaid Starbucks card. It might be increase traffic in the stores particularly in new generation group. High quality and innovation of products Starbucks uses high quality of coffee beans and dairy goods. Furthermore, new products are usually introduced by Starbucks including coffee and beverage line. Both of them enable Starbucks to be able to maintain level of sales and keep competitors out. Weakness: High price Starbucks has increased the price due to rising cost of production, including cost of dairy goods and cost of rent. The increase of price might have an effect on the falling of sales and customer retention directly Clusters of store Because Starbucks has a lot of stores and also these are located in closed areas, it leads to the scramble of customers in each store. Clusters of store might cause inefficient performance of the company. Opportunities: Large consumer group China has the biggest world’s population. Coffee drinking is more popular among young generation, especially those who have overseas education, which influences the coffee consumption. Many of these teenagers have lived in western countries for a long time and they have familiar with the coffee culture. When returning to China they have carried on living in this fashion. Chinese teenagers also like to choose western style coffee shops as their favorite place. Lifestyle Modern lifestyle of Chinese teenagers and adults supports the proliferation of western coffee shops. Meeting and discussing business in a warm and nicely designed coffee shop have become more popular in China. Consequently, the teahouse’s domination has been challenged by the foreign coffee house. Threats: Competitors The global coffee market is a very competitive sector. Starbucks is facing the increase of competitions from other foreign players. The latest Starbucks’ competitor is Canadian chain Blenz Coffee, which plans to open a string of cafà © in China where consumers can smoke, while Starbucks is non smoke stores. Intellectual-property violation Starbucks filed a lawsuit for trademark infringement against Shanghai Xingbake which signs, logos and names similar to Starbucks. It would seem that chances of consumer confusion are high. Porters Five Forces Analysis Porter’s five forces analysis is an important tool for analyzing an organizations industry structure in strategic processes. It helps the marketer to contrast a competitive environment. It tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. Porter has identified five competitive forces that shape every industry and every market. These are: The threat of entry, The power of buyers, The power of suppliers, The threat of substitutes and Competitive rivalry. The threat of entry: The threat of entry covers: Economies of scale, The high or low cost of entry, Ease of access to distribution channels, Cost advantages not related to the size of the company, Whether competitors will retaliate? Government action and How important differentiation is. There will always be a continuous pressure for Starbucks to react and adjust to these new entrants. The easier it is for new entrants to enter the market the more competition there is within the market. Although this really should not pose too much of a problem for Starbucks as they have a very large share of the market that will be relatively immune to the threat of new entrants. Starbucks is a company that have years of experience in roasting specialised coffee, if a company was to enter the coffee industry it would be extremely difficult for them to offer the same quality of coffee at a competitive price. As a company’s volume increases, so does its experience and knowledge which tends to decrease the cost of their products The power of buyers: Buyer power is likely to be high if a number of conditions are in place. There is a concentration of buyers, particularly if the volumes of purchases of the buyers are high, the supplying industry comprises a large number of small operators, there are alternative sources of supply, the component or material cost is a high percentage of total cost, the cost of switching a supplier is low or involves little risk, there is a threat of backward integration by the buyer. This is high where there a few, large players in a market If there are a large number of undifferentiated, small suppliers The cost of switching between suppliers is low for Starbucks. The power of suppliers: If the market is dominated by few large suppliers rather than numerous fragmented sources, a suppliers bargaining power is likely to be high. Although suppliers do have certain amounts of power, it is limited. With Starbucks being ‘the most famous specialty coffee shop chain in the world’ and still expanding they should still be requiring coffee beans for some time. It is safe to say that the Suppliers need Starbucks, just as much, if not more so than Starbucks need their supplies. Fortunately for Starbucks they buy their coffee beans directly from producing countries: Latin America (50%), Pacific Rim (35%) and East Africa (15%). The threat of substitutes: This occurs where there is product-for-product substitution, where there is a substitution of need e.g. a bald head reduces the need for hair gel, where there is generic substitution and finally the attitude ‘we could always do without. An example for Starbucks would be if an alternative to coffee was offered e.g. a customer switching from coffee to tea. Competitive rivalary: Numerous factors contribute to intense rivalry between existing competitors in an industry. This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is found in the centre of the diagram. The extent to which competitors are in balance, this is where competitors are of an equal size which creates intense competition as one of the competitors tries to gain dominance over the other, high fixed costs in an industry may result in price wars, differentiation is important as in a commodity market where products or services are undifferentiated there is little to stop customers switching between competitors. Starbucks do not really have any competitive rivals that are of similar size to them so there are not any rivals in the market that would be considered in balance with them. However, they must maintain their excellent standards and always be on the lookout for new innovation s in order to stay as the market leader. Competitor Analysis Competition is steadily growing against Starbucks each year as the industry grows. Competitors look to gain an advantage by price cuts, launching a rival product, aggressive expansion of production to increase market share or inclusion of significant modifications to a product that other competitors must also undertake to keep up. The following are the current figures showing the market share of companies in the coffee industry. 35% Starbucks 20% Local Coffee Outlets 14% Internet Cyber Cafes 13% Caffe Nero 10% Costa Coffee 8% Coffee Republic Culture Model The culture of an organisation is the set of values that helps its stakeholders understand what the organisation stands for, how it does things and what it considers important. Under culture model, we are going to explain the communication and decision making of Starbucks. The Organisation its environment (Source: Davidson, 2002 pg. 73 Figure 3.1 In the diagram (above), owner created the company objective for Starbucks and the boarder of directors is going to lead company to achieve that company objective. Therefore, the boarder of directors has to choose the suitable organisation culture environment for Starbucks in order to achieve the company objective. The Value System The value system is the inter-organisational links that are vital in the creation of the product or service of a company. It follows the production of the service/product from raw material stage right through to the customer purchase. Each instruction for the development of the product is detailed and explained at each stage of the value system. The ‘firm value chain’ is the most important to a manager because that is their company, however, a good manager will understand the whole process and how to manage each individual link and relationship to maximise customer value. Managers should also need to learn the whole value system because most of the cost and value creation occurs in the supply and distribution chains. For Starbucks, the ‘supplier value chain’ deals with where they get the coffee beans from that they use to create their end product – a cup of coffee. Starbucks buy all their beans direct from the farmers in the producing countries cutting out any middle-man therefore keeping prices to a minimum. The countries that supply them can be found in Latin America, East Africa and on the Pacific Rim. Starbucks fully appreciate the need to oversee all aspects of the value system and we can see an example of this in their determination to obtain the highly sought Narino Supremo crop in 1992. This acquisition ensured some of the highest quality coffee supplies in the world would be reaped by Starbucks. The company has close relationships with their coffee exporters. They maintain this by working directly with them and training them. A good relationship here is essential and needs to be maintained. The ‘firm’s value chain’ consists of: The Firm’s infrastructure; which is about the ways in which Starbucks want their organisation to run and how it is best to implement systems of planning, finance, quality control and information management, it is also where they have made the decision to make high quality coffee from the best coffee beans as this is involved with the quality control. Human Resource Management; It is concerned with the activities involved in recruiting, managing, training, developing and rewarding people within the organisation. For Starbucks this is where they have made decisions about the fact that all employees are equal, even those on the shop-floor that are working over 20 hours a week receive bonuses like free coffee and health care coverage, this was to make sure that the members of staff felt as if they were valued by the company and would continue to provide a good service. Another implemented scheme is for all Starbucks store staff to have a comprehensive 24 hour training scheme before they were allowed on to work directly with customers. Technology development; Starbucks has a large number of areas where it uses technology from regulating their stock levels to the cash registers. There is also technology to enable customers can to order their coffee over the internet and then pick it up from the store when they get there. Some stores now also contain computers where customers can access the internet. Procurement; this refers to the processes for acquiring the various resource inputs to the primary activities. For instance, the method of obtaining the grade A coffee beans from suppliers to use in the Starbucks coffee. Inbound logistics; For Starbucks this means receiving the coffee beans and other products that they need to make the products in their stores from their suppliers and storing these until they are used to make the product that they are going to sell. Operations; this is the stage where Starbucks make the coffee in the store and package the other subsidiary products. Outbound logistics; this is collection, storage and distribution of coffee. A customer actually purchasing a cup of Starbucks coffee from the store. Marketing and Sales; This is how consumers become aware of Starbucks coffee and purchase it. Starbucks is a worldwide company and their brand is recognised all over the world, which means that marketing is not as necessary as it once was. Most people now recognise the name and associate the brand-image with high quality products. Service; this includes all the activities that enhance or maintain the value of the product, e.g. installation, repair and training. This area is concerned with the members of staff that deal with the customers, it focuses on the need to ensure the ‘customer experience’ of visiting a Starbucks store is all the more enjoyable due to the friendliness and efficiency of staff and consistently high quality product on offer.

Ecstasy and the Youth :: essays research papers

  Ã‚  Ã‚  Ã‚  Ã‚  Rave as a Post- Modern Phenomena is continuing to increase is size. Every year more teenagers discover the potential of this way to have fun. They suddenly feel part of something, which they enjoy. However, the rave phenomena primarily depended of taking the drugs. Unfortunately, like any other culture, or cult hippies is self-stupefying. This means that the ignorance of the Ravers maintains as the existence of Raves. Those who become part of such drug taking culture, the problem often intensified, due to the lack of sport with in the raving community, who are still having too much fun. This is made worse because, there is also a lack of support in the community for the victims of recreational drug abuse.   Ã‚  Ã‚  Ã‚  Ã‚  Rave culture is highly attractive to the youth audience in general, regardless of class or ethnic background. Raves are non-elitist, and are primarily for the working class. This makes Raves quit different from all other postmodern sub-cultures. The legalization of a Rave has not prevented the illegal taking of the drugs. This means that there are a lot of young people indulging in Rave culture and recreational drug taking every weekend.   Ã‚  Ã‚  Ã‚  Ã‚  Rave has provided an environment where drugs like ecstasy are socially acceptable. Rave like other cult is self-stupefying and refuses to question the taking of the drugs affecting its continual and successful existence. â€Å"Recreational drug users often see only benefits only from drug use and at this stage will have control over the drug taking, despite using drug on regular basis. However recreational drug use does not mean problem free drug use. For this reason it is vital to raise awareness about some of the known effects of the drug use. Both within the raving community and the general public, after all the young Ravers of today a whole generation, who will ultimately affect the future of the country?   Ã‚  Ã‚  Ã‚  Ã‚  Many young people feel Ecstasy allows them to stay in control unlike alcohol. In an article by Sheila Henderson she particularly emphasis’s the attraction of Ecstasy and the E-culture for young women. She suggests that women felt that being in an environment where every one was on Ecstasy, rather than say alcohol, freed from unwanted sexual attention from men. She state, â€Å"Instead of being tied to a boyfriend, having to stick close to friends, feeling self-conscious about appearance or dace style or intimidated by attention from men, the young women occupied this social space with confidence, circulating and meeting new people independently.

Power Utility Consumption Capm in Uk Stock Markets

Pricing of Securities in Financial Markets 40141 – How well does the power utility consumption CAPM perform in UK Stock Returns? ******** 1 Hansen and Jagannathan (1991) LOP Volatility Bounds Volatility bounds were first derived by Shiller (1982) to help diagnose and test a particular set of asset pricing models. He found that to price a set of assets, the consumption model must have a high value for the risk aversion coefficient or have a high level of volatility.Hansen and Jagannathan (1991) expanded on Shiller’s paper to show the duality between mean-variance frontiers of asset portfolios and mean-variance frontier of stochastic discount factors. Law of one price volatility bounds are derived by calculating the minimum variance of a stochastic discount factor for a given value of E(m), subject to the law of one price restriction. The law of one price restriction states that E(mR) = 1, which means that the assets with identical payoffs must have the same price. For th is constraint to hold, the pricing equation must be true.Hansen and Jagannathan use an orthogonal decomposition to calculate the set of minimum variance discount factors that will price a set of assets. The equation m = x* + we* + n can be used to calculate discount factors that will price the assets subject to the LOP condition. Once x* and e* are calculated, the minimum variance discount factors that will price the assets can be found by changing the weights, w. Hansen and Jagannathan viewed the volatility bounds as a constraint imposed upon a set of discount factors that will price a set of assets.Therefore, when deriving the volatility bounds, we calculate the minimum variance stochastic discount factors that will price the set of assets. Discount factors that have a lower variance than these values will not price the assets correctly. Furthermore, Hansen and Jagannathan showed that to price a set of assets, we require discount factors with a high volatility and a mean close to 1. After deriving these bounds, we can use this constraint to test candidate asset pricing models.Models that produce a discount factor with a lower volatility than any discount factor on the LOP volatility can be rejected as they do not produce sufficient volatility. Hansen and Jagannathan find evidence that using LOP volatility bounds, we can reject a number of models such as the consumption model with a power function analysed in papers such as Dunn and Singleton (1986). 2 Methodology To test whether the power utility CCAPM prices the UK Treasury Bill (Rf) and value weighted market index returns, we first calculate the LOP volatility bounds.The volatility bound is derived by calculating the minimum variance discount factors that correctly price the two assets for given values of E (m). The standard deviations of the stochastic discount factors are then plotted on a graph to give the LOP volatility bound shown in figure one. Figure 1 here The CCAPM stochastic discount factors are then calculated for different levels of risk aversion. The mean and standard deviation of these discount factors are then plotted on the graph and compared to the LOP discount factor standard deviations.Pricing errors can then be calculated and analysed to see whether the assets are priced correctly by the candidate model. To accept the CCAPM model in pricing the assets, we expect the stochastic discount factors variance to be greater than the variance of the LOP volatility bounds. It is also expected that pricing errors and average pricing errors (RMSE) will be close to zero. These results will be analysed more closely in the later questions. 3 Power Utility CCAPM vs LOP Volatility Bounds In order for the power utility CCAPM to satisfy the Law of One Price volatility bound test at any level of risk aversion, the standard deviation f the CCAPM stochastic discount factor at that level of risk aversion must be above the Law of One Price standard deviation bound for the mean value of t he CCAPM stochastic discount factor at the same level of risk aversion. This is the null hypothesis and if it is accepted then the model satisfies the test. The alternative hypothesis is that it the standard deviation of the stochastic discount factor is below the Law of One Price standard deviation bound for the mean value of the stochastic discount factor.If the null hypothesis is rejected and the alternative hypothesis is accepted then the model does not satisfy the test. Table 1 here Figure 2 here Figure 2 shows LOP volatility bounds and the standard deviations and means of the CCAPM stochastic discount factors for levels of risk aversion between 1 and 20. It is obvious the standard deviations (Sigma(m)) of the CCAPM stochastic discounts factors are much lower than the LOP volatility bounds corresponding to the means (E(m)) of the CCAPM stochastic discount factors.This is true for any level of risk aversion, because the entire CCAPM (green) line lies below the LOP volatility bou nds (dark blue) line. Table 1 shows the standard deviations of the stochastic discount factors and the precise LOP volatility bound values, corresponding to the stochastic discount factor means so that the CCAPM can be formally tested. All of the standard deviations are lower than their respective volatility bound values. Therefore the null hypothesis is to be rejected and the alternative hypothesis is to be accepted for all levels of risk aversion between 1 and 20.Furthermore it would take a risk aversion of at least 54 to accept the null hypothesis. Therefore the power utility CCAPM stochastic discount factor does not satisfy the Law of One Price volatility bound test. These results are consistent with the equity premium puzzle study by Mehra and Prescott (1985). The study examines whether a consumption growth based model with a risk aversion value restricted to no more than 10 accurately prices equities. They have found that according to the model equity premiums should not excee d 0. 5% for values of risk aversion (? ) between 0 and 10 and values of the beta coefficient (? ) between 0 and 1. However the average observed equity premium based on the average real return on nearly riskless short-term securities and the S&P 500 for the period 1989-1978 was 6. 18%. This is clearly inconsistent with the predictions of the model. In particular if risk aversion is close to 0 and individuals are almost risk neutral, the model fails to explain why the sample’s average equity returns are so high.If risk aversion is significantly positive the model does not justify the low average risk-free rate of the sample. The results of Mehra and Prescott’s (2008) empirical study are consistent with our results, because the power utility CAPM did not satisfy our empirical tests. 4 Kan and Robotti (2007) Confidence Intervals The Law of One Price volatility bounds calculated in part 2 are subject to sampling variation. We have calculated point estimates of the volatilit y bounds, but we did not take into account that our results are based on a finite sample of Treasury Bill and market returns.To more accurately test whether the power utility CCAPM passes the LOP volatility bounds test, we need to identify the area in which the population volatility bound may lie. The area used is that between the upper and lower 95% confidence intervals for Hansen-Jagannathan volatility bounds obtained by Kan and Robotti (2007), shown in table 2. If the standard deviations of the CCAPM stochastic discount factors lie below that area for values of risk aversion between 1 and 20, then the power utility CCAPM model is to be rejected according to this test.Table 2 here Figure 3 here Figure 3 contains point estimates of the LOP volatility bounds, the standard deviations and means of the CCAPM stochastic discount factors for levels of risk aversion between 1 and 20 and the 95% confidence intervals for the volatility bounds. All of the standard deviations are below the ar ea in between the upper and lower confidence intervals for the volatility bounds. This indicates that at a 95% certainty the CCAPM does not satisfy the LOP volatility bound test even when sampling errors are taken into account. Performance of Power Utility CCAPM In recent academic literature on the subject of asset pricing models a common formal method of evaluating model performance is to calculate the pricing errors on a set of test assets. In this report the test assets are the Treasury Bill and Market Index quarterly returns from Q1 1963 to Q4 2009. The pricing error is calculated as [pic] Where [pic], [pic] Treasury Bill and Market Index returns, and [pic] is the pricing errors. Table 3 hereFor a model to correctly price an asset it would require that the pricing errors are as close to zero as possible since the pricing error is a measure of the distance between the model pricing kernel and the true pricing kernel. From Table 3 we can see that the pricing errors for the differe nt values of risk aversion are not close to zero and the size of the errors actually increases with the level of risk aversion. We can also see that the Route Mean Square Pricing Error (RSME) which measures the average distance from zero of the pricing errors is not as close to zero as we would hope and also increases with the level of risk aversion.If we note the case for a risk aversion level of 20 then the RSME is 6. 76%, since this is quarterly data this works out to an annual RSME of approximately 27%. With such large pricing errors we would not expect this model to perform strongly. Hansen and Jagannathan (1997) found that for different levels of risk aversion the pricing errors do not vary greatly. As noted above, this is not the case in our sample in which the error increases with the level of risk aversion, thus creating an ever wider dispersion of pricing errors.This is counterintuitive to what we would usually assume as with increased levels of risk aversion the consumer is only willing to accept a certain level of return for lower and lower levels of risk, therefore we would expect at some point that the mean variance level would pass the volatility bounds and therefore correctly price the assets. Conforming with this report Cochrane and Hansen (1992) found that in order to satisfy the levels of variance necessary to surpass the volatility bounds a risk aversion level of at least 40 was necessary.It should be noted that in reality this is quite unreasonable and also that for this level of variance to be attained the expected return might also have to drop below the level necessary to surpass the volatility bounds. Table 4 here From Hansen and Jagannathan (1991) we know that in order to price a set of assets correctly the stochastic discount factor (SDF) should be close to one and have high levels of volatility. Table 4 shows that SDF’s at low levels of risk aversion are relatively close to one but have very low levels of volatility.When the level of risk aversion increases the SDF’s get further and further away from one yet the volatility also increases. Therefore it seems reasonable to conclude that we would not expect any of these SDF’s to price the assets correctly. The results illustrated above are consistent with the earlier analysis and point to the conclusion that the power utility CCAPM does not do a good job in pricing the two test assets and thus does not perform well in UK stock returns. Cochrane and Hansen (1992) agree with this conclusion but Kan and Robotti (2007) find the opposite.The reason for this could be the use of sampling error in the Kan and Robotti paper and the different data used the in the analysis. This report illustrates that there exists not only an equity premium puzzle but also a risk free rate puzzle. This risk free rate puzzle as noted by Weil (1989) states that if consumers are extremely risk averse, a result of the equity premium puzzle, then why is the risk free rate s o low. Weil cites market imperfections and heterogeneity as the probable causes of this puzzle; however, this is not the explanation that Bansal and Yaron (2004) find.Using a model that accounts for investor reaction to news about growth rates and economic uncertainty they are able to go some way to resolving not only the risk free rate puzzle but also the equity risk premium puzzle. One method that could be used to improve the performance of the power utility CCAPM would be to construct the model using conditioning information; this would enlarge the possible payoff space available to investors. Kan and Robotti (2006) find that including conditioning information in models reduces the pricing errors by allowing the prices of volatility to move in line with the market.Although as Roussanov (2010) finds, conditioning information does not necessarily improve model performance and may actually exacerbate the problem. 6 Sampling Error in the Volatility Bounds When using the volatility bo unds as specified by Hansen and Jagannathan (1991) to test asset pricing models we must be wary of sampling error in the bounds. As noted previously if a model does not lie within the Hansen and Jagannathan volatility bounds then we can conclude that it does not price the test assets correctly.However, Gregory and Smith (1992) and Burnside (1994) first noted that this test does not take into account significant sampling variation and could therefore reject models that price assets correctly. Burnside (1994) uses Monte-Carlo simulation to illustrate that over repeated samples if sampling error is ignored the volatility bounds test performs poorly. Gregory and Smith (1992) state that the sampling error could be due to large variability in the estimated bounds or the use of sample data in the analysis.Kan and Robotti (2007) derive the finite sample distribution of the Hansen and Jagannathan bounds in order to take account of this sampling error. They argue that confidence intervals tha t take into account the variation can be constructed and used to test asset pricing models. The importance of this new method of testing cannot be underestimated as it could affect the decision to reject an asset pricing model or not, this is best illustrated with reference to examples. Kan and Robotti test the equity premium puzzle using data from Shiller (1989) to show the implications of taking into account sampling error.Through constructing the 95% confidence intervals for the Hansen and Jagannathan volatility bounds they are able to show that the time-separable power utility model being tested may not be rejected at low levels of risk aversion. This is in stark contrast to the findings when sampling error is not taken into account where the model is strongly rejected except for unfeasible levels of risk aversion. From Figure 3, as noted earlier, even when sampling error is taken into account for the model tested in this report it does not fall within the volatility bounds.Howe ver, it does decreases the distance between the model and the volatility bounds which is the major consequence of the Kan and Robotti paper. This new method goes some way to solving the problem noted by Cecchetti, Lam, and Mark (1994) who found using classical hypothesis tests that the Hansen and Jagannathan bounds without sampling error rejected true models too often. Again, an extension here could be to use conditioning information to improve the volatility bounds by using the methods of Ferson and Siegel (2003) and as a result hopefully reduce the sampling error in the bounds.References Bansal, R. and A. Yaron, 2004, Risks for the long run: A potential resolution of asset pricing puzzles, Journal of Finance, American Finance Association, vol. 59(4), pages 1481-1509, 08. Burnside, C. , 1994, Hansen-Jagannathan Bounds as Classical Tests of Asset-Pricing Models,† Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 57-79 Cecchetti, S. G. , P. Lam, and N. C. Mark, 1994, Testing Volatility Restrictions on Intertemporal Marginal Rates of Substitution Implied by Euler Equations and Asset Returns, Journal of Finance, 49, 123–152.Cochrane, J. H. and L. P. Hansen, 1992, Asset Pricing Explorations for Macroeconomics, NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 115-182 National Bureau of Economic Research, Inc. Dunn, K. , and K. Singleton, 1986, Modelling the term structure of interest rates under Non-separable utility and durability of goods, Journal of Financial Economics, 17, 1986, 27-55. Ferson, W. E. , and A. F. Siegel, 2003, Stochastic Discount Factor Bounds with Conditioning Information, Review of Financial studies, 16, 567–595. Gregory, A. W. and G. W Smith, 1992.Sampling variability in Hansen-Jagannathan bounds, Economics Letters, Elsevier, vol. 38(3), pages 263-267. Hansen, L. P. and R. Jagannathan, 1991, Implications of Security Market Data for Models of Dynamic Economies, Journal of Political Economy, Vol. 99, No. 2 (Apr. , 1991), pp. 225-262   Hansen, L. P. and R. Jagannathan, 1997. Assessing specification errors in stochastic discount factor models. Journal of Finance 52, 591-607. Kan, R. , and C. Robotti, 2007, The Exact Distribution of the Hansen-Jagannathan Bound. Working Paper, University of Toronto and Federal Reserve Bank of Atlanta. Mehra, R. , and E. C.Prescott, (1985), The equity premium: A puzzle, Journal of Monetary Economics 15, 145-161. Roussanov, N. , 2010, Composition of Wealth, Conditioning Information, and the Cross-Section of Stock Returns, NBER Working Papers 16073, National Bureau of Economic Research, Inc. Shiller, R. , 1982, Consumption, Asset Markets and Macroeconomic fluctuations, Carnegie–Rochester Conference Series on Public Policy, Vol. 17. North-Holland Publishing Co. , 1982, pp. 203–238. Shiller, R. J. , 1989, Market Volatility, MIT Press, Massachusetts. Journal of Economic Behavior & Organization, Elsev ier, vol. 16(3), pages 361-364.Weil, P. , 1989, The equity premium puzzle and the risk free rate puzzle, Journal of Monetary Economics 24. 401-422. Appendix [pic] Figure 1 LOP Volatility Bounds. The figure shows the LOP volatility bounds (dark blue line) which were found by using Treasury Bill and market returns as test assets. [pic] Figure 2 LOP Volatility Bounds with CCAPM.The figure shows the LOP volatility bounds (dark blue line) which were found by using Treasury Bill and market returns as test assets. It also shows the means and corresponding standard deviations of the CCAPM stochastic discount factors (green line) for values of risk aversion between 1 and 20. [pic] Figure 3 LOP Volatility Bounds with CCAPM and Confidence Intervals. The figure shows the LOP volatility bounds (dark blue line) which were found by using Treasury Bill and market returns as test assets.It also shows the means and corresponding standard deviations of the CCAPM stochastic discount factors (green line ) for values of risk aversion between 1 and 20. The figure contains the confidence intervals, with a 95% level of confidence, estimated by Kan and Robotti (2007) for E(m) between 0. 97 and 1. 0082 for the Law of One Price volatility bounds for their first set of test assets. The light blue line shows the upper bounds of the confidence intervals and the red line shows the lower bounds of the confidence intervals. Table 1 CCAPM stochastic discount factors’ means and standard deviations and corresponding LOP volatility bounds CCAPM |LOP volatility bounds |CCAPM | | |means | |st. dev. | | |0. 985121 |0. 82806186 |0. 011749 | |0. 980404 |1. 2067111 |0. 023503 | |0. 975849 |1. 57451579 |0. 035275 | |0. 971456 |1. 93015539 |0. 04708 | |0. 967223 |2. 27320637 |0. 58934 | |0. 963151 |2. 60350158 |0. 070853 | |0. 959239 |2. 92096535 |0. 082854 | |0. 955486 |3. 22555764 |0. 094953 | |0. 951893 |3. 5172513 |0. 107169 | |0. 94846 |3. 7960217 |0. 11952 | |0. 945187 |4. 06184126 |0. 132027 | |0. 942074 |4. 31467648 |0. 14471 | |0. 939121 |4. 5448604 |0. 15759 | |0. 93633 |4. 7812196 |0. 17069 | |0. 933701 |4. 99481688 |0. 184033 | |0. 931234 |5. 19520693 |0. 197645 | |0. 928931 |5. 38230757 |0. 211552 | |0. 926792 |5. 55602479 |0. 225781 | |0. 92482 |5. 71625225 |0. 240361 | |0. 923016 |5. 8628708 |0. 255322 |This table shows the means of the CCAPM stochastic discount factors for levels of risk aversion between 0 and 20, the corresponding LOP volatility bounds and the standard deviations of the CCAPM stochastic discount factors. Table 2 95% confidence intervals for E(m) between 0. 97 and 1. 0082 E(m) Lower Upper 0. 9700 3. 1823 5. 2069 0. 9710 2. 9385 4. 8383 0. 9719 2. 7038 4. 4830 0. 9729 2. 4781 4. 1411 0. 9738 2. 2617 3. 8125 0. 9748 2. 0544 3. 4974 0. 9757 1. 8565 3. 1959 0. 9767 1. 6680 2. 9080 0. 9776 1. 4890 2. 6337 0. 9786 1. 3195 2. 3731 0. 9795 1. 1597 2. 1262 0. 805 1. 0097 1. 8931 0. 9815 0. 8696 1. 6739 0. 9824 0. 7394 1. 4685 0. 9834 0. 6194 1. 2770 0. 9843 0. 5096 1. 0993 0. 9853 0. 4101 0. 9356 0. 9863 0. 3212 0. 7857 0. 9873 0. 2429 0. 6497 0. 9882 0. 1755 0. 5275 0. 9892 0. 1190 0. 4192 0. 9902 0. 0736 0. 3248 0. 9912 0. 0393 0. 2445 0. 9922 0. 0160 0. 1784 0. 9931 0. 0030 0. 1275 0. 9941 0 0. 0938 0. 9951 0 NaN 0. 9961 0 0. 0938 0. 9971 0. 0029 0. 1279 0. 9981 0. 0159 0. 1798 0. 9991 0. 0395 0. 2474 1. 0001 0. 0745 0. 3302 1. 0011 0. 1212 0. 280 1. 0021 0. 1796 0. 5408 1. 0031 0. 2498 0. 6689 1. 0041 0. 3317 0. 8123 1. 0051 0. 4255 0. 9714 1. 0061 0. 5309 1. 1461 1. 0072 0. 6481 1. 3368 1. 0082 0. 7769 1. 5437 This table shows the upper and lower bounds of the 95% confidence intervals Kan and Robotti (2007) calculated for the volatility bounds for their first set of test assets. The confidence intervals presented are for values of E(m) between 0. 97 and 1. 0082. Table 3 Pricing errors for the Treasury Bill (Rf) and the value weighted UK market index (Rm), and the Root Mean Square Pricing Error (RSME) for each level of risk av ersion Level of Risk Aversion |Error Rf |Error Rm |RSME | |1 |-0. 0104 |0. 0047 |0. 0080 | |2 |-0. 0152 |-0. 0001 |0. 0107 | |3 |-0. 0199 |-0. 0049 |0. 0144 | |4 |-0. 0244 |-0. 0094 |0. 0184 | |5 |-0. 287 |-0. 0138 |0. 0225 | |6 |-0. 0329 |-0. 0180 |0. 0265 | |7 |-0. 0369 |-0. 0221 |0. 0304 | |8 |-0. 0408 |-0. 0260 |0. 0342 | |9 |-0. 0445 |-0. 0297 |0. 0378 | |10 |-0. 0480 |-0. 0333 |0. 413 | |11 |-0. 0514 |-0. 0367 |0. 0446 | |12 |-0. 0546 |-0. 0399 |0. 0478 | |13 |-0. 0577 |-0. 0430 |0. 0508 | |14 |-0. 0606 |-0. 0459 |0. 0537 | |15 |-0. 0634 |-0. 0487 |0. 0564 | |16 |-0. 660 |-0. 0513 |0. 0590 | |17 |-0. 0684 |-0. 0537 |0. 0614 | |18 |-0. 0706 |-0. 0560 |0. 0636 | |19 |-0. 0727 |-0. 0580 |0. 0657 | |20 |-0. 0747 |-0. 0600 |0. 0676 | | | | | |The pricing errors above are calculated as [pic], where [pic], [pic] Treasury Bill and Market Index returns, and [pic] is the pricing errors. The RSME is simply the average pricing error of the stochastic discount factor for each level of risk aversion. Table 4 Summary Statistics for power utility CCAPM stochastic discount factor |Level of Risk Aversion |Average |St Dev |Min |Max | |1 |0. 9851 |0. 0117 |0. 9551 |1. 0436 | |2 |0. 804 |0. 0235 |0. 9214 |1. 1000 | |3 |0. 9758 |0. 0353 |0. 8889 |1. 1595 | |4 |0. 9715 |0. 0471 |0. 8575 |1. 2223 | |5 |0. 9672 |0. 0589 |0. 8273 |1. 2884 | |6 |0. 9632 |0. 0709 |0. 7981 |1. 3581 | |7 |0. 592 |0. 0829 |0. 7699 |1. 4316 | |8 |0. 9555 |0. 0950 |0. 7428 |1. 5090 | |9 |0. 9519 |0. 1072 |0. 7166 |1. 5906 | |10 |0. 9485 |0. 1195 |0. 6913 |1. 6767 | |11 |0. 9452 |0. 1320 |0. 6669 |1. 7674 | |12 |0. 421 |0. 1447 |0. 6434 |1. 8630 | |13 |0. 9391 |0. 1576 |0. 6207 |1. 9638 | |14 |0. 9363 |0. 1707 |0. 5988 |2. 0701 | |15 |0. 9337 |0. 1840 |0. 5777 |2. 1821 | |16 |0. 9312 |0. 1976 |0. 5573 |2. 3001 | |17 |0. 9289 |0. 116 |0. 5377 |2. 4245 | |18 |0. 9268 |0. 2258 |0. 5187 |2. 5557 | |19 |0. 9248 |0. 2404 |0. 5004 |2. 6940 | |20 |0. 9230 |0. 2553 |0. 4827 |2. 8397 | This table shows the average value, standard deviation, minimum and maximum for the stochastic discount factor at each level of risk aversion. ———————– 24th November 2011